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THE  LIBRARY 

OF 

THE  UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 

SCHOOL  OF  LAW 


Digitized  by  the  Internet  Archive 

in  2008  with  funding  from 

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COMMENTARIES 


ON   THE 


LAW  OF  CONTRACTS 


BEING  A  CONSIDERATION 

OF  THE  NATURE  AND  GENERAL  PRINCIPLES  OF  THE 

LAW  OF  CONTRACTS  AND  THEIR  APPLICATION 

IN  VARIOUS  SPECIAL  RELATIONS 


BY 

WILLIAM  F.  ELLIOTT 

CO-AUTHOR  OF 
"ROADS  AND  STREETS,"  "RAILROADS,"  "EVIDENCE," 

ASSISTED  BY  THE  PUBLISHERS'  EDITORIAL  STAFF 


IN  SIX  VOLUMES 

Volume  II 


INDIANAPOLIS 

THE  BOBBS-MERRILL  COMPANY 

PUBLISHERS 


Copyright  1913 
By  The  Bobbs-Merrill  Company 


T 


TABLE  OF  CONTENTS 

VOLUME   TWO. 


OPERATION  AND  INTERPRETATION 

CHAPTER  XXL 

LEGALITY   OF   OBJECT. 
SECTION.  PAGE. 

645.  Generally     3 

646.  Means  by  which  contract  rendered  illegal  immaterial 5 

647.  Agreements  in  violation  of  positive  law 6 

648.  Contracts  prohibited  by  statute  generally  void 7 

649.  Agreements  contrary  to  public  policj- — Generally 8 

650.  Broad  statement  of  the  rule  concerning  public  policy  criticized....  9 

651.  Public  policy — What  determined  by 11 

652.  Contracts    against    public    policy    void 12 

653.  Agreements  contrary  to  express  rules  of  common  law — Generally  12 

654.  Agreements  involving  commission  of  crime 13 

655.  Agreements  involving  commission  of  a  civil  wrong 14 

656.  Agreements  involving  fraud  15 

657.  Contracts  which   cannot  be  performed  without   defrauding  third 

persons     16 

658.  Conspiracy  to  defraud  third  persons 17 

659.  Rule  further  illustrated   18 

660.  Agreements  to  defraud  creditors 18 

661.  Conveyance  of  property  to  defraud  creditors 19 

662.  Who  may  avoid  such  conveyance 20 

663.  Agreements  contemplating  publication  of  libel 22 

664.  Agreements  mala  in  se  and  agreements  mala  prohibita 22 

665.  Basis  of  the  rule •  • 23 

666.  Penalties  generally  import  or  imply  prohibition 24 

667.  When  penalty  does  not  imply  prohibition 26 

668.  Different  tests  applied  by  different  courts  to  determine  legislative 

intent    26 

669.  Revenue  measures — Statutes  for  protection  of  public 27 

670.  Omission  of  penalty  does  not  render  express  prohibition  ineffective  27 

671.  Agreements   may   be    forbidden    yet   not    void   where    statutes    so 

provide    28 

650072 


IV  TABLE    OF    CONTENTS. 

SECTION.  PAGE. 

672.  Illustrations  of  the  rule 29 

673.  Rule  where  conditions  prescribed  for  conducting  business  are  not 

complied  with    29 

674.  Illustrations  of  the  rule 30 

675.  Attempting  to  do  indirectly  what  cannot  be  done  directly 31 

676.  Contracts  growing  out  of  or  connected  with  illegal  contracts....  32 

677.  Modified  rule  stated 32 

678.  Rule  where  aid  is  required  for  illegal  contract  to  establish  case..  23 

679.  Illustrations  of  the  rule 35 

680.  Rule  where  illegal  contract  is  abandoned  or  merely  collateral 35 

681.  Collateral  contracts  of  insurance,  surety  and  loans 36 

682.  Contracts  containing  several  distinct  undertakings 37 

683.  Repeal  of  statutes — Contract  valid  under  existing  law 37 

684.  Repeal  of  statutes — Contract  void  under  existing  law 39 

685.  Repeal  of  statutes — Impairing  obligation  of  contract 39 

686.  Ratification     41 

687.  Violation  of  federal  statutes 41 

688.  Violation  of  liquor  laws 43 

689.  Violation  of  liquor  laws — Knowledge  of  vendee's  unlawful  intent  43 

690.  Violation  of  liquor  laws — Further  illustrations 45 

691.  Sunday    contracts 47 

692.  Violation  of  statute  as  to  gaming  or  wagering 48 

693.  Wagering  contracts  at  common  law 48 

694.  Wagering  contracts — Present  status 49 

695.  Violation  of  statute  as  to  lotteries 50 

695^.  Elements  essential  to  existence  of  a  lottery 50 

696.  Guessing  contests  as  lotteries 51 

697.  Tailor  suit  clubs — Accumulated  funds  distributed  by  chance,  and 

the    like 52 

698.  Solution  of  a  problem  not  a  lottery 53 

699.  Bailee's  refusal  to  deliver  up  property  won  at  a  raffle 54 

700.  No  lottery  when  element  of  chance  is  wanting 54 

701.  Giving  of  trading  stamps  not  a  lottery 54 

702.  No  lottery  when  element  of  consideration  wanting 55 

703.  Collateral  contracts — Rights  of  vendor  and  vendee,  inter  se 55 

704.  Violation  of  the  statute  as  to  usury 56 

705.  Agreements  contrary  to  public  policy — Classification 56 

706.  Agreements  tending  to  official  corruption  or  injury  of  the  public  56 

707.  Tending  to  official  corruption — Interest  of  public  official 57 

708.  Tending  to  official  corruption — Contracts   for  materials 58 

709.  Tending  to  official  corruption — Location  of  public  buildings 59 

710.  Tending  to  official  corruption — Indemnity  bond 59 

711.  Tending  to  official  corruption — Influencing  appointments  to  office  60 

712.  Tending  to  official  corruption — Payment  of  campaign  expenses  and 

the    like 61 

713.  Tending    to    official    corruption — Contract    to    take    more    or    less 

than  statutory  fee 62 


TABLE    OF    CONTEXTS.  V 
SECTION.                                                                                                                                                          PACE. 

714.  Agreements  tending  to  corrupt  citizens  as  to  public  duties 63 

715.  Agreements  tending  to  obstruct  or  pervert  justice— Compounding 

crimes  and  the  like ^^ 

716.  Obstructing   justice — Compounding    crimes — Misdemeanors 67 

717.  Obstructing    justice— Compounding   offenses— Object    must    be    to 

stifle    prosecution    ""^ 

718.  Miscellaneous    illustrations ^° 

719   Agreements  tending  to  obstruct  or  pervert  justice— Civil  proceed- 

69 

mgs     ^^ 

720.  Civil  actions— Fraud  on  the  court 71 

721.  Obstructing  justice— Securing  evidence 71 

722.  Obstructing  justice— Paying  witnesses 73 

723.  Obstructing  justice— Hiring  witnesses  to  leave  state  and  the  like..  74 

724.  Obstructing   justice— Indemnity   to   sureties 75 

725.  Ousting  jurisdiction  or  limiting  powers 76 

726.  Ousting  jurisdiction— Submission  to  private  individual 77 

727.  Ousting  jurisdiction— Condition  precedent 78 

728.  Ousting  jurisdiction— Certificate  of  architect  and  the  like SO 

729.  Ousting  jurisdiction— Notice  of  claim 81 

730.  Ousting  jurisdiction— Further  illustrations 82 

731.  Agreements  tending  to  encourage  litigation 83 

732.  Encouraging  litigation— Champerty  and  maintenance 82 

733.  Encouraging    litigation— Champerty— Modifications    of    rule    con- 

cerning      °^ 

734.  Encouraging   litigation— Champerty— Attorney    and    client 85 

735.  Encouraging  litigation— Champerty— Right  to  compromise 86 

736.  Encouraging  litigation— Champerty— Recovery  of  quantum  meruit  87 

737.  Encouraging   litigation— Champerty— Defense    of— when    available  87 

738.  Agreements  tending  to  corrupt  morals 88 

739.  Corrupting  morals— Letting  house  for  brothel— Prostitute's  board  90 

740.  Corrupting  morals— Leasing  house  for  brothel 90 

741.  Immoral    consideration— Illicit   intercourse 90 

742.  Immoral  consideration— Existing  contract  to  marry 91 

743.  Immoral  consideration— Promise  by  putative  father 91 

744.  Immoral  consideration— Contracts  to  act  as  housekeeper 91 

745.  Immoral  consideration — Executed  contract 92 

746.  Immoral  consideration— Past  immoral  acts 92 

747.  Agreements  tending  to  corrupt  morals— Miscellaneous 94 

748.  Agreements  tending  to  induce  fraud  or  breach  of  trust 94 

749.  Inducing  breach  of  trust— Officers  of  corporation 95 

750.  Inducing  breach  of  trust— Public  service  corporation 97 

751.  Inducing  breach  of  trust— Other  applications  of  rule 97 

752.  Agreements  of  a  gambling  or  wagering  nature 98 

753.  Agreements  in  derogation  of  marriage— Restraint  of  marriage 98 

754.  Derogation  of  marriage— Marriage  brokage  contracts 99 

755.  Derogation    of    marriage— Agreements    made    in    view    of    future 

separation    


Vlll  TABLE    OF    CONTENTS. 

SECTION.  PAGE. 

843.  Contracts  in  restraint  of  trade — Presumptions  as  to  validity 169 

844.  Modern    doctrine 170 

845.  Rules  of  construction  illustrated  by  particular  cases 170 

846.  Recognition  taken  of  modern  conditions 171 

847.  Divisibility  or  severability  of  contract 171 

848.  Divisibility  as  to  territorial  extent — When  valid 172 

849.  Divisibility  as  to  time 173 

850.  Breach   of   contract 174 

851.  Breach  of  contract — Partners  and  employes 175 

852.  Breach  of  contract — Entering  another's  employment — When  is...  175 

853.  Acts  which  amount  to  a  breach  by  vendor 176 

854.  Rights  and  remedies — Injunction 177 

855.  Remedies — Injunction — When    may    issue 177 

856.  Remedies — Action  for  damages  or  penalty " 179 

857.  Breach  of  contract — Parties  in  pari  delicto 179 

858.  Laches,  burden  of  proof,  assignability 180 

CHAPTER  XXIII. 

COMBINATIONS.    AIONOPOLIES    AND    TRUSTS. 

865.  Generally    182 

866.  Legislative  grant  of  monopoly 182 

867.  Definitions  of  terms  as  here  used 183 

868.  Judicial   attitude   toward 185 

869.  Monopoly  need  not  be  complete 185 

870.  Contracts   and  combinations   among  manufacturers  or  dealers   to 

control  and  enhance  price 185 

871.  Rule  further  illustrated 187 

872.  Combination  or  monopoly  must  be  merely  ancillary 187 

873.  Rule  against  monopolies  as  applied  to  dealers 188 

874.  Rule  further  illustrated 188 

875.  Contracts  restricting  sale  of  intoxicating  liquors 189 

876.  Combinations  to  decrease  production  or  withhold  from  market 190 

877.  "Corners"  and  combinations  to  prevent  competition   in  other   re- 

spects      191 

878.  "Corners" — Forestalling,   regrading   and   engrossing 192 

879.  Combinations  relating  to  publication  of  news 193 

880.  Combinations  relating  to  insurance 195 

881.  When  statute  does  not  apply  to  insurance 196 

882.  Combinations  of  laborers  and  other  workmen 197 

883.  Right  to  organize  confers  no  special  privilege 198 

884.  Contracts  between  union  and  employes 199 

885.  Binding  force  of  constitution  and  by-laws  of  union 200 

886.  Strike  in  breach  of  contract 201 

887.  Monopolies  at  common  law 201 

888.  Modern   doctrine 202 


TABLE    OF    CONTENTS.  IX 

SECTION.  PAGE. 

889.  Monopolies  as  affected  by  state  constitution 202 

890.  Monopolies  under  state  statutes 203 

891.  Grants  of  exclusive  rights  by  government  authority 204 

892.  Exclusive  grant  by  private  person 204 

893.  Exclusive  grant  by  carriers 204 

894.  Exclusive  grant  by  carriers  to  hackinen — Right  to  dock  vessel 205 

895.  Discrimination — Exclusive  service  contract  with  patron 208 

896.  What  are  illegal  trusts 208 

897.  Form   not  controlling 209 

898.  Rights   and   disabilities  of   members  of  trusts   as   between   them- 

selves       210 

899.  Rules   further  illustrated 212 

900.  Rights   and   disabilities   of    members   of   trust   as     against    third 

persons    213 

901.  The  rule  illustrated 213 

902.  Rule   further  illustrated — Destruction  of  property  and  the  like..  214 

903.  Rights  of  third  persons 215 

904.  Rights  of  third  persons  under  statutes 216 

905.  Rights    of    stockholder 217 

906.  Antitrust    statutes — Constitutionality 217 

907.  State  antitrust  acts — Limitations  on  power  to  enact 218 

908.  State   antitrust   acts — Constitutionality 219 

909.  Antitrust  acts  of  Congress 221 

910.  Federal  antitrust  act — Construction  and  effect 221 

911.  Federal  antitrust  act  gives  a  reasonable  construction 223 

912.  Federal  antitrust  act — Application  of 224 

913.  Federal  antitrust  act — When  inapplicable 225 

914.  Federal  antitrust   act — Power  to  pass 225 

915.  State  antitrust  acts 228 

916.  State  antitrust   acts — General    scope 228 

917.  State  antitrust  acts — Application  to  labor  unions 230 

918.  State  antitrust  acts — Application  to  insurance 231 

919.  State  antitrust  acts — Exercise  of  police  power 231 

CHAPTER  XXIV. 

VIOLATION    OF    SUNDAY    LAWS. 

925.  Generally    233 

926.  The    English    statute 234 

927.  Sunday  laws  in  the  United  States 235 

928.  Effect  of  the  omission  of  the  words  "ordinary  calling" 236 

929.  Statutes    prohibiting   business    on    Sunday 237 

930.  Illegal    business    transactions 237 

931.  Statutes  prohibiting  labor  but  not  business 238 

932.  Performance  of  contract  for  labor  on  Sunday 240 

933.  The  exceptions  of  necessity  and  charity 240 


X  TABLE    OF    CONTENTS. 

SECTION.  PAGE. 

934.  Suits  to  enforce  contracts  made  on  Sunday 242 

935.  Payments    for   Sunday   labor 242 

936.  Sunday  laws — How   construed 243 

937.  Sales  made  on  Sunday 244 

938.  Delivery  of  goods  without  payment 244 

939.  Sunday  contract  fully  executed 245 

940.  Telegrams   on    Sunday 246 

941.  Contracts  of  common  carriers 247 

942.  Duty  of  carrier  independent  of  contract 247 

943.  Loaning  money  on  Sunday 248 

944.  Deeds,  mortgages  and  sealed  instruments  made  on  Sunday 249 

945.  Rule  as  to  deeds  and  mortgages  illustrated 249 

946.  Notes  and  bills 250 

947.  Bona  fide  holder  of  a  note  made  on  Sunday 252 

948.  Ratification  of  contracts  made  on  Sunday — General  rule 253 

949.  Minority   rule — Distinction    drawn 254 

950.  Completion  of  contract  on  secular  day 256 

951.  Delivery  on  secular  day 257 

952.  Executed  and  executory  Sunday  contracts 258 

953.  Executed  by  one  party 259 

954.  Conflict  of  laws  as  to  Sunday  contracts 259 

955.  Void  when  made  void  everywhere  and  vice  versa 260 

956.  Law  of  place  of  performance 260 

957.  Not  void  on  ground  of  public  policy 261 

CHAPTER  XXV. 

USURY. 

960.  Violation  of  statute  as  to  usury — Generally 262 

96L  Usury  a   personal   defense 263 

962.  Rule  further  illustrated 264 

963.  Usurious  note  secured  by  mortgage 265 

964.  Largely  a  matter  of  statutory   regulation 266 

965.  Bona  fide  holders — Usurious  contract  between  original  parties 267 

966.  Usury  as  a  matter  of  intent 269 

967.  Substance  and  not  form  controls 269 

968.  Usually  applies  to  contracts  of  borrowing  and  lending 271 

969.  Application  to  contracts  of  purchase  and  sale 271 

970.  Resale  to  vendor 272 

971.  Deferred  payments   for  work  and  labor 273 

972.  Grantee  of  real  estate  assuming  mortgage 273 

973.  Discounting   commercial    paper 274 

974.  Restricting   commissions — Exempting   building   and   loan    associa- 

tions      275 

975.  Incidental    expenses    incurred    in    making    or    collecting   loan    not 

usury    27 J 


TABLE    OF    CONTEXTS.  XI 
SECTION.                                                                                                                                                           PAGE. 

976.  Incidental  expenses — Hiring  agent  to  negotiate  loan 277 

977.  Liability  of  principal  for  acts  of  agent — Rule  further  considered  278 

978.  Time  of  payment 278 

979.  Interest  becoming  principal — Weight  of  authority 280 

980.  Renewal  bill  or  note — Extensions 281 

981.  Corporations     283 

982.  Remedies  under  national  banking  act 284 

983.  Rule  as  to  the  application  of  payments  of  usury  interest 284 

984.  Recovery  of  usurious  interest 237 

985.  Recovery    of    usurious    interest — Rights    as    affected    by    federal 

statute   288 

986.  Set-ofif  under  state  laws 291 

987.  Who  may  recover  usurious  interest 292 

CHAPTER  XXVI. 

GAMING    AND    WAGERING. 

990.  Generally    294 

991.  Change   of   attitude   toward 295 

992.  Early   statutes    against 296 

993.  Modern   statutes   against 297 

994.  Gambling  contracts  generally  invalid  thereunder 297 

995.  Futures     298 

996.  Must  intend  and  agree  to  deliver  goods 299 

997.  Kentucky  statute — Contracts  for  future  delivery — Various  forms  of  300 

998.  Intention  not  to  deliver  must  be  mutual •  • 301 

999.  Rule  as  to  mutual  intention  further  considered 301 

1000.  When  intention  of  one  party  may  defeat  contract 303 

1001.  Subsequent  agreement  as  to  delivery 303 

1002.  Futures — Margin    transactions 304 

1003.  Test  by  which  to  determine  validity  of 305 

1004.  Presumption  as  to  margin  transactions — Illustrations 305 

1005.  Legislative  enactment  concerning 307 

1006.  Futures— Options    307 

1007.  Rule  further  illustrated 308 

1008.  Puts  and  calls,  assignments,  resale,  ringing  out 309 

1009.  Other  forms  of  wagering  contracts — Election  debts 310 

1010.  Other  forms  of  wagering — Horse  racing 311 

1011.  Gaming  as  defined  by  statute — Generally 312 

1012.  Games  on  behalf  of  charity 314 

1013.  Bohemian  oats  speculation 314 

1014.  Rights   of   parties — Validity   of   bills,   notes   or   other    obligations 

given  in  payment  of  gambling  debts 314 

1015.  .*\s  between  the  immediate  parties  and  those  with  notice 315 

1016.  Special  statutory  enactments  concerning  recovery  thereon 316 

1017.  Note  given  in  an  option  or  "future"  deal 317 


Xll  •    .        TABLE    OF    CONTENTS. 

*   ♦«  • 

SECTION.  PAGE. 

1018.  Presumptions  concerning  and  validity  of  note  given  for  gambling 

debt    317 

1019.  Recovery  of  money  lost  at  gaming,  wagering  or  dealing  in  futures  318 

1020.  Illustration  of  rule  concerning  recovery 320 

1021.  Rights  and  liabilities  of  third  persons 321 

1022.  Prize    contests 322 

1023.  Further  examples  of  valid  and  invalid  prize  contests 322 

1024.  Collateral    agreements 323 

1025.  Collateral  contracts — Lender  must  be  a  confederate 323 

1026.  Examples  of  invalid  collateral  contracts 324 

1027.  Examples  of  valid  collateral  contracts 325 

1028.  Securities  giv-en  for  gambling  debt 325 

1029.  New  contract — Ratification — Executed  margin  transaction 325 

CHAPTER  XXVII. 

LOBBYING    CONTRACTS. 

1035.  General    rule 327 

1036.  Lobby  contracts  void 328 

1037.  When    illegal 328 

1038.  Character  of   legislation   immaterial 329 

1039.  Lobbying  contract  may  be  general  in  its  nature 329 

1040.  Invalid  if  personal  solicitation  is  contemplated 329 

1041.  Illustrations  of  unenforcible  contracts 330 

1042.  Further    illustrations 331 

1043.  Use  of  money  as  a  test 331 

1044.  Contract  by   executive   officer — Qualifying  a  valid   legislative   en- 

actment      332 

1045.  Lobbying  contract  entered  into  by  public  officials 332 

1046.  When  contract  for  services  before  legislative  body  not  unlawful  332 

1047.  Examples  of  valid  contracts 333 

1048.  Must  appear  openly  in  true  character 333 

1049.  Rule    applied ^^^ 

1050.  Contracts  distinguished  from  lobbying 334 

1051.  Effect  of  making  fee  contingent  on  success 335 

1052.  Contract  entered  into  under  legislative  authority 336 

1053.  Rule  where  contract  provides  for  services  partly  illegal 336 

1054.  Recovery  of   compensation 337 

CHAPTER  XXVIII. 

EFFECT    OF    ILLEGALITY    OF    CONTRACTS. 

1060.  Illegal  contracts  are  void  and  cannot  be  enforced 339 

1061.  Void  contract  incapable  of  supporting  a  remedy 339 

1062.  Rule  as  affected  by  public  policy 340 


TABLE  ..Of  ^GONTENTS.  '   ^^fl.^  xiii 


SECTION.  PAGE. 

1063.  Exception  to  the  rule 340 

1064.  Effect  of  performance  or  execution  of  contract 341 

1065.  Contract  presumed  valid 341 

1066.  Parties  left  in  position  in  which  they  place  themselves 342 

1067.  Illustration  of  illegal  contracts 344 

1068.  A  party  in  pari  delicto  may  object  to  the  legality  of  the  contract  345 

1069.  Effect  of  illegality  of  contract 345 

1070.  Effect  of  subsequent  illegal  contracts  on  prior  contracts 346 

1071.  Necessity  of  making  a  prima  facie  case  without  disclosing  illegal- 

ity  of    contract 346 

1072.  Rule  criticized  and  restated 347 

1073.  Rule    further   considered 347 

1074.  Partial  illegality  when  contract  is  divisible 348 

1075.  Rule  illustrated  and  applied 348 

1076.  Indivisible    illegal    contracts 349 

1077.  Illegal  when  consideration  cannot  be  apportioned — Renunciation, 

effect    of 350 

1078.  Contracts  growing  out  of  or  connected  with  illegal  contracts 352 

1079.  Illegal  combination — Right  to  maintain  alien  or  independent  con- 

tract      352 

1080.  Rule    illustrated 353 

1081.  Illegal    combination — Insurance   contract 353 

1082.  Effect  of  state  statutes 353 

1083.  Promise  by  third  party  to  pay  claim  arising  out  of  illegal  contract  354 

1084.  Third  party  acting  as  depositary 355 

1085.  Recovery  of  that  parted  with  under  executed  agreement 355 

1086.  Duty   of   agents   and    partners   to    turn    over   proceeds    of    illegal 

transaction    356 

1087.  Abandonment  of  illegal  contracts 357 

1088.  Rule  where  aid  of  illegal  contract  is  required  to  establish  case..  358 

1089.  Ratification  of   illegal  contract 358 

1090.  General  rule  as  to  ratification 358 

1091.  Rule    illustrated 359 

1092.  Rule  as  applied  to  Sunday  contracts 359 

1093.  Effect  of  subsequent  payment  of  license  fee 359 

1094.  Enforcing  or  obtaining  relief  from  illegal  contracts 360 

1095.  Exceptions — Recovery  provided  for  by  statute 360 

1096.  Statutes  permitting  recovery  strictly  construed 361 

1097.  Other  statutes  considered 361 

1098.  Recovery  permitted  when  parties  not  in  pari  delicto 362 

1099.  Rule    illustrated 363 

1100.  Penalty  on  both  parties — No  undue  advantage  given 364 

1101.  When  parties  not  equally  at  fault 365 

1102.  Rule    illustrated 365 

1103.  The  principle  of  "par  delicto"  as  affected  by  public  policy 366 

1104.  When  one  in  pari  delicto  may  be  granted  relief 367 


Xiv  TABLE    OF    CONTENTS. 

SECTION.  PAGE. 

1105.  Locus    poenitentiae 368 

1106.  Rule    illustrated 368 

1107.  Money  or  property  given  to  one  of  the  parties  to  the  illegal  agree- 

ment         369 

CHAPTER  XXIX. 

CONFLICT    OF    LAWS. 

1110.  General  rule — Lex  loci  contractus Z12 

1111.  Lex  loci  contractus  governs  as  to  the  nature,  obligation  and  in- 

terpretation of  the  contract 2)1Z 

1112.  The  general  rule  given  further  consideration 374 

1113.  Law  of  the  place  a  part  of  the  contract 375 

1114.  Reasons  underlying  the  rule 375 

1115.  Where  is  the  place  of  the  contract 376 

1116.  Place   of   acceptance 376 

1117.  Place  of  delivery 2>n 

1118.  Place   of   performance 378 

1119.  When  lavir  of  the  place  of  performance  governs 379 

1120.  The    rule   illustrated 380 

1121.  Part  performance  in  one  jurisdiction  and  part  in  another 381 

1122.  Agreement  by  parties  as  to  law  which  shall  control 382 

1123.  Agreements  as  to  the  law  which  shall  control  considered  further  382 

1124.  Formal    validity 383 

1125.  Formal  validity— Statute  of  frauds 383 

1126.  Essential    validity— Legality 384 

1127.  Capacity    of    parties 385 

1128.  Capacity  to  contract — Corporations — Agents 385 

1129.  Distinction  between  capacity  to  contract  and  capacity  to  perform 

the    contract 386 

1130.  Capacity  to  contract — Married  women 385 

1131.  Capacity  to  contract — Transients  in  a  foreign  country 387 

1132.  Capacity  to  contract — Law  of  domicil 387 

1133.  Rule  in   Louisiana 388 

1134.  When  law  of  domicil  imposes  a  total  incapacity 388 

1135.  Capacity  to  contract — Law  of  forum 389 

1 136.  Capacity  to  contract — Infants 389 

1137.  Discharge  of  contracts — Statutes  of  limitation 390 

1138.  Lex  fori — When  action  may  be  maintained  thereunder 391 

1139.  Statutes  as  to  maintenance  of  actions  in  lex  fori 392 

1140.  Other   statutory   enactments 392 

1141.  Rule  when  the  law  of  the  place  extinguishes  the  contract 393 

1142.  Particular  contracts — Contracts  relating  to  realty 393 

1143.  Rule    applied 394 

1144.  Lex  situs  controls  as  to  covenants  which  run  with  the  land  and 

the    like 395 


TABLE   OF    CONTENTS.  XV 
SECTION.                                                                                                                                                           PAGE. 

1145.  Distinction  between  covenants  which  run  with  the  land  and  per- 

sonal   covenants •^96 

1 146.  Transfer  of  personalty 397 

1147.  Legislative  power  extends  to  all  personal  property  within  bound- 

aries of  the  state 398 

1148.  When  the  law  of  domicil  yields  to  the  law  of  the  situs 398 

1149.  Sale  or  attachment  of  goods — When  lex  sitae  controls 399 

1 150.  The  trend  of  authority 399 

1151.  The  law  of  the  domicil  as  compared  with  the  law  of  the  place..  400 

1 152.  Transfer  of  personalty — Sales 400 

1153.  Sale  governed  by  the  law  of  the  place  where  it  becomes  com- 

plete and  binding 401 

1154.  The  law  of  the  situs  as  affecting  the  rights  of  creditors 402 

1155.  Removal  of  goods  without  vendor's  knowledge  or  consent 403 

1156.  Contract  of  sale  providing  for  delivery  and  use  in  another  juris- 

diction      404 

1157.  Validity  of  chattel  mortgages  and  bills  of  sale 404 

1158.  Removal  of  mortgaged  goods  to  another  jurisdiction 405 

1159.  Mortgagors  consenting  to  the  removal — Comity 406 

1160.  Necessity    to    refile    mortgage    on    property    moved    into    another 

jurisdiction    407 

1 161.  Sales  of  intoxicating  liquors 407 

1162.  Sales  of  intoxicating  liquors — Rule  applied 408 

1163.  Voluntary  assignments  for  the  benefit  of  creditors 409 

1164.  Assignment  valid  where  made  generally  valid  everywhere 409 

1165.  Foreign  voluntary  assignment — Resident  creditors 410 

1166.  When  law  of  place  of  assignment  prevails  over  the  law  of  the 

domicil    41 1 

1167.  Involuntary  assignment  under  bankrupt  and  insolvency  laws 412 

1168.  Involuntary    assignment — When    recognized    in    foreign    jurisdic- 

tions      413 

1169.  When  assignment  is  involuntary 413 

1170.  Sale  or  mortgage — As  affected  by  fraud 414 

1171.  Bills  and  notes 414 

1172.  Presumption  as  to  place  of  delivery 415 

1173.  Bill  or  note  payable  generally 416 

1174.  Naming  of  place  for  payment  does  not  necessarily  fix  governing 

law    417 

1175.  Laws  of  more  than  one  state  may  apply  to  same  bill 417 

1176.  Negotiability    418 

1177.  Rule  in  federal  and  a  few  state  courts 419 

1178.  Law  governing  liability  of  parties  to  bills  and  notes 420 

1179.  Necessity  of  demand  and  protest  as  a  condition  precedent 422 

1180.  Necessity  for  notice  of  dishonor 423 

1181.  Time  of  payment — Days  of  grace 424 

1182.  Interest     424 

1183.  Different  rates — Parties  may  stipulate  either 425 


XVI  TABLE    OF    CONTENTS. 

SECTION.  PAGE. 

1184.  In  selecting  rate  must  act  in  good  faith 426 

1 185.  Insurance  contracts — Generally 426 

1186.  Authority   of   agent   limited  to  taking   applications — Exceptions..  427 

1187.  Policy  mailed  to  agent  of  insurer 428 

1188.  Delivery  and  payment  of  first  premium 429 

1189.  Parties  designating  the  state  whose  laws  are  to  govern 429 

1190.  Validit}^ — Policy  usually  governed  by  the  law  of  the  place 430 

1191.  Construction  and  rights  of  the  parties 430 

1192.  Contracts   of   carriers 432 

1193.  Connecting  lines  of  carriers — The  English  rule 433 

1 194.  The  American   rule 435 

1195.  "Contract    tickets" 437 

1196.  Maritime    contracts 437 

1 197.  Contracts  of  affreightment 438 

1198.  Contracts  of  telegraph  company 440 

1199.  Remedies — Lex    fori — Generally 441 

1200.  Lex  fori  governs  as  to  remedy 442 

1201.  Rule    apphed 443 

1202.  When  forum  will  refuse  to  enforce  the  contract 443 

1203.  Foreign  laws  not  judicially  noticed 444 

CHAPTER  XXX. 

STATUTE    OF    FRAUDS. 

1210.  Form  of  contract — Classes  of  simple  contracts  in  writing 447 

1211.  Statute  of  frauds — Origin  and  purpose 449 

1212.  Statute  of  frauds  substantially  adopted  in  this  country 450 

1213.  Construction  of  the  act 451 

1214.  Operation  and  effect  of  statutes  generally — Executed  contracts..  452 

1215.  Its  effect  on  verbal  contracts 453 

1216.  Operation    and    effect    of    statutes    generally — Quasi    and    implied 

contracts 454 

1217.  Statutes  generally  held  to  affect  remedies 455 

1218.  Defense   of   statute   personal 456 

1219.  When  statute  must  be  invoked  by  third  person 457 

1220.  Waiver  of   statute 458 

1221.  Conflict  of  law — Law  of  forum 458 

1222.  Conflict  of  law — Cases  applying  lex  loci  contractus 459 

1223.  Conflict  of  law — Cases  applying  law  of  place  of  performance 460 

1224.  How  statute   must  be   invoked 460 

1225.  Fourth  section  of  the  original  act — Affect  form  of  simple  contracts  461 

1226.  Fourth  section — Promise  by  executors  and  administrators 462 

1227.  Fourth  section — Promise  to  answer  for  debt  of  another — Scope  of 

clause    463 

1228.  Fourth   section — Promise   to   answer   for  the   debts   of   another — 

General    matters 464 


TABLE    OF    CONTEXTS.  XVU 

SECTION.  PAGE. 

1229.  Necessity  for  a  subsisting,  binding  obligation 466 

1230.  To  whom  the  promise  must  be  made 467 

1231.  Original  and  collateral  promises 468 

1232.  General  rules  further  considered 469 

1233.  Original  promises — Paj-mcnt  out  of  property  of  debtor 470 

1234.  Original  promises — New  consideration  moving  to  promisor 471 

1235.  Original  promises — Promise  to  pay  own  debt 472 

1236.  Question  determined  by  person  to  whom  credit  is  given 474 

1237.  Person  to  whom  credit  is  given — Services  rendered,  and  the  like  476 

1238.  Language  indicative  of  collateral  promise 477 

1239.  Miscellaneous    promises 478 

1240.  Question   one   of   intention 478 

1241.  When  a  question  for  the  jury 479 

1242.  Relinquishment    of    lien 480 

1243.  Independent  promise  releasing  another 480 

1244.  Del  credere  commission 481 

1245.  As  to  contracts  of  indemnity 482 

1246.  Oral  promise  to  indemnity  guarantor  not  within  the  statute 483 

1247.  Illustrations  of  collateral  promises 484 

1248.  Agreements  in  consideration  of  marriage 485 

1249.  Promise  to  do  some  act  other  than  marry  in  consideration  of  mar- 

riage      486 

1250.  Antenuptial    contracts 486 

1251.  Antenuptial  parol  agreements  reduced  to  writing  after  marriage  487 

1252.  Antenuptial    agreement — Execution 488 

1253.  Contracts  relating  to  lands 488 

1254.  Necessity  for  and  sufficiency  of  writing 489 

1255.  Scope  of   the  clause 490 

1256.  Cases  not  within  the  statute — Constructive  trusts 492 

1257.  Cases    not    within    the    statute — Party    fences    and    location    of 

boundary    line 493 

1258.  Cases  not  within  the  statute — Licenses  to  enter  on  lands 494 

1259.  Fixtures    496 

1260.  Fructus    industriales 497 

1261.  Other  collateral  contracts  not  within  the  fourth  clause — Illustra- 

tions      500 

1262.  Cases  not  within  fourth  clause — Partnership  to  deal  in  lands 500 

1263.  Cases  distinguished — How  contract  may  be  taken  out  of  statute. .  502 

1264.  Appointment  of  agent  to  buy  land 503 

1265.  Cases  not  within  the  fourth  clause — Judicial  sales 504 

1266.  Contracts  within  statute — Parol  contract  to  arbitrate 505 

1267.  Cases  within  clause  four — Easements 505 

1268.  Contracts   within   the   fourth   clause — Contracts    for   the   sale   of 

growing    trees 507 

1269.  Sale  of  standing  timber  to  be  immediately  removed 509 

1270.  Cases  within  the  fourth  clause — Leases 510 

1271.  How  contract  concerning  land  may  be  taken  out  of  the  statute 511 


xviii  TABLE    OF    CONTENTS. 

SECTION.  PAGE. 

1272.  Insufficient    performance— Possession 513 

1273.  Taking  possession— English  doctrine 514 

1274.  Insufficient    performance— Payment    of    purchase-price— Exchange 

of    lands 515 

1275.  Additional  illustrations  of  the  rule 516 

1276.  Performance  of  services 518 

1277.  Agreements  not   to  be  performed   within   a  year — Scope   of    the 

clause    "^^^ 

1278.  Contracts  within  the  fifth  clause— Contracts  to  last  a  year  from 

a  date  in  f uturo — Leases 521 

1279.  Contracts  to  last  a  year  from  a  date  in  f uturo— Services 522 

1280.  Method  of  computing  time 524 

1281.  Contracts  which  cannot  be  performed  within  a  year 525 

1282.  Cases  not  within  the  fifth  clause— Contracts   which  may  be  per- 

formed within  a  year 5-6 

1283.  Performance  within   a  year    possible— Rule   illustrated   and   con- 

sidered   further 5-7 

1284.  Performance  depending  upon  a  contingency 528 

1285.  Contracts  not  within  the  fifth  clause— Contracts  to  continue  dur- 

ing   hfe  •  •  •     ^"^0 

1286    Contracts  to  be  performed  on  death  of  one  of  the  parties  of  third 

'ill 
person   '^^^ 

1287.  Statute  of  frauds  applies  to  contracts  which  cannot  possibly  or 

reasonably  be  performed  within  a  year 532 

1288.  Agreement    not    to    be    performed    within    a    year— Option    to 

termmate    ^  ^ 

1289.  Performance  on  one  side  within  the  year 534 

1290.  Performance  by  one  party  within  a  year— Sufficiency  of  question 

of    construction ' 536 

1291.  Seventeenth  section  of  the  statute 536 

1292.  Scope  of  the  statute ^^"^ 

1293.  Transactions  construed  as  contracts  for  sale 539 

1294.  Work  and  labor  contracts  distinguished  from  contracts  of  sale..  540 

1295.  Massachusetts   rule    ^^^ 

1296.  The   rule  in   New   York 543 

•  1297.  The  English  rule   ^'^'^ 

1298.  Sale  of  timber  products ^^^ 

1299.  Realty    improvement    contracts 545 

1300.  Work  in  raising  crops  and  the  like 545 

1301.  Sufficiency  of  the  memorandum  acquired  by  the  fourth  and  sev- 

enteenth   sections    545 

1302.  Form    of    memorandum 546 

1303.  Correspondence  as  evidence  of  the  contract 548 

1304.  Bought  and  sold  notes— "Slip  contracts" 549 

1305.  The  contents  of  the  memorandum 549 

1306.  Names  of  parties  must  be  shown 550 

1307.  Description   of    subject-matter— Personal    property 551 


TABLE    OF    CONTENTS.  XIX 
SECTION.                                                                                                                                                          PACE. 

1308.  Contents  of  memorandum — Admission  of  evidence  aliunde 552 

1309.  Contents  of  memorandum — Descriptions  of  real  estate 552 

1310.  Further  illustrations  of  the  rule 554 

1311.  Contract  to  convey  one  of  several  tracts 555 

1312.  Contents   of  memorandum — Descriptions  of   real   estate   held   in- 

sufficient     556 

1313.  Whether  the  memorandum  must  show  the  consideration 557 

1314.  Weight  of  authority 558 

1315.  Statement  of  consideration — Executory  contracts — Price  and  terms  558 

1316.  Memorandum — Time  of  payment 559 

1317.  Form  of  signature 560 

1318.  Place    of    signature 562 

1319.  Who   must   sign 563 

1320.  Who  is  the  party  to  be  charged 564 

1321.  Vendor  as  party  to  be  charged 565 

1322.  Trustee  as  party  to  be  charged 566 

1323.  Special  statutes  relating  to  the  signature  of  the  parties 566 

1324.  Time  when  memorandum  must  be  made 567 

1325.  Must  memorandum  be  prepared  before  action  is  brought? 568 

1326.  Necessity  for  delivery  of  memorandum 569 

1327.  Taking   contract   out   of   operation   of   seventeenth   section — Part 

performance    571 

1328.  Taking  contract  out  of  operation  of  seventeenth  section — Receipt 

and   acceptance — Necessity    for 572 

1329.  Kind  of  acceptance — Must  be  unconditional 574 

1330.  Mere  words  insufficient 576 

1331.  Acts  construing  an  acceptance 576 

1332.  Further  illustrations    577 

1333.  Acceptance  of  part  of  the  goods 578 

1334.  Goods   sold  by  sample 580 

1335.  Constructive    delivery    and    acceptance 581 

1336.  Acceptance  by  agent,  bailee  or  joint  purchasers 583 

1337.  Delivery  at  a  place  or  to  a  person  designated  by  the  buyer 584 

1338.  Delivery  to  a  carrier 584 

1339.  Delivery  which  takes  contract  out  of  the  statute 587 

1340.  Question  for  the  jury 588 

1341.  Earnest   or  part   payment 589 

1342.  Auctioneer's   sale    590 

1343.  Judicial    sales       590 

CHAPTER  XXXI. 

IMPLIED    CONTRACTS. 

1355.  Implied  and  quasi  contracts — Introductory 592 

1356.  Judgments     593 

1357.  Duties   imposed   by  statute 594 


XX  TABLE    OF    CONTENTS. 

SECTION.  PAGE. 

1358.  Acts  of  parties 594 

1359.  Contracts  not  implied  by  law  where  express  contracts 597 

1360.  Limits  of  rule  that  express  contract  excludes  implied  contract...  598 

1361.  Right   to   recover   where   minds   of  parties   did  not   meet   on   at- 

tempted express  contract 600 

1362.  Accounts   stated    602 

1363.  Work    and    services 603 

1364.  Contracts  for  services  where  skill  is  required 606 

1365.  Same  subject  continued — When  silence  imports  assent 607 

1366.  Where  law  will  not   imply  a  promise  owing  to  relationship   of 

parties    610 

1367.  Parent  and  child — Rule  as  to  services  rendered 612 

1368.  Persons  standing  in  loco  parentis 616 

1369.  Same  subject  continued — Further  illustrations 617 

1370.  Same  subject  continued — During  illicit  cohabitation 618 

1371.  Same  subject  continued — In  expectation  of  marriage 618 

1372.  Money  had  and  received 619 

1373.  Rule    illustrated    621 

1374.  Nature  of  the  action 622 

1375.  When  action  may  be  maintained 623 

1376.  Money   lent    •  • 626 

1377.  Money  lent  to  a  municipal  corporation 626 

1378.  Money  received  and  used  by  borrower 627 

1379.  Money  paid — Receiving  without  consent  of  owner 628 

1380.  One  to  whom  an  obligation  is  due  may  proceed  against  one  hold- 

ing the  money 630 

1381.  Money  voluntarily  paid  to  another  with  owner's  consent 631 

1382.  Rule  as  to  voluntary  and  involuntary  payments  further  illustrated  633 

1383.  Effect   of   protest 634 

1384.  Recovery  of  money  paid  under  duress  or  compulsion 635 

1385.  The    rule   illustrated 636 

1386.  Voluntary  payment  of  taxes 638 

1387.  Recovery  of  illegal  taxes  paid  under  compulsion 640 

1388.  Money  paid  by  or  under  mistake 641 

1389.  Payments  by  banks — Insurance  companies — General   matters 642 

1390.  Effect  of  negligence  upon  the  right  of  recovery 643 

1391.  Recovery  of  money  paid  under  mistake  of  law 645 

1392.  Ignorantia  juris  neminem  excusat — Exception  in  the  case  of  igno- 

rance of  a  foreign  law 646 

1393.  Contribution    646 

1394.  When  contribution  may  be  enforced 648 

1395.  Goods  sold  and  delivered 650 

1396.  Board   and   lodging 650 

1397.  Use   and    occupation 651 

1398.  Waiver  of  torts  and  suing  on  implied  contracts 652 

1399.  Rule    further    considered    653 

1400.  Other  instances  in  which  the  tort  may  be  waived  and  suit  brought 

on  the   implied  contract 654 


TABLE    OF   CONTENTS.  XXI 

CHAPTER  XXXII. 

LIMITS   OF   OBLIGATION CONTRACTS    AFFECTING   THIRD    PERSONS. 

SECTION.  PACE. 

1405.  Obligation  of  contract  as  between  the  parties 658 

1406.  Privity   of    contracts 659 

1407.  Further  exceptions  to  the  English  rule 660 

1408.  Obligation  of  contract  as  to  third  person 661 

1409.  Obligation  as  to  liability  of  third  person 662 

1410.  Obligation  as  to  duty  of  third  person — Interference  by  third  per- 

sons       663 

1411.  Obligation  as  to  rights  of  third  persons 666 

1412.  When  third  persons  may  enforce  contracts  for  their  benefit 667 

1413.  Must  be  a  clear  intent  to  benefit  the  third  party 670 

1414.  Acceptance  necessary  for  and  sufficiency  of 672 

1415.  Delivery — Rights  of  parties  in  general 673 

1416.  Particular  cases — Insurance    675 

1417.  Particular   cases — Telegraph    company   cases 676 

1418.  Particular  cases — Building  contract  cases 678 

1419.  Particular   cases — Contracts   with    carriers 681 

1420.  Miscellaneous  cases    682 

1421.  When  third  persons  may  not  enforce  contract 684 

1422.  Question  of  construction — Contracts  with  water  company  and  the 

like    687 

1423.  Rule  further  illustrated 689 

1424.  Rule  further  illustrated— Right  to  enforce  sealed  instrument 690 

CHAPTER  XXXIII. 

ASSIGNMENTS. 

1430.  Definition — Different    rule   at   common   law   and    in    equity   under 

modern   law    691 

1431.  Chose  in  action  unassignable  at  common  law 692 

1432.  The  rule  in  equity 694 

1433.  What  may  be  assigned — Generally 695 

1434.  Assignment  of  public  contracts — Wages  and  the  like 697 

1435.  Assignment  of  contracts  involving  personal  liability 700 

1436.  Examples    of   unassignable    contracts 701 

1437.  Parties   may   stipulate   against   assignment 704 

1438.  Assignment  may  be  forbidden  by  statute 705 

1439.  Assignment  of  liabilities  by  act  of  parties 706 

1440.  Assignment  of  rights  by  acts  of  parties 707 

1441.  Form   and    elements   of   assignments 707 

1442.  Informal    assignments    709 

1443.  Partial    assignments    711 

1444.  Partial  assignments  in  equity 712 


XXll  TABLE   OF    CONTENTS. 

SECTION'.  PAGE. 

1445.  Notice  of  assignment  as  between  the  assignor  and  assignee  and 

the    party    Hable 714 

1446.  Efifect  of  notice  to  debtor  or  person  liable — Rights  of  parties  gen- 

erally      715 

1447.  Assignments  by  operation  of  law — Generally 717 

1448.  Assignments  by  operation  of  law — Effect  of  transfer  of  interest 

in    land    717 

1449.  Nature  and  purpose  of  covenant  controls — Restrictions  as  to  use 

of    real    property    719 

1450.  Valid  covenants   running  with  the  land 720 

1451.  Effect  of  marriage 721 

1452.  Effect  of  death  of  one  of  the  parties — Actions  that  survive 722 

1453.  Actions  that  do  not  survive 722 

1454.  Effect  of  assignment 12Z 

1455.  Rights    of    assignee — Qualified    assignments 724 

1456.  Implied  warranties  in  assignments — Rights  and  liabilities   of   as- 

signor   and    assignee 725 

L457.  Title    of    assignee 726 

1458.  Equities    of    third    persons 729 

1459.  Rights  of  assignees  as  between  themselves — priority  of  notice....  731 

1460.  Priority  in  point  of  time — Rule  criticized ThZ 

1461.  Successive  assignees — Existing  equities 734 

1462.  Evidence  of   assignment   and  of   assignee's    rights — Right   of   as- 

signee to  sue — Burden  of  proof 735 

1463.  Evidence    of    assignee's    right 736 

1464.  Proof  of  the  assignment 738 

1465.  Assignee  of   corporation 739 

1466.  Delivery  and   acceptance 741 

CHAPTER  XXXIV. 

JOINT   AND    SEVERAL    CONTRACTS. 

1470.  What  is  joint  and  what  are  several 742 

1471.  General  rule  stated — Rights  of  parties 743 

1472.  Illustrative    cases — Joint    contracts 744 

1473.  Joint   contracts — Further   illustrated 745 

1474.  Illustrative    cases — Several    contracts 745 

1475.  Illustrative  cases — Joint  and  several  contracts 747 

1476.  Intention  of  parties  generally  governs 748 

1477.  Form  of  promise  as  test 749 

1478.  Interest  of  parties  as  test 750 

1479.  Liability   of   joint   obligors 750 

1480.  Contracts  of  subscription 751 

1481.  Subscription  contracts  further  illustrated — May  be  joint 752 

1482.  Effect  of  release  of  one  joint  debtor 753 

1483.  As  affected  by  the  intention  of  the  parties 754 


TABLE   OF    CONTENTS.  XXI 11 

SECTION.  PACE. 

1484.  Settlement  with  one  joint  debtor 755 

1485.  Covenant   not   to  sue 757 

1486.  Effect  of  death  of  joint  contractor  at  law 757 

1487.  The  rule  in  equity 758 

1488.  Where  the  deceased  joint  debtor  is  surety 759 

1489.  When  a  surety's  estate  is  held  liable 760 

1490.  Contribution    among   joint    debtors 760 

1491.  Contribution    among    sureties 762 

1492.  Actions  on  joint  contracts 764 

1493.  Judgments    on    joint    contracts 765 

1494.  Judgments  on  joint  contracts   further  considered 767 

1495.  Actions  on  joint  and  several  contracts 768 

1496.  Statutory   modifications    '^^ 

1497.  Other  statutory  modifications 771 

1498.  Effect  of  statute  of  limitation 771 

CHAPTER  XXXV. 

INTERPRETATION    AND    CONSTRUCTION. 

1505.  Meaning   of   terms — Purpose 774 

1506.  No  room  for  construction  when  contract  is  unambiguous 775 

1507.  Rules  of  construction  generally 776 

1508.  Rules    of    construction    generally — Intention    of    parties 778 

1509.  Rules  of  construction  generally — Words  understood  in  their  or- 

dinary   meaning     '80 

1510.  Rules    of    construction   generally — Language   used    evidences    the 

intent    782 

1511.  Rules  of  construction  generally — Technical  terms 784 

1512.  Rules  of  construction — Commercial  terms — Words  used   in  legal 

sense   784 

1513.  General  rules — Technical  words  governed  by  the  intent 785 

1514.  Rules  of  construction  generally — Whole  instruments  looked  to....  787 

1515.  Rules  of  construction  generally — Construing  particular  clauses 789 

1516.  Rules  of  construction  generally— Xoscitur  a  sociis 791 

1517.  Rules   of   construction   generally — Surrounding   circumstances 791 

1518.  Rule  illustrated 793 

1519.  Rule  concerning  surrounding  circumstances   further  considered..  794 

1520.  Subsidiary    rules    of    construction — Construction    upholding    con- 

tract preferred 796 

1521.  Subsidiary  rules  of  construction — A  reasonable  construction  will 

be   adopted    798 

1522.  Subsidiary  rules  of  construction — Construing  several  instruments 

together    800 

1523.  Contracts  contained   in  more  than   one  instrument   further   illus- 

trated      802 

1524.  The  rule  further  illustrated 803 


XXIV  TABLE    OF    CONTENTS. 

SECTION.  PAGE. 

1525.  Subsidiary  rules  of  construction — Instruments  partly  written  and 

partly  printed  804 

1526.  Repugnant  provisions  must  be  irreconcilable 806 

1527.  Must  not  be  construed  to  defeat  intention  of  parties — Construc- 

tion of  words  and  figures 806 

1528.  Subsidiary     rules     of     construction — Doubtful     words     construed 

against  the  party  using  them 807 

1529.  Construction  of  grants  by  government 809 

1530.  Application    of    the    rule 810 

1531.  Subsidiary  rules  of  construction — Language  to  be  understood  in 

sense  in   which  promisor  knew   or  had   reason   to  believe  the 

other   party   understood    it 811 

1532.  Subsidiary  rules  of  construction — General  and  particular  words— 

Ejusdem    generis    813 

1533.  Subsidiary    rules    of    construction — Expressio    unius    est    exclusio 

alterius     815 

1534.  Subsidiary  rules  of  construction — Punctuation  and  grammar....  816 

1535.  Subsidiary    rules    of    construction — Rejecting    and    interpolating 

words    817 

1536.  Rejecting  and  interpolating  words — Limits  of   rule 820 

1537.  Practical    construction    821 

1538.  Contemporaneous  and  subsequent  acts  considered 823 

1539.  The    rule    illustrated 824 

1540.  Additional    illustrations     825 

1541.  Must  be  the  act  of  both  parties 826 

1542.  Contract  must  be  ambiguous 827 

1543.  Entire  and  severable  contracts 828 

1544.  Contract  consisting  of  several  distinct  items 829 

1545.  Illustrations  of  entire  contracts 830 

1546.  Example  of  severable  contracts 831 

1547.  Dependent  and  independent  promises 832 

1548.  Alternative  stipulations  and  options 833 

1549.  Rules  as  to  time — Performance 833 

1550.  Computation  of  time  from  a  particular  day  or  a  particular  event.  834 

1551.  Time — Time  at  law  generally  of  the  essence  of  a  contract 837 

1552.  Time— Relative  to  the  sale  of  goods 838 

1553.  Conditions    precedent    839 

1554.  When  time  is  not  of  the  essence  of  a  contract 841 

1555.  Time  not  generally  regarded  in  equity  as  of  the  essence  of  the 

contract    842 

1556.  Illustrations    843 

1557.  Where  the  property  is  subject  to  fluctuations  in  value 843 

1558.  Stipulations  in  regard  to  real  estate 844 

1559.  Rules  as  to  penalties  and  liquidated  damages 845 

1560.  Illustrations    851 

1561.  Stipulations   in  building   contracts 852 

1562.  Further  illustrations  of  penalties 853 


TABLE    OF    CONTENTS.  XXV 

SECTION.  PACE. 

1563.  The  intention  of  the  parties  and  nature  of  the  agreement— Con- 

trolling  guides    8^"* 

1564.  Province  of  courts  and  jury  in  construing  contract 855 

1565.  Province  of  court  and  jury   further  considered 858 

1566.  Oral  contracts   859 

CHAPTER  XXXVL 

COVENANTS    AND    CONDITIONS. 

1575.  Generally — When  words  construed  as  covenant  and  when  as  con- 

dition      861 

1576.  Kinds   of    covenants — Dependent   and    independent — Mutual 863 

1577.  Time    of    performance 864 

1578.  Covenants  construed  as  dependent 865 

1579.  Examples  of  covenants  construed  as  independent 868 

1580.  Mutual  promises — Reliance  on  remedy  or  condition 869 

1581.  Conditions    in    insurance   policies 869 

1582.  Conditions    in    insurance    policies — Suicide 872 

1583.  Examples  of   conditions   precedent — Vendor   and  purchaser 874 

1584.  Examples   of   provisions   held   not   conditions  precedent   in   cases 

of    vendor    and    purchaser 876 

1585.  Vendor  and  purchaser — Miscellaneous 877 

1586.  Conditions    as    to    arbitration — Waiver 879 

1587.  Conditions  and  acts  to  be  performed  in  sales  of  goods 880 

1588.  Sales   of   goods — Conditions   to   passing  the   title 881 

1589.  Sale  of  goods  to  arrive 882 

1590.  Sales  of  goods — Delivery  by  instalments 883 

1591.  Sales — Instalments — Review    of    cases 886 

1592.  Insolvency    of    buyer 887 

1593.  Conditional   sales    888 

1594.  Form  and  construction  of  contract  of  conditional  sales 890 

1595.  Transfer  of   rights  under  conditional   sale 891 

1596.  Conditional  sales— Rights  of  the  parties  on  default 892 

1597.  Waiver  of  forfeiture  and  title 893 

1598.  Risk  of  loss — Destruction  of  the  property 8*^4 

1599.  Recording    895 

1600.  Miscellaneous  matters  concerning  conditional  sales 896 

1601.  Architect's  or  engineer's   certificate  of  approval 897 

1602.  Architect's  certificate— Illustrations    899 

1603.  Promise  conditional  upon  approval  of  promisor 902 

1604.  Cases  holding  that  right  of  approval  must  be  exercised  reasonably    903 

1605.  Cases  holding  right  of  approval  absolute  and  unqualified — Good 

faith    905 

1606.  Failure  to  fully  perform— Substantial  performance 907 

1607.  Building    contracts— Substantial    performance W^ 

1608.  Personal  services    914 


XXVI  TABLE    OF    CONTENTS. 

SECTION.  PAGE. 

1609.  Conditions  in  subscriptions  generally 916 

1610.  Conditions   in   subscriptions   to  stock 918 

1611.  Conditions  subsequent  in  deed — Subsequent  defeasance 921 

1612.  Surety's   bond   signed   under   condition 922 

1613.  Time   of    performance — Reasonable    time 923 

1614.  Waiver — Miscellaneous     924 

CHAPTER  XXXVII. 

PAROL   EVIDENCE. 

1620.  Merger  of  negotiations  in  written  contracts 926 

1621.  Extrinsic  evidence  not  admissible  to  contradict   or   vary  written 

contracts — General  rule    929 

1622.  The  rule  illustrated — Transfers  of  real  property 931 

1623.  The    rule    illustrated — Insurance    contracts 931 

1624.  Bills  and  notes,  promise  to  pay  out  of  particular  fund 932 

1625.  Contemporaneous    contracts — To    defeat    validity    or    legal    effect 

of  note  933 

1626.  Contemporaneous  agreement  to  pay  note  in  property  or  work. . . .  935 

1627.  Miscellaneous    illustrations     935 

1628.  Rule  applies  to  what  is  implied  by  law  as  part  of  contract 937 

1629.  Limitations   and   qualifications   of   general   rule 940 

1630.  Rule  does  not  ordinarily  apply  to  strangers 942 

1631.  Incomplete    writings    942 

1632.  Existence  and  validity  of  contract 944 

1633.  Collateral    and    independent    agreement 945 

1634.  Collateral   agreements — Evidence  held   admissible 947 

1635.  Collateral    agreements — Evidence  held    inadmissible 949 

1636.  Conditions    precedent     951 

1637.  Conditions    precedent — Bills    and    notes 952 

1638.  Conditions    precedent — Sureties     954 

1639.  Conditions    precedent — Rule    further    illustrated 954 

1640.  Subsequent    agreements    955 

1641.  Object— Purpose— Intent    956 

1642.  Consideration     958 

1643.  One  contract  as  consideration   for  another 960 

1644.  Bills    of   lading : 962 

1645.  Evidence  to  connect  different  writings 963 

1646.  Resulting   trust    964 

1647.  Showing  deed  to  be  a  mortgage 965 

1648.  Dates 966 

1649.  Illegality    967 

1650.  Fraud   and   duress 968 

1651.  Fraud — Illustrative  cases   970 

1652.  Mistake 971 

1653.  jMistake — Illustrative  cases    973 


TABLE    OF    CONTENTS.  XXVll 

SECTION.  PAGE. 

1654.  Discharge — Performance — Waiver    974 

1655.  Parol  evidence  to  aid  interpretation 976 

1656.  Patent    ambiguity    977 

1657.  Latent    and    patent    ambiguity 978 

1658.  Another  statement  as  to  patent  and  latent  ambiguity 981 

1659.  Identification   of   subject-matter    982 

1660.  Identification    of    subject-matter — Illustrative    cases 985 

1661.  Meaning    of    words — Generally 986 

1662.  Translations  and   illegible  writings 988 

1663.  Usage  and  custom 989 

1664.  Identification    of    parties 991 

1665.  Abbreviations,  technical  trade,  and  local  terms 992 

CHAPTER  XXXVIII. 
Customs  and  usages. 

1670.  Introductory    997 

1671.  Usages   defined    998 

1672.  Customs    defined    •  • . .  999 

1673.  Local  customs  having  the  force  of  laws 1001 

1674.  Caution  in  the  use  of  usages 1001 

1675.  Terms  "laws"  in  treaties  includes  customs  and  usages 1002 

1676.  Legislative  abolition  of  customs  or  usage 1002 

1677.  Requisites  of  a  valid  custom  or  usage 1003 

1678.  Custom  or  usage  must  be  uniform  and  certain 1005 

1679.  Reasonableness   of   customs   or  usages 1007 

1680.  Reasonableness    of    custom   or   usage — Examples    of    customs    in- 

valid   for    unreasonableness 1009 

1681.  Reasonableness  of  customs  or  usages — Examples  of  customs  held 

not    unreasonable     1010 

1682.  Necessity  that  custom  should  be  general 1012 

1683.  Effect  of  occasional  deviations  from  general  custom 1014 

1684.  Necessity  that  custom  or  usage  should  be  general — Illustrations 

of    principle    1014 

1685.  Individual   usages   or  practices 1015 

1686.  Antiquity  as  element  of  custom  or  usage 1016 

1687.  Antiquity — Illustration  of  principle 1018 

1688.  Legality   of   custom  or  usage 1019 

1689.  Legality  of  customs  or  usages — Customs  which  contravene  public 

policy    1021 

1690.  Legality    of    customs    or    usages — Contravention    of    established 

legal    principles     1022 

1691.  Legality   of   customs   or  usages — Contraventions    of   legal    princi- 

ples— Illustrations   1023 

1692.  Legality  of   customs   or  usages — Contravention   of   statutes 1025 

1693.  Legality  of  railway  and  banking  customs 1027 


XXVlll  TABLE    OF    CONTENTS. 

SECTION.  PAGE. 

1694.  Effect  of  partial   illegality  of   custom 1030 

1695.  Effect  of  adoption  of  usage  by  courts 1030 

1696.  Knowledge  of   custom  or  usage — Essential 1030 

1697.  Presumption   of   knowledge   of   usage 1033 

1698.  Presumption  of  knowledge  continued — As  to  railroads  and  banks  1036 

1699.  Knowledge    of    established    custom 1036 

1700.  Particular  usages  without  binding  force  for  want  of  knowledge.  ..    1037 

1701.  Necessity   of    knowledge    of    usage   giving    arbitrary    meaning    to 

words    1038 

1702.  Mississippi    doctrine    of    presumption    of    knowledge 1041 

1703.  Usage   in   violation    of   rules 1042 

1704.  Agent's  knowledge  imputed  to  principal — Bill  of  lading — Charter 

party    1042 

1705.  Custom  or  usage  to  explain  contract 1043 

1706.  Custom  or  usage  to  show  intention  of  parties 1045 

1707.  Construction    of    words    in    contract 1046 

1708.  Construction  of  words  of  contract — Unusual  and  technical  words.  .  1049 

1709.  Contract  not  created  by  custom  or  usage 1050 

1710.  Incorporation  of  custom   or  usage  in  contract 1051 

1711.  Incorporation  of  custom  in  contract — Custom  as  to  pro  rata  de- 

livery   of    manufactured    articles 1054 

1712.  Custom    construed — Charter    party — Demurrage 1054 

1713.  Express  contract   may  not  be  varied  or  contradicted  by  custom 

or    usage    1055 

1714.  Test   of   variance 1059 

1715.  Customs   and   usages    may   not   vary    express    contracts — Illustra- 

tions       1059 

1716.  Exclusion  of  custom  or  usage  by  express  contract lOil 

1717.  Implied  exclusion  of  custom  by  terms  of  contract 1062 

1718.  Cases  illustrating  the  rule  of  implied  exclusion  of  customs 1063 

1719.  Implied  exclusion  of  custom  or  usage  where  controversy  relates 

solely  to  terms  of  contract 1064 

1720.  Presumption  of  intent  to  include  usage  in  contract 1065 

1721.  Custom  or  usage  to  explain  matters  on  which  contract  is  silent — 

Adding  to  terms   of   contract 1066 

1722.  Illustrative  cases  of  added  terms 1067 

1723.  Usage  to  explain  meaning  of  unambiguous  terms  having  a  pecu- 

liar   meaning    1069 

1724.  Test  to  determine  whether  instrument  to  be  interpreted  by  cus- 

tom  or   usage    1071 

1725.  Warranty  may  not  be  added 1071 

1726.  Strict    construction    of    usage 1072  'j 

1727.  Usages  relating  to  bills  of  lading  and  shipping  contracts 1072 

1728.  Custom  making  bills  of  lading  negotiable 1073 

1729.  Effect  of  custom  on  liability  of  connecting  carriers 1074 

1730.  Custom  as  to  delivery  of  goods  to  carrier 1075 

1731.  Usage  as  to  capacity  of  cars 1076 

1732.  Custom  and  usage  as  to  delivery  of  goods  by  carrier 1076 


TABLE    OF    CONTEXTS.  XXIX 

SECTION.  PAGE. 

1733.  Custom  as  to  delivery  of  goods  by  carrier  by  water 1077 

1734.  Custom  as  to  notice  to  consignee  of  arrival  of  goods 1079 

1735.  Customs  as  to  delivery  of  baggage  to  carrier 1079 

1736.  Usages  allowing  passengers  to  carry  packages  on  trains 1080 

1737.  Usage  as  to  furnishing  refrigerator  cars 1081 

1738.  Guaranty  of    freight   Ijills 1081 

1739.  Effect  of  usage  on  transaction  of  business  at  stockholders'  meet- 

ing— Usage    as    by-law 1081 

1740.  Corporate  lien  on  stock  by  usage  or  custom 1082 

1741.  Creation    and    amendment    of    corporate    by-laws    by    custom    or 

usage    1082 

1742.  Powers  of  president  of  corporation  inferred  from  usage,  custom 

or  habit  of  acting 1083 

1743.  Duties  of  treasurer  as  affected  by  custom  or  usage 1084 

1744.  Effect  of  usage  or  custom  on  right  of  corporate  officer  to  com- 

pensation        1085 

1745.  Usages  as  to  ownership  of  dividends 1086 

1746.  Insurance  customs   and   usages   generally 1086 

1747.  Usage  as  to  authority  of  insurance  agents 1087 

1748.  Custom  to  notify  insured  of  maturity  of  premium 1088 

1749.  Notice  of  cancelation  of  policy 1089 

1750.  Customs    as   to    re-insurance 1090 

1751.  Custom  of  paying  losses  not  covered  by  policy 1090 

1752.  Origin    of    banking    customs 1091 

1753.  Essentials  of  good  bank  usage 1092 

1754.  Customs  and  usages  must  not  be  unreasonable 1093 

1755.  Bank  usages  as  to  powers  and  duties  of  officers 1093 

1756.  Cashier's  powers  and  duties  affected  by  usage 1094 

1757.  Certification   of   checks    1095 

1758.  Custom  of  bank  to  pay  notes  out  of  depositor's  funds 1095 

1759.  Interest    on    overdrafts    1095 

1760.  Local  custom  of  banks  as  to  substituted  check 1096 

1761.  Custom  as  to  days  of  grace 1096 

1762.  Presumption  of  knowledge  of  bank  custom  where  note  payable 

at   bank    1096 

1763.  Bank  usage  as  to  demand  and  notice 1097 

1764.  Mailing  notice  of  protest 1099 

1765.  Collection  customs  of  banks 1099 

1766.  Collection  customs  of  banks— Customs  will  not  excuse  negligence  1101 

1767.  Custom  of  sending  collection  to  drawee  condemned 1102 

1768.  Collection    customs — Remittance   of    proceeds 1 103 

1769.  Value    of    foreign    money 1104 

1770.  Customs  and  usages  in  master  and  servant  relation 1104 

1771.  Customs  and  usages  in  principal  and  agent  relation 1106 

1772.  Principal   and   agent— Authority   of   agent 1 108 

1773.  Brokers    and    factors IHO 

1774.  Usage  of  brokers  to  treat  stock  certificates  as  negotiable  paper..  1111 

1775.  Use  of  stock  of  customer  by  broker 1112 


XXX  TABLE   OF    CONTENTS. 

SECTION.  PAGE. 

1776.  Sale  of  collateral  securities  to  enforce  pledge 1112 

1777.  Landlord    and    tenant 1113 

1778.  Measurements    and    weights 1114 

1779.  Partnership   customs  and  usages 1116 

1780.  Sales    of    goods 1117 

1781.  Charges   for  professional  services 1118 

1782.  Interest   on    contracts 1119 

1783.  Theatrical   and   amusement  contracts 1119 

1784.  Custom  of  sending  telegraph  message  by  telephone 1120 

1785.  General  custom  need  not  be  specially  pleaded 1120 

1786.  Local  customs  and  usages  must  be  pleaded 1120 

1787.  Customs  and  usages  as  evidence  need  not  be  pleaded 1122 

1788.  Technical  meaning  of  words  need  not  be  pleaded 1122 

1789.  Pleading  local  usage  in  action  for  compensation 1122 

1790.  Judicial  notice  of  customs  and  usages 1123 

1791.  Judicial  notice — Examples   1 123 

1792.  Proof  preliminary  to  admission  of  evidence  of  usage  or  custom. .   1126 

1793.  Burden  of  proof  of  custom  or  usage 1127 

1794.  Presumption  of  knowledge  of  usage 1127 

1795.  Character  of  evidence  to  establish  custom  or  usage 1129 

1796.  Opinion  evidence  as  to  customs  or  usages 1130 

1797.  Competency  of  experts  on  question  of  custom  or  usage 1131 

1798.  Number  of  witnesses  required  to  establish  custom 1133 

1799.  Parol  proof  of  usage  or  custom 1134 

1800.  Custom  or  usage  not  established  by  proof  of  isolated  instances..   1137 

1801.  Evidence  of  knowledge  of  custom  or  usage 1138 

1802.  Evidence  of  custom  of  prompt  payment  or  collection 1139 

1803.  The  South  Carolina  rule  as  to  evidence  of  custom  to  vary  contract  1139 

1804.  Custom  or  usage  as  question  of  law  or  fact 1141 

1805.  Knowledge  of  question  for  jury 1142 

CHAPTER  XXXIX. 

TRADE    CONTRACTS. 

1810.  Introductory    1145 

1811.  Construction  of  particular  terms  in  contracts  of  sale,  barter  or 

exchange   generally    1146 

1812.  Abbreviations    generally    1148 

1813.  "Sales    on   credit" — "Time   sales." 1 148 

1814.  "Cash    sale" — "Terms    cash" 1148 

1815.  "Cost"— "Actual    cost"— "Wholesale    cost" 1148 

1816.  "More  or  less"  in  sales  of  personalty 1149 

1817.  "More  or  less"  in  descriptions  of  land 1151 

1818.  "About"— "Almost"    1153 

1819.  "Say"    and    "say    about" 1154 


TABLE    OF    CONTEXTS.  XXXI 

SECTION.  PAGE. 

1820.  Terms   relating  to   time,   "year,"   "month,"   "week,"   "day,"   "Sun- 

day"     1 155 

1821.  "From  and  after" — "On" — "Or  before" — "On  or  about" — "Since".   1156 

1822.  "Until"— "By"  —  "Forthwith"  — "Immediate"  —  "Presently"— "At 

once"    1158 

1823.  Sale   on   trial 1160 

1824.  Interest  with  respect  to  transfer  of  property  right — "Interest   in 

land" — "As    interest    may   appear" 1 160 

1825.  "C.  O.  D."  and  "F.  O.  B." 1161 

1826.  "Carloads"    1162 

1827.  "On    sale   and    return" 1 163 

1828.  "Satisfactory"     1163 

1829.  "For   collections"    1164 

1830.  "Dollar"— "Greenbacks"     1164 

1831.  "Supplies"    1164 

1832.  "Regrating"  and  "Forestalling"  1 165 

1833.  "Stock    in   trade" 1165 

1834.  Terms  used  in  grain  and  lumber  contracts 1165 

1835.  "Strike"   clauses    1165 

1836.  "Extra"  in  building  contract 1166 

1837.  "Agency,"  "agent,"  "sub-agent,"  "attorney  in   fact" 1166 

1838.  Construction    of    conditions    and    warranties 1 166 

1839.  Terms  relating  to  position,  "near,"  "abutting,"  "adjacent,"  "con- 

tiguous,"   "on,"    "meander    line" 1 167 

1840.  "Guaranty,"  "unlimited  guaranty,"  "primarily  liable,"  "secondarily 

liable,"   "surety"    1168 

1841.  Terms  used  in  dealing  with  real  estate 1169 

1842.  "Real    estate,"   "vested   estate,"   "perpetuity,"    "appurtenant" 1170 

1843.  "Conditional  estates,"  "conditions"  in  deeds,  "defeasances,"  "ven- 

dor's lien."    1171 

1844.  "Lease"  or  "license,"  "sub-tenant" 1172 

1845.  "All  crops  grown  and  to  be  grown" 1172 

1846.  Miscellaneous  terms    1 17- 


ELLIOTT  ON  CONTRACTS 


CHAPTER  XXI. 


LEGALITY  OF  OBJECT. 


645.  Generally. 

646.  Means  by  which  contract  ren- 

dered illegal  immaterial. 

647.  Agreements     in     violation     of 

positive  law. 

648.  Contracts  prohibited  by  statute 

generally  void. 

649.  Agreements  contrary  to  public 

policy — Generally. 

650.  Broad    statement    of    the    rule 

concerning  public  policy  crit- 
icised. 

651.  Public      policy— What      deter- 

mined by. 

652.  Contracts  against  public  policy 

void. 

653.  Agreements     contrary     to     ex- 

press rules  of  common  law — 
Generally. 

654.  Agreements  involving  commis- 

sion  of   crime. 

655.  Agreements  involving  commis- 

sion  of   a   civil   wrong. 

656.  Agreements  involving   fraud. 

657.  Contracts  which  cannot  be  per- 

formed   without    defrauding 
third  persons. 

658.  Conspiracy    to    defraud    third 

persons. 

659.  Rule   further  illustrated. 

660.  Agreements    to    defraud    cred- 

itors. 

661.  Conveyance  of  property  to  de- 

fraud creditors. 

662.  Who  may  avoid   such  convey- 

ance. 

(:6Z.  Agreements  contemplating  pub- 
lication  of   libel. 

664.  Agreements  mala  in  se  and 
agreements  mala  prohibita. 


i  665.  Basis  of  the  rule. 

666.  Penalties    generally    import    or 

imply    prohibition. 

667.  When    penalty   does   not   imply 

prohibition. 

668.  Different  tests  applied  by  dif- 

ferent   courts    to    determine 
legislative  intent. 

669.  Revenue    measures  —  Statutes 

for  protection  of  public. 

670.  Omission   of   penalty   does   not 

render     express     prohibition 
ineffective. 

671.  Agreements  may  be  forbidden 

yet  not   void  where  statutes 
so  provide. 

672.  Illustrations  of  the  rule. 

673.  Rule     where     conditions     pre- 

scribed  for  conducting  busi- 
ness  are  not  complied   with. 

674.  Illustrations  of  the  rule. 

675.  Attempting     to     do     indirectly 

what  cannot  be  done  directly. 

676.  Contracts    growing    out    of    or 

connected    with    illegal    con- 
tracts. 

677.  ]\Iodified  rule  stated. 

678.  Rule  where  aid  is  required  for 

illegal    contract    to    establish 
case. 

679.  Illustrations  of  the  rule. 

680.  Rule  where   illegal  contract   is 

abandoned  or  merely  collat- 
eral. 

681.  Collateral    contracts    of    insur- 

ance, surety  and  loans. 

682.  Contracts     containing     several 

distinct  undertakings. 

683.  Repeal     of     statutes— Contract 

valid  under  existing  law. 


1 — CoNTR.^cTS,  Vol.  2 


CONTRACTS. 


§  684.  Repeal     of     statutes — Contract     §  713. 
void  under  existing  law. 

685.  Repeal    of    statutes — Impairing 

obligation  of  contract.  714. 

686.  Ratification. 

687.  Violation  of  federal  statutes.  715. 

688.  Violation  of  liquor  laws. 

689.  Violation     of     liquor      laws — 

Knowledge   of    vendee's    un- 
lawful intent.  716. 

690.  Violation  of  liquor  laws — Fur- 

ther illustrations. 

691.  Sunday  contracts.  717. 

692.  Violation  of  statute  as  to  gam- 

ing or  wagering. 

693.  Wagering  contracts  at  common       718. 

law.  719. 

694.  Wagering     contracts  —  Present 

status. 

695.  Violation  of  statute  as  to  lot-       720. 

teries. 
695a.  Elements    essential    to    exist-       721. 
ence  of  a  lottery. 

696.  Guessing   contests   as   lotteries.       722. 

697.  Tailor  suit  clubs — Accumulated 

funds   distributed  by  chance,       12Z. 
and  the  like. 

698.  Solution    of   a   problem   not   a 

lottery.  _  724. 

699.  Bailee's    refusal    to    deliver    up 

property  won  at  a  raffle.  725. 

700.  No    lottery    when    element    of 

chance  is  wanting.  726. 

701.  Giving  of  trading  stamps  not  a 

lottery.  727. 

702.  No    lottery    when    element    of 

consideration  wanting.  728. 

703.  Collateral  contracts — Rights  of 

vendor  and  vendee,  inter  se.        729. 

704.  Violation  of  the  statute  as  to 

usury.  730. 

705.  Agreements  contrary  to  public 

policy — Classification.  731. 

706.  Agreements  tending   to  official 

corruption   or   injury   of   the       1Z2. 
public. 

707.  Tending    to    official    corruption       TiZ. 

— Interest  of  public  official. 

708.  Tending    to    official    corruption 

— Contracts  for  materials.  734. 

709.  Tending    to    official    corruption 

— Location    of    public    build-       735. 
ings. 

710.  Tending   to   official    corruption       736. 

— Indemnity  bond. 

711.  Tending    to    official    corruption 

— Influencing      appointments       IZl . 
to  office. 

712.  Tending    to    official    corruption 

— Payment   of   campaign   ex- 
penses and  the  like. 


Tending  to  official  corruption 
— Contract  to  take  more  or 
less  than  statutory  fee. 

Agreements  tending  to  corrupt 
citizens  as  to  public  duties. 

Agreements  tending  to  ob- 
struct or  pervert  justice — ■ 
Compounding  crimes  and  the 
like. 

Obstructing  justice  —  Com- 
pounding crimes  —  Misde- 
meanors. 

Obstructing  j  u  s  ti  c  e  —  Com- 
pounding offences  —  Object 
must  be  to  stifle  prosecution. 

Miscellaneous  illustrations. 

Agreements  tending  to  obstruct 
or  pervert  justice — Civil  pro- 
ceedings. 

Civil  actions — Fraud  on  the 
court. 

justice  —  Securing 


justice  —  Paying 

justice —  Hiring 
to  leave  state  and 


Obstructing 
evidence. 

Obstructing 
witnesses. 

Obstructing 
witnesses 
the  like. 

Obstructing  justice — Indemnity 
to  sureties. 

Ousting  jurisdiction  or  limit- 
ing powers. 

Ousting  jurisdiction — Submis- 
sion  to   private   individual. 

Ousting  jurisdiction  —  Condi- 
tion precedent. 

Ousting  jurisdiction  —  Certifi- 
cate of  architect  and  the  like. 

Ousting  jurisdiction — Notice  of 
claim. 

Ousting  jurisdiction  —  Further 
illustrations. 

Agreements  tending  to  encour- 
age litigation. 

Encouraging  litigation — Cham- 
perty and   maintenance. 

Encouraging  litigation — Cham- 
perty— Modifications  of  rule 
concerning. 

Encouraging  litigation — Cham- 
perty— Attorney  and   client. 

Encouraging  litigation — Cham- 
perty— Right   to   compromise. 

Encouraging  litigation — Cham- 
perty— Recovery  of  quantum 
meruit. 

Encouraging  litigation — Cham- 
perty— Defense  of  —  When 
available. 


LEGALITY    OF    OBJECT. 


§    64  = 


§738.  Agreements     tending     to     cor-     §  76L 
rupt  morals.  762. 

739.  Corrupting    morals — Letting 

house     for     brothel — Prosti-       763. 
tute's  board.  764. 

740.  Corrupting     morals  —  Leasing       765. 

house  for  brothel. 
74L  Immoral     consideration — Illicit 

intercourse.  766. 

742.  Immoral    consideration — Exist- 

ing contract  to  marry. 

743.  Immoral    consideration — Prom-       767. 

ise  by  putative  father. 

744.  Immoral     consideration  —  Con- 

tracts to  act  as  housekeeper. 

745.  Immoral     consideration  —  Ex-       768. 

ccuted   contract. 

746.  Immoral     consideration  —  Past 

immoral  acts.  769. 

747.  Agreements  tending  to  corrupt 

morals — Miscellaneous.  770. 

748.  Agreements   tending   to   induce 

fraud  or  breach  of  trust. 

749.  Inducing  breach  of  trust — Offi- 

cers of   corporation.  771. 

750.  Inducing  breach  of  trust — Pub-       112. 

lie  service  corporation. 
75L  Inducing     breach     of     trust — 

Other  applications  of  rule.  IIZ. 

752.  Agreements   of   a  gambling  or 

wagering  nature.  ITA. 

753.  Agreements    in    derogation    of 

marriage — Restraint  of   mar-       775. 
riage.  776. 

754.  Derogation  of  marriage — Mar-       111. 

riage  brokage  contracts. 

755.  Derogation    of    marriage — 

Agreements  made  in  view  of       778. 
future  separation. 

756.  Derogation       of        marriage —       779. 

Duties   imposed   by  law. 

757.  Derogation    of    marriage — Fa-       780. 

cilitating  divorce. 

758.  Agreements     in     restraint     of       78L 

trade. 

759.  Agreements    suppressing    com- 

petition   or    sales    or    public       782. 
Icttings. 

760.  Bidders      may      combine      re- 

sources. 


One  may  bid  for  benefit  of  all. 

Bids  or  proposals  for  govern- 
ment work  and  the  like. 

Rule  further  illustrated. 

Honest  co-operation  permitted. 

Agreements  exempting  from 
liability  for  negligence — Con- 
tracts with  carrier. 

Agreements  exempting  from 
liability  for  negligence — Rea- 
son for  the  rule. 

Agreements  exempting  from 
liability  for  negligence — Eva- 
sion by  stipulation  that  goods 
are   shipped  at   owner's   risk. 

Exempting  from  liability — Eva- 
sion by  stipulation  against 
presumption  of  negligence. 

Exempting  from  liability — 
Rule  in  New  York. 

Limitation  of  liability  to  dam- 
ages resulting  from  gross 
negligence  allowed  in  some 
states. 

Limiting   common-law   liability. 

Validity  of  stipulation  exempt- 
ing carrier  from  liability  to 
passenger  for  negligence. 

Persons  riding  on  passes — 
Basis  of  decisions. 

Rule  given  further  considera- 
tion. 

Degrees  of  negligence. 

Who  is  a  passenger. 

Agreements  exempting  em- 
ployer from  liability  for  neg- 
ligence. 

Valid  contracts  limiting  liabil- 
ity of  employes. 

Valid  contracts — Negligence  of 
fellow    servant. 

Valid  contracts — Criminal  neg- 
ligence. 

Contracts  against  liability  for 
negligence  —  Miscellaneous 
instances. 

Unclassified  illegal  agreements 
— Miscellaneous  cases. 


§  645.  Generally. — The  object  or  subject-matter  of  a  con- 
tract has  been  defined  as  "that  concerning  which  something  is 
done."^  All  authorities  agree  that  the  object  of  a  contract  must 
be  legal.     No  court  will  lend  its  assistance  in  any  way  towards 


^liller    V.    Miller,    104    Iowa    186,  1Z  N.  W.  484. 


§  645 


CONTRACTS. 


carrying  out  the  terms  of  an  illegal  contract."  The  law  will  not 
lend  its  support  to  a  claim  founded  upon  its  violation.^  Those 
contracts  are  illegal  which  have  for  their  object  anything  which 
is  repugnant  to  the  general  policy  of  the  common  law  or  contrary 
to  the  provisions  of  any  statute  or  against  morality,  or  against 
the  principle  of  sound  public  policy."*  But  the  principle  that  no 
court  will  lend  assistance  to  one  who  founds  his  cause  of  action 
upon  an  illegal  act  applies  in  general  only  when  it  appears  that 
the  very  party  who  is  seeking  aid  from  the  court  participated  in 
the  unlawful  purpose.  It  has  been  said  that  the  test  of  its  applica- 
tion is  whether  the  plaintiff  can  establish  his  case  otherwise  than 
through  the  medium  of  an  illegal  transaction  to  which  he  himself 
is  a  party.^  The  term  "illegal"  is  in  many  cases  loosely  applied, 
and  is  made  to  include  all  void  contracts,  and  also  contracts  that 
are  only  voidable.  Thus  the  ultra  vires  contracts  of  a  corporation 
have  been  termed  illegal  or  unlawful." 


"  Claflin  V.  United  States  Credit 
System  Co.,  155  Mass.  501,  43  N.  E. 
293;  Citizens'  Nat.  Bank  of  Chick- 
asha  V.  Mitchell,  24  Okla.  488,  103 
Pac.  720;  ^IcMullen  v.  Hoffman,  174 
U.  S.  639,  654,  43  L.  ed.  1117,  19  Sup. 
Ct.  839. 

'Shenk  V.  Phelps,  6  111.  App.  612; 
Crichfield  v.  Bermudez  Asphalt  Pav- 
ing Co.,  174  111.  466,  51  N.  E.  552; 
Emerv  v.  Kempton,  2  Gray  (Mass.) 
257;  Edelmuth  v.  McGarren,  4  Daly 
(N.  Y.)  467;  Holt  v.  Green,  12>  Pa. 
St.  198;  Coppell  v.  Hall,  7  Wall.  (U. 
S.)  542,  19  L.  ed.  244.  "Courts  are 
instituted  to  carry  into  effect  the 
laws  of  a  country;  how  can  they  then 
become  auxiliary  to  the  consumma- 
tion of  violations  of  law?"  Bank  of 
United  States  v.  Owens,  2  Pet.  (U. 
S.)  527,  7  L.  ed.  508.  To  the  same 
effect,  Berka  v.  Woodward,  125  Cal. 
119,  57  Pac.  m.  45  L.  R.  A.  420,  IZ 
Am.  St.  31 ;  Dolson  v.  Hope,  7  Kans. 
161 ;  Sprague  v.  Roonev,  104  Mo. 
349,  16  S.  W.  505;  Fowler  v.  Scully, 
12  Pa.  St.  456,  13  Am.  Rep.  699.  No 
legal  right  can  arise  out  of  a  con- 
tract which  promotes  or  is  intended 
to  promote  a  violation  of  law.  Pipes 
v.  Boston  &  ^I.  R.  Co.,  75  N.  H.  435, 
75  Atl.  1041.  An  illegal  contract 
creates  no  obligation.     Greenwald  v. 


Weir,  59  Misc.  (N.  Y.)  431,  111  N. 
Y.  S.  235. 

■•Lingle  v.  Snyder,  160  Fed.  627, 
87  C.  C.  A.  529;  Goodrich  v.  Tenney, 
144  111.  422;  Reynolds  v.  Nichols,  12 
Iowa  398 ;  Haggerty  v.  St.  Louis  Ice 
Mfg.  &  Storage  Co.,  143  Mo.  238,  44 
S.  W.  1114;  Hunt  v.  Knickbacker, 
5  Johns.  (N.  Y.)  327;  Thalimer  v. 
Brinkerhoff,  20  Johns.  (N.  Y.)  386; 
Heart  v.  East  Tennessee  Brewing 
Co.,  121  Tenn.  69,  113  S.  W.  364,  19 
L.  R.  A.  (N.  S.)  964n,  130  Am.  St. 
753 ;  Lemon  v.  Grosskopf ,  22  Wis. 
447,  2  Kent's  Comm.  466.  See  also, 
Lambert  Hoisting  Engine  Co.  v. 
Paschall,  151  N.  Car.  27,  65  S.  E. 
523. 

'State  v.  Severs,  86  N.  Car.  588; 
Electrova  Co.  v.  Spring  Garden  Ins. 
Co.,  156  N.  Car.  232,  72  S.  E.  306. 
See  also,  ante,  §  556  et  seq. 

"Buckeye  Marble  &c.  Co.  v.  Har- 
vey, 92  Tenn.  115,  20  S.  W.  427,  18  L. 
R.A.  252,  36  Am.  St.  71.  But  as  is 
pointed  out  in  the  chapter  on  Private 
Corporations,  such  contracts  cannot 
properly  be  termed  illegal.  They  may 
be  illegal  but  are  not  necessarily  so. 
See  ante,  §  556  et  seq.  See  also,  Gor- 
rell  v.  Home  Life  Ins.  Co.,  63  Fed. 
371.  The  term  has  also  been  applied 
to  contracts  entered  into  by  agents  in 


LEGALITY    OF    OBJECT. 


§    646 


.^  645.  Means  by  which  contract  rendered  illegal  immate- 
rial.— If  the  object  of  the  contract  is  in  fact  illegal,  it  is  imma- 
terial whether  such  agreement  is  forbidden  by  the  Constitution 
of  the  United  States/  or  of  a  state,^  by  statutory  enactment, 
state"  or  federal/"  by  a  United  States  treaty,"  by  the  ordinance 
of  a  city,^"  by  the  common  law,^^  or  whether  the  thing  forbidden 
is  malum  in  se  or  malum  prohibitum.^' 


excess  of  their  authority.  This  is 
clearly  a  misuse  of  the  term.  See, 
ante,  §  556  et  seq.  Although  all  con- 
tracts to  do  an  illegal  act  are  invalid, 
it  is  not  true  that  all  illegal  contracts 
call  for  the  doing  of  an  act  that  is 
illegal.  Lovell  v.  Boston  &c.  R.  Co., 
75  N.  H.  568.  78  Atl.  621,  34  L.  R. 
A.  (N.  S.)  67n. 

'  Patton  V.  Gilmer,  42  Ala.  548,  94 
Am.  Dec.  665 ;  Gandolfo  v.  Hartman, 
49  Fed.  181 ;  Craig  v.  Missouri,  4 
Pet.  (U.  S.)  410,  7  L.  ed.  903;  Litch- 
field V.  Eallou,  114  U.  S.  190,  29  L. 
ed.  132,  5  Sup.  Ct.  820. 

*Garms  v.  Jensen,  103  Cal.  374,  2,7 
Pac.  2,2,7;  Oakland  Pav.  Co.  v.  Hil- 
ton, 69  Cal.  479,  11  Pac.  3;  Edwards 
County  V.  Jennings,  89  Tex.  618,  35 
S.  W.  1053;  San  Antonio  Irr.  Co.  v. 
Deutschmann,  102  Tex.  201,  114  S. 
W.  1174. 

"  Persons  v.  Jones,  12  Ga.  371,  58 
Am.  Dec.  476;  Penn  v.  Bornman,  102 
111.  523;  McNulta  v.  Bank,  164  111. 
427,  45  N.  E.  954,  56  Am.  St.  203; 
Naglebaugh  v.  Harding  &c.  Mining 
Co.,  21  Ind.  App.  551,  51  N.  E.  427; 
Moorehouse  v.  Kukalman  (Ind.),  96 
N.  E.  600;  Mcintosh  v.  Wilson,  81 
Iowa  339,  46  N.  W.  1003;  Wheeler 
V.  Russell,  17  ^lass.  258;  Cobbs  v. 
Hixson,  75  Mich.  260.  42  N.  W.  818, 
4  L.  R.  A.  682;  Handy  v.  Publishing 
Co..  41  Minn.  188.  42  N.  W.  872,  4 
L.  R.  A.  466.  16  Am.  St.  695;  Wilson 
V.  Parrish,  52  Nebr.  6,  71  N.  W.  1010; 
Brooks  V.  Cooper,  50  N.  J.  Eq.  761, 
26  Atl.  978,  21  L.  R.  A.  617,  35  Am. 
St.  793;  Ft.  Edward  v.  Fish.  156  N. 
Y.  363.  50  N.  E.  973 ;  Columbia  Bank 
&  Bridge  Co.  v.  Haldeman,  7  Watts. 
&  S.  (Pa.)  233,  42  Am.  Dec.  229; 
Fowler  v.  Scully,  72  Pa.  St.  456,  13 
Am.  Rep.  699;  Olson  v.  Sawver- 
Goodman  Co.,  110  Wis.  149,  85  N. 
W.  640,  53  L.  R.  A.  648.  A  contract 
by  which  one  gives  away  all  her 
property  without  retaining  an  amount 


sufficient  to  support  herself,  subject 
to  a  provision  that  the  donee  shall 
thereafter  maintain  her,  has  been  held 
void  as  against  a  statute  which  pro- 
vides that  a  donor  can  not  divest 
himself  of  all  his  property.  Acker- 
man  V.  Larner,  116  La.  101,  40  So. 
581. 

'"Hawley  v.  Coal  Co.,  48  Kans. 
593,  30  Pac.  14;  Jones  v.  Blacklidge, 
9  Kans.  562,  12  Am.  Rep.  503  (viola- 
tion of  both  state  and  federal  law)  ; 
Cherokee  Strip  Live  &c.  Assn.  v. 
Cass  Land  &  Cattle  Co.,  138  Mo. 
394,  40  S.  W.  107.  See  also.  Gulf 
Pipe  Line  Co.  v.  Vanderberg,  219  U. 
S.  467,  55  L.  ed.  297,  31  Sup.  Ct.  265, 
34  L.  R.  A.   (N.  S.)  671. 

"Gandolfo  v.  Hartman,  49  Fed. 
181,  16  L.  R.  A.  277n. 

^"Denning  v.  Yount,  62  Kans.  217, 
61  Pac.  803,  50  L.  R.  A.  103;  Milne 
V.  Davidson,  5  Martin  (La.)  (N.  S.) 
409,  16  Am.  Dec.  189;  Miller  v.  Am- 
mon,  145  U.  S.  421,  36  L.  ed.  759,  12 
Sup.  Ct.  884. 

"Thomas  v.  First  Nat.  Bank,  116 
111.  App.  20,  affd.  213  111.  261,  72  N. 
E.  801  ;  Indianapolis  &c.  R.  Co.  v. 
Ervin.  118  111.  250,  8  N.  E.  862,  59 
Am.  Rep.  369;  Bishop  v.  Palmer,  146 
Mass.  469,  16  N.  E.  299,  4  Am.  St. 
339:  Messenger  v.  R.  Co.,  36  N.  J. 
L.  407,  13  Am.  Rep.  457;  Wvckoff  v. 
Weaver,  66  N.  J.  L.  648,  52  Atl.  356 ; 
Nellis  V.  Clark.  20  Wend.  (N.  Y.) 
24,  27,  affd.  4  Hill  (N.  Y.)  424. 

"Gardner  v.  Tatum,  81  Cal.  370, 
22  Pac.  880;  Union  Nat.  Bank  v. 
Louisville  N.  A.  &  C  R.  Co..  145  111. 
208,  34  N.  E.  135;  Penn  v.  Bornman, 
102  111.  523;  Pike  v.  King,  16  Iowa 
40;  White  v.  Buss,  3  Cush.  (Mass.) 
448;  Haggerty  v.  Storage  Co.,  143 
Mo.  238.  44  S.  W.  1114.  65  Am.  St. 
647;  Pennington  &  Kean  v.  Town- 
send,  7  Wend.  (N.  Y.)  276;  Cansler 
V.  Pcnland,  125  N.  Car.  578.  34  S.  E. 
683,  48  L.  R.  A.  441  j  Holt  v.  Green, 


647 


CONTRACTS. 


§  647.  Agreement  in  violation  of  positive  law. — A  con- 
tract which  is  prohibited  by  the  positive  provisions  of  a  consti- 
tutional statute  is  void.  This  is  well  settled.^®  So  it  has  been  held 
not  only  that  parties  cannot  agree  so  as  to  bind  themselves  by 
parol  covenants  which  the  law  requires  to  be  in  writing,  but  also 
that  they  cannot  bind  themselves  by  an  agreement  that  contracts 
which  the  law  permits  to  be  made  orally  shall  not  be  valid  unless 


IZ  Pa.  St.  198;  Gibbs  v.  Consolidated 
Gas  Co.,  130  U.  S.  396,  32  L.  cd. 
979,  9  Sup.  Ct.  553;  Bank  of  United 
States  V.  Owens,  2  Pet.  (U.  S.)  527, 
539,  7  L.  ed.  508;  Melchoir  v.  Mc- 
Carty,  31  Wis.  252,  11  Am.  Rep.  605. 
See  post,  §  664.  Compare,  however, 
Hughes  V.  Snell  (Okla.),  115  Pac. 
1105.  34  L.  R.  A.  (N.  S.)  1133. 

"Jackson  v.  Davison,  4  B.  &  Aid. 
691 ;  Rogers  v.  Kingston,  10  Moore 
97,  2  Bing.  441 ;  Murray  v.  Reeves,  8 
B.  &  C.  421;  Hall  v.  Dyson,  16  Jur. 
270,  21  L.  J.  C.  B.  224,  17  Q.  B.  785 ; 
Hills  V.  Mitson,  8  Exch.  751 ;  Cope 
V.  Rowlands,  2  M.  &  W.  149;  Watts 
V.  Brooks,  3  Ves.  Jr.  612;  Victorian 
Davlesford  Syndicate  v.  Dott.  74  L. 
J.  Ch.  (N.  S.)  673  (1905),  2  Ch.  624, 
93  L.  T.  627,  21  Times  L.  R.  742;  Cun- 
dell  V.  Dawson,  4  C.  B.  376;  Brown 
V.  Moore,  32  Can.  S.  C.  93 ;  Arkan- 
sas Stave  Co.  v.  State,  94  Ark.  27, 
125  S.  W.  1001,  27  L.  R.  A.  (N.  S.) 
255n,  140  Am.  St.  103 ;  Compagionette 
V.  McArmick,  91  Ark.  69,  120  S.  W. 
400;  Berka  v.  Woodward,  125  Cal. 
119,  57  Pac.  m,  45  L.  R.  A.  420.  1Z 
Am.  St.  31 ;  Skelton  v.  Bliss,  7  Ind. 
n  \  Western  U.  Teleg.  Co.  v.  Yopst, 
118  Ind.  248,  20  N.  E.  222,  3  L.  R.  A. 
224n ;  Naglebaugh  v.  Harder  &c.  Min- 
ing Co.,  21  Ind.  App.  551,  51  N.  E. 
427;  Hill  V.  Smith.  Morris  (Iowa) 
70;  Watrous  v.  Blair,  32  Iowa  58; 
Pangborn  v.  Westlake,  36  Iowa  546; 
Vanmeter  v.  Spurrier,  94  Ky.  22,  21 
S.  W.  Zyi;  Collins  v.  Lewiston,  107 
Maine  220,  11  Atl.  834;  Robinson  v. 
Barrows,  48  Maine  186;  Durgin  v. 
Dyer,  68  Maine  143;  Bowditch  v. 
New  England  Mut.  Life  Ins.  Co., 
141  Mass.  292,  4  N.  E.  798,  55  Am. 
Rep.  474;  Deans  v.  McLendon,  30 
Miss.  343;  Williams  v.  Tappan,  23 
N.  H.  385 ;  Cannon  v.  Cannon,  26  N. 
J.  Eq.  316;  Kreiss  v.  Seligman,  8 
Barb.   (N.  Y.)   439,  5  How.  Pr.   (N. 


Y.)  425;  Pratt  v.  Short,  79  N.  Y. 
437,  35  Am.  Rep.  531;  Burger  v. 
Koelsch,  n  Hun  (N.  Y.)  44,  59  N. 
Y.  St.  69,  28  N.  Y.  S.  460;  Peck  v. 
Burr,  10  N.  Y.  294;  Pease  v.  Walsh, 
7  Jones  &  S.  (N.  Y.)  514;  Sharp  v. 
Farmer,  4  Dev.  &  B.  L.  (N.  Car.) 
122;  Spurgeon  v.  McElwain,  6  Ohio 
442,  27  Am.  Dec.  266;  Rossman  v. 
McFarland,  9  Ohio  St.  369;  Seiden- 
bender  v.  (Iharles,  4  Serg.  &  R.  (Pa.) 
151,  8  Am.  Dec.  682;  Atherton  v. 
Wilkes-Barre,  3  Kulp  (Pa.)  402; 
Fowler  v.  Scully,  72  Pa.  St.  456,  13 
Am.  Rep.  699;  Holt  v.  Green,  IZ  Pa. 
St.  198,  13  Am.  Rep.  1Z7 ;  Birkett  v. 
Chatterton,  13  R.  I.  299,  43  Am.  Rep. 
30;  Gilliland  v.  Phillips,  1  S.  Car. 
152;  Perkins  v.  Watson,  2  Baxt. 
(Tenn.)  173;  Stevenson  v.  Ewing,  87 
Tenn.  46,  9  S.  W.  230;  Keith  v.  Foun- 
tain, 3  Tex.  Civ.  App.  391,  22  S.  W. 
191;  In  re  Pittock,  2  Sawy.  (U.  S.) 
416,  Fed.  Cas.  No.  11189;  Hayden  v. 
Davis,  3  McLean  (U.  S.)  276,  Fed. 
Cas.  No.  6259;  Deaton  v.  Lawson,  40 
Wash.  486,  82  Pac.  879,  2  L.  R.  A. 
(N.  S.)  392,  111  Am.  St.  922;  Mel- 
choir V.  McCarty,  31  Wis.  252,  11 
Am.  Rep.  605.  No  one  has  a  right 
to  enter  into  a  contract  where  the 
obligation  imposed  by  it  cannot  be 
performed  by  the  other  party  without 
violation  of  law.  Edgar  Lumber  Co. 
V.  Cornie  Stave  Co.,  95  Ark.  449, 
130  S.  W.  452.  No  en  forcible  prom- 
ise or  obligation  grows  out  of  a  con- 
tract prohibited  by  statute.  Security 
Life  &  Annuity  Co.  v.  Costner,  149 
N.  Car.  293,  63  S.  E.  304.  There  can 
be  no  recovery  for  acts  or  services 
rendered  or  property  sold  in  direct 
contravention  of  a  statute.  Harding 
V.  Hagar,  60  Maine  340.  Where  a 
contract  shows  on  its  face  that  it  is 
in  contravention  of  a  statute  the  stat- 
ute need  not  be  pleaded  to  raise  the 
question   of   illegality.      Shohoney   v. 


LEGALITY    OF    OP.JECT. 


§    648 


in  writing/"  A  contract  may  be  illegal  even  though  it  does  not 
contravene  the  specific  directions  of  a  statute  if  it  be  opposed  to 
the  general  policy  and  intent  of  the  statutory  law/^  The  statu- 
tory prohibition  may  be  either  express  or  implied.^^ 

§  648.  Contract  prohibited  by  statute  generally  void. — 
Contracts  prohibited  by  statute  are,  as  a  general  rule,  void  not- 
withstanding the  statute  does  not  expressly  declare  them  to  be 
so,  especially  where  a  penalty  is  attached  for  its  violation." 
Thus,  under  a  statute  which  provided  that  oats  and  meal  should 
be  sold  "by  the  bushel"  it  has  been  held  that  selling  by  the  bag 
amounted  to  disobeying  a  prohibition  and  that  no  action  could  be 


Quincy  &c.  Co.,  231  Mo.  131,  132  S. 
W.  1059,  Ann.  Cas.  1912A.  1143.  Un- 
less of  course  the  statute  provides  the 
consequences  that  shall  attach  to  its 
violation.  See  post,  §  671.  As  to  the 
duty  of  the  court  sua  sponta  to  refuse 
to  entertain  an  action  on  an  illegal 
contract,  see  O'Brien  v.  Shea,  208 
Mass.  528.  95  N.  E.  99,  Ann.  Cas. 
1912A.  1030  and  note.  No  right  can 
be  founded  on  a  violation  of  the  law. 
Moorehouse  v.  Kukalman  (Ind.)i  96 
N.  E.  600. 

^'  Northwestern  Nat.  Ins.  Co.  of 
IMilwaukee  v.  Avant,  132  Ky.  106, 
116  S.  W.  274.    See  post.  chap.  30. 

"  Staines  v.  Wainwright,  6  Bing. 
N.  C.  174;  Phillpott  v.  St.  George's 
Hospital,  6  H.  L.  Cas.  338;  De  Beg- 
nis  V.  Armistead,  10  Bing.  107;  Guen- 
ther  V.  Dewien,  11  Iowa  133;  Van- 
meter  V.  Spurrier,  94  Ky.  22,  21  S. 
W.  337;  Roby  v.  West,  4  N.  H.  285, 
17  Am.  Dec.  423;  Hunt  v.  Knicker- 
backer,  5  Johns.  (N.  Y.)  327;  Wet- 
more  v.  Brien,  3  Head  (Tenn.)  723; 
Mcintosh  v.  Renton,  2  Wash.  Ter. 
121,  3  Pac.  830. 

"Cope  V.  Rowlands,  2  ^Mees.  &  W. 
149;  Victorian  Daylesford  Syndicate 
V.  Dott,  74  L.  J.  Ch.  (N.  S.)  673 
(1905).  2  Ch.  624,  93  L.  T.  627,  21 
Times  L.  R.  742;  Cundell  v.  Dawson, 
4  C.  B.  376;  Macdonald  v.  Riordan, 
Rap.  Jud.  Quebec.  8  B.  R.  555 ;  Cook 
V.  Pierce,  2  Houst.  (Del.)  499;  Siter 
V.  Sheets.  7  Ind.  132;  Barton  v.  Port 
Jackson  &c.  Road  Co.,  17  Barb.  (N. 
Y.)  397;  Gilliland  v.  Phillips,  1  S. 
Car.  152;  Perkins  v.  Watson,  2 
Baxt.    (Tenn.)    173;   Ohio   Life   Ins. 


&c.   Co.  V.   Merchants'   Ins.   &c.   Co., 

11  Humph.  (Tenn.)  1,  53  Am.  Dec. 
742 ;  Stevenson  v.  Ewing,  87  Tenn. 
46,  9  S.  W.  230;  Harris  v.  Runnels, 

12  Plow.  (U.  S.)  79,  13  L.  ed.  901; 
Elkins  V.   Parkhurst,   17  Vt.    105. 

"  Youngblood  v.  Birmingham  Trust 
&  Sav.  Co.,  95  Ala.  521,  12  So.  579, 
20  L.  R.  A.  58,  36  Am.  St.  245; 
O'Donnell  v.  Sweeney,  5  Ala.  467,  39 
Am.  Dec.  336;  Woods  v.  Armstrong, 
54  Ala.  150,  25  Am.  Rep.  671 ;  Tucker 
V.  West,  29  Ark.  386;  Swanger  v. 
Mayberrv,  59  Cal.  91;  People  v. 
Whitesides,  122  111.  App.  40;  Watkins 
Med.  Co.  V.  Paul,  87  111.  App.  278; 
Skelton  v.  Bliss,  7  Ind.  77;  Cashin 
v.  Pliter,  168  Mich.  386.  134  N.  W. 
482;  Columbia  Bank  &  Bridge  Co.  v. 
Haldeman,  7  Watts  &  S.  (Pa.)  233, 
42  Am.  Dec.  229;  Lutz  v.  Weidner, 
1  Woodw.  Dec.  (Pa.)  428;  Seiden- 
bender  v.  Charles,  4  Serg.  &  R.  (Pa.) 
151.  8  Am.  Dec.  682;  Harrison  v. 
Berkley,  1  Strob.  L.  (S.  Car.)  525,  47 
Am.  Dec.  578;  Territt  v.  Bartlett,  21 
Vt.  184;  Wilson  v.  Spencer,  1  Rand. 
(Va.)  76,  10  Am.  Dec.  491;  Middle- 
ton  V.  Arnolds,  13  Grat.  (Va.)  489. 
A  contract  prohibited  by  law  is  void 
regardless  of  whether  the  act  pro- 
hibiting it  expressly  so  declares  it  or 
not.  Swing  v.  Sligo  Furnace  Co.,  133 
111.  App.  217.  To  same  effect.  Swing 
v.  Dayton,  124  App.  Div.  (N.  Y.)  58, 
108  N.  Y.  S.  155.  But  see,  as  to  rev- 
enue statutes.  Hughes  v.  Snell.  28 
Okla.  828,  115  Pac.  1105.  34  L.  R.  A. 
(N.  S.)  1133,  and  cases  cited;  also 
post,  §  669. 


§  649 


CONTRACTS. 


8 


maintained  for  the  price.=°  The  same  has  been  held  true  under  a 
statute  which  required  goods  to  be  branded,  tagged,  or  labeled, 
where  such  goods  were  sold  in  contravention  of  this  statutory 
provision-^  and  so  where  untested  weights  and  measures  are  used 
when  the  statute  requires  them  to  be  tested  and  sealed  by  the 
proper  officer.^'^  In  short,  any  attempt  to  contravene  the  policy 
of  a  public  statute  is  illegal  notwithstanding  the  absence  of  any 
express  prohibition  in  the  statute  condemning  the  means 
adopted."  Agreements  in  violation  of  positive  law  will  be  sub- 
divided and  treated  more  at  length  in  the  subsequent  sections  of 
this  chapter. 

§  649.    Agreements  contrary  to  public  policy — Generally. 

— Under  this  head  might  be  included  all  illegal  contracts,  for  con- 
tracts that  are  illegal  are  certainly  in  contravention  of  public 
policy.  By  public  policy  is  meant  that  principle  of  law  which 
holds  that  no  citizen  can  lawfully  do  that  which  has  a  tendency  to 
injure  the  public  or  which  is  against  the  public  good.-*    And  in 

public  policy.  Montgomery  v.  Mont- 
gomery, 142  Mo.  App.  481,  127  S.  W. 
118.  Agreements  are  against  public 
policy  when  they  tend  to  injure  the 
state  or  public.  Lawson  v.  Cobban, 
38  Mont.  138,  99  Pac.  128.  Public 
policy  does  not  forbid  competent  par- 
ties from  entering  into  an  agreement 
to  form  a  corporation  and  providing 
for  its  future  management  and  con- 
trol, if  the  corporation  is  created  ac- 
cording to  statutory  requirements, 
and  the  objects  contemplated  are  law- 
ful and  proper.  Borland  v.  Prindle 
&c.  Co.,  144  Fed.  713.  One  may 
make  a  valid  enforcible  contract  bind- 
ing himself  not  to  dispose  of  his 
property  by  will  but  to  permit  his 
possessions  to  descend  according  to 
the  laws  of  intestacy.  Jones  v.  Ab- 
bott, 228  111.  34,  81  N.  E.  791,  119 
Am.  St.  412.  See  also.  Mills  v.  Smith, 
193  Mass.  11,  78  N.  E.  765,  6  L.  R. 
A.  (N.  S.)  865  (contract  giving  the 
second  party  entire  charge  of  the 
lands  of  the  first  party  and  vesting 
in  him  the  sole  right  to  sell  the  same 
providing  that  the  agreement  should 
be  binding  on  the  executors  of  the 
first  party,  upheld).  A  provision^  in 
an  award  for  damages  for  the  taking 
of  one's  land   for  a  public  purpose, 


="  Eaton   v.   Kegan,   114   Mass.  433. 

^Campbell  v.  Segars,  81  Ala.  259, 
1  So.  714;  Pacific  Guano  Co.  v.  Mul- 
len, 66  Ala.  582;  Johnston  Bros.  & 
Co.  V.  McConnell.  65  Ga.  129;  Con- 
ley  V.  Sims,  71  Ga.  161;  Van  Meter 
v.  Spurrier,  94  Ky.  22,  21  S.  W.  2,2,7; 
Abbott  v.  Goodwin,  27  Maine  203; 
Buxton  V.  Hamblen,  32  Maine  448; 
Richmond  v.  Foss,  77  Maine  590,  1 
Atl.  830;  Prescott  v.  Battersby,  119 
Mass.  285 ;  Braunn  v.  Keally,  146  Pa. 
519,  23  Atl.  389,  28  Am.  St.  811;  Mc- 
Connell V.  Kitchens,  20  S.  Car.  430, 
47  Am.  Rep.  845;  Niemeyer  v. 
Wright,  75  Va.  239,  40  Am.  Rep.  720. 

=^  Finch  V.  Barclav,  87  Ga.  393,  13 
S.  E.  566;  Smith  v.  Arnold,  106  Mass. 
269 ;  Sawyer  v.  Smith,  109  Mass.  220 ; 
Bisbee  v.  McAUen,  39  Minn.  143,  39 
N.  W.  299. 

f  Sharp  V.   Teese,  9  N.  J.  L.  352. 

^  Everton  v.  Brownlow,  4  H.  L. 
Cas.  1 ;  Russell  v.  Courier  &c.  Co.,  43 
Colo.  321,  95  Pac.  936;  Holland  v. 
Sheehan,  108  Minn.  362,  122  N.  W. 
1,  23  L.  R.  A.  (N.  S.)  510;  Superior 
V.  Douglas  County  Tel.  Co.,  141  Wis. 
363,  122  N.  W.  1023.  A  contract 
which  conflicts  with  the  morals  of  the 
time  and  contravenes  an  established 
interest  of  society  is  void  as  against 


LEGALITY    OF    OBJECT. 


§    650 


determining  whether  or  not  a  contract  is  contrary  to  pubhc  policy 
it  has  been  stated  that  "the  contract  must  be  measured  by  its 
tendency,  and  not  merely  by  what  was  done  to  carry  it  out."^'* 

§  650.  Broad  statement  of  the  rule  concerning  public  pol- 
icy criticised. — The  law's  broad  general  statements  of  this 
character,  it  is  believed,  are  of  little  value  when  applied  to  the 
concrete  case.  It  must  be  borne  in  mind  that  the  public  interest 
is  not  well  ser\cd  by  indulging  baseless  suspicions  of  wrong- 
doing. Public  policy  forbids  the  enforcement  of  any  illegal  or 
immoral  contract,  but  it  is  equally  insistent  that  those  which  are 
lawful  and  contravene  none  of  its  rules  be  duly  enforced  and 
not  set  aside  or  held  invalid  on  a  bare  suspicion  of  illegality."® 
Courts  will  not  declare  a  contract  void  on  the  ground  of  public 
policy  unless  it  clearly  appears  that  the  contract  is  in  violation  of 


which  reserves  any  and  all  claims 
for  interest  on  the  award,  is  not  void 
as  against  public  policy.  Grote  v. 
New  York,  190  N.  Y.  235,  82  N.  E. 
1088.  A  contract  by  a  private  com- 
pany to  pay  a  part  of  the  expense  of 
a  bridge  to  be  erected  by  a  town  if 
it  would  erect  a  strong  and  substan- 
tial bridge  is  not  unenforcible  as 
against  public  polic3\  Charlotte 
Township  v.  Piedmont  Realty  Co., 
134  N.  Car.  41,  46  S.  E.  723.  Con- 
tracts which  have  for  their  direct  ob- 
ject the  acquisition  of  public  lands  in 
a  lawful  manner  are  not  against  pub- 
lic policv.  Williams  v.  Finley,  99 
Tex.  468,  90  S.  W.  1087.  But  it  is 
obvious  that  if  the  contract  is 
violative  of  the  school  land  law  it 
will  not  be  enforced.  Brown  v. 
Brown  (Tex.  Civ.  App.),  132  S.  W. 
887.  A  provision  in  the  constitution 
of  a  benefit  organization  to  the  effect 
that  "no  will  shall  be  permitted  to 
control  the  appointment  or  distribu- 
tion of,  or  rights  of  any  person  to 
any  benefit  payable  to  this  order,"  has 
been  held  not  at  variance  with  law  or 
public  policy.  Thomas  v.  Covert 
(subnominee  Supreme  Lodge  Knights 
of  Honor).  126  Wis.  593.  l05  N.  W. 
922,  3  L.  R.  A.  (N.  S.)  904n.  Under 
the  laws  of  Georgia  contracts  which 
tend  to  corrupt  legislation  or  the 
judiciary,  contracts  in  general  re- 
straint  of   trade,   contracts   to   evade 


or  oppose  the  revenue  laws  of  an- 
other country,  wagering  contracts 
and  contracts  of  maintenance  and 
champerty  are  a'gainst  the  policy  of 
the  law.  Bailey  &  Graham  v.  Phil- 
lips, 159  Fed.  535. 

'''Sherman  v.  Burton  (Mich.),  33 
L.  R.  A.  (N.  S.)  87,  130  N.  W.  667; 
Conklin  v.  Conklin,  165  IMich.  571, 
131  N.  W.  154.  A  contract,  the  terms 
or  operation  of  which  is  unlawful, 
whether  so  intended  or  not,  will  not 
be  enforced.  Stewart  v.  Stearns  & 
Culver  Lumber  Co.,  56  Fla.  570,  48 
So.  19,  24  L.  R.  A.  (N.  S.)  649n. 
See  also,  Russell  v.  Courier  &c.  Co., 
43  Colo.  321,  95  Pac.  936;  Delbridge 
v.  Beach,  66  Wash.  416,  119  Pac.  856. 

^  Stroemer  v.  Van  Orsdel.  74  Xebr. 
132,  103  N.  W.  1053,  107  N.  W.  125, 
121  Am.  St.  7l3n.  The  principles 
of  sound  public  policy  do  not  run 
counter  to  principles  of  honesty  and 
fair  dealing;  for  this  reason  it  cannot 
be  invoked  to  defeat  recovery  on  an 
honest  claim  for  services.  Darknell  v. 
Coeur  D'Alene  &  St.  &c.  Co.,  IS 
Idaho  61,  108  Pac.  536.  See  also, 
Printing  &c.  Registering  Co.  v. 
Sampson.  L.  R.  19  Eq.  462;  Hall  v. 
O'Xeil  Turpentine  Co..  56  Fla.  324, 
47  So.  609;  Mutual  Life  Ins.  Co.  v. 
Durden,  9  Ga.  App.  797.  72  S.  E.  295 : 
D.  H.  Baldwin  &  Co.  v.  Mosei 
(Iowa),  123  N.  W.  989. 


6;o 


CONTRACTS. 


lO 


the  public  policy  of  the  state.-'  A  doubtful  matter  of  public  policy 
is  not  sufficient  to  invalidate  a  contract.  An  agreement  is  not  void 
on  this  ground  unless  its  contravention  of  public  policy  is  clear 
and  is  manifestly  injurious  to  the  interest  of  the  state. "^  Freedom 
of  contract  is  as  essential  to  unrestricted  commerce  as  freedom  of 
competition,  and  one  who  asks  the  court  to  put  restrictions  upon 


~Goodhart  v.  Mission  Pub.  Co. 
(Cal.  App.),  123  Pac.  210;  Oregon  R. 
&  Nav.  Co.  V.  Dumas,  181  Fed.  781, 
104  C.  C.  A.  641;  Virginia  Bridge  & 
Iron  Co.  V.  Crafts,  2  Ga.  App.  126,  58 
S.  E.  Z22 ;  Superior  Coal  Co.  v.  Darl- 
ington Lumber  Co.,  236  111.  83,  86  N. 
E.  180,  127  Am.  St.  275;  Leeds  v. 
Townsend,  228  III.  451,  81  N.  E.  1069, 
13  L.  R.  A.  (N.  S.)  191n;  Livingston 
V.  Chicago  &c.  R.  Co.,  142  Iowa  404, 
120  N.  W.  1040;  D.  H.  Baldwin  & 
Co.  V.  Moser  (Iowa),  123  N.  W. 
989;  Barrett  v.  Carden,  65  Vt.  431, 
26  Atl.  530,  36  Am.  St.  876,  per 
Start,  J. :  "In  Richmond  v.  Dubuque 
R.  Co.,  26  Iowa  191,  it  is  said, 
'that  the  power  of  courts  to  declare 
a  contract  void  for  being  in  contra- 
vention of  sound  public  pohcy  is  a 
very  delicate  and  undefined  power, 
and,  like  the  power  to  declare  a 
statute  unconstitutional,  should  be 
exercised  only  in  cases  free  from 
doubt'  In  Kellogg  v.  Larkin,  3  Pin. 
(Wis.)  123,  56  Am.  Dec.  164,  Howe, 
J.,  said :  'He  is  the  safest  magistrate 
who  is  more  watchful  over  the  rights 
of  the  individual  than  over  the  con- 
venience of  the  public,  as  that  is 
the  best  government  which  guards 
more  vigilantly  the  freedom  of  the 
subject  than  the  rights  of  the  state.' 
In  Richardson  v.  Hellish,  2  Bing. 
229,  9  Eng.  Com.  L.  557,  Sir  James 
Burrough,  said :  'I  protest,  as  my 
lord  has  done,  against  urging  too 
strongly  upon  public  policy ;  it  is  a 
very  unruly  horse,  and  when  once 
you  get  astride  it  you  never  know 
where  it  will  carry  you.  It  may  lead 
you  from  the  sound  law.  It  is 
never  urged  at  all  but  when  other 
points  fail.'  In  Walsh  v.  Fussell,  6 
Bing.  169,  19  Eng.  Com.  L.  83,  Lord 
Chief  Justice  Tindale,  in  pronounc- 
ing judgment,  said :  'It  is  not  con- 
tended that  the  covenant  was  ille- 
gal on  the  ground  of  the  breach  of 


any  direct  rule  of  law,  or  the  direct 
violation  of  any  statute,  and  we  think 
to  hold  it  to  be  void  on  the  ground  of 
its  impolicy  or  inconvenience,  we 
ought  to  be  clearly  satisfied  that  the 
performance  of  it  would  be  necessar- 
ily attended  with  injury  or  inconve- 
nience to  the  public' "  "It  is  not 
against  public  policy  for  a  public 
service  corporation  to  enter  into  a 
contract  to  give  an  employe  perma- 
nent employment."  Louisville  &  N. 
R.  Co.  V.  Cox,  145  Ky.  667,  141  S.  W. 
389. 

''^  Cox  V.  Hughes,  10  Cal.  App.  553, 
102  Pac.  956;  McCowen  v.  Pew,  147 
Cal.  299,  96  Pac.  893,  first  appeal, 
147  Cal.  299,  81  Pac.  958;  Equitable 
Loan  &  Security  Co.  v.  Waring,  117 
Ga.  599,  62  L.  R.  A.  93,  44  S.  E.  320, 
97  Am.  St.  177;  McCandless  v.  Alle- 
gheny Bessemer  Steel  Co.,  152  Pa. 
St.  139,  25  Atl.  579.  See  also.  Kan- 
sas City  Paper  House  v.  Foley  R. 
Printing  Co.,  85  Kans.  678,  118  Pac. 
1056;  Dallas  v.  Douglas  (Mont.),  122 
Pac.  275.  A  contract  will  not  be 
declared  against  public  policy  unless 
it  requires  the  doing  of  some  thing 
against  the  public  good  or  the  con- 
sideration of  which  is  immoral  or 
hurtful  or  is  forbidden  by  statute. 
Callicott  V.  Allen,  31  Ind.  App.  561, 
67  N.  E.  196.  See  also.  Printing  &c. 
Co.  V.  Sampson,  L.  R.  19  Eq.  462. 
An  agreement  by  which  an  inventor 
engages  to  work  for  a  term  of  years 
at  a  salary,  and  assign  an  interest_  in 
any  invention  he  may  make  during 
that  time  to  his  employer,  is  not 
against  policy.  Wright  v.  Vocalion 
Organ  Co.,  148  Fed.  209,  79  C.  C.  A. 
183.  An  agreement  by  the  lessor  of 
premises  to  obtain  a  liquor  license 
for  his  lessee  has  been  held  not  con- 
trary to  public  policy.  Cavanagh  v. 
Iowa  Beer  Co.,  136  Iowa  236,  113  N. 
W.  856. 


II 


LEGALITY    OF    OBJECT. 


6;i 


the  right  to  contract  ought  to  make  it  clearly  appear  that  the  con- 
tract is  against  public  policy."" 

§  651.  Public  policy — What  determined  by. — In  determin- 
ing whether  a  contract  is  or  is  not  contrary  to  public  policy,  ref- 
erence must  be  made  to  the  constitution,  federal  and  state,  to  the 
statutes,  and  to  the  decisions  of  the  courts,  federal  and  state. "'^ 
The  public  policy  of  the  nation  must  be  determined  so  far  as  it 
can  be  from  its  constitution,  laws,  and  judicial  decisions.  The 
act  of  congress  1887,  entitled  "An  Act  to  regulate  commerce," 


"*  Couch  V.  Hutchinson,  2  Ala.  444, 
57  So.  75;  United  States  v.  Trans- 
Missouri  Freight  Assn.,  58  Fed.  58. 
See  also,  Printing  &c.  Registering 
Co.  V.  Sampson,  L.  R.  19  Eq.  462; 
Zeigler  v.  Illinois  Trust  &c.  Bank, 
245  111.  180.  91  X.  E.  1041.  See,  how- 
ever, Escambia  Land  &  Mfg.  Co.  v. 
Ferrv  Pass  &-c.  Assn.,  59  Fla.  239, 
52  So.  715,  138  Am.  St.  121,  which 
lays  down  the  rule  that  "Courts  will 
take  notice  of  their  own  motion,  too, 
of  illegal  contracts  which  come  be- 
fore them  for  adjudication,  and  will 
leave  the  parties  where  they  have 
placed  themselves."  Parties  do  not 
have  the  right  to  make  any  and  all 
contracts  they  may  choose.  The 
state  has  the  power  to  place  many  re- 
strictions on  the  right  to  contract. 
Karnes  v.  American  Fire  Ins.  Co., 
144  Mo.  413.  46  S.  W.  166. 

'"Hartford  Fire  Ins.  Co.  v.  Chi- 
cago &c.  R.  Co.,  62  Fed.  904,  affd. 
70  Fed.  201,  17  C.  C.  A.  62,  30  L.  R. 
A.  193,  per  Shiras,  J. :  "The  real 
question  for  consideration  is,  how 
shall  it  be  determined  whether  the 
contract  is  or  is  not  contrary  to 
public  policy?  The  subject-matter  of 
the  contract  may  be  such  that  it  af- 
fects the  country  at  large,  or  it  may 
be  local  in  its  nature.  The  nature  of 
the  subject-matter  determines  the 
source  from  which  light  must  be 
sought  upon  the  question  of  fact 
whether  the  provisions  of  a  given 
contract  are  or  are  not  contrary  to 
public  policy.  In  other  words,  there 
is  a  public  policy  of  the  nation,  ap- 
plicable to  all  matters  wherein  the 
people  at  large  are  interested,  in- 
cluding those  committed  to  the  con- 


trol of  the  national  government,  and 
co-extensive  with  the  boundaries  of 
the  union,  and  also  a  state  public 
policy  adapted  to  the  circumstances 
of  the  locality  embraced  within  the 
boundaries  of  the  state,  and  applic- 
able to  all  matters  within  state  con- 
trol. Thus,  in  Greenhood  on  Public 
Policy,  it  is  said  that  any  contract 
made  by  a  competent  party,  upon 
valuable  consideration,  is  valid,  un- 
less it  binds  the  maker  to  do  some- 
thing opposed  to  the  public  policy 
of  the  state  or  nation.  Greenhood  on 
Public  Policy,  p.  1,  rules  1  and  2.  In 
seeking  to  ascertain  the  requirements 
of  the  public  policy  of  the  nation, 
the  principal  sources  of  information 
are  the  Constitution  of  the  United 
States,  the  statutes  enacted  by  the 
congress,  and  the  decisions  of  the 
courts,  federal  and  state :  and  in 
case  there  should  be  a  divergence  in 
the  views  of  the  federal  and  state 
courts  upon  a  question  of  national 
public  policy,  the  conclusion  reached 
in  the  federal  courts  must  be  ac- 
cepted as  the  best  evidence  of  what 
the  requirements  of  the  national  pub- 
lic policy  are.  On  the  other  hand, 
when  seeking  to  determine  the  public 
policy  of  the  state  toward  a  sub- 
ject within  state  control,  the  prin- 
cipal sources  of  information  are  the 
state  constitution  and  statutes  and 
the  decisions  of  the  courts,  state  and 
federal ;  and,  in  case  of  divergence 
between  them,  the  decisions  of  the 
state  court  must  be  accepted  as  the 
best  evidence  of  the  public  policy  of 
the  state.  Swann  v.  Swann,  21  Fed. 
299;  Atlantic  Coast  Line  R.  Co.  v. 
Beazley,  54  Fla.  311,  45  So.  761;  Mu- 


.^  6;2 


CONTRACTS. 


12 


and  known  as  the  Interstate  Commerce  Law,  it  has  been  said, 
demonstrates  the  fact  that  from  the  date  of  the  passage  of  that 
act  it  has  been  the  pubHc  poHcy  of  this  nation  to  regulate  that 
part  of  interstate  commerce  which  consists  of  transportation,  and 
to  so  far  restrict  competition  in  freight  and  passenger  rates  be- 
tween railroad  companies  engaged  therein  as  shall  be  necessary 
to  make  such  rates  open,  public,  reasonable,  uniform  and  steady, 
and  to  prevent  discriminations  and  undue  preferences.^^ 

§  652.  Contracts  against  public  policy  void. — When  a  con- 
tract belongs  to  a  class  which  is  reprobated  by  public  policy  it 
will,  as  a  general  rule,  be  declared  void  and  unen forcible,  although 
in  the  particular  instance  no  injury  to  the  public  may  have  re- 
sulted.^" Agreements  contrary  to  public  policy  will  be  classified 
and  treated  at  length  in  the  subsequent  sections  of  this  chapter.^^ 

§  653.  Agreements  contrary  to  express  rules  of  common 
law — Generally. — At  common  law  contracts  which  were  con- 


tual  Life  Ins.  Co.  v.  Burden,  9  Ga. 
App.  797,  72  S.  E.  295;  Moon  v. 
School  City  of  South  Bend  (Ind. 
App.),  98  N.  E.  153;  Orrell  v.  Bay 
^Ifg.  Co.,  83  Miss.  800,  36  So.  561, 
70  L.  R.  A.  881 ;  Langdon  v.  Conlin, 
67  Nebr.  243,  93  N.  W.  389,  60  L. 
R.  A.  429,  108  Am.  St.  643;  Vidal 
V.  Philadelphia,  2  How.  (U.  S.),  127, 
11  L.  ed.  205.  To  same  effect  adding 
that  the  public  policy  of  a  state  does 
not  depend  upon  the  private 
conviction  or  notions  of  the  individ- 
ual judge.  Picket  Pub.  Co.  v.  Car- 
bon County,  36  Mont.  188,  92  Pac. 
524,  13  L.  R.  A.  (N.  S.)  1115,  122 
Am.  St.  355.  "The  public  policy  of 
the  state  or  of  the  nation  is  to  be 
found  in  its  Constitution  and  its 
statutes,  and,  when  cases  arise  con- 
cerning matters  upon  which  they  are 
silent,  then  in  its  judicial  decisions 
and  the  constant  practice  of  the  gov- 
ernment officials."  Zeigler  v.  Illinois 
Trust  &  Sav.  Bank,  245  111.  180,  91 
X.  E,  1041,  1045,  28  L.  R.  A.  (N. 
S.)  1112n.  See,  however,  the  case 
of  Craig  V.  United  States,  Health 
&c.  Ins.  Co.,  80  S.  Car.  151,  61  S. 
E.  423,  128  Am.  St.  877,  which  states 
that  "the  judicial  department  of  the 


government  may  refuse  to  enforce 
contracts  recognized  by  the  people  at 
large  as  vicious  in  themselves,  and 
therefore   opposed   to   public   policy." 

^^  United  States  v.  Trans-Missouri 
Freight  Assn.,  58  Fed.  58.  See  also. 
Standard  Oil  Co.  v.  United  States, 
221  U.  S.  1,  55  L.  ed.  619,  31  Sup.  Ct. 
502,  34  L.  R.  A.  (N.  S.)  834.  The 
public  policy  of  a  government  is 
found  in  the  statutes,  or,  in  the  ab- 
sence of  statutes,  in  the  court  de- 
cisions. When  a  constitutional  stat- 
ute is  enacted,  the  public  policy  is 
what  the  statute  enacts.  Logan  v. 
Postal  Tel.  &c.  Co.,  157  Fed.  570. 
See  also.  General  Electric  Co.  v.  Ft. 
Deposit  (Ala.),  56  So.  802.  In  the 
absence  of  a  statute  the  courts  may 
declare  void,  as  against  public  policy, 
contracts  that  are  closely  injurious 
to  the  interests  of  the  public.  Buck 
V.  Walker,  115  Minn.  239,  132  N.  W. 
205. 

^^  Fireman's  Assn.  v.  Berghaus,  13 
La.  Ann.  209;  Hurley  v.  Allman  Gas 
&-c.  Co,.  144  App.  Div.  (N.  Y.)  300, 
129  N.  Y.  S.  14;  City  of  Pittsburgh  v. 
Goshorn,  230  Pa.  212,  79  Atl.  505. 

■^  See  post,  §  705  et  seq. 


13 


LEGALITY   OF   OBJECT. 


654 


trary  to  the  interest  of  the  5lale  and  to  the  prejudice  of  the  public 
generally  were  forbidden  and  held  illegal.^*  The  principles  of 
the  common  law  apply  in  all  jurisdictions  whose  jurisprudence 
is  based  upon  it,  except  where  there  has  been  a  change  by  statu- 
tory enactment. 

§  654.  Agreements  involving  commission  of  crime. — Un- 
less otherwise  provided  by  statute,  when  a  plaintiff  seeks  to  en- 
force an  executory  contract  or  to  recover  damages  for  its  breach, 
he  will  be  denied  recovery  if  in  the  development  of  the  case  it 
appears  that  the  consideration  of  the  contract  involved  the  viola- 
tion of  a  penal  law  and  the  courts  will  declare  the  contract  void 
and  refuse  to  aid  in  its  enforcement  whether  its  illegality  be 
pleaded  or  not.^'^  This  is  true,  as  a  general  rule,  regardless  of 
whether  the  contract  calls  for  the  performance  of  an  act  which 
is  a  breach  of  a  rule  of  common  law,  when  the  crime  is  a  common- 
law  offense,  or  is  for  the  performance  of  an  act  declared  criminal 
by  statute.^^     This  is  true  whether  the  act  is  a  felony^'  or  a  mis- 


"  Indianapolis  &c.  R.  Co.  v.  Er- 
win,  118  111.  250,  8  N.  E.  862,  59  Am. 
Rep.  369;  Bishop  v.  Palmer,  146 
Mass.  469,  16  N.  E.  299,  4  Am.  St. 
339;  Nellis  v.  Clark,  20  Wend.  (N. 
Y.),  24,  afTd.  4  Hill  (N.  Y.)  424. 
See  also,  Reynolds  v.  Nichols,  12 
Iowa  398;  Wvkoft  v.  Weaver,  66  N. 
J.  L.  648,  52  Atl.  356;  Hunt  v. 
Knickerbacker,  5  Johns.  (N.  Y.)  327; 
Thalimer  v.  Brinkerhoft,  20  Johns. 
(N.  Y.)  386;  Lemon  v.  Grosskopf.  22 
Wis.  447,  99  Am.  Dec.  58.  The  gener- 
al principle  enforced  by  the  common 
law  ris  that  no  one  can  lawfully  do 
that  which  has  a  tendency  to  be  in- 
jurious to  the  public  or  against  pub- 
lic good.  See  People  v.  Chicago  Gas 
Trust  Co.,  130  111.  268,  22  N.  E.  798, 
8  L.  R.  A.  497n,  17  Am.  St.  319:  Aged 
Women's  &c.  Homes  v.  Pierce,  100 
Md.  520,  60  Atl.  277,  70  L.  R.  A.  485n, 
108  Am.  St.  450;  McNamara  v.  Gar- 
gett,  68  l^Iich.  454,  36  N.  W.  218,  13 
Am.  St.  355;  Robson  v.  Hamilton,  41 
Ore.  239,  69  Pac.  651. 

"Evans  v.  Richardson,  3  Mer.  469; 
Parken  v.  Whitby,  Turn.  &  Rus.  Eng. 
Ch.  366;  Russell  v.  Burton.  66  Barb. 
(N.   Y.)    539;    Keith   v.    Fountain,   3 


Tex.  Civ.  App.  391,  22  S.  W.  191; 
Oscanyan  v.  Arms  Co.,  103  U.  S. 
261,  26  L.  ed.  539. 

="  Collins  v.  Blantern,  2  Wils.  341; 
James  v.  Hendree's  Admr.,  34  Ala. 
488;  Evans  v.  Collier,  79  Ga.  315, 
4  S.  E.  264;  Henderson  v.  Palmer, 
71  111.  579,  22  Am.  Rep.  117;  McWil- 
liams  V.  Phillips,  51  ]Miss.  196;  Hinds 
V.  Chamberlin,  6  N.  H.  225 ;  Griffiths 
V.  Hardenbergh.  41  X.  Y.  464;  Cump- 
ston  V.  Lambert,  18  Ohio  81,  51  Am. 
Dec.  442;  Hunter  v.  Agee,  5  Humph. 
(Tenn.)  57;  Arnold  v.  Clifford,  2 
Sumn.  (U.  S.)  238.  "A  promise  to 
pay  for  services  in  criminal  trans- 
actions will  not  be  enforced."  Crig- 
ler  V.  Shcplcr   (Kans.),  101  Pac.  619. 

"  Robinson's  Exrs.  v.  Robards,  15 
Mo.  459.  "There  can  be  no  doubt 
that  a  contract  to  commit  murder  or 
any  other  crime,  or  a  contract  to  give 
a  reward  to  one  for  the  commission 
of  a  crime,  is  void  as  against  public 
policy."  The  contract  must,  however, 
contemplate  the  commission  of  a 
crime.  Zcigler  v.  Illinois  Trust  &c. 
Bank,  245  111.  180,  91  X.  E.  1041,  28 
L.  R.  A.   (X.  S.)   1112n. 


§    655  CONTRACTS.  I4 

demeanor.^®  Thus,  agreements  by  one  of  the  parties  to  commit 
an  assault  on  a  third  person,^"  to  indemnify  one  for  the  commis- 
sion of  such  assault  and  battery/"  to  abduct  another,*^  for  the 
commission  of  a  nuisance/-  to  compensate  another  for  the  com- 
mission of  a  wilful  and  malicious  trespass/^  or  mutual  promises  to 
marry  when  the  parties,  to  the  knowledge  of  each  other,  are 
already  married,"**  have  been  held  illegal  since  their  execution 
requires  the  commission  of  a  crime.  Contracts  made  in  violation 
of  federal  statutes,  the  liquor  laws  or  Sunday  laws,  and  laws  of 
a  similar  character,  will  be  treated  in  subsequent  sections  of  this 
chapter.*^ 

§  655.  Agreements  involving  commission  of  a  civil  wrong. 
— A  civil  injury  has  been  defined  as  "a  violation  of  the  pre-exist- 
ing right  for  which  the  law  gives  a  right  of  private  action  or  pro- 
cedure."*® An  agreement  which  has  for  its  object  the  invasion  of 
the  civil  right  of  a  third  person  is  illegal,  although  the  wrong 
may  not  be  a  crime  either  at  common  law  or  by  statute.*^  Thus, 
it  has  been  held  that  a  printer  who  prints  a  book  after  the  copy- 
right has  been  secured,  and  with  actual  notice  of  the  fact,  cannot 
recover  the  value  of  his  services.*^  A  contract  which  has  for  its 
object  the  commission  of  a  trespass  upon  the  person*^  or  prop- 

^^Youngblood  v.  Birmingham  Trust  down  the  rule  that  a  stipulation 
&c.  Co.,  95  Ala.  521,  12  So.  579,  20  L.  by  a  father  to  restore  his  daughter 
R.  A.  58,  36  Am.  St.  245;  Gardner  v.  nolens  volens  to  the  custody  of  her 
Tatum,  81  Cal.  370,  22  Pac.  880;  mother,  when  she  should  be  eighteen 
Nichols  V.  Ruggles,  3  Day  (Conn.)  years  old,  was  as  much  a  contract  to 
145,  3  Am.  Dec.  262;  Dillon  v.  Allen,  infringe  her  personal  liberty  as  if  the 
46  Iowa  299,  26  Am.  Rep.  145 ;  age  fixed  had  been  thirty-six  or  fifty- 
State  V.  Wilson,  IZ  Kans.  334,  80  Pac.  four,  and  was  unlawful. 
639,  84  Pac.  12,1 ;  Smith  v.  Robertson,  "  Friend  v.  Porter,  50  Mo.  App. 
106  Ky.  472,  20  Ky.  L.  1959,  50  S.  W.  89. 

852,   45   L.   R.   A.   510;    Haggerty   v.  "  Ives  v.  Jones,  3  Ired.   (N.  Car.) 

St.  Louis  Ice  &c.   Co.,   143   Mo.  238,  538,  40  Am.   Dec.  421. 

44  S.  W.  1114,  40  L.  R.  A.  151,  65  Am.  "  Paddock  v.  Robinson,  63  111.  99, 

St.    647;    Snoddy   v.    American    Nat.  14  Am.   Rep.  412.   See  also,   Prevost 

Bank,  88  Tenn.  573,  13  S.  W.  127,  7  L.  v.  Wood,  21  Times  L.  R.  684. 

R.  A.  705n,  17  Am.  St.  918 ;  See  also,  "'  See  post,  §  687  et  seq. 

Poplett  V.   Stockdale,   1   Ryan   &   M.  '"Benjamin   on   Contracts,   p.   5  of 

Zn\  Gale  V.  Leckie,  2  Stark.  107.  the  Introduction. 

'*  Allen  V.  Rescous,  2  Lev.  174.  "  Randall  v.  Howard,  2  Black  (U. 

*"Babcock  V.  Terry,  97  Mass.  482;  S.)   585,  17  L.  ed.  269. 

Hatch  v.  Mann,  15  Wend.  (N.  Y.)  44,  '"Nichols      v.      Ruggles,      3      Day 

revg.  9  Wend.   (N.  Y.)  262.  (Conn.)   145,  3  Am.  Dec.  262. 

"  Baker  v.  Parker,  23     Ark.     390 ;  '*  Babcock  v.  Terry,  97  Mass.  482 ; 

See  also,  Dittrich  v.  Gobey,  119  Cal.  Cumpston  v.  Lambert,  18  Ohio  St.  81, 

599,     51     Pac.      962,      which      lays  51  Am.  Dec.  442. 


15 


LEGALITY   OF    OBJECT. 


§    656 


erty^"  of  a  third  person  is  illegal.  Nor  can  one  who  commits  a 
civil  trespass  on  the  property  or  person  of  another  hold  one 
liable  on  his  contract  for  the  commission  of  such  trespass  and  to 
indemnify  him  against  liability  for  the  injuiy  inllicted.^^  The 
same  principle  has  been  held  to  apply  to  a  contract  to  publish  a 
libel  and  slander  upon  a  third  person  when  such  publication  was 
not  punishable  by  indictment,  but  was  only  actionable.°^ 

§  656.   Agreements  involving  fraud. — Fraud  is  a  civil  wrong, 

and  consequently  an  agreement  the  object  of  which  is  to  defraud 
a  particular  individual  or  individuals  or  the  public  generally,  is 
illegal.^^  Thus  contracts  which  have  for  their  object  the  perpe- 
tration of  a  fraud  and  deceit  upon  the  general  public  are  illegal,^* 
such  as  contracts  which  tend  to  deceive  the  public  as  to  the  quality 

Likewise,  a  contract  by  which  a  trade- 


and  kind  of  goods  sold.^^ 


""Marcy  v.  Crawford,  16  Conn. 
549,  41  Am.  Dec.  158;  Avery  v.  Hal- 
sey,  14  Pick.  (Mass.)  174;  Favor  v. 
Philbrick,  7  N.  H.  326;  Coventry  v. 
Barton.  17  Johns.  (N.  Y.)  142,  8  Am. 
Dec.  376;  Ives  v.  Jones,  3  Ired.  (N. 
Car.)  538,  40  Am.  Dec.  421;  AIc- 
Grcal  v.  Wilson,  9  Tex.  426.  A  con- 
tract to  clear  an  unnavigable  stream 
and  to  run  logs  through  it  cannot  be 
assumed  to  be  void  as  against  public 
policy  on  the  ground  that  it  involves 
trespassing  on  the  lands  of  third  per- 
sons, unless  it  also  appears  that  the 
riparian  owners  object  or  that  an  in- 
vasion of  their  rights  is  intended. 
Fuller  v.  Rice,  52  Mich.  435,  18  N.  W. 
204. 

"  Evans  v.  Collier,  79  Ga.  315,  4  S. 
E.  264:  Stanton  v.  McMullen,  7  111. 
App.  326 ;  Fuller  v.  Rice,  52  Mich. 
435,  8  N.  \V.  204.  See  also,  cases  cited 
in   preceding  notes. 

"Shackell  v.  Rorier,  2  Bing.  N.  C. 
634 ;  Clay  v.  Yates,  1  Hurl.  &  N.  72, ; 
Hayes  v.  Hayes,  8  La.  Ann.  468.  See 
also,  post,  §  663. 

"  Begbie  v.  Phosphate  Sewage  Co., 
L.  R.  10  Q.  B.  491;  Church  v. 
Proctor,  56  Fed.  240,  13  C.  C.  A.  426 ; 
Grav  v.  McRevnolds,  65  Iowa  461,  21 
N.  W.  777,  SA.\m.  Rep.  16;  Davis  v. 
Tones*  Admr.,  94  Kv.  320,  15  Ky.  L. 
89,  22  S.  W.  331,  42  Am.  St.  360; 
Thomas  v.  Caulkett.  57  Mich.  392,  24 
N.  W.  154,  58  Am.  Rep.  369;  Ellicott 


V.  Chamberlin,  38  N.  J.  Eq.  604,  48 
Am.  Rep.  2,27;  Kelly  v.  Scott,  49  N. 
Y.  595;  Blakely  v.  Sousa,  197  Pa. 
305,  47  Atl.  286,  80  Am.  St.  821; 
Simon  v.  Garlitz  (Tex.  Civ.  App.), 
133  S.  W.  461.  Any  contract  which 
involves  a  fraud  on  the  rights  of 
others  is  against  public  policy.  Coch- 
ran V.  Zachery,  137  Iowa  585,  115  N. 
W.  486,  16  L.  R.  A.  (N.  S.)  235n, 
126  Am.   St.  307. 

"  Church  V.  Proctor,  66  Fed.  240,  13 
C.  C.  A.  426;  Jerome  v.  Bigelow,  66 
111.  452,  16  Am.  Rep.  597 ;  McDonnell 
V.  Rigney,  108  Mich.  276.  66  N.  W.  52 ; 
McNamara  v.  Gargett,  68  Mich.  454, 
36  N.  W.  218,  13  Am.  St.  355;  Ma- 
terne  v.  Horwitz,  101  X.  Y.  469,  5  N. 
E.  331 ;  Blakely  v.  Sousa,  197  Pa.  St. 
305,  47  Atl.  286,  80  Am.  St.  821. 

"Church  V.  Proctor,  66  Fed.  240, 
13  C.  C  A.  426.  Thus,  it  has  been 
held  that  there  could  be  no  recovery 
in  action  brought  for  damages  on 
defendant's  failure  to  accept  and  re- 
ceive four  hundred  cases  of  domestic 
sardines  with  fancy  labels.  By  fan- 
cy labels  it  was  meant  that  the  sar- 
dines were  to  be  marked  so  as  to 
indicate  that  they  were  imported 
goods.  It  was  held  that  these  labels 
were  intended  to  deceive  the  consum- 
ers and  was  a  fraud  of  which  both 
parties  were  cognizant,  and  that  con- 
sequently the  courts  would  not  aid 
either  party  in  carrying  out  its  fraud- 


§  657 


CONTRACTS. 


i6 


mark  was  assigned,  which  indicated  that  a  certain  person  was  the 
manufacturer  of  a  product  sold,  has  been  held  illegal.^°  The 
name  of  an  artist,  an  author,  a  musician  or  lawyer  has  never  been 
regarded  as  a  trade  name,  and  as  such  salable.  Consequently  an 
agreement  by  which  it  is  sought  to  assign  the  right  to  use  such 
name  is  unenforcible,  for  the  reason  that  its  enforcement  would 
enable  the  assignee  to  impose  upon  and  deceive  the  public." 

§  657.  Contracts  which  cannot  be  performed  without  de- 
frauding third  persons. — In  some  jurisdictions  contracts  are 
held  illegal  that  cannot  be  performed  without  defrauding  a  third 
person.^  ^  Thus,  where  coupons  are  sold  under  such  terms  that 
the  performance  thereof  must  necessarily  work  a  fraud  on  the 
last  vendee  of  such  coupon,  the  agreement  has  been  held  against 
public  policy.^^  The  familiar  "Bohemian  Oats"  contract  belongs 
to  this  class  of  agreements.®"     Contracts  whereby  two  persons 


ulent  purpose.  Materne  v.  Horwitz, 
101  N.  Y.  469,  5  N.  E.  331.  Also, 
Harshow  v.  Elwood  (Conn.),  Id  Atl. 
531.  Plaintiff  and  defendants  agreed 
to  buy  inferior  goods,  mark  them 
with  the  label  of  well  known  manu- 
facturers, and  resell  them  as  high 
grade  stock  at  a  "bankrupt  sale." 
Action  was  brought  for  an  account- 
ing, the  appointment  of  a  receiver 
and  other  relief.  It  was  held 
that  the  action  was  properly  dis- 
missed. 

'"  Alaver  v.  Flanagan,  12  Tex.  Civ. 
App.  405,  34  S.  W.  785.  See  also, 
Joseph  V.  Macowsky,  96  Cal.  518,  31 
Pac.  914,  19  L.  R.  A.  53;  Hoxie  v. 
Chaney,  143  Mass.  592,  10  N.  E.  713, 
58  Am.  Rep.  149. 

"Messer  v.  The  Fadettes,  168 
IMass.  140,  46  N.  E.  407,  Zl  L.  R.  A. 
721,  60  Am.  St.  371;  Skinner  v. 
Oakes,  10  Mo.  App.  45;  Hegeman  v. 
Hegeman,  8  Daly  (N.  Y.)  1;  Blake- 
ly  v.  Sousa,  197  Pa.  305,  47  Atl.  286, 
80  Am.   St.  821. 

''Knight  V.  Linzey,  80  Mich.  396, 
45  N.  W.  ZZl,  8  L.  R.  A.  476;  Mc- 
Namara  v.  Gargett,  68  Mich  454,  36 
N.  W.  218,  13  Am.  St.  355;  Shirey 
V.  Ulsh,  2  Ohio  C.  C.  401,  1  Ohio  C. 
D.  554;  Cowell  v.  Harris.  2  Ohio  C. 
C.  404,  1  Ohio  C.  D.  556;  Carter  v. 
Lillie,  3  Ohio  C.  C.  364,  2  Ohio  C.  D. 


204.  In  Jacobs  v.  Mitchell,  46  Ohio 
St.  601,  22  N.  E.  768,  such  contract 
was  held  probably  not  invalid, 
though  the  decision  was  not  based  on 
such  ground.  Twentieth  Century 
Co.  V.  Quilling,  130  Wis.  318,  110  N. 
W.  174. 

''Hubbard  v.  Freiberger,  133  Mich. 
139,  94  N.  W.  727.  See  also.  Bank  of 
Ozark  V.  Hanks,  142  Mo.  App.  110, 
125  S.  W.  221. 

™Bonisteel  v.  Saylor,  17  Ont.  App. 
505;  Shipley  v.  Reasoner,  80  Iowa 
548,  45  N.  W.  1077 ;  Merrill  v.  Packer, 
80  Iowa  542,  45  N.  W.  1076 ;  Hanks  v. 
Brown,  79  Iowa  560,  44  N.  W.  811; 
Davis  V.  Seeley,  71  Mich.  209,  38  N. 
W.  901;  McNamara  v.  Gargett,  68 
Mich.  454,  36  N.  E.  218,  13  Am.  St. 
355;  Knight  v.  Linzey,  80  Mich.  396, 
45  N.  W.  Zyi,  8  L.  R.  A.  476 ;  Carter 
V.  Lillie,  3  Ohio  C.  C.  364,  2  Ohio  C. 
D.  204;  Cowell  v.  Harris.  2  Ohio  C. 
C.  404.  1  Ohio  C.  D.  556;  Shirey  v. 
Ulsh,  2  Ohio  C.  C.  401,  1  Ohio  C.  D. 
554.  See,  however,  Matson  v.  Blos- 
som. 50  Hun  (N.  Y.)  600,  18  N.  Y. 
St.  726,  4  N.  Y.  S.  489.  It  has  been 
held  that  such  a  contract  was  not 
illegal  as  a  gambling  contract.  Eber- 
sole  V.  First  Nat.  Bank.  36  111.  App. 
267;  Merrill  v.  Packer,  80  Iowa  542, 
45  N  W.  1076;  Shipley  v.  Reasoner, 
80  Iowa  548,  45  N.  W.  1077;  Hanks 


17  LEGALITY  OF  OBJECT.  §  658 

conspire  to  dcfraiul  a  third  are  to  be  distinguished  from  agree- 
ments for  the  accomphshment  of  some  lawful  purpose,  but  by  the 
terms  of  which  one  party  is  induced  to  accept  through  the  other 
party's  fraud. "^ 

§  658.  Conspiracy  to  defraud  third  persons. — An  agree- 
ment entered  into  betw-een  two  persons,  whereby  they  conspire  to 
wrong  or  defraud  a  third,  is  illegal  and  unenforcible."^  In  con- 
formity with  this  principle  it  has  been  held  that  if  two  parties 
enter  into  a  fraudulent  conspiracy  to  cheat  a  life  insurance  com- 
pany, and  one  of  them  obtains  the  proceeds  of  the  policy,  the 
other  can  under  no  circumstances  recover  of  him.*^^  Likewise, 
an  agreement,  whereby  commissions  are  to  be  paid  one  who 
effects  the  sale  of  certain  lots,  cannot  be  enforced  wdiere  the  one 
to  whom  the  commissions  were  to  be  paid  was  to  subscribe  for 
certain  lots  at  a  meeting  held  by  prospective  purchasers  and  per- 
suade them  to  buy,  at  the  same  time  concealing  the  fact  that  the 
owner  had  agreed  to  release  him  from  such  subscriptions  as  he 
did  not  wish  to  retain.*'*  So,  where  a  creamery  partnership  firm 
fixes  a  unifonn  price  for  butter,  making  the  contract  with  the 
various  dairymen  who  were  to  furnish  it  cream,  and  one  of  the 
firm  entered  into  a  secret  agreement  with  plaintiff,  allowing  him 
a  rebate  to  induce  him  to  come  in  so  that  others  would  be 
induced,  by  his  action,  to  enter  into  the  agreement,  the  court 
treated  such  secret  agreement  as  illegal  and  left  the  parties  with 
reference  to  it  where  they  have  placed  themselves.^'' 

V.  Brown,  79  Iowa  560,  44  N.  W.  811;  Mary's    Benevolent   Assn.    v.    Lvnch. 

INIatson  v.  Blossom.  50  Hun  (N.  Y.)  64  N.  H.  213.  9  Atl.  98;  Wittkowsky 

600,  18  N.  Y.  St.  726,  4  N.  Y.  S.  489.  v.  Baruch,  127  N.  Car.  313,  Z7  S.  E. 

Compare,  Schmueckle  v.  Waters,  125  449;  Crawford  v.  Wick,  18  Ohio  St. 

Ind.   265,  25    N.    E.   281;    McNamara  190,  98  Am.  Dec.    103;   State  v.  Cin- 

V.   Gargctt,  68  Mich.  454,  36  N.   W.  cinnati  &c.  Coke  Co.,  18  Ohio  St.  262; 

218,  13  Am.  St.  355.    See  post,  §  692.  Simon   v.   Garlitz    (Tex.    Civ.   App.), 

"  In  the  latter  case  A's  acceptance  133  S.  W.  461 ;  Leach  v.  Devereaux 

of    B's    offer    is    procured    through  (Tex.    Civ.    App.),    32    S.    W.    837; 

fraud  on  the  part  of  B.     In  the  first  Barnett  v.  Barnett,  83  Va.  504,  2  S.  E. 

instance    the    subject-matter    of    the  7ZZ. 

agreement  itself  is  illegal.     See  ante,  ""Howe's   Exr.   v.   Griffin's   Admr., 

Chap.  4.  126  Kv.  37Z,  103  S.  W.  714,  128  Am. 

°=Buchtella   v.    Stepanek,   53   Kans.  St.  296n. 

2,73,  36  Pac.  749;  Bennett  v.  Tiernav,  "'McDonnell  v.   Rigney,   108  Mich. 

78  Ky.  580,  1  Kv.  L.   (abstract)  312;  276.  66  N.  W.  52. 

Selby   V    Case.   87   Md.   459.   39   Atl.  ""  McEwen  v.  Shannon,  64  Vt.  583, 

1041-    Lawton    v.    Estes,    167    Mass.  25   .\tl.  661.     The  court   said:   "The 

181,  45  N.  E.  90,  57  Am.  St.  450;  St.  court    treats   all    such    secret   agree- 

2 — CoNTR.'\CTS,  Vol.  2 


§    659  CONTRACTS.  I8 

§  659.  Rule  further  illustrated. — On  the  same  principle 
one  who  advances  money  to  a  stockholder  in  a  corporation,  to 
enable  him  to  carry  on  an  action  and  to  recover  in  his  own  name 
and  for  his  own  use  a  judgment  which  properly  belonged  to  the 
corporation,  and  with  knowledge  that  the  corporation  was  thereby 
being  deprived  of  its  property,  cannot  have  such  claim  allowed 
in  the  distribution  of  the  fund.""  A  partnership,  whereby  the 
parties  thereto  arrange  for  a  horse  race  with  one  whom  they  in- 
duced to  enter  his  horse  by  making  him  think  he  had  a  "sure 
thing,"  and  by  leading  the  latter  to  think  that  their  horse  was 
untrained  and  undeveloped,  has  been  held  a  conspiracy  to  defraud 
so  that  a  court  would  not  aid  either  of  the  partners  by  compelling 
the  one  who  had  possession  of  all  the  profits  to  make  an  account- 
ing."" It  has  also  been  held  that  where  several  cotenants  join  in 
a  contract  by  which  the  property  of  the  cotenancy  is  sold  at  a  tax 
sale  to  one  of  the  conspirators,  for  the  purpose  of  defrauding  one 
of  the  cotenants,  the  conspirator  who  purchases  to  subsequently 
deed  the  property  to  the  conspirators,  free  from  the  claim  of  the 
defrauded  cotenant,  none  of  the  parties  to  the  fraudulent  scheme 
will  be  granted  relief  in  equity  as  against  the  one  who,  pursuant 
to  the  scheme,  acquired  the  tax  title  to  the  land  and  claims  it  as 
his  own."® 

§  660.  Agreements  to  defraud  creditors. — An  agreement  to 
defraud  creditors,  such  as  a  private  stipulation  with  the  debtor 
whereby  one  creditor,  who  assumes  to  act  with  other  creditors 
in  a  composition  of  their  debts,  is  to  receive  some  advantage  to 

merits  which  work  a  fraud  upon  the  represented  to   X   that  he  would  in- 

rights   of    others   as    illegal,   and    re-  duce  B  to  believe  that  his  mine  was 

fuses  to  enforce  them."'  salted,    and    thus    enable    X    to    buy 

"  Davis  V.  Gemmell,  Ti  Md.  530,  21  below  value,  it  was  held  that  A  was 

Atl.  712.  entitled  to  no  relief  in  equity  where 

"  Morrison    v.    Bennett,    20    Mont,  the   scheme  was   really   one   between 

560,    52    Pac.  553,  40  L.  R.  A.  158.     See  A  and  B  to  induce  X  to  buy,  the  mine 

also,    Dakin    v.    Rumsey,    104    Mich,  being  in   reality   worthless.     Bearden 

636,  62  N.  W.  990.     Compare,  how-  v.  Jones   (Tenn.),  48  S.  W.  88. 
ever,  with  the  case  of  Hobbs  v.  Boat-        ""Lawton   v.   Estes,   167   Mass.   181, 

right,   195  ^lo.  693,  93  S.  W.  934,  5  45   N.   E.  90,   57   Am.    St.   450.     See 

L.   R.   A.    (N.   S.)    906,   113  Am.   St.  also,  Tappan  v.  Brewing  Co.,  88  Cal. 

709.      In    this    latter    case   the   party  570,  22  Pac.  257,  5  L.  R.  A.  428,   13 

who  was  induced  to  bet  was  the  one  Am.    St.    174;    Smith   v.    Humphreys, 

that  brought  the  suit.     See  also,  ante,  88  Maine  345,  34  Atl.  166. 
§  92.    In  pari  delicto.    So,  where  A 


19 


LEGALITY    OF    OBJECT. 


§    66l 


himself  over  such  other  creditors,  is  also  unen forcible.""  Such 
fraudulent  advantage  vitiates  the  composition  as  to  innocent  cred- 
itors and  they  are  not  bound  by  it.'"  On  the  other  hand  it  has  been 
held  that  the  creditor  who  perpetrated  the  fraud  could  not  sue 
even  to  enforce  his  original  claim,"  or  recover  his  share  or  divi- 
dend under  the  composition  agreement." 

§  661.  Conveyance  of  property  to  defraud  creditors. — 
Likewise  a  debtor  who  transfers  his  property  to  another  in  order 
to  defraud  his  creditors  cannot  compel  the  performance  of  a 
promise,  given  in  consideration  of  such  conveyance  by  the  one  to 

"Benicia     Agricultural     Works    v. 
Estes,  98  Cal.  17,  32  Pac.  938;  Smith 
V.  Owens,  21  Cal.  11;  In  re  Clement's 
Appeal,  52  Conn.  464;   McFarland  v. 
Garber,     10    Ind.     151;     Morrison    v. 
Schlesinger,   10  Ind.  App.  665,  38  N. 
E.   493;    Goodwin  v.    Blake,  3  T.  B. 
Mon.    cKy.)    106,    16   Am.    Dec.   87; 
John  T.  Hardie's  Sons  Co.  v.  Scheen, 
110  La.  612,  34  So.  707;  Ramsdell  v. 
Edgarton,     8     Mete.     (Mass.)     227; 
Sternberg  v.  Bowman,  103  Mass.  325 ; 
Brown  v.  Nealley,  161  Mass.  1,  36  N. 
E.    464;     Vreeland    v.     Turner,     117 
Mich.  366,  75  N.  W.  937,  72  Am.  St. 
562;  Newell  v.  Higgins,  55  ]\Iinn.  82, 
56    N.    W.    577;    O'Shea    v.    Collier 
White  Lead  &c.  Co.,  42  Mo.  397,  97 
Am.  Dec.  332;  Bank  of  Commerce  v. 
Hoeber,  88  Mo.  37 ;  Winn  v.  Thomas, 
55  N.  H.  294 ;  Adams  v.  Outhouse,  45 
N.  Y.  318;   Bliss  v.   Matteson,  45  N. 
Y.  22;   Breck  v.  Cole,  4  Sandf.    (N. 
Y.)     79;    Wheeler    v.    Pettyjohn,    14 
Okla.   71,   76   Pac.    117;    Patterson   v. 
Boehm.  4  Pa.  St.  507;  Lee  v.  Sellers, 
8P2    Pa.    473;    Willis    v.    Alorris,    63 
Tex.  458,  51   .Am.  Rep.  655;   Dansby 
V.    Frieberg,   76   Tex.   463,    13   S.   W. 
331 ;  Clarke  v.  White,  12  Pet.  (U.  S.) 
178,  9  L.  ed.  1046.     Thus,  a  guaranty 
of  a  debt  at  a  bank  by  a  third  person, 
whereby    the    bank    was    induced    to 
sign    a    compromise    agreement    for 
its    claim    against    an    insolvent   firm, 
without  knowledge  of  the  other  cred- 
itors of  the  firm,  is  void  as  against 
public   policy,   even   though   the  com- 
position failed  because  of  the  refusal 
of  some  of  the  other  creditors  to  sign 
the     agreement.       Glens     Falls     Nat. 
Bank  v.  Van  Nostrand,  41  :\Iisc.   (N. 
Y.)    526,  85   N.   Y.   S.  50,  affd.   103 


App.  Div.  (N.  Y.)  598,  92  N.  Y.  S. 
1125.  A  solvent  debtor  conveyed 
property  to  a  trustee  with  authority 
to  convert  the  same  into  cash  and  pay 
creditors.  Under  the  trust  agreement 
the  trustee  was  to  settle  with  the 
creditors  as  cheaply  as  possible  and 
give  the  debtor  the  benefit  of  any  dis- 
count he  might  obtain.  The  agree- 
ment was  held  contrary  to  public 
policy,  because  of  its  tendency  to  lead 
the  trustee  to  deal  unjustly  with  the 
creditors.  Haswell  v.  Blake  (Tex. 
Civ.  App.),  90  S.  W.  1125.  See  also, 
Fried  v.  Danziger,  120  App.  Div.  (N. 
Y.)  604,  121  App.  Div.  (N.  Y.)  903, 
105  N.  Y.  S.  44. 

'"Daughlish  v.  Tennent,  L.  R.  2 
Q.  B.  49;  Ex  parte  Milner,  15  Q.  B. 
D.  605;  Kullman  v.  Greenebaum,  92 
Cal.  403,  28  Pac.  674,  27  Am.  St.  150; 
Ilefter  v.  Cahn,  73  111.  296;  Kahn  v. 
Gumberts,  9  Ind.  430;  Partridge  v. 
Messer,  14  Gray  (Mass.)  180;  Cobb 
v.  Tirrell,  137  Mass.  143;  Powers 
Drv  Goods  Co.  v.  Harlin,  68  Minn. 
193,  71  N.  W.  16,  64  Am.  St.  460; 
Stuart  V.  Blum,  28  Pa.  225. 

^Mallalieu  v.  Hodgson,  16  Q.  B. 
689;  O'Brien  v.  Greenebaum,  92  Cal. 
104,  28  Pac.  214;  Baldwin  v.  Rosen- 
man,  49  Conn.  105 ;  Huckins  v.  Hunt. 
138  Mass.  366;  White  v.  Kuntz,  107 
N.  Y.  518,  14  N.  E.  423,  1  Am.  St. 
886. 

'^Howden  v.  Haigh,  11  Ad.  &  E. 
1033;  Doughty  v.  Savage,  28  Conn. 
146;  Huntington  v.  Clark,  39  Conn. 
540;  Frost  v.  Gage.  3  Allen  (Mass.) 
560.  Contra,  Hanover  Nat.  Bank  v. 
Blake.  142  N.  Y.  404.  37  N.  E.  519, 
27  L.  R.  A.  33,  40  Am.  St.  607. 


662 


CONTRACTS. 


20 


whom  the  property  is  conveyed,  should  the  latter  refuse  to  per- 
form." Thus,  in  case  the  agreement  calls  for  a  subsequent  re- 
conveyance the  reconveyance  cannot  be  compelled.'*  One  who 
conveys  property  to  another  in  order  to  avoid  paying  alimony 
cannot  compel  a  reconveyance.'^  Nor  can  the  heirs  of  a  grantor 
who  conveyed  property  to  his  son  in  order  to  defraud  his  cred- 
itors show  this  fact  in  order  to  rebut  the  presumption  that  the 
conveyance  was  an  advancement  and  to  establish  a  resulting  trust 
in  themselves.'® 

§  662.  Who  may  avoid  such  conveyance. — But  while  such 
conveyance  cannot  be  avoided  by  the  debtor  it  may  be  avoided  by 
the  creditor  or  creditors  injured  thereby."  It  has  been  held  that 
the  debtor  cannot  recover  the  purchase-price  which  the  grantee 
agreed  to  pay"  although  perhaps  the  weight  of  authority  is  to  the 
contrary.'^  A  mortgage  given  by  the  debtor  and  taken  to  defraud 


'^  Kirkpatrick  v.  Clark,  132  111.  342, 
24  N.  E.  71,  8  L.  R.  A.  511,  22  Am.  St. 
531;  Kitts  v.  Willson,  130  Ina. 
492,  29  N.  E.  401;  Gentry  v.  Field, 
143  Mo.  399,  45  S.  W.  286;  Pass  v. 
Pass,  109  N.  Car.  484,  13  S.  E.  908; 
Brinkerhoff  v.  Tracy,  55  Ohio  St. 
558,  45  N.  E.  1100. 

'*Castellow  v.  Brown,  119  Ga.  461, 
46  S.  E.  632;  Moore  v.  Horsley,  156 
111.  36,  40  N.  E.  323;  Brady  v.  Huber, 
197  111.  291,  64  N.  E.  264,  90  Am.  St. 
161;   Kitts  V.  Willson,   130  Ind.  492, 
29   N.   E.   401;    Briggs   v.    Coffin,  91 
Iowa  329,  59  N.  W.  259;   Canton  v. 
Dorchester,    8    Cush.     (Mass.)     525; 
Hassam   v.   Barrett,    115    Mass.   256; 
Poppe   V.    Poppe,    114    Mich.    649,   72 
N.  W.  612,  68  Am.  St.  503;   Sell  v. 
West,    125   Mo.   621,   28   S.   W.  969; 
Whitaker  v.  Whitaker,   157  Mo.  342, 
58  S.  W.  5;  Eyre  v.  Eyre,  19  N.  J. 
Eq.    42;    McManus   v.    Tarleton,    126 
N.  Car.  790,  36  S.  E.  338 ;  Lockren  v. 
Rustan,  9  N.  Dak.  43,  81  N.  W.  60 ; 
Pride  v.   Andrew,   51    Ohio   St.   405, 
38   N.    E.   84;   Walton   v.    Blackman 
(Tenn.    Ch.    App.),    36    S.    W.    195; 
Herndon  v.  Reed,  82  Tex.  647,  18  S. 
W.  665;  Randall  v.  Howard,  2  Black 
(U.  S.)  585,  17  L.  ed.  269;  Shoemake 
V.  Finlayson,  22  Wash.  12,  60  Pac.  50 ; 
McClintock  v.   Loisseau,   31   W.   Va. 
865,  8  S.  E.  612,  2  L.  R.  A.  816. 


"Fiske  V.  Fiske,  173  Mass.  413,  53 
N.  E.  916.  It  has  been  held  other- 
wise, however,  where  the  wife  was 
not  awarded  any  alimony  for  the  rea- 
son that  no  creditor  was  defrauded. 
Rivera  v.  White,  94  Tex.  538,  63  S. 
W.   125. 

"  McClintock  v.  Loisseau,  31  W. 
Va.  865,  8  S.  E.  612,  2  L.  R.  A.  816. 

"  StilHngs  v.  Turner,  153  Mass.  534. 
27  N.  E.  671;  Harvey  v.  Varney,  98 
Mass.  118;  Dyer  v.  Homer,  22  Pick. 
(Mass.)  253.  Creditors  of  a  de- 
ceased husband's  estate  may  agree  to 
withdraw  their  objections  to  the  al- 
lowance of  the  year's  support  in  con- 
sideration of  a  note  made  to  them  by 
the  widow  and  such  agreement  is  not 
a  fraud  on  the  other  creditors  and 
against  public  policy.  Golding  V. 
McCall,  5  Ga.  App.  545,  63  S.  E.  706. 
^*Norris  v.  Norris'  Admr.,  9  Dana 
(Ky.)  317,  35  Am.  Dec.  138;  Church 
v.  Muir,  33  N.  J.  L.  318;  Powell  v. 
Inman,  8  Jones  L.  (N.  Car.)  436,  82 
Am.  Dec.  426n;  Bradford  v.  Beyer,  17 
Ohio  St.  389;  Goudy  v.  Gebhart,  1 
Ohio  St.  262. 

'"'  Harcrow  v.  Harcrow,  69  Ark.  6, 
58  S.  W.  553,  64  S.  W.  881 ;  Springer 
V.  Drosch,  32  Ind.  486,  2  Am.  Rep. 
356,  overruling  Welby  v.  Armstrong. 
21  Ind.  489;  Butler  v.  Moore,  73 
Maine   151,  40  Am.   Rep.  348;    Still- 


21 


LEGALITY  OF  OBJECT.  §  662 


his  creditors^"  or  accepted  by  him  in  order  to  estabHsh  a  false  de- 
fense to  an  action  for  damages-'  cannot  be  enforced.  The  same 
is  true  of  a  fraudulent  note  executed  without  consideration/-  as 
where  a  note  is  given  to  a  bank  merely  to  increase  its  apparent 
assets.^^  There  is  some  conflict  in  the  application  of  the  doctrine 
of  in  pari  delicto  in  cases  of  this  character.  Some  cases  hold  that 
if  the  fraudulent  grantor  remains  in  possession  an  action  in 
ejectment  may  be  maintained  by  the  grantee.**  Other  jurisdic- 
tions hold  that  the  grantee  cannot  maintain  an  action  in  ejectment 
for  the  reason  that  the  courts  will  aid  neither  party.''  A  judg- 
ment confessed  in  fraud  of  creditors  has  also  been  held  good 
as  between  the  parties. "*  But  should  the  grantee  or  his  heirs 
reconvey  they  cannot  avoid  such  reconveyance."  Moreover  it  is 
the  unlawfulness  of  the  agreement  and  not  the  underlying  intent 
which  renders  the  transaction  unenforcible,  and  where  the  mort- 
gage is  given  to  secure  a  bona  fide  indebtedness  the  mortgagor 
may  redeem  notwithstanding  the  intention  to  give  an  unlawful 
preference.'*  Nor  can  a  conveyance  in  trust  for  creditors  be 
avoided  merely  because  of  a  secret  fraudulent  intent.*^ 

ings  V.  Turner,  153  Mass.  534,  27  N.  Admr.,  17  B.  Mon.  (Ky.)  292;  Boyle 

E.  671;  Sauter  v.  Leveridge,  103  Mo.  v.  Rankin,  22  Pa.  St.  168;  Epperson 

615,  15  S.  W.  981.  V.  Young,  8  Te.x.  135. 

^O'Kane   v.   Terrill,   144   Ind.   599,  ^Harrison  v.  Hatcher.  44  Ga.  638: 

43  N.   E.  869;   Miller  v.   Marckle,  21  Kirkpatrick  v.  Clark,  132  111.  342,  24 

111.  152;  Williams  v.  Clink,  90  Alich.  N.  E.  71,  8  L.  R.  A.  511,  22  Am.  St. 

297,  51   N.  W.  453,  30  Am.   St.  443;  531.     So  where  grantee  is  grantor's 

Schroeder  v.  Pratt,  21   Utah  176,  60  surety,    and    grantor    acted    in    good 

Pac.     512.      Contra,     Pierce     v.     Le  faith,    replevin    was   held   not   to   lie. 

Monier.  172  Mass.  508,  53  N.  E.  125 ;  Havs   v.   Windsor,    130   Cal.   230,   62 

Barwick  v.   Movse,   74   Miss.   415,  21  Pac.  395. 

So.  238.  60  Am'.   St.  512;   Bradtfeldt  ^Pitkin  v.  Burnham,  62  Nebr.  385, 

V.  Cooke.  21  Ore.   194,  40  Pac.  1,  50  87  X.  W.  160,  55  L.  R.  A.  280. 

Am.  St.  701.  "Dctwiler  v.   Detwiler,     30     Nehr. 

"^  Bates  V.  Cain,  70  Vt.  144,  40  Atl.  338.    46    N.    W.    624.      Nor    can    the 

36.  creditors  of  the  grantee  avoid  such 

*-  McTighe  v.  McKee.  70  Ark.  293,  conveyance.         Biccochi     v.     Casev- 

67  S.  W.  754 ;  Sternberg  v.  Bowman,  Swasev   Co.,  91   Tex.  259,  42  S.   W. 

103  Mass.  325.  963,  66  Am.  St.  875.     See  also.  Kihl- 

*"  Chicago    Title    &    Trust    Co.    v.  ken  v.   Kihlken,  59  Ohio  St.  106,  51 

Brady,   165   Mo.   197,  65   S.   W.  303;  N.  E.  969. 

Clay  County  Bank  v.  Keith,  85  Mo.  ^  Halloran  v.  Halloran.  137  III.  100, 

App.  409.  27  N.  E.  82. 

^Elmore  v.  Elmore  (Kv.),  22  Kv.  ^  Neresheimer  v.  Smvth,  167  N.  Y. 

L.  856.  58  S.  W.  980;  Jones'  Admr.  v.  202,  60  N.  E.  449. 
Jenkins,  83  Ky.  391 ;  Bibb  v.  Baker's 


§    663  CONTRACTS.  22 

§  663.  Agreements  contemplating  publication  of  libel. — A 
contract  which  contemplates  the  publication  of  a  libel  against  a 
third  person  has  been  held  illegal  because  it  has  for  its  object  the 
commission  of  a  civil  injury  against  such  third  person. ^'^  Thus 
a  contract  to  indemnify  a  publisher  against  loss  or  damages  re- 
sulting from  the  publication  of  a  libel  is  void.  The  law  will 
not  interfere  to  aid  either;  it  will  not  inquire  which  of  the  two 
is  the  more  in  the  wrong  with  a  view  of  adjusting  the  equities 
between  them,  but  regarding  both  as  having  been  understandingly 
engaged  in  a  violation  of  the  law  it  will  leave  them  as  it  finds 
them  to  adjust  their  differences  between  themselves  as  best  they 
may.^^  The  liberty  of  the  press  is  not  involved  in  such  cases. 
''The  liberty  of  the  press  does  not  include  the  right  to  publish 
libel  much  less  does  it  include  the  right  to  be  indemnified  against 
the  just  legal  consequences  of  such  publication."^^  However,  it 
has  been  held  that  a  publisher  might  contract  for  indemnity 
against  possible  liability  for  unintentional  libel.®^ 

§  664.  Agreements  mala  in  se  and  agreements  mala  pro- 
hibita. — Some  of  the  earlier  cases  made  a  distinction  between 
contracts  mala  prohibita  and  mala  in  se.  This  distinction  rested 
on  no  solid  foundation,  however,  so  far  at  least  as  it  was  supposed 
to  affect  the  subject  here  under  consideration,''*  and  has  been  re- 

''"  Fores  v.  Johnes,  4  Esp.  97 ;  Pop-  prietor's  knowledge  or  consent.    Col- 

lett    V.    Stockdale,    2    C.    &    P.    198;  burn    v.    Patmore,    1    Cromp.    M.    & 

Shackell  v.   Rosier,  2  Bing.   N.   Cas.  R.  73. 

634;  Hayes  v.  Hayes,  8  La.  Ann.  468;  °- Arnold  v.   Clifford,  2  Sumn.    (U. 

Ives  V.  Jones,  25  N.  Car.  538.  40  Am.  S.)  238.  Fed.  Cas.  No.  555.    To  same 

Dec.   421 ;    Lea   v.    Collins,   4    Sneed.  effect,  Adkins  v.  Johnson,  43  Vt.  78, 

(Tenn.)    393;    Arnold   v.    Clifford.   2  5  Am.  Rep.  260. 

Sumn.    fU.    S.)    238,    Fed.    Cas.    No.  "'The    court    said:    "In    order,    we 

555 ;  Atkins  v.  Johnson,  43  Vt.  78,  5  think,  to  render  the  contract  unlaw- 

Am.  Rep.  260.     See  also,  Colburn  v.  ful,  it  should  appear  that  there  was 

Patmore,  1  Cromp.  M.  &  R.  73.  an  intention  on  the  part  of  the  author 

"Adkins  v.   Johnson,   43   Vt.   78,  5  and    pubhsher    to    write   and    pubhsh 

Am.   Rep'.   260.    To   same  effect,   Ar-  hbelous    matter,    or    that    the    author 

nold   V.   Clifford.  2    Sumn.   238.   Fed.  proposed,  with  the  knowledge  and  ac- 

Cas.   No.   555;    Shackell   v.   Rosier,  2  quiescence  of  the  publisher,  to  write 

Bing.    N.    C.    634.      For    the    same  libelous   matter,  or  that  the  contract 

reason  it  has  been  held  that  the  pro-  on  its  face  provided  for  or  promoted 

prietor  of  a  newspaper  could  not  re-  an  illegal  act."    C.  F.  Jewett  Pub.  Co. 

cover  of  his  editor  damages  he  had  v.    Butler.    159    Mass.    517,   34    N.    E. 

sustained    as    a    result    of    an    action  1087,  22  L.  R.  A.  253. 

brought   against  him    for   a   libel    in-  "'  Sharp  v.  Farmer,  4  Dev.  &  B.  L. 

serted  by  the  editor  without  the  pro-  (N.  Car.)   122. 


23 


LEGALITY    OF    OBJECT. 


§  66: 


pudiated."  The  same  general  rule  applies  whether  the  contract 
is  malum  in  se  or  malum  prohibitum ;  in  either  case  the  maxim 
ex  turpi  causa  non  oritur  actio  applies.^*^ 

§  665.  Basis  of  the  rule. — It  should  be  borne  in  mind,  how- 
ever, that  public  policy  lies  at  the  basis  of  the  law  in  regard  to 
illegal  contracts,  and  the  rule  is  adopted  not  strictly  for  the  bene- 
fit of  the  parties  but  rather  for  the  benefit  of  the  public.  It  is 
obvious  that  cases  may  arise  even  under  contracts  of  this  char- 
acter in  which  the  public  interest  will  be  better  served  by  granting 
than  by  denying  relief  and  in  such  the  general  rule  should  yield 
to  this  policy.  The  principle  of  in  pari  delicto  will  not  defeat 
recovery  in  such  cases  if  public  policy  demands  it.°^     Again  it 


"Bensley  v.  Bignold.  5  Barn.  & 
Aid.  335;  Penn  v.  Bornman,  102  111. 
523.  "A  contract  may  be  invalid  when 
the  act  to  be  done  is  legal,  both  where 
the  contract  is  made  and  where  it  is 
to  be  performed  (Davis  v.  Osgood, 
69  N.  H.  427,  44  Atl.  432),  for,  not 
only  is  a  contract  to  do  an 
illegal  act  invalid,  but  one  to  do 
a  legal  act  is  also  invalid  if  it  is 
made  at  a  time  or  in  a  way  the  lex 
loci  contractus  forbids  the  parties  to 
make  it.  The  test  therefore  to  deter- 
mine the  validity  of  a  contract  is  to 
inquire  whether  the  lex  loci  contractus . 
forbids  the  parties  to  make  it — not 
whether  it  forbids  them  to  do  the 
act  or  acts  it  contemplates,  nor 
whether  the  parties  are  forbidden  to 
do  them  by  the  law  of  the  place 
where  they  are  to  be  done."  Lovell 
v.  Boston  &  M.  R.  Co.  (N.  H.),  78 
Atl.  621. 

•*Melchoir  v.  ^IcCarty,  31  Wis.  252, 
11  Am.  Rep.  605.  To  same  effect, 
Aubert  v.  Maze,  2  Bos.  &  P.  371; 
Jackson  v.  Shawl,  29  Cal.  267;  Pike 
v.  King,  16  Iowa  49;  I-Iathaway  v. 
Aloran,  44  Maine  67;  White  v.  Buss, 
3  Cush.  (Mass.)  448;  Haggerty  v. 
St.  Louis  Ice  &c.  Co.,  143  Mo.  238, 
44  S.  W.  1114,  40  L.  R.  A.  151,  65  Am. 
St.  647;  Downing  v.  Ringer,  7  Mo. 
585;  Lewis  v.  Welch.  14  N.  H.  294; 
Evans  v.  Trenton,  24  N.  J.  L.  764; 
Pennington  v.  Townsend,  7  Wend. 
(N.  Y.)  276;  Securitv  Life  &  Annu- 
ity Co.  V.  Costner,  149  N.  Car.  293.  63 
S.  E.  304;  Puckett  v.  Alexander,  102 


N.  Car.  95,  8  S.  E.  1Q,  3  L.  R.  A. 
43 ;  Cansler  v.  Penland,  125  N.  Car. 
578,  34  S.  E.  683,  48  L.  R.  A.  441; 
Rossman  v.  McFarland,  9  Ohio  St. 
369;  Columbia  Bank  &  Bridge  Co. 
V.  Haldeman,  7  Watts  &  S.  (Pa.) 
233.  42  Am.  Dec.  229;  Eberman  v. 
Reitzel.  1  Watts  &  S.  (Pa.)  181  ;  Holt 
V.  Green,  IZ  Pa.  198,  13  Am.  Rep. 
12>1 ;  Young  v.  Robertson,  6  Phila. 
(Pa.)  184;  Ohio  Life  Ins.  &c.  Co.  v. 
Alerchants'  &c.  Ins.  Co.,  11  Humph. 
(Tenn.)  1,  53  Am.  Dec.  742;  Hunt  v. 
Robinson,  1  Tex.  748;  Bank  of 
United  States  v.  Owens,  2  Pet.  (U. 
S.)  527,  7  L.  ed.  508;  Gibbs  v.  Con- 
solidated Gas  Co.,  130  U.  S.  396,  Zl  L. 
ed.  979,  9  Sup.  Ct.  553.  An  act  which 
is  prohibited  by  statute  or  the  com- 
mon law  whether  malum  in  se  or 
merely  malum  prohibitum,  whether 
indictable  or  subject  only  to  a  penalty 
of  forfeiture,  cannot  form  the  con- 
sideration of  a  valid  contract.  Lind- 
sev  V.  Rottaken,  32  .\rk.  619. 

"  See  Berka  v.  Woodward,  125  Cal. 
119.  57  Pac.  ni,  45  L.  R.  A.  420,  li 
Am.  St.  31 ;  Hobbs  v.  Boatright,  195 
I\Io.  693.  93  S.  W.  934,  5  L.  R.  A.  (N. 
S.)  906,  113  Am.  St.  709.  "In  re- 
gard to  contracts  not  immoral  or 
criminal  in  themselves,  but  prohibited 
by  statutory  law,  the  same  general 
rule  may  be  said  to  apply,  not.  how- 
ever, universal  in  its  application,  but 
subject  to  certain  exceptions  as  bind- 
ing in  authority  as  the  rule  itself." 
Lester  v.  Howard  Bank,  Zl  I\Id.  558, 
3  Am.  Rep.  211. 


§    666  CONTRACTS.  24 

has  been  said :  *'It  is  no  doubt  the  general  rule  of  law,  that  no 
right  of  action  can  spring  out  of  an  illegal  contract.  And  the 
rule  that  an  illegal  contract  cannot  be  enforced,  applies  as  well  to 
contracts  malum  prohibitum,  as  to  contracts  malum  in  se.  But 
it  does  not  necessarily  follow  that  all  the  consequences  attending 
a  contract,  which  is  contrary  to  public  morals,  or  founded  on  an 
immoral  consideration,  attend  and  affect  a  contract  malum  pro- 
hibitum merely.  The  law  in  the  former  case  will  not  undertake 
to  relieve  parties  from  the  position  in  which  they  have  placed 
themselves,  or  to  adjust  the  equities  between  them.  But  in 
the  latter  case,  while  the  law  will  not  enforce  the  prohibited  con- 
tract, it  will  take  notice  of  the  circumstances,  and  if  justice  and 
equity  require  a  restoration  of  money  or  property,  received  by 
either  party  thereunder,  it  will  give,  and  in  many  cases  has  given 
relief."^« 

§  666.    Penalties  generally  import  or  imply  prohibition. — 

A  statute  which  imposes  a  penalty  upon  an  act  by  implication 
ordinarily  prohibits  such  act.  A  penalty  usually  implies  a  pro- 
hibition although  there  are  no  prohibitory  words  in  the  statute.^^ 

'*  Pratt  V.  Short,  79  N.  Y.  437,  35  Am.    Rep.   671;    Harrison   v.    Jones, 

Am.  Rep.  531.     See  also,  In  re  T.  H.  80   Ala.   412;    Dudley   v.    Collier,    87 

Bunch  Co.,  180  Fed.  519,  which  says,  Ala.  431,  6  So.  304,   13  Am.   St.  55; 

"A   distinction  is  made  between  acts  Aloog  v.  Hannon,  93  Ala.  503,  9  So. 

which  are  mala  in  se,  which  are  gen-  596;      Youngblood     v.      Birmingham 

erally  regarded  as  absolutely  void  in  Trust   &c.    Co.,   95    Ala.    521,    12    So. 

the  sense  that  no  right  or  claim  can  579,  20  L.  R.  A.  58,  36  Am.  St.  245 ; 

be  derived  from  them,  and  acts  which  Tucker  v.  West,  29  Ark.  386 ;  Martin 

are  mala  prohibitum,  which  are  void  v.  Hodge,  47  Ark.  378,  1  S.  W.  694, 

or   voidable  according  to  the  nature  58  Am.  Rep.  763;  Jackson  v.  Shawl, 

of     the     thing    prohibited,"     quoting  29  Cal.  267 ;  Berka  v.  Woodward,  125 

from  Ewell  v.  Daggs,  108  U.  S.  143,  Cal.  119,  57  Pac.  777,  45  L.  R.  A.  420, 

27  L.  ed.  682,  2  Sup.  Ct.  408;  Doney  73  Am.  St.  31;  Funk  v.  Gallivan,  49 

V.   Langheim    (Ind.   App.),  94   N.   E.  Conn.  124,  44  Am.  Rep.  210;  Cook  v. 

1027.   See  also,  post,  §  676.  Also  chap.  Pierce,  2  Houst.  (Del.)  499;  Watkins 

28,  Effect  of  Performance  of  Illegal  Medical    Co.    v.    Paul,    87    111.    App. 

Contract.  278;  People  v.  Whiteside  County,  122 

'•"'Bensley  v.  Bignold,  5  B.  &  Aid.  III.  App.  40;  Skelton  v.  Bliss,  7  Ind. 

335;  D'Allax  V.  Jones,  2  Jur.  (N.  S.)  77;     Siter    v.    Sheets,    7    Ind.     132; 

979;   Tyson  v.  'J'homas,   McCl.   &  Y.  Beecher    v.     Peru    Trust    Co.     (Ind. 

119;    MacDonald    v.    Riordan,    Rap.  App.),  97  N.  E.  23;  Pike  v.  King,  16 

Jud.  Quebec,  8  B.  R.  555,  Appeal  dis-  Iowa  49;  Watrous  v.  Blair,  32  Iowa 

missed    in    30    Can.    Sup.    Ct.    619;  58;    Pangborn  v.   Westlake,  36  Iowa 

Brown  v.   Moore,  32  Can.  S.  C.  93;  546;  Dillon  v.  Allen,  46  Iowa  299,  26 

Shippey    v.    Eastwood,    9    Ala.    198;  Am.  Rep.   145;   Tootle  v.  Taylor,  64 

Saltmarsh    v.    Tuthill,    13    Ala.    390;  Iowa  629,  21  N.  W.  115;  Richardson 

Stanley     v.     Nelson,     28    Ala.     514;  v.  Brix,  94  Iowa  626,  63  N.  W.  325; 

Woods  V.  Armstrong,  54  Ala.  150,  25  Pinney  v.  First  Nat.  Bank,  68  Kans. 


25 


LEGALITY  OF  OBJECT. 


666 


Thus,  it  has  been  held  that  the  law  would  not  aid  a  plaintiff  to 
recover  the  value  of  a  lottery  ticket  from  one  who  had  obtained 
possession  of  it.'  Likewise,  a  statute  which  lays  a  penalty  on 
any  one  who  brings  lumber  into  the  state  for  sale  without  its 
being  surveyed,  marked  and  numbered  according  to  the  require- 
ments of  the  statute,  by  implication  prohibits  its  sale  unless  so 
surveyed,  marked  and  numbered."  And  a  sale  of  pressed  hay 
unbranded  in  violation  of  the  statute  has  been  declared  void 
although  not  prohibited  in  express  terms.^  And  one  who  sells 
wood  before  it  is  measured  by  the  proper  official  has  been  denied 
the  right  to  recover  the  price  of  the  wood.-*  The  same  rule  has 
been  applied  where  shingles  were  sold  which  were  not  of  the  size 
prescribed  by  statute.^ 


223.  75  Pac.  119;  Rust  v.  Larue,  4 
Litt.  (Ky.)  411,  14  Am.  Dec.  172; 
Murph}^  V.  Simpson,  14  B.  Mon. 
(Ky.)  419;  Vanmeter  v.  Spurrier,  94 
Ky.  22,  21  S.  W.  Z?>7 ;  Buxton  v. 
Hamblen,  32  Maine  448;  Durgin  v. 
Dver,  68  Maine  143;  Allen  v.  Hawks, 

13  Pick.  (Mass.)  79;  Miller  v.  Post, 
1  Allen  (]\rass.)  434;  Prescott  v. 
Battersbv,  119  Mass.  285;  Shattuck 
V.  Watson,  164  Mich.  167,  129  N.  W. 
196;  Solomon  v.  Dreschler,  4  Minn. 
278,  4  Gil.  197;  Ingersoll  v.  Randall, 

14  Gil.  (Minn.)  304;  Bisbee  v.  Mc- 
Allen,  39  Minn.  143,  39  N.  W.  299; 
Demers  v.  Daniels,  39  Minn.  158.  39 
N.  W.  98;  Robv  v.  West,  4  N.  H.  285, 
17  Am.  Dec.  423;  Pray  v.  Burbank, 
10  N.  H.  ^77;  Lewis  v.  Welch,  14  N. 
H.  294;  Williams  v.  Tappan,  23  N.  H. 
385 ;  Brackett  v.  Hoyt,  29  N.  H.  264 ; 
Coburn  v.  Odell,  30  N.  H.  540;  Plal- 
lett  V.  Novion,  14  Johns.  (N.  Y.)  273, 
revd.  16  Johns.  (N.  Y.)  327;  Griffith 
V.  Wells,  3  Denio  (N.  Y.)  226;  Barton 
V.  Port  Jackson  &c.  Road  Co.,  17 
Barb.  (N.  Y.)  397;  Best  v.  Bauder, 
29  How.  Pr.  (N.  Y.)  489;  Vininp;  v. 
Bricker,  14  Ohio  St.  331  ;  Mitchell  v. 
Smith.  1  Binn.  (Pa.)  110,  2  Am.  Dec. 
417;  Seidenbender  v.  Charles,  4  Serg. 
&  R.  (Pa.)  151,  8  Am.  Dec.  682; 
Columbia  Bank  &  Bridge  Co.  v. 
Haldeman.  7  Watts.  &  S.  (Pa.)  233, 
42  .\m.  Dec.  229;  Lutz  v.  Wcidner, 
1  Woodw.  Dec.  (Pa.)  428;  Harrison 
V.  Berkley,  1  Strob.  (S.  Car.)  525,  47 


Am.  Dec.  578;  Ohio  Life  Tns.  &  T. 
Co.  V.  Merchants'  Ins.  &  T.  Co.,  11 
Humph.  (Tenn.)  1,  53  Am.  Dec.  742; 
Perkins  v.  Watson,  2  Baxt.  (Tenn.) 
173;  Harris  v.  Runnels,  12  How.  (U. 
S.)  79,  13  L.  ed.  901;  Elkins  v.  Park- 
hurst,  17  Vt.  105;  Territt  v.  Bartlett, 
21  Vt.  184;  Bancroft  v.  Dumas,  21 
Vt.  456;  Boutwell  v.  Foster,  24  Vt. 
485;  Aiken  v.  Blaisdell,  41  Vt.  665; 
Wilson  V.  Spencer,  1  Rand.  (Va.)  76, 
10  Am.  Dec.  491 ;  Middleton  v.  Ar- 
nold, 13  Grat.  (Va.)  489;  Niemeyer 
V.  Wright,  75  Va.  239,  40  Am.  Rep. 
720.  This  rule  was  announced  thus 
in  the  early  case  of  Bartlett  v.  Vinor, 
Carth.  251,  where  it  is  said:  "Every 
contract  made  for  or  about  any  mat- 
ter or  thing  which  is  prohibited  and 
made  unlawful  by  any  statute  is  a 
void  contract,  tho'  the  statute  itself 
doth  not  mention  that  it  shall  be  so, 
but  only  inflicts  a  penalty  on  the  of- 
fender, because  the  penalty  implies 
a  prohibition,  tho'  there  are  no  pro- 
hibitory words  in  the  statute." 

^  Funk  V.  Gallivan,  49  Conn.  124,  44 
Am.  Rep.  210. 

'Prescott  V.  Battersbv,  119  Mass. 
285. 

^  Buxton  V.  Hamblen,  32  Maine  448. 

*  Prav  V.  Burbank,  10  N.  H.  2>77. 

•>  Wheeler  v.  Russell,  17  Mass.  258. 
See  also,  Beecher  v.  Penn  Trust  Co. 
(Ind.  App.),  97  N.  E.  23  (sale  of 
stock  food).  See  further  succeeding 
sections. 


g    667  CONTRACTS.  26 

§  667.  When  penalty  does  not  imply  prohibition. — How- 
ever, the  imposition  of  a  penalty  does  not  necessarily  and  invar- 
iabh-  render  every  contract  in  contravention  of  the  statute  void 
and  unenforcible  in  the  courts.®  The  question  of  whether  all 
contracts  in  derogation  of  the  statute  are  void  is  one  of  legislative 
intent.  The  purpose  and  intention  of  the  legislature  will  control. '^ 
If,  from  the  subject-matter  of  the  statute,  the  language  used  and 
the  purpose  sought  to  be  accomplished  by  its  enactment,  it  appears 
that  the  statute  was  not  intended  to  imply  a  prohibition,  courts 
will  construe  the  statute  accordingly.^ 

§  668.  Different  tests  applied  by  different  courts  to  deter- 
mine legislative  intent. — It  seems,  however,  that  different 
cases  apply  different  rules  of  construction  by  which  to  determine 
the  legislative  intent.  It  has  been  said  that  "when  a  statute  is 
silent  and  contains  nothing  from  which  the  contrary  can  be  prop- 
erly inferred,  a  contract  in  contravention  of  it  is  void."®  Other 
cases  lay  down  the  rule  that  if  the  statute  does  not  declare  a  con- 
tract made  in  violation  of  it  to  be  void  and  if  it  is  not  necessary 
to  hold  the  contract  void  in  order  to  accomplish  the  purposes  of 
the  statute,  the  inference  is  that  it  was  intended  to  be  directory 
and  not  prohibitory  of  the  contract.^^ 

°  Demers  v.  Daniels,  39  Minn.  158,  such   intention,  the  contracts   should 

39   N.   W.  98;    Niemeyer  v.   Wright,  be  sustained  and  enforced."     Dunlop 

75  Va.  239,  40  Am.  Rep.  720.  v.  Mercer,  156  Fed.  545,  86  C.  C.  A. 

'  Toodle  V.  Taylor,  64  Iowa  629,  21  435. 

N.    W.    115;    Pinney    v.    First    Nat.  *  Pangborn    v.    Westlake,    36    Iowa 

Bank,    68    Kans.    223,    75    Pac.    119;  546.    See  also,  Lestor  v.  Bank,  33  Md. 

Vanmeter  v.  Spurrier,  94  Ky.  22,  21  558,  3  Am.  Rep.  211;  Burck  v.  Taylor, 

S.  W.  337;  Burck  v.  Taylor,  152  U.  152  U.  S.  634,  38  L.  ed.  578,  14  Sup. 

S.  634,  38  L.   ed.   578,    14   Sup.   Ct.  Ct.  696. 

696;  Harris  V.  Runnels,  12  How.   (U.  *  Harris  v.   Runnels,    12   How.    (U. 

S.)    79,   13  L.   ed.  901;   Niemeyer  v.  S.)  79,  13  L.  ed.  901.     See  also.  In  re 

Wright,    75    Va.    239,    40    Am.    Rep.  Pittock,  2   Sawy.    (U.   S.)    416,   Fed. 

720.    "The  true  rule  is  that  the  court  Cas.  No.  11189. 

should  carefully  consider  in  each  case  ""When  a  statute  imposes  specific 
the  terms  of  the  statute  which  pro-  penalties  for  its  violation,  where  the 
hibits  an  act  under  a  penalty,  its  act  is  not  malum  in  se,  and  the  pur- 
object,  the  evil  it  was  enacted  to  rem-  pose  of  the  statute  can  be  accom- 
edy,  and  the  effect  of  holding  con-  plished  without  declaring  contracts 
tracts  in  violation  of  it  void,  for  the  in  violation  thereof  illegal,  the  infer- 
purpose  of  ascertaining  whether  or  ence  is  that  it  was  not  the  intention 
not  the  lawmaking  power  intended  of  the  lawmakers  to  render  such  con- 
to  make  such  contracts  void,  and,  if  tracts  illegal  and  unenforcible."  In 
from  all  these  considerations  it  is  re  T.  H.  Bunch  Co.,  180  Fed.  519; 
manifest  that  the  legislature  had  no  Bowditch  v.  New  England  Mutual  &c. 


27 


LEGALITY    OF    OBJFXT. 


669 


§  669.  Revenue  measures — Statutes  for  protection  of  pub- 
lic.— The  effect  of  a  penal  statute  upon  a  contract  in  deroga- 
tion thereof  also  depends  on  the  purposes  for  which  the  penalty 
is  attached.  In  case  the  penalty  is  attached  for  the  protection  of 
the  public,  a  contract  which  violates  the  statutory  provision  is 
almost  universally  declared  void."  On  the  other  hand,  if  the  law 
is  strictly  a  revenue  law,  the  sole  object  being  to  get  money  into 
the  treasury,  a  contract  will  not  be  held  invalid  merely  because 
the  stipulated  license  fee  has  not  been  paid/-  Some  jurisdic- 
tions, however,  seem  to  hold  all  contracts  void  regardless  of 
whether  the  statute  was  passed  to  raise  revenue  or  to  protect  the 
public.^" 

^  670.  Omission  of  penalty  does  not  render  express  pro- 
hibition ineffective. — The  omission  of  a  penalty,  however, 
does  not  necessarily  render  the  express  prohibitum  ineffective. 
Contracts  in  violation  of  a  statute  have  been  held  unlawful  not- 
withstanding the  statute  violated  merely  prohibited  the  doing  of 
the  act  and  imposed  no  penalty  for  its  violation.^*    Such  decisions 


Ins.  Co.,  141  Mass.  292,  4  X.  E.  798,  55 
Am.  Rep.  474.  To  same  effect,  Bemis 
V.  Becker,  1  Kans.  226. 

''  Cope  V.  Rowland.  2  M.  &  W.  149; 
Taylor  v.  Crowland  Gas  &  Coke  Co., 
10  Exch.  293 ;  Victorian  Davlesford 
Syndicate  v.  Dott,  74  Law  J.  Ch.  (N. 
S.)  673  (1905),  2  Ch.  624.  93  L.  T. 
627,  21  Times  L.  R.  742;  Cundell  v. 
Dawson,  4  C.  B.  376;  Ellis  v.  Batson 
(Ala.),  58  So.  193;  Levison  v.  Boas, 
150  Cal.  185,  88  Pac.  825,  12  L.  R.  A. 
(N.  S.)  575n;  Taliaferro  v.  Moffett. 
54  Ga.  150;  Randall  v.  Tuell,  89 
Maine  443,  36  Atl.  910,  38  L.  R.  A. 
143;  Shattuck  v.  Watson,  164  Mich. 
167,  129  N.  W.  196;  Cashin  v.  Pliter, 
168  Mich.  386,  134  N.  W.  482 ;  Tandy 
V.  Elmore  Cooper  Live  Stock  Co..  113 
Mo.  App.  409,  87  S.  W.  614;  Hall  v. 
Bishop,  3  Daly  (N.  Y.)   109. 

'=  Smith  V.  Mawhood.  14  M.  &  \V. 
452;  Swan  v.  Bank  of  -Scotland.  1 
Deacon  Bankruptcy  752;  Sunflower 
Lumber  Co.  v.  Turner  Supply  Co., 
158  Ala.  191,  48  So.  510,  132  Am.  St. 
20;  Vermont  Loan  &  T.  Co.  v.  Hoff- 
man. 5  Idaho  376,  49  Pac.  314.  37  L. 
R.  A.  509.  95  Am.  St.  186;  Straus  v. 
Mmzesheimer,  78  111.  492;  Coates  v. 


Locust  Point  Co..  102  Md.  291,  62 
Atl.  625,  5  Am.  &  Eng.  Ann.  Cas. 
895;  Favor  v.  Philbrick,  7  N.  H. 
326;  Lewis  v.  Welch,  14  N.  H.  294; 
Hughes  V.  Snell,  28  Okla.  828,  115 
Pac.  1105,  34  L.  R.  A.  (X.  S.)  1133; 
Amato  V.  Dreyfuss  (Tex.  Civ.  App.), 
34  S.  W.  450;  Dowell  v.  Applegate, 
7  Fed.  881,  7  Sawv.  (U.  S.)  232. 

"Holt  v.  Green, '73  Pa.  198,  13  Am. 
Rep.  737;  Johnson  v.  Hulings,  103 
Pa.  498,  49  Am.  Rep.  131.  Compare, 
Rahter  v.  First  Xat.  Bank.  92  Pa. 
393.  See  also.  Smith  v.  Alawhood, 
14  Mees.  &  W.  452;  Cope  v.  Row- 
lands. 2  M.  &  W.  149;  Denning  v. 
Yount,  62  Kans.  217.  61  Pac.  803,  50 
L.  R.  A.  103;  Manker  v.  Tough.  79 
Kans.  46.  98  Pac.  792,  19  L.  R.  A. 
(X.  S.)  675,  17  Am.  &  Eng.  Ann.  Cas. 
208 ;  Van  Meter  v.  Spurrier,  94  Kv.  22, 
21  S.  W.  337  ;Territt  v.  Bartlett.  21 
Vt.  184. 

"Robertson  v.  Hayes.  83  Ala.  290. 
3  So.  674:  Woods  v.  Armstrong.  54 
Ala.  150.  25  Am.  Rep.  671n ;  Black  v. 
Oliver,  1  Ala.  449,  35  Am.  Dec.  38; 
Walker  v.  Gregory,  36  Ala.  180:  Peo- 
ple V.  Whiteside  County.  122  111. 
App.  40 ;  Buchanan  v.  Tilden,  IS  App. 


§  6/1 


CONTRACTS. 


28 


are  based  largely  upon  the  ground  that  there  is  a  moral  obligation 
on  the  part  of  all  people  to  obey  the  law  regardless  of  any  penalty 
imposed  for  its  violation,  nor  will  courts  sanction  the  violation  of 
a  law  which  they  are  bound  to  respect,  and  enforce  and  give 
effect  to  a  contract  forbidden  by  it/^ 

^671.  Agreements  may  be  forbidden  yet  not  void  where 
statutes  so  provide. — In  case  the  statute  points  out  the  con- 
sequences of  its  violation  it  has  been  stated  broadly  no  other  con- 
sequence than  that  provided  for  in  the  statute  can  be  imposed. ^° 
When  it  appears  to  have  been  the  legislative  intent  to  exclude 
every  other  penalty  or  forfeiture  than  such  as  is  declared  in 
the  statute  no  other  will  be  enforced,  and  it  is  held  that  an  action 
may  be  maintained  upon  the  transaction  of  which  the  prohibited 
act  was  a  part,  if  such  action  can  be  maintained  without  sanction- 
ing the  illegality."  Consequently  when  statutes  prohibit  a  specific 
kind  of  contract  but  in  addition  provide  that  contracts  entered 
into  in  violation  of  such  statute  are  not  to  be  deemed  void, courts 
are  obliged  to  enforce  such  contracts  in  accordance  with  the  pro- 
visions of  the  statute.^^ 


Div.  (N.  Y.)  123,  45  N.  Y.  S.  417; 
Waugh  V.  Beck,  114  Pa.  St.  422,  6 
Atl.  923,  60  Am.  Rep.  354;  Hunt  v. 
Robinson,  1  Tex.  748;  Pierce  v. 
United  States,  1  Ct.  CI.  (U.  S.)  270. 
"It  is  not  necessary  that  a  statute 
impose  a  penalty  for  doing  or  omit- 
ting to  do  something,  in  order  to 
make  a  contract  void  which  is  op- 
posed to  its  operation."  McGeehee  v. 
Lindsay,  6  Ala.  16. 

"Hunt  V.  Robinson,  1  Tex.  748. 
See  also,  Sussex  Peerage  Case,  11 
Clark  &  F.  85,  148.    See  ante,  §  647. 

^°  Philadelphia  Loan  Co.  v.  Tow- 
ner 13  Conn.  249;  Lazear  v.  Nat. 
Union  Bank,  52  Md.  78,  36  Am.  Rep. 
355;  Peterborough  Nat.  Bank  v. 
Childs,  133  Mass.  248,  43  Am.  Rep. 
509;  Faneuil  Hall  Bank  v.  Brighton, 
Bank,  16  Gray  (Mass.)  534;  Ossipee 
Hosiery  &c.  Mfg.  Co.  v.  Canney,  54  N. 
H.  295;  Connecticut  River  Sav.  Bank 
V.  Fiske,  60  N.  H.  363;  Taylor  v. 
Empire  State  Sav.  Bank,  66  Hun 
rN.  Y.)  538;  Pratt  v.  Short,  79  N. 
Y.  437,  35  Am.  Rep.  531;  Utica  Ins. 
Co.  V.   Scott,  19  Johns.   (N.  Y.)    1; 


Utica  Ins.  Co.  v.  Kip,  8  Cow.  (N. 
Y)  20;  Utica  Ins.  Co.  v.  Cadwell,  3 
Wend.  (N.  Y.)  296;  Utica  Ins.  Co.  v. 
Bloodgood,  4  Wend.  (N.  Y.)  652; 
Smith  V.  Exchange  Bank,  26  Ohio 
St.  141;  First  Nat.  Bank  of  Colum- 
bus V.  Garlinghouse,  22  Ohio  St.  492, 
10  Am.  Rep.  751;  Rossman  v.  Mc- 
Farland,  9  Ohio  St.  369;  Turner  v. 
Calvert,  12  S.  &  R.  (Pa.)  46;  Lucas 
v.  Government  Nat.  Bank,  78  Pa.  St. 
228,  21  Am.  Rep.  17;  Harris  v.  Run- 
nels, 12  How.  (U.  S.)  79,  13  L.  ed. 
901;  Oates  v.  National  Bank,  100  U. 
S.  250,  25  L.  ed.  580 ;  Bank  of  United 
States  v.  Waggener,  9  Pet.  (U.  S.) 
378,  9  L.  ed.  163;  Fleckner  v.  Bank 
of  U.  S.,  8  Wheat.  (U.  S.)  338,  5  L. 
ed.  631. 

"Pratt  V.  Short,  79  N.  Y.  437,  35 
Am.  Rep.  531.  See  also,  Lewis  v. 
Bright,  4  El.  &  Bl.  917. 

"Lewis  V.  Bright,  4  El.  &  Bl.  917; 
McMahon  v.  Boden,  89  Conn.  316; 
Connecticut  River  Mutual  &c.  Ins. 
Co.  v.  Whipple,  61  N.  H.  61;  York 
County  v.  Small,  1  W.  &  S.  (Pa.) 
315. 


29  LEGALITY  OF  OBJECT.  §  6/2 

§  672.  Illustrations  of  the  rule. — Thus  it  has  Ijcen  held  that 
where  the  statute  in  regard  to  usury  provides  for  a  forfeit  of  all 
interest  where  the  contract  is  usurious  but  provides  for  no  for- 
feiture of  any  portion  of  the  principal,  and  the  criminal  statute 
makes  the  taking  of  usury  a  misdemeanor  punishable  by  fine  and 
imprisonment,  an  action  on  a  note,  a  part  of  the  consideration  of 
which  was  usurious,  is  not  defeated  by  the  criminal  statute  since 
the  usury  statute  provided  for  the  status  of  usurious  contracts 
when  the  subject  of  an  action  in  a  civil  court. ^^  And  a  statute 
which  forbids  an  insurance  company  to  grant  a  rebate  under  pen- 
alty of  forfeiting  its  license  to  do  business  does  not  render  the 
policy  void  on  the  premium  of  which  a  rebate  is  given  nor  does  it 
entitle  the  insured  to  recover  the  premium  paid  by  him.-''  It 
has  also  been  held  that  a  statute  which  made  it  a  misdemeanor 
to  transact  business  under  an  assumed  name  without  filing  in  the 
office  of  the  clerk  of  the  county  or  counties  a  certificate  showing 
the  parties'  true  full  name,  was  intended  to  protect  the  creditors 
and  not  the  debtors  of  persons  conducting  a  business  under  a 
fictitious  name  and  did  not  prevent  the  latter  from  recovering 
on  an  executed  contract."^ 

§  673.  Rule  v^rhere  conditions  prescribed  for  conducting 
business  are  not  complied  with. — Violations  of  a  law"  which 
requires  a  license  to  conduct  a  certain  business  or  occupation 
have  already  been  treated  and  nothing  further  will  be  added 
at  this  point.""  The  present  topic  does  not  have  to  do  with  the 
necessity  to  obtain  a  license  to  conduct  a  business  at  all,  but 
rather  with  the  placing  of  restrictions  upon  the  method  by  which 

"  Waite   V.    Bartlett,    53   Mo.    App.  a  firm."     This  construction  being,  in 

378,    (Construing   Dakota    Statutes.)  our  opinion,   justified   by     the     very 

"^  Laun  V.  Pacific  Mutual  Life  Ins.  words  of  the  act,  supports  the  pre- 

Cc,   131  Wis.  555,  111  N.  W.  660,  9  sumption   that   it   was   the  legislative 

L.  R.  A.    (N.  S.)    1204.  intent   to   make   the    statute   effective 

"  "In  construing  the  New  York  act  as  thus   interpreted,   and  that  where, 

the  Court  of  Appeals  of  that  state  in  as  in  this  case,  goods  contracted  for 

Gay  V.  Seibold,  97  N.  Y.  472,  49  Am.  have  been  accepted,  and  the  contract 

Rep.  533,  said :  "The  purpose  of  the  executed   by   the   vendor,   the   debtor 

statute  was  obviously  to  protect  per-  cannot    escape    payment    because    the 

sons    giving    credit    to    the    fictitious  creditor   has   rendered   himself   liable 

firm  on  the  faith  of  fictitious  desig-  to   indictment.    Rutkowsky  v.   Bozza, 

nation.     It  could  have  no  other  pur-  73^^.-\tl.   502. 

pose.     It  was  not  needed  to  protect  ""  See  ante,   §  666.    See  also,  ante, 

those  who  obtained  credit  from  such  §  669. 


§    6/4  CONTRACTS.  30 

a  given  business  may  be  conducted.  So  long  as  statutes  wbich 
prescribe  conditions  for  conducting  a  business  do  not  invade 
any  constitutional  right  o£  the  individual  they  are  upheld  and 
are  enforcible.  Thus,  a  statute  which  provided  for  the  bi-w^eekly 
payment  of  employes  has  been  upheld,  the  courts  saying  that 
"Any  contract  that  might  be  voluntarily  entered  into  between 
the  corporation  and  its  employes  for  the  payment  of  the  wages 
at  a  longer  period  than  semi-monthly  would  be  void,  and  could 
not  deprive  the  employe  of  his  right  to  request  or  demand  the 
payment  of  his  wages  semi-monthly.""^  But  a  statute  which 
prohibits  both  employer  and  employe  in  all  lines  of  labor  from 
contracting  for  employment  except  upon  the  condition  that  wages 
earned  by  the  employe  shall  be  paid  weekly  has  been  declared 
unconstitutional  for  the  reason  that  it  deprived  citizens  of  their 
liberty  to  contract  and  of  property  without  due  process  of  law,^* 

§  674.  Illustrations  of  the  rule. — A  contract  for  the  em- 
ployment of  minors  in  a  factory  in  violation  of  a  statute  prohibit- 
ing their  employment  is  void.""''  An  agreement  whereby  an  em- 
ploye has  agreed  to  work  more  than  eight  hours  a  day  in  violation 
of  a  law  prohibiting  more  than  eight  hours  of  work  a  day  in 
mines  and  filters  has  been  declared  void.^®  Building  contracts 
such  as  agreements  to  erect  a  building  in  a  manner  prohibited  by 
law  have  been  held  unenforcible.^^     Should  the  statute  impose  a 

°^  Arkansas   Stave  Co.  v.   State,  94  68 ;  Johnson  v.  Goodyear  Min.  Co.,  127 

Ark.  27,  125  S.  W.  1001,  27  L.  R.  A.  Cal.  4,  59  Pac.  304,  47  L.  R.  A.  338, 

(N.  S.)   255n,   140  Am.  St.  103.    For  78  Am.   St.  17. 

cases      upholding      similar      statutes  ^  Republic    Iron    &    Steel    Co.    v. 

which   are   held    not   to   infringe   the  State,    160   Ind.    379,  66   N.    E.    1005, 

rights  of  either  employe  or  the  em-  62  L.  R.  A.  136.     See  also,  Common- 

ployer    to    contract,    see,      Seelyville  wealth  v.   Isenberg,  4  Pa.  Dist.  579; 

&c.  Min.  Co.  V.  McGlosson,   166  Ind.  Sally    v.    Berwind-White    Coal    Min. 

561,     n     N.     E.      1044,      117     Am.  Co.,  5  Pa.  Dist.  316. 

St.      Rep.     396;      New      York      &c.  "''Birkett  v.  Chatterton,  13  R.  I.  299, 

R^.  Co.  V.  Williams,  64  Misc.  (N.  Y.)  43    Am.    Rep.    30.      The    above    case 

15,    118   N.   Y.   S.   785;    Lawrence   v.  holds  that  the  wages  earned   cannot 

Rutland   R.   Co.,  80  Vt.   370,   67  Atl.  be    recovered.      See    also,    Emery    v. 

1091,  15  L.  R.  A.  (N.  S.)  350n.     Sim-  Kempton,  2  Gray   (Mass.)  257. 

ilar  statutes  have,  however,  been  de-  ^  Short   v.    Bullion    Beck   &c.    Min. 

clared    unconstitutional    where    they  Co.,  20  Utah  20,  57  Pac.  720,  45  L.  R. 

impose  a  penalty  on  artificial  persons  -V.  603. 

which  was  not  imposed  upon  natural  "^Stevens  v.   Gourley,  7  C.  B.    (N. 

persons.    Smith   v.   Ohio   Oil   Co.,   43  S.)  99;  Eastern  Expanded  Metal  Co. 

Ind.  App.  735,  86  N.  E.  1027.   See  also,  v.   Webb  Granite  &c.   Co.,   195   Mass. 

Slocum  V.  Bear  Valley  Irrigation  Co.,  356.  81  N.  E.  251 ;  Beman  v.  Tugnot, 

122  Cal.  555,  55  Pac.  403,  68  Am.  St.  5    Sands.    (N.    Y.)    153;    Burger    v. 


31  LEGALITY  OF  OBJECT.  §  675 

penalty  for  selling  or  disposing  of  goods,  wares,  or  merchandise 
by  scales  or  measures  which  have  not  been  sealed  and  tested  it  has 
been  held  that  no  recovery  can  be  had  for  the  price  thereof, 
since  such  sales  are  in  violation  of  law.^*  The  rule  has  thus  been 
expressed  :  "The  weighing  or  measuring  is  not  a  collateral  matter, 
but  is  directly  involved  in  the  act  of  selling  and  the  contract  of 
sale.  It  regulates  the  quantity  to  be  delivered  and  the  amount  to 
be  paid.  And  where  the  statute  has  in  view  the  prevention  of 
fraud  by  the  seller,  then,  though  there  be  nothing  but  a  penalty, 
a  contract  which  infringes  the  statute  cannot  be  upheld."-"  The 
same  general  principle  applies  in  those  cases  in  which  the  statute 
requires  goods  to  be  inspected,  labeled  or  their  weight  to  be  set 
forth.^"  Thus,  it  has  been  held  that  the  vendor  of  wood  sold 
could  not  recover  its  price  when  before  being  sold  it  was  not 
measured  by  officers  appointed  for  that  purpose  as  required  by 
statute.^^  And  a  similar  rule  has  been  applied  where  shingles 
were  of  a  size  other  than  that  prescribed  by  statute. ■''- 

§  675.  Attempting  to  do  indirectly  v^^hat  cannot  be  done 
directly. — It  is  well  settled  that  one  cannot  do  by  indirection 
that  which  cannot  lawfully  be  done  directly.  A  contract  entered 
into  in  fraud  or  evasion  of  the  statute  is  equivalent  to  an  open 
violation  of  the  act.^^     Thus,  an  agreement  entered  into  on  Sun- 

Koelsch,  n  Hun   (N.  Y.)   44,  28  N.  McConnell,    65    Ga.    129;    Conley    v. 

Y.  S.  460,  59  N.  Y.  St.  69.     See  also,  Sims,    71    Ga.    161 ;    Van    Meter    v. 

Hart  V.  City  Theaters  Co.,  71   Misc.  Spurrier,  94  Ky.  22,  21    S.  W.  ZZl  \ 

(N.   Y.)    427,    128    N.    Y.    S.   678,   in  Abbott    v.    Goodwin,    il    Maine    203; 

which  a  suit  was  brought  to  recover  Prescott  v.  Battersby,  119  Mass.  385; 

agreed  payments  to  be  made  in  con-  McConnell    v.    Kitchens,    20    S.    Car. 

sideration'of  the  plaintiff's  permitting  430,  47   Am.   Rep.   845;    Niemeyer  v. 

defendant    to    cut    a    hole    through  Wright,  75  Va.  239.  40  Am.  Rep.  720. 

plaintiff's    wall    and    use    the    latter's  ^  Pray  v.   Burbank,   10  N.  H.  377. 

stairway  as   an   exit   for  defendant's  ''Wheeler  v.  Russell,  17  Mass.  258. 

theater.      The    building    department  '^  Ex    parte    McKay,    L.    R.    8    Ch. 

refused  a  permit.     Held:  that  plain-  App.    643;    Working    Men's    Bankmg 

tiff  could  not  recover,  as  the  agree-  Co.    v.    Rautenberg,    103    111.    460,    42 

ment  if  carried  out  would  involve  a  Am.  Rep.  26;  Wells  v.  People.  71  111. 

violation  of  the  buildins:  code.  532;   Bank  of  United   States  v.   Ow- 

=*  Finch  v.   Barclav.  87  Ga.  393,   13  ens.  2  Pet.  (U.  S.)  527.  7  L.  ed.  508. 

S.  E.  566;  Eaton  v.  Kegan,  114  Mass.  "Whatever  is  prohibited  by  law  to  be 

433.  done    directly,    cannot    legally   be   ef- 

^Bisbee  v.  McAllen,  39  ]\Iinn.  143,  fectcd   by  an   indirect   and  circuitous 

39  N    W.  299.  contrivance."   Booth  v.  Bank  of  Eng- 

'"  Pacific" Guano   Co.  v.   Mullen.  66  land.  7  CI.  &  Fin.  509.  A  fraud  upon 

Ala   582-  Campbell  v.  Segars.  81  Ala.  a  statute  is  a  violation  of  the  statute. 

259,    1    So.    714;    Johnston    Bros.    v.  "It   cannot   be   permitted   by   law    to 


§    6/6  CONTRACTS.  32 

day  in  violation  of  the  statute  is  illegal,  notwithstanding  the 
parties  date  the  instrument  which  sets  forth  the  agreement  on  a 
week  day.^* 

§  676.  Contracts  growing  out  of  or  connected  with  illegal 
contracts. — Where  a  contract  grows  immediately  out  of  and 
is  connected  with  a  prior  illegal  or  immoral  contract  the  illegality 
of  the  latter  will  enter  into  the  new  contract  and  render  it  illegal 
and  a  court  of  justice  will  not  lend  its  aid  to  enforce  it.^^  The 
rule  has  been  given  the  following  broad  statement:  "If  the  con- 
nection between  the  original  illegal  transaction  and  the  new 
promise  can  be  traced,  if  the  latter  is  connected  with  and  grows 
out  of  the  former,  no  matter  how  many  times  and  in  how  many 
different  forms  it  may  be  renewed,  it  cannot  form  the  basis  of 
a  recovery,  for  repeating  a  void  promise  cannot  give  it  validity.""^ 

§  677.  Modified  rule  stated. — It  is  believed,  however,  that 
a  more  conservative  statement  is  to  the  effect  that  if  the  new  con- 
tract'grows  out  of  or  is  dependent  upon  the  original  contract, 
which  was  an  indivisible  one,   it  cannot  be  enforced."     And 

stipulate  for  the  reservation  of  that  Webster  v.  Sturges,  7  111.  App.  560; 
which  it  is  not  permitted  to  receive.  Henderson  v.  Palmer,  71  111.  579,  22 
In  those  instances  in  which  courts  Am.  Rep.  117;  Nash  v.  Monheimer, 
are  called  upon  to  inflict  a  penalty  20  111.  215;  Cox  v.  Grubb,  47  Kans. 
*  *  *  it  is  necessarily  otherwise;  for  435,  28  Pac.  157,  27  Am.  St.  303;  Da- 
then  the  actual  receipt  is  generally  vis  v.  Holbrook,  1  La.  Ann.  176; 
necessary  to  consummate  the  Cummings  v.  Saux,  30  La.  Ann.  207; 
offense.  But  when  the  restrictive  Wheeler  v.  Russell,  17  Mass.  258; 
policy  of  a  law  alone  is  in  con-  Comstock  v.  Draper,  1  Mich.  481,  53 
templation,  we  hold  it  to  be  Am.  Dec.  78;  Buckingham  v.  Fitch, 
an  universal  rule  that  it  is  unlawful  18  Mo.  App.  91 ;  Electrova  Co.  v. 
to  contract  to,  do  that  which  it  is  un-  Spring  Garden  Ins.  Co.,  156  N.  Car. 
lawful  to  do.  *  *  *  There  can  be  no  232,  12  S.  E.  306;  Jones  v.  Surprise, 
civil  right  where  there  can  be  no  le-  64  N.  H.  243,  9  Atl.  384;  Barton  v. 
gal  remedy,  and  there  can  be  no  legal  Port  Jackson  &c.  Road  Co.,  17  Barb, 
remedy  for  that  which  is  itself  ille-  (N.  Y.)  397;  Woodworth  v.  Bennett, 
gal.  *  *  *  There  is  no  distinction,  43  N.  Y.  273,  3  Am.  Rep.  706;  Rose 
as  to  vitiating  the  contract,  between  v.  Truax,  21  Barb.  (N.  Y.)  361;  John- 
malum  in  se  and  malum  prohibitum."  son  v.  Hulings,  103  Pa.  St.  498,  49 
Bank  of  United  States  v.  Owens,  2  Am.  Rep.  131 ;  Shelton  v.  Marshall, 
Pet.   (U.  S.)   527,  7  L.  ed.  508.  16  Tex.  344;  Armstrong  v.  Toler,  11 

"Heller  v.  Crawford,  Zl  Ind.  279;  Wheat.  (U.  S.)  258,  6  L.  ed.  468.   See 

Moseley  v.  Hatch,  108  Mass.  517:  Ni-  also,  Muller  v.  Wm.  F.  Stoacker  Ci- 

bert  V.  Baghurst,  47  N.  J.  Eq.  201,  20  gar  Co.,  89  Nebr.  438.  131  N.  W.  923, 

Atl.  255.    See  post,  §  691.  34  L.  R.  A.  (N.  S.)  573n. 

"  De  Begnis  v.  Armistead,  10  Bing.  "°  Comstock  v.  Draper,  1  Mich.  481- 

107;  Aubert  v.  Maze.  2  B.  &  P.  371;  53  Am.  Dec.  78. 

Sturges  v.  Bush,  5  Day  (Conn.)  452;  "  Brechlin  v.  Night  Hawk  Min.  Co., 


33 


LEGALITY    OF    OBJECT. 


§    678 


if  the  new  agreement  does  not  grow  out  of  or  is  not  connected 
with  the  illegal  contract  or  transaction  but  is  based  on  a  new  con- 
sideration, it  is  valid  so  far  as  this  question  is  concerned,  not- 
withstanding the  prior  illegal  contract  or  transaction  may  have 
indirectly  given  rise  to  the  new  agreement. ^^  As  stated  at  the 
beginning  of  the  chapter,  the  generally  accepted  test  is  whether 
the  plaintiff  can  establish  his  case  otherwise  than  through  the 
medium  of  an  illegal  transaction  to  which  he  himself  was  a 
party.^^ 

§  678.  Rule  where  aid  is  required  for  illegal  contract  to 
establish  case. — On  the  other  hand  if  the  plaintiff  cannot 
establish  his  case  otherwise  than  through  the  medium  of  an 
illegal  transaction  to  which  he  himself  was  a  party  the  new  con- 
tract will  be  held  illegal.""*     Thus  a  subsequent  agreement  which 


49  Wash.  198,  94  Pac.  928,  126  Am. 
St.  863.  So  long  as  the  void  contract 
is  the  basis  of  the  right  of  action, 
courts  will  leave  the  parties  where  it 
finds  them.  Cascade  Pub.  Serv.  Corp. 
V.  Railsback,  59  Wash.  376,  109  Pac. 
1062. 

^*  Branch  Bank  v.  Crocheron,  5  Ala. 
250;  Whetstone  v.  ^Montgomery 
Bank,  9  Ala.  875;  Scheible  v.  Bacho, 
41  Ala.  423;  Barker  v.  Parker,  23 
Ark.  390 :  Fearnley  v.  De  Mainville, 
5  Colo.  App.  441,  39  Pac.  73;  Phalen 
V.  Clark,  19  Conn.  421,  50  Am.  Dec. 
253;  Jackson  v.  Dwight,  78  Fed.  896, 
24  C.  C.  A.  380 ;  Hoffman  v.  McMul- 
len,  83  Fed.  372,  28  C.  C.  A.  178,  45 
L.  R.  A.  410,  affd.  174  U.  S.  639,  43 
L.  ed.  1117,  19  Sup.  Ct.  839;  Gullatt 
V.  Thrasher,  42  Ga.  429;  Guilfoil  v. 
Arthur,  158  111.  600,  41  X.  E.  1009; 
Tvler  V.  Tvler,  126  111.  525,  21  N.  E. 
616, 9  Am.  St.  642 ;  Daniels  v.  Barney, 
22  Ind.  207;  Green  v.  Schoenhofen 
Brewing  Co.,  103  Iowa  252,  72  X.  W. 
655;  ]\iartin  v.  Richardson,  94  Ky. 
183.  14  Kv.  L.  847,  21  S.  W.  1039,  19  L. 
R.  A.  692,  42  Am.  St.  353 ;  Stanley  v. 
Nye,  51  Mich.  232;  Smith  v.  Barstow, 
2  Doug.  (^lich.)  155;  Gunnaldson  v. 
Nyhus.  27  Minn.  440,  8  X.  W.  147; 
Hutchinson  v.  Dornin,  23  Mo.  App. 
575;  Scott  V.  Scott,  68  X.  H.  7,  38 
Atl.  567;  Thalimer  v.  Brinkerhofif,  20 
Johns.  (X.  Y.)  386;  Bly  v.  Second 
Nat.  Bank,  79  Pa.  St.  453;  Johnson  v. 

3 — CoNTR.\cTS,  Vol.  2 


Hullings,  103  Pa.  St.  498,  49  Am.  Rep. 
131;  Sawyer  v.  Macaula}',  18  S.  Car. 
543;  Torbett  v.  Worthy,  1  Heisk. 
(Tenn.)  107;  De  Leon  v.  Trevino, 
49  Tex.  88,  30  Am.  Rep.  101 ;  Flovd 
V.  Patterson  (Tex.),  18  S.  W.  654, 
affg.  72  Tex.  202,  10  S.  W.  526,  13 
Am.  St.  787;  Dent  v.  Ferguson,  132 
U.  S.  50,  33  L.  ed.  242.  10  Sup.  Ct. 
13;  Ocean  Ins.  Co.  v.  Pollevs,  13  Pet. 
(U.  S.)  157,  10  L.  ed.  105;  Armstrong 
V.  Toler,  11  Wheat.  (U.  S.)  258,  6  L. 
ed.  468;  Armstrong  v.  American 
Exch.  Nat.  Bank,  133  U.  S.  433,  33  L. 
ed.  747.  10  Sup.  Ct.  450 ;  Buck  v.  Al- 
bee,  26  Vt.  184,  62  Am.  Dec.  564: 
Bier  v.  Dozier,  24  Grat.  (Va.)  1.  If 
a  contract  is  void,  as  made  in  viola- 
tion of  law,  the  fact  that  a  second 
promise  is  made  into  which  a  new 
consideration,  lawful  in  its  charac- 
ter, enters  and  is  mingled  with  the 
unlawful  consideration  does  not  ren- 
der such  second  contract  valid.  Gwinn 
V.  Simes,  61  ^lo.  335;  Bick  v.  Seal,  45 
Mo.  App.  475;  Gray  v.  Hook,  4  X.  Y. 
449. 

^•'In  re  T.  H.  Bunch  Co.,  180  Fed. 
519;  Electrova  Co.  v.  Spring  Garden 
Ins.  Co.,  156  N.  Car.  232,  72  S.  E. 
306;  Oliphant  v.  Markham,  79  Tex. 
543,  15  S.  W.  59.  23  Am.  St.  363.  See 
also,  ante,  §  226. 

*'  Smith  v.  Mawhood.  14  M.  &  W. 
452;  Simpson  v.  Bloss,  2  Marsh.  542, 
7   Taunt.   246;    Fivaz   v.    XichoUs,    2 


§  6-8 


CONTRACTS. 


34 


has  for  its  purpose  the  execution  of  the  unexecuted  portion  of  an 
illegal  contract  is  illegal."  For  the  same  reason  a  new  promise 
to  pay  money  which  is  due  on  an  illegal  contract  is  unenforcible."^ 


C.  B.  501;  Farmer  v.  Russel,  1  Bos. 
&  P.  296;  Tavlor  v.  Bowers,  1  Q.  B. 

D.  291;   Booth  v.   Hodgson,  6  T.  R. 
405;  Gunter  v.  Lackev,  30  Ala.  591; 
:McGehee  v.  Lindsav,  6  Ala.  16;  Walk- 
er V.  Gregory,  36  Ala.  180;  Martin  v. 
Hodge.  47  Ark.  378,  1  S.  W.  694,  58 
Am.    Rep.  763;    Phalen   v.   Clark,   19 
Conn.  421.  50  Am.  Dec.  253 ;  Hoffman 
V.  McMullen,  83  Fed.  372,  28  C.  C.  A. 
178,  45  L.  R.  A.  410,  affd.  174  U.  S. 
639.  43  L.  ed.  1117.  19  Sup.  Ct.  839; 
Clark  V.  Brown,  11  Ga.  606;  Ingram 
V.    Mitchell.    30    Ga.    547:    Welch    v. 
]^Iesson,  6  Gray  (Mass.)  505;  Gilliam 
V.   Brown,  43   Miss.  641 ;    Parsons  v. 
Randolph,  21  ]Mo.  App.  353;  Harrison 
V.  McCluney,  32  Mo.  App.  481;  Ty- 
ler  V.    Larimore,    19   Mo.   App.   445 
Suits   V.    Taylor,   20    Mo.   App.    166 
Kitchen  v.  Greenabaum,  61  Mo.   110 
Roby  V.  West,  4  N.  H.  285,  17  Am. 
Dec.  423;  Woodman  v.  Hubbard,  25 
X.  H.  67,  57  Am.  Dec.  310;  Thalimer 
V.  Binkerhoff,  20  Johns.  (N.  Y.)  386; 
Woodworth  v.  Bennett,  43  N.  Y.  273, 
3  Am.   Rep.   706;    Swan  v.    Scott,   11 
Serg.  &  R.  (Pa.)  155;  Holt  v.  Green, 
11  Pa.  St.  198,  13  Am.  Rep.  Til ;  Eber- 
man  v.  Reitzel,   1  Watts  &  S.    (Pa.) 
181;    Thomas   v.    Brady,    10    Pa.    St. 
164;  Hippie  v.  Rice,  28  Pa.  St.  406; 
Oliphant  v.  Markham,  79  Tex.  543,  15 
S.  W.  569,  23  Am.  St.  363;  Floyd  v. 
Patterson,  72  Tex.  202,  10  S.  W.  526, 
13  Am.    St.  787;   Catts  v.   Phalen,  2 
How.  (U.  S.)  376,  11  L.  ed.  306;  Har- 
ris V.  Runnels,  12  How.    (U.  S.)   79; 
Buck  V.   Albee,   26  Vt.   184,   62  Am. 
Dec.   564;   Hardy  v.   Stonebraker,  31 
Wis.  640. 

"Webster  v.  Sturges,  7  111.  App. 
560;  Barton  v.  Port  Jackson  &c. 
Plank  Road  Co.,  17  Barb  (N.  Y.) 
397;  Gray  v.  Hook,  4  N.  Y.  449;  Rob- 
inson V.  Kalbfleisch,  5  Thompson  & 
C.  (N.  Y.)  212;  McBlair  v.  Gibbes, 
17  How.  (U.  S.)  232,  15  L.  ed.  132. 

*"  Crawley  v.  White,  78  L.  T.  (N. 
S.)  167;  Young  v.  Timmins,  1  Tyr. 
226;  Clay  v.  Ray,  17  C.  B.  (N.  S.) 
188;  Geere  v.  Mare,  2  H.  &  C.  339; 
Bibb  V.  Hitchcock,  49  Ala.  468,  20  Am. 
Rep.  288;  Chancely  v.  Bailey,  37  Ga. 


532,  95  Am.  Dec.  350 ;  Hall  v.  Gavitt, 
18  Ind.  390;  Firemen's  Charitable 
Assn.  V.  Berghaus,  13  La.  Ann.  209; 
Howe  V.  Litchfield,  3  Allen  (Mass.) 
443 ;  Coulter  v.  Robertson,  14  Smedes 
&  M.  (Miss.)  18;  Claflin  v.  Torlina,  56 
Mo.  369;  Bick  v.  Seal,  45  Mo.  App. 
475;  Crossley  v.  Moore,  40  N.  J.  L. 
27;  Stanton  v.  Allen,  5  Denio  (N.  Y.) 
434,  49  Am.  Dec.  282 ;  Payne  v.  Eden, 
3  Caines  (N.  Y.)  213;  Bly  v.  Second 
Nat.  Bank,  79  Pa.  St.  453 ;  Morris  Run 
Coal  Co.  V.  Barclay  Coal  Co.,  68  Pa. 
St.  173,  8  Am.  Rep.  159;  Brown  v. 
Tarkington,  3  Wall.  (U.  S.)  2>11 ,  18 
L.  ed.  255.  Compare  York  County  v. 
Small,  1  W.  &  S.  (Pa.)  315;  Mechan- 
ics' Sav.  Bank  &c.  Co.  v.  Duncan 
(Tenn.  Ch.  1896),  36  S.  W.  887;  Bog- 
gess  V.  Lilly,  18  Tex.  200;  Shelton  v. 
Marshall,  16  Tex.  344;  Robertson  v. 
Marsh,  42  Tex.  149;  Seeligson  v. 
Lewis,  65  Tex.  215,  57  Am.Rep.  593; 
Reed  v.  Brewer  (Tex.  Civ.  App.), 
36  S.  W.  99,  affd.  90  Tex.  144,  Zl  S. 
W.  418;  Wegner  Bros.  v.  Biering,  65 
Tex.  506;  Pierce  v.  Kibbee,  51  Vt. 
559;  Fivas  v.  Nicholls,  2  C.  B.  501. 
"No  court  will  lend  its  aid  to  a  man 
who  founds  his  cause  of  action  upon 
an  immoral  or  an  illegal  act."  Hol- 
man  v.  Johnson,  Cowp.  341.  Con- 
tracts in  violation  of  law  are  with- 
out binding  force,  the  parties  there- 
to, being  in  delicto,  can  claim  no 
rights  under  them.  Johns  v.  Bailey, 
45  Iowa  241.     "No  principle  of  law 

*  *  *  is  better  settled,  than  that  no 
action  will  lie  upon  a  contract  made 
in  violation  of  a  statute."  Wheeler 
V.  Russell,  17  Mass.  258.  In  Holt  v. 
Green,  11  Pa.  St.  198,  13  Am.  Rep. 
IZl ,  it  is  said :  "The  test  whether  a 
demand  connected  with  an  illegal 
transaction  is  capable  of  being  en- 
forced by  law  is,  whether  the  plain- 
tiff requires  the  aid  of  the  illegal 
transaction     to     establish     his     case. 

*  *  *  If  a  plaintiff  cannot  open  his 
case  without  showing  that  he  has 
broken  the  law,  a  court  will  not  as- 
sist him.  *  *  *  The  principle  to  be 
extracted  from  all  the  cases  is,  that 
the  law  will  not  lend  its   support  to 


35 


LEGALITY    OF    OBJECT. 


§    679 


§  679.  Illustrations  of  the  rule. — Thus,  as  between  the  par- 
ties, a  promissory  note'^  or  a  note  and  mortgage  given  in  place  of 
other  notes  and  mortgages/*  or  a  draff*^  cannot  be  recovered  on 
when  made  in  execution  of  an  illegal  contract,  and  this  is  held 
true  even  though  a  new  consideration  enter  into  the  new  contract 
when  the  two  are  indivisible/*^  The  same  principle  has  been  held 
to  apply  notwithstanding  the  new  contract  is  under  seal,  and  for 
that  reason  imports  a  consideration.*^  It  is  obvious  that  a  con- 
tract illegal  as  against  public  policy  cannot  be  rendered  valid  by 
a  subsequent  ratification.*^ 

§  680.  Rule  where  illegal  contract  is  abandoned  or  merely 
collateral. — However,  where  the  contract  between  the  par- 
ties is  not  directly  connected  with  the  illegal  transaction  and  is 


a  claim  founded  on  its  own  viola- 
tion." 

"  Seeligson  v.  Lewis,  65  Tex.  215, 
57  Am.  Rep.  593.  Compare  also,  Em- 
brey  v.  Jemison,  131  U.  S.  336,  33  L. 
ed.  172,  9  Sup.  Ct.  776. 

"  Pierce  v.  Kibbee,  51  Vt.  559. 

*^  Morris  Run  Coal  Co.  v.  Barclay 
Coal  Co.,  68  Pa.  St.  173,  8  Am.  Rep. 
159. 

"Clay  V.  Ray,  17  C  B.  (N.  S.)  188. 
See  also,  Santa  Clara  Valley  &c.  Co. 
V.  Hayes,  76  Cal.  387,  18  Pac.  391,  9 
Am.  St.  211;  Nicholson  v.  Ellis,  110 
Md.  322,  73  Atl.  17.  24  L.  R.  A.  (N. 
S.)  942n,  132  Am.  St.  445.  See  also, 
ante,  §  226. 

"Fisher  v.  Bridges,  3  El.  &  Bl. 
642;  Lyon  v.  Waldo,  36  Mich.  345, 
353 

*'Swann  v.  Miller,  82  Ala.  530,  1 
So.  65;  Moog  v.  Hannon,  93  Ala. 
503,  9  So.  596;  Rainev  v.  Capps,  22 
Ala.  288;  Butler  v.  Lee,  11  Ala.  885, 
46  Am.  Dec.  230;  Shippey  v.  East- 
wood, 9  Ala.  198;  Pettit's  Admr.  v. 
Pettit's  Distributees,  32  Ala.  288; 
Tucker  v.  West.  29  Ark.  386;  Hoff- 
man V.  McMuUen.  83  Fed.  372.  28  C. 
C.  A.  178,  45  L.  R.  A.  410,  affd.  174 
U.  S.  639.  19  Sup.  Ct.  839.  43  L.  ed. 
1117;  Meriwether  v.  Smith,  44  Ga. 
541;  Calhoun  v.  Phillips,  87  Ga.  482, 
13  S.  E.  593;  Thompson  v.  War- 
ren, 8  B.  Mon.  (Ky.)  488:  Pope 
V.    Linn,    50   Maine   83;    Plaisted    v. 


Palmer,  63  Maine  576;  Ladd  v. 
Rogers,  11  Allen  (Mass.)  209; 
Day  V.  McAllister,  15  Gray  (Mass.) 
433 ;  Tucker  v.  Mowrey,  12  Mich. 
378;  Winheld  v.  Dodge,  45  Mich. 
355.  7  X.  W.  906,  40  Am.  Rep.  476; 
Handy  v.  St.  Paul  Globe  Pub.  Co.,  41 
Minn.  188,  42  X.  W.  872,  4  L.  R.  A. 
466,  16  Am.  St.  695;  Kountz  v.  Price, 
40  Miss.  341 ;  Gwinn  v.  Simes,  61  Mo. 
335;  Bick  v.  Seal,  45  Mo.  App.  475; 
-McCormick  Harvesting  Mach.  Co.  v. 
^liller,  54  Xebr.  644,  74  N.  W.  1061 ; 
Allen  V.  Deming,  14  N.  H.  133,  40 
Am.  Dec.  179;  Boutelle  v.  Melendv, 
19  N.  H.  196,  49  Am.  Dec.  152: 
Reeves  v.  Butcher,  31  N.  J.  L.  224; 
Nibert  v.  Baghurst  (N.  J.  Eq.). 
25  Atl.  474;  Steffens  v.  Earl,  11 
Vroom  (X.  J.  L.)  128.  29  Am. 
Rep.  214;  Ryno  v.  Darby,  20  X. 
J.  Eq.  231 ;  Robinson  v.  Kalb- 
fleisch,  5  Thomp.  &  C.  (X.  Y.) 
212;  McKee  v.  Cheney,  52  How.  Pr. 
(N.  Y.)  144;  Gray  v.  Hook,  4  X.  Y. 
449;  Wheeler  v.  Wheeler.  5  Lans. 
(X.  Y.)  355;  Henry  Christian  Bldg. 
&c.  Assn.  V.  Walton,  181  Pa.  St.  201. 
37  Atl.  261,  59  Am.  St.  636:  Shisler  v. 
Vandike,  92  Pa.  St.  447,  37  Am.  Rep. 
702:  Hunter  v.  Xolf.  71  Pa.  St.  282; 
Pearsoll  v.  Chapin,  44  Pa.  St.  9 :  Xeg- 
ley  V.  Lindsay,  67  Pa.  St.  217,  5  Am. 
Rep.  427;  Rue  v.  Missouri  Pac.  R. 
Co..  74  Tex.  474,  8  S.  W.  533,  15  Am. 
St.  852;  Vinz  v.  Beatty.  61  Wis.  645. 


68 1 


CONTRACTS. 


36 


itself  legal  and  entirely  collateral  to  any  illegal  agreement  it  will 
be  upheld."  Thus  it  has  been  held  that  an  action  could  be  main- 
tained on  a  note  given  for  the  rent  of  land  leased  for  the  purpose 
of  raising  food  for  laborers  in  the  employ  of  the  confederate 
government.^"^  Likewise,  in  the  absence  of  any  express  statutory 
provision  to  the  contrary,  an  action  may  be  maintained  to  recover 
the  price  of  goods  sold  and  delivered  by  one  who  is  a  member  of 
an  illegal  trust  or  combination,  when  the  sale  of  such  goods  is 
merely  collateral  to  the  illegal  combination  or  agreement.^^ 

§  681.  Collateral  contracts  of  insurance,  surety  and  loans. 
— It  has  also  been  held  that  insurance  could  be  recovered  on  a 
piano  which  had  been  placed  in  a  house  of  ill  fame  to  enable  the 
proprietor  to  try,  and  induce  her  to  purchase  the  same,  since  the 
illegal  nature  of  the  house  was  too  remote  to  make  the  insurance 


*' Midland  Valley  R.  Co.  v.  Hoff- 
man Coal  Co.,  91  Ark.  180,  120  S.  W. 
380 ;  Chicago  Well  Paper  Mill  v.  Gen- 
eral Paper  Co.,  147  Fed.  491,  78  C.  C. 
A.  607,  8  Am.  &  Eng.  Ann.  Cas.  889; 
International  Harvester  Co.  v.  Smith, 
163  .Mich.  55,  127  N.  W.  695,  30  L.  R. 
A.  (N.  S.)  580;  Electrova  Co.  v. 
Spring  Garden  Ins.  Co.,  156  N.  Car. 
232,  12  S.  E.  306. 

°*  McKesson  v.  Jones,  66  N.  Car. 
258,  264.  In  the  course  of  the  opin- 
ion the  court  said :  "In  the  present 
case  the  aid  given  the  rebellion  was 
much  more  indirect ;  it  was  at  best 
two  steps  further  off.  It  was  not  a 
sale  of  military  material,  nor  even  a 
sale  of  provisions  to  laborers  engaged 
in  making  such  material,  but  a  lease 
of  land  upon  which  provisions  might 
be  raised,  which  might  be  applied  to 
feed  laborers  engaged  in  an  unlaw- 
ful occupation."  Again,  it  is  said 
in  the  same  case:  "It  is  possible 
to  foresee  and  calculate  •  the  direct 
consequences  of  an  act.  If  we  at- 
tempt to  follow  it  out  into  its  indirect 
and  more  remote  consequences,  our 
reasoning  becomes  soon  uncertain, 
and  after  a  few  steps  altogether  un- 
satisfactory. When  we  confine  our- 
selves to  direct  consequences,  we  feel 
that  we  are  treading  on  tolerably  firm 
ground;  but  if  we  go  farther,  there 
is  no  telling  into  what  calculations  of 


remote  and  merely  possible  conse- 
quences we  may  not  be  compelled  to 
plunge." 

"  Midland  Valley  R.  Co.  v.  Hoffman 
Coal  Co.,  91  Ark.  180,  120  S.  W.  380 ; 
Buckhorn  Plaster  Co.  v.  Consolidated 
Plaster  Co.,  47  Colo.  516,  108  Pac.  27; 
Chicago  Wall  Paper  Mills  v.  General 
Paper  Co.,  147  Fed.  491,  78  C.  C.  A. 
607,  8  Am.  &  Eng.  Ann.  Cas.  889; 
Boatmen's  Bank  v.  Fritzlen,  175  Fed. 
183;  Johns-Pratt  Co.  v.  Sachs  Co., 
176  Fed.  738;  Motion  Picture  Patents 
Co.  v.  Laemmle,  178  Fed.  104;  Virtue 
V.  Creamery  Package  Mfg.  Co.,  179 
Fed.  115,  102  C.  C.  A.  413;  Bessire  & 
Co.  V.  Corn  Products  Mfg.  Co.,  47 
Ind.  App.  298,  94  N.  E.  353;  Inter- 
national Harvester  Co.  v.  Smith,  163 
Mich.  55,  127  N.  W.  695,  30  L.  R.  A. 
(N.  S.)  580;  Freed  v.  American  Fire 
Ins.  Co.,  90  Miss.  72,  43  So.  947,  11 
L.  R.  A.  (N.  S.)  368;  Brooklyn  Dis- 
tilling Co.  V.  Standard  Distilling  and 
Distributing  Co.,  120  App.  Div.  (N. 
Y.)  2Z1,  105  N.  Y.  S.  264,  affd.  on 
other  grounds  in  193  N.  Y.  551,  86  N. 
E.  564;  Connolly  v.  Union  Sewer  Pipe 
Co.,  184  U.  S.  540,  46  L.  ed.  679,  22 
Sup.  Ct.  431 ;  Continental  Wall  Paper 
Co.  V.  Louis  Voight  &  Sons  Co.,  212 
U.  S.  227,  53  L.  ed.  486.  29  Sup.  Ct. 
280,  affg.  148  Fed.  939,  78  C.  C.  A. 
567,  19  L.  R.  A.  (N.  S.)  143. 


37 


LEGALITY    OF    OBJECT.  §    682 


policy  void  as  against  pnl^lic  policy."  So,  it  has  been  held  that 
where  a  principal  and  surety  gave  a  note  for  a  consideration 
against  public  policy  and  the  surety  paid  the  same  at  the  request 
of  the  principal,  the  principal  giving  a  new  note  to  the  surety, 
the  latter  note  could  be  collected.''^  On  the  same  principle  a  loan 
of  money  by  one  in  no  way  connected  with  a  gambling  transac- 
tion, to  another,  in  order  that  he  may  pay  a  gambling  debt  already 
made,  may  be  recovered  in  the  absence  of  a  special  statute.'^* 

§  682.  Contracts  containing  several  distinct  undertakings. 
— Closely  allied  to  contracts  of  this  character  are  those  which 
contain  distinct  undertakings,  some  of  which  are  legal  and  some 
illegal.  As  a  general  rule,  where  a  deed  or  other  contract  con- 
tains distinct  undertakings  some  of  which  are  legal  and  valid 
and  some  illegal  or  void,  the  former  will,  when  separable  from  the 
latter,  be  upheld,  though  the  latter  are  void.'^^ 

§  683.  Repeal  of  statutes — Contract  valid  under  existing 
law. — As  a  general  rule,  the  validity  of  a  contract  is  deter- 
mined by  the  law  in  force  at  the  time  the  contract  was  made."^ 
This  is  true  regardless  of  whether  the  law  in  force  at  the  time 

"Electrova   Co.   v.   Spring  Garden  mere  subterfuge  resorted  to  in  order 

Ins.  Co.,  156  N.  Car.  232,  72  S.  E.  306.  to  avoid  the  statute  against  gaming. 

^  Powell  V.   Smith,  66  N.  Car.  401.  St.  Croix  v.  Morris.  1  Cab.  &  El.  485 ; 

"Faiknev  v.  Reynous.  4  Bur.  2069;  Hill  v.  Fox,  4  H.  &  N.  359;  Roberts 

Ex  parte  Fyke,  L.  R.  8  Ch.  Div.  754,  v.    Blair,    11      Colo.  64;    Sampson   v. 

38  L.  T.   (N.  S.)  923.  26  W.  R.  806;  Whitney,  27  La.  Ann.  294.     See  also. 

Fox  V.  Hill,  4  H.  &  N.  359,  7  W.  R.  McKinnell  v.   Robinson.  3   M   &  W. 

263;   English   v.  Youn?.   10   B.   Mon.  435;  White  v.  Wilson,  100  Ky.  367,  38 

(Ky.)    141;   White  v.   Wilson    (Ky),  S.  W.  495,  37  L.  R.  A.  197. 
37    S.    W.   677;    Wyman    v.    Fiske,    3        "Pittsburgh   &c.   R.   Co.   v.   Brown 

Allen   (Mass.)   238,  80  Am.  Dec.  66;  (Tnd.),  97   N.   E.   145;   Nicholson   v. 

Mooring  v.   Stanton,   1   Mart.    (1   N.  Ellis,  110  Md.  322,  73  Atl.  17,  24  L.  R. 

Car.)    52;   Ballard  v.   Green,   118   N.  A.    (N.   S.)    942n,   132  Am.   St.  445; 

Car.   390,   24   S.    E.    777:    Folwell  v.  Leavitt  v.  Palmer,  3  N.  Y.  19.  51  Am. 

Stuart,   4   Pa.    Co.    Ct.   80;    Owen   v.  Dec.  333;  Central  Xew  York  Tel.  &c. 

Davis.   1   Bail.    (S.  Car.)   315;   Arm-  Co.  v.  Averill,  199  N.  Y.  128,  92  N.  E. 

strong  V.  American  Exch.  Nat.  Bank,  211.  139  Am.  St.  878;  Tate  v.  Gaines 

133  U.  S.  433,  33  L.  ed.  747,  10  Sup.  (Okla.),   105   Pac.   193.   26   L.   R.  A. 

Ct.  450.     Under  the  provision  of  spe-  (N.    S.)    106.    and    note;    Winsor    v. 

cial   statutes   recovery  has  been  held  Commonwealth    Coal    Co.     (Wash.), 

to  be  forbidden.     Tatam  v.  Reeve.  5  114  Pac.  908,  33  L.  R.  A.  (N.  S.)  63. 

Reports  83  (1893),  1  Q.  B.  44,  62  L.  See  also,  ante,  §  226. 
J.  Q.  B.  30,  67  L.  T.   (N.  S.)  683.  41        ""Woods    v.    Armstrong,    54    Ala. 

W    R    174,   57  J.    P.    118;    White   v.  150,  25  Am.  Rep.  671;  Pacific  Guano 

Wilson's  Admr.  (Kv.).  37  S.  W.  677.  Co.  v.  Dawkins,  57  Ala.  115;  Schaun 

The   loan    must   not,   however,   be   a  v.   Brandt,  116  Md.  560,  82  Atl.  551. 


§  683 


COXTRACTS. 


38 


the  contract  is  entered  into  declares  it  valid  or  void.  Thus,  it 
has  been  held  that  a  contract  legal  and  valid  at  the  time  it  is 
entered  into  is  not  rendered  illegal  by  a  subsequent  statute  de- 
claring such  contract  to  be  unlawful."'  In  accordance  with  this 
principle  recovery  has  been  permitted  upon  a  contract  for  the  sale 
of  beer  in  Indian  Territor}-  made  before  the  passage  of  an  act 
declaring  such  sales  unlawful.^^  Xor  can  a  property  right  ac- 
quired under  a  state  statute  be  divested  by  repealing  the  statute.'^'^ 
Where,  therefore,  under  an  act  directing  a  city  to  audit  and 
adjust  the  amount  of  damage  done  to  certain  private  property  by 
the  opening  of  a  street,  providing  for  an  appraisal  thereof  by 
commissioners,  and  requiring  the  city  to  raise  the  amount  by 
assessment,  and  pay  it  over  to  the  owner  of  the  property,  after 
the  commissioners  have  made  the  appraisal,  and  their  report  has 
been  affirmed  by  the  court,  the  owner's  claim  against  the  city  is 
fixed,  and  cannot  be  affected  by  a  subsequent  repeal  of  the  act.®" 


"Bennett  v.  Woolfolk,  15  Ga.  213. 

"  Anheuser-Busch  Brewing  Assn. 
V.  Bond,  66  Fed.  653,  13  C.  C.  A.  665. 

''People  V.  O'Brien,  HI  X.  Y.  1, 
18  X.  E.  692,  2  L.  R.  A.  255,  7  Am. 
St.  684. 

**"\Ve  have  seen  that  the  report  of 
the  commissioners  under  the  statute, 
awarding  damages  to  the  relator  in 
the  sum  of  $5,500,  confirmed  by  an 
order  of  the  court,  had  all  the  force 
and  effect  of  a  judgment  creating  an 
obligation  on  the  part  of  the  city  to 
pay.  Woodhull  v.  Little,  102  X.  Y. 
165,  6  X.  E.  266;  People  v.  Common 
Council  of  Syracuse,  78  X.  Y.  56.  It 
vested  in  the  relator,  when  the  or- 
der of  confirmation  was  enforced,  an 
absolute  right  to  receive  the  amount. 
It  created  an  obligation  on  the  part 
of  the  city  to  pay,  and  in  this  sense 
was  a  contract  of  the  highest  nature. 
Cornell  v.  Donovan,  14  Daly  295.  All 
contract  obligations  are  protected 
from  impairment  by  state  legislation 
by  the  provisions  of  the  federal  con- 
stitution. The  obligation  of  a  con- 
tract is  impaired  in  the  constitutional 
sense  by  any  law  which  prevents  its 
enforcement,  or  which  materially 
abridges  the  remedy  for  enforcing 
it,  which  existed  when  it  was  con- 
tracted,  and   does  not  supply  an  al- 


ternative remedy  equally  adequate 
and  efficacious.  McGahey  v.  Virginia, 
135  U.  S.  662,  685,  10  Sup.  Ct.  972. 
*  *  *  The  remedy  subsisting  in  es- 
tate when  and  where  an  obligation  is 
made  or  created  and  is  to  be  per- 
formed is  a  part  of  the  obligation, 
and  any  subsequent  law  of  the  state 
which  so  affects  that  remedy  as  sub- 
stantialh-  to  impair  and  lessen  the 
value  of  the  contract  is  forbidden  by 
the  constitution,  and  is,  therefore, 
void.  Edwards  v.  Kearzey,  96  U.  S. 
595.  This  provision  of  the  constitu- 
tion cannot  be  evaded  by  indirect 
methods.  The  obligation  of  a  mu- 
nicipal corporation  cannot  be  im- 
paired by  restraining  its  powers  of 
taxation  to  the  point  of  disabling  it 
from  performance,  or  by  repeal  of 
the  law  under  which  the  obligation 
was  to  be  enforced,  or  by  enacting 
statutes  of  limitation  that  do  not  al- 
low a  reasonable  time  for  bringing 
the  action  any  more  than  by  open 
and  avowed  assaults  upon  the  con- 
tract itself.  In  this  case  the  repeal- 
ing act  could  have  no  other  purpose 
than  to  prevent  the  audit  and  pay- 
ment of  the  relator's  claim ;  but 
whatever  the  motive  which  prompted 
the  legislation,  it  is  clearly  inoper- 
ative and  void  as  to  the  award  made 


39  LEGALITY  OF  OBJECT.  §  684 

?  684.  Repeal  of  statutes — Contract  void  under  existing 
law. — On  the  other  hand,  a  contract  whicli  is  in\-alid  under 
the  law  in  force  at  the  time  it  was  made  is  not  validated  by  the 
enactment  of  subsequent  legislation  under  which  it  might  be  en- 
tered into  legally."^  It  follows  that  the  repeal  of  a  law  which 
declares  a  specified  contract  unlawful  and  which  was  in  force  at 
the  time  the  minds  of  the  parties  met  does  not  render  such  con- 
tract valid  and  binding.""  Thus,  the  subsequent  repeal  of  a  stat- 
ute by  which  a  particular  transaction  is  rendered  void  and  illegal 
does  not  validate  an  agreement  made  in  contravention  of  its 
terms  while  the  statute  was  in  force."^  It  has  also  been  held  that 
a  physician  cannot  recover  for  services  rendered  while  practicing 
in  violation  of  a  statute  after  such  statute  has  been  repealed."* 
The  general  principle  underlying  cases  of  this  character  is  that 
the  law  in  existence  at  the  time  the  contract  is  entered  into  be- 
comes a  part  of  the  agreement.*'^ 

§  685.  Repeal  of  statutes — Impairing  obligation  of  con- 
tract.— That  section  of  the  federal  constitution  which  inhibits 
legislation  impairing  the  obligation  of  a  contract  also  applies  in 
a  proper  case  of  this  kind.*'"     It  would  seem,  however,  that  a  dis- 

by  the  commissioners  and  confirmed  Gilliland  v.   Phillips,   1   S.   Car.   152; 

by    the    court."     People    v.    Common  Hunt  v.  Robinson,  1  Tex.  748. 

Council,  140  N.  Y.  300,  35  N.  E.  485.  "  Nichols    v.    Poulson.   6   Ohio    St. 

"Lanning  v.  Osborne,  82  Fed.  575;  305.   See,  however,  the  case  of  Wash- 

Schaun   v.   Brandt,    116   Md.   560,  82  burn  v.  Franklin,  13  Abb.  Pr.  (N.  Y.) 

Atl.  551.  140,  which  seems  to  hold  contrary  to 

'^  Woods  V.  Armstrong,  54  Ala.  150,  the  foregoing  cases. 

25  Am.  Rep.  671 ;  Pacific  Guano  Co.  ~  Aycock  v.  Martin,  Z1  Ga.  124,  92 

V.  Dawkins,  57  Ala.  115;  Pacific  Gu-  Am.  Dec.  56;  Phinnev  v.  Phinney,  81 

ano  Co.  V.  Mullen,  66  Ala.  582 ;  White  Maine  450,  17  Atl.  405,  4  L.  R.  A.  348, 

V.  Noland,  3  Mart.  (La.)  (N.  S.)  636;  10  Am.   St.  266;    People  v.   Common 

Quarles   v.    Evans,    7   La.    Ann.    543;  Council  of  Buffalo.  140  N.  Y.  300,  35 

Hathaway   v.    Moran,  44   Maine   67;  N.  E.  485.  Zl  Am.  St.  563;  Walker  v. 

Banchor    v.    Mansel,    47    Maine    58;  Whitehead.  16  Wall.    (U.  S.)   314,  21 

Robinson  v.  Barrows,  48  Maine  186;  L.    ed.    357;    Swinburne    v.    Mills,    17 

Springfield     Bank     v.     Merrick,     14  Wash.  611,  50  Pac.  489,  61   Am.    St. 

Mass.   Z22:   Roby  v.   West,  4    N.   H.  932;    People    v.    Superior    Court    of 

2  5.  17  Am.  Dec.  423;  Puckett  v.  Al-  King  County,  21  Wash.  186,  57  Pac. 

exander,  102  N.  Car.  95,  8  S.  E.  767,  3  ZZl . 

L.  R.  A.  43.  «*'  Superior  v.   Douglas  County  Tel. 

"'Woods    V.    Armstrong.    54    Ala.  Co..    141   Wis.  363,    122   N.   W.    1023. 

150,  25  .\m.  Rep.  671 :   Pacific  Guano  For  a  review  of  the  subject  see  .\v- 

Co.  V.  Dawkins,  57  .A.la.  115:  Willcox  cock  v.    Martin.  Zl   Ga.    124.  92  .Xm. 

V.    Edwards     (Cat),    123    Pac.    276;  Dec.  56.     See  further  on  this  subject 

Quarrels  v.  Evans,  7  La.  Ann.  543;  note  in  120  Am.  St.  468.    An  errone- 


§    685  CONTRACTS.  40 

tinction  must  be  drawn  between  executed  and  executory  contracts 
for  "It  is  a  general  principle  of  law,  that  when  a  contract  is  lawful 
when  made,  and  a  law  afterward  renders  performance  of  it  un- 
lawful, neither  party  to  the  contract  shall  be  prejudiced,  but  the 
contract  is  to  be  considered  at  an  end.""  This  does  not  mean, 
however,  that  a  contract  legal  at  its  inception  becomes  illegal  by 
subsequent  statutory  prohibition  as  to  acts  done  before  the  enact- 
ment of  the  statute,  but  that  the  statute  puts  an  end  to  the  con- 
tract and  there  can  be  no  legal  recovery  by  the  plaintiff  even  if  he 
should  perform  the  unlawful  act,  as  it  is  against  public  policy 
to  permit  a  party  to  recover  for  the  performance  of  his  own 
illegal  act  or  benefit  by  his  own  wrong.***  Thus,  where  property 
was  leased  to  be  used  as  a  saloon  and  subsequent  to  the  execution 
of  the  lease  the  sale  of  intoxicating  liquors  was  rendered  unlaw- 
ful, it  was  held  that  by  operation  of  law  the  lease  became  void 
and  unen forcible.^''  There  are  also  cases  in  which  an  agreement 
or  instrument  lacking  in  some  formality  may  be  validated  or 
made  effective  by  subsequent  statute.'^''  And  it  has  been  held  by 
the  Supreme  Court  of  the  United  States,  in  a  very  recent  case, 
that,  although  a  contract,  such  as  to  issue  an  annual  pass  for  life, 
was  valid  when  made,  it  could  not  be  enforced  after  the  passage 
of  an  act  of  congress  prohibiting  such  agreements,  and  that  such 
act  is  not  unconstitutional  as  so  applied. ^^ 

ous  decision  gives  a  person  no  vested  *   *   *    The  rule   is   the   same   when 

right,    however.     Crigler    v.    Shepler,  the  purpose  of  the  contract,  aUhough 

79  Kans.  834,  101  Pac.  619,  22>  L.  R.  A.  lawful  when  made,  becomes  unlawful 

(N.  S.)  500n.  by    statutes    enacted    before    the    full 

'^  Odlin  v.  Insurance  Co.  of  Penn-  performance    of    its    term."      If    the 

sylvania,  2  Wash.  C.  C.  312,  Fed.  Cas.  contract  is   executory  and  cannot  be 

No.  10433.  performed  without  a  violation  of  the 

**  American     Mercantile     Exchange  existing  law,  it  will  be  discharged  on 

V.  Blunt,  102  Maine  128,  66  Atl.  212,  the   ground    of   impossibility   of   per- 

120  Am.  St.  463n,  10  L.  R.  A.  (N.  S.)  formance.      Odlin    v.    Insurance    Co., 

414n.    See  also,  Mississippi  &c.  R.  Co.  2  Wash.    (U.   S.  312),   18  Fed.   Cas. 

v.  Green,  9  Heisk.  (Tenn.)  588;  Gray  No.  10433. 

v.  Sims,  3  Wash.  C.  C.  276,  Fed  Cas.        '"  Downs    v.    Blount,    170    Fed.    15, 

No.  5729.  95  C.  C.  A.  289,  31  L.  R.  A.  (N.  S.) 

*  Heart   v.   East  Tennessee   Brew-  1076,  and  many  other  cases  cited  and 

jng  Co.,  121  Tenn.  69,  113  S.  W.  364,  reviewed  in  the  note.     See  Eckles  v. 

19  L.  R.  A.    (N.   S.)   964n,  130  Am.  Wood,   143  Ky.  451,   136  S.   W.  907, 

St.   753.     The   court   said:     "It   is  a  34  L.  R.  A.   (N.  S.)  832. 
principle  of   general   appHcation  that        "  Louisville  &c.   R.  Co.  v.  Mottley, 

all  contracts  are  void  which  provide  219  U.  S.  467,  55  L.  ed.  297,  31   Sup. 

for  doing  a  thing  which  is  contrary  Ct.  265,  34  L.  R.  A.  (N.  S.)  671.     In 

to   law,   morality,   and  public   policy,  the  course  of  the  opinion  the  court 


41 


LEGALITY    OF    OBJECT. 


§  68: 


§  686.  Ratification. — In  strictness,  a  contract  which  is  ille- 
gal under  existing  laws  cannot  be  ratified  so  as  to  give  it  validity 
after  the  repeal  of  such  statute,"  and  this  is  true  notwithstanding 
the  party  who  attempts  to  ratify  has  received  a  benefit  under  the 
illegal  contract.^^  It  is  competent,  however,  for  the  same  parties 
after  the  repeal  of  the  statute  which  made  their  former  contract 
illegal,  to  enter  into  a  new  agreement  supported  by  a  valid  con- 
sideration to  the  same  effect  as  the  old  contract.''*  It  has  also 
been  held  that  a  contract  which  violates  an  existing  law,  but 
which  is  made  in  contemplation  of  a  change  of  such  law,  is  not 
void  and  may  be  enforced  when  the  law  is  changed  so  as  to 
render  its  performance  legal. ^^ 

§  687.  Violations  of  federal  statutes. — The  Constitution  of 
the  United  States  is  the  supreme  law  of  the  land  and  a  contract 
violative  of  its  provisions  is  illegal. ''°  Contracts  in  contravention 
of  treaties  entered  into  by  the  United  States  have  also  been  held 
void."     The  same  is  true  of  contracts  violative  of  a   federal 


says :  "After  the  commerce  act  came 
into  effect,  no  contract  that  was  in- 
consistent with  the  regulations  estab- 
hshed  by  the  act  of  Congress  could 
be  enforced  in  any  court."  And  the 
court  quotes  from  Fitzgerald  v. 
Grand  Trunk  R.  Co.,  63  Vt.  169,  173, 
22  Atl.  76,  13  L.  R.  A.  70,  to  the  ef- 
fect that  parties  must  be  held  to  have 
contracted  on  the  basis  that  the  law 
might  be  changed,  and  from  Atkin- 
son V.  Ritchie,  10  East  530,  534,  to  the 
effect  that  no  contract  can  be  en- 
forced which  was  either  contrary  to 
the  provisions  of  the  law  when  made 
or  has  become  illegal  by  virtue  of 
some  subsequent  law. 

"Handv  V.  St.  Paul  Globe  Pub. 
Co..  41  Minn.  188,  42  N.  W.  872,  4 
L.  R.  A.  466,  16  Am.  St.  695.  Com- 
pare, however,  Lovell  v.  Boston  &c. 
R.  Co..  75  N.  H.  568,  78  Atl.  621,  34 
L.  R.  A.  (N.  S.)  67n. 

"Dever  v.  Corcoran,  8  N.  B.  338; 
Ludlow  v.  Hardy,  38  Mich.  690.  The 
above  case  holds  that  a  sale  of  liq- 
uors in  violation  of  law  would  not 
support  a  new  promise  to  pay  there- 
for after  the  law's  repeal.  Puckctt  v. 
Alexander,   102  N.  Car.  95,  8  S.  E. 

I 


767,  3  L.  R.  A.  43.  Thus  an  action 
will  not  lie  to  recover  the  purchase- 
price,  nor  can  validity  be  imparted  to 
the  contract  by  a  subsequent  ratifi- 
cation, where  liquor  is  sold  by  a 
wholesale  dealer  who  has  not  taken 
out  a  revenue  license  as  required  by 
law,  such  sale  being  void  under  the 
statute  then  in  force.  Moog  v.  Han- 
non,  93  Ala.  503,  9  So.  565.  For  a 
further  discussion  of  subsequent 
statutory  prohibition,  see  post,  chap- 
ter on  Impossible  Contracts,  vol.  3. 

"  Carr  v.  Louisiana  Nat.  Bank,  29 
la.  Ann.  258;  Handv  v.  St.  Paul 
Globe  Pub.  Co.,  41  Minn.  188,  42  N. 
W.  872,  4  L.  R.  A.  466,  16  Am.  St. 
695. 

"Taylor  v.  Chichester  &  Midhurst 
R.  Co.,  L.  R.  4  H.  L.  628;  Norwich 
V.  Norfolk  &c.  R.  Co.,  4  El.  &  Bl.  397. 

'"Gandolfo  v.  Hartman,  49  Fed. 
181,  16  L.  R.  A.  277;  Craig  v.  Mis- 
souri, 4  Pet.  (U.  S.)  410,  7  L.  ed.  903; 
Litchfield  V.  Ballou.  114  U.  S.  190,  29 
L.  ed.  132,  5  Sup.  Ct.  820. 

"  Pcttit's  Admr.  v.  Pettit's  Dis- 
tributees, 32  Ala.  288;  Lewis  v.  Love 
&  Lane.  1  .•Ma.  335 ;  Gandolfo  v.  Hart- 
man,  49  Fed.  181,  16  L.  R.  A.  277; 


§    68/  CONTRACTS.  42 

Statute.'*  A  state  court  gives  the  statute  of  the  United  States  the 
same  recognition,  force  and  effect  accorded  to  acts  passed  by  the 
state  legislative  body.  Thus,  where  cattle  were  pastured  on  an 
inclosed  portion  of  the  public  domain,  in  violation  of  a  federal 
law,  declaring  it  to  be  a  misdemeanor  to  erect  or  maintain  any 
fence  inclosing  more  than  i6o  acres  of  the  public  domain,  it  was 
held  that  a  note  given  in  payment  for  such  pasturage  was  based  on 
an  illegal  consideration,  and  was  therefore  unenforcible,  though 
the  note  purported  to  have  been  for  expenses  incurred  for  the  serv- 
ice of  cowboys  in  connection  therewith."  A  contract  to  ship  goods 
in  foreign  vessels  from  one  port  of  the  United  States  to  another, 
being  in  violation  of  the  federal  statute,  does  not,  as  between  the 
parties,  becom.e  legal,  because  the  United  States  has  remitted  the 
forfeiture.*"  An  action  cannot  be  maintained  on  a  transfer  of 
a  government  contract  prohibited  by  the  federal  statute.*^  A 
contract  for  the  sale  and  transfer  of  soldiers'  additional  home- 
stead scrip,  that  is,  such  scrip  as  purports  to  carry  a  soldier's 
personal  right  to  enter  public  land,  is  against  the  plain  intent  and 
policy  of  the  statute,  and  cannot  be  made  the  basis  of  an  action." 
The  same  is  true  of  an  agreement  to  obtain  qualified  citizens  to 
enter  public  lands  under  the  general  homestead  law  and  to  grant 
the  entire  use  of  such  lands  to  another  until  final  proof  is  made 
or  the  holdings  are  disposed  of.*^  Where  one  agrees  with 
another  to  acquire  public  land  for  the  benefit  of  the  latter,  con- 
trary to  the  California  statute,  the  latter  cannot  have  relief  from 

Howell  V.  Fountain,  3  Ga.  176,  46  Am.  general  rule  is  laid  down  by  Holt,  C. 

Dec.  415.    See  also,  Kennett  v.  Cham-  J. :     "Every    contract    made    for    or 

bers,  14  How.    (U.  S.)   38,  14  L.  ed.  about  any  matter  or  thing  which   is 

316.  prohibited    and     made    unlawful    by 

"Cornelius  v.  Murray  (Okla.),  120  statute  is  a  void  contract,  though  the 

Pac.  653.  statute  does  not  mention  that  it  shall 

"Tandy     v.     Elmore-Cooper     Live  be  so,  but  only  inflicts  a  penalty  on 

Stock  Commission  Co.,  113  Mo.  App.  the  offender,  because  the  penalty  im- 

409,  87  S.  W.  614.     See  also,  Cox  v.  plies  a  prohibition.")     Bartlett  v.  Vi- 

Cameron  Lumber  Co.,  39  Wash.  562,  nor,  Carth.  251. 

82  Pack  116.  "Turnbull  v.  Farnsworth,  1  Wash. 

^  Smith  V.  Mawhood,  14  M.  &  W.  Ter.  444. 

452 ;  Petrel  Guano  Co.  v.  Jarnette,  25  *"  Macintosh    v.    Renton,    2    Wash. 

Fed.  675.     (In  this  case  it  is  held  that  Ter.  121,  3  Pac.  830. 

it  is  the  fact  that  the  statute  forbids  ^  Ware  v.  United  States,  84  C.  C. 

such  act,  and  not  the  penalty  imposed,  A.  503,  12  L.  R.  A.  (N.  S.)  1053n,  154 

which  makes  the  contract  illegal.  The  Fed.  577. 


43 


LEGALITY   OF    OBJECT.  §    688 


the  courts  to  enforce  his  rights  under  the  agreement.     The  par- 
ties are  in  pari  deHcto.®* 

§  688.  Violation  of  liquor  laws. — As  a  general  rule  liquor 
laws  are  not  enacted  for  the  purposes  of  revenue  only,  but  for  the 
safety  and  protection  of  the  puhlic  morals  as  well.  It  follows 
that  contracts  made  in  violation  of  such  laws  are  illegal.^'^  Thus 
courts  have  frequently  held  that  a  promissory  note  given  as  pay- 
ment for  intoxicating  liquors  illegally  sold  on  Sunday  is  invalid, 
notwithstanding  the  sum  included  in  the  note  was  also  for  other 
articles  legally  sold.^°  It  has  also  been  held  that  one  who  sells 
liquors  and  so  marks  the  cask  that  their  contents  cannot  be  ascer- 
tained by  the  revenue  officers,  and  thus  aids  in  their  being  sold 
in  violation  of  law,  cannot  recover  on  the  contract  of  sale." 
But  it  has  been  held  that  knowledge  that  the  vendee  of  liquors  is 
selling  them  in  violation  of  law  is  no  defense  to  an  action  by  the 
vendor  for  their  price,  when  the  vendor  does  no  act  with  the  pur- 
pose of  aiding  in  the  evasion  of  the  law.^* 

§  689.  Violation  of  liquor  laws — Knowledge  of  vendee's 
unlawful  intent. — While  the  better  authorities  hold  that 
mere  knowledge  by  a  vendor  of  the  vendee's  unlawful  intent  will 
not  bar  a  recovery  upon  a  contract  of  sale,  yet,  if  in  any  way 
the  former  aids  the  latter  in  his  unlawful  design  to  violate  a 
law,  such  participation  will  prevent  him  from  maintaining  an 

**  McGregor    v.    Donelly,    67    Cal.  consideration    of    the    receiver    in    a 
149,  7   Pac.  422.     Plaintiff  agreed  to  bankruptcy    proceeding    being    given 
point  out   timber  lands   belonging  to  the  use  of  defendant's  liquor  license). 
the     United     States     and     defendant  *"  Wadsworth  v.  Dunnam.   117  Ala. 
agreed  to  procure  title  to  reservation  661,  23  So.  699;  Braitch  v.  Guelick,  Zl 
lands  and  exchange  the  same  for  the  Iowa   212;    Gerlach    v.     Skinner,    34 
lands    pointed    out    which    were    sub-  Kans.  86,  8  Pac.  257,  55  Am.  Rep.  240 
ject    to    exchange.      This    agreement  Ladd   v.    Dillingham.   34    Maine   316 
was  held  not  void  as  against  public  Gotten    v.    McKenzie,    57    Miss.    418 
policy  because  the  right  of  exchange  Brick  v.  Seal,  45  Mo.  App.  475 ;  San- 
was    not    assignable,    no    assignments  derson  v.  Goodrich,  46  Barb.  (N.  Y.) 
being   contemplated.      Western    Lum-  616;    Widoe    v.    Webb,    20    Ohio    St. 
ber  Co.  v.  Willis,  160  Fed.  27,  87  C.  C.  431,   5   Am.   Rep.  664. 
A.  183.  "Gavlord   v.    Soragen,   32  Vt.    110, 

'"Loranger    v.    Jardine,    56    Mich.  Id  Am.  Dec.  154;  Aiken  v.  Blaisdell, 

518    23  N.  W.  203.     See  also.  Brown  41  Vt.  655. 

v.    Detroit    Trust    Co..    193    Fed.    622  ''  Gambs  v.  Sutherland's  Estate.  101 

(agreement  by  which   defendant  was  Mich.  355.  59  N.  W.  652;  Gaylord  v. 

to  be  permitted  to  remain  in  posses-  Soragen,  Z2  Vt.  110,  76  Am.  Dec.  154. 
sion  of  a  suite  of  rooms  in  a  hotel  in 


§  689 


COXTRACTS. 


44 


action  to  recover.  The  participation  must  be  active  to  some 
extent.  The  vendor  must  do  something  in  furtherance  of  the 
purchaser's  design  to  transgress,  but  positive  acts  in  aid  of  the 
unlawful  purpose  are  sufficient,  although  slight.^^  Thus  the 
plaintiff,  a  corporation,  by  its  agent,  sold  and  furnished  bottled 
beer  to  the  defendant,  the  keeper  of  a  house  of  prostitution,  as 
the  agent  well  knew.  While  he  had  no  knowledge  of  just  what 
was  to  be  done  with  the  beer,  the  agent  supposed  at  the  time  it  was 
furnished  that  it  was  to  be  used  or  sold  in  the  brothel.  No  other 
facts  appearing,  it  was  held  that  plaintiff  could  recover  a  balance 
claimed  to  be  due  from  defendant  for  and  on  account  of  said 
sale.®**  And  where  it  appeared  that  the  promisee  of  a  note  given 
by  an  inhabitant  of  Maine  for  spiritous  liquors  sold  and  deliv- 
ered in  another  state,  where  the  sale  was  not  illegal,  knew  of  the 
purchaser's  intent  to  sell  the  same  in  violation  of  law,  and  did 
acts,  beyond  the  mere  sale,  which  aided  the  purchaser  in  his  un- 


"Hill  V.  Spear,  50  N.  H.  253,  9 
Am.  Rep.  205;  Tracv  v.  Talmage,  14 
N.  Y.  162,  67  Am.  Dec.  132n. 

^Anheuser-Busch  Brewing  Assn. 
V.  Mason,  44  Minn.  318,  46  N.  W. 
558,  per  Colhns,  J. :  "While  it  is  cer- 
tain that  a  contract  is  void  when  it  is 
illegal  or  immoral,  it  is  equally  as 
certain  that  it  is  not  void  simply  be- 
cause there  is  something  immoral  or 
illegal  in  its  surroundings  or  con- 
nections. It  cannot  be  declared  void 
merely  because  it  tends  to  promote 
illegal  or  immoral  purposes.  The 
American  text-writers  generally  ad- 
mit this  to  be  the  prevailing  rule  of 
law  in  the  states  upon  this  point.  1 
Wharton  on  Contracts,  §  343;  Hill 
on  Sales.  490.  492;  1  Parson  on  Con- 
tracts 456:  Story  on  Contracts  (5th 
ed.),  §  671;  Story  on  Conflict  oi 
Laws,  §  253 ;  Greenhood  on  Doctrine 
of  Public  Policy  in  the  Law  of  Con- 
tracts 589.  However,  it  has  been  sug- 
gested that  this  statement  is  subject 
to  the  modification  that  the  unlawful 
use,  of  which  the  vendor  is  advised, 
must  not  be  a  felony  or  crime  involv- 
ing great  moral  turpitude.  See  Han- 
auer  v.  Doane,  12  Wall.  (U.  S.)  342; 
Tatum  v.  Kelley,  25  Ark.  209;  Milner 
V.  Patton,  49  Ala.  423;  Lewis  v. 
Latham,  74  N.  Car.  283;   Bickel    v. 


Sheets,  24  Ind.   1;  Steele  v.  Curie,  4 
Dana  (Ky.)  381. 

Without  expressly  indorsing  the  re- 
sult in  some  of  the  cases,  or  all  that 
has  been  said  by  the  courts  in  their 
opinions  when  making  an  application 
to  the  facts  then  in  hand,  of  the  rule 
so  exhaustively  examined  and  ap- 
proved in  Tracy  v.  Talmage,  and  Hill 
V.  Spear,  we  cite,  in  support  of  the 
propositions  therein  contended  for, 
and  upon  which  we  rest  a  reversal 
of  the  order  of  dismissal  made  by 
the  court  below,  Armstrong  v.  Toler, 
11  Wheat.  (U.  S.)  258;  Green  v.  Col- 
lins, 3  Cliff.  (U.  S.)  494;  Dater  v. 
Earl,  3  Gray  (Mass.)  482;  Armfield 
V.  Tate,  7  Ired.  L.  (N.  Car.)  258; 
Read  v.  Taft,  3  R.  I.  175;  Cheney  v. 
Duke,  10  Gill.  &  J.  (Md.)  11;  Kreiss 
v.  Seligman,  8  Barb.  (N.  Y.)  439; 
Michael  v.  Bacon,  49  Mo.  474 ;  Bruns- 
wick V.  Valleau,  50  Iowa  120;  Web- 
ber V.  Donnelly,  33  Mich.  469;  Bishop 
V.  Honey,  34  Tex.  245;  Wright  v. 
Hughes,  119  Ind.  324,  21  N.  E.  907; 
Feineman  v.  Sachs,  33  Kans.  621  (7 
Pac.  222)  ;  Rose  v.  Mitchell.  6  Colo. 
102;  Banchor  v.  Mansel,  47  Maine 
58;  Henderson  v.  Waggoner,  2  Lea 
(Tenn.)  133;  Gaylord  v.  Soragen,  32 
Vt.  110;  Mahood  v.  Tealza.  26  La. 
Ann.  108;  Delavina  v.  Hill  (N.  H.), 
19  Atl.  1000." 


45 


LEGALITY    OF    ODJECT. 


§    690 


lawful  design,  the  court  held  that  he  could  not  legally  enforce 
the  payment  of  such  note.  The  original  contract  being  in  viola- 
tion of  the  statute  was  void ;  and  the  subsequent  repeal  of  the  stat- 
ute did  not  render  the  contract  valid.'^^  In  New  Hampshire  it 
has  been  held  that  if  goods  are  sold  and  delivered  in  the  state 
where  the  contract  is  made,  and  the  sale  is  there  legal,  and  noth- 
ing remains  then  to  be  done  by  the  vendor  to  complete  the  trans- 
action, and  his  connection  therewith  ceases,  the  vendor  may 
maintain  an  action  for  the  price  in  a  state  where,  by  its  laws,  the 
sale  would  be  prohibited.  But  if  it  enters  at  all  as  an  ingredient 
into  the  contract  between  the  parties  that  the  goods  shall  be  ille- 
gally sold,  or  that  the  seller  shall  do  some  act  to  assist  or  facilitate 
the  illegal  sale,  the  contract  will  not  be  enforced.  Or,  if  the 
goods  are  sold  to  be  delivered  in  the  place  where  the  sale  is  pro- 
hibited, the  purchaser  \vill  not  be  held  liable."^ 

§  690.    Violation  of  liquor  laws — Further  illustrations. — A 

retail  liquor  dealer,  who  has  failed  to  pay  his  state  license  tax, 


*'  Banchor  v.  Mansel,  47  Maine  58, 
per  Appleton,  J. :  "In  the  present 
case,  it  appears  from  the  letters  of 
the  plaintiff,  that  the  liquors  were  to 
be  kept  by  the  master  of  the  vessel 
carrying  them,  till  called  for  by  the 
defendant,  and  that  he  was  cautioned 
•  against  the  dangers  of,  and  advised 
how  to  avoid  their  seizure.  The 
plaintiff  then  not  merely  knew  that 
the  liquors  sold  were  purchased  by  the 
defendant  to  be  sold  by  him  in  viola- 
tion of  law,  but  he  co-operated  with 
and  aided  the  defendant  in  his  efforts 
to  evade  the  law  and  to  elude  the 
vigilance  of  its  officers.  Having  done 
this,  he  asks  this  Court  to  enforce 
a  contract  made  under  such  circum- 
stances and  for  such  purposes. 
*  *  *  The  original  contract  being  in 
violation  and  fraud  of  the  law  as  it 
then  existed,  was  void.  The  subse- 
quent repeal  of  the  prohibitory  laws 
of  the  State  cannot  restore  validity 
to  a  contract  void  in  its  inception. 
Hathawav  v.  Moran,  44  Maine  67; 
Milne  V.' Ruber,  3  McLean  (U.  S.) 
212;  West  v.  Roby,  4  N.  H.  285."  To 
same  effect,  Corbin  v.  Houlehan,  100 
Maine  246,  61  Atl.  131,  70  L.  R.  A. 
568. 
"Banchor  v.  Mansel,  47  Maine  58, 


per  Appleton,  J. :  "In  Kreiss  v.  Selig- 
man,  8  Barb.  (N.  Y.)  439,  the  Su- 
preme Court  of  New  York  says  'that, 
where  a  part^^  who  sells  goods  or 
advances  money  to  another,  with 
knowledge  of  a  design  on  the  part  of 
the  latter  to  put  the  money  or  goods 
to  an  unlawful  use,  does  any  act 
whatever  beyond  the  bare  sale  or 
loan,  in  aid  or  furtherance  of  the  un- 
lawful object,  he  cannot  recover.' 
This  view  of  the  law  is  recognized  as 
sound  by  the  Supreme  Court  of  Mas- 
sachusetts, in  Datre  v.  Earl,  3  Gray 
(Mass.)  482.  The  authorities  bear- 
ing upon  this  question  were  fully  ex- 
amined by  Selden,  J.,  in  Tracy  v. 
Talmage.  4  Kernan  162.  and  it  was 
there  held,  that  if  the  vendor,  with 
knowledge  of  the  intent  of  the  pur- 
chaser to  use  the  property  purchased 
for  an  unlawful  purpose,  does  any 
thing  beyond  making  the  sale,  in  aid 
or  furtherance  of  the  unlawful  de- 
sign, he  cannot  recover.  The  same 
question  came  before  the  Court  of 
Appeal  of  New  York  in  Curtis  v. 
Leavitt.  15  N.  Y.  fl  Smith)  10,  and 
the  doctrine  of  Tracy  v.  Talmage  was 
unanimously  affirmed."'  To  same  ef- 
fect. Corbin  v.  Houlehan,  100  Maine 
246,  61  Atl.  131,  70  L.  R.  A.  568. 


690 


CONTRACTS. 


46 


and  is  actually  engaged  in  an  illegal  traffic,  cannot  recover  from  a 
brewing  company  for  its  breach  of  contract  to  sell  its  beer  exclu- 
sively to  him  in  a  designated  town.®^  An  action,  as  provided  by 
statute,  to  recover  money  paid  by  plaintiff  to  a  liquor  dealer  for 
beer  sold  in  violation  of  the  liquor  law  to  plaintiff,  a  retail  liquor 
dealer,  survives  on  the  death  of  the  seller.  Where  the  statute 
provides  that  such  payment  may  be  recovered  as  money  received 
and  held  to  the  plaintiff's  use,  the  rule  that  plaintiff,  having  pur- 
chased the  beer  for  illegal  sale,  cannot  have  the  aid  of  the  law  in 
matters  growing  out  of  the  transaction,  does  not  apply. ^* 

It  has  also  been  held  that  one  who  hired  to  a  dealer  in  liquors  to 
serve  as  clerk  or  general  employe,  and  also  to  act  as  barkeeper, 
cannot  recover  any  compensation  for  the  services  rendered  where 


"**  Niagara  Falls  Brewing  Co.  v. 
Wall,  98  Mich.  158,  57  N.  W.  99,  per 
Grant,  J. :  "It  has  been  held  by  this 
court  that  a  saloon  keeper  cannot 
recover  for  sales  made  by  him  before 
he  has  paid  his  tax  and  filed  his 
bond.  Loranger  v.  Jardine,  56  Mich. 
518,  23  N.  W.  203.  It  was  there  held 
that  the  liquor  law  was  not  enacted 
for  the  purpose  of  revenue  only,  but 
for  the  safety  and  protection  of  pub- 
lic morals  as  well ;  and  that  a  con- 
tract or  sale  made  in  violation  of  it 
was  void.  The  same  was  held  in 
Deering  v.  Chapman,  22  Maine  488. 
It  is  insisted,  however,  by  the  defend- 
ant that  he  might  legally  buy,  though 
he  could  not  legally  sell.  The  case 
is  not  one  where  a  party  has  bought 
intending  to  make  legal  sales,  and  to 
store  and  keep  the  liquor  until  he  has 
obtained  the  legal  right  to  sell.  De- 
fendant was  actually  engaged  in  the 
illegal  business  and  sold  most  of  the 
liquor  while  he  was  thus  engaged. 
While  thus  violating  the  law,  public 
policy  will  not  permit  him  to  defend 
against  a  legal  purchase  while  he  was 
engaged  in  illegal  sales.  He  was  not 
legally  in  condition  to  perform  his 
contract  with  the  plaintiff  vmtil  he 
had  paid  his  tax  and  filed  his  bond. 
This  he  did  not  do  before  the  alleged 
violation  of  the  contract  by  plaintiff, 
and  he  had  treated  it  as  rescinded  in 
consequence  of  the  violation.  The 
plaintiff  might  legally  have  rescinded 
the  contract  upon  ascertaining  that 
the  defendant  had  not  complied  with 


the  law,  and  therefore  had  no  right 
to  make  sales  of  the  goods  pur- 
chased from  it.  The  court  was  cor- 
rect in  directing  a  verdict  for  the 
plaintiff." 

"*  Yearteau  v.  Bacon's  Estate,  65 
Vt.  516,  27  Atl.  198,  per  Munson,  J.: 
"The  defendant  submits  that  if  the 
action  is  one  that  will  survive,  as 
not  penal  in  its  nature,  it  cannot  be 
maintained  because  based  upon  an 
illegal  transaction,  in  which  the  plain- 
tiff and  the  deceased  were  equally  in 
fault.  The  liquor  was  sold  by  the 
deceased  in  violation  of  law,  and  was 
bought  by  the  plaintiff  for  the  pur- 
pose of  unlawful  sale;  and  neither 
party  could,  ordinarily,  have  the  aid 
of  the  court  in  any  matter  growing 
out  of  the  transaction.  But  it  is 
within  the  province  of  the  legislature 
to  relieve  either  party  to  an  illegal 
transaction  from  the  operation  of  this 
rule.  The  statute  provides  that  one 
who  makes  a  payment  for  liquor  sold 
in  violation  of  law  may  recover  it 
back,  as  money  received  and  held  to 
his  use.  If  the  plaintiff  is  within  the 
purview  of  the  statute,  the  doctrine 
that  one  in  pari  delicto  shall  not 
maintain  a  suit  cannot  be  invoked 
against  him,  for  the  legislature  has 
given  him  the  right  to  sue  notwith- 
standing the  character  of  the  transac- 
tion. But  the  defendant  insists  that 
a  statute  should  not  be  so  construed 
as  to  contravene  a  well-recognized 
and  wholesome  rule  of  law,  when 
there  is  room  for  its  application  else- 


47  LEGALITY  OF  OBJECT.  ?  GQI 

the  sale  of  intoxicating  liquors  is  prohibited.^'  So  it  has  been 
held  that  one  who  leased  premises  to  be  used  for  the  keeping  and 
sale  of  liquors,  and  who  in  addition  agreed  to  supply  ice  with 
which  to  keep  the  premises  cool,  was  not  liable  for  damage  done 
to  liquor  caused  by  the  failure  of  the  landlord  to  keep  the  prem- 
ises cool,  when  the  sale  of  intoxicating  liquors  was  illegal."*'  A 
surviving  partner  has  also  been  denied  the  right  to  an  accounting 
against  the  deceased  partner's  executrix,  where  the  partnership 
was  formed  to  manufacture  and  sell  distilled  liquors,  when  the 
business  was  conducted  and  the  licenses,  state  and  federal,  held  in 
the  deceased's  name ;  and  the  state  law  required  that  the  applicant 
for  a  distiller's  license  must  state  that  he  is  the  only  person 
pecuniarily  interested  in  the  business,  and  the  federal  laws  re- 
quired every  distiller  to  give  the  collector  of  the  district  written 
notice  as  to  the  parties  interested  in  the  business.®^ 

§  691.  Sunday  contracts. — A  subsequent  chapter  wdl  be 
devoted  to  a  discussion  of  Sunday  contracts.  The  general  rules 
are  much  the  same  as  to  such  contracts,  but  they  constitute  a  dis- 

where.  It  is  urged  that  this  statute  employment,  the  contract  being  an 
should  be  held  to  give  the  right  of  entirety.  If  the  plaintiff  contracted 
recovery  only  to  those  who  purchase  with  the  defendants  for  his  personal 
for  their  personal  use,  and  not  to  one  services  in  their  employment,  a  part 
dealer  as  against  another.  The  ar-  of  which  employment  was  to  be  in 
gument  is  that  when  applied  to  a  case  selling  liquors  unlawfully,  he  can 
like  this  the  statute  cannot  punish  recover  nothing  upon  such  a  contract 
one  violator  of  the  law  without  re-  or  for  services  rendered  in  pursuance 
warding  another  to  the  same  extent,  of  it.  But  if  his  contract  was  to 
and  that  the  legislature  cannot  have  render  services  only  in  a  legal  em- 
intended  an  application  of  the  pro-  ployment,  and  he  seeks  to  recover  for 
vision  where  it  would  produce  such  no  other,  he  is  not  to  be  debarred 
a  result.  But  we  think  the  purpose  therefrom  merely  because,  during  the 
of  the  legislature  is  to  be  determined  season  of  his  employment,  he  occa- 
from  a  broader  survey  of  the  law.  If  sionally  assisted  in  the  sale  of  liquors 
the  vendor  of  intoxicating  liquor  sells  as  a  gratuitous  service  to  his  em- 
on  credit  he  cannot  enforce  collection  ployers,  and  not  as  a  part  of  his  con- 
of  the  price,  and  if  he  sells  for  cash  tracted  services  for  which  he  seeks 
he  cannot  defend  his  receipts  against  compensation." 
a  demand  for  their  return."  ""  Kellv  v.  Courter,  1   Okla.  277.  30 

"'Bixbv   v.    Moor.    51    N.    H.   402:  Pac.  372. 
Sullivan  v.  Horgan.  17  R.  I.   100.  20        '^Vandegrift  v.  Vandegrift.  226  Pa. 

Atl.  232,  9  L.  R.  A.  110.     See,  how-  254.  75   Atl.   365.     "It  is   lawful   for 

ever,  in  connection  with  the  two  fore-  parties   to   contract  to   abstain    from 

eoing  cases,  the  case  of  Goodwin  v.  the  performance  of  acts  proper  and 

Clark,    65    ATaine    280.    which    holds  legal  in  themselves,  when  others  with 

that    "A    person    cannot    recover    for  whom  they  contract  may  have  an  in- 

his    personal     services,     portions     of  terest  in  their  doing  so  *  *  *  and  such 

which  arc   rendered   in   an   unlawful  agreement  may  assume  the  form  of 


§  692 


CONTRACTS. 


48 


tinct  class,  and  there  is  some  difference  of  opinion  on  a  few  of  the 
questions  relating  to  such  contracts. 

§  692.  Violation  of  statute  as  to  gaming  or  wagering. — A 
gambling  or  wagering  contract  has  been  defined  as  "Anything 
which  induces  men  to  risk  their  property  without  any  other 
hope  of  return  than  to  get  for  nothing  any  given  amount  from  the 
other."®^  Gaming  and  wagering  contracts  will  be  treated  at 
length  in  a  subsequent  chapter;  for  this  reason  they  will  be  given 
only  brief  consideration  at  this  time. 

§  693.  Wagering  contracts  at  common  law. — At  common 
law  wagering  contracts  upon  indifferent  matters  were  valid. "^ 
But  those  which  tended  to  a  breach  of  the  peace  or  to  injure  the 
feelings,  character  or  interest  of  third  persons,  or  to  militate 
against  the  principles  of  morality  of  sound  public  policy,  were 
void.^  Moreover,  the  courts  were  not  disposed  to  entertain 
actions  upon  idle  wagers,  and  were  vigilant  for  reasons  upon 


a  condition,"  annexed  to  the  sale  of 
real  estate  that  intoxicating  liquors 
shall  not  be  sold  thereon.  Whealkate 
Min.  Co.  V.  Mulan,  152  Mich.  607,  116 
N.  W.  360. 

"^In  re  Brua's  Appeal,  55  Pa.  St. 
294,  quoted  in  Creston  First  Nat. 
Bank  v.  Carroll,  80  Iowa  11,  14,  45  N. 
W.  304,  8  L.  R.  A.  275.  "A  bet  or 
wager  is  ordinarily  an  agreement  be- 
tween two  or  more  that  a  sum  of 
money,  or  some  valuable  thing,  con- 
tributing to  which  all  agreeing  take 
part,  shall  become  the  property  of 
one  or  some  of  them  on  the  happen- 
ing in  the  future  of  an  event  at  the 
present  uncertain ;  and  the  stake  is 
the  money  or  thing  thus  put  upon 
the  chance."  Harris  v.  White,  81  N. 
Y.  532,  quoted  in  Hankins  v.  Ottinger, 
115  Cal.  454,  47  Pac.  254,  40  L.  R.  A. 
76.  See  also,  Fareira  v.  Gabell,  89 
Pa.  St.  89.  "There  is  no  mutuality 
in  a.  gambling  contract;  no  oppor- 
tunity for  both  sides  to  make  gains; 
no  consideration  to  be  paid  bv  one 
and  received  bv  the  other"  (other 
than  the  mutual  promises  of  each  to 
the  other).  "One  must  gain  and  the 
other  must  lose."  Rehberg  v.  Ton- 
tine Surety  Co.  (Mich.),  91  N.  W. 
132. 


^'^  Jones  V.  Randall,  1  Cowp.  37; 
Good  V.  Elliott,  3  T.  R.  693;  De 
Costa  V.  Jones,  2  Cowp.  729 ;  Bunn 
V.  Riker,  4  Johns.  (N.  Y.)  426,  4  Am. 
Dec.  292 ;  Bernard  v.  Taylor,  23  Ore. 
416,  31  Pac.  968,  18  L.  R.  A.  859,  37 
Am.  St.  693. 

Mn  Irwin  v.  Williar,  110  U.  S.  499, 
28  L.  ed.  225,  4  Sup.  Ct.  160,  the  Su- 
preme Court  of  the  United  States 
says  of  wagering  contracts :  "In  Eng- 
land, it  is  held  that  the  contracts, 
although  wagers,  were  not  void  at 
common  law,  and  that  the  statute  has 
not  made  them  illegal,  but  only  non- 
enf orcible ;  Thacker  v.  Hardy,  ubi 
supra ;  while  generally,  in  this  coun- 
try, all  wagering  contracts  are  held 
to  be  illegal  and  void  as  against  pub- 
lic policy.  Dickson's  Executor  v. 
Thomas,  97  Pa.  St.  278;  Gregory  v. 
Wendell,  40  Mich.  432;  Lyon  v.  Cul- 
bertson,  83  111.  33;  Melchert  v.  Ameri- 
can Union  Telegraph  Co.,  3  McCrarv 
(U.  S.)  521,  11  Fed.  193.  and  note; 
Barnard  v.  Backhaus.  52  Wis.  593; 
Kingsburv  v.  Kirwan.  77  N.  Y.  612; 
Story  v.  Salomon.  71  N.  Y.  420:  Love 
V.  Harvev,  114  Mass.  80."  4  Kent's 
Commentaries  466;  Greenhood  on 
Public  Policy  226. 


49 


LEGALITY    OF    OBJECT. 


§    694 


which  to  base  a  refusal  to  enforce  them  without  violating  the 
rule  of  stare  decisis."  Some  of  the  American  courts  have  fol- 
lowed the  common-law  rule.  Where  this  is  true,  in  the  absence 
of  any  statutory  enactment,  unless  it  contravenes  sound  public 
policy,  a  wager  contract  will  be  upheld.^  A  stock  illustration  of 
wagering  contracts  that  are  against  public  policy  within  the  mean- 
ing of  the  common-law  rule  is  election  bets.  Such  wagers  are 
held  to  be  illegal  and  void  because  they  tend  to  destroy  the  surety 
of  the  ballot.* 


§  694.  Wagering  contracts — Present  status. — The  pres- 
ent day  disposition  of  the  courts  is  to  increase  the  number  of 
exceptions  to  the  common-law  rule  which  permits  a  recovery 
upon  gaming  or  wager  contracts.  Many  jurisdictions  declare  all 
wagering  contracts  to  be  illegal  and  void  without  regard  to  sub- 
ject-matter for  the  reason  that  they  are  against  public  policy.'* 


*  Gilbert  v.  Sykes,  16  East  150; 
Atherfold  v.  Beard,  2  T.  R.  610;  Elt- 
ham  V.  Kingsman,  1  B.  &  Aid.  683; 
Fisher  v.  Waltham,  4  Q.  B.  889. 

*  Boughner  v.  Meyer,  5  Colo.  71,  40 
Am.  Rep.  139;  De'wees  v.  Miller,  5 
Har.  (Del.)  347;  Flagg  v.  Baldwin, 
38  N.  J.  Eq.  219,  48  Am.  Rep.  308; 
Campbell  v.  Richardson,  10  Johns. 
(N.  Y.)  406;  Smith  v.  Brown,  3  Tex. 
360.  49  Am.  Dec.  748.  See  Appleton 
V.  Maxwell,  10  N.  Mex.  748,  65  Pac. 
158,  55  L.  R.  A.  93,  for  a  review  of 
the  subject.  A  bet  on  a  horse  race  is 
not  invalid  because  against  public 
policy.  Gridley  v.  Dorn,  57  Cal.  78, 
40  Am.  Rep.  110;  Ross  v.  Green,  4 
Har.  (Del.)  308;  Harris  v.  White, 
81  N.  Y.  532;  McElroy  v.  Carmichael, 
6  Tex.  454.  A  wager  as  to  the  time 
a  railroad  will  be  completed  is  valid. 
Johnson  v.  Fall,  6  Cal.  359,  65  Am. 
Dec.  518;  Beadles  v.  Bless,  27  111.  320, 
81  Am.  Dec.  231.  Idle  wagers  and 
all  gaming  contracts  have  been  de- 
clared void.  Kuhl  V.  M.  Gaily  Uni- 
versal Press  Co.,  123  Ala.  452.  26  So. 
535,  82  Am.  St.  135;  ^lonroe  v. 
Smell  v.  25  Tex.  586.  78  Am.  Dec.  541. 

*Hill  v.  Kidd,  43  Cal.  615;  John- 
ston v.  Russell,  37  Cal.  670;  Wheeler 
v.  Spencer,  15  Conn.  28;  Merchants' 
Sav.  &c.  Co.  v.  Goodrich.  75  111.  554; 
Wroth  V.   Johnson.   4   Har.   &   McH. 

4 — CoNTR.\CTS,  Vol.  2 


(Md.)  284;  Ball  v.  Gilbert,  12  Mete. 
(Mass.)    397;   Cooper  v.   Brewster,   1 
Gil.  (Minn.)  73;  Bates  v.  Clifford,  22 
Minn.    52;    Specht    v.     Beindorf,    56 
Nebr.  553,  76  N.  W.  1059,  42  L.  R.  A. 
429;  Vischer  v.  Yates,  11  Johns.  (X. 
Y.)  23;  Thomas  v.  Cronise,  16  Ohio 
54;    Stoddard   v.    Martin,    1    R.    I.    1 ; 
Quarles  v.  State,  5  Humph.   (Tenn.) 
561;  Tarleton  v.  Baker,   18  Vt.  9,  44 
Am.  Dec.  358;  Shumate  v.  Common- 
wealth, 15  Grat.  (Va.)  653.     Election 
bets  are  illegal  even  when  made  after 
the  poll  is  closed,  if  before  the  can- 
vass   is    complete.     Rust    v.    Gott,    9 
Cow.   (X.  Y.)   169,  18  Am.  Dec.  497. 
A  bet  on  the  outcome  of  an  election 
to   be   held    in   a   district   other   than 
that  in  which  the  parties  reside  has 
been  upheld.     Smith  v.  Smith,  21  111. 
244,    74   Am.     Dec.     100;     Wroth     v. 
Johnson,  4  Har.  &  McH.   (Md.)  284. 
'Eldred  v.  Malloy,  2  Colo.  320,  20 
Am.    Rep.   752;    Stacy    v.    Foss,    19 
Maine  335,  36  Am.  Dec.  755;  Lewis 
V.   Littlefield.    15   Maine  233;   Harvev 
v.  Merrill,  150  Mass.  1,  22  N.  E.  49. 
5  L.  R.  A.  200.  15  Am.  St.  159;  Love 
V.   Harvev,    114  Mass.  80;   Wilkinson 
v.  Touslev.  16  Minn.  299.  10  Am.  Rep. 
139;  Winchester  v.  Nutter.  52  N.  H. 
507.  13  Am.   Rep.  93;  Williston  Cas. 
on  Contracts  157;   Pekkins  v.   Eaton, 
3     N.    H.     152;    Dickson's    Exr.    v. 


695 


CONTRACTS. 


50 


The  common-law  rule  relative  to  gambling  and  wager  contracts 
is  at  present  comparatively  unimportant  since  modern  statutes  de- 
clare practically  all  gambling  and  wager  contracts  invalid.® 

§  695.  Violation  of  statute  as  to  lotteries. — Lotteries  are 
closely  allied  to  gaming  and  wagering.  Indeed  a  lottery  has  been 
defined  as  a  species  of  gaming,  which  may  be  defined  as  a  scheme 
for  the  distribution  of  prizes  by  chance  among  persons  who  have 
paid,  or  agreed  to  pay,  a  valuable  consideration  for  the  chance 
to  obtain  a  prize. ^  For  this  reason  the  subject  of  lotteries  might 
be  properly  included  with  gaming  and  wagering  contracts  but 
brief  mention  will  be  given  the  former  subject  in  this  section. 
Concisely  stated  a  lottery  is  a  scheme  for  the  distribution  of  a 
prize  or  prizes  by  chance.^ 

§  695a.    Elements   essential   to   existence   of  a  lottery. — 

Three  elements  are  declared  essential  to  its  existence,  which  are : 
a  prize,  a  chance  on  the  prize,  and  the  payment  of  a  consideration 
for  the  chance.''     The  question  of  what  actually  constitutes  a  lot- 


Thomas,  97  Pa.  278;  Edgell  v.  Mc- 
Laughlin, 6  Whart.  (Pa.)  176,  36 
Am.  Dec.  214;  Rice  v.  Gist,  1  Strob. 
(S.  Car.)  82;  Irwin  v.  Williar,  110 
U.  S.  499,  28  L.  ed.  225,  4  Sup.  Ct. 
160;  West  v.  Holmes.  26  Vt.  530; 
Collamer  v.  Day,  2  Vt.  144.  And 
see  Pabst  Brewing  Co.  v.  Liston,  80 
Minn.  473,  83  N.  W.  448,  81  Am.  St. 
275.  "Of  late  years,  by  legislation 
and  judicial  decision,  the  hostility  to 
wagers  of  every  nature  has  been 
marked."  Bernard  v.  Taylor,  23  Ore. 
416,  31  Pac.  968,  18  L.  R.  A.  859. 

'  See  post,  §  692. 

'  Burks  V.  Harris,  91  Ark.  205,  120 
S.  W.  979,  23  L.  R.  A.  (N.  S.)  626n, 
134  Am.  St.  67,  25  Cyc.  1633. 

*  State  V.  Sedgwick  (Del.),  81  Atl. 
472;  State  v.  Kansas  Mercantile 
As.sn.,  45  Kans.  351,  25  Pac.  984,  11 
L.  R.  A.  430,  23  Am.  St.  727;  State 
V.  Boneil,  42  La.  Ann.  1110,  8  So.  298. 
21  Am.  St.  413.  See,  too,  Ballock  v. 
State,  73  Md.  1.  20  A.  184.  8  L.  R.  A. 
,  671,  25  Am.  St.  559;  People  v.  Elliott, 
74  Mich.  264,  41  N.  W.  916,  3  L.  R. 
A.  403,  16  Am.  St.  640;  Ouatsoe  v. 
Eggleston,  42  Ore.  315,  71  Pac.  66; 
State  V.  Dalton,  22  R.  I.  77,  46  Atl. 


234,  48  L.  R.  A.  775,  84  Am.  St.  818. 
"Burks  V.  Harris,  91  Ark.  205,  120 
S.  W.  979,  23  L.  R.  A.  (N.  S.)  626n, 
134  Am.  St.  67;  Brooklyn  Daily  Eagle 
V.  Voorhies,  181  Fed.  579;  Equitable 
Loan  &c.  Co.  v.  Warring,  117  Ga. 
599,  44  S.  E.  320,  62  L.  R.  A.  93,  97 
Am.  St.  177 ;  State  v.  Nebraska  Home 
Co.,  66  Nebr.  349,  92  N.  W.  763,  60 
L.  R.  A.  448,  103  Am.  St.  706.  See 
also,  Loiseau  v.  State,  114  Ala.  34, 
22  So.  138,  62  Am.  St.  84;  Grant  v. 
State,  54  Tex.  Cr.  403,  112  S.  W. 
1068,  21  L.  R.  A.  (N.  S.)  876,  130 
Am.  St.  897.  As  to  what  constitutes 
a  prize,  see  Fitzsimmons  v.  United 
States,  156  Fed.  477,  84  C.  C.  A.  287, 
13  L.  R.  A.  (N.  S.)  1095;  United 
States  V.  Purvis,  195  Fed.  618.  For 
other  definitions  of  what  constitutes 
a  lottery,  see  People  v.  Elliott,  74 
Mich.  264,  41  N.  W.  916,  3  L.  R.  A. 
403,  16  Am.  St.  640 ;  Hull  v.  Ruggles, 
56  N.  Y.  424.  For  a  case  drawing 
the  distinction  between  lotteries, 
wagers,  and  bets,  see.  Stevens  v. 
Cincinnati  Times-Star  Co..  72  Ohio 
St.  112.  73  N.  E.  1058,  106  Am.  St. 
586.  For  a  case  drawing  the  dis- 
tinction   between    games    of    chance 


51 


LEGALITY    OF    OBJECT. 


696 


tcry  depends  largely  on  the  statute  declaring  lotteries  to  be  unlaw- 
ful. The  following  is  an  instance  in  which  a  given  scheme  was 
declared  a  lottery :  The  distribution  of  parcels  of  land  of  unequal 
value  by  chance  among  holders  of  tickets  of  purchasers,  ^uch  per- 
sons not  being  tenants  in  common,  has  been  held  a  lottery,  not- 
withstanding each  pays  a  uniform  price. ^° 

§  696.  Guessing  contests  as  lotteries. — "Guessing  con- 
tests" such  as  a  scheme  by  which  the  subscriber  for  a  certain  peri- 
odical who  shall  guess  nearest  the  popular  vote  for  a  certain 
official  at  a  coming  election,"  or  the  person  who  guesses  nearest 


and  those  of  skill,  see  People  v. 
Lavin,  179  N.  Y.  164,  71  N.  E.  753. 
It  is  immaterial  whether  the  methods 
used  make  the  value  of  the  prize  de- 
pend upon  chance  or  its  possession 
(it  having  a  fixed  value)  depend 
upon  chance.  In  cither  case  a  lottery 
exists.  United  States  v.  One  Box  of 
Tobacco,  190  Fed.  731,  111  C.  C.  A. 
459. 

"  Power  v.  Canniff,  18  U.  C.  Q.  B. 
403;  Loyd  v.  Clark,  11  U.  C.  C.  P. 
248;  Cronyn  v.  Widder,  16  U.  C.  Q. 

B.  356;  Marshall  v.  Piatt,  8  U.  C.  C. 
P.  189;  Paulk  v.  Jasper  Land  Co., 
116  Ala.  178,  22  So.  495;  Burks  v. 
Harris,  91  Ark.  205,  120  S..  W.  979, 
23  L.  R.  A.  (N.  S.)  626n,  134  Am. 
St.  dl  \  Branham  v.  Stallings,  21  Colo. 
211,  40  Pac.  396,  52  Am.  St.  213; 
Whitley  v.  McConnell,  133  Ga.  738. 
66  S.  E.  933,  27  L.  R.  A.  (N.  S.) 
287,  134  Am.  St.  223.  (Lots  to  be 
sold  at  auction.  After  the  sale  a 
drawing  was  to  be  had  in  which  all 
purchasers  might  participate,  the 
lucky  person  to  receive  a  lot  which 
was  not  to  be  put  on  sale.)  Glcnn- 
ville  Inv.  Co.  v.  Grace,  134  Ga.  572, 
68  S.  E.  301 ;  Elder  v.  Chapman.  176 
111.  142,  52  N.  E.  10,  revg.  70  Til.  App. 
288;  Swain  v.  Bussell,  10  Ind.  438; 
Lvnch  v.  Rosenthal.  144  Ind.  86,  42 
N.  E.  1103,  31  L.  R.  A.  835.  55  Am. 
St.  168;  Emshwiler  v.  Tyner,  21  Ind. 
App.  347.  52  N.  E.  459,  69  Am.  St. 
360;  Guenther  v.  Dewien,  11  Iowa 
133;  Wooden  v.  Shotwell,  24  N. 
J.  L.  789,  aflFg.  23  N.  J.  L. 
465 ;  Jackson  Steel  Nail  Co.  v. 
Marks.  2  Ohio  C.  D.  584.  4  Ohio  C. 

C.  343;  Hooker  v.  DePalos,  28  Ohio 


St.  251 ;  Seidenbender  v.  Charles,  4 
Serg.  &  R.  (Pa.)  151,  8  Am.  Dec. 
682n;  Allebach  v.  Godshalk,  116  Pa. 
St.  329,  9  .A.tl.  444;  .\llebach  v.  Hun- 
sicker,  132  Pa.  St.  349,  19  .^tl.  139; 
Ridgeway  v.  Underwood,  4  Wash.  C. 
C.  129,  Fed.  Cas.  No.  11815.  See, 
however,  Lauder  v.  Peoria  Agri.  & 
Trotting  Soc,  71  111.  App.  475,  which 
holds  that  if  the  parcels  of  land  are 
of  equal  value  and  are  apportioned  to 
the  purchasers  by  a  designated  com- 
mittee, no  lottery  exists.  See  also, 
Harlow  v.  Snow,  147  111.  App.  369. 
And  where  the  subscribers  to  lots  de- 
cided in  a  meeting  held  by  them  that 
the  lots  subscribed  for  should  be  ap- 
portioned by  drawing,  it  did  not  con- 
stitute a  lottery.  Chancv  Park  Land 
Co.  v.  Hart,  104  Iowa  592,  12>  N.  W. 
1059.  The  subscribers  may  meet  and 
determine  upon  a  method  of  distribu- 
tion (Ginther  v.  Rochester  Imp.  Co. 
(Ind.  App.),  92  N.  E.  698;  Wash- 
ington Glass  Co.  V.  IMosbaugh,  19 
Ind.  App.  105,  49  N.  E.  178;  McCleary 
V.  Chipman.  32  Ind.  App.  489,  68  N. 
E.  320),  but  they  must  not  adopt  a 
plan  which  constitutes  a  lottery. 
Emshwiler  v.  Tvner.  21  Ind.  App. 
347,  52  N.  E.  4.59,  69  Am.  St.  360.  The 
owners  may  distribute  by  lot  when 
thev  are  tenants  in  common.  Wooden 
V.  Shotwell,  24  N.  J.  L.  789.  See 
also.  Elder  v.  Chapman,  176  111.  142, 
52  N.  E.  10. 

"  Waite  V.  Press  Pub.  Co..  155  Fed. 
58.  11  L.  R.  A.  609n.  85  C.  C.  A.  576. 
Stevens  v.  Cincinnati  Times-Star  Co., 
72  Ohio  St.  112.  n  N.  E.  1058.  106  Am. 
St.  586;  Hobing  v.  Enquirer  Co.,  2 
Ohio  N.  P.  (N.  S.)  205;  25  Ops.  Atty. 


§    697  CONTRACTS.  52 

the  number  of  beans  in  a  jar/"  or  the  number  of  seeds  In  a  water- 
melon or  pumpkin/^  or  a  "guessing  contest"  as  to  the  total 
number  of  paid  admissions  to  the  World's  Fair  at  St.  Louis/*  or 
a  chance  drawing  of  certain  niunbers  representing  given  ball 
clubs,  the  prize  going  to  the  one  who  held  numbers  representing 
clubs  that  made  the  greatest  number  of  scores  in  a  week's  time/^ 
have  been  held  games  of  chance  or  lotteries.  A  scheme  for  the 
distribution  of  money  among  the  purchasers  of  certain  brands  of 
cigars  who  should  estimate  most  closely  the  number  of  cigars  of 
all  brands  upon  which  the  government  would  collect  taxes  during 
a  named  month  has  been  held  a  lottery.^* 

§  697.  Tailor  suit  clubs — Accumulated  funds  distributed 
by  chance,  and  the  like. — A  "tailor  suit  club"  the  members  of 
which  contributed  a  specified  amount  per  week  and  had  weekly 
drawings  has  been  held  a  lottery.^^  The  courts  also  condemn  as 
a  lottery  any  scheme  whereby  a  fund  is  accumulated  by  the  pay- 
ment of  designated  sums  of  money  at  specified  intervals  by  the 
holders  of  certificates,  which  certificates  are  to  mature  and  be  paid 
in  a  manner  dependent  upon  chance,  the  holder  to  be  paid  a 
greater  sum  than  he  has  contributed.^*     Likewise  a  plan  whereby 

Gen.  (Moody)  286.     Contra,  19  Ops.  Q.  B.  474  (prize  for  person  correctly 

Atty.    Gen.     (Miller)    679;    23    Ops.  guessing     the     names     of     winning 

Atty.  Gen.   (Griggs.)  207.  horses  in  a  race  to  be  run)  ;  Camin- 

"Hudelson  v.  State,  94  Ind.  426,  48  ada  v.  Hulton,  60  L.  J.  Mag.  Cas.  (N. 

Am.     Rep.     171.      Contra,     Reg.     v.  S.)   116,  17  Cox.  C.  C.  307   (guessing 

Dodds,  4  Ont.  390;  Reg.  v.  Jamieson,  winner   of  horse   race)  ;    Dunham   v. 

7   Ont.    149    (buttons   in  the  jar  in-  St.  Croix  Soap  Mfg.  Co.,  34  N.  B.  243 

stead  of  beans).  (weight   of  a   block  of   soap).     See, 

"Thomas,       Nonmailable      Matter  however,  Barclay  v.  Pearson   (1893), 

§  137a.  2   Ch.    154.     Guessing   contest   as   to 

"25  Ops.  Atty.  Gen.  (Moody)  286.  missing  word  in  a  sentence.     Word 

Contra,  23  Ops.  Atty.   Gen.    (Knox)  not  chosen  until  after  the  close  of  the 

492.  contest.     Held  lottery.     To  same  ef- 

"  State  V.  Sedwick   (Del.),  81  Atl.  feet,   Hall  v.   MacWilliams,  65  J.   P. 

472.  742. 

^"Ellison  V.  Lavin,  179  N.  Y.  164,  "De  Florin  v.   State,  121   Ga.  593, 

71  N.  E.  753,  66  L.  R.  A.  601.  Contra,  49  S.  E.  699,  104  Am.  St.  177;  People 

United  States  v.  Rosenblum,  121  Fed.  v.  McPhee,  139  Mich.  687,  103  N.  W. 

180.       The     English     and     Canadian  174,  69  L.  R.  A.  505,  5  Am.  &  Eng. 

authorities   generally  hold   such  con-  Ann.    Cas.   835 ;    State   v.    Moren,   48 

tests  valid.     In  addition  to  those  al-  Minn.    555,    51    N.    W.   618;    State   v. 

ready  cited,  see;  Hall  v.  Cox  (1899),  Perry,  154  N.  Car.  616,  70  S.  E.  387: 

1  Q.  B.  198  (prize  for  a  correct  pre-  Grant  v.  State,  54  Tex.  Crim.  403,  112 

diction  of  the  number  of  births  and  S.  W.  1068,  21  L.  R.  A.  (N.  S.)  876n, 

deaths    in    London    during    a    certain  130   Am.    St.   897. 

week);  Stoddart  v.  Sagar  (1895),  2  "Fitzsimmons    v.     United     States, 


53 


LEGALITY    OF    OBJECT. 


§    698 


one  buys  a  lead  pencil  of  triflincj  value  and  at  the  same  time  se- 
lects a  number  or  numbers,  which  if  selected  at  a  chance  drawing, 
entitled  the  purchaser  to  a  prize  of  much  greater  value  than  the 
amount  paid  for  the  ticket,  constitutes  a  lottery/^  And  this  has 
been  said  of  a  slot  machine  which  awarded  unequal  prizes. -°  An 
agreement  among  certain  holders  of  lottery  tickets  to  divide  their 
.winnings  is  also  declared  against  public  policy  and  unenforcible.^^ 

§  698.  Solution  of  a  problem  not  a  lottery. — But  where  a 
prize  is  offered  for  the  correct  solution  of  a  problem,  such  as 
counting  the  dots  in  a  given  space,  one  who  correctly  counts  the 
dots  may  maintain  an  action  for  the  prize  offered."     The  legality 


156  Fed.  477,  84  C.  C.  A.  287,  13  L.  R. 
A.  (N.  S.)  1095;  MacDonald  v. 
United  States,  24  U.  S.  App.  25,  63 
Fed.  426,  12  C.  C.  A.  339  (writ  of 
certiorari  denied  in  159  U.  S.  260,  40 
L.  ed.  143,  15  Sup.  Ct.  1040)  ;  United 
States  V.  Fulkerson,  74  Fed.  619; 
State  V.  United  States  Express  Co., 
95  Winn.  442,  104  N.  W.  556;  Siver  v. 
Guarantee  Invest.  Co..  183  Mo.  41,  81 
S.  W.  1098;  Public  Clearing  House  v. 
Coyne,  194  U.  S.  497,  48  L.  ed.  1092, 
24  Sup.  Ct.  789;  State  v.  Nebraska 
Home  Co.,  66  Nebr.  349,  92  N.  W. 
763,  60  L.  R.  A.  448,  103  Am.  St.  706. 
In  the  above  case  money  was  to  be' 
used  in  purchasing  homes  for  its  mern- 
bers.  In  schemes  of  this  character  it 
is  usually  the  one  who  first  applies  or 
whose  application  is  first  accepted 
that  gets  the  prize.  Thus  in  the  above 
case  it  appeared  that  the  first  few 
applicants  accepted  would  receive 
their  first  instalment  of  money  within 
the  first  twenty  months  after  the 
contract  was  made  while  the  one 
thousandth  man  might  have  to  wait 
seventy  years  from  the  time  he  took 
his  contract.  State  v.  Interstate  Sav. 
Inv.  Co.,  64  Ohio  St.  283,  60  N.  E. 
220.  52  L.  R.  A.  530,  83  Am.  St.  754; 
Fidelitv  Funding  Co.  v.  Vaughn,  18 
Okla.  13,  90  Pac.  34,  10  L.  R.  A.  (N. 
S.)  1123.  See  also.  United  States  v. 
Purvis,  195  Fed.  618  (change  to  ab- 
tain  loan  at  early  date)  ;  Attorney 
General  v.  Preferred  IMercantile  Co., 
187  Mass.  516,  72,  N.  E.  669;  State  v. 
United  States  Express  Co.,  95  Minn. 
442,   104   N.   W.   556.    See,   however, 


McDonald  v.  Pacific  Debenture  Co., 
146  Cal.  667,  80  Pac.  1090 ;  Equitable 
Loan  &  Security  Co.  v.  Waring,  117 
Ga.  599,  44  S.  E.  320,  62  L.  R.  A.  93, 
97  Am.   St.   177. 

"  State  v.  Mercantile  Assn.,  45 
Kans.  351,  25  Pac.  984,  23  Am.  St. 
727,  11  L.  R.  A.  430.  To  same  eflfect, 
Hull  v.  Ruggles,  56  X.  Y.  424. 

"^Loiseau  v.  State,  114  Ala.  34, 
22  So.  138,  62  Am.  St.  Rep.  84.  See 
also,  Muller  v.  Wm.  F.  Stoecker 
Cigar  Co.,  89  Nebr.  438,  131  N.  W. 
923,  34  L.  R.  A.  (N.  S.)  573n.  For 
additional  illustrations  of  what  gen- 
erally constitutes  a  lottery,  see  Yel- 
lowstone Kit  V.  State.  88  Ala.  196, 
7  L.  R.  A.  599  and  note,  16  Am.  St. 
38  and  note. 

•'  Roselle  v.  Farmers'  Bank,  141 
Mo.  36,  39  S.  W.  274,  64  Am.  St.  501. 
Compare  foregoing  case  with,  Ro- 
selle V.  Beckemeir,  134  Mo.  380,  35 
S.  W.  1132;  Crutchfield  v.  Rambo, 
38  Tex.  Civ.  App.  579,  86  S.  W.  950. 

"  Minton  v.  F.  G.  Smith  Piano  Co., 
36  App.  D.  C.  137.  Z3  L.  R.  A.  (N. 
S.)  305  and  note.  The  above  case 
can  readily  be  distinguished  from  the 
preceding  ones  in  that  it  required 
skill  while  in  the  others  chance  pre- 
dominated. But  where  an  element  of 
chance  enters  in,  the  scheme  becomes 
a  lottery  and  illegal.  Thus  where 
a  prize  is  given  to  those  persons  who 
solve  a  puzzle  by  obtaining  seven 
complete  animal  pictures  therefrom, 
ability  to  solve  the  puzzle  depending 
on  the  chance  that  the  purchaser  will 
buy  a  box  containing  an  animal  nee- 


§    699  CONTRACTS.  54 

of  a  prize  contest  involving  skill  in  making  the  largest  number  of 
words  out  of  the  letters  composing  the  words  "Hamilton  Pianos" 
has  also  been  upheld."^ 

§  699.  Bailee's  refusal  to  deliver  up  property  won  at  a 
raffle. — The  bailee  of  an  automobile  disposed  of  at  a  raffle 
has  no  right  to  refuse  to  deliver  it  to  the  winner  because  of  the 
illegality  of  the  transaction  by  which  title  to  the  machine  was 
transferred,  especially  after  having  recognized  an  order  for  the 
machine  given  the  winner  and  consenting  to  hold  the  machine 
for  the  new  owner, '^ 

§  700.    No  lottery  v/hen  element  of  chance  is  wanting. — 

When  the  element  of  chance  is  wanting-^  as  where  one  is  to  pay 
for  a  ring  by  weekly  instalments,  forfeiting  all  interest  in  money 
paid  by  him  on  the  agreement  should  he  let  his  payments  lapse,^'' 
or  where  all  the  chances  on  the  prize  are  bought  by  one  person" 
or  where  the  prize  is  awarded  "to  the  society,  church,  school, 
lodge  or  person  having  secured  the  greatest  number  of  votes  at 
the  close  of  each  contest"^^  the  transaction  is  not  a  lottery  or 
gaming  contract. 

§  701.  Giving  of  trading  stamps  not  a  lottery. — To  give  a 
purchaser,  without  additional  price,  a  ticket  or  trading  stamp 

cessary     to    complete    the     required  hundred   five  cent   cuts   of   plug   to- 

number    of    animal    pictures    (United  bacco.    United  States  v.  One  Box  of 

States   V.    McKenna,    149   Fed.   252),  Tobacco,  190  Fed.  731,  111  C.  C.  A. 

or  the  obtaining  of  the  premium   is  459. 

made  to  turn  upon  purchasing  boxes  '"Barney    v.    Tontine    Surety    Co., 

of    a    given    commodity    and    finding  131    Mich.    192,   91    N.   W.    140.      See 

therein  coupons  on  which  are  printed  also,  Watkins  v.  Curry  (Ark.),  147  S. 

letters  that  can  be  combined  into  the  W.  43    (conditional   sale   of   automo- 

word   "Mother's",    (United    States   v.  bile,    vendor    held    entitled    to    assert 

Jefferson,  134  Fed.  299),  the  scheme  his  lien  even  though   the  sale  might 

is  a  lottery.  To  same  effect,  Sheedy  v.  have  been    indirectly  connected   with 

District  of  Columbia,  19  App.  D.  C  a  lottery  scheme).  Younkman  v.  Hill- 

280.  man,    53    Wash.    661,    102    Pac.    Ill 

^D.   H.   Baldwin   &  Co.  v.   Moser  (purchase   of   real  estate.     Ten   dol- 

(lowa),  123   N.  W.  989.  lars     down     and     ten     dollars     per 

"^Dee'v.  Sears-Nahinger  Auto  Co.,  month). 

141  Iowa  610,  118  N.  W.  529.  133  Am.  "Thornhill  v.  O'Rear,  108  Ala.  299, 

St.   182.  19  So.  382,  31  L.  R.  A.  792. 

-=*  United  Jewelers  Mfg.  Co.  v.  =*Quatsoe  v.  Eggleston,  42  Ore. 
Keckley,  11  Kans.  797,  90  Pac.  781.  315,  71  Pac.  66.  Such  a  contest  may 
The  element  of  chance  has  been  held  however  be  vitiated  by  fraud.  Good- 
present  where  a  prize  of  a  fixed  value  hart  v.  Mission  Pub.  Co.  (Cal.),  123 
was    concealed    in    one    out    of    each  Pac.  210. 


55  LEGALITY  OF  OBJECT.  §  702 

which  entitles  him  to  a  certain  sum  of  money  or  to  goods  of  a 
certain  value,  is  not,  in  the  absence  of  any  element  of  chance  or 
hazard,  contrary  to  the  law  against  gambling  and  lotteries  and 
legislation  which  forbids  their  use  is,  as  a  general  rule,  held  un- 
constitutional.-" Legislation  prohibiting  their  use  has,  however, 
been  upheld. ^'^ 

§  702.  No  lottery  v^rhen  element  of  consideration  wanting. 
— Likewise  if  the  element  of  consideration  is  wanting  as  where 
the  chances  on  the  prize  are  distributed  gratuitously  no  lottery 
exists.^^  The  same  holding  has  been  made  where  gifts  of  sub- 
stantially equal  value  were  made  with  each  sale.^-  It  has  also 
been  held  that  a  subscriber  for  stock  in  a  corporation  cannot 
defeat  an  action  thereon  by  a  trustee  in  bankruptcy  because  of 
the  proposed  distribution  of  lots  by  a  drawing  to  be  conducted 
by  the  company. ^^ 

§  703.  Collateral  contracts — Rights  of  vendor  and  vendee, 
inter  se. — A  contract  indirectly  connected  with  a  lottery  may 
be  valid  when  not  otherwise  illegal.^*  But  the  lottery  contract 
itself  is  void  and  cannot  be  enforced. ^^  However,  when  the 
law  does  not  declare  both  the  vendor  and  vendee  of  a  lottery 
ticket  equally  guilty  but  is  instead  enacted  for  the  purchaser's 
protection  such  purchaser  may  recover  money  paid  for  lottery 
tickets.^^ 

'» Ex  parte,  Drexel,  147  Cal.  763,  Long  v.  State,  74  Md.  565,  22  Atl.  4, 
82  Pac.  429.  2  L.  R.  A.  (N.  S.)  588  12  L.  R.  A.  425,  28  Am.  St.  Rep.  268; 
and  note ;  Citv  and  County  of  Den-  State  v.  Dalton,  22  R.  I.  77,  46  Atl. 
ver  V.  Frueanff,  39  Colo.  20.  88  Pac.  234.  48  L.  R.  A.  775.  84  Am.  St.  818. 
389,  7  L.  R.  A.  (N.  S.)  1131  and  '^  Reed  v.  Gold.  102  Va.  37,  45  S. 
note;  State  v.  Sperry  &  Hulchrison  E.  868.  See  also,  Roney  v.  Craw- 
Co..  110  Minn.  378,  126  N.  W.  120,  ford,  135  Ga.  1,  68  S.  E.  701. 
30  L.  R.  A.  (N.  S.)  966.  See  also,  =>*  Watkins  v.  Curry  (Ark.),  147  S. 
State  V.  Caspere,  115  Md.  7,  80  Atl.  W.  43. 
606.  ''^  American  Copying  Co.  v.  Thomp- 

^  District  of  Columbia  v.  Kraft.  35  son  (Tex.  Civ.  App.),  110  S.  W.  777. 

App.  D.  C.  253,  30  L.  R.  A.  (N.  S.)  =«  Becker  v.   Wilcox,  81    Xebr.  476, 

957  and   note.  116  X.  W.  160,  16  L.  R.  A.   (X.  S.) 

"'Yellowstone  Kit  v.  State.  88  Ala.  571n,    129    Am.    St.    690.     See.    ante, 

196,  7  So.  338,  16  Am.  St.  38n,  7  L.  §  645.     See  also.  post,  chapt.  28.  Ef- 

R.  A.  599n.  feet  of  Performance  of  Illegal  Con- 

*"  United     Jewelers     Mfg.     Co.     v.  tracts. 
Keckley,  77  Kans.  797,  90  Pac.  781; 


ro4 


CONTRACTS.  S^ 


§  704.  Violation  of  the  statute  as  to  usury. — This  subject 
will  be  given  consideration  in  a  separate  chapter."  A  great  deal 
depends  in  such  cases  on  the  provisions  of  the  particular  statute. 

§  705.  Agreements  contrary  to  public  policy — Classifica- 
tion.— As  was  stated  in  one  of  the  preceding  sections  to  this 
chapter/^  the  title,  Agreements  Contrary  to  Public  Policy,  is 
broad  enough  to  include  illegal  contracts  of  every  character  and, 
as  is  there  pointed  out,  the  term  "public  policy"  is  one  more  or 
less  indefinite  in  its  application.  Owing  to  the  vague  outlines  of 
the  subject,  it  is  not  only  convenient  but  imperative  that  some 
classification  be  given  the  decided  cases.  This  will  be  done  in 
the  succeeding  sections  of  this  chapter. 

§  706.  Agreements  tending  to  official  corruption  or  injury 
of  the  public. — Agreements  which  tend  to  official  corruption 
or  injury  of  the  public  service  may  be  entered  into  either  directly 
with  the  official  or  with  a  third  person  who  is  to  bring  improper 
influences  to  bear  upon  such  official.  The  courts  will  unhesitat- 
ingly pronounce  illegal  and  void,  as  being  contrary  to  public 
policy,  those  contracts  entered  into  by  an  officer  or  agent  of  the 
public  which  naturally  tend  to  induce  such  officer  or  agent  to  be- 
come remiss  in  his  duty  to  the  public.'"  Nor  is  it  necessary  for 
the  officer  or  agent  to  bind  himself  to  violate  his  duty  to  the 

"  See  post,  §  704.  ceedings  and  cannot  recover  the 
■^See  ante,  §  649.  agreed  price.  Coffey  v.  Burke,  132 
'•Cheney  v.  Unroe,  166  Ind.  550,  App.  Div.  (N.  Y.)  128,  116  N.  Y.  S. 
77  N.  E.  1041,  117  Am.  St.  391.  An  514.  An  attorney  made  a  contract 
agreement  by  a  county  official  to  de-  with  a  sheriff  by  which  he  was  to 
posit  public  funds  in  a  certain  bank  act  as  counsel  for  the  sheriff  during 
in  consideration  of  an  officer  of  such  his  term  of  office  at  $300.00.  This 
bank  going  his  bond  is  unlawful,  amount  was  to  be  applied  in  satis- 
Ramsay's  Estate  v.  Whitbeck,  183  faction  of  the  attorney's  taxes.  The 
111.  550,  56  N.  E.  322,  revg.  81  111.  contract  was  held  contrary  to  public 
App.  210.  A  contract  to  pay  an  ex-  policy  as  tending  to  divert  from  the 
cessive  price  for  labor  "upon  the  public  treasury  its  money  to  pay  the 
understanding  that  the  government  sheriff's  private  debt.  Miller  v.  Wise- 
would  be  soaked,"  has  been  held  ner,  45  W.  Va.  59,  30  S.  E.  237.  "Any 
against  public  policy  and  void.  Fish-  agreement  whereby  the  officer  en- 
er  Electric  Co.  v.  Bath  Iron  Works,  trusts  custody  of  his  prisoner  to  an- 
116  Mich.  293,  74  N.  W.  493.  An  other  who  has  no  authority  under 
employe  of  a  city  while  acting  as  em-  protection  of  the  writ  to  restrain 
ploye  is  precluded  from  selling  in-  him,  accomplishes  a  legal  escape  *  *  * 
formation,  no  matter  how  gained,  to  and  is  absolutely  void."  Gebhardt  v. 
be  used  against  the  city  in  legal  pro-  Holmes,  149  Wis.  428,  135  N.  W.  860. 


57 


LEGALITY    OF    OBJECT. 


§    707 


public  in  order  to  bring  such  an  agreement  within  the  operation 
of  the  rule.  Any  agreement  by  which  h'e  places  himself  or  is 
placed  in  a  position  which  is  inconsistent  with  his  duty  to  the 
public  and  has  a  tendency  to  induce  him  to  violate  such  duties,  is 
clearly  illegal  and  void/" 

§  707.  Tending  to  official  corruption — Interest  of  public 
official. — Under  this  principle,  contracts  for  services  or  mate- 
'rial  in  which  public  officers  have  an  individual  interest,  are  pro- 
hibited. "Independently  of  any  statute  or  precedent,  upon  the 
general  principles  of  law  and  morality,  a  member  of  an  official 
board  cannot  contract  with  the  body  of  which  he  is  a  member."" 
Thus,  a  contract  entered  into  by  a  municipal  board  with  one  of  its 


*°  Cheney  v.  Unroe,  166  Tnd.  550,  77 
N.  E.  1041,  117  Am.  St.  391;  Consoli- 
dated Coal  Co.  V.  Board  of  Trustees, 
164  Mich.  235,  129  N.  W.  193.  A 
contract  which  tends  to  draw  public 
oiticials  away  from  the  honest  dis- 
charge of  their  duties  is  against  pub- 
lic policy.  Lucas  v.  Allen,  80  Ky. 
681,  4  Ky.  L.  687.  A  contract  for 
public  printing  with  a  corporation  in 
which  the  then  Secretary  of  State 
was  a  stockholder  and  of  which  he 
was  treasurer  has  been  declared  void, 
notwithstanding  the  corporation  was 
the  lowest  bidder  for  the  work  and 
the  Secretary  of  State  had  nothing 
to  do  with  the  awarding  of  the  con- 
tract. In  re  Opinion  of  the  Justices 
(Maine),  82  Atl.  90  (reviewing  a 
number  of  decisions  on  the  subject). 
"Any  contract  by  one  acting  in  a 
public  capacity,  which  restricts  the 
free  exercise  of  discretion  vested  in 
him  for  the  public  good,  is  void." 
Brown  v.  First  Nat.  Bank,  137  Ind. 
655,  37  N.  E.  158,  24  L.  R.  A.  206, 
quoting  from  Greenhood  on  Public 
Policy,  337.  To  same  effect,  Schnei- 
der v.  Local  Union  Xo.  60,  116  La. 
270,  40  So.  700,  5  L.  R.  A.  (N.  S.) 
891n,  114  Am.  St.  549;  Robinson  v. 
Patterson,  71  Mich.  141,  39  N.  W.  21 ; 
Edwards  v.  Goldsboro.  141  N.  Car. 
60,  53  S.  E.  652,  4  L.  R.  A.  (N.  S.) 
589.  A  contract  to  sell  postoffice 
fixtures  and  to  use  influence  to  ob- 
tain the  appointment  of  the  purchaser 
as   postmaster   has   been   held   illegal. 


Edwards  v.  Randle,  63  Ark.  318,  38 
S.  W.  343,  58  Am.  St.  108,  36  L. 
R.  A.  174.  To  same  effect, 
Haas  V.  Fenlon,  8  Kans.  601 
(army  post  sutler).  And  the  same 
is  true  of  a  contract  by  a  third-class 
postmaster  to  obtain  the  removal  of  a 
post-office  to  a  certain  building  and 
maintain  it  there  during  such  post- 
master's term  of  office  in  considera- 
tion of  receiving  fixtures  for  the 
office.  The  postmaster  is  required 
to  exercise  his  official  judgment  in 
locating  the  office.  Benson  v.  Baw- 
den,  149  Mich.  584.  113  N.  W.  20, 
13  L.  R.  A.  (N.  S.)  721.  The  giving 
of  money  to  the  governor  of  a  prov- 
ince to  defray  his  expenses  on  a  trip 
to  confer  with  the  president  con- 
cerning the  grant  of  mineral  con- 
cessions to  the  one  who  advanced  the 
money  has  been  held  not  the  use  of 
money  for  an  unlawful  or  immoral 
purpose.  Allen  v.  O'Brvan,  118  App. 
Div.  (N.  Y.)  213,  103  X.  Y.  S.  125. 

"  Davidson  v.  Guilford  Countv, 
152  X.  Car.  436,  67  S.  E.  918.  See 
also,  State  v.  Windle,  156  Ind.  648, 
59  N.  E.  276  (County  commissioners 
authorized  the  county  treasurer  to 
loan  the  county  all  moneys  for  the 
payment  of  orders,  bonds  and  the 
like  and  agreed  to  pay  him  not  more 
than  6  per  cent,  interest  thereon). 
Pipe  Creek  School  Tp.  v.  Hawkins 
(Ind.),  97  N.  E.  936  (contract  be- 
tween a  member  of  a  township  ad- 
visory board  and  the  board). 


§  70S 


CONTRACTS. 


58 


members  or  with  a  firm  to  which  he  belongs  to  perform  legal  serv- 
ices for  such  body  or  the  municipality  has  been  declared  void  as 
against  public  policy."  The  same  rule  applies  to  the  employment 
of  a  physician  by  a  board  of  which  he  is  a  member*^  or  the  em- 
ployment of  the  wife  of  one  of  the  members  of  a  board  of  school 
trustees  to  teach  in  a  school  over  which  such  board  had  super- 
vision/* Nor  does  it  have  the  right  to  employ  one  of  its  mem- 
bers to  act  as  "street  boss,"'*'^  or  to  make  settlements  with  a  tax 
collector/*^  or  to  furnish  carriages  at  the  expense  of  the  city  for 
a  Fourth  of  July  celebration."*^ 

§  708.  Tending  to  official  corruption — Contracts  for  mate- 
rials.— As  a  general  rule,  contracts  for  materials  and  supplies 
from  an  officer  or  member  of  a  board  whose  duty  it  is  to  purchase 
such  supplies  are  held  invalid,  although  in  some  cases  where  the 
contract  has  been  executed  a  recovery  of  the  quantum  meruit  is 
allowed.''^     The  rule  that  an  agent  cannot  bind  his  principal  in  a 


*' Young  V.  Mankato,  97  Minn.  4, 
105  X.  W.  969,  3  L.  R.  A.  (N.  S.) 
849n.  In  the  above  case  the  board 
was  appointed  to  draft  a  charter  for 
the  municipality.  The  board  em- 
ployed one  of  its  members  to  fur- 
nish advice  to  it  and  prepare  a  char- 
ter for  it.  Beebe  v.  Sullivan  County, 
64  Hun  (X.  Y.)  Ill,  199  N.  Y.  S. 
629;  Burkett  v.  Athens  (Tenn.),  59  S. 
W.  667.  See  contra,  Niles  v.  Muzzv, 
ZZ  Mich.  61,  20  Am.  Rep.  670.  In 
this  case  it  was  held  that  one  who 
had  been  elected  mayor  and  a  mem- 
ber of  the  council  might  be  legally 
employed  to  defend  a  suit  against 
the  city  and  could  collect  for  the 
services  rendered,  there  being  noth- 
ing to  show  the  contract  was  fraudu- 
lent and  the  services  rendered  being 
highly  beneficial  to  the  city. 

"^  Fort  Wayne  v.  Rosenthal,  75  Ind. 
156,  39  Am.  Rep.  127;  Goodrich  v. 
Waterville,  88  Maine  39,  ZZ  Atl.  659. 

"Nuckols  V.  Lyle,  8  Idaho  589,  70 
Pac.  401    (decided  under  a   statute). 

"Snipes  v.  Winston,  126  N,  Car. 
374,   35    S.   E.   610,   78   Am.   St.  666. 

*'  Winchester  v.  Frazer,  19  Ky.  L. 
1366.  43  S.  W.  453. 

"Smith  V.  Albany,  61  N.  Y.  444. 
Compare  with  the  foregoing  cases 
that    of    Concordia    v.    Hageman,    1 


Kans.  App.  35,  31  Pac.  133,  in  which 
case  the  board  made  a  contract  for 
public  printing  with  a  firm  a  mem- 
ber of  which  was  also  a  member  of 
the  board.  It  was  held  that  since  the 
printing  company  had  dealt  fairly 
and  honestly  with  the  city  it  was  en- 
titled to  recover  the  quantum  meruit 
of   its   services. 

"McGehee  v.  Lindsay,  6  Ala.  16; 
Edwards  v.  Estell,  48  Cal.  194 ;  Skeels 
V.  PhilHps,  54  111.  309;  Noble  v. 
Davison  (Ind.),  96  N.  E.  325  (suit 
to  enjoin  the  performance  of  a  con- 
tract for  the  instalation  of  a  heat- 
ing system  in  a  public  school  build- 
ing, one  of  the  school  trustees  being 
president  of  the  corporation  which 
was  to  install  the  system).  Root  v. 
Stevenson's  Admr.,  24  Ind.  115;  Con- 
cordia v.  Ilagaman,  1  Kans.  App.  35, 
41  Pac.  133;  Smith  v.  Albany,  61  N. 
Y.  444;  Commonwealth  v.  Press  Co., 
156  Pa.  St.  516,  26  Atl.  1035;  Wills 
V.  Abbey,  27  Tex.  202  ;  Baldwin  v.  Co-  < 
burn,  39  Vt.  441 ;  Pickett  v.  Wiota 
School  District,  25  Wis.  551,  3  Am. 
Rep.  105.  An  agreement  to  purchase 
certain  county  orders  for  $2,500.00,  the 
legality  of  which  was  in  question, 
the  purchaser  agreeing  to  take  his 
chances  on  the  litigation,  is  against 
good    morals    and    void.      The    pur- 


59 


LEGALITY    OF    OBJECT. 


§    709 


contract  whicli  the  agent  makes  with  himself  extends  to  pubHc 
officials.-"* 

§  709.  Tending  to  official  corruption — Location  of  public 
buildings. — Likewise  a  contract  made  in  order  to  secure  the 
location  of  a  public  building  or  office  or  to  prevent  its  removal 
when  public  convenience  requires  its  removal,  for  private  advan- 
tage, tends  to  injure  the  public  service  and  is  void.^*"  However, 
private  subscriptions  which  do  not  in  any  way  influence  the  selec- 
tion of  a  particular  site,  save  the  judgment  of  the  person  selecting 
the  site  as  to  its  suitableness,  are  not  against  public  policy.^^ 

§  710.  Tending  to  official  corruption — Indemnity  bond. — 
A  bond  which  indemnities  a  public  official  from  loss  for  breach 
of  duty  is  void  as  against  public  policy  and  no  recovery  can  be 


chaser  thereby  places  himself  in  an 
attitude  of  hostility  to  the  suit 
brought  in  behalf  of  the  county  by 
its  taxpayers.  Giblin  v.  North  Wis- 
consin Lumber  Co.,  131  Wis.  261,  111 
N.  W.  499,  120  Am.  St.  1040.  It  has 
been  held  that  a  corporation  may  re- 
cover the  quantum  meruit  for  work 
done  for  a  city,  notwithstanding  a 
member  of  the  city  council  was  a 
stockholder  in  such  corporation, 
where  the  councilman  did  not  con- 
trol or  direct  the  expenditures  for 
the  work.  Call  Pub.  Co.  v.  Lincoln, 
29  Xebr.  149,  45  N.  W.  245.  See 
also,  and  compare  1  Elliott  Rds.  & 
Sts.  (3rd  ed.),  §  630.  See  ante, 
chapt.   20. 

"Baars  v.  Laketon  Tp..  163  Mich. 
665.  129  N.  W.  7.  Ann.  Cas.  1912A. 
866  and  note. 

""  Edwards  v.  Goldsboro.  141  N. 
Car.  60.  53  S.  E.  652,  4  L.  R.  A. 
(N.  S.)  589,  reviewing  many  authori- 
ties. In  the  above  case  it  is  said : 
"All  agreements,  for  pecuniary  con- 
siderations, to  control  the  business 
operations  of  the  government,  or  the 
regular  administration  of  justice,  or 
the  appointment  to  public  offices,  or 
the  ordinary  course  of  legislation, 
are  void  as  against  public  policy, 
without  reference  to  the  question 
whether  improper  means  are  contem- 
plated or  used  in  their  execution. 
The   law    looks   to   the   general   ten- 


dency of  such  agreements,  and  it 
closes  the  door  to  temptation  by  re- 
fusing them  recognition  in  any  of 
the  courts  of  the  country.  Provi- 
dence Tool  Co.  V.  Xorris,  2  Wall.  (U. 
S.)  45.  17  L.  ed.  868."  For  cases  of 
similar  import  not  cited  in  the  above 
opinion,  see  Spence  v.  Harvev,  22 
Cal.  336,  83  Am.  Dec.  69;  Colburn  v. 
El  Paso  County.  15  Colo.  App.  90,  61 
Pac.  241 :  Randolph  Countv  v.  Jones. 
Rrecsc  (Ul)  237:  Hare  v.' Phaup.  23 
Okla.  575,  101  Pac.  1050.  138  Am.  St. 
852;  Filson  v.  Himes,  5  Pa.  St.  452, 
47  Am.  Dec.  422. 

"  In  this  case  $15,000  had  been  ap- 
propriated with  which  to  buy  a  post- 
office  site.  By  means  of  subscrip- 
tions it  was  made  possible  to  select  a 
site  worth  $32,000.  Currier  v.  United 
States.  184  Fed.  700.  106  C.  C.  A. 
654.  For  other  cases  holding  that  a 
contract  for  the  location  of  a  public 
building  is  not  necessarily  invalid, 
see  Carpenter  v.  Mather.  3  Scam. 
(111.)  374;  State  v.  Johnson.  52  Ind. 
197;  Brown  v.  Anderson,  1  T.  B. 
Mon.  (Kv.)  198;  Beal  v.  Polhemus, 
67  Mich.  130.  34  N.  W.  532:  State 
Treasurer  v.  Cross,  9  Vt.  289.  31  Am. 
Dec.  626.  See  also.  Electric  Plaster 
Co.  V.  Blue  Rapids  Citv  Tp.,  77  Kans. 
580,  96  Pac.  68  (agreement  by  mill- 
owners  to  pay  a  part  of  the  cost  of 
a  public  improvement  upheld). 


§    711  CONTRACTS.  6o 

had  thereon.^^     A  public  official  cannot  barter  away  his  power  to 
discharge  his  official  duty.^^ 

§  711.  Tending  to  official  corruption — Influencing  appoint- 
ments to  office. — It  is  also  well  settled  that  contracts  which 
have  for  their  object  the  influencing  of  appointment  to  public 
office  and  the  restricting  of  the  discretion  vested  in  a  public  officer 
in  the  selection  of  appointees  are  invalid.^*  An  officer  who  has 
the  power  of  appointment  should  make  the  best  appointment  pos- 
sible and  it  is  contrary  to  public  policy  that  such  officer  be  de- 
prived of  this  discretionary  power  by  a  contract  previously 
made  or  an  obligation  previously  assumed. ^^  Consequently  an 
agreement  by  the  terms  of  which  the  defendant  was  to  obtain  the 
resignation  of  the  sheriff  for  a  money  consideration  and  then 
secure  the  plaintiff's  appointment  who  would  in  turn  make  the 
defendant  his  deputy  is  void.^®  A  contract  involving  one's  resig- 
nation as  postmaster  and  the  appointment  of  a  designated  person 
as  his  successor  has  been  held  contrary  to  public  policy.^^     Public 

''  Harrington  v.  Crawford,  136  Mo.  Atl.  965,  59  L.  R.  A.  336,  93  Am.  St. 

467,  38  S.  W.  80,  58  Am.  St.  653,  35  901 ;   Stephenson  v.   Salisbury,  53  W. 

L.  R.  A.  477.   Compare  Smith  v.  Rob-  Va.    366,    44    S.    E.    217.      A    public 

inson,  3   Ohio  C.   C.  257,  2  Ohio  C.  officer   is   prohibited    from   contribut- 

D.   146.  ing  money  or   other   valuable  things 

°^  James  v.  Pepper   (Ga.  App.),  IZ  to   secure   his   appointment.     In   this 

S.   E.  407.  case  contract   was   made  with  mayor 

"  Meguire  v.  Corwine,  3  MacArth.  bv  an  applicant  for  the  position  of  tax 
(10  D.  C)  81,  afifd.  101  U.  S.  108,  25  collector.  Pittsburg  v.  Goshorn,  230 
L.  ed.  899;  Schneider  v.  Local  Union  Pa.  212,  79  Atl.  505. 
No.  60,  116  La.  270,  40  So.  700,  114  '^''Schneider  v.  Local  Union  No. 
Am.  St.  549,  5  L.  R.  A.  (N.  S.)  891n;  60,  116  La.  270,  40  So.  700,  5  L.  R.  A. 
Faurie  v.  Morin's  Syndics,  4  Mart.  (N.  S.)  891n,  114  Am.  .St.  549.  See 
(O.  S.)  CLa.)  39,6Am.  Dec.  701;Har-  also,  Conner  v.  Canter,  15  Ind.  App. 
ris  V.  Chamberlain,  126  Mich.  280,  85  690,  44  N.  E.  656  (promise  of  a 
N.  W.  728 ;  Keating  v.  Hyde,  23  Mo.  candidate  in  case  of  election  to  ap- 
App.  555;  Gray  v.  Hook,  4  N.  Y.  point  another  as  his  deputy  held 
449;  P>asket  v.  Moss,  115  N.  Car.  448,  void).  Compare  with  Stout  v.  Ennis, 
20  S.  E.  TiZ.  48  L.  R.  A.  842.  44  Am.  28  Kans.  706,  which  holds  that  such  a 
St.  Rep.  463 ;  Wishek  v.  Hammond,  promise  made  before  election  does 
10  N.  Dak.  72,  84  N.  W.  587;  Fil-  not  render  invalid  a  contract  of  em- 
son  v.  Himes,  5  Pa.  452,  47  Am.  Dec.  ployment  made  after  election. 
422;  Sallade  v.  Schuvlkill  County,  19  ''^  Eversole  v.  Holliday,  131  Ky. 
Pa.  Sup.  Ct.  191;  Burch  v.  Abbott.  22  202,  114  S.  W.  1195. 
Tex.  Civ.  App.  216,  54  S.  W.  314;  "' McCall  v.  Whaley,  52  Tex.  Civ. 
Willis  V.  Weather  ford  Compress  Co.  App.  646,  115  S.  W.  658.  See  also, 
(Tex.  Civ.  App.),  66  S.  W.  472;  Harris  v.  Chamberlain,  126  Mich. 
Livingston   v.    Page,   74   Vt.   356,   52  280,  85  N.  W.  728. 


6i 


LEGALITY    OF    OBJECT. 


712 


policy  forbids  that  a  public  office  be  made  the  subject  of  con- 
tracts.'^* 

§712.  Tending  to  official  corruption — Payment  of  cam- 
paign expenses  and  the  like. — An  agreement  by  one  largely 
interested  in  the  erection  of  public  buildings  and  works  to  pay 
the  campaign  expenses  of  a  candidate  for  the  presidency  of  the 
city  council  has  been  declared  against  public  policy.^^  The  same 
is  true  of  contracts  for  procuring  public  or  government  contracts 
where  the  compensation  to  be  received  is  contingent  upon  the 
success  of  the  promisee's  efforts.  The  law  considers  the  tend- 
ency of  such  contracts  as  evil."''  This  is  also  true  of  a  contract 
for  services  in  obtaining  contracts  from  state  officers  through 
social  and  political  relations  with  such  officers,**^  or  which  tends 
to  introduce  personal  solicitation  or  personal  influence  as  elements 
in  the  procurement  of  contracts."^     And  a  transaction  where- 


''Aughev  V.  Windrem,  137  Iowa 
315,  114  N.  W.  1047;  New  Bruns- 
wick V.  Cramer,  61  N.  J.  L.  270,  39 
Atl.  671,  68  Am.  St.  705;  White  v. 
Cook,  51  W.  Va.  201,  41  S.  E.  410, 
57  L.  R.  A.  417,  90  Am.  St.  775; 
McGraw  v.  Traders'  Nat.  Bank,  64 
W.  Va.  509,  63  S.  E.  398  (contract  to 
pay  a  specified  sum  of  money  to  se- 
cure one's  election  or  appointment 
as  special  receiver  in  a  pending 
cause).  The  sale  of  offices  is  against 
public  policy.  Hall  v.  Gavitt,  18  Ind. 
390.  To  same  effect,  White  v.  Cook. 
51  W.  Va.  201,  41  S.  E.  410,  57  L.  R. 
A.  417,  90  Am.  St.  775.  A  contract 
by  one  who  anticipates  that  he  will 
be  appointed  county  treasurer  to  ap- 
ply all  his  fees  and  emoluments  in 
excess  of  a  certain  stipulated  amount 
toward  the  discharge  of  certain  obli- 
gations on  which  he  and  the  plain- 
tiffs were  jointly  liable  in  considera- 
tion of  the  latter  becoming  sureties 
on  his  bond  is  contrary  to  public 
policy  and  void.  Serrill  v.  Wilder, 
77  Ohio  St.  343,  83  N.  E.  486.  14  L. 
R.  A.  (N.  S.)  982.  A  contract  by 
one  public  official  to  perform  the 
duties  of  another  officer  is  against 
public  policy  and  unenforcible. 
Aloore  v.  Cassilv,  16  Ohio  Cir.  Ct. 
R.  708.  9  Ohio  C.  D.  305 ;  Walker  v. 
Jackson,   7   Hill    (N.   Y.)    387    (con- 


tract to  keep  a  log  cabin  open  in 
City  of  New  York  to  further  candi- 
dacy of  certain  parties). 

'"Ward  V.  Hartley,  178  Mo.  135, 
77  S.  W.  302.  A  contract  providing 
for  the  payment  for  services  and  ex- 
penses incurred  in  procuring  the  es- 
tablishment of  a  post-office  in  a  city 
in  and  on  a  certain  block  therein,  the 
payment  to  continue  so  long  as  said 
post-office  shall  be  there  maintained 
not  to  exceed  ten  years,  is  contrary 
to  public  policv  and  void.  Hare  v. 
Thaup,  23  Okla.  575,  101  Pac.  1050. 
138  Am.  St.  Rep.  852. 

*"  Russell  V.  Courier  Printing  & 
Publishing  Co.,  43  Colo.  321,  95  Pac. 
936. 

•"Drake  v.  Lauer,  93  App.  Div.  (N. 
Y.)  86.  86  N.  Y.  S.  986,  affd..  182  N. 
Y.  533,  75  N.  E.  1129.  To  same  effect, 
jMcCallum  v.  Corn  Products  Co.,  131 
App.  Div.  (N.  Y.)  617,  116  N.  Y. 
S.    118. 

"^Dunlap  V.  Lebus,  112  Ky.  237, 
23  Ky.  L.  1481,  65  S.  W.  441 ;  Flynn 
v.  Bank  of  Mineral  Wells,  53  Tex. 
Civ.  App.  481,  118  S.  W.  848.  See 
also,  Bovd  v.  Cochrane.  18  Wash. 
281.  51  Pac.  3S3  (agreement  by  bank 
to  extend  time  for  payment  of  a 
note  if  payor  would  get  the  county 
treasurer  to  deposit  with  tlie  hank  a 
part  of  the  public  funds  held  illegal). 


§  713 


CONTRACTS. 


62 


by  a  note  is  executed  by  an  official  of  one  bank  in  consideration 
of  the  latter  bank  crediting  the  bank  represented  by  the  maker  of 
the  note  in  order  to  enable  it  to  appear  solvent  when  it  made  its 
report  to  the  State  Auditor  is  illegal  and  neither  party  can  enforce 
any  rights  thereunder.*'^  The  mere  possibility,  however,  of 
resorting  to  corrupt  practices  does  not  necessarily  render  the  con- 
tract void.^* 

§713.  Tending  to  official  corruption — Contract  to  take 
more  or  less  than  statutory  fee. — Agreements  whereby  a 
public  officer  contracts  to  accept  less  than  the  fees  or  salaries  pre- 
scribed by  law  are  also  contrary  to  public  policy  and  void.*'^  The 
same  has  been  held  true  of  a  contract  with  a  school  teacher  by 
which  she  agrees  to  accept  as  compensation  less  than  the  amount 
provided   for  by  statute. ''^     So  an  agreement  by  a  justice  of 


^  Kentucky  &  Indiana  Bank  v. 
Globe  Bank  &  Trust  Co.  (Ky.),  116 
S.  W.  792. 

"Bergen  v.  Frisbie,  125  Cal.  168, 
57  Pac.  784;  Cole  v.  Brown-Hurley 
Hardware  Co.,  139  Iowa  487,  117  N 
W.  746,  18  L.  R.  A.  (N.  S.)  1161n 
Kerr  v.  American  Pneumatic  Ser, 
Co.,  188  Mass.  27,  73  N.  E.  857 
Knut  V.  Xutt,  83  Miss.  365,  35  So 
686,  102  Am.  St.  452,  afifd.  200  U.  S 
13,  26  Sup.  Ct.  216,  50  L.  ed.  350.  Thus 
the  employment  of  an  attorney  to 
draft  a  resolution  to  be  acted  on  by 
the  board  of  aldermen  is  not  illegal 
in  the  absence  of  any  evidence  show- 
ing improper  conduct  on  the  part  of 
the  lawyer  in  securing  the  adoption 
of  the  resolution.  Eisenstein  v. 
Maiden  Lane  Safe  Deposit  Co.,  113 
N.  Y.  S.  967.  See  also,  Bigham  v. 
Wabash-Pittsburgh  Terminal  R.  Co., 
223  Pa.  106,  72  Atl.  318.  See,  how- 
ever, Flj'nn  V.  Bank  of  Mineral 
Wells,  53  Texas  Civ.  App.  481,  118 
S.  W.  848. 

•^Ohio  Nat.  Bank.  v.  Plopkins,  8 
App.  D.  C.  146  (agreement  by  notary 
to  accept  less  than  prescribed  fees). 
Compare  the  foregoing  case  with 
that  of  Settle  v.  Sterling,  1  Idaho 
259;  Bodenhofer  v.  Hogan,  142  Iowa 
321,  120  N.  W.  659,  134  Am.  St.  418 
(holding  that  a  contract  to  accept 
less  does  not  defeat  a  deputy  sheriff's 
right  to  recover     the     compensation 


fixed  by  law  when  he  claims  no  rights 
under  the  unlawful  contract).  Hawk- 
eye  Ins.  Co.  V.  Brainard,  72  Iowa  130, 
33  N.  W.  603;  Second  Nat.  Bank  v. 
Ferguson,  114  Ky.  516,  71  S.  W.  429; 
In  re  Callaway,  123  Mo.  App.  508, 
100  S.  W.  565  (public  administrator 
agreeing  to  accept  less  than  compen- 
sation allowed  by  law).  Abbott  v. 
Hayes  County,  78  Nebr.  729,  111  N. 
W.  780;  Gallaher  v.  Lincoln,  63 
Nebr.  339.  88  N.  W.  505  (officer 
appointed  by  city  council  agreeing  to 
take  less  than  sum  prescribed  by  law). 
People  V.  Board  of  Police,  75  N,  Y. 
38;  Tappan  v.  Brown,  9  Wend.  (N. 
Y.)  175:  Pittsburg  v.  Goshorn,  230 
Pa.  212,  79  Atl.  505  (mayor  appoint- 
ing one  collector  of  delinquent  taxes 
upon  his  agreeing  to  accept  as  com- 
pensation less  than  the  amount  pro- 
vided for  by  statute).  See  also, 
Peters  v.  Davenport,  104  Iowa  625, 
74  N.  W.  6.  See,  however.  Bloom  v. 
Hazzard,  104  Cal.  310,  37  Pac.  1037. 
'"'  City  School  Corp.  of  Evansville 
V.  Hickman,  47  Ind.  App.  500,  94  N. 
E.  828.  In  the  above  case  the  teacher 
taught  under  the  contract  until  the 
close  of  the  school  year,  when  she 
sued  for  the  difference  between  the 
contract  price  and  the  compensation 
provided  for  by  statute.  It  was  held 
she  might  recover.  See,  however. 
Brown  v.  Board  of  Education,  70 
Misc.  (N.  Y.)  399,  128  N.  Y.  S.  16. 


(^3 


LEGALITY   OF    OBJECT. 


714 


the  peace  not  to  charge  a  litigant  any  fees  unless  his  judgment 
is  collected  has  been  declared  void."  The  same  principle  applies 
to  agreements  to  pay  a  public  official  more  than  the  statutory  fee 
or  salary. ^^  This  has  been  held  to  apply  to  a  court  stenographer 
even  though  appointed  to  act  for  only  one  case.*'"  Nor  can  a 
landlord  who  contracts  to  pay  and  does  pay  a  marshal  extra  for 
executing  a  dispossess  warrant,  recover  from  the  dispossessed 
tenant  the  sum  paid  the  marshal.^**  Lobbying  contracts  might 
properly  be  included  under  this  head.  A  separate  section  has, 
however,  been  devoted  to  this  subject." 

§  714.  Agreements  tending  to  corrupt  citizens  as  to  public 
duties. — Agreements  which  tend  to  the  corruption  of  citizens 
as  to  public  duties  or  with  reference  to  matters  in  which  the  public 
has  a  direct  interest  are  also  contrary  to  public  policy  and  void."- 


"Willemin  v.  Bateson,  63  Mich. 
309,  29  N.  W.  734.  See  also, 
Watson  V.  Fales,  97  Maine  366, 
54  Atl.  853,  94  Am.  St.  504 
(disclosure  commissioner  to  have 
no  pay  unless  the  party  is  successful 
or  until  he  collects  of  his  adversary)  ; 
Edgerly  v.  Hale,  71  N.  H.  138,  51 
Atl.  679  (sheriff  to  receive  no  fees 
unless  action  resulted  successfully). 
A  contract  with  reference  to  the 
emoluments  of  a  public  office  is 
against  public  policy  and  void.  It 
has  been  said  that  this  would  be  true 
of  a  contract  by  a  postmaster  to  give 
another  the  emoluments  of  his  office, 
also  that  he  does  not  lose  his  right 
thereto  bv  not  claiming  them.  Bailey 
V.  Sibley  &c.  Co.  (Mich.),  129  N. 
W.  17. 

•^  Downs  V.  McGlvnn,  2  Hilt.  (N. 
Y.)  14,  6  Abb.  Prac.  (N.  Y.)  241; 
Dull  V.  Mammoth  Min.  Co.,  28  Utah 
467,  79  Pac.  1050.  An  agreement  to 
pay  a  delegate  from  a  territory  to 
congress  for  services  rendered  in 
securing  payment  of  a  claim  for 
which  congressional  action  is  neces- 
sarv  is  void.  Weed  v.  Black.  2  Mc- 
Arthur  (U.  S.)  368,  29  Am.  Rep.  618. 

"•Dull  V.  Mammoth  Mm.  Co..  28 
Utah  467,  79  Pac.  1050 ;  Wadsworth 
V.  Livingston  County.  115  N.  Y.  S. 
8   (also  to  a  countv  clerk). 

"Gravrock  Land'  Co.  v.  Wolff.  67 
Misc.  (N.  Y.)  153,  121  N.  Y.  S.  953. 


But  two  game  protectors  each  en- 
titled to  receive  as  part  of  his  com- 
pensation half  the  fines  and  penal- 
ties paid  in  actions  brought  on  in- 
formation furnished  by  him,  and 
each  having  obtained  evidence  of  vio- 
lations of  the  game  law  by  the  same 
person,  those  of  which  defendant  had 
evidence,  they  agreed  that  plaintift 
should  surrender  his  right  to  prose- 
cute an  action  for  fines  and  penalties 
and  should  merge  his  evidence  with 
that  of  defendant  and  join  with  de- 
fendant in  the  prosecution  of  the 
larger  claim;  they  to  divide  the 
money  which  might  be  recovered. 
Such  agreement  was  held  not  against 
public  policv.  Overton  v.  Williams, 
139  App.  Div.  (N.  Y.)  177,  123  N. 
Y    S    758 

'""  See.  post,  ch.  XXVH. 

"Jacobs  V.  Tobiason,  65  Iowa  245, 
21  N.  W.  590,  54  Am.  Rep.  9;  Usher 
V.  McBratney.  3  Dill.  (U.  S.)  385, 
Fed.  Cases  No.  16805 ;  Pingrv  v. 
Washburn,  1  Aiken  (Vt.)  264.'  15 
Am.  Dec.  676.  An  agreement  to 
withdraw  opposition  to  a  pardon  and 
to  endeavor  to  induce  the  pardoning 
authority  to  grant  a  pardon  is  against 
public  policy.  William  Deering  &  Co. 
V.  Cunningham,  63  Kans.  174.  65  Pac. 
263,  54  L.  R.  A.  410.  A  promissory 
note  given  under  an  agreement  by 
the  payee  to  obtain  for  the  maker  a 
substitute    in     case     he     should    be 


§  714 


CONTRACTS. 


64 


For  this  reason  it  has  been  held  that  a  promise  to  pay  money  to 
one  if  he  will  withdraw  his  opposition  to  the  laying  out  of  a  high- 
way over  his  real  estate  is  illegal.^^  The  same  has  been  held  true 
of  an  agreement' not  to  protest  against  one's  application  for  a 
patent  to  public  land,'*  or  of  an  agreement  to  give  one  an  inter- 
est in  property  sold  at  judicial  sale  if  he  will  not  object  to  the 
confirmation  of  such  sale.'^^ 

It  is  also  unlawful  to  purchase  the  consent  of  property  owners 
who  represent  more  than  one-half  of  a  certain  street  frontage 
when  the  consent  of  property  owners  representing  that  much  of 
the  frontage  is  a  necessary  condition  to  the  grant  by  municipal 
authorities  of  permission  to  lay  a  street  railroad  in  such  street/'' 
The  same  has  been  held  true  of  purchasing  consent  to  the  open- 
ing or  improvement  of  street  or  highway/'  or  to  the  issuance  of 
a  certificate  authorizing  the  sale  of  intoxicating  liquors/^  The 
foregoing  principles  seem  to  apply  to  artificial  as  well  as  natural 


"drafted  so  as  to  do  duty  in  the 
army"  or  otherwise  to  clear  him  from 
draft  is  unenforcible  for  the  rea- 
son that  so  to  do  would  be  against 
pubhc  pohcy.  O'Hara  v.  Carpenter, 
22>  Mich.  410,  9  Am.  Rep.  89. 

"  Smith  V.  Applegate,  23  N.  J.  L. 
352.  See  also,  Mcguire  v.  Smock, 
42  Ind.  1,  13  Am.  Rep.  353;  Rider 
V.  Parker-Washington  Co.,  144  Mo. 
App.  67,  128  S.  W.  226  (citing  Elliott 
Rds.  and  Sts.  (2d  ed.),  §  587). 
Contra,  Weeks  v.  Lippencott.  42  Pa. 
St.  474.  Compare,  also,  Barr  v. 
IMayor  &c.  of  New  Brunswick,  67  Fed. 
402;  North  Baptist  Church  v.  Orange, 
54  N.  J.  L.  Ill,  22  Atl.  1004,  14  L.  R. 
A.  62n;  State  v.  Geneva,  107  Wis.  1, 
82  N.  W.  550. 

'*Roy  V.  Harney  &c.  Mfg.  Co.,  21 
S.  Dak.  140,  110  N.  W.  106,  9  L.  R. 
A.  (N.  S.)  529n,  130  Am.  St.  706 
(may  agree  not  to  contest  but  can- 
not agree  not  to  protest). 

"Davezae  v.  Seiler,  12  Ky.  L.  599. 

™  Doane  v.  Chicago  City  R.  Co.,  160 
111.  22,  45  N.  E.  507,  35  L.  R.  A.  588. 
See  also,  Sussman  v.  Porter,  137 
Fed.  161,  in  which  contract  to  pro- 
cure the  consent  of  property  owners 
to  the  construction  of  a  trolley  line 
in  front  of  their  properties,  the  pay 
received  to  be  contingent  upon  suc- 


cess, has  been  held  contrary  to  pub- 
lic policy.  See,  however,  Montclair 
Military  Academy  v.  Northern  Jer- 
sey Street  R.  Co.,  65  N.  J.  L.  328,  47 
Atl.  890. 

"MaGuire  v.  Smock,  42  Ind.  1,  13 
Am.  Rep.  353 ;  Howard  v.  First  In- 
dependent Church,  18  Md.  451;  Rider 
v.  Parker  Washington  Co.  (Mo. 
App.),  128  S.  W.  226,  227  (citing  2 
Elliott  Rds.  &  Sts.  (3d  ed.),  §  729 
(587)  ;  State  v.  Stout,  Z2>  N.  J.  L.  42. 
It  has  been  held,  however,  that  the 
party  whose  consent  is  purchased 
must  be  really  opposed  to  the  con- 
templated highway,  and  that  there 
must  be  a  buying  of  conscientious 
opposition.  Makemsen  v.  Kauffman, 
35  Ohio  St.  444.  Compare  also, 
Lowne  v.  Newton,  167  Mass.  311,  45 
N.  E.  745 ;  Stratford  v.  Greensboro, 
124  N.  Car.  127,  32  S.  E.  394;  2  El- 
liott Rds.  &  Sts.  (3d  ed.),  §  729.  See 
also,  Sussman  v.  Porter,  137  Fed. 
161,  in  which  a  contract  to  obtain  the 
consent  of  property  owners  to  the 
construction  of  a  trolley  line  in  front 
of  their  properties,  the  amount  to 
be  paid  for  such  services  being  con- 
tingent on  success,  was  held  contrary 
to  public  policy. 

''Riggs  V.  Rvan,  121  App.  Div.  (N. 
Y.)  301,  106  N.  Y.  S.  39. 


65 


LEGALITY    OF    OBJECT. 


§    715 


persons.  Thus  the  editor  of  a  paper  who  sought  to  recover  for  the 
sale  of  his  editorial  influence  as  expressed  in  editorials  in  his 
paper  and  for  other  alleged  services  in  carrying  an  election  was 
not  entitled  to  compensation  since  the  agreement  to  sell  the 
editorial  columns  of  his  paper  was  against  public  policy  and  for 
that  reason  not  cnforcible.'" 

§  715.  Agreements  tending  to  obstruct  or  pervert  justice 
— Compounding  crimes  and  the  like. — Agreements  which 
tend  to  obstruct  or  pervert  justice,  such  as  contracts  which  have 
for  their  purpose  the  compounding  of  a  crime  or  the  stifling  of  a 
criminal  prosecution,  are  against  public  policy.**^    This  has  been 


'"King  V.  Raleigh  &c.  R.  Co.,  147 
N.  Car.  263,  60  S.  E.  1133,  125  Am. 
St.  546.  To  same  effect,  Livingston 
V.  Page,  74  Vt.  356,  52  Atl.  965,  59 
L.  R.  A.  336,  93  Am.  St.  901.  A 
check  given  in  order  that  voters  may 
be  influenced  to  authorize  the  is- 
suance of  township  bonds  at  a  sub- 
sequent election  is  void.  Burden 
Bank  v.  Phelps,  5  Kans.  App.  685, 
48  Pac.  938. 

^"Folman  v.  Siler,  132  Ala.  297,  31 
So.  719  (promise  to  conceal  crime)  ; 
United  States  Fidelitv  &c.  Co.  v. 
Charles,  131  Ala.  658,  31  So.  558,  57 
L.  R.  A.  212.  (In  the  above  case  the 
surety  company  made  good  an  em- 
bezzlement of  one  Caldwell.  Cald- 
well and  the  defendants  as  sureties 
then  gave  a  note  to  the  surety  com- 
pany to  reimburse  it  on  condition 
that  the  surety  company  would  not 
prosecute  Caldwell  for  embezzlement. 
It  was  held  illegal.)  Kirkland  v. 
Benjamin.  67  Ark.  480,  55  S.  W.  840 
(dismissal  of  criminal  prosecution)  ; 
Keating  v.  Morrissev.  6  Cal.  App. 
163,  91  Pac.  677;  Mc^Iahon  v.  Smith, 
47  Conn.  221.  36  Am.  Rep.  67;  Giles 
V.  De  Cow.  30  Colo.  412.  70  Pac.  681 
(promise  by  brother-in-law  to  repay 
loss)  ;  Bierbauer  v.  Wirth,  5  Fed. 
336,  10  Biss.  (U.  S.)  60;  In  re  Law- 
rence, 166  Fed.  239,  92  C.  C.  A.  251 ; 
Henderson  v.  Palmer.  71  111.  579; 
Wolf  v.  Flctcmcyer.  83  111.  418 ;  Halt- 
haus  v.  Kuntz,  17  111.  App.  434; 
Sellers  v.  Catron,  5  Ind.  T.  263.  82 
S.  W.  742 ;  Crowder  v.  Reed.  80  Ind. 
1 ;  Ricketts  v.  Harvev,  106  Ind.  564. 
6   X.    E.    325;    Peed    v.    McKee,    42 

5 — CoxTR.\CTS.  Vol.  2 


Iowa  689.  20  Am.  Rep.  631;  Rosen- 
baum  v.  Levitt,  109  Iowa  292,  80  N. 
W.  393;  Friend  v.  Miller,  52  Kans. 
139,  34  Pac.  397,  39  Am.  St.  340; 
First  Nat.  Bank  v.  Payne,  19  Ky.  L. 
839,  42  S.  W.  736;  Averbeck  v.  Hall, 
14  Bush  (Ky.)  505  ("To  use  every 
legal  and  proper  endeavor  to  have 
dismissed"  certain  criminal  prose- 
cutions). Owens  V.  Green,  103 
Ky.  342,  20  Ky.  L.  44,  45  S.  W. 
84;  American  Nat.  Bank  v.  Madison, 
144  Kv.  152,  137  S.  W.  1076;  Part- 
ridge V.  Hood,  120  ^lass.  403,  21  Am. 
Rep.  524;  Gorham  v.  Keves,  137 
lAIass.  583 ;  Snyder  v.  Willey,  33  Mich. 
483;  Case  v.  Smith,  107  Mich.  416, 
65  N.  W.  279,  31  L.  R.  A.  282,  61 
Am.  St.  341 ;  Buck  v.  First  Nat.  Bank, 
27  ^lich.  293,  15  Am.  Rep.  189  (note 
given  in  consideration  of  the  officers 
of  a  bank  agreeing  to  sign  petition 
asking  clemency  or  otherwise  exert 
influence  to  obtain  clemency)  ;  Mc- 
Coy V.  Green.  83  Mo.  626;  Metro- 
politan Land  Co.  v.  Manning.  98  Mo. 
App.  248,  71  S.  W.  696;  McCormick 
&c.  Co.  V.  Miller.  54  Nebr.  644,  74 
N.  W.  1061;  Graham  v.  Hiesel,  73 
Nebr.  433.  102  N.  W.  1010  (defend- 
ant not  to  prosecute  plaintiff's  hus- 
band for  burglarv)  ;  Jourdan  v.  Bur- 
stow,  76  N.  J.  Eq.  55,  74  Atl.  124,  139 
Am.  St.  741;  Havnes  v.  Rudd,  102 
N.  Y.  372.  7  N.  E.  287.  55  Am.  Rep. 
815;  Buffalo  Press  Club  v.  Greene, 
86  Hun  (N.  Y.)  20.  67  N.  Y.  St.  105. 
33  N.  Y.  S.  286;  Roll  v.  Raguet.  4 
Ohio  400.  7  Ohio  76,  22  Am.  Dec. 
759;  Springfield  Fire  &  Marine  Ins. 
Co.  v.  Hull,  51  Ohio  St.  270,  25  L. 


§  715 


CONTRACTS. 


66 


held  again  and  again,  and  the  ilkistrative  cases  are  very  numer- 
ous, although  there  is  some  difference  of  opinion  as  to  some 
phases  of  the  general  subject.*''^  Thus  a  note  and  mortgage, 
the  sole  consideration  for  which  was  a  promise  by  the  obligee 
not  to  prosecute  the  obligor's  son  for  a  felony,  have  been 
held  unen forcible.**^  The  agreement  not  to  prosecute  may  be 
either  express  or  implied.**-  But  while  this  is  true,  there  is  no 
compounding  of  a  felony  unless  there  is  an  agreement  not  to 
prosecute.*^     The  foregoing  rule  does  not  militate  against  the 


R.  A.  Z7,  Z7  N.  E.  1116,  46  Am.  St. 
571 ;  Weber  v.  Shay  &  Cogan,  56  Ohio 
St.  116,  46  N.  E.  2,77,  2,7  L.  R.  A.  230, 
60  Am.  St.  743  (contract  by  which 
attorneys  were  to  prevent  the  finding 
of  indictments)  ;  Calloway  v.  West- 
ern States  Lumber  Co.  (Okla.),  123 
Pac.  151;  In  re  Bredin's  Appeal,  92 
Pa.  St.  241,  2  Ky.  L.  20,  2,7 
Am.  Rep.  677;  Pearce  v.  Wilson,  111 
Pa.  St.  14,  2  Atl.  99,  56  Am.  Rep. 
243;  Biddle  v.  Hall,  99  Pa.  St.  116; 
Bankhead  v.  Shed,  80  S.  Car.  253,  61 
S.  E.  425,  16  L.  R.  A.  (N.  S.)  971n; 
Aledearis  v.  Cranberry,  38  Tex.  Civ. 
App.  187,  84  S.  W.  1070,  86  S.  W. 
790  (holding  that  the  court  would 
not  aid  a  grantee  to  recover  posses- 
sion of  land  under  a  deed  given  in 
consideration  of  compounding  a  fel- 
ony, where  the  grantor  remained  in 
possession)  ;  Barron  v.  Tucker,  53 
Vt.  338,  38  Am.  Rep.  684;  Fernekes 
V.  Bergenthal,  69  Wis.  464,  34  N.  W. 
238. 

*"a  In  addition  to  the  cases  cited  in 
the  last  preceding  note,  see  also  the 
following:  Abandonment  of  criminal 
proceeding  by  prosecution  for  a  con- 
sideration. Deen  v.  Williams,  128 
Ga.  265,  57  S.  E.  427.  Money  or 
property  parted  with  in  considera- 
tion of  the  compounding  of  a  felony, 
both  parties  being  equally  guilty,  can- 
not be  recovered.  Pierce  v.  Kibbee, 
51  Vt.  559.  (In  the  above  case  a  note 
and  mortgage  given  in  lieu  of  notes 
and  mortgages  given  to  compound  a 
felony  held  invalid.)  But  it  is  a 
question  whether  a  promise  to  pay 
what  he  justly  owes  made  by  one 
under  threat  of  criminal  prosecution 
can  be  avoided  by  the  promisor,  as 
where  A  embezzles  money  and  under 
threat  of  prosecution  promises  to  re- 


pay the  same.  Some  authorities  hold 
him  liable  on  the  promise  since  he 
agrees  to  do  nothing  more  than  dis- 
charge a  legal  liabilitv.  Hilborn  v. 
Bucknam,  78  Maine  482,  7  Ad.  272, 
57  Am.  Rep.  816;  Thorn  v.  Pinkham, 
84  Maine  101,  24  Atl.  718.  30  Am.  St. 
335n ;  Wolf  v.  Troxell.  94  lAIich.  573, 
54  N.  W.  383;  Beath  v.  Chapoton, 
115  Mich.  506,  7Z  N.  W.  806.  69  Am. 
St.  589.  See,  however,  Morrill  v. 
Nightingale,  93  Cal.  452,  28  Pac. 
1064,  27  Am.  St.  207.  See  ante, 
chapt.   7. 

"Jones  V.  Dannenberg,  112  Ga.  426, 
2,7  S.  E.  729,  52  L.  R.  A.  271  (notes 
and  mortgage  executed  by  wife)  ; 
Koons  V.  Vanconsant,  129  Mich.  260, 
88  N.  W.  630,  95  Am.  St.  438; 
Corbett  v.  Clute,  137  N.  Car.  546,  50 
S.  E.  216;  Racine-Sattlev  Mfg.  Co. 
V.  Pavlicek,  21  N.  Dak.  222,  130  N. 
W.  228.  (In  the  above  case  judg- 
ment by  default  had  been  taken  on 
notes  given  to  compound  a  felony. 
On  its  being  made  to  appear  that  the 
notes  on  which  judgment  had  been 
taken  were  given  to  compound  a  fel- 
ony the  judgment  was  vacated.  The 
party  giving  the  notes  was  an  illit- 
erate foreign  woman.) 

"  In  re  Lawrence,  166  Fed.  239,  92 
C.  C  A.  251;  Clark  v.  Pomeroy,  4 
Allen  (Mass.)  534;  Sumner  v.  Sum- 
mers, 54  Mo.  340 ;  Conderman  v. 
Hicks,  3  Lans.  (N.  Y.)  108;  Ball  v. 
Ward,  76  N.  J.  Eq.  8,  74  Atl.  158; 
Riddle  v.  Hall,  99  Pa.  St.   116. 

"'Miller  v.  Minor  Lumber  Co.,  98 
Mich.  163,  57  N.  W.  101,  39  Am.  St. 
524.  (In  above  case  two  deeds  were 
given  by  wife  for  same  property; 
first  one  held  invalid,  second  one 
valid.)  Moyer  v.  Dodson,  212  Pa. 
344,    61    Atl.    937.      Conveyance    of 


67 


LEGALITY    OF    OBJECT. 


§    716 


compromise  or  settlement  of  a  claim  for  civil  injuries  or  liabilities 
o-rowinjr  out  of  a  criminal  act  when  there  is  no  express  or  implied 
agreement  to  suppress  the  criminal  prosecution  made  in  connec- 
tion therewith. ""^ 

^716.  Obstructing  justice— Compounding  crimes — Misde- 
meanors.— It  would  also  seem  that  misdemeanors  which  are 
personal  in  their  nature  between  the  parties,  and  in  the  prosecu- 
tion of  which  the  public  has  no  interest,  may  be  settled  by  an 
agreement  between  the  parties."  Bastardy  cases  afford  an  illus- 
tration of  such  compromises.*"*^  Some  jurisdictions  permit,  with 
the  court's  approval,  an  agreement  not  to  prosecute  certain  minor 
misdemeanors  to  be  included  in  a  contract  by  wdiich  the  private 
injuries  resulting  therefrom  are  settled.®^ 


property,  without  any  promise  not  to 
institute  criminal  proceedings,  though 
with  the  expectation  that,  if  restora- 
tion were  made,  no  prosecution  would 
he  instituted.  Bishop  v.  Howe,  117 
N.  Y.  S.  996;  Pierson  v.  Green,  69 
S.  Car.  559,  48  S.  E.  624.  (Mortgage 
executed  by  wife  to  raise  money  to 
pay  husband's  debts  and  compromise 
a  criminal  prosecution  against  him. 
The  mortgagee  assisted  in  such  com- 
promise, ^lortgage  held  valid  in  so 
far  as  it  was  executed  to  raise  money 
to  pay  husband's  debts,  but  invalid 
as  to  the  amount  used  to  compromise 
the  criminal  prosecution.)  See  also, 
Thorn  V.  Stewart  (Cal.),  122  Pac. 
1069:  Horn  v.  Gibson,  24  Okla.  481, 
103  Pac.  563. 

-*  Goodrum  v.  Merchants'  &  Plant- 
ers' Bank  (Ark.),  144  S.  W.  198; 
Keating  v.  Morrissey,  6  Cal.  App. 
163,  91  Pac.  677;  Lomax  v.  Colorado 
Nat.  Bank.  46  Colo.  229,  104  Pac.  85 ; 
Paige  V.  Hieronvmus,  192  111.  546, 
61  N.  E.  832;  Sloan  v.  Davis.  105 
Iowa  97,  74  N.  W.  922  (agreement 
for  the  settlement  of  civil  action  for 
adulterv)  ;  Powell  v.  Flanarv.  109  Kv. 
342.  22" Kv.  L.  908,  59  S.  W.'  5;  Ward 
V.  Allen,  '2  Mete.  (Mass.)  53.  35  Am. 
Dec.  3S7:  Atwood  v.  Fisk,  101  Mass. 
:^63,  100  Am.  Dec.  124:  Beath  v. 
Chapolon,  115  Mich.  506.  73  N.  W. 
806.  69  Am.  St.  589;  Wolf  v.  Trox- 
ell,  94  Mich.  573.  54  N.  W.  383 ;  Bar- 
rett V.  Weber  (see  Weber  v.  Bar- 
rett), 125  N.  Y.  18,  25  N.  E.  1068; 


Cohen  v.  Grimes,  18  Tex.  Civ.  App. 
327.  45  S.  W.  210. 

^'Moog  V.  Strang,  69  Ala.  98; 
Breathwit  v.  Rogers,  32  Ark.  758; 
McMahon  v.  Smith,  47  Conn.  221,  36 
Am.  Rep.  67;  Soule  v.  Bonney,  37 
Maine  128;  Mathison  v.  Hanks,  2 
Hill  (N.  Car.)  625;  Geier  v.  Shade, 
109  Pa.  St.  180;  Holcomb  v.  Stimp- 
son,  8  Vt.  141. 

"^Hinman  v.  Taylor,  2  Conn.  357; 
Davis  V.  Moodv,  15  Ga.  175;  Jones 
v.  Peterson,  117  Ga.  58,  43  S.  E.  417; 
Coleman  v.  Frum.  3  Scam.  (111.)  378; 
Allyn  V.  Allyn.  108  Ind.  327,  9  N.  E. 
279;  Griffin  v.  Chriswisser.  84  Nebr. 
196,  120  N.  W.  909.  In  the  above 
case  a  settlement  of  bastardy  pro- 
ceedings was  upheld,  notwithstanding 
such  settlement  contained  a  provision 
against  prosecution  for  statutory 
rape,  on  the  ground  that  the  legal 
was  severable  from  the  Mlcgal  part, 
and  it  appearing  that  the  infant  feme 
did  not  knowingly  participate  in  the 
unlawful  agreement.  Hoit  v.  Cooper. 
41  N.  H.  Ill:  Burton  v.  Belvin.  142 
N.  Car.  151.  55  S.  E.  71:  Maxwell  v. 
Campbell.  8  Ohio  St.  265:  Wyant  v. 
Lesher.  23  Pa.  St.  338:  Jangraw  v. 
Perkins.  77  Vt.  37S.  60  Atl.  385.  See 
also,  Bca  v.  People.  101  111.  App.  132 
(agreement  to  pay  an  abandoned  wife 
and  child  fixed  amount,  which  agree- 
ment contained  a  provision  against 
indictment   for  abandonment). 

"Deen  v.  Williams.  128  Ga.  265. 
57  S.  E.  427;  Partridge  v.  Hood,  120 


§717  CONTRACTS.  68 

§717.  Obstructing  justice — Compounding  offenses — Ob- 
ject must  be  to  stifle  prosecution. — It  seems  that  an  agree- 
ment will  not  be  avoided  on  the  ground  that  it  has  for  its  object 
the  compounding  of  a  crime  or  the  stifling  of  a  criminal  prosecu- 
tion, unless  it  appears  that  the  alleged  crime  was  committed  or 
that  a  criminal  prosecution  had  actually  been  commenced  or  was 
pending,^^  or  that  the  contract  was,  in  fact,  given  for  the  stifling 
of  a  criminal  prosecution.  Thus,  where  one  agreed  to  pay  three 
hundred  dollars  for  the  return  of  a  watch  which  he  believed  had 
been  stolen,  it  was  held  that  there  was  no  attempt  to  com- 
pound a  felony,  and  the  contract  was  not  void  for  that  rea- 
son.®'* Voluntary  subscriptions  by  some  of  the  stockholders  of 
a  loan  association,  sufficient  in  amount  to  cover  the  defalcation 
of  the  secretary  made  without  knowledge  of  or  any  partici- 
pation therein  by  the  officers  and  directors  of  such  associations, 
are  not  invalid  on  the  ground  that  the  transaction  was  an  ar- 
rangement to  compound  a  felony.^" 

§  718.    Miscellaneous  illustrations. — One   may  also  enter 

into  an  agreement  which  has  for  its  purpose  the  suppression  of  a 

». 

Mass.  403,  21  Am.  Rep.  524;  Lyon  party  to  be  under  arrest  and  actually 
V.  Waldo,  36  Mich.  345;  People  v.  in  the  course  of  being  prosecuted,  in 
Bishop,  5  Wend.  (N.  Y.)  Ill;  Roth-  order  to  enable  a  party  who  secures 
ermal  v.  Hughes,  134  Pa.  St.  510,  19  the  dismissal  or  termination  of  the 
Atl.  677;  Brown  v.  McCreight,  187  prosecution,  for  a  money  considera- 
Pa.  St.  181,  41  Atl.  45.  tion,  to  plead  the  illegality  of  such 
^'Woodham  v.  Allen,  130  Cal.  194,  consideration  in  bar  of  its  collection. 
62  Pac.  398;  Eberstein  v.  Willets,  134  Beal-Doyle  Dry  Goods  Co.  v.  Barton, 
111.  101,  24  N.  E.  967;  Baker  v.  Far-  80  Ark.  326,  97  S.  W.  58.  See  also, 
ris,  61  Mo.  389.;  Manning  v.  Colum-  Smith  Premier  Typewriter  Co.  v. 
bian  Lodge,  57  N.  J.  Eq.  338,  38  Atl.  Mayhew,  65  Nebr.  65,  90  N.  W.  939, 
444,  45  Atl.  1092;  Steuben  County  which  lays  down  the  rule  that  a 
Bank  v.  Mathewson,  5  Hill  (N.  Y.)  promise  not  to  institute  criminal  pro- 
249;  Swope  v.  Jefferson  Fire  Ins.  Co.,  ceedings  is  as  illegal  as  the  dismissal 
93  Pa.  St.  251 ;  Catlin  v.  Henton,  9  of  a  prosecution  already  instituted. 
Wis.  476;  Schultz  v.  Catlin,  78  Wis.  ^'Schirm  v.  Wieman,  103  Md.  541, 
611,  47  N.  W.  496.  It  is  not  neces-  63  Atl.  1056,  7  L.  R.  A.  (N.  S.)  175n, 
sary,  however,  to  show,  in  order  to  115  Am.  St.  2>7?).  See  also,  Live  Stock 
defeat  an  action  on  a  note  alleged  Nat.  Bank  v.  Collins,  147  Iowa  107. 
to  have  been  given  to  compound  a  124  N.  W.  172,  which  holds  that  a 
felony,  that  the  crime  had  actually  contract  whereby  commission  men 
been  committed,  it  appearing  that  an  agree  to  pay  a  certain  amount  in  set- 
information  had  been  filed  charging  tlement  of  a  fraud  perpetrated  by 
one  of  the  co-makers  of  the  note  with  them  is  not  void,  for  the  reason  that 
a  crime.  W.  T.  Joyce  Co.  v.  Rohan,  it  compounds  a  felony. 
134  Iowa  12,  111  N.  W.  319,  120  Am.  '"  Richter  v.  Phoenix  Bldg.  &c.  Co., 
St.   410.     It   is   not  necessary   for   a  27  Ohio  C.  C.  793. 


69  LEGALITY  OF  OBJECT.  §  719 

public  scandal  or  the  institution  of  an  unwarranted  and  ground- 
less prosecution.  But  such  an  one  may  avoid  the  agreement  so 
induced  on  the  ground  of  fraud,  duress  or  want  of  consideration, 
depending  on  the  circumstances  of  each  particular  case.°^  And 
in  a  very  recent  case  it  was  held  to  be  against  public  policy  for  a 
husband  to  contract  to  settle  with  one  for  criminal  conversation 
with  such  husband's  wife,  and  to  do  nothing  to  give  the  matter 
publicity,  and  that  the  breach  of  such  agreement  by  suing  the  wife 
for  divorce  and  introducing  the  agreement  in  evidence  gave  no 
right  of  action."*'  A  contract  to  pay  an  attorney  a  given  fee, 
in  case  he  succeeded  in  ''suspending  the  enforcement  or  opera- 
tion" of  a  designated  act  for  a  certain  period  of  time,  has  been 
held  illegal  and  unenforcible.''  There  can  be  no  recovery  on  a 
note  given  solely  to  establish  a  false  defense  to  a  criminal  prose- 
cution."'' 

§  719.  Agreements  tending  to  obstruct  or  pervert  justice 
— Civil  proceedings. — Agreements  relating  to  civil  proceed- 
ings and  involving  and  providing  for  anything  inconsistent  with 
the  full  and  impartial  course  of  justice  therein,  or  those  that  tend 
to  pervert  the  course  of  justice  or  its  pure  administration  by  the 
courts,  are  also  illegal."'     In  case  public  interests  are  involved  in 

"Woodham  v.  Allen,  130  Cal.  194,  sent."     Ball   v.  Ward,   l(i  N.   J.   Eq. 

62   Pac.   ZS)%;   Keith  v.   Buck.    16  111.  8,  74  Atl.  158. 

App.    121;    Smith  v.    Steely,  80   Iowa        °=McKenzie    v.    Lynch,    167    Mich. 

738    45   N.   W.  912;    Koons  v.   Vau-  583,    133    N.    W.   490,    citing    Case   v. 

consant,    129    Mich.    260,    88    N.    W.  Smith,  107  Mich.  416,  65  N.  W.  279, 

630,  95  Am.  St.  438;  James  v.  Rob-  31    L.   R.   A.   282,   61    Am.    St.   341; 

erts,  18  Ohio  548;  Smith  v.  Blachley,  Clark  v.  Ricker,  14  N.  H.  44;  Treat 

188  Pa.  St.  550,  41  Atl.  619,  68  Am.  v.  Jones,  28  Conn.  334. 
St.  887;  Heckman  v.  Swartz,  50  Wis.        "'Arlington    Hotel    Co.    v.    Ewmg 

267,  6  N.  W.  891.  "It  is  against  equity  (Tenn.),   138  S.  W.  954. 
and   good   conscience   for  a   creditor        "Bates    v.    Cain's    Estate,    70    Vt. 

to  extort  from  a  parent  payment  on  144,    40    Atl.   36. 

or  security  for  the  debt  of  a  son,  for  "Dawkins  v.  Gill,  10  Ala.  206;  Pat- 
which  the  parent  is  not  responsible,  terson  v.  Donner,  48  Cal.  369;  Gil- 
by  threats  of  criminal  prosecution  of  lette  v.  Logan  County  Supervisors, 
the  son,  even  if  the  imprisonment  be  67  111.  256.  When  the  contract  was 
lawful,  or  supposed  to  be  lawful,  and  made  proceedings  were  pending  to 
that  contracts  of  the  parent  for  such  have  a  guardian  appointed  for  the 
payment  or  security  executed  under  plaintiff.  The  dismissal  of  this  pro- 
circumstances  created  by  the  creditor,  ceeding  was  the  consideration  for  the 
which  deprive  the  parent  of  the  free-  contract  sought  to  be  canceled.  Held, 
dom  and  power  of  deliberation  neces-  that  if  the  suit  was  brought  merely 
sary  to  validate  transactions  of  this  to  extort  the  contract  its  dismissal  af- 
description,  may  be  avoided  in  a  forded  no  consideration ;  on  the  other 
court  of  equity,  as  made  w^ithout  con-  hand,  if    the    proceeding    was    well- 


§  719 


CONTRACTS. 


a  civil  suit  it  cannot  be  compromised  in  derogation  of  the  inter- 
ests of  the  public.^*'  An  agreement  to  withdraw  a  plea  of  usury 
has  been  held  against  public  policy  and  unen forcible."  It  has 
also  been  held  that  the  probate  of  a  will  is  a  proceeding  in  rem  to 
wdiich  all  the  world  are  in  some  sense  parties,  and  that  for  this 
reason  a  probate  court  cannot  refuse  to  probate  a  will  merely 
because  all  parties  directly  interested  in  it  have  entered  into  an 
agreement  to  the  effect  that  the  testator  was  of  unsound  mind.^** 
Nor  will  an  agreement  be  enforced  whereby  one  of  the  owners  of 
land  to  be  sold  at  judicial  sale  agrees  not  to  oppose  the  con- 
firmation of  such  sale.^^     The  same  has  been  held  true  of  an 


grounded  public  policy  required  that 
it  be  pushed  to  a  conclusion.  In 
neither  event  could  the  one  instituting 
the  proceeding  make  its  abandonment 
a  source  of  profit  to  herself.  Sim- 
mons V.  Kelsey.  76  Nebr.  124,  107  N. 
W.  122.  An  agreement  among  sev- 
eral parties  to  prevent  personal  serv- 
ice of  summons  in  mortgage  fore- 
closure suits  has  been  held  void.  Peo- 
ple V.  Spiro,  71  Misc.  (N.  Y.)  362, 
129  N.  Y.  S.  183. 

^  Amestoy  v.  Electric  Rapid  Tran- 
sit Co.,  95  Cal.  311,  30  Pac.  550.  (The 
above  case  had  to  do  with  the  ob- 
struction  of   a   public   thoroughfare.) 

"'Clark  V.  Spencer,  14  Kans.  398, 
19  Am.  Rep.  96;  In  re  Melon's  Ap- 
peal   (Pa.),  7  Atl.  201. 

•'In  re  Will  of  Dardis,  135  Wis. 
457,  115  N.  W.  332.  23  L.  R.  A.  (N. 
S.)  783n,  128  Am.  St.  1033.  Compare 
with  this  case  the  case  of  Cochran  v. 
Zachery,  137  Iowa  585,  115  N.  W. 
486,  16  L.  R.  A.  (N.  S.)  235n,  126 
Am.  St.  307.  See  also,  Carter  v. 
Owens,  41  Ala.  217;  Crow  v.  Blakey's 
Exr.,  31  Ala.  728;  In  re  McNamara, 
154  Mich.  671;  In  re  Leonard's  Will 
(N.  J.),  47  Atl.  222;  In  re  Lasak,  131 
N.  Y.  624,  30  N.  E.  112;  Cuthbert  v. 
Chauvet,  48  N.  Y.  St.  346,  20  N.  Y. 
S.  336;  Heermans  v.  Hill,  2  Hun  (N. 
Y.)  409.  In  the  absence  of  collusion 
or  fraud  as  to  other  parties  interested 
in  the  estate,  one  interested  in  de- 
feating the  probate  of  a  will  may 
enter  into  a  valid  agreement  not  to 
interpose  any  objection  to  its  probate. 
Grochowski  v.  Grochowski,  77  Nebr. 
510,  112  N.  W.  335.  The  conveyance 
of  a  prospective  interest  in  the  estate 


of  an  ancestor,  and  an  agreement  not 
to  contest  any  disposition  thereof,  is 
not,  in  California,  against  public  pol- 
icy. In  re  Wickersham's  Estate,  153 
Cal.  603,  96  Pac.  311.  An  agreement 
entered  into  by  the  two  proponents 
of  two  different  wills,  one  proponent 
being  the  guardian  and  trustee  for 
an  infant  beneficiary,  whereby  the 
costs  of  all  the  parties  should  be 
paid  out  of  the  estate  irrespective  of 
which  will  was  probated,  has  been 
held  not  void  as  tending  to  afifect  the 
administration  of  justice,  and  while 
the  plaintiff's  costs  could  not  be  paid 
out  of  the  estate,  for  the  reason  that 
the  will  of  which  the  infant  was  the 
beneficiary  was  probated,  and  such 
infant  was  not  bound  by  such  agree- 
ment, the  defendant,  executor  and 
trustee  was  not  thereby  freed  from 
his  agreement,  and  consequently  he 
was  liable  to  the  plaintiff.  Prince  v. 
Haworth,  75  L.  J.  K.  B.  92  (1905), 
2  K.  B.  768.  But  where  the 
agreement  not  to  contest  is  of  such 
a  nature  as  to  tend  toward  the  sup- 
pression of  truth  and  to  exaggerate 
and  color  facts  tending  to  support 
the  will,  it  will  not  be  allowed  to 
stand.  Conklin  v.  Conklin,  165  Mich. 
571.  131   N.  W.  154. 

"'Tappan  v.  Albanv  Brewing  Co., 
80  Cal.  570,  22  Pac.  257,  5  L.  R.  A. 
428n,  13  Am.  St.  174.  The  court 
said:  "It  is  contended  by  the  re- 
spondent that  this  was  nothing  more 
than  the  payment  of  a  sum  of  rnoney 
by  way  of  a  compromise  of  litiga- 
tion, and  that  such  contracts  have 
been  upheld.  We  do  not  so  construe 
the  agreement.     It  was  the  promise  to 


yi  LEGALITY  OF  OBJECT.  §  72O 

agreement  to  aid  in  obtaining  land  at  an  administrator's  sale  at 
less  than  its  real  value. ^ 

§  720.  Civil  actions — Fraud  on  the  court. — Courts  will  not 
give  effect  to  a  fraud  practiced  on  them.  Thus  where  a  woman, 
in  order  to  procure  a  divorce,  conceals  her  relations  with  a  second 
man  she  cannot  maintain  an  action  for  breach  of  promise  against 
this  second  man  on  a  promise  to  marry  made  prior  to  obtaining 
her  divorce."  An  agreement  whereby  a  patient  who  has  sus- 
tained a  personal  injury  agrees  to  pay  his  physician  one-third 
of  any  sum  which  he  might  receive  from  the  parties  through 
whose  negligence  he  was  injured,  has  been  held  unenforcible 
because  it  furnished  a  powerful  motive  for  exaggeration,  suppres- 
sion or  misrepresentation, — a  temptation  to  swell  the  damages  so 
likely  to  color  the  doctor's  testimony  as  to  be  inimical  to  pure 
administration  of  justice.^ 

§  721.  Obstructing  justice — Securing  evidence. — Likewise 
an  agreement  to  pay  a  witness  a  sum  contingent  upon  the  success 
of  the  promisor  in  the  contemplated  suit  has  been  held  against 
public  policy.''  Contracts  to  secure  evidence  of  a  given  state 
of  facts  which  will  enable  or  tend  to  enable  a  party  to  wdn  a  suit 
or  force  a  favorable  settlement  have  also  often  been  held  void  as 
against  public  policy.^     The  rule  is  otherwise,  however,  where  the 

pay  a  consideration  for  the  conceal-  N.  W.  154,  58  Am.  Rep.  369;  Laffin 

ment  of  a   fact    from   the  court  and  v.  Billington,  86  N.  Y.  S.  267,  14  N. 

the  parties,  material  to  the  rights  of  Y.  Ann.  Cases  360. 
said    parties,    and    which    it    was    her        *  Dawkins    v.     Gill,     10    Ala.    206; 

duty  to  make  known.     Such   a  con-  Pollak  v.  Gregory,  9  Bosw.    (N.  Y.) 

tract   was   against   public   policy,   and  116.      See    also,    Henderson    v.    Hall, 

neither  party  should   receive   the  aid  87  Ark.  1,  112  S.  W.  171,  25  L.  R.  A. 

of  the  courts  to  enforce  it.''  (N.  S.)    70n ;   Hughes  v.   Mullins,  36 

'  Smith    V.    Humphreys,    88    Maine  Mont.  267,  92  Pac.  758. 
345.  34  Atl.  166.  '  Hutlev  v.   Hutlev,  L.   R.  8  Q.   B. 

=  Prevost  V.  Wood,  21  Times  L.  R.  112;   Rees  v.  De  Bernardv   (1896),  2 

684.  Ch.   437;    Neece   v.   Joseph,   95   Ark. 

'Sherman    v.    Burton.     165     ^lich.  552,  129  S.  W.  797,  30  L.  R.  A.    (X. 

293.  33  L.  R.  A.  (X.  S.)  87n.  130  X.  S.)    278:    Goodrich    v.    Kennev.    144 

W.    <667.    The  same  has  been  held  true  111.  422.  33  N.  E.  44.  19  L.  R.  A.  371 

of   a   contract   by  which   an  attorney  and  note,  36  Am.   St.  459;   Phelps  v. 

agreed  to  pay  the  physician  who  at-  Afanecke,  119  Mo.  App.  139,  96  S.  W. 

tended  the  person  injured  a  specified  221 ;    Hughes    v.    'Mullins,    36    'Mont, 

sum  for  his  services  as  a  witness  if  267,  92  Pac.  758.  13  .A..  S:  P..  .A.nn  Cas. 

the  suit  was  won.    In  re  Schapiro.  128  209;   Quirk  v.   Mullcr,   14  ^lont.  467, 

N.     Y.     S.     852.      To     same    effect.  36  Pac.  1077,  25  L.  R.  A.  87.  43  Am. 

Thomas  v.  Caulkett,  57  Mich.  392,  24  St.  647;  Lyon  v.  Hussey,  82  Hun  (N. 


§    721 


CONTRACTS. 


72 


contract  merely  provides  for  the  payment  of  services  rendered 
in  securing  for  use  such  testimony  as  actually  exists  and  does  not 
contemplate  the  procurement  of  evidence  which  tends  to  estab- 
lish a  given  state  of  facts  regardless  of  any  other  considera- 
tion, and  compensation  does  not  depend  upon  the  outcome  of  the 
suit  in  which  the  evidence  is  to  be  given.® 


Y.)  15.  63  N.  Y.  St.  531,  31  N.  Y.  S. 
281;  Getchell  v.  Welday,  4  Ohio  S. 
&  C.  P.  Dec.  65;  Bowling  v.  Blum 
(Tex.),  52  S.  W.  97.  An  agreement 
whereby  a  deputy  sheriff  is  to  be  paid 
a  certain  sum  in  consideration  of  his 
furnishing  evidence  sufficient  to  con- 
vict the  murderers  of  a  relative  of 
the  other  party  to  the  contract  has 
been  held  void  as  an  agreement  to 
pay  a  public  officer  for  doing  a  duty 
which  the  law  requires  him  to  do 
without  such  pavment.  Kennedy  v. 
Hodges,  97  Ga.  753,  25  S.  E.  493. 

"  Wood  V.  Casserleigh,  30  Colo.  287, 
71  Pac.  360,  97  Am.  St.  138  and  note, 
affg.  Casserleigh  v.  Wood,  14  Colo. 
App.  265,  59  Pac.  1024._  The  contract 
in  the  above  case  required  the  plain- 
tiff to  furnish  evidence  which  was 
then  in  his  possession  and  which  he 
had  secured  prior  to  the  execution 
of  the  contract.  The  plaintiff  had 
collected  this  testimony  under  a  con- 
tract with  a  party  by  whom  he  had 
been  employed  which  in  no  manner 
rendered  his  compensation  contin- 
gent upon  the  character  of  the  testi- 
mony which  he  had  been  employed 
to  procure  or  the  result  of  any  action 
in  which  it  might  be  used.  On  the 
contrary,  for  the  services  thus  per- 
formed he  was  paid  or  promised  a 
specific  compensation  in  no  manner 
contingent  upon  his  success.  Com- 
pare, however,  with  the  foregoing 
case  that  of  Casserleigh  v.  Wood, 
119  Fed.  308,  56  C.  C.  A.  212,  where 
an  opposite  conclusion  was  reached 
on  exactly  similar  facts  but  on  the 
ground  of  champerty  and  mainte- 
nance. Lucas  v.  Pico,  55  Cal.  126  Cin- 
formation  concerning  outstanding 
title).  Contract  to  pay  defendants  to 
procure  evidence  of  another's  breach 
of  contract  without  reference  to  the 
outcome  of  a  suit  in  which  the  evi- 
dence was  to  be  used.  J.  I.  Case 
Threshing  Mach.  Co.  v.  Fisher 
dowa),   122  N.   W.   575.     See  also. 


Singer  Mfg.  Co.  v.  City  Nat.  Bank, 
145  N.  Car.  319,  59  S.  E.  72.  The 
above  case  holds  that  merely  because 
one  received  a  certain  sum  for  se- 
curing witnesses  in  a  pending  divorce 
suit,  it  does  not  follow  that  the  re- 
cipient of  the  money  was  to  obtain 
false  or  suborned  testimony.  Chand- 
ler V.  Mason,  2  Vt.  193;  Cobb  v. 
Cowdery,  40  Vt.  25,  94  Am.  Dec.  370; 
Plating  Co.  v.  Farquharson,  L.  R.  17 
Ch.  Div.  49.  In  the  above  case  an 
advertisement  was  inserted  in  the 
newspaper  which  offered  a  hundred- 
pound  reward  to  any  one  who  could 
pioduce  documentary  evidence  of  a 
certain  fact.  An  action  was  brought 
to  commit  parties  inserting  this  ad- 
vertisement for  contempt  of  court. 
The  court  said :  "Advertisements  of 
a  similar  nature  are  very  common. 
You  advertise  for  a  lost  deed  or  a 
lost  will,  or  you  advertise  for  a  cer- 
tificate of  marriage  or  of  baptism,  to 
prove  heirship  or  kinship.  That  is 
done  as  a  matter  of  course.  *  *  * 
And  I  have  never  heard  it  suggested 
that  those  advertisements  were  il- 
legal, or  were  not  a  proper  mode  of 
obtaining  evidence."  The  above  case 
criticizes  that  of  Pool  v.  Sacheverel, 
1  P.  Wms.  675.  In  this  latter  case  a 
party  who  had  been  defeated  in  a  suit 
offered  a  hundred  pound  reward  for 
the  discovery  and  legal  proof  that  a 
certain  registry  entry  which  had  been 
introduced  at  a  trial  evidenced  the 
marriage  of  the  parties  whose  names 
were  correctly  stated  therein.  He 
was  held  guilty  of  contempt  of  court. 
Contracts  for  the  investigation  of 
evidence  are  looked  upon  with  suspi- 
cion, since  they  may  easily  become 
the  instrument  of  corruption,  and  the 
law  does  not  tolerate  the  offering  to 
any  one,  no  matter  how  virtuous,  of 
such  temptation  to  crime.  See  cases 
cited  ante,  this  note.  It  is  ap- 
parent    that     a     contract     for     the 


71 


LEGALITY    OF    OBJECT. 


722 


§  722.  Obstructing  justice — Paying  witnesses. — As  a  gen- 
eral rule  agreements  to  give  a  witness  compensation  in  addition 
to  his  statutory  fee  are  held  invalid  where  the  witness  is  merely 
to  testify  as  to  facts  within  his  knowledge  which  the  law  and  his 
duty  as  a  citizen  require  him  to  make  known/  The  foregoing 
principle  does  not  necessarily  apply  to  expert  witnesses.  Con- 
tracts with  expert  witnesses  for  extra  compensation  are  as  a 
general  rule  upheld  where  the  employment  is  such  as  to  require 


purchase  of  evidence  coupled  with 
an  agreement  to  suppress  testi- 
mony is  void.  Young  v.  Thom- 
son, 14  Colo.  App.  294,  59  Pac. 
1030.  An  agreement  by  a  public  offi- 
cer or  other  fiduciary  to  reveal  facts 
coming  within  his  knowledge  on  ac- 
count of  his  office  or  fiduciary  rela- 
tion is  unenforcible.  Lucas  v.  Allen, 
80  Ky.  681,  4  Ky.  L.  687.  Compare 
with  this  case  that  of  Harris  v.  More, 
70  Cal.  502,  11  Pac.  780,  which  holds 
an  officer  entitled  to  recover  on  a 
contract  to  furnish  evidence  where  it 
related  to  a  crime  committed  out- 
side his  jurisdiction. 

'  "Were  it  otherwise,  and  witnesses 
might  be  allowed  to  make  terms  for 
testifying,  there  would  be  room  for 
oppressive  conduct,  and  for  corrup- 
tion. Witnesses,  knowing  that  their 
testimony  was  indispensable,  would 
under  one  pretense  or  another,  make 
terms  for  their  testimony,  and  such 
as  might  be  induced  to  represent  their 
testimony  as  important,  would  be 
tempted  to  barter  their  oaths  at  the 
expense  of  truth  and  justice.  Now, 
a  promise  to  pay  more  than  the  stat- 
ute fees  for  just  this  statute  service, 
without  further  service  or  loss  _  by 
the  witness,  may  be  said  to  be  with- 
out consideration.  It  cannot  be  im- 
portant, in  our  view,  whether  the 
promise  be  made  after  the  service  of 
the  subpoena,  co-temporaneously  with 
it,  or  before,  provided  the  promise 
refers  to  this  duty  and  is  founded  on 
no  other  consideration.  "There  may 
be  a  further  consideration,  in  which 
case  an  executory  promise  for  extra 
compensation  will  be  upheld;  as  if 
the  witness  was  about  going  abroad 
at  the  time  he  may  be  wanted  to  at- 
tend court,  and  agrees  that  he  will 
remain  and  give  up  his  journey  and  is 
summoned;    or   living   at   a    distance 


from  the  place  of  the  court,  more 
than  twenty  miles,  so  that  his  deposi- 
tion could  be  taken,  agrees  that  he 
will  attend  in  person.  In  these  and 
the  like  cases  the  promise  is  one  for 
indemnity,  and  is  founded  on  a  new 
and  meritorious  consideration,  and  is 
good.  *  *  *  If  a  witness  agrees 
with  a  party,  that  he  will  attend  and 
testify  without  being  summoned,  and 
he  is  not  summoned  and  so  not 
brought  under  the  order  or  censure 
of  the  court,  we  suppose  any  reason- 
able promise  for  compensation  is 
good  and  may  be  enforced;  for  the 
proceeding  or  service  is  not  under 
nor  in  pursuance  of  the  statute." 
Dodge  v.  Stiles,  26  _  Conn.  _  463. 
"Where  a  witness  who  is  not  inter- 
ested in  the  result  of  the  controversy 
resides  within  the  state  and  is 
amenable  to  process  therein,  an 
agreement  to  compensate  him  in  an 
amount  in  excess  of  the  legal  fees  for 
attending  as  a  witness  and  testifying 
only  as  to  facts  within  his  knowl- 
edge, is  contrary  to  public  policy 
and  void."  Cliflford  v.  Hughes,  139 
App.  Div.  (N.  Y.)  730,  124  N.  Y.  S. 
478.  An  agreement  to  pay  a  mem- 
ber of  a  fraudulent  conspiracy  a  val- 
uable consideration  in  return  for 
such  conspirator's  testimony  and  per- 
mission to  use  the  evidence  showing 
such  conspiracy  in  his  possession  has 
also  been  held  void,  and  no  recovery 
permitted  on  such  agreement  by  the 
conspirator,  since  he  is  not  permitted 
to  profit  by  the  information  pos- 
sessed by  reason  of  his  unlawful  con- 
spiracv.  Hagan  v.  Wellington,  7 
Kan s.' App.  74~;  52  Pac.  909.  See  also, 
Wright  V.  Somers.  125  111.  App.  256; 
Eoehmer  v.  Foval,  55  111.  App.  71 ; 
Haines  v.  Lewis,  54  Iowa  301.  6  N. 
W^  495.  yi  Am.  Rep.  202n ;  Cowles 
v.    Rochester    Folding    Box    Co.,    81 


7^1 


CONTRACTS. 


74 


special  work  in  preparation  for  the  trial. ^  Thus,  if  a  physician 
renders  extra  services  as  an  expert  an  agreement  whereby  he  is 
to  receive  extra  payment  for  such  services  is  proper  and  legal." 
However,  if  tlie  agreement  is  one  by  which  the  expert  is  to  receive 
for  his  services  a  percentage  of  the  amount  that  may  be  recovered 
or  realized  from  the  suit  the  contract  is  illegal.^"  Nor  is  he  en- 
titled to  extra  compensation  wliere  he  is  a  witness  merely  as  to 
matters  concerning  which  the  law  and  his  duty  as  a  citizen  would 
comoel  him  to  testifv.^^ 


§  723.  Obstructing  justice — Hiring  witnesses  to  leave  state 
and  the  like. — It  goes  without  saying  that  a  contract  by 
which  a  witness  is  hired  to  leave  the  state  and  not  to  appear  at  the 
trial  of  a  pending  suit  is  an  unlawful  agreement  to  stifle  public 
justice.^"    An  agreement  to  abstain  from  giving  or  to  suppress 


App.  Div.  (N.  Y.)  414,  80  N.  Y.  S. 
811;  In  re  Ramschasel's  Estate,  24 
Pa.  Sup.  Ct.  262.  An  agreement  for 
extra  compensation  does  not  render 
invalid  an  agreement  otherwise  valid 
and  enforcible  if  sucli  illegal  pro- 
vision is  separable  from  that  part 
which  is  legal.  Smith  v.  Hartsell, 
150  X.  Car.  71,  63  S.  E.  172,  22  L. 
R.  A.  (X.  S.)  203.  A  contract 
which  contains  a  provision  to  the  ef- 
fect that  the  plaintiff  will  give  all 
true  evidence  does  not  render  illegal 
a  contract  otherwise  valid.  Smith  v. 
Hartsell.  150  X.  Car.  71,  63  S.  E. 
172,  22  L.  R.  A.   (X.  S.)  203. 

*  Lincoln  ^Mountain  Gold  ]\Iin.  Co. 
V.  Williams,  yi  Colo.  193,  85  Pac. 
844  (expert  testimony  as  to  the  value 
of  mining  property)  ;  Johnson  v. 
Pietsch,  94  111.  .A.pp.  459;  Barrus  v. 
Phaneuf,  166  Mass.  123,  44  X.  E. 
141,  32  L.  R.  A.  619;  People  v.  Mont- 
gomery, 13  Abb.  Pr.  (X.  S.)  (X.  Y.) 
207;  People  v.  Cayuga  County,  22 
Misc.  ex.  Y.)  616,  50  X.  Y.  S.  16; 
People  v.  Cortland  County,  39  X.  Y. 
St.  313,  15  X.  Y.  S.  748;  People  v. 
Jefferson  Countv,  35  App.  Div.  (X. 
Y.)  239.  54  X.  Y.  S.  782;  Hough  v. 
State,  68  Misc.  rx.  Y.)  26,  124  X.  Y. 
S.  878;  Philler  v.  Waukesha  County, 
139  Wis.  211.  120  X.  W.  829,  25  L. 
R.  A.  ex.  S.)  1040n,  131  Am.  St. 
Rep.  1055,  17  Am.  &  Eng.  Ann.  Cas. 
712. 


*  Lewis  V.   Blye,  79  111.  App.  256. 

'"Laffin  V.  Billington,  86  X.  Y.  S. 
267,  14  X.  Y.  Ann.  Cas.  360.  See 
also.  Hough  V.  State,  145  App.  Div. 
(X.  Y.)  718,  130  X.  Y.  S.  407,  hold- 
ing an  agreement  by  an  expert  wit- 
ness employed  to  appraise  property 
to  appraise  it  at  a  substantially  less 
figure  than  an  expert  employed  by 
the  adverse  party  against  public  pol- 
icy. 

"  Burnett  v.  Freeman,  125  Mo. 
App.  683,  103  S.  W.  121,  same  case 
on  second  appeal   134  Mo.  App.  709, 

115  S.  W.  488.  The  above  case  lays 
down  the  rule  "that  a  witness  called 
to  testify  as  an  expert,  whether  as 
a  physician  or  in  any  other  branch 
of  knowledge,  may  be  compelled  to 
state  his  opinion  upon  hypothetical 
or  other  questions  involving  his  pro- 
fessional knowledge,  without  com- 
pensation other  than  the  witness  fee 
taxed  to  the  ordinary  witness.  He 
cannot,  however,  be  required  to  make 
special  preparation  without  extra 
compensation."  See  also,  Walker  v. 
Cook,  ZZ  111.  App.  561. 

"Feltner   v.    Feltner,    132   Ky.   705. 

116  S._  W.  1196.  (In  the  above  case 
the  witness  executed  his  part  of  the 
agreement  and  then  attempted  to  re- 
cover on  the  contract.)  To  same  ef- 
fect, Lazenby  v.  Lazenby,  132  Ga.  836,  < 
65  S.  E.  120,  in  which  a  witness  who 
knew  facts  favorable  to  the  adverse 


/D 


LEGALITY    OF    ORJF.CT. 


§    72A 


evidence  is  void.'^  In  short  any  contract  which  relates  to  court 
proceedings  and  which  may  involve  anything  inconsistent  with  the 
impartial  course  of  justice  is  void  regardless  of  actual  corruption, 
the  good  faith  of  the  parties,  or  the  fact  that  no  evil  resulted 
therefrom.^* 

§  724.  Obstructing  justice — Indemnity  to  sureties, — There 
is  a  conflict  of  authority  on  the  (lucstion  as  to  whether  a  bond 
of  indemnity  to  sureties  on  a  bail  bond  is  void  as  contrary  to  pub- 
lic policy.  By  one  line  of  cases  a  prisoner  may  indemnify  his 
bail.'=  Other  autliorities  hold  that  such  contracts  tend  to  ob- 
struct or  interfere  with  the  administration  of  public  justice  and 
are  for  that  reason  against  public  policy  and  void.  The  reason- 
ing in  such  cases  briefly  stated  is :  The  effect  of  a  bail  bond  is  to 
transfer  the  legal  custody  of  the  prisoner  from  the  state  to  the 
bailor;  if  the  bailor  is  indemnified  against  loss  there  is  no  longer 


party  agreed  not  to  volunteer  any 
information  to  such  adverse  party 
Init  to  assist  the  other  party  to  the 
litigation,  this  latter  party  agreeing 
to  convey  certain  property  to  the 
witness  on  a  favorable  issue  of  the 
suit: 

'=  Valentine  v.  Stewart,  15  Cal.  387; 
Haines  v.  Lewis.  54  Iowa  301,  6  N. 
W.  495,  2>7  Am.  Rep.  202n ;  Friend  v. 
Miller,  52  Kans.  139,  34  Pac.  397,  39 
Am.  St.  340;  Crisup  v.  Grosslight, 
79  Mich.  380,  44  N.  W.  621. 

"Treat  v.  Jones.  28  Conn.  334; 
Paton  v.  Stewart,  7?<  111.  481 ;  Brown 
v.  Bank.  137  Ind.  655.  2,7  N.  E.  158, 
24  L.  R.  \.  206n;  Gray  v.  Mc- 
Revnolds,  65  Iowa  461,  21  N.  W. 
777,  54  Am.  Rep.  16;  Bowman  v. 
Phillips,  41  Kans.  364,  21  Pac.  230.  3 
L.  R.  A.  631.  13  Am.  St.  Rep.  292; 
Averbeck  v.  Hall,  14  Bush  (Ky.)  505; 
Thomas  v.  Caulkett,  57  Mich.  392,  24 
N.  W.  154.  58  Am.  Rep.  369;  Will- 
emin  v.  Bateson.  63  Mich.  309,  29  N. 
W.  734;  Ridenbaugh  v.  Young,  154 
Mo.  274,  46  S.  W.  959;  Weber  v. 
Shav.  56  Ohio  St.  116,  46  N.  E.  2>77, 
27  L.  R.  A.  230.  60  Am.  St.  743j 
Ormerod  v.  Dearman,  100  Pa.  561.  45 
Am.  Rep.  391  ;  Bierbauer  v.  Wirth, 
10  Biss.  (U.  S.")  60.  5  Fed.  336;  Bar- 
ron v.  Tucker,  53  Vt.  338.  38  Am. 
Rep.  684. 


"Learv  v.  United  States  (U.  S.), 
32  Sup.  Ct.  599 ;  Molonev  v.  Nelson, 
158  N.  Y.  351.  53  X.  E.  3'l  (statutory 
law  permitted  a  prisoner  to  furnish 
cash  bail).  Essig  v.  Turner,  60 
Wash.  175,  110  Pac.  998.  (Based  on 
statutory  grounds.  Law  permitted 
prisoner  to  give  cash  bail.  Court 
could  see  no  difference  between  go- 
ing cash  bond  directly  to  state  and 
agreement  to  indemnifv  suretv.)  Carr 
V.  Davis,  64  W.  Va.  522,  63  S.  E.  326. 
20  L.  R.  A.  (N.  S.)  58n.  See  also, 
Ellis  V.  Korman,  19  Kv.  L.  1798.  44 
S.  W.  429.  The  indemnity  to  the 
bailor  may  be  given  by  a  third  per- 
son. Stevens  v.  Hay,  61  111.  399; 
Harp  V.  Osgood,  2  Hill  (N.  Y.)  216. 
See  also,  Anderson  v.  Spence,  72  Ind. 
315,  37  Am.  Rep.  162;  Aldrich  v. 
Ames,  9  Gray  (Mass.)  76;  Holmes 
V.  Knights,  10  X.  H.  175;  Harrison 
v.  Sawtel,  10  Johns.  (X.  Y.)  242,  6 
Am.  Dec.  2)2>7.  Contra,  Dunkin  v. 
Hodge,  46  Ala.  523.  Pennsylvania 
is  perhaps  contra.  Mavne  v.  Fidcl- 
itv  &c.  Co.,  198  Pa.  490,  48  Atl.  46Q. 
revg.  8  Pa.  Dist.  711.  When  the  bail 
pays  a  recognizance  the  law  does  not 
imply  a  promise  by  the  accused  to 
reimburse  the  bail.  United  States  v. 
Greene,  163  Fed.  442.  and  cases  cited ; 
Ignited  States  v.  Rvder.  110  U.  S.  729. 
28  L.  ed.  308,  4  Sup.  Ct.  196 ;  Carr  v. 


§725  CONTRACTS.  7^ 

any  inducement  for  him  to  exercise  vigilance,  and,  as  a  result, 
the  state  receives  the  surety  of  only  one  person  instead  of  two." 

§  725.  Ousting  jurisdiction  or  limiting  powers. — Contracts 
by  which  the  parties  thereto  seek  to  oust  the  jurisdiction  of  the 
courts  and  to  deny  the  right  of  one  or  both  to  resort  to  any  court 
of  competent  jurisdiction  to  settle  questions  of  law  that  may 
arise  thereunder,  are  declared  void  as  against  public  policy." 
Courts  guard  with  jealous  eye  any  contract  innovations  upon 
their  jurisdiction.^^  Agreements  to  the  effect  that  suit  shall  be 
brought  only  in  a  certain  court^^  or  in  a  certain  county"''  or  state"^ 

Davis,  64  W.  Va.  522,  63  S.  E.  Z26,  and     jurisdiction."     Victor     Talking 

20  L.  R.  A.   (N.  S.)   58n.     See  how-  Machine    Co.    v.    American    Grapho- 

ever,  J.  G.  Hutchinson  &  Co.  v.  Mor-  phone    Co.,    140    Fed.    860,    affd.    145 

ris  Bros.,  86  Mo.  App.  40;  Reynolds  Fed.  350.     And  where  the  facts  are 

V.  Harral,  2  Strob.   (S.  Car.)   87.  the  same  in  several  cases  the  parties 

^°  United  States  v.  Greene,  163  Fed.  may  agree  to  try  only  one  case  and 
442;  United  States  v.  Simmons,  47  that  the  result  in  that  case  shall  de- 
Fed.  575,  14  L.  R.  A.  78.  Compare  termine  all.  Peyton  v.  Stuart,  88  Va. 
the  foregoing  federal  cases  with  50,  13  S.  E.  408,  16  S.  E.  160. 
Leary  v.  United  States  (U.  S.),  32  "First  Nat.  Bank  of  Kansas  City 
Sup.  Ct.  599.  See  also,  Dunkin  v.  v.  White,  220  Mo.  717,  120  S.  W.  36, 
Hodge,  46  Ala.  523;  Mayne  v.  Fidel-  132  Am.   St.  612. 

ity  &c.  Co.,  198  Pa.  490,  48  Atl.  469,  "Mutual  Reserve  Fund  Life  Assn. 

revg.  8  Pa.  Dist.   711.      Where    part  v.    Cleveland   Woolen   Mills,  82   Fed. 

of  the  consideration  was  the  agree-  508,    27   C.    C.   A.   212    (suit    to    be 

ment    to    procure    "straw     bail"    this  brought    only    in    the    United    States 

was  said  to  taint  the  entire  transac-  circuit     court),      Blair     v.     National 

tion  and  render  it  unenforcible.    Way  Shirt  and  Overalls  Co.,  137  111.  App. 

v.    Greer,    196   Mass.   237,   81    N,   E.  413   (suit  to  be  brought  only  in  the 

1002.  highest    court    of    original    jurisdic- 

"  See    generally,   Ross  v.   Conwell,  tion).     Darling  v.   Protective  Assur. 

7  Ind.  App.  375,  24  N.  E.  752;  Hager  Society  of  Buffalo,  71  Misc.   (N.  Y.) 

V.  Shuck,  120  Ky.  574,  47  Ky.  L.  957,  113,   127  N.  Y.   S.  486   (provision  in 

87  S.  W.  300;  Ison  v.  Wright,  21  Ky.  insurance  policy  that  suit  thereon  to 

L.  1368,  55  S.  W.  202;  Bauer  v.  In-  be  brought  in  Buffalo  courts), 

ternational  Waste  Co.,  201  Mass.  197,  ^^  Benson    v.    Eastern    Building    & 

87  N    E.  637;  Watson  v.  Boswell,  25  Loan  Assn.,  174  N.  Y.  83,  66  N.  E. 

Tex.    Civ.   App.  379,    61    S.    W.   407  627;  McLean  v.  Tobin,  109  N.  Y.  S. 

(lease   providing  against   liability  on  926,   58  Misc.    (N.  Y.)    528    (suit  on 

part   of   landlord    for    damages   aris-  fire    insurance   policy   to   be   brought 

ing  from  any  future  distraint).   Flor-  in  supreme  court   of  specified  coun- 

ida   Athletic   Club    v.    Hope    Lumber  ty).     Healy  v.   Eastern   Building  &c. 

Co.,  18  Tex.  Civ.  App.  161,  44  S.  W.  Assn.,  17  Pa.  Super.  Ct.  385;  Savage 

10.     See  also,  Webber  v.  Cambridge-  v.  People's  &c.  Sav.  Assn.,  45  W.  Va. 

port  Sav.  Bank,  186  Mass.  314,  71  N.  275,  31  S.  E.  991. 

E.     567.      "A     prior    agreement,     by  "^  Buel  v.  Baltimore  &c.  O.  S.  W.  R. 

which  the  interested  parties  mutually  Co.,  24  Misc.   (N.  Y.)  646,  53  N.  Y. 

agree   upon    terms    of    settlement    on  S.  749.     See,  however,  Mittenthal   v. 

condition   that  the  patent   in   contro-  Mascagni,  183  Mass.  19,  66  N.  E.  425, 

versy  is  sustained  by  the  court,  can-  60    L.    R.    A.    812,    97    Am.    St.    404, 

not  upon  principle  and  authority  de-  which  upholds  a  clause  in  a  contract 

prive  a  court  of  its   inherent  power  which  was  to  be  performed  in   sev- 


77 


LEGALITY    OF    OBJECT. 


§    726 


or  that  suit  shall  not  be  brought  in  a  certain  court"  are  not  bind- 
ing. 

§  726.  Ousting  jurisdiction — Submission  to  private  indi- 
vidual.— An  agreement  in  advance  whereby  a  question  of 
law  is  to  be  submitted  to  a  private  party  for  decision  has  been  held 
invalid.-^  A  party  does  not  have  the  right  to  contract  beforehand 
under  penalty  of  forfeiture  that  he  will  not  litigate  a  claim  that 
may  thereafter  arise.  The  policy  of  the  law  is  to  furnish  every 
citizen  with  speedy  redress  for  any  injury  which  he  may  receive 
in  person  or  property  and  a  contract  which  essentially  imposes  a 
penalty  upon  seeking  such  redress  is  contrary  to  that  policy."* 
These  principles  also  find  application  in  those  instances  in  which 
there  is  an  agreement  to  arbitrate.  One  is  not  bound  by  an 
agreement  entered  into  in  advance  to  submit  finally  the  entire 
subject-matter  of  dispute  under  a  specified  contract  of  arbitra- 
tion.'^   Thus  a  provision  in  the  by-laws  of  a  corporation  which 


eral  countries,  that  suits  upon  it 
should  be  brought  in  the  country 
where  the  contracting  parties  are 
domiciled.  See  also,  Gitler  v.  Rus- 
sian Co.,  124  App.  Div.  (N.  Y.)  273, 
108  N.  Y.  S.  793. 

-  Home  Ins.  Co.  v.  IMorse,  20  Wall. 
(U.  S.)  445.  II  L.  ed.  365  (action  not 
to  be  brought  in  or  removed  to  United 
States  court).  Barron  v.  Burnside, 
121  U.  S.  186,  30  L.  ed.  915,  7  Sup. 
Ct.  931. 

°  Sanitary  District  v.  McMahon  &c. 
Co.,  110  111.  .App.  510. 

"  Chicago  B.  &  Q.  R.  Co.  v.  Healy, 
76  Nebr.  783,  107  N.  W.  1005.  Ill  N. 
W.  598,  revd.  10  L.  R.  A.  (N.  S.)  198. 
In  the  above  case  the  deceased  was  a 
member  of  the  railroad  company's  re- 
lief department.  His  contract  of 
membership  provided  that  if  suit  was 
brought  for  any  injuries  sustained  by 
him  he  forfeited  any  benefits  that  he 
might  be  entitled  to  or  if  he  accepted 
benefits,  the  right  to  sue  for  damages 
was  forfeited.  His  widow  accepted 
benefits  and  it  was  then  held  that  she 
might  sue  as  administratrix  for  the 
benefit  of  the  deceased's  minor  chil- 
dren. 

=' Mitchell  V.  Doughcrtv,  90  Fed. 
639,  II  C.  C.  A.  205;  Supreme  Coun- 


cil V.  Garrigus,  104  Ind.  133,  3  N.  E. 
818,  54  Am.  Rep.  298n ;  Hartford  Fire 
Ins.  Co.  v.  Bourbon  Countv  Court, 
115  Kv.  109,  24  Ky.  L.  1850,  72  S.  W. 
739;  Ison  v.  Wright,  21  Ky.  L.  368, 
55  S.  W.  202;  Jones  v.  Brown,  171 
Mass.  318,  50  N.  E.  648;  Miles  v. 
Schmidt,  168  Mass.  339,  47  N.  E.  115; 
White  V.  Middlesex  R.  Co.,  135  Mass. 
216;  Vass  v.  Wales,  129  Mass  38; 
Pearl  v.  Harris.  121  Mass.  390;  Phoe- 
nix Ins.  Co.  V.  Zlotkv,  66  Nebr.  584, 
92  N.  W.  lid;  Hartford  Fire  Ins.  Co. 
V.  Hon,  66  Nebr.  555,  92  N.  W.  746, 
60  L.  R.  A.  436,  103  Am.  St.  725; 
Home  Fire  Ins.  Co.  v.  Kennedy,  47 
Nebr.  138.  66  N.  W.  278.  53  Am.  St. 
521 ;  IMarch  v.  Eastern  R.  Co.,  40  N. 
H.  548,  11  Am.  Dec.  1Z2\  Seward  v. 
Rochester,  109  N.  Y.  164.  16  N.  E. 
348:  Haggart  v.  Morgan.  5  N.  Y.  422, 
55  Am.  Dec.  350;  Pittsburgh  &c.  R. 
Co.  V.  Garrett,  50  Ohio  St.  405.  34  N. 
E.  493:  Tilden  v.  Bernhard,  31  Ohio 
C.  C.  255 ;  Needy  v.  German-Ameri- 
can Ins.  Co..  197  Pa.  St.  460,  47  Atl. 
739;  Mentz  v.  Lancaster  Fire  Ins.  Co., 
79  Pa.  St.  478.  21  Am.  Rep.  80;  Grav 
v.  Wilson.  4  Watts  (Pa.)  39:  In  re 
The  Excelsior.  123  U.  S.  40.  31  L.  ed. 
75.  8  Sup.  Ct.  33.  In  Miles  v.  Schmidt. 
168  Mass.  339,  47  N.  E.  115,  the  court 


§  1^7 


CONTRACTS. 


78 


requires  all  stockholders  to  submit  disputes  with  it  to  arbitration 
and  attempts  to  oust  the  jurisdiction  of  the  courts  is  void.'*'  And 
the  provision  in  an  insurance  policy  to  the  effect  that  a  deci- 
sion of  a  tribunal  of  the  insurer  or  arbitrators  shall  be  final  as  to 
all  disputes  arising  under  the  policy,  is  invalid  and  does  not  pre- 
vent a  resort  to  the  court  on  the  contract  of  insurance."'^ 

§727.  Ousting  jurisdiction — Condition  precedent. — Some 
fact  or  condition  precedent  to  litigation  may,  however,  be  settled 
by  arbitration.'**    Thus  provisions  in  an  insurance  policy  that  the 


said:  "Perhaps  if  the  question  were 
a  new  one,  no  objection  would  be 
found  to  permitting  the  parties  to  se- 
lect their  own  tribunals  for  the  set- 
tlement of  civil  controversies,  even 
though  the  result  might  be  to  oust 
the  courts  of  jurisdiction  in  such 
cases.  But  the  law  is  settled  other- 
wise in  this  state."  To  same  effect, 
Condon  v.  South  Side  R.  Co.,  14 
Grat.  (Va.)  302,  where  the  rule  was 
held  settled  but  not  to  be  extended. 
There  is  some  authority  to  the  effect 
that  an  action  will  lie  on  the  covenant 
to  arbitrate,  for  at  least  nominal 
damages.  Nute  v.  Hamilton  Mut. 
Ins.  Co.,  6  Gray  (Mass.)  174;  Hag- 
gart  v.  Morgan,  5  X.  Y.  422,  55  Am. 
Dec.  350;  Munson  v.  Straits  of  Do- 
ver S.  S.  Co.,  99  Fed.  787,  affd.  100 
Fed.  1005,  41  C.  C.  A.  156. 

^  State  v.  North  American  &c. 
Timber  Co.,  106  La.  621,  31  So.  172, 
87  Am.  St.  309;  National  League  &c. 
of  United  States  v.  Hornung,  72 
Misc.  (N.  Y.)  181,  129  N.  Y.  S.  437; 
Pepin  V.  Societe  of  St.  Jean  Baptiste, 
23  R.  I.  81,  49  Atl.  387,  91  Am.  St. 
620;  Daniher  v.  Grand  Lodge,  10 
Utah  110,  Zl  Pac.  245. 

^The  parties  waived  right  of  ap- 
peal to  a  court  of  law  or  equity  from 
the  decision  of  the  arbitrators.  Jef- 
ferson Fire  Ins.  Co.  v.  Bierce,  183 
Fed.  588;  Supreme  Council  &c.  v. 
Forsinger,  125  Ind.  52,  25  N.  E.  129, 
9  L.  R.  A.  501,  21  Am.  St.  196;  Bauer 
V.  Sampson  Lodge  No.  32,  K.  of  P., 
102  Ind.  262,  1  N.  E.  571;  Stephen- 
son V.  Piscataque  &c.  Ins.  Co..  54 
Maine  55;  Reed  v.  Washington  Fire 
&  Marine  Ins.  Co.,  138  Mass.  572; 
Whitney  v.  National  Masonic  Acci- 
dent Assn.,  52  Minn.  378,  54  N.  W. 


184;  Randall  v.  American  Fire  Ins. 
Co.,  10  Mont.  340,  25  Pac.  953,  24  Am. 
St.  50;  Hartford  Fire  Ins.  Co.  v. 
Hon,  66  Nebr.  555,  92  N.  W.  746,  60 
L.  R.  A.  436,  103  Am.  St.  725;  Ger- 
man-American Ins.  Co.  v.  Etherton, 
25  Nebr.  505,  41  N.  W.  406;  Williams 
v.  Branning  Mfg.  Co..  154  N.  Car. 
205,  70  S.  E.  290;  :\Ivers  v.  Jenkins, 
63  Ohio  St.  101,  57  "N.  E.  1089,  81 
Am.  St.  613;  BaUimore  &c.  R.  Co. 
v.  Stankard,  56  Ohio  St.  224,  46  N. 
E.  577,  49  L.  R.  A.  381,  60  Am.  St. 
745;  Mentz  v.  Lancaster  Fire  Ins. 
Co.,  79  Pa.  St.  478,  21  Am.  Rep.  80; 
Fox  v.  Masons'  Fraternal  Ace.  Assn., 
96  Wis.  390,  71  N.  W.  363.  See  also, 
Utter  V.  Travelers'  Ins  Co.,  65  Mich. 
545,  32  N.  W.  812,  8  Am.  St.  913n 
(cannot  contract  as  to  the  right  of 
recovery  itself). 

^'^  Scott  V.  Avery,  5  H.  L.  Cas.  811 ; 
Hall  V.  Norwalk  Fire  Ins.  Co.,  57 
Conn.  105,  17  Atl.  356;  Mundy  v. 
Louisville  &c.  R.  Co.,  67  Fed.  633,  14 
C  C.  A.  583;  Lewis  v.  Brotherhood 
Ace.  Co.,  194  Mass.  1,  79  N.  E.  802,  17 
L.  R  A.  (N.  S.)  714;  Hutchinson  v. 
Liverpool  &c.  Ins.  Co.,  153  Mass.  143, 
26  N.  E.  439,  10  L.  R.  A.  558;  Wood 
V.  Humphrey,  114  Mass.  185;  Easter 
V.  Brotherhood  of  Am.  Yeomen,  154 
Mo.  App.  456,  135  S.  W.  964;  Wolff 
V.  Liverpool  &c.  Ins.  Co.,  50  N.  J.  L. 
453.  14  Atl.  561 ;  Delaware  &  Hudson 
Canal  Co.  v.  Pennsylvania  Coal  Co., 
50N.  Y.  250;  Kane  v.  Ohio  Stone  Co., 
39  Ohio  St.  1;  Mansfield  &c.  Co.  v. 
Veeder,  17  Ohio  385 ;  Easton  v.  Canal 
Co.,  13  Ohio  79;  North  Lebanon  R. 
v.  McGrann,  Zl  Pa.  St.  530,  75  Am. 
Dec.  624;  Faunce  v.  Burke  &  Goner, 
16  Pa.  St.  469,  55  Am.  Dec.  519; 
Hamilton     v.  Liverpool  &c.  Ins.  Co., 


79 


LEGALITY    OF    OBJECT. 


S    1^7 


loss  sustained  shall  be  ascertained  by  arbitration*®  or  that  in  the 
case  of  mutual  benefit  insurance  companies  the  question  under 
dispute  must  be  presented  to  a  tribunal  of  the  insurer  before  the 
suit  is  brought/"  or  that  all  means  of  settlement  provided  for  in 
the  contract  must  be  exhausted, ^^  have  been  upheld  even  though 
a  question  of  law  as  to  the  liability  of  such  mutual  benefit  organi- 
zation is  thereby  determined.^-     It  is  believed,  however,  that  as 


136  U.  S.  242,  34  L.  ed.  419,  10  Sup. 
Ct.  945.  Contra,  to  the  effect  that 
such  contracts  are  unen forcible,  even 
when  to  arbitrate  the  amount  of  loss. 
Schrandt  v.  Young,  62  Nebr.  254,  86 
X.  VV.  1085.  Such  provision  may  be 
revoked  even  after  loss,  and  suit  is 
a  revocation.  Needy  v.  German- 
.American  Ins.  Co.,  197  Pa.  St.  460,  47 
Atl.  739. 

^  Carroll  v.  Girard  Fire  Ins.  Co., 
12  Cal.  297,  13  Pac.  863;  Adams  v. 
South  British  &c.  Ins.  Co.,  70  Cal. 
198,  11  Pac.  627;  Old  Saucelito  &c. 
Co.  V.  Commercial  &c.  Assur.  Co.,  66 
Cal.  253,  5  Pac.  232;  Southern  Mu- 
tual Ins.  Co.  v.  Turnley,  100  Ga.  296, 
27  S.  E.  975 ;  George  Dee  &  Sons  Co. 
v.  Key  City  Fire  Ins.  Co.,  104  Iowa 
167,  IZ  X.  W.  594;  Zalesky  v.  Home 
Ins.  Co.,  102  Iowa  613,  71  X.  W.  566; 
Fisher  v.  Merchants'  Ins.  Co.,  95 
Maine  486,  50  Atl.  282,  85  Am.  St. 
428;  Perrv  v.  Cobb,  88  Maine  435,  34 
Atl.  278,  49  L.  R.  A.  389;  Dunton  v. 
Westchester  Fire  Ins.  Co.,  104  Maine 
2,12.  71  Atl.  1037.  20  L.  R.  A.  (N.  S.) 
1058;  Lamson  &c.  Co.  v.  Pru- 
dential Fire  Ins.  Co.,  171  Mass. 
433,  50  N.  E.  943;  Hutchinson  v. 
Liverpool  &c.  Ins.  Co..  153  Mass. 
143.  26  X.  E.  439,  10  L.  R.  A.  558; 
Reed  v.  Washington  Fire  &  Marine 
Ins.  Co.,  138  Mass.  572;  Chippewa 
Lumber  Co.  v.  Phenix  Ins.  Co.,  80 
Mich.  116,  44  X.  VV.  1055:  Hamberg 
V.  St.  Paul  &c.  Ins.  Co.,  68  Minn.  335, 
71  X.  W.  388;  Mosness  v.  German- 
American  Ins.  Co.,  50  Minn.  341.  52 
X.  W.  932;  Gasser  v.  Sun  Fire  Of- 
fice, 42  Minn.  315,  44  X.  W.  252; 
Stevens  v.  Xorwich  Union  Fire  Ins. 
Co..  120  Mo.  App.  88.  96  S.  W.  684; 
Wolff  V.  Liverpool  &c.  Ins.  Co.,  50 
X.  J.  L.  453,  14  Atl.  561;  Pioneer 
Mfg.  Co.  v.  Phoenix  Assur.  Co.,  106 
X.   Car.  28,   10  S.   E.    1057;   Leu  v. 


Commercial  Mut.  Fire  Ins.  Co.,  115  N. 
Dak.  360,  107  X.  W.  59;  Phoenix  Ins. 
Co.  V.  Carnahan,  63  Ohio  St.  258,  58 
X.  E.  805;  Scottish  &c.  Xational  Ins. 
Co.  V.  Clancy,  71  Tex.  5,  8  S.  W.  630; 
Hamilton  v.  Home  Ins.  Co.,  137  U.  S, 
370,  34  L.  ed.  708.  11  Sup.  Ct.  133; 
Montgomery  v.  Am.  Cent.  Life  Ins. 
Co.,  108  Wis.  146,  84  X.  W.  175; 
Chapman  v.  Rockford  Ins.  Co.,  89 
Wis.  572,  62  X.  W.  422,  28  L.  R.  A. 
405;    Hobkirk    v.    Phoenix    Ins.    Co., 

102  Wis.  13,  78  X.  W.  160;  Straker 
V.  Phoenix  Ins.  Co.,  101  Wis.  413, 
11  X.  W.  752.  Contra.  Xational  &c. 
Accident  Assn.  v.  Burr,  44  Xebr.  256; 
Schrandt  v.  Young.  62  Xebr.  254,  86 
X.  W.  1085 ;  Phoenix  Ins.  Co.  v.  Zlot- 
ky,  66  Xebr.  584.  92  X.  W.  736 ;  Hart- 
ford Fire  Ins.  Co.  v.  Hon.  66  Xebr. 
555,  92  X.  W.  746,  60  L.  R.  A.  436. 

103  Am.  St.  725. 

^°  Harrington  v.  Workingmen's  Be- 
nevolent Association,  70  Ga.  340;  Su- 
preme Council  &c.  v.  Forsinger,  125 
Ind.  52,  25  X.  E.  129,  9  L.  R.  A.  501, 
21  Am.  St.  196;  Bauer  v.  Samson 
Lodge,  102  Ind.  262,  1  X.  E.  571; 
Jeane  v.  Grand  Lodge  &c.,  86  Maine 
434,  30  Atl.  70:  Cotter  v.  Grand 
Lodge  A.  O.  U.  W.,  23  Mont.  %2.  57 
Pac.  650;  Lew  v.  Iron  Hall,  67  X.  H. 
593,  38  Atl.  18:  :\Ivers  v.  Jenkins,  63 
Ohio  St.  101,  57  X.  E.  1089,  81  Am. 
St.  Rep.  613  . 

^^  Levy  v.  Magnolia  Lodge,  110 
Cal.  297,  42  Pac.  887:  Mvers  v.  Jen- 
kins, 63  Ohio  St.  101,  57  "X.  E.  1089, 
81  Am.  St.  613.  See  also,  note  on 
this  in  59  Am.  St.  Rep.  203. 

^' Lew  V.  Magnolia  Lodge.  110 
Cal.  297.  42  Pac.  887;  Raymond  v. 
Farmers'  Mut.  Fire  &c.  Ins.  Co.,  114 
Mich.  386,  12  N.  W.  254:  Patrons' 
Mut.  Fire  Ins.  Co.  v.  Attornev-Gen- 
eral  (Mich),  131  N.  W.  1119.  ' 


§    y28  CONTRACTS.  8o 

a  general  rule  an  agreement  to  arbitrate  can  refer  only  to  ques- 
tions of  fact  and  that  any  condition  precedent  by  which  inquiry 
is  required  into  the  liability  of  the  company  and  made  final  is 
an  attempt  to  oust  the  jurisdiction  of  the  courts  and  for  that 
reason  invalid.  Nor  can  the  writer  discern  any  valid  reason 
why  this  salutar}^  rule  should  not  be  applied  to  mutual  benefit 
societies.^^  Arbitration  does  not  finally  determine  the  liability 
of  the  company.'* 

§  728.  Ousting  jurisdiction — Certificate  of  architect  and 
the  like. — And  in  building  contracts  which  provide  that  a  cer- 
tificate shall  be  obtained  from  an  architect  to  the  effect  that  the 
work  is  done  in  accordance  with  the  drawings  and  specifications 
and  that  he  considers  the  payment  properly  due,  it  has  been  held, 
where  a  provision  of  this  sort  exists  that  the  obtaining  of  a  cer- 
tificate is  a  condition  precedent  to  the  maintenance  of  a  suit  by 
the  builder  against  the  owner  for  compensation,  provided,  of 
course,  the  architect  acts  in  good  faith.^^  Closely  analogous  to 
cases  of  this  character  and  which  reach  a  similar  conclusion  are 
those  in  which  the  common  council  of  a  city  in  contracting  for 
a  public  improvement  provides  that  upon  the  sworn  statement 
of  any  unpaid  claim  for  labor  or  material  being  filed  with  the 
common  council  a  sum  of  money  sufficient  to  cover  such  claims 
shall  be  retained  from  any  money  due  the  contractor,  the  council 
to  pay  such  claim  out  of  the  money  so  held  when  fully  substan- 

^  Lewis  V.  Brotherhood  Accident  Mass.  99,  74  N.  E.  305.  In  the  above 
Ins.  Co.,  194  Mass.  1,  79  N.  E.  802,  case  it  was  provided  that  if  the  con- 
17  L.  R.  A.  (N.  S.)  714;  Easter  v.  tractor  failed  to  go  ahead  and  corn- 
Brotherhood  of  American  Yeomen,  plete  the  building  and  the  builder 
154  Mo.  App.  456,  135  S.  W.  964.  See  was  compelled  to  finish  the  work 
also,  Dunton  v.  Westchester  Fire  Ins.  the  architect  should  determine  the 
Co.,  104  Maine  372,  71  Atl.  1037,  20  amount  expended  by  the  owner  in 
L.  R.  A.  (N.  S.)  1058;  Porter  v.  completing  the  contract  and  that  his 
Traders'  Ins.  Co.,  164  N.  Y.  504,  58  finding  should  be  conclusive  on  the 
N.  E.  641,  52  L.  R.  A.  424;  Williams  parties.  It  also  contained  a  provision 
V.  Branning  Mfg.  Co.,  154  N.  Car.  to  the  effect  that  the  increased  or  di- 
205,  70  S.  E.  290;  Myers  v.  Jenkins,  minished  compensation  of  the  con- 
63  Ohio  St.  101,  57  N.  E.  1089,  81  Am.  tractor  caused  by  changes  in  the  plan 
St.  613.  should  be  fixed  by  competent  persons 

^  Smith  V.  Herd,  110  Ky.  56,  22  Ky.  or  a  designated  tribunal  whose  deci- 

L.  1596,  60  S.  W.  841.  sion  was  to  be  binding.     These  pro- 

^Bannon    v.    Jackson,     121    Tenrf.  visions     were     upheld.      Conners     v. 

381,  117  S.  W.  504,  130  Am.  St.  778.  United  States,  130  Fed.  609. 
To  same  effect.  White  v.  Abbott,  188 


8i 


LEGALITY    OF    OBJECT. 


§    /29 


tiatcd  to  the  satisfaction  of  the  council.'"''  A  construction 
contract  may  also  provide  that  in  case  additional  time  is  desired 
a  claim  therefor  must  be  filed  with  the  owner's  superintendent, 
who  should  certify  the  additional  time.  The  contract  also  pro- 
vided for  an  appeal  from  such  award  to  arbitrators.^^  The 
estimate  of  designated  engineers  of  the  amount  of  work  done, 
unless  unreasonably  refused  may  be  made  a  necessary  pre- 
requisite for  a  recovery  for  work  done."*  Matters  of  similar 
character  may  be  left  to  an  architect,  engineer  or  mnpire,  and 
his  decision  is  final  unless  fraud,  gross  mistake  or  a  failure  to 
exercise  an  honest  judgment  exists.^^  But  such  architect,  engi- 
neer or  umpire  cannot  determine  the  legal  rights  of  the  parties 
under  the  contract.'*'-' 

§  729.    Ousting  jurisdiction — Notice  of  claim. — A  contract 
may  also  provide  that  notice  of  a  claim  for  damages  must  be 


'""We  do  not  read  this  provision 
as  excluding  wholly  the  jurisdiction 
of  the  courts,  and  see  no  valid  ob- 
jection to  the  provision  which  au- 
thorizes the  city  to  withhold  so  much 
of  the  contract  price  as  shall  pro- 
tect the  materialmen."  Carlisle  v. 
Spain.  147  Mich.  158,  110  X.  W.  532. 

^'  The  court  said  the  contract  would 
have  been  valid  even  if  the  superin- 
tendent had  been  made  the  final 
judge,  it  appearing  that  his  award 
had  not  been  made  through  fraud, 
mistake  or  arbitrarilv.  Thompson  v. 
St.  Charles  Countv,  227  Mo.  220,  126 
S.  W.  1044.  See  also,  Huber  v.  St. 
Joseph's  Hospital,  11  Idaho  631,  83 
Pac.  768  (in  the  writing  application 
for  time  was  held  to  have  been 
waived). 

^*  National  Contracting  Co.  v.  Hud- 
son River  &c.  Co.,  192  N.  Y.  209,  84 
N.  E.  965. 

='  Shriner  v.  Craft.  166  Ala.  146.  51 
So.  884,  28  L.  R.  A.  (N.  S.)  450n. 
139  Am.  St.  19:  Conners  v.  United 
States,  130  Fed.  609.  affd.  141  Fed.  16, 
12  C.  C.  A.  272:  Korblv  v.  Lnomis, 
172  Tnd.  352.  88  X.  E.  698.  139  Am. 
St.  379;  Edwards  v.  Hartshorn.  72 
Kans.  19.  82  Pac.  520.  1  L.  R.  A.  (X. 
S.)  1050;  Chapman  v.  Kansas  Citv 
&c.  R.  Co..  114  Mo.  542.  21  S.  \y.  858 
(to   judge    quantity    and    quality   of 

6 — CoNTR.\CTS,  Vol.  2 


work)  ;  Wortman  v.  INIontana  Cent. 
R.  Co.,  22  Mont.  266,  56  Pac.  316  (to 
judge  whether  work  properlv  done  or 
not)  ;  Ruch  v.  York  City,  81  Atl.  891 
(power  to  determine  right  to  liqui- 
dated damage  under  the  terms  of  the 
contract)  ;  Seim  v.  Krause,  13  S. 
Dak.  530,  83  X.  W.  583  (to  determine 
amount  to  be  added  or  deducted  from 
contract  price  on  account  of  altera- 
tions). Bannon  v.  Jackson,  121  Tenn. 
381,  117  S.  W.  504,  130  Am.  St.  778 
(certificate  of  architect  required  for 
extra  work)  ;  Barlow  v.  United 
States.  35  Ct.  CI.  (U.  S.)  514.  affd. 
184  U.  S.  123.  46  L.  ed.  463,  22  Sup. 
Ct.  468,  37  Ct.  CI.  547  (quantity  or 
fitness  of  material)  ;  Halsey  v.  Wau- 
kesha Springs  &:c.  Sanitarium  Co., 
125  V;is.  311,  104  X.  W.  94,  110  Am. 
St.  838.  See  also.  X^ational  Contract- 
ing Co.  V.  Hudson  River  &c.  Co.,  170 
X.  Y.  439.  63  X.  E.  450:  Bell  v. 
Campbell  (Tex.  Civ.  App.),  143  S.  W. 
953  (holding  that  an  executed  con- 
tract  of   arbitration   is   binding). 

"Mitchell  v.  Dnughertv,  90  Fed. 
639.  33  C.  C.  A.  205.^  See  also.  Mait- 
land  v.  Reed.  37  Tnd.  App.  469.  77  N. 
E.  290.  A  contract  by  which  a  com- 
pany's engineer  is  to  determine 
whether  a  contract  with  it  has  been 
breached  and  assess  the  damages 
would  be  invalid,  since  such  matters 


§    yT^O  CONTRACTS.  82 

given  within  a  reasonable  time,  and  the  reasonableness  of  the 
time  specified  is  usually  a  question  of  fact  to  be  determined  by  the 
evidence  in  the  particular  case.*^  So,  reasonable  stipulations  as  to 
the  manner  or  time  within  which  claims  for  loss  or  damage  to 
freight,  shall  be  submitted  to  a  common  carrier  and  the  like, 
have  often  been  upheld.*^ 

§  730.  Ousting  jurisdiction — Further  illustration. — A  by- 
law of  a  board  of  trade  which  provided  that  in  case  of  a  failure 
between  the  contracting  parties  to  adjust  a  dispute  in  regard  to 
the  right  to  a  margin  deposit  "after  the  maturity  of  all  contracts 
upon  which  the  deposit  is  applicable,  the  matter  in  dispute  shall, 
upon  the  application  of  either  party  to  such  contracts,  be  sub- 
mitted to  a  select  committee  of  three  disinterested  persons,  mem- 
bers of  the  association,  to  be  appointed  by  the  president,  which 
committee  shall,  without  unnecessary  delay,  summon  the  parties 
before  them,  and  hear  such  evidence,  under  oath,  as  either  may 
wish  to  submit  touching  their  claims  to  the  deposit,  and  shall  by 
a  majority  vote  decide,  and  report  to  the  president  of  the  board, 
in  writing,  in  what  manner  and  to  whom  the  deposit  is  payable, 
either  wholly  or  in  part,"  has  been  upheld.^^  It  has  been  held 
proper  for  one  to  contract  to  refrain  from  pursuing  a  particular 
remedy  to  enforce  an  existing  claim,  since  public  policy  is  in  no 
way  concerned  with  the  option  which  every  man  has  to  sue  or 
forbear  to  sue.** 

could  only  be  determined  by  a  court  ed.  556.     See  also,  Case  v.  Cleveland 

of   competent   jurisdiction.     El    Paso  &c.  R.  Co.,  11  Ind.  App.  517,  39  N.  E. 

&c.  R.  Co.  V.  Eichel  (Tex.  Civ.  App.),  426;   Grieve  v.   Illinois  Cent.   R.   Co., 

130  S.  W.  922.   To  same  effect,  Miles  104  Iowa  659,  74  N.  W.  192;  Selby  v. 

v.   Schmidt,  168  Mass.  339,  47  N.  E.  Wilmington  &c.   R.  Co.,  113  N.  Car. 

115.  588,  18  S.  E.  88,  Z7  Am.  St.  635 ;  Penn- 

*^  Western  Union  Tel.  Co.  v.  Smith  sylvania  Co.  v.  Shearer,  75  Ohio  St. 

Ox.    Civ.    App.),    130    S.    W.    622;  249,  79  N.  E.  431,  116  Am.   St.  730; 

Chicago  &c.  R.  Co.  v.  Thompson,  100  Bennett  v.  Northern  Pac.   R.  Co.,  12 

Tex.   185,  97  S.  W.  459,  7  L.  R.  A.  Ore.  49,  6  Pac.   160. 

(N.  S.)   191n,  123  Am.  St.  798.    Con-  ^' Pacaud  v.  Waite,  218  111.  138,  75 

tracts  which  provide  that  actions  are  N.  E.  779,  2  L.  R.  A.   (N.  S.)  672. 

to  be  brought  within     a     reasonable  **  Gitler    v.    Russian    &c.    Ins.    Co., 

time  have  also  been  upheld.  Baker  v.  124  App.  Div.  (N.  Y.)  273,  108  N.  Y. 

Baker.  139  Til.  App.  217.  S.   793.     One   may   agree  to   let   the 

^  Inman  v.    Seaboard   Air  Line  R.  decision  of  the  circuit  court  be  final 

Co.,  159  Fed.  960,  citing  4  Elliott  R.  fHoste  v.  Dalton.  137  Mich.  522,  100 

R.,   §    1512,  where  many  other  cases  N.  W.  750),  or  may  waive  jury  and 

are   cited;    Southern    Express    Co.   v.  summons  and  provide  that  the  judge's 

Caldwell,  21  Wall.  (U.  S.)  264,  22  L.  decision  shall  be  final.     Pendleton  v. 


83  LEGALITY    OF    ORJFXT.  §    73 1 

§  731.  Agreements  tending  to  encourage  litigation. — The 
quieting  of  disputes  and  tlie  adjustment  and  settlement  of  litiga- 
tions has  always  been  and  always  should  be  favored  by  the  acts 
of  legislatures  and  the  decisions  of  courts.'^  Agreements  which 
amount  to  maintenance  or  champerty  oppose  this  legislative  and 
judicial  policy,  and  for  that  reason  are  declared  void.  Main- 
tenance, as  generally  defined,  is  an  officious  intermeddling  in  a 
suit  by  one  that  has  no  connection  with  it,  by  maintaining  or 
assisting  either  party  with  money  or  otherwise  to  prosecute  or 
defend  it."  Maintenance  contracts  are  unlawful."  But,  as  will 
hereinafter  appear  in  considering  champertous  contracts,  there 
may  be  contracts  to  assist  in  litigation  that  are  not  contracts  of 
maintenance  within  the  definition  or  rule,  and  it  is  not  every  one 
who  can  complain ;  but  as  champerty  may  well  be  regarded  as  a 
species  of  maintenance,  and  the  most  common  one,  and  the  rules 
are  in  general  the  same,  it  seems  sufficient  to  take  up  that  particu- 
lar phase  of  the  subject  without  further  amplifying  or  illus- 
trating the  general  statement  upon  the  subject  of  maintenance. 

§  732.  Encouraging  litigation — Champerty  and  mainte- 
nance.— "Champerty  as  recognized  in  most  of  the  states  is 

Electric   Light   Co.,   121    N.   Car.   20,  22  Utah  366,  62  Pac.  913,  53  L.  R.  A. 

27  S.  E.  1003.  952,  83  Am.  St.  794 ;  4  Bl.  Comm.  134. 

'Mn  re  Snvder,  190  N.  Y.  66,  82  N.  135.     See  also.   Brush  v.  Carbondale, 

E.  742.  14  L.'R.  a.  (X.  S.)   1101,  123  229  111.   144.  82   N.   E.  252    (contract 

Am.  St.  533..  bj'  the  plaintiff  to  paj^  the  expense  of 

'"Mud  Vallev  Oil  &c.  Co.  v.  Hitch-  an   appeal   bv   the   city,   where,   after 

cock,  40  Ind.  App.  105.  81  N.  E.  Ill;  he    had    expended    more   than    $1,000 

Tngersoll  v.  Coal  Creek  Coal  Co..  117  under  his  agreement,  but  before  the 

Tenn.  263.  98  S.  W.   178,  9  L.  R.  A.  case  was  finally  adjudicated,  the  city 

(N.   S.)   282n.   119  Am.  St.   1003n ;  4  dismissed,     and     the     plaintiff     then 

Bl.  Com.  149.  brought     this     suit     to     recover     the 

■"Phelps  V.  Manicko.  119  Mo.  App.  money  expended  by  him,  and  it 
139.  96  S.  W.  221  (agreement  by  lay-  was  held  he  might  recover), 
man  to  hire  lawyers,  look  up  evi-  When  the  plaintiff  simply  asserts 
dence.  and  tlic  like).  One  is  not  a  legal  right,  consequential  upon 
guilty  of  maintenance,  however,  who,  the  possession  of  property  which 
out  of  charity,  maintains  the  suit  of  has  been  legally  assigned  to  him, 
his  kinsmen,  servant  or  any  poor  per-  any  action  he  may  maintain  there- 
son.  Harris  v.  Brisco,  17  Q.  B.  D.  on  is  not  open  to  the  objection 
504;  Quigley  v.  Thompson,  53  Ind.  of  maintenance,  nor  will  the  court, 
317;  Brown  v.  Beauchamp,  5  T.  B.  upon  the  grounds  of  public  policy, 
Mon.  (Kv.)  413,  17  Am.  Dec.  81;  refuse  its  assistance.  Fitzrov  v. 
Thallhimer  v.  Brinckerhoff,  3  Cow.  Cave  (1905).  2  K.  B.  364.  In  the 
(N.  Y.)  623.  15  Am.  Dec.  308n ;  above  case  plaintiff  had  taken  assign- 
Reece  v.  Kyle,  49  Ohio  St.  475.  31  N.  ments  of  claims  against  a  creditor 
E.  747,  16  L.  R.  A.  723;  In  re  Evans,  under  an  agreement  that,   after  pay- 


§  7Z^ 


CONTRACTS. 


84 


where  a  person  agrees  to  prosecute  another's  suit  wholly  or  in 
part  at  his  own  expense  for  a  share  of  the  proceeds  of  the  suit.'"' 
Thus,  an  agreement  to  pay  an  attorney  a  percentage  of  the 
amount  obtained  as  alimony  in  a  divorce  proceeding  has  been 
held  invalid  on  the  ground  of  champerty.*''  The  principles  of 
champerty  or  maintenance  do  not  apply  exclusively  to  attorneys. 
Thus,  it  has  been  held  that  a  contract,  by  which  the  executor  and 
trustee  in  a  will  agree  for  a  consideration  to  contest  the  probate 
thereof,  has  been  held  void  as  a  species  of  champerty  and  main- 
tenance.^" So,  a  contract  and  bond,  by  which  an  expert  account- 
ant, having  no  interest  in  the  subject  of  the  litigation,  contracted 
to  audit  the  books  of  a  township  trustee  for  a  percentage  of  all 
moneys  recovered,  and  to  hold  the  township  free  from  all  costs 
and  expenses  of  the  litigation,  were  held  inseparably  connected 
and  void  for  champerty  in  a  recent  case  in  Indiana.^ ^  Nor  is  it 
necessary  that  the  contract  be  entered  into  between  an  attorney 
and  his  client.     Contracts  between  an  attorney  and  a  layman, 


ment  of  costs  of  collection,  he  would 
pay  over  the  amounts  represented  by 
the  claims,  or  so  much  thereof  as  he 
was  able  to  recover.  The  assignee 
desired  to  throw  the  creditor  into 
bankruptcv.  And  see  Hotmire  v. 
O'Brien,  44  Ind.  App.  694,  90  N.  E. 
Z?>;  Smith  V.  Flack,  95  Ind.  116.  See 
also,  the  case  of  Bernard  v.  Fromme, 
132  App.  Div.  (N.  Y.)  922,  116  N. 
Y.  S.  807,  in  which  an  agreement  by 
an  attorney  to  pay  a  creditor's  claim 
if  he  would  join  with  others  in  a 
petition  to  have  the  debtor  adjudged 
a  bankrupt  was  upheld. 

''Benj.  Cont.  265,  citing:  4  Bl. 
Com.  135;  Gilbert  v.  Holmes,  64  111. 
548;  Geer  v.  Frank,  179  111.  570,  53 
N.  E.  965.  45  L.  R.  A.  110;  State  v. 
Sims,  76  Ind.  28;  Wallace  v.  Chicago 
&c.  R.  Co.,  112  Iowa  565,  84  N.  W. 
662;  Boardman  v.  Thompson,  25 
Iowa  487;  Barngrover  v.  Pettigrew, 
128  Iowa  533,  104  N.  W.  904,  2  L.  R. 
A.  (N.  S.)  260,  111  Am.  St.  206; 
Atchison  &c.  R.  Co.  v.  Johnson,  29 
Kans.  218;  Aultman  v.  Waddle,  40 
Kans.  195,  19  Pac.  730;  Belding  v. 
Smythe,  138  Mass.  530:  Lancey  v. 
Havender,  146  Mass.  615,  16  N.  E. 
464.  See  Hadlock  v.  Brooks,  178 
Mass.  425.  59  N.  E.  1009;  Huber  v. 


Johnson,  68  Minn.  74,  70  N.  W.  806, 
66  Am.  St.  456;  Gammons  v.  John- 
son, 76  Minn.  76,  78  N.  W.  1035; 
Duke  V.  Harper,  66  Mo.  51,  27  Am. 
Rep.  314;  Omaha  &c.  Ry.  Co.  v  Brady, 
39  Nebr.  27,  57  N.  W.  767;  Key  v. 
Vather,  1  Ohio  132;  Brown  v.  Ginn, 
66  Ohio  St.  316,  64  N.  E.  123 ;  Martin 
V.  Clarke,  8  R.  I.  389,  5  Am.  Rep. 
586;  Peck  v.  Heurich,  167  U.  S.  624, 
42  L.  ed.  302,  17  Sup.  Ct.  927;  Nelson 
V.  Evans,  21  Utah  202.  60  Pac.  557; 
Hamilton  v.  Gray,  67  Vt.  233,  31  Atl. 
315,  48  Am.  St.  811;  Stearns  v. 
Felker,  28  Wis.  594;  Dockery  v.  Mc- 
Lellan,  93  Wis.  381,  67  N.  W.  733. 
Compare  also,  the  definition  in  the 
recent  case  of  Mud  Valley  Oil  Co. 
V.  Hitchcock,  40  Ind.  App.  105,  81 
N.  E.  111.  An  attorney  has  been  de- 
nied the  right  to  recover  the  quantum 
meruit  of  services  rendered  under  a 
champertous  contract.  Roller  v. 
Murrav,  112  Va.  780,  72  S.  E.  665. 

'"Brindley  v.  Brindley,  121  Ala. 
429,  25  So.  751. 

'^'^  Cochran  v.  Zacherv,  137  Iowa 
585,  115  N.  W.  486,  16  L.  R.  A.  (N. 
S.)  235n,  126  Am.  St.  307. 

"Lancaster  Tp.  v.  Graves  (Ind. 
App.),  96  N.  E.  172. 


85  LEGALITY  OF  OBJECT.  §  733 

by  which  the  latter  contracts  to  bring  to  the  former  persons  hav- 
ing causes  of  action,  are  as  a  general  rule  condemned." 

§  733.  Encouraging  litigation — Champerty — Modifications 
of  rule  concerning. — In  a  number  of  states,  however,  the 
rules  relative  to  maintenance  and  champerty  are  either  unsettled 
or  limited,"  have  been  entirely  abandoned,"  or  ^o  not  prevail, 
except  as  preserved  by  statute." 

§  734.  Encouraging  litigation — Champerty — Attorney  and 
client. — As  between  attorney  and  client  the  courts  are  not  in 
complete  harmony  as  to  what  contracts  are  champertous.  The 
weight  of  authority  seems  to  be  that  contracts  between  attorney 
and  client,  by  which  the  attorney  agrees,  in  consideration  of  hav- 
ing a  part  of  the  thing  recovered,  to  support  the  litigation  at  his 
own  expense,  are  champertous;  but  where  the  attorney  does  not 
undertake  to  support  the  litigation  at  his  own  expense,  but  simply 
agrees  to  render  the  ordinary  services  of  an  attorney  in  consid- 
eration of  receiving  a  sum  equal  to  a  certain  per  cent,  or  a  part 
of  the  thing  recovered,  then  the  agreement  is  not  champertous.^*^ 
And  it  has  been  held  that  in  order  to  constitute  champerty  the 
contract  between  the  attorney  and  his  client  must  not  only  pro- 
vide that  the  attorney  shall  have  a  part  of  the  money  or  thing 
recovered  in  the  action,  but  it  must  also  provide  that  the  at- 
torney shall,  at  his  own  expense,  support  the  suit,  be  respon- 

"See     Holland     v.     Sheehan.     108  W.    327;    Smedlev    v.    Dregge.    101 

Minn.  362,  122  N.  W.  1,  23  L.  R.  A.  Mich.  200.  59  N.  W.  411;  Schomp  v. 

(N.   S.)    510,   reviewing   the   author-  Schenck,    40   N.    J.   L.    195,   29   Am. 

ities.     Langdon   v.    Conlin,   67    Nebr.  Rep.  219;  Hassell  v.  Van  Houten,  39 

243,  93  N.  W.  389,  60  L.  R.  A.  429,  N.  J.   Eq.   105. 
108  .\m.  St.  643.  "Ledgwick   v.    Stanton.    14   N.    Y. 

"Richardson  v.  Rowland,  40  Conn.  289;    Coughlin   v.   New   York  &c.   R. 

565:    Metropolitan    Life    Ins.    Co.    v.  Co.,  71  N.  Y.  443,  27  Am.  Rep.  75; 

Fuller,  61  Conn.  252,  23  Atl.  193,  29  Fowler  v.   Callan,   102   N.   Y.  395,   7 

Am.    St.    196;    Dahms    v.    Sears,    13  N.  E.   169;  Browne  v.  West,  9  App. 

Ore.  47,  11  Pac.  891;  Brown  v.  Bigne,  Div.    (N.   Y.)    135,  41   N.   Y.   S.   146. 

21  Ore.  260,  28  Pac.  11,  14  L.  R.  A.  Compare  Roller  v.   Murray,   107  Va. 

745.  28  Am.  St.  752;  Perry  v.  Dicken,  527,  59  S.   E.  421,  second  appeal,  72 

105    Pa.    St.    83,    51    Am.    Rep.    181;  S.  E.  665   (agreement  by  attorney  to 

Chester  County  v.  Barber,  97  Pa.  St.  carry  on  litigation  at  his  own  expense 

455.  in   consideration   of   a   percentage  of 

"  Mathewson  v.   Fitch.  22  Cal.  86;  the  net  amount   recovered). 
PToffman    v.    Vallejo.    45    Cal.    564;        "Blaisdell  v.  .Ahern.  144  Mass.  393, 

Wildey  V.  Crane,  63  Mich.  720,  30  N.  11  N.  E.  681,  59  Am.  Rep.  99. 


§    y^S  CONTRACTS.  86 

sible  for  the  costs,  and  take  all  the  risks  of  litigation.^"  And 
the  New  York  Court  of  Appeals,  in  a  comparatively  recent 
case,  has  said:  "It  has  been  decided  so  often  and  so  fully  that 
attorneys  may  undertake  litigation  for  a  compensation  contin- 
gent upon  their  successful  efforts  that  it  is  unnecessary  to  refer 
to  the  decisions  upon  that  point. "^^ 

§  735.  Encouraging  litigation — Champerty — Right  to  com- 
promise.— But  even  those  courts  that  have  adopted  a  rule 
similar  to  that  just  stated  do  not  generally  go  so  far  as  to  hold 
that  an  attorney,  in  furtherance  of  his  contract  for  a  contingent 
compensation,  may  reserve  a  veto  power  upon  the  right  of  his 
client  to  make,  in  good  faith,  an  honest  settlement  of  his  claim, 
in  other  words,  to  entirely  block  a  settlement  of  the  suit  without 
the  attorney's  consent.  Contracts  for  a  contingent  fee  which 
provide  against  settlement  without  the  attorney's  consent  are,  as 
a  general  rule,  held  invalid.  This  has  been  held  true  in  actions 
to  recover  for  personal  injuries,^^  to  recover  damages  sustained 
by  a  fire,*^^  to  remove  a  cloud  on  the  title  to  real  estate,"^  to  set 
aside  the  admission  of  a  will  to  probate,^^  to  recover  on  an  official 
bond,^^  or  to  recover  possession  of  real  estate.*^* 

^     "Omaha  &c.   R.   Co.   v.   Brady,  39  '"Jackson   v.    Stearns,   48   Ore.   25, 

Nebr.  27,  57  N.  W.  767.  84  Pac.  798,  5  L.  R.  A.  (N.  S.)  390. 

"In   re   Snyder,    190   N.   Y.  66,  82  "Williams  v.   Miles,  63  Nebr.  859, 

N.  E.  742,  14  L.  R.  A.  (N.  S.)  1101,  89  N.  W.  451. 

123   Am.    St.   533.    See  also,   to   this  *' Davis  v.  Webber,  66  Ark.  190,  49 

effect,    Whinery   v.    Brown,    36    Ind.  S.  W.  822,  45  L.  R.  A.  196,  74  Am. 

App.  276,  75  N.  E.  605,  where  many  St.  81. 

authorities  are  cited;  Tron  v.  Lewis,  ** Davis  v.   Chase,    159  Ind.  242,  64 

31  Ind.  App.  178,  66  N.  E.  490.  N.    E.   88,  95   Am.    St.   294;    Key   v. 

''■'North     Chicago     St.    R.     Co.    v.  Vattier,  1  Ohio  132.     See  also.  Gam- 

Ackley,    171    111.    100,   49    N.    E.    222,  mons   v.    Johnson.   69    Minn.   488,    72 

44     L.     R.     A.     177;     Boardman     v.  N.  W.  563    (damages  resulting  from 

Thompson,  25  Iowa  487 ;  Kansas  City  failure  of  railroad  company  to  fence 

Elev.  R.  Co.  v.  Service,  77  Kans.  316.  right  of  way)  ;  Mosley  v.  Jamison,  71 

94  Pac.  262.  14  L.  R.  A.  (N.  S.)  1105;  Miss.  456,   14  So.  529   (damages   for 

Burho  v.  Carmichael  (Minn.),  135  N.  assault).    A  contract  for  a  contingent 

W.  386;  Weller  v.  Jersey  City  &c.  R.  fee.  by  which  the  client  is  restricted 

Co.     (N.    J.),    61    Atl.    459;    Lee    v.  from    settling    or    compromising    his 

Vacuum   Oil   Co.,   126  N.   Y.  579,  27  claim  without  the  consent  of  his  at- 

N.    E.     1018    (in    effect)  ;     Emslie   v.  torney,  is  void  as  against  public  pol- 

Ford  Plate  Glass  Co.,  25  Ohio  C  C.  icy.     Papineau  v.  White,  117  111.  App. 

548.     Compare,    however,    Granat    v.  51.        See,      however,      Lipscomb     v. 

Kruse.  114  111.  App.  488,  writ  of  error  Adams,   193  Mo.  530.  91   S.  W.  1046. 

dismissed,  213  111.  328,  72  N.  E.  744.  112  Am.  St.  500,  which  holds  that  the 

"Anderson  v.    Itasca   Lumber   Co.,  validity  of   such   a   contract   depends 

86  Minn.  480,  91  N.  W.  12.  upon  the  circumstances  of  each  case. 


8y  LEGALITY    OF    OBJECT.  §    JT,G 

§  736.  Encouraging  litigation — Champerty — Recovery  of 
quantum  meruit. — An  attorney  has  been  denied  tlie  riglit  to 
recover  from  a  coal  company  the  agreed  per  cent,  of  his  fee, 
when  such  company  effected  a  settlement  with  the  attorney's 
client  without  the  consent  of  the  attorney."^  However,  if  the 
compromise  is  not  a  good  faith  settlement,  but  is  made  collusively 
and  for  the  purpose  of  defeating  the  attorney's  lien  or  claim  to 
compensation,  the  court  may  set  it  aside  and  refuse  to  enforce  the 
settlement. "^"^  Some  cases  hold  that  where  such  a  settlement  is 
made  the  attorney  may  prosecute  the  suit  to  final  judgment  in  the 
client's  name  in  order  to  fix  his  fee.°^ 

^  737.  Encouraging  litigation — Champerty — Defense  of — 
When  available. — Notwithstanding  a  champertous  agree- 
ment may  exist  between  a  plaintiff  and  his  attorney  for  the  prose- 
cution of  a  certain  suit  which  is  against  public  policy  and  void,  it 
does  not  affect  the  right  of  the  plaintiff  to  prosecute  his  action 
against  the  defendant  in  the  suit  for  the  prosecution  of  which 
such  champertous  agreement  was  made.**^  The  defense  of  main- 
tenance or  champerty  cannot  be  raised  by  one  not  a  party  to  the 
obnoxious  agreement,^"  unless  the  right  to  sue  was  acquired  by 

In   this   instance  they  upheld  a  con-  Abb.  Pr.  (N.  Y.)  324;  Fisher-Hansen 

tract  bv  which  the  attorneys  were  to  v.  Brooklyn  Heights  R.  Co.,  63  App. 

have    half    the    land    recovered,    and  Div.    (N.  Y.)   356.  71   N.  Y.  S.  513; 

which   contained   a  provision   against  Wilber  v.  Baker,  24  Hun  (N.  Y.)  24. 

compromise    without    the   consent   of  See  also,  Falconio  v.  Larsen,  31  Ore. 

defendant's  attornevs.  137,   48    Pac.   703,   37   L.   R.    A.   254; 

"  Ingersoll  v.  Coal  Creek  Coal  Co.,  Potter  v.  Ajax  Min.  Co.,  19  Utah  421, 

117  Tenn.  263.  98  S.  W.  178.  9  L.  R.  57  Pac.  270. 

A.   (X.  S.)  282n,  119  Am.  St.  1003n.  ""McDonald  v.   Napier,   14  Ga.  89; 

In  the  above  case  the   facts  showed  Jones  v.  Morgan,  39  Ga.  310,  99  Am. 

that  the  attorney  visited  the  scene  of  Dec.  458;  Talcott  v.  Bronson,  4  Paige 

the  disaster  and  solicited  employment  (N.    Y.)    502;    Wilber    v.    Baker.    24 

for   bringing   action   against   the  one  Hun  (N.  Y.)  24;  Potter  v.  Ajax  Min. 

responsible  for  the  injury.    The  con-  Co.,   19  Utah  421,  57  Pac.  270.     See. 

tract  in  question  called  for  a  percent-  however,     Morehouse     v.      Brooklyn 

age    of    the    amount    recovered,    and  Heights  R.  Co.,  43  Misc.  (N.  Y.)  4i4. 

contained  a  clause  against  settlement  89  N.  Y.  S.  332;  Oliwell  v.  Verden- 

without    the   attorney's   consent.     See  holvcn,  17  N.  Y.  Civ.  Pr.  362.  7  X.  Y. 

also,  De  Graffenreid  v.  St.  Louis  &c.  S.  99;  In  re  Evans,  34  Misc.  (X.  Y.) 

R.  Co.,  66  Ark.  260,  50  S.  W.  272.    As  37,  69  N.  Y.  S.  487;  Stearns  v.  Wol- 

to  the  right  of  an  attorney  to  solicit  Icnberg,  51  Ore.  88,  92  Pac.  1079,  14 

business,  see  note  in  9  L.'R.  A.   (N.  L.  R.  A.  (X.  S.)   1095. 

S.)  282.  "^Pennsylvania    Co.    v.    Lambardo, 

"^  Young    v.    Dearborn,    27    N.    H.  49  Ohio  St.  1,  29  N.  E.  573.  14  L.  R. 

324;  Rasquin  v.  Knickerbocker  Stage  .•X.  785n. 

Co.,   21    How.    Pr.    (N.    Y.)    293,    12  ~  Bullock  v.   Dunbar,    114  Ga.   754, 


§  738 


CONTRACTS. 


88 


and  rests  upon  such  unlawful  agreement.  In  other  words,  the 
defense  of  champerty  or  maintenance  can  only  be  set  up  when 
such  agreement  itself  is  sought  to  be  enforced.""  Nor  do  the 
principles  of  maintenance  and  champerty  apply  to  one  who  has 
an  independent  interest  recognized  by  the  law"  in  the  subject- 
matter  or  ultimate  outcome  of  the  litigation.'^ 

§  738.  Agreements  tending  to  corrupt  morals. — Where  a 
contract  grows  immediately  out  of  and  is  connected  with  an 
illegal  or  immoral  act  a  court  of  justice  will  not  lend  its  aid  to 
the  enforcement  of  it;  and  if  the  contract  is  connected  in  part 
only  with  the  illegal  transaction  and  grows  immediately  out  of  it, 
although  it  be  in  fact  a  new  contract,  it  is  equally  tainted  by  it.'^^ 


40  S.  E.  783;  Torrence  v.  Shedd,  112 
111.  466;  Burton  v.  Perrv,  146  111.  71, 
34  N.  E.  60;  Zeigler  v.  Mize,  132  Ind. 
403,  31  N.  E.  945;  Cleveland  &c.  R. 
Co.  V.  Davis,  10  Ind.  App.  342,  36  N. 
E.  778,  Zl  N.  E.  1069;  Small  v.  Chi- 
cago &c.  R.  Co.,  55  Iowa  582,  8  N. 
v/.  437;  Wehmhoff  v.  Rutherford,  98 
Ky.  91,  Z2  S.  W.  288;  Euneau  v. 
Rieger,  105  Mo.  659,  16  S.  W.  854; 
Chamberlain  v.  Grimes,  42  Nebr.  701, 
60  N.  W.  948;  Pennsylvania  Co.  v. 
Lombardo,  49  Ohio  St.  1,  29  N.  E. 
573,  14  L.  R.  A.  785n ;  Croco  v.  Ore- 
gon Short  Line  R.  Co.,  18  Utah  311, 
54  Pac.  985,  44  L.  R.  A.  285 ;  Burnes 
V.  Scott,  117  U.  S.  582,  29  L.  ed.  991, 
6  Sup.  Ct.  865.  Contra,  Kelly  v. 
Kelly,  86  Wis.  170,  56  N.  W.  (^Zl . 
But  the  rule  does  not  apply  when  the 
champertous  nature  of  the  transac- 
tion appears  on  the  plaintifif's  own 
showing.  Roller  v.  Murray,  107  Va. 
527,  59  S.  E.  421,  second  appeal,  12 
S.  E.  665. 

'"Keiper  v.  Miller,  68  Fed.  627;  In 
re  The  Clara  A.  Mclntyre,  94  Fed. 
552;  Johnson  v.  Hilton,  96  Ga.  577, 
23  S.  E.  841;  Caldwell  v.  Boone 
County,  41  Ind.  App.  40,  83  N.  E. 
355;  Stewart  v.  Welch,  41  Ohio  St. 
483;  Miles  v.  Mutual  Life  Assn., 
108  Wis.  421,  84  N.  E.  159.  See  also. 
Brush  V.  Carbondale,  229  111.  144,  82 
N.  E.  252;  Baltimore  &c.  R.  Co.  v. 
Trennepohl,  44  Ind.  App.  105,  87  N. 
E.  1059;  Allen  v.  Frazee,  85  Ind.  283; 
Hart  V.  State,  120  Ind.  83,  21  N.  E. 
654. 


"Alabaster  v.  Harness,  1895,  1  Q. 

B.  339.  In  Hotmire  v.  O'Brien,  44 
Ind.  App.  694,  90  N.  E.  ZZ,  it  is  said : 
"Where  a  party  has  an  interest, 
direct  or  remote,  immediate  or  con- 
tingent, existing  at  the  time  the  suit 
is  commenced  the  right  of  such  party 
to  assist  in  maintaining  such  a  suit 
exists,  and  may  be  exercised." 

"Oilman  v.  Jones,  87  Ala.  691,  5 
So.  785,  7  So.  48,  4  L.  R.  A.  113; 
Chicago  City  R.  Co.  v.  General  Elec- 
tric Co.,  74  111.  App.  465;  Bartholo- 
mew County  V.  Jameson,  86  Ind.  154; 
Tron  V.  Lewis,  31  Ind.  App.  178,  66 
N.  E.  490;  Call  v.  Calef,  13  Mete. 
(Mass.)  362;  Williams  v.  Fowle,  132 
Mass.  385;  Thallhimer  v.  Brincker- 
hoff,  3  Cow.  (N.  Y.)  623,  15  Am. 
Dec.  308n ;  Reece  v.  Kyle,  49  Ohio  St. 
475,  31  N.  E.  747,  16  L.  R.  A.  12Z\ 
Pittsburg  &c.  R.  Co.  v.  Volkert,  58 
Ohio  St.  362,  50  N.  E.  924;  Dorwin 
v.  Smith,  35  Vt.  69;  Davies  v.  Sto- 
well,  78  Wis.  334,  47  N.  W.  370,  10 
L.  R.  A.  190;  Gilbert-Arnold  Land 
Co.  V.  O'Hare,  93  Wis.  194,  67  N. 
W.  38. 

"Dumont  v.  Dufore,  27  Ind.  263; 
Merrick  v.  Bank  of  Metropolis,  S 
Gill.  (Md.)  59;  Forsythe  v.  State,  6 
Ohio  19;  Brua's  Appeal,  55  Pa.  St. 
294;    Toler    v.    Armstrong,    4    Wash. 

C.  C.  (U.  S.)  297;  Armstrong  v. 
Toler,  11  Wheat.  (U.  S.)  258,  6  L. 
ed.  468.  The  mere  fact  that  con- 
demnable  acts  are  done  under  a  con- 
tract does  not  necessarily  invalidate 
it  when  it  appears  that  the  perform- 


89 


LEGALITY    OF    OBJECT. 


738 


In  accordance  with  this  principle  a  conditional  sale,  title  to  rest 
in  the  vendor  until  payment,  of  furniture  and  household  goods 
for  use  in  a  house  of  ill  fame,  with  knowledge  on  the  part  of  the 
vendor  of  the  manner  in  which  the  goods  are  to  be  used,  is  a 
contract  against  public  policy  and  void."  But  while  it  is  certain 
that  a  contract  is  void  when  it  is  illegal  or  immoral,  it  is  equally 
as  certain  that  it  is  not  void  simply  because  there  is  something 
immoral  or  illegal  in  its  surroundings  or  connections.  It  can  not 
be  declared  void  merely  because  it  may  indirectly  tend  to  promote 
illegal  or  immoral  purposes." 

the  deferred  payments  of  the  pur- 
chase price.  The  sale  and  dehvery 
of  the  property  was  complete,  and 
no  element  of  participation  or  aid  in 
the  immoral  or  illegal  design  of  the 
vendee  could  be  imputed  to  the 
vendor.  On  the  other  hand,  it  is 
held  by  all  the  cases— even  those 
which  announce  the  rule  contended 
for  by  the  appellant— that  if  the 
vendor  has  knowledge  of  the  im- 
moral or  illegal  design  of  the  ven- 
dee, and  in  any  way  aids  or  par- 
ticipates in  that  design,  or  if  the  con- 
tract of  sale  is  so  connected  with  the 
illegal  or  immoral  purpose  or  trans- 
action of  the  vendee  as  to  be  insep- 
arable from  it,  the  vendor  cannot 
recover." 

"Anheuser-Busch  Brewing  .^ssn. 
V.  :Mason,  44  Minn.  318,  46  N.  W. 
558,  9  L.  R.  A.  506,  20  Am.  St.  580. 
In  the  above  case  the  brewing  asso- 
ciation was  allowed  to  recover  for 
goods  sold  to  the  keeper  of  a  house 
of  prostitution.  It  appeared  that  the 
vendor  did  not  know  just  what  was 
to  be  done  with  the  goods,  but  sup- 
posed that  the  vendee  would  sell 
them  or  use  them  in  her  brothel.  To 
same  effect,  Washington  Liquor  Co. 
V.  Shaw.  38  Wash.  398,  80  Pac.  536 
(unconditional  sale  of  liquor  to 
keeper  of  house  of  ill  fame).  See, 
however,  .Anderson  v.  Freeman  (Tex. 
Civ.  App.),  100  S.  W.  350.  in  which 
one  was  not  permitted  to  recover  on 
notes  and  a  chattel  mortgage  on 
furniture  given  by  the  defendant  to 
enable  her  to  carry  on  and  conduct  a 
IioiLS''  of  public  prostitution. 


ance  of  such  acts  was  not  contem- 
plated by  the  agreement.  Drake  v. 
Lauer,  93  App.  Div.  (N.  Y.)  86,  86 
N.  Y.  S.  986,  182  N.  Y.  533,  75  N.  E. 
1129. 

'*Reed  v.  Brewer  (Tex.  Civ. 
App.),  36  S.  W.  99,  affd.  90  Tex.  144, 
37  S.  W.  418;  Standard  Furniture 
Co.  V.  Vanalstine,  22  Wash.  670,  62 
Pac.  145,  51  L.  R.  A.  889,  79  Am.  St. 
960.  The  case  last  cited  draws  the 
distinction  between  an  actual  sale  and 
delivery  of  the  goods  and  a  condi- 
tional sale  under  which  the  property 
is  merely  leased  until  paid  for.  In 
the  former  the  relation  of  debtor  and 
creditor  merely  exists  while  in  the 
latter  they  are  merely  leased  and  in 
the  above  case  they  were  leased  with 
knowledge  to  be  used  for  an  unla^v- 
f  ul  purpose.  The  court  said :  "It  is 
true  that  it  is  held  in  many  well-con- 
sidered cases,  and  it  is  perhaps  the 
weight  of  authority,  that  mere  knowl- 
edge on  the  part  of  the  vendor  of 
goods  that  the  vendee  designs  to  and 
will  put  them  to  an  immoral  or  ille- 
gal use  is  not  of  itself  sufficient  to 
bar  an  action  brought  to  recover  the 
purchase-price  of  the  goods  sold.  But 
in  all  of  the  cases  announcing  this 
rule  which  have  been  brought  to  our 
attention  the  transaction  was  one  in 
which  the  owner  of  the  goods  at  the 
time  of  their  delivery  to  the  vendee 
parted  with  his  title  and  right  of  pos- 
session, so  that  thereafter  the  rela- 
tion between  the  vendor  and  vendee 
was  that  of  debtor  and  creditor 
merely,  or  that  of  debtor  and  cred- 
itor with  a  m.ortgage  over  to  secure 


.§    739  CONTRACTS.  9O 

§  739.  Corrupting  morals — Letting  house  for  brothel — 
Prostitute's  board. — A  brothel  is  a  nuisance  at  common  law, 
and  to  keep  or  contract  to  rent  a  house  to  be  used  as  a  brothel 
is  illegal  and  indictable,  irrespective  of  the  statute.'*^  So,  also, 
the  price  of  the  board  and  lodging  of  prostitutes  is  not  recover- 
able when  furnished  to  enable  them  to  lead  a  life  of  prostitution."^ 
In  order,  however,  to  avoid  a  mortgage  given  in  part  payment 
for  a  house  on  the  ground  that  it  was  bought  by  one  whom  the 
grantor  knew  to  be  a  prostitute,  for  immoral  purposes,  it  must 
appear  not  merely  that  the  house  w'as  capable  of  use  for  such  pur- 
poses, but  that  in  view  of  the  grantee's  means  and  conditions  in 
life,  she  could  not  intend  to  use  it  for  a  lawful  purpose.^* 

§  740.    Corrupting  morals — Leasing  house  for  brothel. — 

A  lease  made  with  the  knowledge  of  the  lessor  that  the  premises 
are  rented  for  the  express  purpose  of  being  used  as  a  house  of 
prostitution  is  contrary  to  public  policy,  and  no  rent  can  be  recov- 
ered thereon. ^^  Nor  can  one  member  of  a  partnership  which  has 
for  its  purpose  the  renting  of  apartments  for  purposes  of  prosti- 
tution maintain  an  action  against  the  other  for  an  accounting.®" 
Nor  can  a  cotenant  recover  compensation  for  his  services  in  let- 
ting apartments  for  such  purposes.*^ 

§  741.  Immoral  consideration — Illicit  intercourse. — Con- 
tracts entered  into  in  consideration  of  future  illicit  intercourse, ^- 

™Ashbrook   v.   Dale,  27   Mo.   App.  S.    E.     109;    Macbee    v.    Griffith,    2 

649  per  Rombauer,  J.:    "The  answer  Cranch    (U.   S.)    336,  Fed.   Cas.   No. 

simply    claims    the    illegality    of    the  8660. 

transaction.      A    bawdy    house    is    a  '*  Clark  v.  Hagar,  22  Can.  Sup.  Ct. 

common  nuisance,  per  se,  and  to  con-  510. 

duct   such  a  place  or  lease  property  "Dougherty  v.   Seymour,   16  Colo, 

for  such  a  purpose  is  a  public  wrong.  289,  26  Pac.  823;   Ralston  v.   Boady, 

Givensv.  Studdiford,86Mo.  156.    The  20  Ga.  449;   Kathman  v.  Walters,  22 

fact   that  the  statute  above   referred  La.   Ann.   54;    Ashbrook  v.   Dale,   27 

to  has  no  application  to  the  city  of  Mo.  App.  649;   Ernst  v.  Crosby,   140 

St.  Louis,  cannot  render  that  lawful  N.  Y.  364,  35   N.   E.  603;   Hunstock 

which  is  unlawful  irrespective  of  the  v.   Palmer,  4  Tex.  Civ.  App.  459,  23 

statute.     If  the  plaintiffs  claim  that,  S.  W.  294. 

owing  to  some  authorized  local  regu-  *°  Chateau  v.  Singla,  114  Cal.  91,  45 

lation,  it  was  unlawful  to  keep  such  Pac.   1015,  33  L.  R.  A.  750,  55  Am. 

a  house  in  the  city  of  St.  Louis,  it  St.  63. 

was    incumbent   upon   them   to   show  *"  Ballerino   v.    Ballerino,    147    Cal. 

it."     Standard  Furniture  Co.  v.  Van  544.  82  Pac.  199. 

Alstine,  22  Wash.  670,  62  Pac.  145.  51  "'Boigneres  v.  Boulon.  54  Cal.  146; 

L.  R.  A.  889,  79  Am.  St.  960.  Drennan  v.  Douglas,   102  111.  341.  40 

"Pitts   V.   Rivers,   112   Ga.   850,   38  Am.  Rep.  595;  Winebrinner  v.  Weis- 


91  LEGALITY  OF  OBJECT.  §  742 

such  as  a  promise  of  marriage  in  the  future  on  condition  of  inter- 
course before  marriage,  are  illegal  and  an  action  will  not  be 
for  their  breach.-^  A  contract  made  in  consideration  of  future 
illicit  sexual  intercourse  is  void,  and  the  woman  cannot  recover 
under  such  contract,  although  it  has  been  performed  on  her 
part.'" 

§  742.  Immoral  consideration — Existing  contract  to  marry. 

— However,  if  the  parties  have  already  entered  into  a  valid  con- 
tract to  marry,  such  contract  is  not  rendered  invalid  by  subse- 
Cjuent  illicit  intercourse  under  a  promise  to  marry  at  once  should 
pregnancy  result  therefrom."^    The  latter  is  not  the  consideration 

for  the  original  promise  to  marry. 

§  743.  Immoral  consideration — Promise  by  putative  father. 

— A  promise  by  the  putative  father  to  pay  for  the  board  of  a 
woman  and  her  bastard  child,  the  purpose  of  both  parties,  express 
or  tacit,  being  to  facilitate  a  continued  state  of  cohabitation  be- 
tween the  promiser  and  woman,  is  void ;  but  the  purpose  must  be 
clearly  proved,  and  is  not  to  be  inferred  merely  from  the  previous 
cohabitation,  although  that  was  known  to  the  promisee  and  she  is 
the  mother  of  the  woman.^'' 

?  744.    Immoral  consideration — Contracts  to  act  as  house- 
keeper.— As  a  general  rule,  there  can  be  no  recovery  on  a 

iger,  3  T.  B.  Mon.  (Ky.)  32;  Simp-  her  with  money  to  start  in  the  mil- 
son  V.  Normand,  51  La.  Ann.  1355,  linery  and  dressmaking  business)  ; 
26  So.  266;  Brown  v.  Tuttle,  80  Winebrinner  v.  Weisiger,  3  T.  B. 
Maine  162.  13  Atl.  583;  Massev  v.  :\Ion.  (Kv.)  32;  Randolph  v.  Stokes, 
Wallace,  32  S.  Car.  149,  10  S.  E.  937;  125  App.  Div.  (N.  Y.)  679.  110  N.  Y. 
Cusack  V.  White,  2  Mill  Const.  (S.  S.  20;  Sherman  v.  Barrett,  1  McMul. 
Car.)  279.  12  Am.  Dec.  669;  Bivins  v.  (S.  Car.)  147;  Singleton  v.  Bremar, 
Jarnigan,  3  Baxt.  (Tenn.)  282.  Harp.  L.   (S.  Car.)   201. 

''Boigneres  v.  Boulon,  54  Cal.  146;  "Kurtz  v.   Frank,   76   Ind.   594,  40 

Saxon  y.  Wood.  4  Ind.  App.  242,  30  Am.  Rep.  275.     In  such  case  the  con- 

X.  E.  797;   Edmonds  v.   Hughes,  115  sideration   for  the  promise  to  marrv 

Ky.  561,  24  Ky.  L.  2467.  74  S.  W.  283;  is  not  that  of  present  or  future  sex- 

Baldy    v.    Stratton,    11    Pa.    St.    316;  ual  intercourse.     Henderson  v.  Sprat- 

Goodall  V.  Thurman,  1  Head  (Tenn.)  Icn,  44  Colo.  278,  98  Pac.  14    19  L   R 

209;  Burke  v.  Shaver,  92  Va.  345,  23  A.   (N.  S.)  655n.     See  also."  Lauer  v. 

S    E.  740.  Bauming.    152    Iowa   99.    131    N.    W. 

**  Walker  v.   Gregory.  36  Ala.   180;  783.  140  Iowa  319,  118  N.  W.  446. 

Wilson    V.    Ensworth,    85    Ind.    399  "Trovinger   v.   M'Burney,   5   Cow. 

(agreement    to    discharge    mortgage  (N.  Y.)  253. 
on   plaintift's   real   estate  and   supply 


§    745  CONTRACTS.  92 

contract  to  render  services  as  a  housekeeper  or  servant  when  such 
agreement  is  entered  into  in  contemplation  of  an  ilHcit  relation- 
ship. This  is  true  either  under  an  express"  or  implied®^  agree- 
ment. But  if  a  contract  for  the  rendition  of  services  as  a 
housekeeper  is  entered  into  without  reference  to  any  unlawful 
relation  existing  between  the  parties,  recovery  may  be  had 
thereon  even  though  the  parties  thereto  may  live  together  in  a 
state  of  concubinage.®''  It  has  also  been  held  that  a  woman  sus- 
taining such  relations  to  a  man  may  recover  money  loaned  by  her 
to  him.'" 

§  745.  Immoral  consideration — Executed  contract. — Im- 
moral or  illegal  contracts  will  not  be  enforced;  but  if  executed, 
courts  will  not  disturb  them,  but  will  leave  the  parties  as  they  find 
them.''^  Under  this  principle  a  deed  executed  and  delivered  in 
consideration  of  illicit  intercourse,  the  grantees  being  in  posses- 
sion, vests  title  and  ejectment  will  not  lie  to  dispossess  them.°- 

§  746.  Immoral  consideration — Past  immoral  acts. — 
While  it  seems  true  on  principle  that  past  illegal  intercourse  can- 
not be  the  sole  consideration  of  a  promise,  the  fact  that  it  is  given 
for  past  illegal  intercourse  does  not,  of  necessity,  render  it  in- 
valid.    A  contract  to  make  compensation  for  the  injury  done  in 

"Walker  v.  Gregory,  36  Ala.   180;  following    cases    recovery    was    per- 

Sackstaeder  v.  Kast,  31  Ky.  L.  1304,  mitted    under    an    implied    contract. 

105   S.  W.  435;   McLane's  Admr.  v.  Viens  v.  Brickie,  8  Mart.    (La.)    11; 

Dixon,  30  Ky.  L.  683,  99  S.  W.  601 ;  In  re  Pereuilhet's  Succession,  23  La. 

Winebrinner    v.    Weisiger,    3    T.    B.  Ann.  294,  8  Am.  Rep.  595. 

Mon.   (Ky.)  32.  ""McDonald  v.  Fleming,  12  B.  Hon. 

^Walraven     v.     Jones,     1     Houst.  (Ky.)  285. 

(Del.)    355;    McDonald   v.    Fleming,  "Howell  v.  Fountain,  3  Ga.  176,  46 

12   B.   Mon.    (Ky.)    285;    Stringer   v.  Am.    Dec.   415;   Denton   v.    Erwin,   6 

Mathis,  41  La.  Ann.  985,  7  So.  229;  La.   Ann.   317;    Hertz   v.   Wilder,    10 

Simpson    v.    Normand,    51    La.    Ann.  La.  Ann.  199;  Summerlin  v.  Livings- 

1355^  26   So.   266;    Brown   v.   Tuttle,  ton,   15  La.  Ann.  519;   Worcester  v. 

80    Maine   162,   13  Atl.  583;  Vincent  Eaton,     11     Mass.     368;     White     v. 

V.   Moriarty,   31    App.   Div.    (N.-  Y.)  Hunter,    23    N.    H.    (3    Fost.)    128; 

484,  52  N.  Y.  S.  519;  Swires  v.  Par-  Denton  v.   English,  2  Nott.  &  McC. 

sons,  5  Watts  &  S.   (Pa.)   357.  (S.  Car.)  581,  10  Am.  Dec.  638.   Such 

''-"Lytle  V.  Newell,  24  Ky.  L.  188,  68  executed   illegal    contract   may,   how- 

S.  W.  118;  Rhodes  v.  Stone,  63  Hun  ever,  in  a  proper  case,  be  set  aside 

CN.  Y.)  624,  44  N.  Y.  St.  17,  17  N.  Y.  at    the    instance    of    a    third    person. 

S.  561 ;  Emmerson  v.  Botkin,  26  Okla.  Leupert  v.  Shields,  14  Colo.  App.  404, 

218,  109  Pac.  531,  29  L.  R.  A.  (N.  S.)  60  Pac.  193. 

786,  138  Am.  St.  953.     See  also,  Goff  "'  Hill  v.  Freeman,  73  Ala.  200,  49 

V.  Supreme  Lodge  Royal  Achates,  90  Am.   Rep.  48.     See   also,    Marksbury 

Nebr.  578,   134   N.   W.  239.     In  the  v.  Taylor,  10  Bush.  (Ky.)  519. 


93 


LEGALITY  OF    OBJECT.  §    74^ 


consequence  of  past  illegal  cohabitation,  which  contains  no  stipu- 
lation for  future  interc(jurse,  is  valid.''"  An  agreement  made  as 
an  indemnity  against  the  consequences  of  an  illegal  or  immoral 
act  to  be  done  at  a  future  period  is  void ;  but  a  person  may  in- 
demnify himself  against  the  consequences  of  an  unlawful  act 
already  done,"*  as  where  a  woman  married  a  man,  by  whom  she 
became  the  mother  of  two  children.  She  subsequently  discovered 
that  he  had  a  wife  living,  from  whom  he  had  not  been  divorced. 
He  then  made  to  her  an  assignment  of  a  mortgage.  It  was  held 
that  the  assignment  was  a  meritorious  act  and  not  impeachable 
for  immorality  of  consideration."^  An  executed  contract  for  sale 
of  land,  based  upon  illicit  sexual  commerce,  cannot  be  set  aside 
at  the  instance  of  the  grantor  or  his  heirs  at  law.""  Once  exe- 
cuted it  cannot  be  recalled."  It  has  also  been  held  that  a  vendee 
of  a  residence  cannot  defeat  an  action  for  the  purchase-price  on 
the  ground  that  the  vendor  knew  that  the  premises  were  to  be 
used  for  a  mistress  of  the  purchaser."^  Public  policy  does  not 
forbid  a  contract  made  to  restrain  one  from  the  continuance  of 
disgraceful  relations,  such  as  a  contract  of  employment  which 
requires  the  employe  to  break  off  relations  with  certain  women 
of  bad  repute.""     Neither  is  it  contrary  to  public  policy  to  agree 

"'Smith   V.   Dubose,   78   Ga.   413,  3  v.  Banning.  152  Iowa  99,  131  N.  W. 

S.  E.  309.  6  Am.  St.  260;  Burton  v.  783,  140  Iowa  319,  118  N.  W.  446. 

Belvin,  142  N.  Car.  151.  55  S.  E.  71;  °'Gay  v.  Parpart,  106  U.  S.  679,  per 

Cusack  V.  White,  2  ]\Iill.  Const.    (S.  Miller,  J.:  "It  was  not  the  case  of  a 

Car.)  279,  12  Am.  Dec.  669.    See  also,  contract  for  future  illicit  intercourse 

In   re   Isaacson.   21    Times   L.-  R.   89  of    the    class    which    the    authorities 

(contract  upheld  even  though  it  also  hold  to  be  against  public  policy,  but 

contemplated       future       cohabitation  an    appropriate    means    of    providing 

when    given    for    past    cohabitation)  ;  for  the  support  of  a  woman  whom  he 

Winebrinner    v.    Weisiger,    3    T.    B.  had    married    while    he    had    a    wife 

Mon.  (Kv.)  32;  Dotv  Admr.  v.  Doty's  living,  and  of  the  children  resulting 

Gdn.    118    Kv.    204,    26    Ky.    L.    63,  from  that  marriage." 

80   S.   W.   803,  2   L.   R.  A.    (X.   S.)  "^ IMarksbury    v.    Taylor,    10    Bush 

713   (contract  to  give  property  to  the  (Ky.)    519. 

illegitimate    child    of    the    parties    in  "  Gisaf  v.   Neval,   31    Smith    (Pa.) 

consideration   of  the  mother  permit-  354;     Bivins    v.     Jarnigan,    3     Baxt. 

ting  it  to   remain   with  the   father);  (Tenn.)   282;  Carter  v.  Montgomery, 

Brown    v.    Kinsey,    81    X.    Car.    245;  2  Tenn.  Ch.  216.     Under  certain  cir- 

Wyant    v.    Lesher,    23    Pa.    St.    338;  cumstances    the    gift    or    conveyance 

Massev  v.  Wallace,  32  S.  Car.  149,  10  mav  be  avoided  bv  creditors.     Jack- 

S.  E.  937.  son  v.  Miner,  101  'ill.  550. 

•^Kneeland  v.  Rogers,  2  Hall    (X.  •'^\rmfield  v.  Tate.  29  X.  Car.  258. 

Y.)  579;  Given  v.  Driggs,  1  Cai.  Cas.  »» Gould  v.  Magnolia  Metal  Co.,  207 

(X.    Y.)    450;    Doty    v.    Wilson.    14  111.  172,  69  N.  E.  896. 
Johns.  (X.  Y.)  378.    See  also,  Lauer 


§    747  CONTRACTS.  94 

to  influence  a  person  by  lawful  methods  to  cease  disgraceful  rela- 
tions with  women  or  others.  But  an  agreement  by  two  or  more 
to  make  such  efforts  and  compensate  each  other  out  of  the  legacy 
given  to  one  or  more  by  such  person  so  operated  upon, — the 
laro-er  the  legacy  the  larger  the  compensation — has  been  declared 
against  public  policy  on  the  ground  that  it  tended  to  encourage 
the  use  of  all  sorts  of  influence  not  only  as  to  conduct,  but  in 
procuring  the  execution  of  a  will  favorable  to  the  one  or  the 
other  of  the  parties  to  the  agreernent  or  to  both.^ 

§  747.  Agreements  tending  to  corrupt  morals — Miscel- 
laneous.— The  mere  fact  that  a  contract  involves  moral  tur- 
pitude will  not,  as  a  general  rule,  necessarily  render  it  invalid.^ 
Contracts  of  a  different  character  but  yet  which  involve  wrong 
and  immoral  acts  are  declared  against  public  policy.  Thus,  as  a 
general  rule,  any  contract  which  contemplates  or  necessarily  in- 
volves the  defrauding  of  third  persons  as  its  ultimate  result  is 
contra  bonos  mores  and  against  public  policy.^  Contracts  which 
are  regarded  as  contra  bonos  mores  in  one  state  will  not  be  en- 
forced or  given  any  recognition  there,  notwithstanding  such  con- 
tract was  made  in  another  state  and  was  valid  by  the  laws  of  that 
state.* 

§  748.  Agreements  tending  to  induce  fraud  or  breach  of 
trust. — Agreements  which  tend  to  induce  fraud  or  breach  of 
trust  on  the  part  of  persons  standing  in  a  fiduciary  or  confiden- 
tial  relation  are  void.^     Consequently  contracts  the   object   or 

'  Sheppey  v.  Stevens,  185  Fed.  147.  *  De  Sobry  v.  De  Laistre,  2  Har.  & 
See  also,  Sheppey  v.  Stevens,  177  J.  (Md.)  191,  3  Am.  Dec.  535 ;  Green- 
Fed.  484.  wood  V.  Curtis,  6  Mass.  358.  4  Am. 

^'Nevins  v.  Chapman,  15  La.  Ann.  Dec.  145;  Flagg  v.  Baldwin,  38  N.  J. 
353;  Moore  v.  Remington,  34  Barb.  Eq.  219,  48  Am.  Rep.  308;  Hmds  v. 
ex.  Y.)  427;  Gay  v.  Parpart,  106  U.  Brazealle,  2  How.  (Miss.)  837,  32 
S.  697,  27  L.  ed.  256,  1  Sup.  Ct.  456.  Am.  Dec.  307;  Commonwealth  v. 
See  also,  Baumeister  v.  Markham,  Bassford,  6  Hill  (X.  Y.)  526;  Gist  v. 
101  Ky.  122  19  Ky.  L.  308,  39  S.  W.  Western  Union  Tel.  Co.,  45  S.  Car. 
844,  41  S.  W.  816,  72  Am.  St.  397,  344,  23  S.  E.  143,  55  Am.  St.  763n. 
in  which  an  actress  who  hired  to  per-  See  post,  chapt.  29. 
form  as  a  burlesque  opera  artist  in  ""  Smith  v.  David  B.  Crockett  Co. 
tights  was  held  entitled  to  recover  (Conn.),  82  Atl.  569  (contract  con- 
damages  for  an  injury  which  pre-  templating  the  bribing  of  purchasing 
vented  her  from  earning  money  in  agents)  ;  Byrd  v.  Hughes.  84  111. 
such  employment.  174,  25  .\m.  Rep.  422:  Lucas  v.  Allen, 

"Twentieth    Century   Co.   v.   Quill-  80  Kv.  681,  4  Ky.   L.  687;   Helee  v. 

ing,  130  Wis.  318,  110  X.  W.  174.  Fink,  75  Mo.  100,  43  Am.  Rep.  385; 


95 


LEGALITY    OF    OBJECT. 


§    749 


necessary  tendency  of  which  places  a  party  who  owes  a  duty  or 
obligation  to  third  persons  in  a  position  inconsistent  with  such 
duties  are  void,  even  though  no  breach  of  trust  results.^ 

§  749.  Inducing  breach  of  trust — Officers  of  corpora- 
tion.— Chief  among  contracts  of  this  character  are  those 
which  tend  to  control  the  discretion  of  officers  of  corporations. 
Generally  speaking,  a  contract  between  an  officer  or  director  of  a 
corporation  and  another  which  places  such  officer  or  director  in  a 
position  where  he  is  under  obligations  inconsistent  w'ith  the  duty 
imposed  upon  him  by  reason  of  his  official  connection  with  the 
corporation  is  voidable.'^     A  contract  whereby  a  bidder  on  con- 


Halloway  v.  Stevens,  48  How.  Pr. 
(X.  Y.)  129;  Everhart  v.  Searle,  71 
Pa.  256;  Woodstock  Iron  Co.  v. 
Richmond  Gas  Co..  129  U.  S.  643,  32 
L.  ed.  819,  9  Sup.  Ct.  402. 

'  Yale  Gas  Stove  Co.  v.  Wilcox,  64 
Conn.  101.  29  Atl.  303.  25  L.  R.  A. 
90,  42  Am.  St.  159  (In  the  above  case 
a  promoter  arranged  to  make  a  secret 
profit).  McClure  v.  Ullman.  102  Mo. 
App.  697,  n  S.  W.  325  (The  above 
case  was  one  of  agency,  the  agent 
acting  for  both  aprties)  ;  Bolton  v. 
Amsler,  95  N.  Y.  S.  481.  Plaintiff 
was  engaged  in  the  business  of  writ- 
ing circular  letters  giving  advice  and 
information  to  his  clients  as  to  the 
value  of  securities  dealt  in  on  the 
Stock  Exchange.  His  agreement  with 
defendant  stockbrokers  to  influence 
by  his  letters  the  purchase  by  his 
clients  of  certain  stock  in  which  de- 
fendants were  interested,  was  ille- 
gal. Ridglev  V.  Keene,  134  App.  Div. 
(X.  Y.)  647,  119  X.  Y.  S.  451.  To 
same  effect,  Ridgelv  v.  Keene,  134 
App.  Div.  (X.  Y.)  647.  119  X.  Y.  S. 
451 :  Williams  v.  Kendrick.  105  Va. 
791,  54  S.  E.  865  (sale  of  coal  lands). 
A  secret  agreement  with  an  employe 
of  a  rival  company  whereby  he  was 
to  abandon  his  contract  of  employ- 
ment, in  order  to  embarrass  the  rival 
company  as  a  competitor,  was  held 
illegal  and  fraudulent,  and  did  not 
furnish  a  good  consideration  for  a 
promise  to  pay  the  employe  a  salary. 
Rhoades  v.  Malta  Vita  Pure  Food 
Co..  149  Mich.  235,  112  X.  W.  940. 
One     who     furnished     supplies     and 


work  in  repairing  defendant's  auto- 
mobile' pursuant  to  a  contract  on  de- 
fendant's behalf  with  his  chauffeur, 
paid  to  the  chauffeur  a  discount  in 
violation  of  Penal  Code,  sec.  384r.  It 
was  held  that  the  one  making  re- 
pairs could  not  recover,  the  contract 
being  void  as  against  public  policy. 
General  Tire  Repair  Co.  v.  Price, 
115  X.  Y.  S.  171.  To  same  eft'ect.  Sir- 
kin  V.  Fourteenth  St.  Store,  108  N. 
Y.  S.  830;  Jablon  v.  Traynor,  135  N. 
Y.  S.  545.  But  it  is  not  against  public 
policy  for  an  architect  to  agree  to 
pay  a  third  party  a  certain  per  cent, 
of  his  fee  if  such  third  party  will  pro- 
cure a  loan  for  his  employer.  The 
architect  was  by  such  contract  not 
only  advancing  his  own  interests  but 
also  the  interests  of  his  employer. 
McCrarv  v.  Thompson,  123  Mo.  App. 
5%,  100  S.  W.  535;  Livermore  v. 
Bushnell.  5  Hun  (X.  Y.)  285.  See 
also,  Selz  v.  Unna,  6  Wall.  (U.  S.) 
327,  18  L.  ed.  799. 

'  Davis  V.  Gemmell,  70  Md.  356,  17 
Atl.  259;  Woodruff  v.  Wentworth, 
133  Mass.  309;  Attawav  v.  Third  Xat. 
Bank.  93  Mo.  485.  5  S.  W.  16:  Bliss 
V.  Mattcson.  45  X.  Y.  22:  Wardell  v. 
Union  Pacific  R.  Co..  103  U.  S.  651, 
26  L.  ed.  509;  Woodstock  Iron  Co.  v. 
Richmond  &  D.  Extension  Co.,  129 
U.  S.  643.  32  L.  ed.  819,  9  Sup.  Ct. 
402.  .A  stockholder  in  a  corporation 
has  been  denied  the  right  to  recover 
on  a  contract  the  consideration  for 
which  was  the  sale  of  his  vote  at  a 
stockholders*  meeting.  Dieckmann  v. 
Robyn   (Mo).  141   S.  W.  717. 


§  749 


CONTRACTS. 


96 


stmctlon  work  for  a  corporation  agrees  to  pay  the  president  of 
the  corporation  a  large  bonus  in  addition  to  the  amount  of  his 
bid  renders  the  entire  contract  illegal  and  precludes  the  mainte- 
nance of  any  action  on  the  contract  either  to  recover  the  contract 
price  or  the  amount  originally  bid.®  A  contract  whereby  one,  on 
purchasing  a  controlling  interest  in  a  corporation,  engages  that 
he  will  endeavor  to  retain  a  certain  person  as  an  officer,  in  the 
corporation  at  a  fixed  salary,  has  been  held  void  as  against  public 
policy  for  the  reason  that  it  might  require  him  to  act  contrary  to 
the  interest  of  stockholders  other  than  himself.^     An  agreement 


^Standard  Lumber  Co.  v.  Butler 
Ice  Co.,  146  Fed.  359,  Id  C.  C.  A. 
639,  7  L.  R.  A.  (N.  S.)  467n.  To 
same  effect,  Landes  v.  Hart,  131  App. 
Div.  (N.  Y.)  6,  115  N.  Y.  S.  2>2n. 
See  also,  Stanton  v.  Sturgis,  140 
Fed.  789.  In  the  above  case  there 
was  an  agreement  to  pay  part  of  the 
directors  a  certain  per  cent,  of  the 
profits.  The  court  regarded  the  con- 
tract as  one.  An  agreement  be- 
tween the  engineer  of  a  corporation 
and  one  who  has  the  contract  to  con- 
struct certain  works  for  it  that  the 
latter  will  divide  the  profits  of  his 
contract  with  the  former  is  against 
public  policy  and  void.  Smythe's  Es- 
tate V.  Evans,  209  111.  App.  Z16,  70  N. 
E.  906. 

"  West  v.  Camden,  135  U.  S.  507,  34 
L.  ed.  254,  10  Sup.  Ct.  838.  To  same 
effect.  Noel  v.  Drake,  28  Kans.  265,  42 
Am.  Rep.  162;  Guernsey  v.  Cook,  120 
Mass.  501;  Woodruff  v.  Wentworth, 
133  Mass.  309.  See  also.  Glass  v. 
Basin  and  Bay  State  Min.  Co.,  31 
Mont.  21,  n  Pac.  302,  in  which  juris- 
diction the  rule  is  statutory.  See, 
however,  Kantzler  v.  Benzinger,  214 
111.  589,  1Z  N.  E.  874,  in  which 
it  is  said :  "It  is  next  contended 
that  the  provision  in  the  con- 
tract that  the  plaintiffs  should 
hold  the  offices  of  president,  secre- 
tary, and  treasurer  of  the  Garden 
City  Billiard  Table  Company  for 
five  years  from  the  date  of  the  con- 
tract, at  a  salary  of  $2,000  per  annum 
each,  is  contrary  to  public  policy  and 
void.  The  contract  was  entered  into 
by  all  the  stockholders  of  the  cor- 
poration, and,  while  it  might  not  have 
bound  the  board  of   directors  after- 


ward elected,  we  think  there  is  no 
reason,  in  law,  why  it  should,  not  be 
held  to  be  binding  upon  the  defend- 
ants, and  enforceable  against  them. 
The  entire  stock  of  the  corporation 
was  held  by  the  plaintiffs,  and,  in 
making  a  contract  with  the  defend- 
ants whereby  the  latter  were  to  ob- 
tain at  once  six-tenths  of  said  stock, 
it  was  open  to  the  parties  to  make 
any  arrangements  with  regard  to  the 
management  of  the  company  mu- 
tually agreeable  to  them.  The  price 
to  be  paid  for  the  stock  was  a  mat- 
ter to  be  determined  by  them,  and 
by  them  only.  They  owned  all  the 
property  represented  by  the  stock 
and  the  mere  fact  that  it  was  repre- 
sented by  corporate  stock  could  make 
no  difference.  No  other  person  had 
any  interest  in  it,  and  no  one  else 
could  complain.  Instead  of  paying  a 
different  price  than  that  agreed  on  for 
the  stock  not  then  to  be  transferred, 
it  was  mutually  agreed  that  the  plain- 
tiffs should  continue  in  their  old 
official  positions  for  five  years,  with 
an  increase  of  salary."  A  sale  by  a 
majority  stockholder  of  all  of  the 
property  of  the  corporation  without 
the  knowledge  or  consent  of  the 
other  stockholders,  is  against  public 
policy.  Bias  v.  Atkinson,  64  W.  Va. 
486,  63  S.  E.  395.  See  also,  Scripps  v. 
Sweeney,  160  Mich.  148,  125  N.  W. 
72.  where  a  minority  number  of  the 
stockholders  in  four  different  cor- 
porations entered  into  an  agreement, 
without  the  consent  of  the  other 
stockholders,  which  had  for  its  ob- 
ject the  personal  aggrandizement  of 
the  minority  stockholders.  The  con- 
tract was  held  against  public  policy, 


97  LEGALITY  OF  OBJECT.  §  75O 

by  which  a  trustee  of  a  savings  bank  for  a  consideration  moving 
to  himself  for  his  private  benefit,  agrees  to  secure  the  election  of 
certain  persons  as  trustees  of  the  institution,  is  illegal  as  against 
public  policy. ^° 

§  750.  Inducing  breach  of  trust — Public  service  corpora- 
tions.— Directors  of  corporations  aflccted  with  a  public  in- 
terest, such  as  railway  companies,  are  held  not  only  to  owe  a 
duty  to  the  stockholders  of  such  corporations  but  to  the  public 
generally.  Consequently  contracts  with  the  corporation  by 
which  the  directors  obtain  some  private  advantage  are  unenforci- 
ble  because  against  public  policy.^ ^ 

§  751.  Inducing  breach  of  trust — Other  applications  of 
rule. — Public  policy  forbids  that  a  person  occupying  a  fidu- 
ciary relation  place  himself  or  be  placed  in  a  position  which  may 
tempt  him  to  betray  his  trust.^"     An  agreement  whereby  one  is 

notwithstanding  good  faith  on  the  To  pay  them  individually  anything  of 
part  of  one  of  the  parties  thereto,  value  for  executing  a  corporate  con- 
Compare  with.  San  Remo  Copper  tract  is  grossly  unlawful,  and  taints 
Min.  Co.  V.  Monense,  133  N.  Y.  S.  such  contract  with  moral  turpitude. 
509.  A  voting  trust  agreement  is  not  Vast  interests,  in  which  the  public, 
per  se  void.  Carnegie  Trust  Co.  v.  as  well  as  the  immediate  parties,  are 
Security  Life  Ins.  Co.,  Ill  Va.  1,  68  deeply  concerned,  are  intrusted  to  the 
S.  E.  412,  31  L.  R.  A.  (N.  S.)  1186,  control  and  management  of  such 
and  note;  Winsor  v.  Commonwealth  officials;  and  in  my  judgment,  there 
Coal  Co.,  63  Wash.  62.  114  Pac.  908,  are  important  considerations  of  pub- 
33  L.  R.  A.  (X.  S.)  63.  Compare  lie  policy  which  demand  that  courts 
with  Morel  v.  Hoge.  130  Ga.  625,  61  of  justice  shall  hold  them  to  a  strict 
S.  E.  487,  16  L.  R.  A.  (N.  S.)  1136  account,  and  shall  never  for  a  mo- 
and  note.  For  full  discussion  of  the  ment  recognize  as  valid  a  contract 
subject  of  the  relation  sustained  by  obtained  by  paying  directly  or  in- 
officers  of  a  corporation  toward  such  directly  to  such  officials  any  consider- 
corporation,  see  Thomp.  Corp.  (2d.  ation,  whether  large  or  small."  See 
ed.).  also,  Peckham  v.  Lane,  81  Kans.  489, 
'"Dickson  v.  Kittson.  75  Minn.  168,  106  Pac.  464,  25  L.  R.  A.  (X.  S.)  935. 
77  N.  W.  820,  74  Am.  St.  447.  >=  Sims  v.  Petaluma  Gas  Light  Co., 
*St.  Louis  &c.  R.  Co.  v.  Mathers,  131  Cal.-  656,  63  Pac.  1011.  ^A,n  ex- 
71  111.  592.  22  Am.  Rep.  122:  Fuller  v.  ecutor  mav  renounce  his  trust,  but 
Dame,  18  Pick.  (Mass.)  472;  Holla-  he  cannot  lawfullv  sell  his  right  to 
day  V.  Patterson.  5  Ore.  177:  Wood-  act  as  administrator  and  anv  agree- 
stock  Iron  Co.  v.  Richmond  S:c.  Co.,  ment  by  which  he  attempts  to  do  so 
129  LT.  S.  643,  32  L.  ed.  819.  9  Sup.  for  a  consideration  moving  to  him- 
Ct.  402.  In  Western  LTnion  Tel.  Co.  self  is  against  public  poHcv  and  un- 
V.  Union  Pac.  R.  Co..  3  Fed.  1,  1  IMc-  enfnrcible.  Oakeshott  v.  Smith.  104 
Crary  (U.  S.)  418,  it  is  said:  "The  App.  Div.  (N.  Y.)  384.  93  N.  Y.  S. 
officers  of  a  railway  company  are  659.  185  N.  Y.  583.  78  N.  E.  1108.  The 
quasi  public  officers.  Their  duties  office  of  a  guardian  is  not  a  matter 
are  of  a  fiduciary  character.  They  of  commerce  and  an  agreement  to  re- 
are,  in  an  important  sense,  trustees,  sign  is  against  public  policy.    Aughcy 

7 — CoNTR.vcTS,  Vol.  2 


§  752 


CONTRACTS. 


98 


to  pay  another  for  his  trouble  in  recommending  him  as  a  builder 
to  one  who  may  inquire  as  to  his  capacity  and  liability  in  that 
line  has  been  declared  illegal."  A  contract  which  virtually  en- 
courages one  of  the  parties  thereto  to  future  violations  of  the 
law  is  also  illegal.^* 


§  752.    Agreements  of  a  gambling  or  wagering  nature. — 

A  separate  chapter  will  be  devoted  to  the  subject  of  agreements 
of  a  gambling  or  wagering  nature,  and  for  that  reason  contracts 
of  this  character  will  not  be  discussed  in  this  connection.^^ 

§  753.  Agreements  in  derogation  of  marriage — Restraint 
of  marriage. — A  contract  in  unreasonable  restraint  of  mar- 
riage is  against  public  policy  and  invalid."     However,  agree- 


V.  Windrem,  137  Iowa  315,  114  N.  W. 
1047.  A  guardian  and  his  surety 
agreed  that  the  ward's  funds  should 
be  deposited  in  a  bank,  and  not  with- 
drawn except  on  the  joint  check  of 
the  guardian  and  the  surety.  This 
contract  was  held  contrary  to  pub- 
lic policy  as  having  the  effect  to  take 
from  the  guardian,  in  part,  the  cus- 
tody and  control  of  the  ward's  funds, 
and  surrender  the  same  to  the  surety  ; 
and  for  that  reason  did  not  bind  the 
bank  so  as  to  render  it  liable  to  the 
surety  for  having  paid  over  funds  of 
the  ward  in  violation  of  the  agree- 
ment. Fidelity  &  Deposit  Co.  v.  But- 
ler, 130  Ga.  225,  60  S.  E.  851,  16  L. 
R.  A.  (N.  S.)  994n.  The  duty  restini; 
upon  the  majority  owners  of  a  ves- 
sel to  manage  it  to  the  advantage  of 
all  the  owners  and  all  persons  whose 
lives  and  property  may  be  involved  is 
a  trust  which  they  cannot  agree  to 
surrender  permanently  or  indefinite- 
Iv.  Smith-Green  Co.  v.  Bird,  96 
Elaine  425,  52  Atl.  910,  90  Am.  St. 
352.  An  agent  in  charge  of  his 
principal's  estate  induced  the  prin- 
cipal to  exchange  his  property  for 
other  property  which  belonged  to  the 
agent.  The  agent  did  not  disclose 
the  fact  of  his  ownership.  Tt  was 
held  that  the  contract  of  exchange 
could  be  avoided  by  the  principal, 
whether  beneficial  or  not,  on  the 
ground  that  the  contract  was  con- 
trary  to   public    policy.      McClain    v. 


Parker,  229  Mo.  68,  129  S.  W.  500;  J. 
I.  Case  Threshing  Machine  Co.  v. 
Fisher,  144  Iowa  45,  122  N.  W.  575 
(holding  that  a  mere  selling  agent 
may  divulge  that  he  is  able  to  obtain 
goods  at  better  rates  from  one  man- 
ufacturing company  than  from  an- 
other). Plaintiff  was  a  subagent  for 
defendants  in  selling  lands  for  a  cer- 
tain company.  Defendants  were  dis- 
charged as  agents  and  plaintiff  ap- 
pointed in  their  stead.  Defendants 
then  entered  into  an  agreement  with 
plaintiff  to  divide  the  commissions  to 
be  derived  from  certain  unfinished 
sales.  Held,  that  such  agreement  was 
not  illegal,  though  defendants,  im- 
mediately on  termination  of  their 
agency,  became  agents  for  a  rival 
company.  Duensing  v.  Paine,  150 
Iowa  417,  130  N.  W.  385.  See  also, 
Keady  v.  United  R.  Co.,  57  Ore.  325, 
108  Pac.  197  (all  parties  to  the  agree- 
ment had  knowledge  of  its  terms). 

"  Holcomb  v.  Weaver,  136  Mass. 
265.  See,  however,  the  case  of  Hoyt 
V  Holly,  39  Conn.  326,  12  Am.  Rep. 
390,  in  which  an  agreement  whereby 
one  physician  contracts  to  pay  an- 
other five  hundred  dollars  to  recom- 
mend him  to  the  latter's  patients  was 
upheld. 

"  Bowman  v.  Phillips,  41  Kans.  364, 
21  Pac.  230,  3  L.  R.  A.  631,  13  Am. 
St.  292. 

^'See  post,  §  692. 

"Hartley    v.    Rice,     10    East    22; 


99 


LEGALITY   OF    OBJECT. 


§  754 


ments  against  marriage  under  the  age  of  twenty-one  or  other 
reasonable  age  or  with  a  specified  person,  or  a  member  of  a  desig- 
nated family  and  the  like  have  been  upheld/'  A  condition  by 
husband  or  wife  in  restraint  of  second  marriage  has  been 
upheld.'^  Thus  a  contract  whereby  a  man  agrees  to  pay  his 
divorced  wife  a  specified  simi  per  month  so  long  as  she  remains 
unmarried,  no  obligation  being  imposed  upon  her  not  to  marry,  is 
not  a  contract  in  restraint  of  marriage,  and,  not  involving  ques- 
tions of  morals  or  public  policy,  it  cannot  be  avoided  on  any  of 
these  grounds.^" 

i;  754.    Derogation   of  marriage — Marriage  brokage   con- 
tracts.— A  contract  to  procure  or  Ijring  about  a  marriage  for 


White  V.  Benefit  Union,  76  Ala.  251, 
52  Am.  Rep.  325;  James  v.  Jellison, 
94  Ind.  292,  48  Am.  Rep.  151;  Chal- 
fant  V.  Payton,  91  Ind.  202,  46  Am. 
Rep.  586;  Williams  v.  Cowden,  13 
Mo.  211,  53  Am.  Dec.  143;  Knost  v. 
Knost,  229  Mo.  170,  129  S.  W.  665 
(daughter,  under  will,  to  receive  less 
than  the  other  children  in  case  she 
married)  ;  Sterling  v.  Sinnickson,  5 
X.  J.  756;  Conrad  v.  Williams,  6 
Hill  (N.  Y.)  444;  Maddox  v.  Mad- 
dox,  Admr.,  11  Grat.  (Va.)  804. 
While  a  contract  between  a  man  and 
a  woman  each  to  marry  the  other  re- 
strains each  of  them  from  marryirig 
any  one  else,  the  contract  is  not  void 
for  that  reason.  If  it  were  other- 
wise there  could  be  no  valid  mar- 
riage contract.  Brown  v.  Odill,  104 
Tenn.  250,  56  S.  W.  840,  52  L.  R.  A. 
660,  78  Am.  St.  914.  A  contract  by 
which  the  father  of  the  prospective 
groom  agrees  to  pay  the  wife  a  speci- 
fied sum  should  his  son  mistreat  her 
or  abandon  her  and  her  child  is  not 
in  restraint  of  marriage.  Wright  v. 
Wright.  114  Iowa  748,  87  N.  W.  709, 
55  L.  R.  A.  261.  Defendant  desired 
to  marry  one  of  plaintiff's  employes 
and  promised  to  pay  $30.00  for  her 
release  from  her  contract  of  em- 
ployment in  consideration  of  which 
promise  she  was  released.  It  was 
held  that  the  contract  was  not  in 
restraint  of  marriage.  Holtz  v.  Han- 
son. 115  Wis.  236.  91  N.  W.  663. 

"Shackelford  v.   Hall.   19  111.  212; 
Hogan  V.  Curtain,  88  X.  Y.  162,  42 


Am.  Rep.  244;  Phillips  v.  Ferguson, 
85  Va.  509,  8  S.  E.  241,  1  L.  R.  A. 
S37,  17  Am.  St.  78;  Reuff  v.  Coleman, 
30  W.  Va.  171,  3  S.  E.  597.  However, 
it  would  seem  that  contracts  of  this 
character  must  be  entered  into  by  the 
one  who  contemplates  marriage. 
Thus,  A  may  contract  that  he  will 
not  marry  under  a  certain  reasonable 
age  or  that  he  will  not  marry  a  cer- 
tain person,  but  the  law  will  not 
recognize  and  enforce  contracts  be- 
tween outside  parties,  relatives  or 
friends  to  break  up  and  prevent  con- 
templated marriages.  Sheppey  v. 
Stevens,   177  Fed.  484. 

'\M\cn  V.  Jackson,  1  Ch.  Div.  399; 
Phillips  V.  Medburv.  7  Conn.  568; 
Bennett  v.  Packer,  70  Conn.  357,  39 
Atl.  739,66  Am.  St.  112;  Shackelford 
v.  Hall.  19  111.  212;  Siddons  v.  Cock- 
rell,  131  111.  653,  23  X.  E.  586;  Bos- 
tick  v.  Blades,  59  Md.  231,  43  Am. 
Rep.  548;  Knight  v.  Mahoney.  152 
Mass.  523,  25  N.  E.  971 :  9  L.  R.  A. 
573;  Dumev  v.  Schoeftler,  24  Mo. 
170,  69  Am.'  Dec.  422;  Herd  v.  Cat- 
ron. 97  Tenn.  662.  37  S.  W^  551,  37 
L.  R.  A.  731 ;  Giles  v.  Little.  104  U.  S. 
291.  26  L.  ed.  745.  See  Stilwell  v. 
Knapper,  69  Ind.  558,  35  Am.  Rep. 
240.  See  also,  Knost  v.  Knost,  229 
Mo.  170.  129  S.  W.  665;  Trust  Co. 
&c.  V.  Xash,  50  Misc.  (X.  Y.)  295, 
98  X.  Y.  S.  734  (separation  agree- 
ment). 

°°  Jones  V.  Jones,  1  Colo.  App.  28, 
27  Pac.  85.  See  also,  Appleby  v. 
Appleby,   100   Minn.   408,   111   N.   W. 


§  754 


CONTRACTS. 


100 


a  consideration,  usually  termed  a  marriage  brokage  agreement,  is 
invalid,  both  at  law  and  in  equity,  as  being  opposed  to  public  pol- 
icy."'^ This  applies  not  only  to  contracts  to  bring  about  a  marriage 
between  strangers  but  also  to  an  agreement  to  hasten  an  intended 
marriage  for  a  consideration.  A  contract  to  hasten  an  intended 
marriage  is  as  obnoxious  as  a  contract  to  bring  about  a  marriage 
between  strangers."^  The  same  is  true  of  a  contract  by  which 
one  undertakes  to  prevent  a  person  from  breaking  his  contract 
to  marry.-"  Marriage  brokage  contracts  cannot  be  enforced 
either  at  law  or  in  equity."^  On  the  other  hand,  if  the  considera- 
tion has  been  paid  to  the  marriage  broker  it  is  held  by  the  better 
rule  that  the  payment  is  induced  by  fraud  or  is  made  under  a 
species  of  duress  or  undue  influence,  and  that  a  court  will  award 


305,  10  L.  R.  A.  (N.  S.)  590,  117 
Ani.  St.  709,  where  a  contract  which 
provided  that  the  husband  should 
have  an  annuity  of  $10,000  so  long 
as  he  remained  unmarried  after  the 
death  of  the  wife,  provided  they 
were  living  together  as  husband  and 
wife  at  the  time  of  her  death,  was 
upheld. 

"» Roberts  v.  Roberts,  3  P.  Wms. 
66;  Hall  v.  Potter,  3  Lev.  411;  Keat 
■V.  Allen,  2  Vern.  588;  Morrison  v. 
Rogers,  115  Cal.  252,  46  Pac.  1072,  56 
Am.  St.  95;  Leupert  v.  Shields,  14 
Colo.  App.  404,  60  Pac.  193;  Hellen 
V.  Anderson,  83  111.  App.  506;  Chal- 
fant  v.  Payton,  91  Ind.  202,  46  Am. 
Rep.  586;  James  v.  Jellison,  94  Ind. 
292,  48  Am.  Rep.  151 ;  Grobe's  Estate, 
127  Iowa  121,  102  N.  W.  804;  John- 
son's Admr.  v.  Hunt,  81  Ky.  321, 
(Agreement  by  grandfather  that  he 
would  surrender  to  grandson  a  note 
held  again.st  the  latter  if  he  would 
aid  in  inducing  a  young  lady  to 
marry  the  former.)  Fuller  v. 
Dame,  18  Pick.  (Mass.)  472;  Craw- 
ford V.  Russell,  62  Barb.  (N.  Y.)  92; 
Duvall  V.  Wellman,  124  N.  Y.  156,  26 
N.  E.  343 ;  Place  v.  Conklin,  34  App. 
Div.  (N.  Y.)  191,  54  N.  Y.  S.  532; 
Overman  v.  Clcmmons,  19  N.  Car. 
185.  See  Jangraw  v.  Perkins,  76  Vt. 
127,  56  Atl.  532,  104  Am.  St.,  which 
holds  that  a  contract  to  hasten  an 
intended  marriage  for  a  considera- 
tion is  a  marriage  brokerage  coritract. 
A  marriage-brokage  contract  is  an 
agreement  for  the  payment  of  money 


or  any  other  consideration  or  com- 
pensation for  the  procurement  of  a 
marriage.  "Although  they  may  not 
be  a  fraud  on  either  party,  such  con- 
tracts are  held  to  be  void  and  a  pub- 
lic mischief,  forasmuch  as  they  are 
calculated  to  bring  to  pass  mistaken 
and  unhappy  marriages,  to  counter- 
vail parental  influence  in  the  training 
and  education  of  children,  and  to 
tempt  the  exercise  of  an  undue  and 
pernicious  influence  for  selfish  gain 
in  respect  to  the  most  sacred  of 
human  relations.  An  essential  ele- 
ment in  such  contracts  is  the  procure- 
ment of  a  marriage,  oftentimes  with- 
out regard  to  the  wishes  of  friends 
or  parents,  or  to  the  happiness  of  the 
parties  most  deeply  interested." 
White  V.  Equitable  Nuptial  Benefit 
Union,  76  Ala.  251,  52  Am.  Rep.  325. 

^Jangraw  v.  Perkins,  76  Vt.  127, 
56  Atl.  532,  104  Am.  St.  917. 

"Morrison  v.  Rogers,  115  Cal.  252, 
46  Pac.  1072,  56  Am.  St.  95. 

'^Morrison  v.  Rogers,  115  Cal.  252, 
46  Pac.  1072,  56  Am.  St.  95;  Hellen 
V.  Anderson,  83  111.  App.  506;  In  re 
Grobe's  Estate,  127  Iowa  121,  102  N. 
W.  804;  Crawford  v.  Russell,  62 
Barb.  (N.  Y.)  92.  But  a  contract  by 
which  a  father  promised  to  a  man 
$2,000  if  he  would  marry  the  for- 
mer's daughter  has  been  upheld  on 
the  ground  that  marriage  is  a  valua- 
ble consideration.  Lieb  v.  Dobriner, 
60  Misc.  (N.  Y.)  66,  111  N.  Y.  S. 
650. 


lOI 


LEGALITY    OF    OBJECT. 


§  75: 


restitution  of  the  money  or  other  property  parted  with.-*  There 
are  cases,  however,  which  hold  that  the  property  so  parted  with 
cannot  be  recovered.'^ 

§  755.  Derogation  of  marriage — Agreements  made  in 
view  of  future  separation. — A  contract  Ijctween  a  husband 
and  wife  which  contemplates  a  future  separation  is  invalid  be- 
cause it  tends  to  facilitate  a  separation.-*^'  But  where  the  separa- 
tion is  an  accomplished  fact"'  or  where  it  takes  place  at  a  time 
contemporaneous  with  the  actual  separation,-**  the  courts  will  as 
a  general  rule  uphold  a  contract,  entered  into  between  the  parties 
concerning  their  property  rights,  which  is  not  tainted  by  fraud, 
duress  or  undue  influence."" 


"'Hermann  v.  Cliarlesworth  (1905), 
2  K.  B.  123;  Wcnniger  v.  Mitchell, 
139  :\Io.  App.  420,  122  S.  W.  1130 
(also  on  the  ground  that  public  pol- 
icy requires  repayment)  ;  Duvall  v. 
Wellman,  124  N.  Y.  156,  26  N.  E. 
343;  Place  v.  Conklin,  34  App.  Div. 
(X.  Y.)  191.  54  N.  Y.  S.  532,  afifg. 
23  Misc.  (N.  Y.)  40,  51  N.  Y.  S. 
407.  In  the  above  case  suit  was 
brought  by  the  husband,  the  wife 
having  turned  over  to  the  broker 
property  given  her  by  the  husband. 

='Chalfant  v.  Payton,  91  Ind.  202, 
46  Am.  Rep.  586.  The  contract  in 
this  case  was  more  in  the  nature  of 
a  wagering  agreement. 

"■'  Pcrcira  v.  Percira,  156  Cat.  1,  103 
Pac.  488,  23  L.  R.  A.  (N.  S.)  880n, 
134  Am.  St.  107;  Watson  v.  Watson. 
37  Ind.  App.  584,  77  N.  E.  355  (ante- 
nuptial contract)  ;  Donohue  v.  Dono- 
hue  (Mo.  App.).  141  S.  W.  465 
(antenuptial  agreement  for  di- 
vorce) ;  Brun  v.  Brun,  64  Nebr.  782, 
90  N.  W.  860.     See  ante,  chapt.  13. 

-"^  McConnell  v.  McConncll,  98  Ark. 
1^3.  136  S.  W.  931;  Prvor  v.  Prvor. 
88  Ark.  302.  114  S.  W.  700  (contract 
contemporaneous  with  the  decree  of 
divorce)  ;  Storey  v.  Storey,  125  111. 
608,  18  N.  E.  329.  1  L.  R.  A.  320n. 
8  Am.-  St.  417;  Hilbish  v.  Hattle.  145 
Ind.  59,  44  N.  E.  20.  33  L.  R.  A.  7S3 ; 
Loud  v.  Loud,  4  Bush  (Kv.)  453; 
Grime  v.  Borden.  166  Mass.  198.  44 
N.  E.  216;  Roll  v.  Roll.  51  Minn.  3.53. 
53  N.  W.  716:  Galusha  v.  Galusha, 
116  N.  Y.  635,  22  N.  E.  1114;  Durvea 


y.  Bliven,  122  N.  Y.  567,  25  N.  E. 
908;  Effrav  v.  Effray,  110  App.  Div. 
(N.  Y.)  545,  97  N.  Y.  S.  286;  Bettle 
v.  Wilson,  14  Ohio  257;  Rains  v. 
Wheeler,  76  Tex.  390,  13  S.  W.  324; 
Squires  v.  Squires,  53  Vt.  208,  38 
.Am.  Rep.  668;  Rolette  v.  Rolette,  1 
Pin.  (Wis.)  370,  40  Am.  Dec.  782. 
See  also.  Trust  Co.  of  America  v. 
Nash,  50  Misc.  (N.  Y.)  295,  98  N. 
Y.  S.  734. 

'^Nichols  V.  Palmer,  5  Day 
(Conn.)  47;  Boland  v.  O'Xeil,  72 
Conn.  217,  44  Atl.  15;  King  v.  Mollo- 
han.  61  Kans.  683,  60  Pac.  731,  affd. 
61  Kans.  692.  61  Pac.  685;  Carev  v. 
Mackey,  82  Maine  516,  20  Atl.  84,  9 
L.  R.  A.  113,  17  Am.  St.  500;  Steb- 
bins  V.  :\Iorris,  19  Mont.  115.  47  Pac. 
642;  Brun  v.  Brun,  64  Nebr.  782,  90 
N.  W.  860 ;  Poillon  v.  Poillon,  49  App. 
Div.  (N.  Y.)  341,  63  N.  Y.  S.  301; 
Dower  v.  Dower,  36  Misc.  (N.  Y.) 
559,  73  N.  Y.  S.  1080;  Henderson  v. 
Henderson.  37  Ore.  141,  60  Pac.  597, 
61  Pac.  136.  48  L.  R.  A.  766.  82  Am. 
St.  741;  Walker  v.  Walker's  Exr., 
9  Wall.  (U.  S.)  743,  19  L.  ed.  814; 
Baum  V.  Baum.  109  Wis.  47.  85  N. 
W.  122,  53  L.  R.  A.  650.  83  Am.  St. 
854. 

®  Bowers  v.  Hutchinson,  67  Ark. 
15,  53  S.  W.  309;  Wells  v.  Stout.  9 
Cal.  479.  See  Luttrell  v.  Boggs.  168 
111.  361.  48  N.  E.  171 :  Dutton  v.  Dut- 
ton,  30  Ind.  452;  Robertson  v.  Rob- 
ertson. 25  Iowa  350:  McKee  v.  Reyn- 
olds. 26  Iowa  S7S;  Fox  v.  Davis.  113 
Mass.  255.  18  Am.  Rep.  476;  Randall 


§  756 


CONTRACTS. 


102 


§  756.  Derogation  of  marriage — Duties  imposed  by 
law. — An  agreement,  however,  by  the  husband  to  pay  his 
wife  for  services  rendered  as  a  housekeeper,  or  for  the  per- 
formance of  other  duties  imposed  upon  her  by  the  marital  rela- 
tion,"" is  void  for  the  reason  that  it  is  without  consideration  and 
against  public  policy.  But  it  has  been  held  by  many  cases  that  a 
promise  whereby  the  husband  agrees  to  pay  his  wife  a  specified 
sum  of  money,  if  she  will  dismiss  a  divorce  proceeding  and  renew 
the  marital  relation,  will  be  enforced."^ 

§  757.    Derogation    of    marriage — Facilitating    divorce. — 

But  it  is  well  settled  that  any  agreement  between  husband  and 


V.  Randall,  Zl  Mich.  563;  Nelson  v. 
Vassenden,  115  .Minn.  1,  131  N.  W. 
794;  Garbut  v.  Bowling,  81  Mo.  214; 
Foote  V.  Nickerson,  70  N.  H.  496, 
48  Atl.  1088,  54  L.  R.  A.  554;  Aspin- 
v.-all  V.  Aspinwall,  49  N.  J.  Eq.  302, 
24  Atl.  926;  Carson  v.  Murray,  3 
Paige  (N.  Y.)  483;  Clark  v.  Fosdick, 
118  N.  Y.  7,  22  X.  E.  1111,  6  L.  R. 
A.  132,  16  Am.  St.  IZl;  Miller  v.  Mil- 
ler. 16  Ohio  St.  527;  Commonwealth 
V.  Richards,  131  Pa.  St.  209,  18  Atl. 
1007;  In  re  Scott's  Estate,  147  Pa. 
St.  102,  23  Atl.  214.  See  ante,  chapt. 
13.  _ 

'"Grant  v.  Green,  41  Iowa  88; 
Miller  v.  Miller,  78  Iowa  177,  35  N. 
W.  464,  42  N.  W.  641,  16  Am.  St. 
431;  Michigan  Trust  Co.  v.  Chapin, 
106  Mich.  384,  64  X.  W.  334,  58  Am. 
St.  490.  But  an  agreement  which 
bound  the  husband  to  treat  his  wife 
as  a  husband  should  has  been  upheld. 
It  tended  to  uphold  instead  of  de- 
stroy the  marriage.  The  contract 
was  also  conditional  on  the  wife's 
own  good  behavior.  It  was  also  held 
that  there  was  a  sufficient  considera- 
tion to  support  the  contract.  Mont- 
gomery V.  Montgomery,  142  Mo.  App. 
481,  127  S.  W.  118. 

"  Phillips  V.  Mevers.  82  111.  67; 
Poison  V.  Stewart,  167  Mass.  211,  45 
N.  E.  737,  36  L.  R.  A.  771,  57  Am. 
St.  452  (agreement  to  forbear  suit 
for  divorce)  ;  Reithmaier  v.  Beck- 
with,  35  Mich.  110;  Barbour  v.  Bar- 
bour, 49  X.  J.  Eq.  429,  24  Atl.  227; 
Adams  v.  Adams,  91  N.  Y.  381,  43 
Am.  Rep.  675.  See  also,  DufiFy  v. 
White,  115  Mich.  264  73  N.  W.  363 


(providing    for    resumption   of    mar- 
ital   relation    where    wife    had    been 
guilty    of      adultery)  ;      Sommer      v. 
Sommer,  87  App.  Div.    (N.  Y.)   434, 
84  X.  Y.   S.  444;   In  re  Burkholder's 
Appeal,  105  Pa.  St.  31.    A  promise  by 
a   third    person   made   to    induce   the 
wife,  who  lives  apart  from  her  hus- 
band   for    cause    sufficient    to    entitle 
her  to  a  divorce,  to  resume  her  duties 
as  a  wife  is  valid.    Mack  v.  Mack,  87 
Xebr.  819,   128  X.  W.  527,  31   L.  R. 
A.    (N.    S.)    441n.     A   husband   and 
wife,    while    they    were    living    apart 
and  a  divorce  suit  instituted  by  the 
wife   was   pending,   made   a   contract 
whereby,  in  consideration  of  the  set- 
tlement of  the  divorce  suit   and   for 
the  purpose  of  a  reconsideration,  the 
husband  agreed     that     if     the     wife 
should   at   any   time  thereafter  leave 
him,   or  be   unable   to  live  with  him 
for  any  good  cause,   she   should   re- 
ceive a   sum  of   money  each   month, 
such  sum  being  no  greater  than  the 
court    would    have    allowed    her    had 
no    contract    been    made.      The    con- 
tract was  held  not  contrary  to  pub- 
lic policy,  but  as  valid,  as  under  the 
code  the  wife  may  maintain  an  action 
for  alimony  without  suing  for  a  di- 
vorce.     Woodruff    V.    Woodruff,     28 
Ky.  L.  757,  90  S.  W.  266,  judgment 
modified,    91    S.    W.    265.      Compare 
with    Pereira  v.    Pereira,    156   Cal.    1, 
103   Pac.  488,  23   L.   R.   A.    (X.    S.) 
880n,    134    Am.    St.    107.      See    ante, 
chapt.  13.     But  see  Merrill  v.  Peas- 
lee,  146  Mass.  460,  16  N.  E.  271,  4 
Am.  St.  334. 


10' 


LEGALITY    OF    OBJFXT. 


§  717 


wife,  the  purpose  of  which  is  to  inckice  or  facihtate  the  procure- 
ment of  a  divorce  at  the  suit  of  either  party,  is  against  public 
poHcy  and  unen forcible.^'" 

The  foregoing  principles  apply  not  only  to  contracts  between 
husband  and  wife,  but  to  contracts  between  one  of  the  married 
parties  with  a  third  person  which  tend  to  break  up  the  marriage 
relation.  Thus,  an  agreement  by  a  wife  to  pay  her  attorney  in 
a  suit  for  divorce  and  alimony  against  her  husband  a  certain  per 


"Newman  v.  Freitas,  129  Cal.  283. 
61  Pac.  907,  50  L.  R.  A.  548;  Beard 
V.  Beard.  65  Cal.  354,  4  Pac.  229 
(notes  secured  by  mortgage  given 
by  husband  to  induce  wife  not  to  re- 
sist divorce  proceedings)  ;  Smutzer  v. 
Stimson,  9  Colo.  App.  326,  48  Pac. 
314;  Goodwin  v.  Goodwin,  4  Day 
(Conn.)  343;  Appeal  of  Seelev,  56 
Conn.  202,  14  Atl.  291;  Paddock  v. 
Robinson,  63  111.  99,  14  Am.  St.  112; 
Hamilton  v.  Hamilton.  89  111.  349; 
Stokes  V.  Anderson,  118  Ind.  533,  21 
N.  E.  331,  4  L.  R.  A.  313n;  Fredrick 
V.  Sault.  19  Ind.  App.  604,  49  N.  E. 
909 ;  Comstock  v.  Adams,  23  Kans. 
513,  Zi  Am.  Rep.  191 ;  Johnson  v. 
Johnson's  Committee,  122  Ky.  13,  90 
S.  W.  964,  121  Am.  St.  449;  Hardy  v. 
Smith,  136  Mass.  328;  Adams  v. 
Adams.  25  Minn.  72;  McAllen  v. 
Hodge,  94  Minn.  237,  102  N.  W.  707 
(contract  to  withdraw  one  action  for 
divorce  and  interpose  another  for 
cruel  and  inhuman  treatment  by  the 
husband  would  make  no  defense)  ; 
Blank  V.  Nohl,  112  Mo.  159,  20  S.  W. 
477,  18  L.  R.  A.  350;  Donohue  v. 
Donohue,  159  Mo.  App.  610,  141  S. 
W.  465:  Wilde  v.  Wilde,  ^7  Nebr. 
891.  56  X  W.  724;  Davis  v.  Hinman, 
IZ  Neb.  850,  103  N.  W.  668 ;  Sayles  v. 
Sayles.  21  N.  H.  312.  53  Am.  Dec. 
208n;  Cross  v.  Cross.  58  N.  H.  yil\ 
Noice  V.  Brown,  38  N.  J.  L.  228.  20 
Am.  Rep.  388 ;  Lake  v.  Lake,  136  -App. 
Div.  (N.  Y.)  47,  119  N.  Y.  S.  686; 
Train  v.  Davidson,  20  App.  Div.  (N. 
Y.)  577,  47  N.  Y.  S.  289  (husband  to 
furnish  evidence  against  self  and  pay 
wife  an  annuitv)  ;  Stoutenburg  v.  Lv- 
brand.  13  Ohio  St.  228;  PhiUips  v. 
Thorp,  10  Ore.  494;  Kilborn  v.  Field, 
78  Pa.  St.  194:  Irvin  v.  Irvin,  169  Pa. 
St.  529,  32  Atl.  445.  29  L.  R.  A.  292 ; 
Palmer  v.  Palmer,  26  Utah  31, 12  Pac. 


3,  61  L.  R.  A.  641,  99  Am.  St.  820; 
Kistler  v.  Kistler.  141  Wis.  491.  124 
N.  W.  1028.  A  contract  relating  to 
alimony  made  during  the  pendency  of 
a  suit  for  divorce  executed  before  the 
rendition  of  the  decree,  performance 
of  which  was  conditioned  on  the 
granting  of  a  divorce,  has  been  held 
against  public  policy.  Wilson  v. 
Fahneslock,  44  Ind.  App.  35,  86  N.  E. 
1037.  An  instrument  whereby  a  wife 
released  her  one-third  interest  in  her 
husband's  real  estate  for  a  sum  of 
money  on  an  understanding  that  the 
husband  should  apply  for  a  divorce, 
and  that  the  wife  should  make  no  de- 
fense thereto,  was  declared  void  as 
against  public  policv.  In  re  Bell's  Es- 
tate, 29  Utah  1,  80  Pac.  615.  See  also, 
Barngrover  v.  Pettigrew,  128  Iowa 
533.  104  N.  W.  904.  2  L.  R.  A.  (X. 
S.)  260,  111  Am.  St.  206;  McCurdv 
V.  Dillon.  135  .Mich.  678.  98  N.  W. 
746;  Lcvine  v.  Klein,  65  Misc.  (N. 
Y.)  498,  120  N.  Y.  S.  196.  But  an 
agreement  which  does  not  suspend, 
modify  or  abridge  the  rights  of  either 
of  the  parties  to  a  divorce,  or  affect 
the  proceedings  in  court,  may  be  up- 
held. Ward  V.  Goodrich,  34  Colo. 
369.  82  Pac.  701.  2  L.  R.  A.  (X.  S.) 
201n.  114  Am.  St.  167.  See  also,  Gib- 
bons v.  Gibbons.  21  Ky.  L.  1214.  54 
S.  W.  710  (no  question  as  to  the  right 
of  the  husband  to  a  divorce)  ;  Dono- 
hue v.  Donohue.  159  Mo.  App.  610, 
141  S.  W.  465  (antenuptial  agreement 
to  secure  a  divorce)  ;  Delhridge  v. 
Beach,  66  Wash.  416,  119  Pac.  856. 
However,  a  contract  whereby  a  hus- 
band agreed  to  pay  his  wife  certain 
sums  of  money  in  consideration  of 
her  withdrawing  an  appeal  from  a  di- 
vorce decree  has  been  upheld.  Bloom 
V.  Bloom,  134  N.  Y.  S.  581. 


CONTRACTS. 


104 


cent,  of  whatever  property,  real  or  personal,  that  should  be 
awarded  her  out  of  her  husband's  estate  for  alimony,  is  void  as 
against  public  policy.^^  Such  an  agreement  tends  to  facilitate 
divorce  and  prevents  reconciliation  between  the  parties.^*  A  con- 
tract entered  into  by  the  husband  with  an  attorney,  conditioned 
on  the  obtainment  of  a  divorce,  or  intended  or  calculated  to  facili- 
tate its  procurement,  is  also  void  as  against  public  policy.^^  An 
agreement  whereby  the  husband  is  to  pay  his  attorney  in  a  divorce 
proceeding  a  lump  sum  as  his  fee,  out  of  which  such  attorney  is  to 
pay  the  defendant's  witness  fees,^®  or  alimony  awarded  the  wife," 
has  been  held  void  on  the  ground  of  champerty.^^     So  an  agree- 


^Brindley  v.  Brindlev,  121  Ala. 
429,  25  So.  751;  McConnell  v.  Mc- 
Connell,  98  Ark.  193,  136  S.  W.  931, 
33  L.  R.  A.  (N.  S.)  1074;  Newman 
V.  Freitas,  129  Cal.  283,  61  Pac.  907, 
50  L.  R.  A.  548  (suit  for  specific  per- 
formance by  assignee  of  attorneyj  ; 
Jordan  v.  Westerman,  62  Alich.  170, 
28  N.  W.  826,  4  Am.  St.  836;  Mc- 
Curdy  V.  Dillon,  135  ^lich.  678,  98 
X.  W.  746 ;  Lynde  v.  Lynde,  64  N.  J. 
Eq.  736,  52  Atl.  694,  58  L.  R.  A.  471, 
97  Am.  St.  692;  Van  Vleck  v.  Van 
Vleck,  21  App.  Div.  (N.  Y.)  272,  47 
N.  Y.  S.470;  In  re  Brackett,  114  App. 
Div.  (N.  Y.)  257,  99  N.  Y.  S.  802. 
The  plaintiff,  in  an  action  for  breach 
of  promise,  alleged  that  during  the 
pendency  of  a  hearing  on  a  suit  for 
divorce  filed  by  her  the  defendant 
promised  to  marry  her,  should  she  ob- 
tain her  divorce.  Thereupon  illicit 
relations  were  established  between 
them.  She  concealed  this  fact  from 
the  court  and  obtained  her  divorce. 
This  suit  was  brought  on  the  breach 
of  promise  to  marry.  Held,  assuming 
the  promise  to  have  been  made,  that 
since  the  divorce  was  necessary  for 
the  performance  of  the  promise  to 
marry,  and  as  it  was  founded  on  de- 
ceit and  immorality,  it  was  against 
public  policy  to  permit  her  to  main- 
tain the  action  for  breach  of  prom- 
ise. Prevost  V.  Wood,  21  Times  L.  R. 
684.  A  contract,  by  which  a  married 
man,  about  a  month  prior  to  obtain- 
ing a  divorce,  promised  to  give  a 
woman  not  his  wife  $3,500  if  she 
would  marry  him  as  soon  as  he  ob- 
tained a  divorce,  has  been  declared 
Contrary  to  public   policy,   repugnant 


to  good  morals  and  utterly  void.  Leu- 
pert  V.  Shields,  14  Colo.  App.  404,  60 
Pac.  193. 

""  Newman  v.  Freitas,  129  Cal.  283, 
61  Pac.  907,  50  L.  R.  A.  548;  Jordan 
V.  Westerman,  62  Mich.  170,  28  N.  W. 
826,  4  Am.  St.  836;  McCurdv  v.  Dil- 
lon, 135  Mich.  678,  98  N.  W.  746; 
Lynde  v.  Lvnde,  64  N.  J.  Eq.  736, 
52  Atl.  694,  58  L.  R.  A.  471,  97  Am. 
St.  692.  Such  agreements  have  also 
been  declared  void  because  champer- 
tous.  Newman  v.  Freitas,  129  Cal. 
283,  61  Pac.  907,  50  L.  R.  A.  548.  See 
also,  Delbridge  v.  Beach,  66  Wash. 
416,  119  Pac.  856. 

'^Barngrover  v.  Pettigrew,  128 
Iowa  533,  104  N.  W.  904,  2  L.  R.  A. 
(N.  S.)  260,  111  Am.  St.  206;  Don- 
aldson V.  Eaton,  136  Iowa  650,  114 
N.  W.  19,  14  L.  R.  A.  (N.  S.)  1168, 
125  Am.  St.  275. 

^^  Barngrover  v.  Pettigrew,  128 
Iowa  533,  104  N.  W.  904,  2  L.  R.  A. 
(N.  S.)  260,  111  Am.  St.  206. 

^'  Donaldson  v.  Eaton,  136  Iowa  650, 
114  N.  W.  19,  14  L.  R.  A.  (N.  S.) 
1168,  125  Am.  St.  275. 

"^An  attorney  has  been  permitted 
to  recover  the  quantum  meruit  of  his 
services  in  a  divorce  proceeding,  not- 
withstanding his  contract  with  the 
wife  called  for  percentage  of  the  ali- 
mony recovered.  McCurdy  v.  Dillon, 
135  Mich.  678,  98  N.  W.  746.  See, 
however,  Brindlev  v.  Brindlev,  121 
Ala.  429.  25  So.  751 ;  Sharon  v.  Sha- 
ron, 75  Cal.  1,  16  Pac.  345;  White  v. 
White,  86  Cal.  212,  24  Pac.  10.30.  And 
in  Barngrover  v.  Pettigrew.  128  Iowa 
533,  104  N.  W.  904,  2  L.  R.  A.  (N. 
S.)  260,  111  Am.  St.  206,  an  attorney 


lO: 


LEGALITY    OF    OBJECT. 


§    7^8 


/J< 


ment  whereby  a  wife  confirms  the  gift  of  a  note  to  her  husband 
if  he  will  not  defend  an  action  for  divorce  brought  by  her  is  void 
and  does  not  defeat  her  right  to  maintain  an  action  against  her 
former  husband  to  obtain  possession  of  it  or  to  recover  judgment 
for  the  amount  of  the  note.^° 

§  758.  Agreements  in  restraint  of  trade. — It  is  a  general 
rule  in  all  the  slates  of  this  country  as  well  as  in  England  that 
contracts  in  general  restraint  of  trade  are  void  as  against  public 
policy. ■*"  Universality  as  to  space  or  time  does  not,  however, 
necessarily  render  a  particular  contract  void  because  in  re- 
straint of  trade.  The  invalidity  of  such  contracts  is  to  be  deter- 
mined by  the  conditions  of  each  case  and  the  reasonableness  of 
the  restraint  under  the  circumstances  is  a  test  of  the  contract's 
validity."  If  the  restraint  which  the  contract  places  on  trade  is 
only  partial,  is  founded  on  a  valid  consideration,  and  affords  only 
reasonable  protection  to  the  party  in  whose  favor  the  restraint  is 
imposed,  it  will  be  held  valid.*"     It  is  not  intended  to  give  any 


was  not  permitted  to  recover  the 
quantum  meruit  of  his  services  where 
the  agreement  entered  into  with  the 
husband  was  in  derogation  of  the 
marriage  relation,  and  champertous. 
Roller  V.  Murray,  112  Ya.  780,  12  So. 
665  (denying  quantum  meruit  recov- 
ery for  services  rendered  imder  a 
champertous  contract). 
^"Johnson  v.  Johnson's  Committee, 

122  Ky.  13,  90  S.  W.  964.  121  Am.  St. 
449.  In  the  above  case  the  court  held 
that  the  principle  of  in  pari  delicto 
did  not  apply.  The  court  said :  "It 
was  simply  a  void  contract.  If,  at  the 
time  the  contract  was  made,  the  ap- 
pellee was  entitled  to  recover  the  note 
or  the  amount  of  it,  her  cause  of  ac- 
tion was  not  destroyed  by  reason  of 
that  agreement.  It  being  void,  it  left 
the   parties   with   rights   as   fixed   by 

'  *"  Harris  v.  Theus,  149  Ala.  133.  43 
So.   131.   10  L.   R.   A.    (N.   S.)    204n. 

123  Am.  St.  17;  More  v.  Bonnet.  40 
Cal.  251,  6  Am.  Rep.  621;  Goodman 
V.  Henderson,  58  Ga.  567;  Wiley  v. 
Baumgardner,  97  Ind.  66,  49  Am. 
Rep.  427;  Sutton  v.  Head.  86  Kv. 
156.  5  S.  W.  410.  9  Am.  St.  Rep.  274; 
Merchants'  Ice  S:c.  Co.  v.  Rohrman, 
138  Ky.  530,  128  S.  W.  599,  137  Am. 


St.  390;  Warfield  v.  Booth.  Zl  Md. 
63;  Bishop  v.  Palmer,  146  Mass.  469, 

16  N.  E.  299,  4  Am.  St.  339 ;  Peltz  v. 
Eichele,  62  Mo.  171 ;  Mandeville  v. 
Harman,  42  X.  J.  Eq.  185,  7  Atl.  Zl  \ 
Curtis  V.  Gokev,  68  X.  Y.  300;  Gras- 
seilli  V.  Lowden,  11  Ohio  St.  349;' 
In  re  Smith's  Appeal,  113  Pa.  579, 
6  Atl.  251;  Herreshoflf  v.  Boutineau, 

17  R.  I.  3.  19  Atl.  712.  8  L.  R.  A.  469, 
ZZ  Am.  St.  850;  Berlin  Mach.  \Yorks 
V.  Perrv.  71  Wis.  495,  38  X.  \\".  %1, 

5  Am.  St.  236. 

"  Trenton  Potteries  Co.  v.  Oliphant, 
58  X.  J.  Eq.  507,  43  Atl.  IIZ,  46  L. 
R.  A.  255.  78  Am.  St.  612 ;  Cowan  v. 
Fairbrother.  118  X.  Car.  406,  24  S.  E. 
212.  Z2  L.  R.  A.  829,  54  Am.  St.  IZZ; 
Oakdale  :Mfg.  Co.  v.  Garsh,  18  R.  I. 
484,  28  Atl.  91Z,  23  L.  R.  A.  639,  49 
Arn  St.  784. 

"Tuscaloosa  Ice  Mfg.  Co.  v.  Will- 
iams, 127  Ala.  110.  28  So.  669,  50  L. 
R.  A.  175,  85  Am.  St.  125 ;  Getz  Bros. 

6  Co.  v.  Federal  Salt  Co.,  147  Cal. 
115.  81  Pac.  416,  109  Am.  St.  114; 
Lanzit  v.  Sefton  Mfg.  Co.,  184  111. 
326,  56  X.  E.  393.  75  Am.  St.  171; 
Harding  v.  American  Glucose  Co., 
182  111.  551,  55  X.  E.  577,  64  L.  R.  A. 
IZ'^,  74  .\m.  St.  189,  and  note ;  Union 
Strawboard   Co.   v.   Bonfield,   193  111. 


S      -7 


^  759 


CONTRACTS. 


1 06 


more  at  this  point  than  a  statement  of  the  general  rules  covering 
the  subject  of  contracts  in  restraint  of  trade.  Contracts  of  this 
character  will  be  treated  more  in  detail  in  a  subsequent  chapter. 


§  759.  Agreements  suppressing  competition  or  sales  or 
public  lettings. — The  law  condemns  all  unlawful  combina- 
tions to  prevent  biddings  at  auction  sales, ''^  or  public  lettings** 
when  made  for  the  purpose  of  stifling  competition.  Agreements 
not  to  bid  against  each  other  at  a  public  auction  as  well  as  agree- 
ments for  the  employment  of  underbidders  and  puffers  are  held 
to  be  a  fraud  on  the  bidders  at  a  sale,  and  void  as  against  public 
policy.  So  contracts  of  brokers  or  agents  upon  a  consideration 
founded  on  violations  of  duties  to  the  principal  are  void.*^     Thus 


420,  61  N.  E.  1038,  86  Am.  St.  346; 
Swigert  v.  Tilden.  121  Iowa  650,  97 
N.  \y.  82,  63  L.  R.  A.  608,  100  Am. 
St.  374;  Pohlman  v.  Dawson,  63  Kans. 
471.  88  Am.  St.  Rep.  249,  65  Pac.  689, 
54  L.  R.  A.  913. 

« Packard  v.  Bird,  40  Cal.  378; 
Loyd  V.  Malone,  23  111.  43,  76  Am. 
Dec.  179;  Devine  v.  Harkness,  117 
111.  145,  7  N.  E.  52;  Ingalls  v.  Rowell, 
149  111.  163,  36  N.  E.  1016;  Goldman 
V.  ^Oppenheim,  118  Ind.  95,  20  N.  E. 
635;  Fleming's  Heirs  v.  Hutchinson, 
36  Iowa  519;  Gardiner  v.  iNIorse,  25 
Maine  140;  Fisher  v.  Hampton 
Transp.  Co.,  136  Mich.  218,  98  N.  W. 
1012,  112  Am.  St.  358  (bankrupt 
sale)  ;  Wooton  v.  Hinkle,  29  Mo.  290; 
Durfee  v.  ISIoran,  57  Mo.  374;  Mc- 
Clelland V.  Citizens'  Bank,  60  Nebr. 
90,  82  N.  W.  319  (note  given  to  pre- 
vent bidding  at  chattel  mortgage  sale 
unenforcible)  ;  IVIorris  v.  Woodward, 
25  X.  J.  Eq.  32 ;  Jones  v.  Caswell,  3 
Johns.  Cas.  (X.  Y.)  29,  2  Am.  Dec. 
134;  Brisbane  v.  Adams,  3  X.  Y.  129; 
Dudlev  V.  Little,  2  Ohio  504;  Kine  v. 
Turner,  27  Ore.  356,  41  Pac.  664; 
Slingluff  V.  Eckel,  24  Pa.  St.  472; 
Barton  v.  Benson,  126  Pa.  St.  431, 
17  Atl.  642.  12  Am.  St.  883 ;  Camp  v. 
Bruce,  96  Va.  521,  31  S.  E.  901,  43 
L.  R.  A.  146,  70  Am.  St.  873 ;  Ralph- 
snyder  v.  Shaw,  45  W.  Va.  680,  31 
S.  E.  953  (trustee's  sale). 

« Woodruff  v.  Berry,  40  Ark.  251; 
Swan  V.  Chorpenning,  20  Cal.  182; 
Ray  V.  Mackin,  100  111.  246;  Conway 


v.  Garden  City  Pav.  &c.  Co.,  190  111. 
89,  60  X.  E.  82;  Hunter  v.  Pfeiffer, 
108  Ind.  197,  9  X.  E.  124;  Weld  v. 
Lancaster,  56  Maine  453 ;  Gibbs  v. 
Smith,  115  Mass.  592;  Hannah  v. 
Fife,  27  Mich.  172;  Boyle  v.  Adams, 
50  Minn.  255,  52  X.  W.  860,  17  L.  R. 
A.  96;  Gulick  v.  Ward,  10  X.  J.  L. 
87,  18  Am.  Dec.  389;  Brooks  v. 
Cooper,  50  X.  J.  Eq.  761,  26  Atl.  978, 
21  L.  R.  A.  617;  Atcheson  v.  Mallon, 
43  X.  Y.  147,  3  Am.  Rep.  678;  Baird 
v.  Sheehan,  38  App.  Div.  (X.  Y.)  7, 
166  N.  Y,  631,  60  X.  E.  1107,  56  X. 
Y.  S.  228;  Hardison  v.  Reel,  154  X. 
Car.  273,  70  S.  E.  463,  34  L.  R.  A. 
(X.  S.)  1098;  McMullen  v.  Hoffman, 
174  U.  S.  639,  19  Sup.  Ct.  839. 

*=See  Waldo  v.  Martin,  4  B.  &  C. 
319;  Elliott  v.  Richardson,  L.  R.  5 
C.  P.  744;  Marshall  v.  Baltimore  & 
Ohio  R.  Co.,  16  How.  (U.  S.)  314, 
14  L.  ed.  953 ;  Guernsey  v.  Cook,  120 
Mass.  501 ;  Smith  v.  Townsend,  109 
Mass.  500 ;  Phippen  v.  Stickney,  3 
Mete.  (Mass.)  384;  Gibbs  v.  Smith, 
115  Mass.  592;  Curtis  v.  Aspinwall, 
114  Mass.  187,  19  Am.  Rep.  332.  An 
auctioneer  at  a  fair  and  open  sale 
struck  off  property  to  the  highest  bid- 
der. One  who  was  interested  in  the 
sale  of  the  property  thought  other- 
wise and  wished  the  auctioneer  to 
recry  the  property.  The  purchaser 
agreed  to  indemnify  the  auctioneer 
against  all  claims  that  might  be 
brought  against  him  if  he  would  con- 
firm   the    sale.     The    sale    was    con- 


lo: 


LKGALITV    01"    OBJECT. 


760 


a  note  given  or  other  agreement  entered  into  in  consideration  of 
forbearance  of  bidding  at  a  sheriff's  sale  of  real  estate  has  been 
held  to  be  without  consideration  on  the  ground  that  it  is  the 
policy  of  the  law  to  encourage  bidding  at  sales  on  execution/" 

§  760.  Bidders  may  combine  resources. — But,  on  the 
other  hand,  an  agreement  between  two  or  more  persons  that  one 
shall  bid  on  behalf  of  all  the  parties  to  the  agreement,  where  the 
object  of  the  agreement  is  not  to  stifle  competition  but  to  combine 
their  resources  so  as  to  raise  the  purchase-money,  or  to  enable 
them  to  make  a  division  of  the  property,  or  to  protect  existing 
interests,  or  has  for  its  object  the  accomplisliment  of  any  other 
equitable  object,  will  be  upheld.*^ 

§  761.  One  may  bid  for  benefit  of  all. — Parties  may  agree 
that  one  shall  bid  for  the  benefit  of  all  upon  property  about  to  be 


firmed.  Agreement  held  valid.  Carr 
V.  Gooch,  1  Wash.  (Va.)  260.  See 
also,  Auction  Sales. 

"Jones  V.  Caswell.  3  Johns.  Cas. 
(N.  Y.)  29,  2  Am.  Dec.  134.  To  same 
effect,  Hallam  v.  Hoffman,  5  Kans. 
App.  303,  48  Pac.  602;  Hamilton  v. 
Hamilton,  2  Rich.  Eq.  (S.  Car.)  379; 
Boiling  V.  Mullins,  111  Va.  250,  68 
S.  E.  982;  Xitrophosphate  Syndicate 
&c.  V.  Johnson.  100  Va.  774,  42  S.  E. 
995;  Camp  v.  Bruce.  96  Va.  521,  31 
S.  E  901.  43  L.  R.  A.  146.  70  Am.  St. 
873  (purchaser  bought  rights  of  bid- 
der giving  the  latter  advance  on  bid). 
See  also.  Ruis  v.  Branch  (Ga.),  74 
S.  E.  1081.  The  policy  of  the  law 
encourages  free  competition,  and 
contracts  in  avoidance  of  that  policy 
are  void.  Tones  v.  Caswell.  3  Johns. 
Cas.  (N.  Y.)  29,  2  Am.  Dec.  134; 
Doolin  V.  Ward,  6  Johns.  (N.  Y.) 
194;  Thompson  v.  Davies,  13  Johns. 
(N.  Y.)  112;  National  Bank  v. 
Sprague,  20  N.  J.  Eq.  159;  Morris 
V.  Woodward,  25  N.  J.  Eq.  32.  A 
contract  for  the  sale  of  a  decree  for 
the  foreclo.sure  of  certain  mechanics' 
liens  provided  that  the  purchaser 
should  give  his  notes  for  the  consid- 
eration and  should  purchase  the  prop- 
erty on  the  sale  under  the  decree,  in 
case  it  did  not  bring  more  than  called 
for  by  the  decree,  in  which  latter 
event   the   notes   should   be    returned 


to  the  purchaser  of  the  decree.  The 
agreement  was  held  not  void  as  tend- 
ing to  stifle  competition  at  the  sale 
under  the  decree.  Spitzlev  v.  Rivard, 
152  Mich.  670,  116  N.  W.'547,  15  De- 
troit Leg.  N.  391.  One  may  contract 
to  buy  land  at  a  foreclosure  sale  for 
an  amount  sufficient  to  cover  the  in- 
debtedness. Satterfield  v.  Kindley, 
144  N.  Car.  455.  57  S.  E.  145. 

*' Jenkins  v.  Frink,  30  Cal.  586,  89 
Am.  Dec.  134;  Garrett  v.  Moss.  20 
111.  549;  Switzer  v.  Skiles.  3  Gilm. 
(111.)  529;  Hunt  v.  Elhott,  80  Ind. 
245.  41  Am.  Rep.  794;  Mallon  v. 
Buster.  121  Kv.  379.  89  S.  W.  257; 
Smith  V.  Ullman.  58  Md.  183;  Phip- 
pen  V.  Stickncv.  3  Mete.  (Mass.)  384; 
Gulick  V.  Webb.  41  Nebr.  706.  60  N. 
W.  13,  43  Am.  St.  720;  Olson  v. 
Lamb.  56  Nebr.  104,  76  N.  W.  433, 
71  Am.  St.  670;  National  Bank  v. 
Sprague.  20  N.  J.  Eq.  ISO;  De  Baun 
V.  Brand.  61  N.  J.  L.  624,  41  Atl. 
958;  Marie  v.  Garrison.  83  N.  Y.  14; 
Hopkins  v.  Ensign.  122  N.  Y.  144. 
25  N.  E.  306.  9  L.  R.  A.  731 ;  Breslin 
V.  Brown.  24  Ohio  St.  565.  15  Am. 
Rep.  627;  Smull  v.  Tones.  1  Watts. 
S:  S.  (Pa.)  128,  6  Watts.  &  S.  (Pa.) 
122;  Kearnev  v.  Tavlor  15  How.  (U. 
S.)  404.  14"  L.  ed."  787:  Wicker  v. 
Hopnock,  6  Wall.  (U.  S.)  94.  18  L. 
ed.  7S2:  Missisquoi  Bank  v.  Sabin. 
48  Vt.  239;  Henderson  v.  Henrie.  61 


§    ^62  CONTRACTS.  .  I08 

sold  at  public  auction  which  they  desire  to  purchase  together, 
either  because  they  propose  to  hold  it  together  or  afterward  to 
divide  it  into  such  parts  as  they  wish  individually  to  hold,  neither 
desiring  the  whole,  or  for  any  similar  honest  or  reasonable  pur- 
pose ;  but  such  agreement,  if  made  for  the  purpose  of  preventing 
competition  and  reducing  the  price  of  the  property  to  be  sold  be- 
low its  fair  value,  is  against  public  policy  and  illegal/*  There  is 
nothing  in  law  or  morals  to  prevent  parties  from  uniting  together 
in  good  faith  to  purchase  property  whether  it  be  offered  up  at 
public  auction  or  advertised  for  sale  and  bids  from  purchasers 
are  invited.''^  And  the  mere  fact  that  an  agreement,  entered  into 
by  parties  having  an  interest  in  property  about  to  be  sold  at  public 
or  judicial  sale,  with  honest  motives  for  the  purpose  of  preserv- 
ing their  interests,  may  incidentally  restrict  competition  upon 
such  sale,  does  not  render  the  agreement  illegal.^*' 

§  762.  Bids  on  proposals  for  government  work  and  the 
like. — The  rule  condemning  as  unlawful  combinations  which 
prevent  bidding  at  auction  sales  is  also  applicable  to  proposals  for 
government  work  in  response  to  a  call  therefor  or  other  public 
lettings,  with  a  view  to  contract  with  the  lowest  bidder.  And  a 
combination  of  contractors  under  and  by  which  the  privilege  of 
bidding  for  the  work  is  secured  by  one  without  competition  is 
against  public  policy  and  illegal,  and  if  the  combination  results  in 

W.  Va.   183,  56  S.  E.  369.    In  order  Compare    Fletcher    v.    Johnson,    139 

to    protect    an    existing    interest    in  Mich.    51,    102    N.   W.   278,    111    Am. 

property  to  be  sold  at  public  auction  St.  401. 

one  may  lawfully  agree  not  to  bid  at  "^  Marie  v.  Garrison,  83  N.  Y.   14; 

such  sale.    De  Baun  v.  Brand,  61  N.  Delisi    v.    Ficarrotta,    135    N.    Y.    S. 

J.  L.  624,  41  Atl.  958.  653;  Barnes  v.  Morrison,  97  Va.  372, 

'"Gibbs  V.  Smith,  115  Mass.  592;  34  S.  E.  93.  See  also,  Hughes  v. 
Phippen  v.  Stickney,  3  Mete.  (Mass.)  Foltz,  142  Mo.  App.  513,  127  S.  W. 
384.  See  also,  matter  on  this  subject  112,  in  which  it  had  been  agreed  that 
in  the  chapter  on  Offer  and  Accept-  public  property  would  be  sold  at 
ance  Under  Sale  and  Auction  Sale.  $20,000.00.  Plaintiff  was  told  that  the 
An  agreement  by  a  prospective  bid-  board  would  rather  sell  to  him.  than 
der  on  property  at  a  foreclosure  sale  to  an  out-of-town  party  with  whom 
to  sell  the  property  to  a  third  per-  the  board  was  thinking  of  contract- 
son,  in  case  the  former  became  an  ing.  Plaintiff  then  went  to  the  other 
actual  purchaser,  was  not  illegal,  un-  party  and  offered  to  give  $1000  for 
less  it  had  for  its  object  the  preven-  the  withdrawal  of  the  latter  or  to 
tion,  competition,  and  the  sacrifice  of  take  $1,000  for  his  own  withdrawal, 
the  property  to  be  sold.  Venncr  v.  The  other  party  decided  to  give. 
Denver  T'nion  Water  Co..  40  Colo.  Plaintiff  brought  suit  on  the  prom- 
212.  90  Pac.  623.  122  Am.  St.  1036.  ise.    It  was  held  that   he  might  re- 

*»  Smith    v.    Ullman,    58    Md.    183.  cover. 


109  LEGALITY  OF  OBJECT.  §  763 

a  letting  at  an  unreasonable  price  it  authorizes  a  rejection  of  the 
proposal  or  a  rcpiuHation  of  the  contract.  Where,  however,  a 
contracting  board  having  sole  power  to  act  for  the  state  and  to  re- 
ject proposals  in  case  it  deems  them  disadvantageous  to  the  state, 
with  full  knowledge  of  all  the  facts,  adjudges  a  proposal  not  ex- 
cessive in  price  or  disadvantageous  to  the  state,  accepts  it  and 
enters  into  a  contract  in  pursuance  of  it,  the  state  is  bound  and 
cannot  maintain  an  action  to  recover  damages  for  the  illegal  com- 
bination, in  the  absence  of  any  evidence  that  the  board  acted  cor- 
ruptly or  malum  fide."  A  secret  partnership  agreement  to  stifle 
or  diminish  competitive  bidding  on  public  work  or  letting  is 
void.'^^  An  agreement  not  to  bid  or  influence  any  one  else  to  bid 
for  the  service  or  labor  of  the  inmates  of  a  house  of  correction  is 
against  public  policy  and  void,  and  no  action  will  lie  upon  it  even 
if  the  party  letting  the  services  has  sustained  no  injuries  by  rea- 
son of  making  the  agreement.^^ 

§  763.  Rule  further  illustrated. — A  combination  among 
the  principal  banks  of  a  county,  by  which  a  specified  bank  is  to 
make  a  designated  bid  for  public  funds,  the  other  banks  agreeing 
to  bid  under  the  bid  of  the  favored  bank,  the  latter,  on  becoming 
the  depositar}^  to  parcel  out  the  deposits  among  all  the  banks  in 
the  combination  in  given  proportion,  is  a  fraud  on  the  county  and 
invalid.^*     The  supreme  court  of  North  Carolina  has  decided  a 

"  People  V.  Stephens.  71  N.  Y.  527.  N.  Y.  S.  228,  affd.,  166  N.  Y.  631,  60 

■"McMullan    v.    Hoffman,   69    Fed.  N.  E.  1107;  Coverly  v.  Terminal  Ware- 

509   (fictitious  bid   made  to  give  ap-  house  Co.,  85  App.  Div.   (N.  Y.)  488, 

pearance   of   competition)  ;    Hoffman  83  N.  Y.  S.  369.  affd.  178  N.  Y.  602, 

V.  McMullcn.  83  Fed.  372.  28  C.  C  A.  70  N.  E.  1097  (lease  of  dock  belong- 

178,  45  L.  R.  A.  410;  affd.,  174  U.  S.  ing  to  city  of  New  York)  :  Dailv  v. 

639,  43  L.  ed.   1117.  19  Sup.  Ct.  839  Hollis,  27  Tex.  Civ.  App.  570,  66  S. 

(fictitious    bid)  ;    Brady    v.    Yost,    6  W.    586    (contractors    agreed    as    to 

Idaho   273,    55    Pac.    542;    Hunter   v.  amount  tliat  each  should  bid;  success- 

Pfeiffer,   108  Ind.    197,  9  N.   E.   124;  ful  bidder  to  share  profits).    A  con- 

Edelen    v.    Newman.    5    Ky.    L.    120  tract  entered  into  by  an  administra- 

(combination    among    livery    men    to  trix,  which  would  induce  her  to  dis- 

prevent    competition    between    them-  courage    purcliasers    from    attending 

selves  in  bidding  for  contract  to  carry  lier  sale  as  administratrix,  is  against 

mail  to  and    from  terminal  office  of  public  policy.    Beatrice  Creamery  Co. 

a     railroad     companv)  ;     Hannah     v.  v.  Fitzgerald,  70  Nebr.  308  97  N    W. 

Fife,  27  Mich.  172;  Pendleton  v.  As-  301. 

bury.  104  Mo.  App.  723,  78  S.  W.  651        "  Gibbs  v.  Smith,  115  Mass.  592. 
(combination  between  newspapers  of        "  In   re  Salmon,   145   Fed.  649.    To 

countv)  ;     Whalen     v.     Harrison.    26  same    effect,    In    re    Blake,    150    Fed. 

Mont.    316.    67    Pac.    934;    Baird    v.  279;  Henrv  Countv  v.  Citizens'  Bank 

Sheehan,  38  App.  Div.  (N.  Y.)  7,  56  of  Windsor,  208  Mo.  209,  106  S.  W. 


§    764  CONTRACTS.  IIO 

unique  case  under  this  subject."  Briefly  the  facts  were:  Plaintiff 
submitted  a  bid  for  a  contract  to  carry  the  mail.  He  requested 
the  notary  who  swore  him  to  the  bid  not  to  divulge  the  amount 
thereof.  The  bidder  claimed  that  the  notary  divulged  the  amount 
of  his  bid  to  another,  who  underbid  him,  because  of  which  he 
lost  the  contract.  He  sued  the  notary  for  damages.  Recovery 
was  denied.  The  court  said:  "The  authorities  clearly  recognize 
the  principle  that  where  an  agreement,  without  regard  to  its  form, 
is  made  for  the  purpose  of  preventing  free  and  fair  competition, 
or  of  stifling  or  chilling  biddings  at  public  sales,  or  in  the  letting 
of  contracts  by  the  government,  or  for  the  purpose  of  giving 
undue  advantage  to  either  of  the  parties  thus  engaged  in  dealing 
with  reference  to  the  biddings,  it  is  contrary  to  public  policy  and 
void."  A  contract  for  paving  a  street,  providing  that  the  brick 
shall  be  of  a  particular  kind,  manufactured  by  only  one  person, 
there  being  bricks  of  the  same  kind  manufactured  by  other  per- 
sons in  the  vicinity,  is  contrary  to  public  policy  as  creating  a 
monopoly  and  restricting  free  competition.^^^ 

§  764.  Honest  co-operation  permitted. — However,  an 
agreement  between  two  parties,  one  of  whom  has  already  filed 
his  bid  on  a  contract  for  a  public  improvement,  to  do  the  work 
in  partnership  in  case  the  contract  shall  be  awarded  to  either,  the 
same  to  enure  to  the  benefit  firm,  is  not  void  as  against  public 
policy  when  there  was  no  intention  to  influence  the  bid  of  either 
party  or  to  stifle  fair  competition.^*'  Two  or  more  contractors 
may  openly  and  honestly  co-operate  for  the  purpose  of  bidding 
on  and  securing  a  contract  for  the  construction  of  a  public 

622,    14    L.    R.    A.    (N.    S.)    1052n;  Kans.  196,  84  Pac.  1034 ;  Atkin  v.  Wy- 

Henry  County  v.   Farmers'  Bank  of  andotte  Coal  &c.  Co.,  IZ  Kans.  768,84 

Windsor,  208  Mo.  238,  106  S.  W.  630,  Pac.    1040;    Shoenberg    v.    Field,    95 

14  L.  R.  A.   (N.  S.)   1052n.  See  also.  Mo.  App.  241,  68  S.  W.  945;   Smith 

Pittsburgh  &c.  Const.  Co.  v.  Monon-  v.  Syracuse  Imp.  Co.,  161  N.  Y.  485, 

gahela   &c.    Dredging   Co.,    139   Fed.  56   N.    E.    1077.     See   also.   Swift   v. 

im.  The  court  said  further:  "In  ad-  St.  Louis,  180  Mo.  80.  79  S.  W.  172; 

ministering  the  law,  courts  have  noth-  Curtice  v.  Schmidt,  202  Mo.  703,  101 

ing  to  do  with  the  moral  quality  of  S.  W.  61 ;  Dickey  v.  Holmes,  208  Mo. 

an   act   where   no  legal   right   is   in-  664,  106  S.  W.  511;  2  Elliott  Rds.  & 

vaded"  Sts.   f3d  ed.),  §  712. 

» Hardison   v.    Reel,    154    N.    Car.        ""  Pittsburgh  Dredg.  &c.  Co.  v.  Mo- 

273,  70  S.  E.  463.  nongahela  &c.   Dredg.   Co..   139  Fed. 

"a  National    Surety   Co.   v.   Kansas  780;    P.reslin   v.    Brown,  24  Ohio   St. 

City   Hydraulic   Press  Brick   Co.,  11  565,  15  Am.  Rep.  627. 


Ill 


LEGALITY    OF    OBJECT. 


§    76: 


work."  A  contractor  also  has  the  right  to  abandon  negotiations 
and  permit  another  to  obtain  the  contract  when  there  is  no  cor- 
rupt agreement  between  the  parties.'^*  But  it  is  against  public 
policy  for  a  contractor  to  hire  another  to  withdraw  his  bid.''° 
Contracts  to  stifle  competition  among  applicants  for  a  public 
franchise  are  also  unenforcible.'^*' 

§  765.  Agreements .  exempting  from  liability  for  negli- 
gence— Contracts  with  carrier. — Cases  on  this  subject  may 
be  classified  under  two  heads,  namely,  contracts  whereby  a  car- 
rier seeks  to  contract  against  his  own  negligence,  and  agreements 
whereby  an  employer  seeks  to  contract  against  liability  resulting 
from  the  negligent  injury  of  his  employe.  Contracts  of  the  first 
class  may  be  further  subdivided  into  those  whereby  the  carrier 
attempts  to  contract  against  its  negligence  with  reference  to  per- 
sonal property  entrusted  to  its  care  for  transportation,  and  con- 
tracts whereby  it  seeks  to  limit  its  liability  to  passengers.  It  has 
been  repeatedly  held  that  carriers  of  goods  cannot  contract  for 
exemption  from  liability  from  losses  and  damages  happening 
from  the  negligence  of  themselves  or  their  servants — that  it  is 
against  public  policy  to  permit  them  to  do  so.®^ 


"  See  also,  Virginia  Bridge  &c.  Co. 
V.  Crafts,  2  Ga.  App.  126,  58  S.  E. 
322 ;  State  v.  Follmer,  4  Nebr. 
(unof.)  376,  94  N.  \V.  103  (bids  at 
leasing  of  public  lands).  One  on  sell- 
ing out  his  business  may  agree  not 
to  bid  on  public  work  for  a  desig- 
nated county  for  a  period  of  five 
vears.  Trentman  v.  Wahrenburg,  30 
Ind.  App.  304,  65  N.  E.  1057. 

''Moore  v.  First  Nat.  Bank,  139 
Ala.  595,  36  So.  777. 

*°  Conwav  v.  Garden  Citv  Pav.  &c. 
Co..  190  Hi.  89.  60  N.  E.  82. 

**  Hver  V.  Richmond  Traction  Co., 
80  Fed.  839.  26  C.  C.  A.  175. 

*^  Cobban  v.  Canadian  &c.  R.  Co., 
23  Ont.  .\pp.  115;  South  &c.  R.  Co. 
V.  Henlein.  52  Ala.  606;  Louisville 
&-C.  R.  Co.  V.  Oden.  SO  Ala.  38;  St. 
Louis  R.  Co.  V.  Jones.  93  Ark.  537, 
125  S.  \y.  1025.  137  Am.  St.  99; 
Kansas  Citv  Southern  R  Co.  v.  Carl, 
91  Ark.  97:  121  S.  W.  932.  134  Am. 
St.  56;  Milton  V.  Denver  &-c.  R.  Co.. 
1  Colo.  App.  307.  2<^  Pac.  22;  Mears 
V.   New  York  &c.   R.   Co.,  75   Conn. 


171,  52  Atl.  610,  56  L.  R.  A.  884,  96 
Am.  St.  192;  Liverpool  &c.  Ins.  Co. 
V.  McNeill,  89  Fed.  131,  32  C  C.  A. 
173;  Berry  v.  Cooper.  28  Ga.  543; 
Georgia  R.  Co.  v.  Gann,  68  Ga.  350 ; 
Baltimore  &c.  R.  Co.  v.  Ragsdale,  14 
Ind.  App.  406.  42  N.  E.  1106;  Cleve- 
land &c.  R.  Co.  V.  Heath.  22  Ind. 
App.  47,  53  N.  E.  198;  Indianapolis 
&c.  R.  Co.  V.  .\llen,  31  Ind.  394; 
Michigan  &c.  R.  Co.  v.  Heaton,  37 
Ind.  448.  note;  Missouri  Vallev  R. 
Co.  V.  Caldwell.  8  Kans.  244;"  St. 
Louis  &-c.  R.  Co.  V.  Tribbev.  6  Kans. 
.•\pp.  467,  50  Pac.  458;  Louisville  &c. 
R.  Co.  V.  Brownlee.  14  Bush.  (Kv.) 
590;  Louisville  &-c.  R.  Co.  v.  Hedarer, 
9  Bush  (Kv.)  645.  15  Am.  Rep.  740; 
Simon  v.  The  Fung  Shuey  21  La. 
Ann.  363;  Fillebrown  v.  Grand  Trunk 
R.  Co..  55  Maine  462.  92  Am.  Dec. 
606  (if  such  notice  is  expressly  or 
impliedly  assented  to  by  the  owner')  : 
^forse  v.  Canadian  Pac.  R.  Co..  97 
Maine  77,  53  Atl.  874;  Cox  v.  Ver- 
mont Cent.  R.  Co..  170  Mass.  129.  49 
N.  E.  97,  9  Am.  &  Eng.  R.  Cas.   (N. 


;66 


CONTRACTS. 


112 


§766.  Agreements  exempting  from  liability  for  negli- 
gence— Reason  for  the  rule. — This  liability  on  the  part  of  the 
carrier  rests  on  the  old  common-law  doctrine  that  a  bailee  for 
hire  became  an  insurer,  on  the  articles  committed  lo  his  care, 
against  loss  or  damage  from  any  cause  other  than  an  act  of  God, 
the  law,  the  public  enemy  or  an  act  of  the  shipper,  or  some  in- 
herent vice  in  the  article  itself,*'^  and,  also,  on  a  recognition  of  the 
inequality  of  the  parties  to  the  contract  of  shipment  at  the  time 
of  its  execution.  At  this  time  it  is  obvious  that  a  shipper  is  in 
no  position  to  stand  out  for  another  contract  and  be  redressed  in 


S.)  591;  Sanford  v.  Housatonic  R. 
Co,  11  Cush.  (Mass.)  155;  Christen- 
son  V.  American  Express  Co..  15  Gil. 
(Minn.)  208,  2  Am.  Rep.  122;  Hull 
V.  Chicago  &c.  R.  Co.,  41  Minn  510, 
43  N.  W.  391,  5  L.  R.  A.  587,  16  Am. 
St.  722,  40  Am.  &  Eng.  R.  Cas.  104; 
George  v.  Chicago  &c.  R.  Co.,  57  Mo. 
App.  358;  Ketchum  v.  American  &c. 
Exp.  Co.,  52  AIo.  390;  Johnson  v. 
Alabama  &c.  R.  Co..  69  Miss.  191, 
11  So.  104,  30  Am.  St.  534;  Nelson 
V.  Great  Northern  R.  Co.,  28  Mont. 
297,  72  Pac.  642;  Omaha  &c.  R.  Co. 
V.  Crow,  54  Nebr.  747,  74  N.  W. 
1066,  69  Am.  St.  741 ;  Union  Pac.  R. 
Co.  V.  Langan,  52  Nebr.  105,  71  N. 
W.  979;  Paul  v.  Pennsylvania  R.  Co., 
70  N.  J.  L.  442,  57  Atl.  139;  Gardner 
V.  Southern  R.  Co.,  127  N.  Car.  293, 
2>1  S.  E.  328;  Parker  v.  Atlantic  &c. 
R.  Qo.  133  N.  Car.  335,  45  S.  E.  658, 
63  L.  R.  A.  827;  Cincinnati  &c.  R. 
Co.  V.  Berdan,  22  Ohio  C.  C  326,  12 
Ohio  C.  D.  481 ;  Davidson  v.  Graham, 
2  Ohio  St.  131 :  Normile  v.  Oregon 
&c.  R.  Co.,  41  Ore.  177,  69  Pac.  928; 
Aliam  V.  Pennsylvania  R.  Co.,  3  Pa. 
Super.  Ct.  335 ;  Farnham  v.  Camden 
&c.  R.  Co.,  55  Pa.  St.  53;  Ballou  v. 
Earle,  17  R.  I.  441,  22  Atl.  1113,  14 
L.  R.  A.  443,  .33  Am.  St.  881;  John- 
stone V.  Richmond  &c.  R.  Co.,  39  S. 
Car.  55,  17  S.  E.  512;  Springs  v. 
South  Bound  R.  Co.,  46  S.  Car.  104, 
24  S.  E.  166;  Bird  v.  Southern 
R.  Co.,  99  Tenn.  719.  42  S.  W. 
451,  63  Am.  St.  8.56;  Houston 
&c.  R.  Co.  V.  Williams  (Tex. 
Civ.  App.),  31  S.  W.  556:  In- 
ternational &c.  R.  Co.  V.  Foltz.  3 
Tex.  Civ.  App.  644,  22  S.  W.  541; 
Bank   of    Kentucky    v.    Adam's    Ex- 


press Co.,  93  U.  S.  174,  23  L.  ed.  872; 
Southern  Express  Co.  v.  Caldwell,  2l 
Wall.  (U.  S.)  264,  22  L.  ed.  556  (car- 
rier shipped  by  more  dangerous 
route,  contrary  to  shipper's  instruc- 
tions, and  goods  were  lost)  ;  Rintoul 
v.  New  York  &c.  R.  Co.,  21  Blatchf. 
(U.  S.)  439,  17  Fed.  90S;  Maslin  v. 
Baltimore  &c.  R.  Co.,  14  W.  Va.  180, 
overruling  Baltimore  &c.  R.  Co.  v. 
Rathbone,  1  W.  Va.  87,  35  Am.  Rep. 
748;  Berry  v.  West  Virginia  &c.  R. 
Co.,  44  W.  Va.  538,  30  S.  E.  143,  67 
Am.  St.  781,  11  Am.  &  Eng.  R.  Cas. 
(N.  S.)  103;  Black  v.  Goodrich 
Transp.  Co.,  55  Wis.  319,  13  N.  W. 
224,  42  Am.  Rep.  713;  Densmore 
Commission  Co.  v.  Duluth  &c.  R.  Co., 
101  Wis.  563,_  n  N.  W.  904.  This 
principle  applies  to  all  persons  and 
corporations,  such  as  carriers  and 
warehousemen,  engaged  in  receiving 
and  caring  for  the  property  of  others. 
Gulf  Transit  Co.  v.  United  States, 
43  Ct.  CI.  (U.  S.)  183.  See  also, 
5  Thomp.  Neg.,  §  6507,  et  seq. 

"■"This  is  a  politick  establishment, 
contrived  by  the  policy  of  the  law, 
for  the  safety  of  all  persons,  the 
necessity  of  whose  affairs  oblige  them 
to  trust  these  sorts  of  persons,  that 
they  may  be  safe  in  their  way  of 
dealing;  or  else  these  carriers  might 
have  an  opportunity  of  undoing  all 
persons  that  had  any  dealings  with 
them,  by  contriving  with  thieves,  etc., 
and  yet  doing  it  in  such  clandestine 
manner  as  would  not  be  possible  to 
be  discovered.  And  this  is  the  rea- 
son the  law  is  founded  upon  in  that 
point."  Coggs  V.  Bernard,  2  Lord 
Raym.  909. 


113 


LEGALITY   OF    OBJECT. 


767 


the  court.  His  business,  if  he  is  a  business  jnan,  will  not  allow 
such  a  course  of  conduct."^  It  is  held  that  the  liability  of  a  car- 
rier for  negligence  is  not  lessened  by  the  fact  that  the  goods  de- 
stroyed through  its  negligence  were  insured  by  the  shipper."* 

§  767.  Agreements  exempting  from  liability  for  negli- 
gence— Evasion  by  stipulation  that  goods  are  shipped  at 
owner's  risk. — A  common  carrier  is  not  released  from  liabil- 
ity for  damage  occurring  through  his  own  negligence,  by  stipu- 
lating that  the  goods  are  shipped  at  the  "owner's  risk."  At  most 
this  would  only  protect  him  against  loss  occurring  from  the 
ordinary  and  known  risks  of  transportation."^^ 

§  768.  Exempting  from  liability — Evasion  by  stipulation 
against  presumption  of  negligence. — It  has  also  been  held 
that  the  carrier  will  not  be  permitted  to  contract  that  no  presump- 
tion of  negligence  shall  arise  from  non-delivery  of  goods  received 
for  shipment ;  since  such  a  stipulation  would  result  in  the  abro- 
gation by  contract  of  the  well-settled  rules  of  evidence."" 


*""If  the  customer  had  any  real 
freedom  of  choice,  if  he  had  a  rea- 
sonable and  practicable  alternative, 
and  if  the  employment  of  the  carrier 
were  not  a  public  one,  charging  him 
with  the  duty  of  accommodating  the 
public  in  the  line  of  his  employment, 
then,  if  the  customer  chose  to  assume 
the  risk  of  negligence,  it  could  with 
more  reason  be  said  to  be  his  private 
affair,  and  no  concern  of  the  public. 
But  the  condition  of  things  is  en- 
tirely different,  and  especially  so  un- 
der the  modified  arrangements  which 
the  carrying  trade  has  assumed.  The 
business  is  mostly  concentrated  in  a 
few  powerful  corporations,  whose 
position  in  the  body  politic  enables 
them  to  control  it.  They  do,  in  fact, 
control  it,  and  impose  such  condi- 
tions upon  travel  and  transportation 
as  they  see  fit,  which  the  pulilic  is 
compelled  to  accept.  These  circum- 
stances furnish  an  additional  argu- 
ment, if  any  were  needed,  to  show 
that  the  conditions  imposed  by  com- 
mon carriers  ought  not  to  be  adverse 
(to  say  the  least)  to  the  dictates  of 
public  policy  and  morality.  The 
status    and    relative    position    of    the 

8 — CoNTR.\CTS,  Vol.  2 


parties  render  any  such  conditions 
void.  Contracts  of  common  carriers, 
like  those  of  persons  occupying  a 
fiduciary  character,  giving  them  a 
position  in  which  they  can  take  un- 
due advantage  of  the  persons  with 
whom  they  contract,  must  rest  upon 
their  fairness  and  reasonableness." 
N.  Y.  Cent.  R.  Co.  v.  Lockwood,  17 
Wall.   (U.  S.)  357,  21  L.  ed.  627. 

"•Merrick  v.  Branard,  3  Barb.  (N. 
Y.)  547;  Burnside  v.  Union  Steam 
Boat  Co.,  10  Rich._(S.  Car.)    113. 

"^  Pigeon  v.  Dominion  Express  Co., 
Rap.  Jud.  Que..  11  Super.  Ct.  276; 
Aaronson  v.  Pennsvlvania  R.  Co.,  23 
Misc.  CN.  Y.)  666,  52  N.  Y.  S.  95; 
Nashville  S:c.  R.  Co.  v.  Jackson,  6 
Heisk.  (Tenn.)  271.  Compare,  how- 
ever, with  the  case  of  Ellison  v. 
Adams  Exp.  Co.,  245  111.  410,  92  N. 
E.  277,  in  which  the  consignor  re- 
fused to  divulge  the  value  of  the 
goods  consigned  to  an  express  com- 
pany for  shipment.  The  more  val- 
uable the  goods  the  higher  the  rate. 
The  court  refused  to  aid  the  shipper 
to  recover  the  true  value  of  the 
goods. 

*■  Southern    Pac.   Co.   v.    Phillipson 


§    769  CONTRACTS.  II4 

§769.    Exempting  from  liability — Rule  in  New  York. — 

The  courts  of  New  York  seem  to  stand  alone  in  opposition  to  the 
sound  and  wholesome  doctrine  in  regard  to  contracting  against 
neslieence.  In  that  state  a  carrier  may  stipulate  for  exemption 
from  liability  for  losses  resulting  from  his  own  negligence. 
There  the  position  is  taken  that  men  must  be  permitted  to  make 
their  own  agreements,  and  that  it  is  no  concern  of  the  public  upon 
what  terms  the  individual  chooses  to  have  his  goods  carried.  "To 
say  the  parties  have  not  a  right  to  make  their  own  contract  and 
to  limit  the  precise  extent  of  their  respective  risks  and  liabilities, 
in  a  matter  in  no  way  affecting  the  public  morals  or  conflicting 
with  the  public  interests,  would,  in  my  judgment,  be  an  unwar- 
rantable restriction  upon  trade  and  commerce  and  a  most  palpable 
invasion  of  personal  right.""  But  the  courts  require  that  this 
exemption  should  be  expressly  stated  in  the  contracf"^  and  the 
intent  to  claim  exemption  so  plainly  and  distinctly  expressed  that 
it  cannot  be  misunderstood  by  the  shipper.*^" 

§  770.    Limitation  of  liability  to  damages  resulting  from 
gross  negligence  allowed  in  some  states. — In   Illinois   the 

(Tex.   Civ.  App.),  39  S.  W.  958,  2  43  N.  Y.  St.  65,  60  N.  Y.  Super.  Ct. 

Am.   Neg.  652.     A  stipulation  in  the  117;    Jennings    v.    Grand    Trunk    R. 

contract   for  the   shipment  of  cattle,  Co.,  127  N.  Y.  438,  28  N.  E.  394,  10 

that  a  failure  of  the  shipper  to  fur-  Rail.  &  Corp.   L.   J.   409.   49  Am.   & 

nish    to    each    conductor    in    whose  Eng.    R.    Cas.    98;    Knell    v.    United 

charge  the  cattle  are  placed,  a  state-  States  &  Brazil  S.  S.   Co.,  33   N.  Y. 

ment  of  their  condition,  shall  be  con-  Super.  Ct.  423 ;  Magnin  v.  Dinsmore. 

elusive  evidence  that  they  are  in  good  56  N.  Y.  168;  Prentice  v.  Decker,  49 

condition,   is   unreasonable   and   void.  Barb.    (N.   Y.)    21;   Zimmer  v.    New 

Missouri  &c.  R.  Co.  v.  Carter,  9  Tex.  York   &c.    R.    Co.,  42   N.    Y.    St.   63, 

Civ.  App.  677,  29  S.  W.  565.  16  N.  Y.  S.  631. 

''Parker,  J.,  in  Dorr  v.  New  Jer-  «°  Holsapple  v.  Rome,  W.  &  O.  R. 
sey  Steam  Nav.  Co.,  1  Kernan  (N.  Co.,  86  N.  Y.  275;  Nicholas  v.  New 
Y.)  485.  See  also,  Campe  v.  Weir,  York  &c.  R.  Co.,  89  N.  Y.  370.  See 
28  Misc  (N  Y.)  243,  58  N.  Y.  S.  also.  Hooper  v.  Wells  Fargo  &  Co., 
1082;  Condict  v.  Grand  Trunk  R.  Co.,  27  Cal.  11,85  Am.  Dec.  211.  A 
54  N.  Y.  500;  Fasev  v.  International  stipulation  in  a  receipt  that  the  car- 
Nav.  Co.,  77  App.  Div.  (N.  Y.)  469,  rier  acted  as  forwarder  only,  and 
79  N.  Y.'S.  1103;  Falkenau  v.  Fargo,  should  not  be  liable  for  any  loss  or 
44  How.  Pr.  (N.  Y.)  325,  35  N.  Y,  damage  except  from  fraud  or  gross 
Super.  Ct.  332;  Mvnard  v.  Syracuse  negligence,  will  not  exempt  such  car- 
&'C.  R.  Co..  7  Hun  (N.  Y.)  399,  revd.  rier  from  liability  or  failure  to  re- 
71  N.  Y.  180.  27  Am.  Rep.  28;  Sher-  turn  the  goods  when  ordered  to  do 
man  v.  Tnman  Steamship  Co.,  26  so  by  the  shipper,  during  their  trans- 
Hun  (N.  Y.)  107;  Wilson  v.  New  portation.  Rosenthal  v.  Weir.  54 
York  &c.  R.  Co.,  27  Hun  (N.  Y.)  App.  Div.  CN.  Y.)  275,  66  N.  Y.  S. 
•  149  841,  affd.  170  N.  Y.  148,  63  N.  E.  65, 
"Giles  V.  Fargo,  17  N.  Y.  S.  476,  57  L.  R.  A.  527. 


115  LEGALITY  OF  OBJECT.  §  77I 

cases  indicate  a  leaning  in  favor  of  allowing  the  exemption  from 
liability  for  ordinary  negligence  of  sei'\'ants;  but  they  deny  the 
right  to  an  exemption  from  liability  for  damage  resulting  from 
gross  negligence  of  the  carrier  or  his  employes.'"  This  is  also 
the  view  of  the  courts  in  Gcorgia^^  and  South  Dakota;  in  the 
latter  state  it  is  claimed  that  the  statute  allowing  the  carrier  to 
limit  his  liability  by  express  contract  permits  stipulations  against 
liability  for  ordinary  negligence."  This  doctrine  is  not  un- 
qualifiedly accepted  by  other  courts  of  the  United  States.  The 
rule  supported  by  reason  and  authority  denies  the  carrier  the 
right  to  contract  for  an  exemption  where  the  loss  has  been  occa- 
sioned by  negligence  on  his  part,  or  on  the  part  of  his  servants; 
and  the  courts  recognize  no  distinction  in  the  degrees  of  the  neg- 
ligence, but  hold  that  the  carrier  can  no  more  stipulate  for  a  slight 
degree  of  negligence  than  he  can  for  a  gross  degree.'^ 

§771.  Limiting  common-law  liability. — A  distinction 
must  be  drawn,  however,  between  contracts  entered  into  by  a 
carrier  against  its  own  negligence  and  tliose  contracts  by  w'hich 
it  limits  its  common-law  liability.  In  the  absence  of  a  statute  to 
the  contrary,  while  a  carrier  cannot  contract  against  liability  for 
its  own  negligence  it  may  by  special  contract  limit  its  common- 
law  liability.  Thus  it  may  contract  against  liability  from  loss  by 
fire  not  caused  by  the  carrier's  negligence.'^*     It  may  limit  its 

'"Arnold   v.    Illinois   Cent.    R.   Co.,  stock  may  be  rejected.    United  States 

83  111.  273,  25  .^m.  Rep.  386;  Chicago  Express   Co.   v.   Burke,   94  111.   App. 

&    N.    W.    R.    Co.    V.    Calumet    Stock  29. 

Farm,    194   111.  9.  61   N.   E.   1095.  88  "Cooper    v.    Raleigh    &c.    R.    Co., 

Am.   St.  68n.  affg.  96  111.   App.  Z2>7 ;  110  Ga.  659,  36  S.  E.  240. 

Chicago  B.  &  Q.  R.  Co.  v.  Miller,  79  '' Meucr   v.    Chicago   &c.   R.   Co.,   5 

111.  App.  473 ;  Chicago  B.  &  N.  R.  Co.  S.  Dak.  568,  59  N.  \V.  945,  25  L.  R. 

V.   Hawk.  42  111.  App.  322,  affd.   147  A.  81.  49  Am.  St.  898. 

111.    399,    35    N.    E.    139.      See    also,  "Michigan    Southern    &    Northern 

Cleveland.   C.   C.  &   St.  L.  R.   Co.  v.  &c.    R.   Co.   v.    Heaton.   Z7   Ind.   448; 

Ncwlin,  74  111.  App.  638;   Chicago  &  Steamboat    New   World   v.    King,    16 

A.  R.  Co.  V.  Grimes.  71  111.  App.  397 j  How.   (U.  S.)  469.  14  L.  ed.  1019. 

Baltimore    &c.    R.    Co.    v.    Ross,    105  '*  Ellison    v.    Adams    Exp.    Co..   245 

111.  App.  54.     In  accepting  live  stock  111.  410.  92  N.  E.  277  (holding  that  at 

for    transportation,    the    carrier    un-  common  law  a  carrier  might  by  spe- 

dertakcs  to  use  ordinary  care  for  its  cial   contract   stipulate   against   liabil- 

safety,  commensurate  with  its  nature  ity  for  any  loss  not  the  result  of  its 

and   condition ;    and    all    contracts   in  own   negligence  or  that  of   its   serv- 

which  the  carrier  undertakes  to  limit  ants)  ;    Johnson    v.    West    Jersey    & 

its  duty  to  less  than  the  use  of  or-  Seashore  R.  Co..  78  N.  J.  L.  529,  74 

dinary   care   for   the   safety   of   such  Atl.  496,  138  Am.  St.  625. 


§    7/2  CONTRACTS.  Il6 

common-law  liability  in  the  transportation  of  live  stock.*^^  Con- 
tracts of  this  character  are,  however,  foreign  to  the  subject  under 
discussion  and  for  that  reason  will  not  be  given  further  consider- 
ation. Mention  was  made  of  them  merely  to  point  out  the  dis- 
tinction. 

§  772.  Validity  of  stipulation  exempting  carrier  from  lia- 
bility to  passenger  for  negligence. — It  is  settled  beyond 
dispute  that  where  a  carrier  is  under  a  duty  to  carry  a  passenger 
and  it  undertakes  for  a  reward  to  perform  that  duty  it  cannot  by 
contract  legally  exempt  or  relieve  itself  from  liability  arising  out 
of  the  negligence  of  itself  or  servants.'*'     There  is  a  conflict  of 

"Louisville  &  N.  R.  Co.  v.  Smitha,  53,  66  N.  W.  667,  62>  Am.   St.  541; 

145  Ala.  686,  40  So.   117;   Cooper  v.  Chicago  &  N.  W.  R.  Co.  v.  Calumet 

Raleigh  &c.   R.   Co.,   110  Ga.  659,  36  Stock    Farm,    194    111.    9,    61    N.    E. 

S.  E.  240;  Central  of  Georgia  R.  Co.  1095.  88  Am.  St.  68n. 
V.    Hall,    124   Ga.   322,   52    S.    E.   679,        '"In    re    Brantford    City    (N.    Y.), 

4  L.  R.  A.   (N.  S.)  898,  110  Am.  St.  29  Fed.   Z73\    Pittsburgh   &c.   R.    Co. 

170 ;  Chicago  &  N.  W.  R.  Co.  v.  Cal-  v.  Higgs,  165  Ind.  694,  76  N.  E.  299, 

umet  Stock  Farm,  194  111.  9,  61  N.  E.  4   L.    R.    A.    (N.    S.)    1081;    Hart   v. 

1095,  88  Am.   St.   68n ;    Terre   Haute  Chicago   &   N.   W.    R.    Co.,   69   Iowa 

&     L.     R.     Co.     V.     Sherwood,     132  485,  29  N.  W.  597;  Coppock  v.  Long 

Ind.      129,      31        N.      E.      781,      17  Island  R.  Co.,  89  Hun   (N.  Y.)   186, 

L.    R.    A.    339n,    32    Am.    St.    239;  69  N.   Y.   St.   11,  34  N.  Y.   S.   1039; 

Hudson  V.  Northern  Pac.  R.  Co.,  92  Railroad  Co.  v.  Lockwood,   17  Wall. 

Iowa  231,  60  N.  W.  608,  54  Am.  St.  (U.  S.)  357,  21  L.  ed.  627;  Railroad 

550 ;  Kansas  Pac.  R.  Co.  v.  Reynolds,  Co.  v.  Stevens,  95  U.  S.  655,  24  L.  ed. 

8  Kans.  623;   McFadden  v.   Missouri  535;   Phoenix  Ins.  Co.  v.  Erie  &  W. 

Pac.    R.    Co.,   92   Mo.   343,   4   S.   W.  &c.  Co.,  117  U.  S.  312,29L.    ed.    873,   6 

689,    1    Am.    St.    Rep.    721;    Smith   v.  Sup.  Ct.  750;  Inman  v.  South  Caro- 

Chicago   &c.    R.    Co.,    112   Mo.    App.  lina  R.  Co.,  129  U.  S.  128,  32  L.  ed. 

610,  87  S.  W.  9;  Chicago  R.  I.  &  P.  612,   9   Sup.    Ct.   249;    Davis   v.    Chi- 

R.    Co.   V.    Witty,   32    Nebr.   275,   49  cago  &c.  R.  Co.,  93  Wis.  470,  67  N. 

N.  W.  183,  29  Am.  St.  436;  Normile  W.   16.  ZZ  L.  R.  A.  654,  57  Am.  St. 

V.  Oregon  Nav.  Co.,  41  Ore.   177,  69  935;  Annas  v.  Milwaukee  N.  R.  Co., 

Pac.  928;  Louisville  &  N.  R.  Co.  v.  67  Wis.   46,   30   N.   W.  282,   58  Am. 

Dies,  91  Tenn.  177,  18  S.  W.  266,  30  Rep.  848.     In   New  York  a  contract 

Am.  St.  871;  Gulf  C.  &  S.  F.  R.  Co.  exempting    from    liability    for    negli- 

V.    Trawick,    68    Tex.    314,    4    S.    W.  gence   of   employes   is  held   effective. 

567,  2  Am.  St.  494;  Gulf  C.  &  S.  F.  Nichola.s_  v.    New   York   &c.    Co.,   89 

R.  Co.  V.  Dunman   (Tex.  Civ.  App.),  N.  Y.  370.     The  English  rule  is  dif- 

31   S.  W.   1070;    Norfolk  &c.   R.   Co.  ferent  from  the  American.     M'Cance 

V.  Harman,  91  Va.  601,  22  S.  E.  490,  v.  London  &c.  R.  Co.,  7  Hurl.  &  N. 

44   L.    R.    A.    289,    50    Am.    St.    855;  477;   Hall  v.   North  Eastern  &c.  Co., 

Abrams    v.    Milwaukee    &c.    R.    Co.,  L.  R.  10  Q.  B.  437;  Glenister  v.  Great 

87  Wis.  485,  58  N.  W.  780,  41  Am.  Western   R.    Co.,   29   L.   T.    (N.   S.) 

St.      55 ;       Notes      to      Clarke      v.  423 ;  McCawley  v.  Furness  R.  Co.,  L. 

Rochester  &c.   R.   Co.,  67  Am.   Dec.  R.  8  Q.  B.  57;  Slim  v.  Great  North- 

213;   Missouri  Pac.  R.  Co,  v.  Fagan,  ern  &c.  Co.,  14  C.  B.  647;  Taubman 

72  Tex.  127,  9  S.  W.  749,  2  L.  R.  A.  v.   Pacific  &c.   Navigation  Co.,  26  L. 

75,     13     Am.     St.     776;      Heller     v.  T.  (N.  S.)  704;  Austin  v.  Manchester 

Chicago  &  G.  T.  R.  Co.,  109  ^lich.  &c.  R.  Co.,  10  C.  B.  454. 


117 


LEGALITY    OF    OBJECT. 


§  ni 


authority,  however,  on  the  question  as  to  whether  or  not  a  carrier 
may  exempt  itself  from  liabihty  for  neghgence  when  it  carries 
such  passengers  gratuitously.  In  many  jurisdictions  the  courts 
hold  that  such  a  stipulation  is  void  and  not  binding  on  the  person 
using  the  pass,"  and  that  the  carrier  is  liable  for  injuries  negli- 
gently inflicted  upon  a  person  using  a  pass  containing  such  a 
stipulation.  But  in  the  states  of  Xew  York,'*  and  Washington,"* 
and  in  a  number  of  other  states,  such  stipulations  are  held  valid, 
at  least  where  the  pass  is  gratuitous,  and  the  carrier  exempted 
from  liability  from  acts  of  negligence  resulting  in  injury  to 
the  person  using  the  pass.  The  rule  in  England  is  also  to  the 
effect  that  the  carrier  may  make  a  valid  contract  exempting  itself 
from  liability  for  injuries  negligently  inflicted  upon  a  person  rid- 
ing on  a  free  pass.**' 

§  773.  Persons  riding  on  passes — Basis  of  decisions. — 
The  authorities  which  hold  that  such  stipulations  are  invalid  rest 
upon  the  doctrine  that  it  is  against  public  policy  for  one  to  con- 
tract exempting  himself  from  liability  for  his  future  negligence,*^ 


"Railroad  Co.  v.  Lockwood,  17 
Wall.  (U.  S.)  357,  21  L.  ed.  627; 
Railway  Co.  v.  Stevens,  95  U.  S.  655, 
24  L.  ed.  535;  Mobile  &c.  R.  Co.  v. 
Hopkins.  41  Ala.  486,  94  Am.  Dec. 
607;  Solan  v.  Chicago  &c.  R.  Co.,  95 
Iowa  260.  63  X.  W.  692,  28  L.  R. 
A.  718,  58  Am.  St.  430;  Dovle  v. 
Fitchburg  R.  Co.,  162  Mass.  66,  11 
N.  E.  770.  25  L.  R.  A.  157,  44  Am. 
St.  335;  Starr  v.  Great  Northern  R. 
Co.,  67  Minn.  18,  69  N.  W.  632;  Car- 
roll V.  Missouri  Pac.  R.  Co.,  88  Mo. 
239,  57  Am.  Rep.  382;  Cleveland  P. 
P.  A.  R.  Co.  V.  Curran.  19  Ohio  St. 
1.  2  Am.  Rep.  362;  Pennsylvania  R. 
Co.  V.  Henderson,  51  Pa.  St.  315; 
Buffalo  &c.  R.  Co.  v.  O'Hara  (Pa.), 
9  Am.  &  Eng.  R.  Cas.  317;  Ft.  Worth 
&c.  R.  Co.  v.  Rogers,  21  Tex.  Civ. 
App.  605.  53  S.  W.  366;  Gulf  C.  & 
S.  F.  R.  Co.  V.  McGowan,  65  Tex. 
640,  26  Am.  &  Eng.  R.  Cas.  274.  But 
several  of  these  cases  are  based,  at 
least  in  part,  upon  a  statute.  See 
also,  Yazoo  &  M.  V.  R.  Co.  v.  Grant, 
86  Miss.  565.  Z"^  So.  502.  109  Am.  St. 
112>;  Norfolk  &c.  R.  Co.  v.  Tanner, 
100  Va.  379.  41  S.  E.  721.  A  child 
who  rides  and  of  whom  no  fare  is 
demanded   because   of   his   age   is   a 


passenger.  Southern  R.  Co.  v.  Lee, 
30  Ky.  L.  1360,  101  S.  W.  307, 
10  L.  R.  A.  (N.  S.)  837.  To  same 
effect,  Ball  v.  Mobile  &c.  Co.,  146 
Ala.  309,  39  So.  584,  119  Am.  St. 
12. 

"  Wells  v.  New  York  &c.  R.  Co.,  24 
N.  Y.  181 ;  Poucher  v.  New  York  &c 
R.  Co.,  49  N.  Y.  263,  10  Am.  Rep 
364;  Perkins  v.  New  York  &c.  R 
Co.,  24  N.  Y.  196,  82  Am.  Dec.  281 
Kenney  v.  New  York  &c.  R 
R.  Co.,  125  N.  Y.  422.  26  N.  E.  626; 
Ulrich  v.  New  York  &c.  R.  Co.,  108 
N.  Y.  80,  15  N.  E.  60.  2  Am.  St.  369. 

"Muldoon  v.  Seattle  &c.  R.  Co., 
7  Wash.   528.  35   Pac.  422.  22  L.   R. 

A.  794,  38  Am.  St.  901.  9  Lewis  Am. 
R.  &  Corp.  715  and  note.  See  also, 
Payne  v.  Terre  Haute  &c.  R.  Co.,  157 
Ind.  616,  56  L.  R.  A.  472,  and  cases 
cited. 

'"McCaroley  v.  Furness  R.  Co..  L. 
R.  8  Q.  B.  57;  Gallin  v.  London 
&c.  R.  Co..  L.  R.  10  Q.  B.  212;  Hall 
v.  North  Eastern  R.  Co..  L.  R.  10  Q. 

B.  437. 

"Mobile  &c.  R.  Co.  v.  Hopkins, 
41  Ala.  486.  94  Am.  Dec.  607;  Finn 
V.  Philadelphia  &c.  R.  Co..  1  Houst. 
(Del.)  469;  Ohio  &c.  R.  Co.  v.  Nick- 


§    774  CONTRACTS.  Il8 

The  authorities  which  hold  the  stipulations  valid  and  binding 
upon  the  person  using  the  pass  rest  upon  the  theory  that  the  car- 
rier, when  it  issues  a  mere  gratuitous  pass,  and  does  a  thing  which 
the  law  does  not  require  it  to  do,  has  a  right  to  stipulate  against 
liability,  and  that  by  so  doing  no  principle  of  public  policy  is  con- 
travened.^" 

§  774.  Rule  given  further  consideration. — In  such  a  case 
since  the  person  who  receives  the  pass  gets  something  which  he 
is  not  entitled  to  demand  it  seems  but  just  that  the  carrier  may 
rightfully  limit  its  liability,  and  that  the  person  who  receives  the 
gratuity  should  assume  the  risk  accompanying  it.  In  some  of 
the  cases  usually  cited  as  opposed  to  this  doctrine  the  pass  was  not 
in  fact  gratuitous,  but  for  it  some  consideration,  although  in- 
direct, was  yielded,  and  it  is  evident  that  such  cases  are  essentially 
different  from  cases  in  which  a  pass  is  issued  as  a  mere  gift,  or 
donation.  In  most  of  the  states  it  is  held  that  if  the  pass  is  not  a 
pure  gratuity,  but  is  one  for  which  some  consideration  has  been 
paid,  then  a  stipulation  against  liability  is  void.  Such  is  the  rule 
where  passes  have  been  issued  to  drovers  or  persons  accompany- 
ing shipments  to  care  for  the  same  during  transit.  In  such  cases 
the  pass  is  not  a  mere  gratuity  but  one  for  which  some  considera- 
tion has  been  paid  and  hence  the  person  using  the  pass  may  be 
justly  regarded  as  a  passenger  for  hire.*^ 

less,  71  Ind.  271 ;  Carroll  v.  Missouri  *'  Little  Rock  &  Ft.  S.  R.  Co.  v. 
Pac.  R.  Co.,  88  Mo.  239,  57  Am.  Miles,  40  Ark.  298,  48  Am.  Rep.  10; 
Rep  382;  Graham  v.  Pacific  R.  Delaware  &c.  R.  Co.  v.  Ashley,  67 
Co.,  66  Mo.  536;  Pennsylvania  R.  Fed.  209,  14  C.  C.  A.  368;  Water- 
Co.  V.  Henderson,  51  Pa.  St.  315;  bury  v.  New  York  &c.  R.  Co.,  17 
Gulf  C.  &  S.  F.  R.  Co.  V.  McGowan,  Fed.  671 ;  Chicago  M.  &  St.  P.  R. 
65  Tex.  640;  Missouri  &c.  R.  Co.  v.  Co.  v.  Carpenter,  56  Fed.  451,  5  C. 
Ivy  71  Tex  409  9  S.  W.  346,  1  L.  C.  A.  551 ;  Cleveland  P.  &  A.  R.  Co. 
R.  A.  500,  10  Am.  St.  758,  Z1  Am.  &  v.  Curran,  19  Ohio  St.  1,  2  Am.  Rep. 
Ene  R  Cas  46-  Saunders  v.  Sou-  362;  New  York  Cent.  R.  Co.  v.  Lock- 
thern  Pac.  R.  Co.,  13  Utah  275,  44  wood,  17  Wall.  (U.  S.)  357,  21  L. 
Pac.  932.  ed'  627;  Saunders  v.  Southern  Pac. 
"Rogers  v.  Kennebec  Steamboat  R.  Co.,  13  Utah  275,  44  Pac.  932; 
Co.,  86  Maine  261,  29  Atl.  1069,  25  Sprigg's  Admr.  v.  Rutland  R.  Co.,  V 
L  R  A  491-  Quimby  v.  Boston  &c.  Vt.  347,  60  Atl.  143;  Maslin  v.  Bal- 
R.  Co..  150  Mass.  365,  23  N.  E.  205,  timore  &c.  R.  Co.,  14  W.  Va.  180, 
5  L.  R.  A.  846;  Muldoon  v.  Seattle  35  Am.  Rep.  748;  Lawson  v.  Chicago 
&c.  R.  Co.,  7  Wash.  528,  35  Pac.  422.  &c.  R.  Co.,  64  Wis.  447,  24  N.  W. 
22  L.  R.  A.  794,  38  Am.  St.  901.  See  618,  54  Am.  Rep.  634.  It  has  been 
also,  Duncan  v.  Maine  Cent.  R.  Co.,  held  otherwise  in  New  York.  Pou- 
113  Fed.  508;  Marshall  v.  Nashville  cher  v.  New  York  &c.  R.  Co..  49  N. 
R  &  Light  Co.,  118  Tenn.  254,  101  Y.  263,  10  Am.  Rep.  364.  See  Gard- 
S.  W.  419,  9  L.  R.  A.  (N.  S.)   1246. 


119 


LEGALITY    OF    OBJECT. 


§  77\ 


§775.  Degrees  of  negligence. — In  some  of  the  courts  a 
distinction  is  made  between  the  different  degrees  of  negligence, 
the  stipulation  creating  the  exemption  being  held  valid  as  to  ordi- 
nary negligence  but  not  as  to  gross  negligence.**  As  already  inti- 
mated, however,  such  distinctions  seem  untenable,  at  least  as  a 
general  rule. 

§  776.  Who  is  a  passenger. — It  has  been  held  that  an  ex- 
press messenger  carried  by  the  railroad  under  a  contract  WMth  the 
express  company  is  a  passenger  for  hire  and  that  consequently 
the  railroad  company  cannot  contract  releasing  itself  from  lia- 
bility to  such  express  messenger.*^  Mail  agents  and  postal  clerks 
are  also  passengers.*"  It  is  held,  however,  that  railroads  are 
under  no  obligation  to  haul  tlie  cars  of  a  sleeping-car  company 
and  that  it  may  require  the  latter  to  indemnify  it  against  lia- 
bility for  personal  injuries  received  by  the  sleeping-car  company's 
employes  and  that  such  contract  of  indemnity  is  valid  and  is  not 
a  contract  against  the  negligence  of  the  railroad  company.*^    On 


ner  v.  New  Haven  &  Northampton 
Co.,  51  Conn.  143.  50  Am.  Rep.  12. 

"Illinois  Cent.  R.  Co.  v.  Read.  11 
111.  484,  87  Am.  Dec.  260;  Arnold  v. 
Illinois  Cent.  R.  Co.,  83  111.  ZIZ,  25 
Am.  Rep.  383.  (But  see  Illinois  Cent. 
R.  Co.  V.  Beebe.  174  111.  13.  50  N. 
E.  1019,  43  L.  R.  A.  210,  66  Am.  St. 
253).  Pennsylvania  R.  Co.  v.  Mc- 
Closkey,  23  Pa.  St.  526.  See  also, 
Annas  v.  Milwaukee  &c.  R.  Co.,  67 
Wis.  46.  30  X.  \\'.  282,  58  Am.  Rep. 
848,  27  Am.  &  Eng.  R.  Cas.  102.  Or- 
dinarily, it  is  the  carrier's  duty  to 
carry  the  baggage  of  its  passengers 
subject,  of  course,  to  the  reasonable 
rules  of  the  companj^  as  to  quantity 
and  character.  See  French  v.  Mer- 
chants &c.  Co..  199  Mass.  433.  85  N. 
E.  424.  19  L.  R.  A.  (N.  S.)  1006  and 
note.  127  Am.  St.  506. 

"Davis  V.  Chesapeake  &c.  R.  Co., 
122  Kv.  528,  29  Kv.  L.  53.  92  S.  W. 
339,  5  L.  R.  A.  (N.  S.)  458.  121  Am. 
St.  481.  But  see  Louisville  &c.  R. 
Co.  V.  Keefer.  146  Ind.  21,  44  N.  E. 
796,  38  L.  R.  A.  93,  58  Am.  St.  348; 
Pittsburgh  &c.  R.  Co.  v.  Mahonev, 
148  Ind.  196,  46  N.  E.  917.  47  N. 
E.  464.  Compare  with  the  case  of 
Piper  V.  Boston  &  M.  R.  Co.,  75  x\. 


H.  435,  75  Atl.  1041,  in  which  a  con- 
tract by  an  employe  of  an  express 
company  to  release  the  defendant 
railroad  company  for  liability  for  in- 
juries caused  by  its  negligence  or  the 
negligence  of  its  servants,  was  held 
severable,  the  invalidity  of  the  former 
provision  not  affecting  the  validity 
of  the  latter.  See,  however,  Peter- 
son V.  Chicago  &c.  R.  Co.,  119  Wis. 
197,  96  N.  W.  532,  100  Am.  St.  879. 
Railway  company  may  by  contract 
with  the  express  company  indemnify 
against  liability  for  injuries  inflicted 
on  expressmen.  See  also,  post,  § 
lid.  A  caretaker  in  charge  of  a 
shipment  of  cattle  has  been  held  a 
passenger  and  a  contract  exempting 
the  railroad  company  from  damages 
for  his  negligent  injury  invalid. 
Sprigg's  Admr.  v.  Rutland  &c.  R. 
Co.,  n  Vt.  347.  60  Atl.  143. 

'"4  Elliott  R.  R.   (2d  ed.),  §  1578a. 

"Chicago  &c.  R.  Co.  v.  Hamler, 
215  111.  525.  74  N.  E.  705.  106  Am. 
St.  187;  Russell  v.  Pittsburgh  &c.  R. 
Co..  157  Ind.  305,  61  N.  E.  678.  55 
L.  R.  A.  253.  87  Am.  St.  214;  San 
Antonio  &c.  R.  Co.  v.  Tracy  (Tex. 
Civ.  App.),  130  S.  W.  639. 


§    "J-JJ  CONTRACTS.  120 

the  same  principle  it  has  been  held  that  one  who  was  given  per- 
mission to  erect  a  coal  shed  on  the  defendant's  right  of  way,  in 
consideration  of  a  small  rental  and  a  contract  to  indemnify  the 
defendant  from  loss  or  damages  to  himself,  his  property  or 
servants,  occasioned  by  the  negligence  of  defendant's  servants, 
was  bound  by  such  indemnity  contract  in  so  far  as  it  worked  no 
injury  to  the  public.^ ^ 

§  777.  Agreements  exempting  employer  from  liability  for 
negligence. — By  the  weight  of  authority,  a  contract  between 
employer  and  employe,  whereby  the  latter  releases,  in  advance, 
the  former  from  liability  for  negligent  injuries  inflicted  on  the 
employe,  is  held  against  public  policy  and  unenforcible.^^  The 
master  cannot  shield  himself  directly  or  indirectly  from  the  con- 
sequences of  his  own  negligence  by  any  form  of  contract.  Thus 
agreements  whereby  the  employe  contracts  to  use  that  degree  of 
care  in  the  inspection  of  tools  and  premises  that  should  be  exer- 
cised by  the  master  have  been  held  against  public  policy.^** 

§  778.    Valid  contracts  limiting  liability  of  employe. — But 

a  contract  whereby  the  employe  agrees  to  assume  liability  from 
injury  resulting  from  a  disobedience  of  the  company's  rules  is 
valid  and  binding  when  such  rules  are  reasonable  and  do  not  con- 

**  Osgood    V.    Central    Vermont    R.  western   R,   Co.   v.   Arnold,   32   Tex. 

Co.,  n  Vt.  334,  60  Atl.  137,  70  L.  R.  Civ.   App.  272,  74   S.   W.  819;   Gal- 

A.  930.  veston  H.  &  S.  A.  R.  Co.  v.   Pigott 

^Hissong   V.    Richmond    &    D.    R.  (Tex.    Civ.    App.),    116    S.   W.    841; 

Co.  91  Ala.  514,  8  So.  776;  Richmond  Texas  &c.   R.   Co.  v.   Putman    (Tex. 

&  D.   R.   Co.  V.   Jones,  92   Ala.   218,  Civ.    App.),   dZ    S.    W.   910    (in   the 

9  So.  276;  Louisville  &  N.  R.  Co.  v.  above  the  father  of  a  minor  executed 

Orr,  91  Ala.  548,  8  So.  360;  Chicago  the    release);    Roesner    v.    Hermann, 

W.  &  V.  Coal  Co.  V.  Peterson,  39  111.  10    Biss.    (U.    S.)    486.    8    Fed.   782; 

App.  114;  Maney  v.  Chicago  B.  &  Q.  Tarbell  v.  Rutland  R.  Co.,  12>  Vt.  347, 

R.  Co.,  49  111.  App.  105 ;   Kansas   P.   R.  51  Atl.  6,  56  L.  R.  A.  656,  87  Am.  St. 

Co.  v    Peavey,  29  Kans.  169,  44  Am.  734;    Johnson's   Admx.   v.    Richmond 

Rep.  630;  Atchison  T.  &  S.  F.  R.  Co.  &  D.  R.  Co.,  86  Va.  975,  11  S.  E.  829. 

v.  Fronk,  74  Kans.  519,  87  Pac.  698;  See  also,   note  in   Ann,   Cas.   1912A. 

Newport  News  &  M.   Valley  Co.   v.  1152. 

Eifort,  15  Ky.  L.  575.  15  Ky.  L.  600;        '"Consolidated    Coal    Co.    v.    Lun- 

Blanton  v.   Bold,    109  Mo.  64,   18   S.  bak,  196  111.  594,  6Z  N.  E.  1079;  Him- 

W.   1149;   Johnson  v.   Fargo,   184  N  rod   Coal   Co.   v.    Clark,   197   111.   514, 

Y.  379.  11  N    E.  388,  7  L.  R.  A.  (N.  64   N.    E.   282;    Bonner   v.    Bean,   80 

S.)  537.    (In  the  above  case  the  em-  Tex.  152,  15  S.  W.  798;  Missouri  K. 

ploye   agreed   to   execute   a   release.)  &   T.    R.    Co.    v.    Wood    (Tex.    Civ. 

Lake  Shore  &  M.  S.  R.  Co.  v.  Spang-  App.),  35  S.  W.  879;  Gulf  C.  &  S.  R 

ler,   44   Ohio    St.   471,   8   N.    E.   467,  R.   Co.  v.  Darby,  28  Tex.   Civ.  App. 

58  Am.   Rep.  833;    St.   Louis   South-  413,  67  S.  W.  446. 


121  LEGALITY  OF  OBJECT.  ^  779 

travene  public  policy.'*^     Indeed,  disobedience  of  reasonable  rules 
properly  promulgated  would  often  defeat  a  recovery  in  any  event. 

§  779.  Valid  contracts — Negligence  of  fellow  servant. — 
A  distinction  has  also  been  suggested  between  those  cases  in 
which  the  employer  seeks  to  contract  against  liability  for  the  non- 
performance of  a  personal  duty  he  owes  his  employe,  such  as  the 
duty  to  exercise  ordinary  care  in  the  selection  of  proper  tools  or 
a  safe  place  in  which  to  work,  and  those  cases  in  which  the  pri- 
mary duty  rests  upon  the  employe  not  to  injure  a  fellow  servant 
negligently,  but  whose  negligence  is  nevertheless  imputed  to  the 
employer.  The  negligence  of  a  fellow  servant  is  not  in  fact  and 
in  morals  the  negligence  of  the  master,  although  by  virtue  of  the 
statute  it  may  be  imputed  to  the  master.  Hence,  it  has  been 
said  that  a  stipulation  not  to  be  answerable  for  the  negligence  of 
his  employe  beyond  the  selection  of  competent  servants  in  the 
first  instance  and  the  discharge  of  such  as  proved  to  be  reckless 
or  incompetent  might  be  upheld  as  reasonable  notwithstanding  a 
statute  might  abolish  the  old  rule  of  nonliability  for  the  acts  and 
omissions  of  a  coservant."" 

§  780.  Valid  contracts — Criminal  negligence. — In  Georgia 
it  is  held  that  the  master  may  exonerate  himself  except  when  the 
injuries  sustained  are  due  to  criminal  negligence. °^  Just  what 
this  means  may  not  always  be  easy  to  determine,  and  other  courts 
make  no  such  distinction  or  exception. 

"Russell  V.  Richmond  &c.  R.  Co.,  Ga.    461;    Western    &c.     R.     Co.     v. 

47  Fed.  204.     See  also,   Sedgwick  v.  Bishop,  50  Ga.  465 ;   Fulton  Bag  &c. 

Illinois  &c.   R.   Co.,  12>  low,   158.  34  Mills  v.  Wilson.  89  Ga.  318,  15  S.  E. 

N.   W.  790;   Quinn  v.   New    V'ork  &  2,12;    New    v.    Southern    R.    Co.,    116 

N.  H.  &  H.  R.  Co.,  175  Mass.   150,  Ga.  147,  42  S.  E.  391,  59  L.  R.  A.  115. 

55  N.  E.  891.  See,  however.   Cook  v.   Western  &c. 

"Little  Rock  &  Ft.  S.  R.  Co.  v.  R.  Co.,  12  Ga.  48.  See  also.  Pitts- 
Eubanks,  48  Ark.  460,  3  S.  W.  808,  burgh  &c.  R.  Co.  v.  Mahonev,  148 
3  Am.  St.  245.  See  also.  Griffiths  v.  Ind.  196.  46  N.  E.  917,  47  N.  E.  464, 
Dudley,  L.  R.  9  Q.  B.  Div.  357.  The  40  L.  R.  A.  101.  62  Am.  St.  503;  In- 
decision in  the  above  case  is  grounded  ternational  &  G.  N.  R.  Co.  v.  Hinzie, 
upon  freedom  of  contract.  Piper  v.  %2  Tex.  623,  18  S.  W.  681.  See,  how- 
Boston  &  M.  R.  Co.,  75  N.  H.  435,  ever,  in  connection  with  this  case, 
75  Atl.  1041.  Contra.  Shohonev  v.  Galveston  &-c.  R.  Co.  v.  Pigott  (Tex. 
Quincv  &c.  R.  Co..  231  Mo.  131.'  132  Civ.  App.).-116  S.  W.  841  :^Texas  &c. 
S.  W.  1059,  Ann.  Cas.  1912A,  1143,  R.  Co.  v.  Putnam  (Tex.  Civ.  App.), 
decided  under  a  statute  forbidding  ^l  S.  W.  910;  Peterson  v.  Seattle 
such  contracts.  Traction   Co.,  IZ  Wash.  615,  63   Pac 

"Western  &c.  R.  Co.  v.  Strong,  52  539,  65  Pac.  543,  53  L.  R.  A.  586. 


§    r-gl  CONTRACTS.  122 

§781.    Contracts  against  liability  for  negligence— Miscel- 
laneous instances. — It  has  been  held  that  a  bailee  may  con- 
tract to  relieve  himself  from  liability  for  negligence.     Thus  the 
contract  by  which  exhibitors  at  the  Chicago  World's  Fair  relieved 
the  World's  Columbian  Exposition  Company  from  liability  for 
losses  "resulting  from  any  cause"  was  upheld  at  least  to  the  ex- 
tent that  the  company  was  not  liable  for  negligence  not  directly 
chargeable  to  the  directors  or  managing  officers  of  the  company 
and  not  of  a  distinctly  gross,  wanton,  or  wilful  character.^*     A 
warehouseman  may  also  contract  to  relieve  himself  against  lia- 
bility for  loss  by  fire  even  though  it  results  from  his  own  negli- 
o-ence.^^     An   agreement  by   which   an   independent   contractor 
agreed  to  exempt  the  railroad  from  any  liability  for  injuries  he 
might  sustain  in  the  removal  of  an  embankment  was  held  void  in 
so  far  as  it  released  the  railroad  company  from  liability  for  its 
own  negligence.®'^     A  commercial  agency  may  be  liable  for  dam- 
age  resulting-  to  a   subscriber    from   its   own   negligence,    even 
though  it  has  contracted  against  such  liability."     A  contract  be- 
tween a  municipal  corporation  and  one  who  desires  sewer  connec- 
tions by  which  the  latter  covenants  to  hold  the  city  harmless 
against  any  damages  resuking  from  such  connection  has  been 
held  invalid  as  against  a  subsequent  purchaser.®*    A  clause  in  the 
contract  of  an  electric  light  company  made  with  one  of  its  con- 
sumers that  it  would  not  "be  liable  in  any  event  for  damage  to 
person  or  property  arising,  accruing  or  resulting  from  the  use  of 
the  light"  does  not  reUeve  the  company  from  liability  for  failure 
to  perform  its  duty.®® 

§782.  Unclassified  illegal  agreements— Miscellaneous 
cases. — A  contract  whereby  a  mother  with  the  consent  of  the 
father  gives  the  custody  of  their  children  to  relatives  of  the 

"World's    Columbian    Ex.    Co.    v.  St.  161,  19  Atl.  500,  7  L.  R.  A.  661, 

Republic  of  France,  96  Fed.  687,  38  19  Am.  St.  681.                       ,,„  ^   ^ 

CCA   483  **  Murphy  v.   Indianapolis,  158  Ind. 

'•^Welis  V.' Porter,  169  Mo.  252,  69  238,  63   N.    E.    469     (city    permitted 

S.  W.  282,  92  Am.  St.  637.  sewer  to  remain   in   defective  condi- 

"  Johnson's  Admx.  v.  Richmond  &  tion).                        ,     „       ^           t 

D.  R.  Co.,  86  Va.  975,  11  S.  E.  829.  ""Denver  Consol.  &c    Co.  v.  Law- 

""  Crew  V.  Bradstreet  Co.,  134  Pa.  rence,  31  Colo.  301,  11  Fac.  J^. 


123  LEGALITY   OF  OBJECT.^  §    782 

mother  has  been  held  null  and  void  as  against  public  policy.' 
However,  an  agreement  entered  into  between  husband  and  wife 
pending  a  settlement  of  divorce  suit,  by  which  they  arrange  for 
the  custody  and  support  of  their  children,  which  contract  did  not 
abridge,  modify,  or  suspend  any  rights  which  the  parties  had  in 
the  action  for  a  divorce,  has  been  upheld.-  A  contract  by  which 
one  entering  a  home  for  aged  men  agreed  that  should  he,  by  de- 
vise, legacy,  or  otherwise,  become  the  owner  of  any  property  what- 
ever, the  home  should  have  the  same,  has  been  declared  against 
public  policy.^  A  power  of  attorney  to  appoint  other  managing 
agents  on  the  same  terms  and  furnish  them  with  similar  contracts 
to  appoint  yet  other  managing  agents  in  an  endless  chain  has  been 
held  void  as  contrar}^  to  public  policy.*  A  contract  whereby  one 
party  leases  to  another  the  shore  or  space  between  high  and  low 
water  mark,  a  part  of  the  bed  of  a  navigable  stream,  the  title  to 
which  is  in  the  state  in  trust  for  the  public,  and  the  riparian  rights 
which  are  concurrent  with  the  rights  of  other  inhabitants  of  the 
state  and  must  be  exercised  subject  to  the  rights  of  others,  is  void 
as  contrary  to  public  policy.^  The  right  to  acquire  title  to  land 
by  limitation  is  given  by  our  statutes  and  an  agreement  between 
two  parties  to  acquire  property  in  this  manner  is  not  wrongful  or 
inequitable." 

^  Hibbette  v.   Baines,  78  IMiss.  695,  having  been  awarded  the  custody  of 

29  So.  80,  51   L.   R.   A.  839.     In  the  the  children.     Wilkinson  v.  Denning, 

above   case   the   mother    was   on    her  80  111.  342,  22  Am.  Rep.  192. 

death-bed    at    the    time    the    contract  "Ward   v.   Goodrich,  34   Colo.   369, 

was    entered    into.      The    same    rule  82  Pac.  701,  2  L.  R.  A.  (N.  S.)  201n, 

applies    to    testamentarv   dispositions  114  Am.  St.  167. 

made  bv  a  mother  of  her  child,  not-  'Baltimore  Humane  &c.  Homes  v. 

withstanding  she  was  divorced  at  the  Pierce,  100  Md.  520,  60  Atl.  Ill,  70 

time    the    instrument    was    executed.  L.  R.  A.  485n.     The  court  suggested 

Hernandez    v.    Thomas,    50   Fla.    522,  it  would  be  proper  for  the  home  to 

39  So.  641,  2  L.  R.  A.   (N.  S.)  203n,  require    the    inmate    to    pay    a    fixed 

111  Am.  St.  137;  Tavlor  v.  Jetter,  ZZ  and  definite  sum  in  case  he  became 

Ga.  195.  81  .\m.  Dec!  202;  McKinney  able  to  make  such  payment. 

v.  Noble,  y?  Tex.  731.  38  Tex.   195;  *Bank  of  Ozark  v.  Hanks.  142  Mo. 

In    re   Neff,   20   Wash.   652,   56   Pac.  App.   110.   126   S.   W.  221. 

383.     Some  states  would  seem  to  rec-  "Escambia    Land    &    Mfg.    Co.    v. 

ognize  the  right  of  a  mother  to  make  Ferry    Pass    Inspectors'    &    Shippers' 

a    testamentary    disposition     of     her  Assn.,    59   Fla.   239,    52    So.    715,    138 

children    where    the    father    is    dead  Am.  St.  126. 

(In    re    Reynolds,    11    Hun    (N.    Y.)  'Hammons    v.    Clwer     (Tex.    Civ. 

41),  or  divorced  from  his  wife,  she  App.),  127  S.  VV.  889. 


CHAPTER  XXII. 


CONTRACTS  IN  RESTRAINT  OF  TRADE. 


§790.  Confusion  on  subject— Distinc-    §813. 
tions. 

791.  Early  doctrine  as  to  contracts 

in   restraint  of  trade.  814. 

792.  Distinction  between  general  re- 

strictions as  to  place  and  as       815. 
to  time. 

793.  Reason  for  holding  such  con-      816. 

tracts   void. 

794.  Unreasonable       restraint       of       817. 

trade. 

795.  Unreasonable   restraint — Injury       818. 

to  the  pubHc. 

796.  Restraint  such  as  is  reasonably       819. 

necessary.  820. 

797.  Gradual    relaxation    of    rule — 

Reason  for.  821. 

798.  Broad    statement    of    the    rule 

criticized. 

799.  Reasonable     and     partial     re- 

straint allowed.  822. 

800.  The   rule   illustrated. 

801.  Application  of  rule  to  various 

callings.  823. 

802.  Agreements  by  parties  and  em- 

ployes not  to  compete.  824. 

803.  Agreement   by    the    vendor   or       825. 

vendee    of    property    not    to 
conduct    a    designated    busi-       826. 
ness. 

804.  Exclusive  agencies.  827. 

805.  Sales   by   stockholders. 

806.  Where    restraint    is    unlimited       828. 

as  to  space. 

807.  Abandonment  of  arbitrary  geo-       829. 

graphical  limits  as  test. 

808.  Illustration   of    modern    rule.  830, 

809.  Limited      and      unlimited      re- 

straints as  to  time — Limited       831, 
as  to  time. 

810.  Limited  as  to  time — Contracts       832, 

between    employer    and    em- 
ploye. 833, 

811.  Limitations  as  to  time — Effect       834, 

and  importance  of. 

812.  Contracts  unlimited  as  to  time. 

124 


Contracts  between  employer 
and  employe — Attitude  of 
courts  toward. 

Must  be  incidental  or  ancillary 
to  be  valid. 

May  be  invalid  although  for 
sale  of  property  or  business. 

Illustrations  of  invalid  con- 
tracts. 

Invalid  contracts — Contracts  of 
common  carriers. 

Subsequent  contracts  in  re- 
straint of  trade. 

"System"  of  contracts. 

As  affected  by  nature  of  busi- 
ness. 

Nature  of  business — Distinc- 
tion between  sale  of  business 
and  contracts  between  em- 
ployer and  employe. 

Nature  of  business — Corpora- 
tions affected  with  public  in- 
terest. 

Nature  of  business — Rule  fur- 
ther illustrated. 

Good  will — Defined. 

Sale  of  good  will  in  absence  of 
restrictive  covenant. 

Sale  of  good  will — Soliciting 
old  customers. 

When  old  customers  may  be 
solicited. 

Sale  of  good  will  at  involun- 
tary sale. 

Holding  out  to  public  that 
vendor  is  successor. 

Right  to  carry  on  competing 
business. 

Nature  of  business  as  affect- 
ing sale  of  good  will. 

Express  provision  against  com- 
peting  in   business. 

Patents  and  secret  processes.  _ 

Contracts  protecting  ownership 
in. 


125  CONTRACTS    IX    RESTRAINT    OF    TRADE.  §    79O 

835.  Restricting     resale     of     article       847.  Divisibility    or    severability    of 

produced  thereby.  contract. 

836.  Trade    secret — When    partner-       848.  Divisibility  as  to  territorial  ex- 

ship  property.  tent — When  valid. 

837.  Trade   secret  and   patent — Dis-       849.  Divisibility  as  to  time. 

tinction  between.  850.  Breach  of  contract. 

838.  Rights  of  owner  of  patent.  851.  Breach    of    contract — Partners 

839.  Transfer    by    owner    of    rights  and    employer. 

under  patent.  852.  Breach    of    contract — Entering 

840.  Contracts     which     owner     of  another's  employment — When 

patent     is     prohibited     from  is. 

making.  853.  Acts  which  amount  to  a  breach 

841.  Construction.  by  vendor. 

842.  The  rule  illustrated.  854.  Rights    and    remedies — Injunc- 

843.  Contracts  in  restraint  of  trade  tion. 

— Presumptions   as   to  valid-       855.  Remedies — Injunction  —   When 

ity.  may  issue. 

844.  Modern  doctrine.  856.  Remedies — Action  for  damages 

845.  Rules     of     construction  illus-                   or  penalty. 

trated   by   particular   cases.  857.  Breach  of  contract — Parties  in 

846.  Recognition    taken    of    modern  pari  delicto. 

conditions. 

§  790.  Confusion  on  subject — Distinctions. — The  subject 
of  contracts  in  restraint  of  trade  is  broad  in  its  scope.  It  is  a  sub- 
ject about  which  confused  ideas  are  held,  largely  because  con- 
tracts of  this  character  have  not  been  properly  classified  or  per- 
haps more  accurately  because  of  a  failure  to  observe  that  the 
subject  has  two  different  phases.  One  class  of  contracts  in  re- 
straint of  trade  consists  of  such  as  tend  or  are  designed  to  destroy 
or  stifle  competition,  effect  a  monopoly,  artificially  maintain 
prices,  or  by  other  means  hamper  or  obstruct  the  course  of  trade 
as  it  would  be  carried  on  if  left  to  the  control  of  the  natural  law 
governing  trade  or  commerce.^  Contracts  of  the  other  class  do 
not  have  for  their  object  the  creation  of  a  monopoly  but  merely 
prevent  a  person,  natural  or  artificial,  from  employing  his  talents, 
industry  or  capital  in  a  designated  occupation  or  undertaking 
within  general  or  specified  limits  for  a  general  or  specified  time." 
It  is  to  this  latter  class  of  contracts  that  the  present  chapter  will 
be  devoted.  Those  of  the  fonner  will  be  treated  in  the  succeed- 
ing chapters  on  Combinations,  Monopolies  and  Trusts. 

§  791.  Early  doctrine  as  to  contracts  in  restraint  of 
trade. — It  seems  that  originally  all  contracts  whereby  a  per- 
son bound  himself  to  abstain  from  the  exercise  of  a  particular 

'See  Black's  L.  Diet.  (2d  ed.).  'See  Black's  L.  Diet.  (2d  ed.). 


^  792 


CONTRACTS. 


126 


lawful  trade,  business,  or  vocation  were  void  regardless  of 
whether  the  restraint  was  general  or  special.  Thus  as  early  as 
1414  such  agreements  were  termed  *'the  immortal  immorality." 
The  case  that  provoked  this  statement  was  one  in  which  suit 
was  brought  on  a  sealed  obligation  which  contained  a  provision 
that  it  should  be  void,  if  the  other  party  did  not  carry  on  his 
trade  of  dyer  within  the  town  where  he  had  formerly  carried  on 
such  business  for  a  period  of  six  months.^  The  early  doctrine 
still  obtains,  as  a  general  rule,  when  applied  to  contracts  in  re- 
straint of  trade  unlimited  as  to  both  time  and  place.  Such 
agreements  are  usually  declared  void  as  against  public  policy.'* 

§  792.    Distinction  between  general  restrictions  as  to  place 
and  as  to  time. — There  is,  however,  a  distinction  between  a 


'  Y.  B.  2  Hen.  5,  pi.  26.  The  court 
said :  "The  condition  is  against  the 
common  law,  and,  per  Dieu,  if  the 
plaintiff  were  here  he  should  go  to 
prison  until  he  paid  a  fine  to  the 
king."  See  also,  Colgate  v.  Bacheler, 
Cro.  Eliz.  872;  [Nlerriman  v.  Cover, 
104  Va.  428,  51  S.  E.  817.  "It  is  cer- 
tain that  at  a  very  remote  period  the 
words  'contract  in  restraint  of  trade' 
in  England  came  to  refer  to  some 
voluntary  restraint  put  by  contract 
by  an  individual  on  his  right  to  carry 
on  his  trade  or  calling.  Originally 
all  such  contracts  were  considered 
to  be  illegal,  because  it  was  deemed 
they  were  injurious  to  the  public  as 
well  as  to  the  individuals  who  made 
them.  In  the  interest  of  the  freedom 
of  the  individuals  to  contract,  this 
doctrine  was  modified  so  that  it  was 
only  when  a  restraint  by  contract 
was  so  general  as  to  be  coterminous 
with  the  kingdom  that  it  was  treated 
as  void.  That  is  to  say,  if  the  re- 
straint was  partial  in  its  operation, 
and  was  otherwise  reasonable,  the 
contract  was  held  to  be  valid." 
Standard  Oil  Co.  v.  United  States, 
221  U.  S.  1,  55  L.  ed.  619,  31  Sup.  Ct. 
502,  34  L.  R.  A.  (N.  S.)  834.  The 
holdings  in  these  early  cases  are  per- 
haps the  result  of  conditions  that 
existed  in  primitive  England.  As 
seen  in  the  chapter  on  Public  Corpo- 
rations, practically  every  person  who 
carried  on  a  business  public  in  its 
nature,    such   as   blacksmiths,    bakers, 


etc.,  was  affected  with  a  public  inter- 
est and  for  that  reason  subject  to 
public  control.  Owing  to  existing  con- 
ditions such  persons  had  practically 
a  monopoly,  and  any  contract  which 
tended  to  strengthen  this  natural 
monopoly  was  unhesitatingly  de- 
clared void. 

*  Davies  v.  Davies,  L.  R.  36  Ch.  Div. 
359;  Harris  v.  Theus,  149  Ala.  133, 
43  So.  131,  10  L.  R.  A.  (N.  S.)  204n, 
123  Am.  St.  17;  Wright  v.  Ryder,  36 
Cal.  342,  95  Am.  Dec.  186;  Callahan 
V.  Donnolly,  45  Cal.  152,  13  Am.  Rep. 
172;  Cook  v.  Johnson,  47  Conn.  175, 
36  Am.  Rep.  64;  Seay  v.  Spratling, 
133  Ga.  27,  65  S.  E.  137;  Hursen  v. 
Gavin,  59  111.  App.  66,  affd.  162  111. 
Zll,  44  N.  E.  735 ;  Union  Strawboard 
Co.  V.  Bonfield,  193  111.  420,  61  N.  E. 
1038,  86  Am.  St.  346;  Ryan  v.  Ham- 
ilton, 205  111.  191,  68  N.  E.  781 ;  Wiley 
V.  Baumgardner,  97  Ind.  66,  49  Am. 
Rep.  427;  Linneman  v.  Allison,  142 
Ky.  309,  134  S.  W.  134;  Gamewell 
Fire  Alarm  Tel.  Co.  v.  Crane,  160 
Mass.  50,  35  N.  E.  98,  22  L.  R.  A. 
673,  39  Am.  St.  458;  Long  v.  Towl, 
42  Mo.  545,  97  Am.  Dec.  355;  Rob- 
erts V.  Lemont,  1Z  Nebr.  365,  102  N. 
W.  770;  Lange  v.  Werk,  2  Ohio  St. 
519;  Lufkin  Rule  Co.  v.  Fringeli,  57 
Ohio  St.  596,  41  L.  R.  A.  185,  49  N. 
E.  1030,  63  Am.  St.  736;  Taylor  v. 
Saurman,  110  Pa.  St.  3,  1  Atl.  40; 
Richards  v.  American  Desk  &  Seat- 
ing Co.,  87  Wis.  503.  58  N.  W.  787; 
Cottington  v.  Swan,  128  Wis.  321,  107 


127  CONTRACTS    IX    RESTRAINT    OF    TRADE.  §    793 

general  restriction  as  to  place  and  a  general  restriction  as  to  time. 
The  mere  fact  that  the  duration  of  the  restriction  as  to  time  is 
indefinite  or  perpetual  will  not  of  itself  avoid  the  contract  if  it  is 
limited  as  to  place  and  is  reasonable  and  proper  in  all  other  re- 
spects.^  On  the  other  hand,  a  contract  limited  in  duration  to  five 
years  but  unlimited  as  to  space,  where  the  business  or  subject 
was  of  a  local  character,  has  been  held  void."  The  same  has  been 
held  tme  of  contracts  limited  as  to  time  for  twenty-five  years  but 
unlimited  as  to  place.'  The  importance  of  the  limitation  as  to 
time  must  not  be  underestimated,  however.  A  limitation  as  to 
time  may  make  a  contract  which  might  otherwise  be  in  unreason- 
able restraint  of  trade  as  to  territory,  reasonable.*  Thus  a  con- 
tract which  was  unlimited  as  to  space  but  was  limited  in  time  to 
five  years  has  been  upheld  as  not  unreasonable.^ 

§  793.  Reason  for  holding  such  contracts  void. — Two  rea- 
sons are  given  for  declaring  contracts  in  restraint  of  trade  void. 
One  is  the  injury  to  the  public  which  results  from  its  being  de- 
prived of  the  restricted  party's  industry.  The  other  is  the  injury 
to  the  party  himself  caused  by  his  being  precluded  from  pursuing 
his  occupation,  and  thus  being  prevented  from  supporting  himself 
and  his  family.  Both  these  evils  occur  when  the  contract  is  gen- 
eral, not  to  pursue  one's  trade  at  all,  or  not  to  pursue  it  in  the 
entire  realm  or  country.  The  country  suffers  the  loss  in  both 
cases  and  the  party  is  either  deprived  of  his  occupation  or  is 

N.  W.  336;  Kradwell  v.  Thiesen,  131        "  Oakdale  Mfg.  Co.  v.  Garst,  18  R. 

Wis.  97.  Ill   N.  W.  233;  Tecktonius  I.  484,  28  Atl.  973,  23  L.  R.  A.  639. 

V.    Scott,    110   Wis.441,86N.W.   672.  49  Am.  St.  784  (where  the  court  dis- 

See  also,  Hoff  v.  Leneerman,  143  111.  tinguishcd  Wiley  v.  Baumgardner,  97 

.•\pp.  170.  Ind.    66,    cited    in    a    previous    note, 

'Cook   V.    Johnson,    47    Conn.    175,  as    involving   a   purely   local    subject. 

36  .Am.  Rep.  64.  whereas  in  the  case  in  hand  the  busi- 

°  Wiley  V.   Bomgartner,  97  Ind.  66,  ness    was    extensive    and    widespread 

49  Am.  Rep.  427.     See  also,   Seay  v.  and   the  five-year  period  was  a  rea- 

Spratling,  133  Ga.  27,  65  S.  E.  137.  sonahle  time  to  ascertain  what  could 

^  Union  Strawboard  Co.  v.  Bon-  be  done  and  to  seek  a  field  of  opera- 
field,  193  111.  420,  61  N.  E.  1038,  86  tion.)  To  same  eflFect.  Artistic  Porce- 
Am.  St.  346.  lain  Co.   v.    Boch.   76  X.   J.   Eq.,   245 

"Proctor  V.  Sargent.  2  Alan.  &  G.  74   Atl.    680,    139   Am.    St.    758.     See 

20;  Ward  v.  Bvrne,  5  M  &  W^  548;  also,    Nordenfelt   v.    Maxim   Norden- 

Munford  v.  Gething,  7  C.  B.  (N.  S.)  felt  Gun  &c.   Co.    (1894),  A.  C.  535, 

305;    Whittaker    v.    Howe.    3    Beav.  6  Eng.  Rul.  Cas.  413. 
383;  Jones  v.  Lees,  1  H.  &  N.  189. 


§    yg^  COXTRACTS.  128 

obliged  to  expatriate  himself  in  order  to  fulfil  the  contract  con- 
ditions.'° 

§  794.  Unreasonable  restraint  of  trade. — There  is  a  tend- 
ency on  the  part  of  the  modern  authorities  to  abandon,  to  some 
extent  at  least,  the  test  of  space  and  time.  Instead,  reasonable- 
ness is  made  the  test  by  which  to  determine  the  validity  of  con- 
tracts in  restraint  of  trade.  This  test  is  applied  according  to  the 
circumstances  of  the  agreement  and  the  contract  is  not  to  be 
arbitrarily  limited  by  boundaries  of  time  and  space.  The  law- 
has  advanced  with  social  progress,  and  it  is  now  true  at  least  in 
some  jurisdictions  that  contracts  in  restraint  of  trade  are  not 
necessarily  void  by  reason  of  universality  of  time  nor  of  space, 
but  they  depend  upon  the  reasonableness  of  the  restriction  under 
the  conditions  of  each  case."  Under  this  rule  the  generality  of 
time  or  space  is  an  important  factor  in  determining  whether  or 
not  the  contract  is  reasonable,  although  not  in  itself  necessarily 
a  decisive  test.^- 

§  795.    Unreasonable    restraint — Injury    to    the    public. — 

"The  application  of  the  rule  does  not  depend  upon  the  number  of 
those  who  may  be  implicated,  nor  the  extent  of  space  included, 
in  the  combination,  but  upon  the  existence  of  injury  to  the  pub- 
lic."^^     If  the  natural  tendency  of  the  contract  is  to  injuriously 

^"Linneman  v.  Allison,  142  Ky.  309,  Co.  v.  Garst,  18  R.  I.  484,  28  Atl.  973, 

134  S.  W.  134;  ^loorman  v.  Parker-  23  L.  R.  A.  639,  49  Am.  St.  784.    See 

son,   127  La.  835,  54  So.  47;  Oregon  also,  Hubbard  v.  Miller,  27  Mich.  15, 

Steam  Nav.  Co.  v.  Windsor,  20  Wall.  15  Am.  Rep.  153;  Merriman  v.  Cover, 

(U.   S.)    64.     See  also,   cases  above  104  Va.  428,  51  S.  E.  817. 

cited  "Artistic    Porcelain    Co.    v.    Boch, 

"  Maxim    Nordenf  elt   Gun   &   Am-  76  N.  J.  Eq.  245,  74  Atl.  680,  139  Am. 

munition    Co.    v.    Nordenf  elt  (1893),  St.  758.     See  also,  Dowden  v.  Pook 

1    Ch.   630,    affd.    (1894)    A.   C.   535,  (1904),    1    K.   B.   45.     Restraint   ex- 

6    Eng.    Rul.     Cas.    413;     John     D.  tended   to   every   part   of   the   world 

Park     &c.     Co.     v.     Hartman,     153  and  was  wider  than  necessary  for  the 

Fed      24      82     C.     C.     A.     158,     12  protection  of  the  company. 

L.   R.  a!    (N.   S.)    135n;   Stewart  v.  ^' Nester    v.    Continental    Brewing 

Stearns    &    Culver  -Lumber    Co.,    56  Co.,   161   Pa.  St.  473,  29  Atl   102,  24 

Fla.  570,  48  So.  19,  24  L.  R.  A.   (N.  L.  R.  A.  247,  41  Am.  St.  894.    Con- 

S.)     649n;     Swigert    v.    Tilden,    121  tinning  the  discussion  the  court  said: 

Iowa  650 '97  N.  W.  82,  63  L.  R.  A.  "One  combination,  consisting  of  but 

608,   100  Am.   St.  374;  Trenton   Pot-  part    of    those    engaged    in    a    given 

teries   Co.   v.  Oliphant,   58  N.  J.   Eq.  branch    of   trade,    may   amount   to   a 

507,  43  Atl.  723,  46  L.  R.  A.  255,  78  practical    monopoly;    while    another, 

Am.   St.  612:    Cowan  v.  Fairbrother,  less    extensive    in    its   scope,    may    as 

118  N   Car.  406,  24  S.  E.  212.  32  L.  R.  well  bring  disaster  in  its  train.     The 

A.  829,  54  Am.  St.  733;  Oakdale  Mfg.  difference    lies    only    in    degree,    but 


129 


CONTRACTS    IX    RESTRAINT    OF    TRADE. 


795 


affect  public  interests,  the  form  and  declared  purpose  are  of  no 
moment ;  the  agreement  will  be  void  and  it  matters  not  whether 
the  restraint  be  complete  or  partial.^*  Thus  an  agreement  by  one 
to  close  and  keep  closed  his  hotel  in  a  certain  town  for  a  period 
of  three  years,  unaccompanied  by  a  sale  of  the  business,  has  been 
held  contrary  to  public  policy  and  void.^^  And  a  contract  by 
which  a  business  and  its  good  will  were  sold,  the  vendor  agreeing 
not  to  engage  directly  or  indirectly  in  the  same  business  again  in 
the  same  state  for  a  period  of  twenty-five  years,  has  been  held 
void/*^  The  same  has  been  held  true  of  a  contract  by  which 
the  vendor  of  a  business  agreed  not  to  conduct  the  same  for  a 
period  of  five  years  outside  the  limits  of  a  certain  city  in  the 
state."  The  apprehension  of  danger  to  public  interest,  however, 
should  rest  on  evident  grounds,  and  courts  should  refrain  from 
interference  with  the  affairs  of  citizens  unless  their  conduct  in 
some  tangible  form  threatens  the  welfare  of  the  public.^*     It  does 


equally  forbids  the  aid  of  courts. 
*  *  *  So  no  one  can  for  a  moment 
doubt  that  more  serious  injury  would 
result  to  densely  settled  than  to  a 
much  larger  district  with  scattered 
population.  Thus  a  combination  to 
raise  the  price  of  breadstuffs  would 
cause  serious  loss  in  a  city,  while  it 
would  be  comparatively  harmless  in 
an  agricultural  state."  See  also, 
Homer  v.  Ashford,  3  Bing.  322;  Dr. 
Miles  Med.  Co.  v.  John  D.  Park  & 
Sons  Co..  220  U.  S.  2>72,,  55  L.  ed.  502, 
31  Sup.  Ct.  376;  Stewart  v.  Stearns 
Lumber  Co.,  56  Fla.  570.  48  So.  19, 
24  L.  R.  A.  (N.  S.)  649n;  Union 
Strawboard  Co.  v.  Bonfield,  193  111. 
420,  61  N.  E.  1038,  86  Am.  St.  346; 
Lanzit  V.  J.  W.  Sefton  ^Ifg.  Co.,  184 
111.  Z26,  56  N.  E.  393,  75  Am.  St. 
175;  Knight  &c.  Co.  v.  Miller,  172 
Ind.  27,  87  N.  E.  823. 

"  Stewart  v.  Stearns  &c.  Lumber 
Co..  56  Fla.  570,  48  So.  19,  24  L.  R.  A. 
(N.  S.)  649n  (agreement  by  lessors 
not  to  establish  a  store  and  to  issue 
to  employes  merchandise  checks 
against  their  wages  directed  exclu- 
sively to  lessees).  Nester  v.  Con- 
tinental Brewing  Co.,  161  Pa.  St. 
473.  29  Atl.  102.  24  L.  R.  A.  247.  41 
Am.  St.  894;  Charleston  Nat.  Gas 
Co.   V.    Kanawha   Nat.   Gas   Light   & 

9— Co.\TR.\CTS,  Vol.  2 


Fuel   Co.,   58   W.   Va.  22,   50   S.   E. 
876.  112  Am.  St.  936. 

"  Clemmons  v.  Meadows,  123  Ky. 
178.  29  Ky.  L.  619,  94  S.  W.  13,  6 
L.  R.  A.  (N.  S.)  847,  124  Am.  St. 
339.  (In  this  case  it  is  obvious  that 
the  main  purpose  of  the  contract  was 
the  creation  of  a  monopoly.)  See 
in  connection  with  this  case,  Mar- 
shalltown  Stone  Co.  v.  Des  Moines 
Brick  Mfg.  Co.,  114  Iowa  574,  87  X. 
W.  496. 

^'Lufkin  Rule  Co.  v.  Fringeli,  57 
Ohio  St.  596,  49  X.  E.  1030,  41  L.  R. 
A.  185,  6Z  Am.  St.  736. 

'•  Consumers'  Oil  Co.  v.  X^'unnea- 
ker,  142  Ind.  560,  41  X.  E.  1048,  51 
Am.  St.  193.  The  courts  said:  "It  is 
not  the  interests  of  the  parties  alone, 
which  in  the  eye  of  the  law  are  to 
be  considered  the  true  test,  but  in 
each  particular  case,  under  the  facts, 
the  judicial  inquiry  is :  Will  it  be  in- 
imical to  the  public  interest?  If  so. 
then,  and  in  that  event,  the  agree- 
ment rnust  be  held  as  hostile  to  "pub- 
lic policv.   and  therefore  void." 

"Leslie  v.  Lorillard,  110  X.  Y.  519 
18  X.  E.  Z62,  1  L.  R.  A.  456;  Wood 
v.  Whitehead  Bros.  Co..  165  N  Y. 
545.  59  N.  E.  357:  Harbison-Walker 
Refractories  Co.  v.  Stanton,  227  Pa. 
55,  75  Atl.  988.     See  also.  My  Laun- 


>>  / 


796 


CONTRACTS. 


130 


not  follow  from  the  authorities  to  which  reference  has  been  made 
that  every  restriction  of  competition  imposed  by  contracts  be- 
tween competing  dealers  is  illegal.  The  modern  rule  is  more 
limited  in  its  application.^^ 

§  796.  Restraint  such  as  is  reasonably  necessary. — Some 
courts  lay  down  tlie  further  rule  that  a  contract  in  restraint  of 
trade  will  be  enforced  when  the  restraint  is  no  more  extensive 
than  is  reasonably  necessary  to  protect  the  interests  of  the  party 
in  whose  favor  it  is  given,  and  it  does  not  interfere  with  the 
interests  of  the  public.^"  Thus  a  contract  which  bound  the  de- 
fendant not  to  engage  in  a  business  of  the  character  conducted 
by  the  plaintiff  either  in  the  city  of  Jersey  or  within  five  hundred 
miles  of  that  city  was  held  unreasonable  so  far  as  it  embraced 
territory  outside  of  Jersey  City  and  the  contract  was  to  that  ex- 
tent invalid.  The  court  said,  however,  that  in  respect  to  Jersey 
City  it  was  clearly  necessary  for  the  protection  of  the  business  as 
it  existed  at  the  time  of  the  sale,  and  to  that  extent  not  in  opposi- 


dry  Co.  v.  Schmeling,  129  Wis.  597, 
109  N.  W.  540. 

^*  United  States  v.  Trans-Missouri 
Assn.,  19  U.  S.  App.  36,  58  Fed.  58, 
7  C.  C.  A.  15,  24  L.  R.  A.  IZ. 

=0  Taylor  Iron  &  Steel  Co.  v.  Nich- 
ols, IZ  N.  J.  Eq.  684,  69  Atl.  186,  24 
L.  R.  A.  (N.  S.)  933n,  133  Am.  St. 
753n ;  Diamond  Match  Co.  v.  Roe- 
btr,  106  N.  Y.  473,  13  N.  E.  419,  60 
Am.  Rep.  464;  Threlkeld  v.  Stewart, 
24  Okla.  403,  103  Pac.  630,  138  Am. 
St.  888;  Harbison-Walker  Refrac- 
tories Co.  V.  Stanton,  227  Pa.  55,  75 
Atl.  988.  See  also,  Merriman  v.  Co- 
ver, 104  Va.  428,  51  S.  E.  817.  In 
giving  application  to  the  present-day 
doctrine  the  true  test  is  whether  the 
restraint  is  such  only  as  to  afford  a 
fair  protection  to  the  interest  of  the 
party  in  favor  of  whom  it  is  given, 
and  not  so  large  as  to  interfere  with 
the  interest  of  the  public.  And  the 
restriction  must  be  reasonable,  not 
oppressive,  nor  out  of  proportion  to 
the  benefits  which  the  vendee  may, 
in  reason,  expect  to  flow  from  the  re- 
strictive features  of  the  contract. 
Swigert  v.  Tilden,  121  Iowa  650,  97 
N.  W.  82,  63  L.  R.  A.  608,  100  Am.  St. 
374.    "The  vendor  will  be  bound  by 


any  covenant  which  is  reasonably 
necessary  for  the  preservation  and 
protection  of  the  property  which  he 
sells."  Anchor  Electric  Co.  v. 
Hawkes,  171  Mass.  101,  50  N.  E.  509, 
41  L.  R.  A.  189,  68  Am.  St.  403.  "It 
is  now  settled  that  a  covenant,  even 
if  it  be  unlimited  both  in  time  and 
space  *  *  *,  not  to  engage  in  a  par- 
ticular business  is  valid  if  it  is  coup- 
led with  the  sale  of  a  business  and 
is  necessary  to  give  to  the  purchaser 
what  he  has  bought."  Marshall  En- 
gine Co.  V.  New  Marshall  Engine 
Co.,  203  Mass.  410,  89  N.  E.  548.  See 
also,  in  connection  with  the  forego- 
ing Massachusetts  cases  that  of  Uni- 
ted Shoe  Machinery  Co.  v.  Kimball, 
193  Mass.  351,  79  N.  E.  790.  "The 
test  usually  laid  down  by  which  to 
determine  whether  a  contract  in  par- 
tial restraint  of  trade  is  reasonable  is. 
whether  it  affords  only  a  fair  pro- 
tection to  the  interests  of  the  party 
in  whose  favor  it  is  made,  without 
being  so  large  in  its  operation  as  to 
interfere  with  the  interests  of  the 
public."  Walter  A.  Woods  &c.  Co. 
V.  Greenwood  Hardware  Co.,  75  S. 
Car.  78,  55  S.  E.  973,  9  L.  R.  A.  (N. 
S.)  501.  See  also,  post,  §  799  et  seq. 


131  CONTRACTS    IN    RESTRAINT    OF    TRADE.  §    797 

tion  to  public  policy  and  to  that  extent  might  be  enforced."^  A 
contract  may  also  be  invalid  in  so  far  as  it  attempts  to  embrace 
territory  outside  of  a  particular  state  but  remain  en  forcible  within 
the  territory  of  the  state  if  when  so  enforced  it  conflicts  with  no 
federal  or  state  law.-- 

§  797.  Gradual  relaxation  of  rule — Reason  for. — This 
gradual  relaxation  of  the  severity  with  which  agreements  in  re- 
straint of  trade  were  treated  has  been  brought  about  by  the 
growth  of  industrial  activities  and  the  enlargement  of  commer- 
cial facilities  which  tend  to  render  monopolies  less  easy  of  accom- 
plishment.-^ "The  changes  in  the  methods  of  doing  business 
and  the  increased  freedom  of  communication  which  have  come 
in  recent  years  have  very  materially  modified  the  view  to  be  taken 
of  particular  contracts  in  reference  to  trade.  The  comparative 
ease  with  which  one  engaged  in  business  can  turn  his  energies  to 
a  new  occupation,  if  he  contracts  to  give  up  his  old  one,  makes 
the  hardship  of  such  a  contract  much  less  for  the  individual  than 
formerly,  and  the  commercial  opportunities  which  open  the  mar- 
kets of  the  world  to  the  merchants  of  every  country  leave  little 
danger  to  the  community  from  an  agreement  of  an  individual 
to  cease  to  work  in  a  particular  field."-* 

§  798.  Broad  statement  of  the  rule  criticized. — This  doc- 
trine had  its  origin  during  the  period  of  great  industrial  develop- 
ment experienced  by  the  English  speaking  people  during  the 
latter  part  of  the  nineteenth  century.  Those  cases  which  seem  to 
consider  the  question  as  one  wholly  between  the  parties  and  which 
lay  down  the  rule  that  if  the  restraint  is  no  more  than  the  pur- 
chaser requires  as  a  protection  to  the  enjoyment  of  what  he  pur- 
chased or  for  what  the  vendor  received  a  fair  consideration,  there 
is  no  objection  to  the  contract  because  the  limits  of  trade  and 

^  Fleckenstein   Bros.   Co.   v.  Fleck-  43  Atl.  723.  46  L.  R.  A.  255,  78  Am. 

enstein.  76  N.  J.  L.  613.  71  Atl.  265,  St.  612.     See,  post.  §  847. 

24  L.  R.  A.   (N.  S.)  913.  =>  Leslie  v.  Lorillard.  110  X.  Y.  519, 

-  Monongahela    River    Consol.    &c.  18  N.  E.  363,  1  L.  R.  A.  456. 

Co.  V.  Jute,  210  Pa.  288.  59  Atl.  188,  =*  Anchor   Electric   Co.   v.    Hawkes, 

105  Am.  St.  812.  2  Am.  &  En?.  Ann.  171  Mass.  101,  50  N.  E.  509,  41  L.  R. 

Cas.  951.    See  also,  Trenton  Potteries  A.  189,  68  Am.  St.  403. 
&c.  Co.  V.  Oliphant,  58  X.  J.  Eq.  507, 


§    799  CONTRACTS.  1 32 

commerce  are  now  so  great,  under  modern  conditions,  that  a  gen- 
eral restraint  is  not  more  than  is  reasonable  to  afford  protection 
to  the  purchaser  in  his  business,  have  been  criticized  and  termed 
fallacious  for  the  reason  that  they  ignore  the  interest  of  the  pub- 
lic in  the  question."^  It  is  believed  that  the  justness  of  this 
criticism  will  become  more  and  more  apparent,  and  that  in  this 
period  of  combination  and  monopoly  the  interest  of  the  public  is 
perhaps  the  only  general  rule  that  can  safely  be  applied.  The 
conflict  between  the  cases  which  seem  to  consider  the  question 
as  one  wholly  between  the  parties  and  those  in  which  injury  to 
the  public  is  made  the  test  is,  however,  more  apparent  than  real. 
The  courts  will  perhaps,  when  forced  to  choose  between  protect- 
ing the  vendee  in  his  purchase  and  the  welfare  of  the  public, 
unhesitatingly  decide  in  favor  of  the  latter. 

§  799.    Reasonable  and  partial  restraint  allowed. — As  is 

apparent  from  the  preceding  sections  of  this  chapter,  the  severity 
of  the  original  rule  regarding  contracts  in  restraint  of  trade  has 
been  more  and  more  relaxed  by  exceptions  and  qualifications  and 
a  gradual  change  has  taken  place.  The  centuries  have  worked  a 
transformation  in  the  modern  field  of  business  society  and  the 
original  rule  has  been  gradually  modified  to  meet  these  changed 
conditions  and  now  the  doctrine  in  regard  to  contracts  in  restraint 
of  trade  is  that  whether  the  covenant  be  general  or  particular  its 
validity  must  be  determined  by  the  question  whether  it  is  reason- 
able and  is  based  upon  a  valid  consideration.^^     The  rule  of  rea- 

'"Lufkin  Rule  Co.  v.  Fringeli,  57  trade  are  void,  as  being  against  pub- 
Ohio  St.  596,  49  N.  E.  1030,  41  L.  R.  lie  policy.  But  contracts  only  in  par- 
A.  185,  63  Am.  St.  736.  tial  restraint  of  trade  are  valid  and 

"^  See,  Nordenfelt  v.  Maxim  Nor-  enforcible,  if  reasonable  and  support- 
den  felt  Gun  Co.  (1894),  App.  Cas.  ed  by  a,  consideration  good  in  law." 
535;  Mitchel  v.  Reynolds,  1  P.  Wms.  Lauzit  v.  J.  W.  Sefton  Mfg.  Co.,  184 
181,  1  Smith's  Leading  Cas.  (11th  ed.)  111.  326,  56  N.  E.  393,  75  Am.  St.  171. 
406;  Rousillon  v.  Rousillon,  L.  R.  14  A  restraint  is  not  general  when  it 
Ch.  Div.  351 ;  Knapp  v.  S.  Jarvis  Ad-  applies  only  to  a  particular  person 
ams  Co.,  135  Fed.  1008,  70  C.  C.  A.  within  prescribed  and  reasonable  lim- 
536;  Anchor  Electric  Co.  v.  Hawkes,  its.  Duffy  v.  Shockey,  11  Ind.  70,  71 
171  Mass.  101,  50  N.  E.  509,  41  L.  R.  Am.  Dec.  348.  The  contract  must  of 
A.  189,  68  Am.  St.  403;  Leslie  v.  Lor-  course  be  supported  by  a  considera- 
illard,  IIQ  N.  Y.  519,  18  N.  E.  363.  1  tion.  Cleaver  v.  Lenhart,  182  Pa.  St. 
L.  R.  A.  456n;  Cottington  v.  Swan,  285,  Zl  Atl.  811.  But  a  contract  of 
128  Wis.  321,  107  N.  W.  336.  "It  is  this  kind  requires  no  greater  pecuni- 
too  well  settled  to  require  discussion  ary  or  valuable  consideration  to  sup- 
that  contracts  in  general  restraint  of  port  it  than  any  other  contract.   Hub- 


133 


CONTRACTS   IN    RESTRAINT   OF   TRADE. 


§    799 


son  now  obtains."  An  agreement  in  restraint  of  trade  will  be 
upheld  when  it  imposes  only  suck  restrictions  as  are  reasonably 
necessary  to  protect  the  interest  of  the  favored  parties,  regard 
being  had  to  the  nature  of  the  business,  and  is  not  so  large  as  to 
interfere  with  the  interests  of  the  public.-^ 


bard  v.  Miller,  27  Mich.  15,   15  Am. 
Rep.  153. 

-'  Standard  Oil  Co.  v.  United  States, 
221  U.  S.  1,  55  L.  ed.  619,  31  Sup.  Ct. 
502;  United  States  v.  American  To- 
bacco Co.,  221  U.  S.  106,  55  L. 
ed.  663,  31  Sup.  Ct.  632.  This  is 
not  true  in  Michigan,  however.  Sec- 
tion 1  of  Act  No.  329  of  the  Public 
Acts  of  1905,  page  507,  provides: 
"All  agreements  and  contracts  by 
which  any  person,  copartnership  or 
corporation  promises  or  agrees  not 
to  engage  in  any  avocation,  employ- 
ment, pursuit,  trade,  profession  or 
business,  whether  reasonable  or  un- 
reasonable, partial  or  general,  lim- 
ited or  unlimited,  are  hereby  declared 
to  be  against  public  policy  and  illegal 
and  void."  The  act  does  not  apply, 
however,  where  the  only  object  of 
the  contract  is  to  protect  the  vendor 
in  the  purchase  of  the  good  will. 

■*  Horner  v.  Graves,  7  Bing.  735 ; 
Nordenfelt  v.  Maxim  Nordenfelt 
Gun  &c.  Co.,  L.  R.  (1894)  App.  Cas. 
535;  Harris  v.  Theus,  149  Ala.  133, 
43  So.  131,  10  L.  R.  A.  (N.  S.)  204n, 
123  Am.  St.  17 ;  Edgar  Lumber  Co. 
v  .Cornie  Stave  Co.,  95  Ark.  449,  130 
S.  W.  452 ;  Trentman  v.  Wahrenburg, 
30  Ind.  App.  304,  65  N.  E.  1057; 
Morse  &c.  Mach.  Co.  v.  Morse,  103 
Mass.  72>,  4  Am.  Rep.  513;  Mever  v. 
Estes,  164  Mass.  457,  41  N.  E.  683,  32 
L.  R.  A.  283 ;  Anchor  Electric  Co.  v. 
Havvkes,  171  Mass.  101,  50  N.  E.  509, 
41  L.  R.  A.  189.  68  Am.  St.  403 ;  Mar- 
shall Engine  Co.  v.  Xew  Marshall 
Engine  Co..  203  Mass.  410,  89  N.  E. 
548:  Hubbard  v.  Miller,  27  Mich.  15, 
15  Am.  Rep.  153;  Beal  v.  Chase,  31 
Mich.    490;    Buck    v.    Coward,    122 


^lich.  530,  81  N.  W.  328;  National 
Benefit  Co.  v.  Union  Hospital  Co.,  45 
Minn.  272,  47  N.  W.  806,  11  L.  R.  A. 
437 ;  Finck  v.  Schneider  Granite  Co., 
187  Mo.  244,  86  S.  W.  213,  106  Am. 
St.  452 :,  Roberts  v.  Lemont,  72  Nebr. 
365,  102  N.  W.  770;  Bancroft  v.  Un- 
ion Embossing  Co.,  72  N.  H.  402,  57 
Atl.  97,  64  L.  R.  A.  298;  EUerman  v. 
Chicago  Junction  &c.  Stock  Yards 
Co.,  49  N.  J.  Eq.  217,  23  Atl.  287; 
Trenton  Potteries  Co.  v.  Oliphant,  58 
N.  J.  Eq.  507,  43  Atl.  723,  46  L.  R.  A. 
255,  78  Am.  St.  612;  Taylor  Iron  & 
Steel  Co.  v.  Nichols,  72,  N.  J.  Eq.  684, 
69  Atl.  186,  24  L.  R.  A.  (N.  S.)  933n, 
133  Am.  St.  753n;  Diamond  Match 
Co.  V.  Roeber,  106  N.  Y.  473,  13  N.  E. 
419,  60  Am.  Rep.  464;  Tode  v.  Gross, 
127  N.  Y.  480,  28  N.  E.  469,  13  L.  R. 
A.  652n,  24  Am.  St.  475;  Wood  v. 
Whitehead  Bros.  Co.,  165  N.  Y.  545, 
59  N.  E.  357;  Cowan  v.  Fairbrother, 
118  N.  Car.  406,  24  S.  E.  212,  32  L.  R. 
A.  829n,  54  Am.  St.  722;  Herreshoff 
v.  Boutineau,  17  R.  I.  3,  19  Atl.  712, 
8  L.  R.  A.  469,  22  Am.  St.  850 ;  Til- 
linghast  v.  Boothby,  20  R.  I.  59,  27 
Atl.  344;  Oregon  Nav.  Co.  v.  Win- 
sor,  20  Wall.  (U.  S.)  64,  22  L.  ed. 
315 ;  Fowle  v.  Park.  131  U.  S.  88,  22 
L.  ed.  67,  9  Sup.  Ct.  658:  Dr.  Miles 
Med.  Co.  V.  John  D.  Park  &  Sons 
Co.,  220  U.  S.  272,  55  L.  ed.  502.  31 
Sup.  Ct.  376;  Kradwell  v.  Thicsen, 
131  Wis.  97.  Ill  N.  W.  233;  WaUer 
A.  Wood  Mowing  &  Reaping  Co.  v. 
Greenwood  Hardw.  Co.,  75  S.  Car. 
378,  55  S.  E.  973.  9  L.  R.  A.  (N.  S.) 
501n.  See  also,  Louisville  Board  of 
Fire  Underwriters  v.  Johnson,  133 
Ky.  797,  119  S.  W.  153,  24  L.  R.  A. 
(N.  S.)   I53n. 


§  8oo 


CONTRACTS. 


134 


§  800.    The  rule  illustrated. — Thus  one  engaged  in  a  pro- 

fession-"'^  or  any  legitimate  business^*^  may,  on  selling  his  property 
and  good  Avill  therein,  bind  himself  not  to  resume  practice  or 
business  within  a  reasonable  time  in  a  designated  place  or  coun- 
try, regard  being  had  to  the  nature  of  the  business.  A  contract 
whereby  a  physician  agrees  not  to  practice  medicine  or  surgery 
within  a  certain  town  or  in  a  particular  locality  within  a  reason- 
able area  is  not  void  as  against  public  pohcy  but  valid.^^     And 


^McCurry  v.  Gibson,  108  Ala.  451, 
18  So.  808,  54  Am.  St.  177;  Webster 
V.  Williams,  62  Ark.  101,  34  S.  W. 
537 ;  Cook  v.  Johnson,  47  Conn.  175, 
36  Am.  Rep.  64 ;  Ryan  v.  Hamilton, 
205  111.  191,  68  X.  E.  781;  Linn  v. 
Sigsbee,  67  111.  75 ;  ]\Iartin  v.  Murphv, 
129  Ind.  464,  28  X.  E.  1118;  Beatty 
V.  Coble,  142  Ind.  329,  41  N.  E.  590; 
Smallev  v.  Green,  52  Iowa  241,  3  X. 
W.  78, '35  Am.  Rep.  267n;  Cole  v.  Ed- 
wards, 93  Iowa  477.  61  N.  W.  940; 
Warfield  v.  Booth,  33  Md.  63;  Gill- 
man  V.  Dwight,  13  Gray  (Mass.)  356, 
74  Am.  Dec.  634;  Dwight  v.  Hamil- 
ton, 113  I\Iass.  175;  Doty  v.  Martin, 
32  Mich.  462;  Timmerman  v.  Dever, 
52  Mich.  34,  17  X.  W.  230,  50  Am. 
Rep.  240;  Gordon  v.  Mansfield,  84 
Mo.  App.  367 ;  Greenfield  v.  Gilman, 
140  X.  Y.  168,  35  X.  E.  435;  In  re 
McClurg's  Appeal,  58  Pa.  St.  51; 
French  v.  Parker.  16  R.  I.  219,  14  Atl. 
870,  27  Am.  St.  733. 

'"Moore  &c.  Hardw.  Co.  v.  Tow- 
ers Hardware  Co.,  87  Ala.  206,  6  So. 
41,  13  Am.  St.  23 ;  Hursen  v.  Gavin, 
59  111.  App.  66,  affd.  162  111.  377,  44 
N.  E.  735;  Eisel  v.  Hayes,  141  Ind. 
41,  40  X.  E.  119;  W.  S.  Wolverton  v. 
Bruce  (Ind.  T.),  89  S.  W.  1018  (sale 
of  insurance  agency)  ;  Arnold  v. 
Kreutzer,  67  Iowa  214,  25  X.  W.  138: 
Sauser  v.  Kearney,  147  Iowa  335,  126 
X.  W.  322  (sale  of  lumber  business)  ; 
Jayne  &c.  Lumber  Co.  v.  Turner,  132 
Iowa  7,  109  X.  W.  307 ;  Wilson  v.  De- 
laney,  137  Iowa  636,  113  X.  W.  842; 
Roller  V.  Ott  (see  W.  W.  Roller  & 
Co.  V.  Ott),  14  Kans.  609;  Western 
Dist.  Warehouse  Co.  v.  Hobson,  96 
Ky.  550,  29  S.  W.  308;  Guerand  v. 
Bandelet,  32  Md.  561,  3  Am.  Rep.  164; 
Boutelle  v.  Smith,  116  Mass.  Ill; 
Smith  V.  Brown,  164  Mass.  584.  42  X. 
E.  101 ;  Up  River  Ice  Co.  v.  Denier, 


114  Mich.  296,  72  X.  W.  157,  68  Am. 
St.  480;  Kronschnabel-Smith  Co.  v. 
Kronschnabel,  87  Minn.  230,  91  X.  W. 
892;  Espenson  v.  Koepke,  93  Minn. 
278,  101  X.  W.  168  (agreement  not 
to  engage  in  purchase  of  hogs  or  cat- 
tle within  ten  miles  of  village  on  sale 
of  an  interest  in  butchering  busi- 
ness) ;  Gill  v.  Ferris,  82  Mo.  156: 
Angelica  Jacket  Co.  v.  Angelica,  121 
Mo.  App.  226,  98  S.  W._  805  (con- 
tract relating  to  sale  of  jackets  and 
aprons)  ;  Downing  v.  Lewis,  59  Xi^ebr. 
38,  80  X.  W.  261 ;  Engles  v.  Morgen- 
stern,  85  Xebr.  51,  122  X.  W.  688 
(sale  of  lumber  yard)  ;  Finger  v. 
Hahn,  42  X.  J.  Eq.  606,  8  Atl.  654, 
44  X.  J.  Eq.  604,  17  Atl.  1104;  Fran- 
cisco v.  Smith,  143  X.  Y.  488,  38  X. 
E.  980;  Kramer  v.  Old,  119  X.  Car.  1, 
25  S.  E.  813,  34  L.  R.  A.  389,  56  Am. 
St.  650 ;  King  v.  Fountain,  126  X.  Car. 
196,  35  S.  E.  427  (sale  of  livery  busi- 
ness) :  Morgan  v.  Perhamus,  36  Ohio 
St.  517,  38  Am.  Rep.  607;  Smith's  Ap- 
peal, 113  Pa.  St.  579,  6  Atl.  251 ;  Pat- 
terson V.  Glassmire,  166  Pa.  St.  230, 
31  Atl.  40:  Palmer  v.  Toms,  96  Wis. 
367,  71  X.  W.  654:  Cottington  v. 
Swan,  128  Wis.  321,  107  X.  W.  336 
(sale  of  liverv  stable)  :  Palmer  v. 
Toms.  96  Wis.  367,  71  X.  W.  654  (sale 
of  livery  business).  An  agreement 
limiting  the  number  of  shares  which 
should  be  issued  to  each  stockholder 
in  a  contemplated  corporation  would 
not  be  binding  on  the  corporation  but 
would  be  ])inding  on  the  parties  to 
the  agreement.  Hladovec  v.  Paul, 
222  111.  254,  78  X.  E.  619,  affg.  124  111. 
App.  589. 

"' Davis  V.  Mason,  5  T.  R.  118;  At- 
kyns  v.  Kinnier,  4  Exch.  776;  Sainter 
V.  Ferguson.  7  C.  B.  716;  Moll  v. 
Moony,  30  Ga.  413;  Goodman  v.  Hen- 
derson, 58  Ga.  567;  Linn  v.  Sigsbee, 


OD 


CONTRACTS    IX    RESTRAINT    OF    TRADE. 


§  8oi 


when  contracts  of  this  character  further  provide  that  a  sum 
named  as  Hquidated  damages  shall  be  paid  if  the  one  restrained 
breaks  the  agreement,  the  penalty  is  recoverable  in  an  action 
based  upon  the  breach  of  the  agreement.^-  Or  a  physician  may 
be  compelled  by  injunction  to  comply  with  his  agreement  not  to 
practice  his  profession  in  a  designated  place.^^  An  agreement 
whereby  an  inexperienced  physician  w^as  not  to  practice  his  pro- 
fession in  a  certain  county  for  a  period  of  five  years  is  binding 
w^hen  based  on  an  agreement  by  an  experienced  doctor  located  in 
such  county  to  employ  the  former  as  an  assistant  at  a  monthly 
salary  during  the  mutual  pleasure  of  the  parties.^* 

§801.    Application  of  rule  to  various  callings. — The  same 
is  true  of  other  callings."^     The  courts  have  upheld  contracts  not 


67  111.  75;  Aliller  v.  Elliott,  1  Ind. 
484,  50  Am.  Dec.  475;  Halde- 
man  v.  Simonton,  55  Iowa  144, 
7  N.  W.  493;  Cole  v.  Edwards,  93 
Iowa  477,  61  N.  W.  940;  Warfield  v. 
Booth,  33  Md.  63;  Dwight  v.  Hamil- 
ton, 113  ;Mass.  175;  Doty  v.  Martin, 
32  IMich.  462;  Timmerman  v.  Dever, 
52  Mich.  34.  17  N.  W.  230,  50  Am. 
Rep.  240;  Thompson  v.  I\Ieans,  11 
Sm.  &  M.  (Miss.)  604;  Smith  v. 
Smith.  4  Wend.  (N.  Y).  468;  Mott 
V.  ^lott,  11  Barb.  (N.  Y.)  127;  Hol- 
brook  V.  Waters,  9  How.  Pr.  (N.  Y.) 
335;  Amedon  v.  Gannon,  6  Hun  (N. 
Y.)  384;  Xiver  v.  Rossman.  18  Barb. 
(N.  Y.)  50;  Threlkeld  v.  Steward,  24 
Okla.  403,  103  Pac.  630,  138  Am.  St. 
888.  In  re  McClurg's  Appeal,  58  Pa. 
St.  51;  Bigony  v.  Tyson,  75  Pa.  St. 
157;  Carroll  v.  Hickes,  10  Phila. 
(Pa.)  308;  In  re  Bett's  Appeal.  10 
Week.  N.  Cas.  (Pa.)  431;  McNutt  v. 
McEwen.  1  Week.  N.  Cas.  (Pa.) 
552,  10  Phila.  (Pa.)  112;  Wolff  v. 
Hirschfeld,  23  Tex.  Civ.  App.  670,  57 
S.  W.  572. 

"Martin  v.  Murphy,  129  Ind.  464, 
28  N.  E.  1118. 

"McCurrv  v.  Gibson,  108  Ala.  451. 
18  So.  808.  54  Am.  St.  177 ;  Freuden- 
thal  V.  Espy,  45  Colo.  488.  102  Pac. 
280,  26  L.  R.  A.  (N.  S.)  961;  Rvan  v. 
Hamihon.  205  111.  191,  68  N.  E.  781 ; 
Threlkeld  v.  Steward.  24  Okla.  403, 
103  Pac.  630.  138  Am.  St.  888.  In 
the  absence  of  anything  to  show  ir- 


remedial  damages  or  that  an  adequate 
remedy  cannot  be  obtained  at  law, 
the  injunction  mav  be  denied.  Osius 
V.  Hinchman,  150'  Mich.  603,  114  N. 
W.  402,  16  L.  R.  A.   (N.  S.)_393. 

^Freudenthal  v.  Espy,  45  Colo. 
488,  102  Pac.  280,  26  L.  R.  A.  (X.  S.) 
961. 

^'^Welstead  v.  Hadley,  21  Times  L. 
R.  165  (agreement  not  to  publish 
magazine  for  ten  years  within  twenty 
miles  of  London)  ;  Edmundson  v. 
Render,  90  L.  T.  (N.  S.)  814  (solic- 
itor's clerk  not  to  practice  within  a 
radius  of  fifteen  miles  of  a  town)  ; 
Hooper  v.  Willis,  93  L.  T.  236.  21 
Times  L.  R.  691  (fourteen  years  or 
at  any  place  within  thirty  miles  of 
the  towns  of  B.  or  S.)  ;  Dendy  v. 
Henderson,  11  Exch.  194  (not  to 
practice  for  twenty-one  years  within 
twentv-one  miles  of  a  town)  ;  Mav 
V.  O'Xeill.  44  L.  J.  Ch.  (X.  S.)  660 
(not  to  practice  within  counties  of 
Middlesex  or  Essex,  nor  within  city 
of  London)  ;  Howard  v.  Woodward, 
34  L.  J.  Ch.  (X.  S.)  47  (not  to  prac- 
tice within  liftv  miles  of  town)  ;  Giles 
V.  Hart,  5  JuV.  (X.  S.)  1381  (sur- 
geon's assistant  not  to  practice  with- 
in a  radius  of  five  miles)  ;  Carnes  v. 
Xesbitt,  7  H.  &  X.  778  (ten  miles)  ; 
Sainter  v.  Ferguson.  7  C.  B.  716 
(seven  miles)  ;  Hastings  v.  Whitley, 
2  Exch.  611  (ten  miles)  ;  Fo.x  v. 
Scard,  33  Beav.  327  (not  to  practice 
within   twelve  miles  of  town   during 


§    So  I  CONTRACTS,  1 36 

to  practice  law  in  a  certain  city,^**  not  to  do  blacksmithing  in  a 
certain  locality,^'  or  not  to  engage  in  a  specified  line  of  business 
at  a  certain  city,^®  such  as  conducting  a  newspaper  in  a  desig- 
nated county,^'  or  a  livery  stable  in  a  given  town/''  or  engaging 
in  the  laundry  business  ''either  by  conducting  a  laundry  establish- 
ment on  his  own  behalf  or  in  conjunction  or  jointly  with  other 
persons  or  by  entering  the  employment  of  any  person,  firm  or 
corporation  engaged  in  such  business  in  the  capacity  of  an  officer, 
manager,  solicitor,  or  in  any  other  capacity  whatsoever,""  or 
refraining  from  the  sale  of  intoxicating  liquors  in  the  county 
where  the  contract  is  made  or  in  adjoining  counties  for  a  period 
of  six  years,*-  or  soliciting  insurance  in  the  district  in  which  an 
agent  acts  for  his  employer  after  he  leaves  his  employment." 

employer's  life  or  ten  years  after  his  wide.     Beetham  v.  Fraser,  21  Times 

death);  Hampton  v.  Caldwell  (Ark.),  L.  R.  8.                                            o^,    , 

129  S.  W.  816   (barber)  ;   Bullock  v.  '' Smalley  v.  Greene,  52  Iowa  241,  3 

Johnson    110  Ga.   486,  35    S.   E.   703  N.  W.  78,  35  Am.  Rep.  267n. 

(produce  dealer):   Hursen  v.   Gavin,  "Stafford   v.    Shortreed,    62    Iowa 

59  111.  App.  66,  affd.  162  111.  Zll ,  44  524,  17  N.  W.  756. 

X.  E.  735   (agreement  not  to  engage  ""Rugg  v.  Rohrback,   110  111.  App. 

in    undertaking    business    in    city    of  532;  Beard  v.  Dennis,  6  Ind.  200,  63 

Chicago  for  five  years)  :  Linneman  v.  Am.  Dec.  380;  Grow  v.  Seligman,  47 

Allison,   142  Kv.  309,   134  S.  W.  134  Mich.  607,  11  N.  W.  404:  Bradford  & 

(agreement    by    undertaker    not    to  Carson  v.  Montgomery  Furniture  Co. 

carry   on   such   business   within   fifty  115  Tenn.  610,  92  S.  W.  1104,  9  L.  R. 

miles  of   a  given  town);   Skaggs  v.  A.   (N.  S.)  979.                         ^^r    ^ 

Simpson,   2>Z  Ky.  L.  410,   110   S.   W.  ™McAuliffe    v.   Vaughan,    135    Ga 

251     (marble    and    tombstone    busi-  852,  70  S.  E.  322,  33  L.  R.  A.  (N.  S.) 

ness)  ;  Thomas  v.  Gavin   (N.  Mex.),  255.     To    same    effect,    Andrews    v. 

110  Pac.  841    (agreement  not  to  buy  Kingsbury,    112    111.    App.    518,    affd. 

or  sell  lumber  in  a  certain  town  or  212  111.  97,  72  N.  E.  11;  Vandiver  v. 

its   vicinity    for  two   years)  ;    Broad-  Robertson,   125  Mo.  App.  307,  102  S. 

brooks  V.  Tolles,  114  App.  Div.    (N.  W.   659;    Mapes    v.    Metcalf,    10    N. 

Y.)  646,  99  N.  Y.  S.  996   (radius  of  Dak.  601,  88  N.  W.  713.    (The  vendor 

twenty-five    miles    for    a    period    of  was  to  receive  a  certain  share  of  the 

twenty-five  years)  ;  Turner  v.  Abbott,  proceeds  realized  from  publication  of 

116  Tenn.  718,  94  S.  W.  64,  6  L.  R.  A.  legal  notices.) 

(X.    S.)    892n,   8  Am.   &   Eng.    Ann.  *» Breeding  v.  Tandy,   148  Ky.  345, 

Cas.  150   (young  dentist  agreeing  not  146  S.  W.  742.                       c-  i.      i- 

to   compete   with   his    employer   in    a  "My    Laundry    Co.    v.    Schmeling-, 

certain  town).     See,   however,   Man-  129  Wis.  597,  109  N.  W.  540.  To  same 

deville  v    Harmon,  42  N.  J.  Eq.  185,  effect,    Downing   v.   Lewis,    59   Nebr. 

7     Atl.    Zl.     But    an    agreement    by  38,  80  N.  W.  261.    See  also,  Barrone 

which   a   cutter    for   a   tailor    agreed  v.  Moseley  Bros.,  144  Ky.  698,  139  S. 

"not  to  enter   into  any  business  ar-  W.  869  (agreement  to  abandon  shirt, 

rangement    in    competition    with    or  collar  and  cuff  laundry  business), 

that  would  in  any  way  interfere  with  *^  Walker    v.    Lawrence,     177    Fed. 

the  business  carried  on"  by  his  em-  2(yZ,  101  C.  C.  A.  417.      To  same  ef- 

ployer,  "at  his  establishment  in  Wey-  feet,    Mitchell   v.    Branham,    104    Mo. 

bridge  or  the  city  of  London,  or  at  App.  480,  79  S.  W.  739. 

any  of  his  addresses  of  the  future"  *^  Barr  v.  Craven,  89  L.    1     574,  2U 

has    been   held   unreasonable   as    too  Times  L.  R.  51.    To  same  effect,  Eu- 


^17 


CONTRACTS    IX    RESTRAINT    OF    TRADE. 


§    802 


§  802.  Agreements  by  partners  and  employes  not  to  com- 
pete.— A  partner  who  sells  his  interest  in  tiie  firm  lousiness 
may  contract  not  to  start  a  competitive  business  nor  to  work  for 
a  competitor.*''  So  also  may  an  employe  make  a  similar  agree- 
ment." 

§  803.  Agreement  by  the  vendor  or  vendee  of  property 
not  to  conduct  a  designated  business. — The  vendor  of  prop- 
erty may  also  agree  with  the  vendee  that  he  will  not  use  the 
property  purchased  in  competition  with  a  business  retained  by 


reka  Laundry  Co.  v.  Long,  146  Wis. 
205,  131  N.  W.  412,  35  L.  R.  A.  (N. 
S.)  119,  except  that  it  has  to  do  with 
an  agreement  by  the  driver  of  a 
laundry  wagon  not  to  solicit  busi- 
ness from  the  customers  on  that 
route  for  one's  self  or  a  rival  of  the 
employer  during  the  term  of  his  em- 
ployment or  two  years  thereafter. 

"Hursen  v.  Gavin,  59  111.  App.  66, 
affd.  162  111.  Zn,  44  N.  E.  735;  O'Neal 
V.  Hines,  145  Ind.  Z2,  43  N.  E.  946; 
Western  Dist.  Warehouse  Co.  v. 
Hobson,  96  Ky.  550,  29  S.  W.  308  (all 
members  of  the  firm  agreeing  not 
to  re-engage  in  business  for  ten 
years)  ;  Moorman  v.  Parkerson,  127 
La.  835,  54  So.  47  (sale  of  interest  in 
insurance  business)  ;  Angier  v.  Web- 
ber, 14  Allen  (Mass.)  211,  92  Am. 
Dec.  748;  Boutelle  v.  Smith,  116 
Mass.  Ill  (binding  on  both  members 
of  the  firm)  ;  Ropes  v.  Upton.  125 
Mass.  258;  Curtis  v.  Gokev.  68  N.  Y. 
300:  Wooten  v.  Harris,  153  N.  Car. 
43,  68  S.  E.  898:  Siegel  v.  IMarcus,  18 
N.  Dak.  214,  119  N.  W.  358,  20  L.  R. 
A.  (N.  S.)  769n:  Lange  v.  Werk,  2 
Ohio  St.  519;  Thomas  v.  Miles,  3 
Ohio  St.  274.  A  contract  by  a  retir- 
ing partner  not  to  engage  in  the  same 
business,  although  containing  no  spe- 
cific limitation  as  to  territory  or  tirne, 
has,  taking  into  consideration  the  cir- 
cumstances of  the  case,  the  nature 
and  extent  of  the  business,  and  the 
situation,  objects  and  interests  of  the 
parties,  been  construed  as  applying 
to  the  entire  United  States,  but  not 
to  other  parts  of  the  world,  and  has 
been  upheld  to  that  extent.  Frame  v. 
Ferrell,  166   Fed.  702.  92  C.  C.  A.  374. 

"Knapp  V.  S.  Tarvis  Adams  Co.. 
135  Fed.  1008,  70  C.  C.  A.  536.  Eure- 


ka Laundry  Co.  v.  Long,  146  Wis. 
205,  131  N.  W.  412,  35  L.  R.  A.  (N.  S) 
119  and  note,  drawing  a  distinction 
between  an  injunction  sought  as  a 
means  of  indirectly  securing  the  spe- 
cific performance  of  an  agreement 
for  services  and  an  injunction  sought 
as  a  means  of  preventing  an  injury 
to  business.  Compare  with.  Jewel  Tea 
Co.  v.  Novak,  146  Wis.  224,  131  N. 
W.  415,  where  the  contract  was  sim- 
ilar to  those  in  the  foregoing  cases 
except  that  the  restraint  imposed  was 
limited  to  the  life  of  the  contract. 
See  also,  Tivoli,  Manchester  v.  Col- 
ley,  52  Week.  Rep.  632,  20  Times  L. 
R.  437,  holding  that  an  actress  may 
be  enjoined  from  appearing  in  a  the- 
ater other  than  that  in  which  she  was 
under  contract  to  appear.  A  com- 
pany controlling  a  number  of  thea- 
ters may  engage  owners  of  attrac- 
tions and  bind  them  not  to  appear  in 
competing  houses,  notwithstanding  it 
thereby  induces  owners  to  violate 
their  contracts  with  such  competing 
houses.  Roseneau  v.  Empire  Circuit 
Zo.,  131  App.  Div.  (N.  Y.)  429,  115 
N.  Y.  S.  511.  See,  however.  Grand 
Union  Tea  Co.  v.  Lewitsky.  153 
:Mich.  244.  116  N.  W.  1090,  to  the 
contrary,  decided  under  a  statute  pro- 
viding, '  ".Ml  agreements  and  con- 
tracts by  which  any  person,  copart- 
nership or  corporation  promises  or 
agrees  not  to  engage  in  any  avoca- 
tion, employment,  pursuit,  trade, 
profession  or  business,  whether  rea- 
sonable or  unreasonable,  partial  or 
general,  limited  or  unlimited,  are 
iierebv  declared  to  be  against  public 
policv  and  illeeal  and  void."  See 
also,' infra,  §  809  et  seq. 


So4 


CONTRACTS. 


138 


the  vendor/''  such  as  a  stipulation  on  the  part  of  the  vendee  that 
he  will  not  sell  sand  off  of  land  purchased  from  the  vendor  when 
the  sole  business  of  the  vendor  is  that  of  selling  sand.*^  A  stipu- 
lation in  a  deed  or  conveyance  that  intoxicating  liquors  shall  not 
be  sold  on  the  property  conveyed  has  been  held  valid. ^^  A  con- 
tract by  which  the  manufacturers  of  a  certain  kind  of  printing 
press  agree  with  the  purchaser  not  to  sell  to  others  similar  presses 
to  be  used  in  the  same  wav  has  been  held  valid." 


§  804.  Exclusive  agencies. — Agreements  whereby  one 
party  for  a  valuable  consideration  contracts  to  act  as  exclusive 
agent,  and  is  given  the  exclusive  agency  for  a  certain  kind  of 
goods,  for  some  local  business,  are,  in  the  absence  of  a  statutory 
enactment  to  the  contrary,  upheld,^"  such  as  an  agreement  by  a 


*°  Moris  V.  Tuscaloosa  Mfg.  Co.,  83 
Ala.  565,  3  So.  689;  Hitchcock  v. 
Anthon.v,  83  Fed.  779,  28  C.  C.  A. 
80;  Wittenberg  v.  Mollvneaux,  60 
Nebr.  583,  83  N.  W.  842;  Herpol- 
sheimer  v.  Funke,  1  Nebr.  (unof.) 
304,  95  N.  W.  687;  Dunlop  v.  Greg- 
ory, 10  X.  Y.  241,  61  Am.  Dec.  746; 
Stines  V.  Dorman,  25  Ohio  St.  580; 
Oregon  Steam  Nav.  Co.  v.  Winsor, 
20  Wall.   (U.  S.)  64,  22  L.  ed.  315. 

'■  Hodge  V.  Sloan,  107  N.  Y.  244,  17 
N.  E.  335.  -A.  deed,  granting  and  con- 
veying certain  land  for  quarry  pur- 
poses, provided  "that  the  rock  and 
material  taken  therefrom  by  the 
party  of  the  second  part  or  by  its 
lessees  or  assigns  is  for  railroad  pur- 
poses, and  the  party  of  the  second 
part  or  its  lessees  or  assigns  is  not 
to  carry  on  the  business  of  furnish- 
ing rock  for  any  other  purpose  than 
that  of  railroad  purposes,  or  for 
such  purposes  and  in  such  business 
as  the  party  of  the  second  part  may 
be  engaged."  Held,  that  the  deed 
was  not  to  be  construed  as  giving 
the  grantee  the  right  to  quarry  or 
remove  rock  and  then  forbidding  cer- 
tain uses  of  it  after  removal,  and 
w^as  not,  therefore,  in  restraint  of 
trade.  Pavkovich  v.  Southern  Pac.  R. 
Co.,  150  Cal.  39,  87  Pac.  1097. 

*^Star  Brewerv  Co.  v.  Primas.  163 
111.  652.  45  N.  'E.  145:  Sullivan  v. 
Kohlenberg.  31  Tnd.  App.  215.  61  N. 
E.  541 ;  Sutton  v.  Head,  86  Ky.   156, 


5  S.  W.  410,  9  Am.  St.  274  (not  to 
be  sold  in  less  quantities  than  five 
gallons)  ;  Whealkate  Min.  Co.  v. 
Mulare,  152  Mich.  607,  116  N.  W. 
360;  Anderson  v.  Rowland,  18  Tex. 
Civ.  App.  460,  44  S.  W.  911. 

'"  New  York  Bank  Note  Co.  v.  Kid- 
der   Press   Mfg.    Co.,    192   Mass.   391, 

78  N.  E.  463.  To  same  effect,  New 
York  Bank  Note  Co.  v.  Hamilton 
Bank  &c.  Co.,  180  N.  Y.  280,  IZ  N.  E. 
48. 

^"^  Keith  V.  Hershberg  Optical  Co., 
48  Ark.  138,  2  S.  W.  Ill ;  Twomey  v. 
People's  Ice  Co.,  66  Cal.  233,  5  Pac. 
158;  Weiboldt  v.  Standard  Fashion 
Co.,  80  111.  App.  61;  Garden  City 
Sand  Co.  v.  Southern  Fire  &c.  Co., 
124  111.  App.  599,  affd.  Lanyon  v. 
Garden    Citv   Sand   Co.,  223   111.   616, 

79  N.  E.  313,  9  L.  R.  A.  (N.  S.) 
446n  (contract  to  manufacture  and 
sell  a  given  product  exclusively  to 
another  who  agreed  to  take  such 
product)  ;  Superior  Coal  Co.  v.  E. 
R.  Darlington  Lumber  Co.,  236  Til. 
83,  86  N.  E.  180,  127  Am.  St.  275 
(sale  of  coal)  ;  Brown  v.  Rounsavell, 
78  111.  589;  Ferris  v.  American  Brew- 
ing Co.,  155  Tnd.  539,  58  N.  E.  701, 
52  L.  R.  A.  305:  Roller  v.  Ott  (see 
W.  W.  Roller  &  Co.  v.  Ott),  14  Kans. 
609;  Peck- Williamson  Heating  &:c. 
Co.  V.  Miller  (Ky.).  118  S.  W.  376; 
Woods  V.  Hart,  SO  Nebr.  497,  70  N. 
W.  53;  New  York  Trap-Rock  Co.  v. 
Brown,  61  N.  J.  L.  536,  43  Atl.  100 


139  CONTRACTS    IX    RESTRAIXT    OF    TRADE.  §    805 

dry  goods  house  to  act  as  the  cxckisive  a^ent  for  patterns  issued 
by  a  certain  company.^^  The  same  has  Ijeen  held  as  to  an  agree- 
ment by  a  manufacturer  of  teeth  to  sell  (nily  to  a  certain  dentist.^" 
This  rule  may,  ho\vc\-er,  be  changed  by  statutors^  enactment.^* 

§  805.  Sales  by  stockholders. — Stockholders  in  a  corpora- 
tion may,  on  selling  their  stock  or  on  disposing  of  the  corporation 
assets,  bind  themselves  by  a  reasonable  contract  not  to  enter  into 
a  competing  business  with  the  corporation,  or  the  business  con- 
ducted by  the  purchaser.^' 

§  806.    Where  restraint  is  unlimited  as  to  space. — As  has 

already  been  mentioned  all  contracts  in  restraint  of  trade  were, 
during  medieval  times,  considered  void.  This  rule  was  gradually 
modified,  but  conditions  remained  such  that  it  seemed  necessary 
to  maintain  a  limit  as  to  space;  consequently  the  old  cases  and 
some  modern  ones  hold  that  a  restriction  which  embraces  the 
whole  country  or  an  entire  state  is  against  public  policy  and  void, 
for  the  reason  that  the  citizen  would  either  be  compelled  to  give 
up  his  chosen  profession  or  expatriate  himself,  and  for  the  fur- 
ther reason  that  the  contract  itself  tended  to  create  a  monopoly 
and  to  drive  men  of  skill  in  business  from  the  state.^^ 

(contract  to  act  as  sole  agent  to  sell  1139;   S.   S.  White  Dental   Mfg.   Co. 

output  of  a  factory).    A  contract  by  v.    Hertzberg    (Tex.    Civ.    App.),   51 

which  one  is  employed  to  buy  all  the  S.    W.    355.      Compare    with    Forrest 

molasses  a  corporation  shall  need  in  Photographic  Co.  v.  Hutchinson  Gro- 

its  business,   the  compensation  to  be  eery    (3o.    (Tex.    Civ.    App.),    108    S. 

ten    cents    per    barrel    for    each   bar-  W.  768. 

rel     purchased    by    the    corporation,  "Davis  v.   Booth.   131    Fed.   31,  65 

whether  the  purchase  should  be  made  C.  C.  A.  269;   Robinson  v.  Suburban 

through  the  one  so  employed  or  not,  Brick  Co..  127  Fed.  804,  62  C.  C.  A. 

has  been  held  valid.     Healy  v.  South-  484;  Up  River  Ice  Co.  v.  Denier,  114 

em   &c.   ^Ifg.   Co.,   125   La.    1038,   52  Mich.  296,  72  N.  W.  157.  68  Am.  St. 

So.    150.      Compare    with    Banker    v.  480;  Buckhout  v.  Wiltwer,  157  Mich. 

Willard,  46  App.  Div.    (N.   Y.)   Z7Z,  406,  122  N.  W.  184,  23  L.  R.  A.   (N. 

61  N.  Y.  S.  447.  S.)    507;   Kronschnabol-Smith   Co.  v. 

"Butterick  Pub.  Co.  v.  Fisher,  203  Kronschnabel,    87    Minn.    230,   91    N. 

Mass.  122,  89  N.  E.  189,  133  Am.  St.  W.  892;  Anders  v.  Gardner,   151   N. 

283.  Car.  604,  66  S.   E.  665;   Kradwell  v. 

"=  Clark  v.  Crosby,  Z7  Vt.  188.  Thiescn,  131  Wis.  97,  111^  N.  W.  233. 

"  Pope-Turnbo    v.    Bedford     (Mo.  See,    however,    Merchant's    Ad    Sign 

App.),   127   S.   W.   426,   holding  that  Co.  v.  Sterling,  124  Cal.  429,  57  Pac. 

under   the    Missouri    antitrust    law    a  468,  46  L.  R.  .A..  142,  71  Am.  St.  94. 

contract  to  use  only  a  specified  hair  "See  Prugnell  v.  Gosse,  Alyen  67, 

restorer  in  treating  patients  for  bald-  which    contains    a    statement    to    the 

ness  or  dandruff  was  void.     To  same  effect    that    the    promise    cannot    be 

effect.    Gust    Feist    Co.    v.    Albertvpe  good     if     the     restraint     be     general 

Co.    (Tex.    Civ.    App.),    109    S.  'W.  throughout      England.      Mitchel      v. 


8o7 


CONTRACTS. 


140 


§  807.  Abandonment  of  arbitrary  geographical  limits  as 
test. — With  the  changing  of  business  conditions  and  the 
practical  annihilation  of  space  the  courts  gradually  abandoned 
arbitrary  geographical  limits  as  a  test.^*'  The  rule  as  now  stated 
is  that  generally  the  contract  will  be  upheld  if  the  restriction  is 
reasonable,  that  is,  reasonable  with  reference  to  the  interest  of 
the  parties  concerned,  and  reasonable  in  reference  to  the  interest 
of  the  public,  so  drawn  and  guarded  as  to  afford  ample  protec- 
tion to  the  party  in  whose  favor  it  is  imposed,  while  at  the  same 
time  it  is  in  no  way  injurious  to  the  public.^^ 


Reynolds,  1  Sm.  L.  C  (lUh  ed.) 
406;  Lanzit  v.  J.  W.  Sefton  Mfg.  Co., 
184  111.  326,  56  N.  E.  393,  75  Am.  St. 
171 ;  Harding  v.  American  Glucose 
Co.,  182  111.  551,  55  N.  E.  577,  64  L. 
R.  A.  738,  74  Am.  St.  189;  Taylor  v. 
Blanchard,  13  Allen  (Mass.)  370,  90 
Am.  Dec.  203 ;  Bishop  v.  Palmer,  146 
Mass.  469,  16  N.  E.  299,  4  Am.  St. 
339.  Compare  the  foregoing  Massa- 
chusetts cases,  however,  with  Anchor 
Electric  Co.  v.  Hawkes,  171  Mass. 
101,  50  N.  E.  509,  41  L.  R.  A.  189,  68 
Am.  St.  403.  "No  case  is  to  be  found 
where  such  a  contract  has  been  up- 
held which  covered  the  whole  of 
England  or  a  state  of  this  union." 
Lang  V.  Werk,  2  Ohio  St.  519.  "We 
do  not  think  the  extent  of  the  terri- 
tory embraced  in  a  state  affects  the 
principle.  Whatever  may  be  the  ex- 
tent of  the  state,  the  monopoly  re- 
stricts the  citizen  from  pursuing  his 
business,  unless  he  transfers  his  resi- 
dence and  his  allegiance  to  some 
other  state  or  country.  Its  tendency 
is  to  drive  business  and  citizens  who 
are  skilled  in  business  from  this  to 
other  states.  If  one  is  not  at  liberty 
to  carry  on  his  business  here,  but  is 
at  liberty  to  do  so  elsewhere,  he  will 
be  likely  to  go  elsewhere,  and  employ 
others  to  go  with  him."  Lufkin  Rule 
Co.  V.  Fringeli,  57  Ohio  St.  596,  49 
N.  E.  1030,  41  L.  R.  A.  185,  63  Am. 
St.  736,  quoting  from  Taylor  v. 
Blanchard,  13  Allen  (Mass.)  370,  90 
Am.  Dec.  203.  "It  is  against  the  pol- 
icy of  the  state  that  its  citizens 
should  not  have  the  privilege  of  pur- 
suing their  lawful  occupations  at 
some  place  within  its  borders,  and 
that  a  citizen  should  be  compelled  to 


leave  the  state  to  engage  in  his  busi- 
ness and  to  support  himself  and  fam- 
ily. It  is  true  that  a  contract  may  be 
valid  which  embraces  portions  of 
more  than  one  state.  Trade  and  busi- 
ness are  not  affected  by  state  lines, 
and  a  contract  might  be  good  in  re- 
straint of  trade  which  embraced, 
within  reasonable  limits,  parts  of  dif- 
ferent states,  but  an  agreement  which 
applies  to  the  whole  state  is  void,  and 
cannot  be  enforced."  Union  Straw- 
board  Co.  V.  Bonfield,  193  111.  420, 
61  N.  E.  1038,  86  Am.  St.  346. 

°'See  Oakdale  Mfg.  Co.  v.  Garst, 
18  R.  I.  484,  28  Atl.  973.  23  L.  R.  A. 
639,  49  Am.  St.  784.  This  is  not  true 
in  all  jurisdictions,  however.  See 
Seay  v.  Spratling,  133  Ga.  27,  65  S. 
E.  137;  Floding  v.  Floding,  137  Ga. 
531,  11  S.  E.  729;  Kinney  v.  Scar- 
brough  Co.  (Ga.),  74  S.  E.  772 

"  Nordenfelt  v.  IMaxim  Norden- 
felt  &c.  Co.  (1894),  A.  C.  535;  Greg- 
ory V.  Spieker,  110  Cal.  150,  42  Pac. 
576,  52  Am.  St.  70;  Fisheries  Co.  v. 
Lennen,  116  Fed.  217,  affd.  130  Fed. 
533,  65  C.  C.  A.  79;  Harrison  v.  Glu- 
cose Refining  Co.,  116  Fed.  304,  53  C. 
C.  A.  484,  58  L.  R.  A.  915 ;  National 
Enameling  &c.  Co.  v.  Haberman,  120 
Fed.  415;  S.  Jarvis  Adams  Co.  v. 
Knapp,  121  Fed.  34,  58  C.  C.  A.  1 ; 
Thibodeau  v.  Hildreth,  124  Fed.  892, 
60  C.  C.  A.  78,  63  L.  R.  A.  480; 
Ryan  v.  Hamilton,  205  111.  191,  68 
N.  E.  781;  Eisel  v.  Haves,  141  Ind. 
41,  40  N.  E.  119;  Swigert  v.  Tilden, 
121  Iowa  650,  97  N.  W.  82,  (^l  L.  R. 
A.  608,  100  Am.  St.  374;  Davis  v. 
Brown,  98  Ky.  475,  32  S.  W.  614,  Zd 
S.  W.  534;  Anchor  Electric  Co.  v. 
Hawkes,  171  Mass.  101,  50  N.  E.  509, 


141 


CONTRACTS    IN    RESTRAINT    OF    TRADE. 


80S 


§  808.  Illustrations  of  modern  rule. — In  those  jurisdic- 
tions where  this  rule  obtains  a  contract  coextensive  with  the  ter- 
ritory of  Great  Britain,^'*  the  District  of  Columbia,"*  one  state,"" 
or  over  several  states  of  the  union,"^  as  "not  to  solicit  freights 
nor  do  any  business  with  Port  au  Prince  in  or  from  any  place  or 
places  in  the  United  States  east  of  the  Mississippi  river,""-  or 
over  the  whole  United  States,"  within  fifteen  hundred  miles  of 
Chicago,"  or  without  limitation  as  to  space  at  all,"  have  been 
upheld  wdiere  it  appeared  that  the  restraint  placed  on  trade  was 


41  L.  R.  A.  189,  68  Am.  St.  403 
(modifying  earlier  Massachusetts  de- 
cisions) ;  Marshall  Engine  Co.  v. 
New  Marshall  Engine  Co.,  203  Mass. 
410,  89  N.  E.  548;  Buck  v.  Coward, 
122  Mich.  530,  81  N.  E.  328;  Kron- 
schnabel-Smith  Co.  v.  Kronschnabel, 
87  i\linn.  230,  91  X.  W.  892;  Bancroft 
V.  Union  Embossing  Co.,  12  N.  H. 
402,  57  Atl.  97,  64  L.  R.  A.  298; 
Althen  v.  Vreeland  (N.  J.  Eq.),  36 
Atl.  479;  Diamond  }^Iatch  Co.  v. 
Roeber.  106  N.  Y.  473,  13  N.  E.  419, 
60  Am.  Rep.  464;  Tode  v.  Gross.  127 
N.  Y.  480,  28  N.  E.  469,  13  L.  R.  A. 
652n,  24  Am.  St.  475 ;  Magnolia  Metal 
Co.  V.  Price,  65  App.  Div.  (N.  Y.) 
276,  12  N.  Y.  S.  792;  Cowan  v.  Fair- 
brother.  118  N.  Car.  406,  24  S.  E.  212, 
32  L.  R.  A.  829.  54  Am.  St.  IZZ; 
Shute  V.  Heath,  131  N.  Car.  281,  42 
S.  E.  704;  Hulen  v.  Earel,  13  Okla. 
246,  12,  Pac.  927;  Nester  v.  Conti- 
nental Brewing  Co.,  161  Pa.  St.  473, 
29  Atl.  102,  24  L.  R.  A.  247.  41  Am. 
St.  894;  Herreshoff  v.  Boutineau,  17 
R.  I.  3,  19  Atl.  712,  8  L.  R.  A.  469, 
Zl  Am.  St.  850;  Tillinghast  v.  Booth- 
bv,  20  R.  I.  59,  Zl  Atl.  344.  See  also, 
ante.  §  790. 

°« Underwood  v.  Barker  (1899),  1 
Ch.  300;  Nordenfelt  v.  Maxim  Nord- 
enfelt  &c.  Ammunition  Co.  (1894), 
A.  C.  535. 

"'Godfrey  v.  Roessle.  5  App.  D.  C. 
299. 

'"Oregon  Steam  Nav.  Co.  v.  Win- 
sor.  20  Wall.  (U.  S.)  64.  22  L.  ed. 
315.  See.  however,  Union  Straw- 
board  Co.  V.  Bonfield,  96  111.  App. 
413,  aflFd..  193  Til.  420,  61  N.  E.  1038, 
86  Am.  St.  346. 

"  Swigert  V.  Tilden,   121  Iowa  650, 


97  X.  W.  82,  63  L.  R.  A.  608.  100  Am. 
St.  374;  Trenton  Potteries  Co.  v.  Oli- 
phant,  58  X.  J.  Eq.  507,  43  Atl.  12Z, 
46  L.  R.  A.  255,  78  Am.  St.  612;  Dia- 
mond Match  Co.  V.  Roeber,  106  X.  Y. 
473,  13  X.  E.  419,  60  Am.  Rep.  464. 
See,  however,  Lanzit  v.  J.  W.  Sefton 
Mfg.  Co..  83  111.  App.  168,  revd.  184 
111.  326,  56  N.  E.  393.  75  Am.  St.  171. 

"-Brett  V.  Ebel.  29  App.  Div.  (X. 
Y.)  256,  51  X.  Y.  S.  573. 

*"  Xational  Enameling  &c.  Co.  v. 
Haberman,  120  Fed.  415  (no  limita- 
tion as  to  time)  ;  Frame  v.  Ferrell, 
166  Fed.  702,  92  C.  C.  A.  374.  See, 
however,  Seay  v.  Spratling.  133  Ga. 
27,  65  S.  E.  137;  Mallinckrodt  Chemi- 
cal Works  V.  X'emnick,  83  Mo.  App 
6,  affd.  169  Mo.  388,  69  S.  W.  355. 

**  Harrison  v.  Glucose  Refining  Co., 
116  Fed.  304.  53  C  C.  A.  484.  58  L. 
R.  A.  915.  See,  however,  Harding  v. 
American  Glucose  Co..  182  111.  551, 
55  X.  E.  577,  64  L.  R.  A.  738,  74  Am. 
St.  189.  See  also,  Althen  v.  Vree- 
land (X.  J.).  36  Atl.  479.  holding 
radius  of  1000  miles  too  great  when 
business  did  not  e.xtend  more  than 
100  miles. 

•^Goddard  v.  Crefield  Mills.  75 
Fed.  818,  21  C  C.  A.  530;  Anchor 
Electric  Co.  v.  Hawkes.  171  Mass. 
101,  50  X.  E.  509.  41  L.  R.  A.  189, 
68  Am.  St.  403 ;  Marshall  Engine  Co. 
V.  Xew  Marshall  Engine  Co.,  203 
IMass.  410,  89  X.  E.  548;  Bancroft  v. 
Union  Embossing  Co.,  72  X.  H.  402, 
57  Atl.  97.  64  L.  R.  A.  298;  Tode  v. 
Gross,  127  N.  Y.  480.  28  X.  E.  469, 
13  L.  R.  A.  652n.  24  Am.  St.  475; 
Oakdale  Mfg.  Co.  v.  Garst,  18  R. 
I.  484.  28  Atl.  973,  23  L.  R.  A.  639. 
49  Am.   St.  784. 


§    809  CONTRACTS.  1 42 

reasonable  under  the  circiunstances."*'  It  will  be  found,  however, 
upon  examination  of  those  cases  which  lay  down  the  rule,  that  a 
contract  may  be  valid  notwithstanding  it  is  unlimited  as  to  space. 
They  are  nearly  all  cases  in  which  there  was  a  limitation  as  to 
space  or  a  limitation  as  to  time,  and,  as  has  already  been  pointed 
out,  a  contract  in  restraint  of  trade  may  be  rendered  valid  by  a 
provision  limiting  the  time  for  which  it  is  to  endure,  which  would 
otherwise  be  invalid. 

§  809.  Limited  and  unlimited  restraints  as  to  time — Lim- 
ited as  to  time. — The  preceding  cases  have  dealt  largely  with 
the  reasonableness  of  contracts  in  restraint  of  trade  as  to  space, 
although  in  many  of  them  the  questions  of  reasonableness  as  to 
space  and  time  overlap  each  other.  The  following  cases  will 
have  reference  more  particularly  to  the  reasonableness  of  con- 
tracts in  restraint  of  trade  as  to  the  time  covered  by  them.  Two 
companies  were  engaged  in  the  business  of  issuing  benefit  certifi- 
cates entitling  the  holders,  in  case  of  sickness  or  injury,  to  care 
and  treatment  in  any  hospital  provided  by  the  company.  The 
plaintiff  company  had  formed  a  lucrative  business  in  several 
states  and  acquired  valuable  contracts  with  hospitals  therein.  The 
two  companies  entered  into  a  contract,  by  the  terms  of  which 
the  plaintiff  agreed  to  refrain  for  the  term  of  three  years  from 
selling  certificates  in  the  territory  named,  to  turn  over  to  the  de- 
fendant its  hospital  contracts,  in  consideration  of  which  the 
defendant  agreed  to  pay  plaintiff  a  certain  sum  of  money,  and 
also  to  refrain  for  a  like  period  of  three  years  from  selling  certifi- 
cates to  railroad  employes  within  the  territory  named.  It  was 
held  that  the  contract  was  not  void  as  being  in  restraint  of  trade.*^ 

§  810.  Limited  as  to  time — Contracts  between  employer 
and  employe. — As  a  general  rule  it  is  held  that  an  employer 
has  the  right  to  contract  with  an  employe  not  to  go  into  the  em- 
ployment of  a  competitor,  for  a  reasonable  time  after  his  employ- 
ment terminates,  within  the  territory  where  the  employer  seeks 

"United    Shoe    Machinery    Co.    v.  "National  Benefit     Co.    v.     Union 

Kimball,  193  Mass.  351,  79  N.  E.  790 ;  Hospital  Co.,  45  Minn.  272,  47  N.  W. 

Underwood  v.  Smith,  135  N.  Y.  661,  806,  11  L.  R.  A.  437. 

32  N.  E.  648. 


143 


COXTRACTS    IN    RESTRAINT    OF    TRADE. 


;ii 


his  market,  and  whether  such  covenant  is  reasonable  and  binding 
is  a  judicial  question  which  must  depend  in  each  case  upon  the 
peculiar  facts  and  circumstances.*^  Thus,  contracts  entered  into 
by  traveling  salesmen  or  solicitors  with  their  employers  that  they 
will  not  act  as  agents  for  a  competitor  of  their  employers,  nor 
engage  in  the  business  on  their  own  account,  for  a  period  of  six 
months,""  one  year,'"  two  years,^^  three  years,'-  and  five  years," 
have  been  held  valid.^*  Even  a  restraint  which  was  to  endure 
for  ninety-nine  years  has  been  upheld. ^^  The  statutes  of  some 
jurisdictions,  however,  provide  that  the  restriction  can  last  only 
so  long  as  the  one  in  whose  favor  it  runs  continues  in  such  busi- 
ness.^® 

§  811.  Limitations  as  to  time — Effect  and  importance  of. — 
There  is  a  well-recognized  distinction  between  a  general  restric- 
tion as  to  place  and  one  as  to  time.  An  agreement,  reasonable 
in  other  respects,  will  not,  as  a  general  rule,  be  declared  invalid 
because  indefinite  or  unlimited  as  to  duration."     However,  re- 


~  Carter  v.  Ailing,  43  Fed.  208. 

'"Hackett  v.  A.  L.  &  J.  J.  Reyn- 
olds Co.,  30  Misc.  (N.  Y.)  72,2,,  62 
N.  Y.  S.  1076. 

'"Underwood  v.  Barker,  80  L.  T. 
(X.  S.)  306;  American  Ice  Co.  v. 
Lynch,  74  N.  J.  Eq.  298,  70  Atl.  138, 
(ice  wagon  driver)  ;  Davies  v.  Racer, 
72  Hun  (N.  Y.)  43.  55  N.  Y.  St.  191, 
25  N.  Y.  S.  293:  Erie  County  Milk 
Assn.  V.  Ripley,  18  Pa.  Sup.  Ct.  28. 

"Benwell  v.  Inns,  24  Beav.  307; 
Rousillon  V.  Rousillon,  L.  R.  14  Ch. 
Div.  351 ;  Rogers  v.  Aladdocks 
(1892),  3  Ch.  346;  Hopp's  Tea  Co. 
v.JDorsey.  99  111.  App.   181. 

"  Badische  Anilin  &c.  Fabrik  v. 
Schott  (1892),  3  Ch.  447  (contract 
as  to  space  covered  the  whole 
world)  ;  Harrison  v.  Glucose  Sugar 
Ref.  Co.,  116  Fed.  304,  53  C.  C.  A. 
484.  58  L.  R.  A.  915;  Carter  v.  Ai- 
ling. 43  Fed.  208. 

"  Magnolia  Metal  Co.  v.  Price,  65 
App.  Div.  (X.  Y.)  276.  72  X.  Y.  S. 
792  (agent  had  obtained  confidential 
information  by  reason  of  his  em- 
ployment). For  a  case  holding  five 
years  unreasonable,  see  Leetham  v. 
White.  23  Times  L.  R.  254. 

'*  See  also,  Hinde  v.  Gray,  1  Mann. 


&  G.  195  (agreement  not  to  enter 
into  competing  business  for  ten  years 
upheld)  ;  Hooper  v.  Willis,  93  L.  T. 
236,  21  Times  L.  R.  691  (fourteen 
years)  ;  Lyddon  v.  Thomas,  17  Times 
L.  R.  450  (agreement  by  brokers  not 
to  carry  on  similar  business  for 
twenty  years  upheld). 

"  Diamond  Match  Co.,  v.  Roeber, 
106  X.  Y.  473,  13  X.  E.  419,  60  Am. 
Rep.  464. 

'°Citv  Carpet  &c.  Works  v.  Jones, 
102  Cai.  506.  36  Pac.  841 ;  Ragsdale  v. 
Nagle,  106  Cal.  222.  39  Pac.  628; 
Hulen  V.  Earel,  13  Okla.  246,  72  Pac. 
927.     See  further,  post,  §  812. 

"  Davies  v.  Davies,  36  Ch.  Div. 
359;  Archer  v.  Marsh,  6  Ad.  &  El. 
959;  Hitchcock  v.  Coker,  6  Ad.  &  El. 
438;  IMcCurrv  v.  Gibson,  108  Ala. 
451,  18  So.  808,  54  Am.  St.  177; 
Brown  v.  Kling,  101  Cal.  295,  35  Pac. 
995 :  Cook  V.  Johnson,  47  Conn.  175, 
36  Am.  Rep.  64:  Goodman  v.  Hender- 
son. 58  Ga.  567 :  Swanson  v.  Kirbv, 
98  Ga.  586,  26  S.  E.  71 :  Rvan  v.  Ham- 
ilton. 205  111.  191,  68  X.  E.  781; 
Bowser  v.  Bliss,  7  Blackf.  (Ind.) 
344,  43  Am.  Dec.  93 ;  Eisel  v.  Haves, 
141  Ind.  41,  40  X.  E.  119;  O'Xeal  v. 
Hines,    145    Ind.    22,   43    X.    E.   946; 


§  8ii 


CONTRACTS. 


144 


straints  which  cover  an  unreasonably  long  period  of  time  are 
not  favored^*  and  a  contract  reasonably  restrained  as  to  time  may 
render  valid  a  contract  which  would  otherwise  be  unreasonable.'^^ 
Cases  of  contracts  which  placed  the  duration  of  restraint  at  one 
year/"  two  years/^  three  years/"  five  years/^  ten  years,^*  four- 


Moorman  V.  Parkerson,  127  La.  835, 
54  So.  47;  Doty  v.  Martin,  32  Mich. 
462;  Up  River  Ice  Co.  v.  Denier,  114 
Mich.  296,  72  N.  W.  157,  68  Am.  St. 
480;  Southworth  v.  Davison,  106 
Minn.  119,  118  N.  W.  363,  19  L.  R.  A. 
(N.  S.)  769n;  Gordon  v.  Mansfield, 
84  Mo.  App.  367;  Dunlop  v.  Gregory, 
10  N.  Y.  241,  61  Am.  Dec.  746;  Law- 
rence V.  Kidder,  10  Barb.  (N.  Y.) 
641 ;  Holbrook  v.  Waters.  9  How.  Pr. 
(N.  Y.)  335;  Diamond  Match  Co.  v. 
Roeber,  106  N.  Y.  473,  13  N.  E.  419, 
60  Am.  Rep.  464;  In  re  McClurg's 
Appeal,  58  Pa.  51;  French  v.  Parker, 
16  R.  I.  219,  14  Atl.  870,  27  Am.  St. 
733;  Tillinghast  v.  Boothby,  20  R.  I. 
59,  37  Atl.  344;  Butler  v.  Burleson, 
16  Vt.  176.  But  see,  Alger  v.  Thach- 
er,  19  Pick.  (Mass.)  51,  31  Am.  Dec. 
119. 

'"  Long  V.  Towl,  42  Mo.  545,  97  Am. 
Dec.  355. 

"  Proctor  V.  Sargent,  2  Mann.  &  G. 
20;  Ward  v.  Byrne,  5  Mees.  &  W. 
548;  Munford  v.  Gething,  7  C.  B.  (N. 
S.)  305;  Whitaker  v.  Howe,  3  Beav. 
383;  Jones  v.  Lees,  1  Hurlst.  &  N. 
189.  See  also,  Oakdale  Mfg.  Co.  v. 
Garst,  18  R.  I.  484,  28  Atl.  973,  23 
L.  R.  A.  639,  49  Am.  St.  784;  Artis- 
tic Porcelain  Co.  v.  Boch,  76  N.  J, 
Eq.  245,  74  Atl.  680,  139  Am.  St. 
758,  in  which  the  court  said :  "Tested 
alone  by  the  question  of  extent  of 
territory,  the  agreement  appears 
plainly  to  be  general  and  unlimited, 
and,  consequently,  inoperative  and 
void.  It  remains  to  be  seen  whether 
the  time  limit  of  the  extension  agree- 
ment, being  a  period  of  approximate- 
ly five  years,  makes  the  contract  one 
of  partial  restraint  to  such  an  extent 
as  to  take  it  out  from  under  the  opera- 
tion of  the  general  rule."  The  court 
held  that  this  limitation  as  to  time 
made  the  contract  valid.  Teckton- 
ius  v.  Scott,  110  Wis.  441,  86  N.  W. 
672. 

""McAlister  v.  Howell,  42  Ind.  15; 
Davies  v.  Racer,  72  Hun  (X.  Y.)  43, 


55  N.  Y.  St.  191,  25  N.  Y.  S.  293; 
Gates  V.  Hooper,  39  S.  W.  186,  revd. 
90  Tex.  563,  39  S.  W.  1079. 

"Wintz  V.  Vogt,  3  La.  Ann.  16; 
Thomas  v.  Gavin  (N.  Mex.),  110 
Pac.  841  (agree  not  to  engage  in  buy- 
ing and  selling  of  lumber)  ;  MoUy- 
neaux  v.  Wittenberg,  39  Nebr.  547, 
58  N.  W.  205. 

^-  Brown  v.  Kling,  101  Cal.  295,  35 
Pac.  995 ;  Skaggs  v.  Simpson,  33  Ky. 
L.  410,  110  S.  W.  251;  Bradford 
v.  Montgomery  Furniture  Co.,  115 
Tenn.  610,  92  S.  W.  1104,  9  L.  R.  A. 
(N.  S.)  979.  For  a  case  holding 
three  years  under  the  circumstances 
as  too  long,  Oppenheimer  v.  Hirsch, 
5  App.  Div.  (X.  Y.)  232,  38  X.  Y.  S. 

3n. 

^'Mitchel  V.  Reynolds,  1  P. 
Wms.  181 ;  Love  v.  Stidham,  18  App. 
Cas.  (D.  C.)  306,  53  L.  R.  A.  397; 
Bullock  V.  Johnson,  110  Ga.  486,  35 
S.  E.  703;  Boutelle  v.  Smith,  116 
Mass.  Ill;  Bishop  v.  Palmer,  146 
Mass.  469,  16  X.  E.  299,  4  Am.  St. 
339;  Buckhout  v.  Witwer,  157  Mich. 
406,  122  X.  W.  184,  23  L.  R.  A.  (X. 
S.)  507;  Greite  v.  Henricks,  71  Hun 
(X.  Y.)  7,  24  X.  Y.  S.  545,  53  X. 
Y.  St.  851;  Sander  v.  Hofifman,  39 
X.  Y.  Super.  Ct.  307,  revd.  64  X.  Y. 
248;  Paragon  Oil  Co.  v.  Hall,  4  Ohio 
Cir.  Dec.  576,  7  Ohio  Cir.  Ct.  240; 
Gompers  v.  Rochester,  56  Pa.  St. 
194;  Oakdale  Mfg.  Co.  v.  Garst, 
18  R.  I.  484,  28  Atl.  973,  23  L.  R.  A. 
639,  49  Am.  St.  784.  Five  year  re- 
straint too  extensive ;  Western 
Woodenware  Assn.  v.  Starkey,  84 
Mich.  76,  47  X.  W.  604,  11  L.  R.  A. 
503n,  22  Am.  St.  686;  Mott  v.  Mott, 
11  Barb.   (X.  Y.)   127. 

"Whitney  v.  Slayton,  40  Maine 
224 ;  Watertown  Thermometer  Co. 
v.  Pool,  51  Hun  (X.  Y.)  157,  4  X.  Y. 
S.  861 ;  Muller  v.  Vettel,  25  How.  Pr. 
(X.  Y.)  350;  Wolff  v.  Hirsch f eld,  23 
Tex.  Civ.  App.  670,  57  S.  W.  572. 
Ten  year  restraint  too  extensive. 
Urmston  v.  Whitelegg,  55  J.  P.  453; 


145 


CONTRACTS    IX    RESTRAINT    OF    TRADE. 


§    8X2 


teen  years,"  fifteen  years,^"  twenty  years,"  twenty-five  years,"' 
and  ninety-nine  years'"''  have  been  upheld. 

§  812.  Contracts  unlimited  as  to  time. — Contracts  in  par- 
ticular instances  unlimited  as  to  lime  may  also  be  upheld.*"'  Con- 
tracts of  this  character  have  been  interpreted  as  running  for  life- 
time of  either  of  the  parties  or  for  so  long  as  the  one  in  whose 
favor  they  are  made  is  engaged  in  the  designated  business." 

§  813.  Contracts  between  employer  and  employe — Atti- 
tude of  courts  toward. — In  many  cases  courts  of  equity  look 
with  great  disfavor  on  contracts  in  restraint  of  trade  ancillary  to 
a  contract  of  employment,  and  contracts  of  this  character  are 
more  apt  to  be  declared  unreasonable  than  those  ancillary  to  the 
sale  of  the  good  will  of  a  business  for  the  reason  that  the  cov- 
enantor's means  for  procuring  a  livelihood  for  himself  and  family 
are  thereby  diminished.     By  such  agreements  the  citizen  is  de- 


Wright  V.  Ryder,  36  Cal.  342,  95  Am. 
Dec.  186;  Oregon  Steam  Nav.  Co.  v. 
Winsor,  20  Wall.  (U.  S.)  64,  22  L. 
ed.  315. 

"Davis  V.  Mason,  5  T.  R.  118; 
Hooper  v.  Willis,  93  L.  T.  236,  21 
T.  L.  R.  691. 

*' United  Shoe  Mfg.  Co.  v.  Kim- 
ball, 193  Mass.  351,  79  N.  E.  790;  Un- 
derwood V.  Smith,  19  N.  Y.  S.  380. 

"  Bryson  v.  Whitehead,  1  Sim.  & 
St.  74;  Whittaker  v.  Howe,  3  Beav. 
383;  Fisheries  Co.  v.  Lennen,  116 
Fed.  217,  affd.  130  Fed.  533,  65  C. 
C.  A.  79;  Fleckenstein  Bros.  Co.  v. 
Fleckenstein.  76  N.  J.  L.  613.  71  Atl. 
265,  24  L.  R.  A.   (X.  S.)  913. 

**  Union  Strawboard  Co.  v.  Bon- 
feld,  193  111.  420,  61  N.  E.  1038,  86 
Am.  St.  346;  Broadbooks  v.  Tooles, 
114  App.  Div.  (X.  Y.)  646,  99  N.  Y. 
S.  996. 

"Diamond  ^latch  Co.  v.  Roeber, 
106  N.  Y.  473,  13  X.  E.  419,  60  Am. 
Rep.  464. 

•"Foss  V.  Robv.  195  Mass.  292.  81 
N.  E.  199.  10  L.  R.  A.  (X.  S.)  1200n; 
United  Shoe  Machinery  Co.  v. 
Kimball.  193  Mass.  351,  79  X.  E. 
790.  "Formerly  it  was  generally  re- 
garded as  essential  to  the  validity  of 


such  contracts  that  they  be  limited 
both  as  to  time  and  place.  *  *  *  The 
settled  modern  law,  however,  is,  both 
in  England  and  this  country,  that 
limitation  as  to  both  time  and  place 
is  unnecessary,  if  the  agreement  in 
other  respects  be  reasonable,  and  not 
in  conflict  with  public  policy  or  gen- 
eral welfare.  *  *  *  Though  there  are 
authorities  which  hold  that  no  limi- 
tation of  time  renders  the  contract 
invalid  *  *  *  the  great  prepon- 
derance of  authority  sustains  the 
converse  of  the  proposition  where 
there  is  a  proper  limitation  as  to 
place."  Southworth  v.  Davidson,  106 
Minn.  119,  118  N.  W.  363. 

"Wooten  V.  Harris.  153  X.  Car. 
43,  68  S.  E.  898;  Hauser  v.  Harding. 
126  X.  Car.  295,  35  S.  E.  586.  "It  can- 
not be  supposed  the  parties  intended 
the  restraint  to  last  after  the  neces- 
sity for  it  ceased  to  exist."  Saddlery 
&c  Co.  v.  Hillsbnroueh  Mills.  68  X. 
H.  216.  44  Atl.  300.  12>  Am.  St.  569. 
When  no  limit  is  fixed  they  may  be 
construed  as  limited  for  a  reasonable 
time.  Rackeman  v.  Riverbank.  167 
Mass.  1.  44  X.  E.  990,  57  Am.  St. 
427.  See  also,  statutes  of  California 
and  Oklahoma. 


10 — CoNTR.ACTS.  Vol.  2 


§  8i4 


CONTRACTS. 


146 


prived  of  much  of  his  nsefnhiess  to  himself  and  the  pubHc  loses 
the  benefit  it  mi^ht  derive  from  his  services. °^ 


§  814.    Must  be  incidental  or  ancillary  to  be  valid. — The 

general  rule  to  the  effect  that  a  contract  in  restraint  of  trade  will 
be  enforced  where  the  restraint  is  no  more  extensive  than  is  rea- 
sonably required  to  protect  the  interests  of  the  party  in  whose 
favor  it  is  given  and  not  so  large  as  to  interfere  with  the  interest 


*"  See  Ward  v.  Byrne,  5  Mees.  & 
W.  548;  Hinde  v.  Gray,  1  Mann.  & 
G.  195;  Leng  v.  Andrews  (1909),  1 
Ch.  763 ;  Keeler  v.  Tavlor,  53  Pa.  St. 
467,  91  Am.  Dec.  221;  Carroll  v. 
Giles,  30  S.  Car.  412,  9  S.  E.  422,  4 
L.  R.  A.  154.  In  the  case  of  Norden- 
felt  V.  ]\Iaxim-Nordenfelt  Guns  &c. 
Co.,  1894,  A.  C.  552,  6  Eng.  Rul. 
Cases  413,  while  it  states  the  rule  for 
the  validity  of  contracts  in  restraint 
of  trade  in  broader  terms  than  it 
had  ever  before  been  stated  in  Eng- 
land and  is  usually  cited  to  the  point 
that  contracts  universal  as  to  time 
and  space  may  nevertheless  be  up- 
held, Lord  Watson  said :  "The  gen- 
eral policy  of  the  law  is  opposed  to 
all  restraints  upon  liberty  of  individ- 
ual actions  which  are  injurious  to 
the  interests  of  the  state  or  com- 
munity. Nor  is  it  doubtful  that 
Courts  will  rightly  refuse  to  enforce 
any  contract  by  which  an  individual 
binds  himself  not  to  use  his  time  and 
talents  in  prosecuting  a  particular  pro- 
fession or  trade,  when  its  enforce- 
ment would  obviously  or  probably 
be  attended  with  these  injurious  con- 
sequences. "  See  also,  the  dissenting 
opinion  of  Williams,  L.  J.,  in  the  case 
of  Underwood  v.  Barker,  80  L.  T. 
(X.  S.)  306,  in  which  he  said: 
"This  difference  *  *  *  seems  to  me 
important,  because  in  the  decision  of 
questions  of  this  sort  one  always  has 
to  balance  two  considerations  against 
each  other,  the  one  being  the  interest 
of  the  public  in  maintaining  the  rules 
of  fair  dealing  between  man  and  man, 
the  other  being  the  consideration  of 
the  interest  of  the  public  in  main- 
taining liberty  of  individual  action, 
and  it  seems  to  me  that  in  the 
case  of  the  sale  of  a  business,  while 
the  public  have  the  deepest  in- 
terest that   the   contract  by   the   sel- 


ler not  to  compete  with  the  buyer 
shall  be  fairly  carried  out,  the  re- 
straint imposed  by  the  contract  upon 
liberty  of  individual  action  is  so 
slight  as  to  be  of  no  public  interest 
whatever,  whereas,  in  the  case  of 
master  and  servant  the  servant  does 
not  enter  into  the  contract  with  the 
same  freedom  of  choice  as  that  with 
which  a  persons  buys  a  business,  and 
the  restraint  on  the  servant  from 
earning  his  livelihood  in  the  manner 
best  suited  to  his  capacity  seems  to 
me  to  be  a  restriction  of  individual 
liberty  in  which  the  public  have  a 
deep  interest."  And  Manderville  v. 
Harman,  42  N.  J.  Eq.  185,  7  Atl.  Zl. 
Ir»  this  case  there  was  an  application 
for  an  injunction  to  restrain  the  de- 
fendant, a  physician,  from  violating 
his  covenant  not  to  engage  in  the 
practice  of  medicine  or  surgery  in  a 
certain  town  at  any  time  thereafter. 
It  lays  down  the  rule  that  contracts 
in  restraint  of  trade  are  prima  facie 
void,  and  points  out  the  distinction 
between  a  mere  sale  of  good  will  and 
a  covenant  to  abstain  from  practicing 
one's  profession  in  the  future.  The 
court  in  disposing  of  the  case  said : 
"The  conspicuous  defect  of  the  com- 
plainant's case  is  that  the  legal  right 
on  which  he  founds  his  claim  to  an 
injunction  is  not  clear.  No  court  of 
this  state  has  ever  declared  that  a 
covenant  like  that  on  which  the  com- 
plainant rests  his  claim  is  valid.  On 
the  contrary,  it  appears  that  the  gen- 
eral legal  presumption  is  against  the 
validity  of  such  covenant.  *  *  *  No 
rule  of  equity  is  better  settled  than 
the  doctrine  that  a  complainant  is 
not  in  a  position  to  ask  for  a  pre- 
liminary injunction  when  the  right  on 
which  he  found  his  claim  is,  as  a  mat- 
ter of  law,  unsettled." 


147 


CONTRACTS    IN    RESTRAINT    OF    TRADE. 


§    814 


of  the  public  has  already  been  stated."^  This  rule  implies  that  the 
contract  must  be  one  in  which  the  main  purpose  is  to  secure  to 
the  covenantee  that  measure  of  protection  needed  by  him,  the 
covenant  in  restraint  of  trade  being  merely  ancillary  or  incident 
to  this  main  purpose.''*  The  agreement  restraining  trade  must 
be  incidental  to  and  in  support  of  the  contract  or  sale  by  which 
the  one  in  whose  favor  it  runs  acquired  some  interest  in  the  busi- 
ness he  seeks  to  protect.  One  cannot  make  a  valid  contract  in 
restraint  of  trade  no  matter  how  limited  as  to  space  or  time  where 
he  does  not  purchase  the  good  will  or  any  interest  in  the  matter 
and  the  main  object  of  which  is  to  stifle  competition."^ 


"  See  ante.  §  794  et  seq. 

"  United  States  v.  Addyston  Pipe 
&  Steel  Co..  85  Fed.  271,  29  C.  C.  A. 
141,  54  U.  S.  App.  m,  46  L.  R.  A. 
122,  affd.  175  U.  S.  211,  44  Law  ed. 
136,  20  Sup.  Ct.  96;  Park  v.  Hartman, 
153  Fed.  24,  82  C.  C.  A.  158,  12  L.  R. 
A.  (N.  S.)  135n ;  Darius  Cole  Transp. 
Co.  V.  White  Star  Line,  186  Fed.  63, 
108  C.  C.  A.  165.  See  also,  McCon- 
nell  V.  Camors-McConnell  Co.,  140 
Fed.  987.  11  C.  C.  A.  681,  revd.  on 
appeal,  152  Fed.  321,  81  C.  C.  A.  429; 
Starkweather  v.  Jenner,  27  App.  D.  C. 
348;  Home  Teleph.  Co.  v.  North 
Manchester  Teleph.  Co,.  47  Ind.  App. 
411,  92  N.  E.  558,  93  N.  E.  234.  See, 
however,  United  Shoe  Machinery  Co. 
V.  Kimball,  93  Mass.  351,  79  N.  E. 
790,  laying  down  the  rule  "If  it  ap- 
peared that  such  a  contract  was  made 
with  the  purpose  to  obtain  a  monopo- 
ly, and  would  have  a  direct  tendency 
to  that  result,  it  would  be  looked 
upon  with  less  favor.  On  the  evi- 
dence in  the  present  case  this  does 
not  appear.  But  one  legitimately 
may  try  to  diminish  competition  in 
his  own  field,  and  may  make  rea- 
sonable efforts  to  enhance  his  profits 
by  energy  and  enterprise  as  a  pioneer 
where  others   only   tardilv    follow." 

"Harris  v.  Thucs,  149  Ala.  133,  43 
So.  131,  10  L.  R.  A.  (N.  S.)  204n,  123 
Am.  St.  17;  Fox  Solid  Pressed  Steel 
Co.  V.  Schoen,  11  Fed.  29.  affd.  84  Fed. 
544.  28  C.  C.  A.  492;  United  States 
V.  Addyston  Pipe  &c.  Co..  85  Fed. 
271,  29    C.    C.    A.    141,    46    L.    R. 


A.  122 ;  National  Enameling  &c.  Co. 
v.  Haberman,  120  l->d.  415 ;  Wiley  v. 
Baumgardner,  97  Ind.  66,  49  Am  Rep. 
427;  Chapin  v.  Brown,  83  Iowa  156, 
48  N.  W.  1047,  12  L.  R.  A.  428,  32 
Am.  St.  297 ;  Barrone  v.  Mosely 
Bros.,  144  Kv.  698,  139  S.  W.  869; 
Watrous  v.  Allen.  57  .Mich.  362,  24 
N.  W.  104,  58  Am.  Rep.  363;  Clark 
V.  Needham,  125  Mich.  8,  83  N.  W. 
1057,  51  L.  R.  A.  785,  84  Am.  St.  559; 
Euston  v.  Edgar,  207  Mo.  287,  105 
S.  W.  lll\  Chappel  v.  Brockwav,  21 
Wend.  (N.  Y.)  157;  Ru  Ton  v. 
Everitt,  35  App.  Div.  (N.  Y.)  412. 
54  N.  Y.  S.  896;  Oppenheimer  v. 
Hirsch,  5  App.  Div.  (N.  Y.)  232,  38 
N.  Y.  S.  311;  Wood  v.  Whitehead 
Bros.  Co.,  165  N.  Y.  545.  59  N.  E. 
357;  Brett  v.  Ebel,  29  App.  Div.  (N. 
Y.)  256,  51  N.  Y.  S.  573;  Mapes  v. 
Metcalf,  10  N.  Dak.  601,  88  N.  W. 
713;  Block  v.  Standard  Distilling  &c. 
Co.,  11  Ohio  Dec.  145.  8  Ohio  (N. 
P.)  313;  Huebner-Toledo  Breweries 
Co.  V.  Singlar,  28  Ohio  C.  C.  329; 
Lufkin  Rule  Co.  v.  Fringeli,  57  Ohio 
St.  596,  49  N.  E.  1030.  41  L.  R.  A. 
185,  63  Am.  St.  736;  Field  Cordage 
Co.  V.  National  Cordage  Co.,  6 
(Ohio)  C.  C.  615,  3  Ohio  Cir.  Dec. 
613;  Lange  v.  Werk.  2  Ohio  St. 
519;  Paragon  Oil  Co.  v.  Hall,  7 
Ohio  C.  C.  240,  4  Ohio  C.  D.  576; 
Gompers  v.  Rochester,  56  Pa.  St. 
194;  Harbinson-Walker  Refractories 
Co.  V.  Stanton,  227  Pa.  55.  75  Atl. 
988;  Palmer  v.  Toms,  96  Wis.  367,  71 
N.  W.  654. 


§   8l5  CONTRACTS.  I48 

§  815.  May  be  invalid  although  for  sale  of  property  or 
business. — And  under  the  more  modern  rule  even  the  fact 
that  the  contract  is  for  the  sale  of  property  or  of  business  and 
good  will  or  for  the  formation  of  a  partnership  or  a  corporation, 
will  not  save  it  from  invalidity  when  it  appears  that  it  was  only 
part  of  a  plan  to  place  all  the  property  used  in  a  business  under 
one  management  with  a  view  of  establishing  a  monopoly.  In 
such  cases  the  restraint  of  competition  ceases  to  be  ancillary  and 
becomes  the  main  purpose  of  the  contract  and  the  transfer  of 
property  and  good  will  or  the  partnership  agreement  is  merely 
ancillary  and  subordinate  to  that  purpose,  in  which  case  the  con- 
tract is  void  and  unenforcible.''°  Covenants  in  restraint  of  trade 
are  sustained  when  made  in  connection  with  a  sale  or  purchase 
of  a  business  and  its  good  will  or  some  analagous  subject-iuatter 
when  the  public  is  not  injured  thereby  and  the  restraint  is  no 
more  extensive  than  necessary  to  protect  the  covenantee.  When 
there  is  no  sale  or  purchase  of  any  business  or  the  like  an  agree- 
ment in  restraint  of  trade  will  not  ordinarily  be  upheld.^^ 

§  816.  Illustrations  of  invalid  contracts. — Consequently  it 
has  been  held  that  the  owner  of  a  hotel  who  in  consideration  of  a 
stipulated  monthly  payment  agreed  to  close  up  his  hotel  in  a 
certain  town  for  three  years  and  thus  attempt  to  give  the  other 

*"  United  States  v.  Addyston  Pipe  compete  with  his  master  or  employer 
&  Steel  Co.,  85  Fed.  271,  29  C.  C.  A.  after  the  expiration  of  his  time  of 
141',  54  U.  S.  App.  723,  46  L.  R.  A.  service.  Before  such  agreements  are 
122,  afifd.  175  U.  S.  211,  44  Law  ed.  upheld,  however,  the  court  must  find 
136,  20  Sup.  Ct.  96.  In  the  above  that  the  restraints  attempted  thereby 
case  it  is  said:  "Covenants  in  partial  are  reasonably  necessary  (1,  2,  and 
restraint  of  trade  are  generally  up-  3)  to  the  enjoyment  by  the  buyer  of 
held  as  valid  when  they  are  agree-  the  property,  good  will,  or  interest 
ments  (1)  by  the  seller  of  property  in  the  partnership  bought;  or  (4)  to 
or  business  not  to  compete  with  the  the  legitimate  ends  of  the  existing 
buyer  in  such  a  way  as  to  derogate  partnership,  or  (5)  to  the  preven- 
from  the  value  of  the  property  or  tion  of  possible  injury  to  the  business 
business  sold ;  (2)  by  a  retiring  part-  of  the  seller  from  use  by  the  buyer  of 
ner  not  to  compete  with  the  firm;  the  thing  sold;  or  (6)  to  protection 
(3)  by  a  partner  pending  the  partner-  from  the  danger  of  loss  to  the  employ- 
ship  not  to  do  anything  to  interfere,  er's  business  causedby  the  unjust  use 
by  cornpetition  or  otherwise,  with  on  the  part  of  the  employe  of  the 
the  business  of  the  firm;  (4)  by  the  confidential  knowledge  acquired  in 
buyer  of  property  not  to  use  the  same  such  business." 

in  competition  with  the  business  re-  *' Fox    Solid   Pressed    Steel   Co.   v. 

tained  by  the  seller;  and   (5)   bv  an  Schoen,  77  Fed.  29,  afifd.,  84  Fed.  544, 

assistant,    servant,    or    agent    not    to  28  C.  C.  A.  492. 


149  CONTRACTS    IN    RESTRAINT    OF    TRADE.  §817 

party  to  the  contract  a  monopoly  on  the  hotel  business  of  that 
town  cannot  recover  the  monthly  payment/^^  The  same  has  been 
held  true  of  a  contract  whereby  the  owner  of  an  ice  machine 
agreed  to  close  down  his  plant  for  five  years  in  order  to  give  the 
owner  of  a  second  plant  a  monopoly,^"  or  an  agreement  by  grocers 
not  to  buy  butter  from  producers  for  two  years  if  a  firm  would 
open  a  butter  store  in  the  place/  and  an  agreement  by  a  manufac- 
turer of  chaplets  and  anchors  to  close  that  part  of  its  business  for 
the  benefit  of  a  rival  is  void  for  the  reason  that  it  tends  to  create 
a  monopoly  although  limited  as  to  time  and  subject-matter.-  It 
has  also  been  held  that  the  holder  of  a  promissory  note  cannot 
recover  on  the  same  where  it  was  given  to  prevent  the  holder 
from  erecting,  operating,  or  to  be  interested  in  the  construction, 
or  operation  of  a  cotton  press  at  a  point  anywhere  within  a  radius 
of  a  hundred  miles  of  the  post-office  at  Oklahoma  City.^ 

§  817.  Invalid  contracts — Contracts  of  common  carriers. — 

Contracts  by  common  carriers  whereby  one  railroad  agreed  not  to 
run  tracks  to  and  through  or  from  a  stone  quarry  or  quarries 
which  were  connected  with  the  other  party's  road,*  or  where  the 
owners  of  rival  steamboats  agreed  to  divide  profits  in  a  certain 
proportion  without  in  anywise  creating  a  partnership  and  in  case 
one  of  the  parties  sold  his  boat  not  to  engage  in  business  for  a 
year'  have  been  held  void  as  in  restraint  of  trade  and  as  attempts 
to  prevent  competition  in  business." 

'*"The  contract  was  not  for  the  Am.  St.  390;  Artie  Ice  Co.  v.  Frank- 
purpose  of  protecting  the  appellants  lin  etc.  Ice  Co.,  145  Ky.  32,  139  S.  W. 
in  the  legitimate  use     of     something  1080. 

which  they  acquired  by  it,  for  noth-  ^  Chapin  v.  Brown,  83  Iowa  156,  48 

ing  was  conveyed  to  them.     The  pur-  X.  W.  1074,  12  L.  R.  A.  428,  32  Am. 

pose  and  effect  of  the  contract  was  St.  297. 

to  enable  the  appellants  to  enjoy  an  =  Clark  v.   Needham,   125   Mich.  84, 

illegitimate  use   of   something  which  83  X.  W.  1027,  51  L.   R.  A.  785,  84 

they     already     had."       Clemons     v.  Am.  St.  559. 

Meadows    (Ky.).  94   S.   W.   13,  6  L.  MVebb  Press  Co.  v.  Bierce,  116  La. 

R.  A.    (X.   S.)   847.     See  in  connec-  905,  41   So.  203. 

tion  with  this  case  IMarshalltown  *  Chicago  I.  &  L.  R.  Co.  v.  South- 
Stone  Co.  V.  Des  Moines  Brick  Mfg.  ern  Indiana  R.  Co.  (Ind.  App.)  70 
Co..  114  Iowa  574,  87  N.  W.  496.  X.  E.  843. 

"Tuscaloosa  Ice  Mfg.  Co.  v.  Wil-  "Anderson   v.  Jett,  89  Kv.   375,   11 

liams,  127  Ala.  110,  28  So.  669,  50  L.  Kv.  L.  570,  12  S.  W.  670,  6  L.  R.  A. 

R.  A.  175.  85  Am.  St.  125.     To  same  390. 

effect,   Merchants'   Ice     &c.     Co.     v.  "  See  also,  .Arnold  &:  Co.  v.  Jones' 

Rohrman,    138    Kv.    530,    128    S.    W.  Cotton  Co.,  152  Ala.  501.  44  So.  662, 

599.  30  L.   R.   A.   (X.   S.)   973,   137  12  L.  R.  A.  (N.  S.)    150n,  declaring 


§  8i8 


CONTRACTS. 


150 


§  818.  Subsequent  contracts  in  restraint  of  trade. — A  sale 
of  the  business  and  property  is  insufficient  to  support  a  subse- 
quent independent  contract  in  restraint  of  trade  where  the  sale  is 
complete  in  all  respects  and  the  duty  of  the  parties  on  both  sides 
is  clearly  defined  and  the  obligation  to  perform  it  comprehended 
within  its  express  provisions,  which  contain  no  stipulation  which 
is  in  restraint  of  trade;  the  subsequent  contract  not  to  engage  in 
the  same  business  is  void  and  unen forcible,  the  first  contract 
having  been  executed  before  the  second  was  entered  into,"  as 
where  one  partner  purchases  the  interest  of  the  other  partner  in- 
cluding good  will,  and  a  subsequent  contract  is  thereafter  entered 
into  whereby  for  a  fixed  sum  the  retiring  partner  agrees  not  to 
engage  in  the  same  business.^ 


an  agreement  between  purchasers  of 
cotton  in  a  given  district  void  as  in 
restraint  of  trade.  See,  however. 
Steam  Xav.  Co.  v.  Wright,  6  Cal. 
259,  65  Am.  Dec.  511  (agreement  en- 
tered into  by  owners  of  steamboats 
whereby  one  agreed  not  to  permit 
his  vessel  to  run  on  certain  waters 
upheld).  Pierce  v.  Fuller,  8  Mass. 
223,  5  Am.  Dec.  102  (agreement  not 
to  use  a  stage  competing  with  plain- 
tiff's stage  upheld).  See  also,  ante, 
chapter  XIX. 

'Cleaver  v.  Lenhart,  182  Pa.  285, 
37  Atl.  811. 

*  Prescott  v.  Bidwell,  18  S.  Dak.  64, 
99  N.  W.  93.  The  distinction  be- 
tween contracts  in  restraint  of  trade 
which  are  ancillary  and  those  in 
which  the  main  purpose  of  the  agree- 
ment is  to  secure  a  monopoly  or  re- 
strain trade  is  illustrated  by  the  two 
cases  of  demons  v.  Meadows  (Ky.), 
94  S.  W.  13,  6  L.  R.  A.  (N.  S.)  847, 
which  is  reviewed  infra,  and  that  of 
Wittenberg  v.  Mollyneaux,  60  Nebr. 
583.  83  N.  W.  842.  In  the  former  case 
restraint  of  trade  was  the  object  of 
the  contract;  in  the  latter  case  the 
parties  agreed  to  exchange  their 
properties  and  the  agreement  was 
carried  into  execution.  The  convey- 
ance made  by  Mollyneaux  to  the  de- 
fendant provided  that  the  premises 
therein  described  should  not  be  used 
for  hotel  purposes  for  a  period  of 
two  years.  This  provision  was  up- 
held. The  court  said :  "Contracts 
which  impose  unreasonable  restraints 


upon  the  exercise  of  any  business, 
trade,  or  profession  are  said  to  con- 
travene sound  public  policy ;  but  par- 
tial restraints  are  not  deemed  to  be 
unreasonable  when  they  are  ancillary 
to  an  actual  purchase  of  property, 
made  in  good  faith,  and  are  appar- 
ently necessary  to  afford  fair  protec- 
tion to  the  purchaser.  Although  such 
agreements  tend  to  suppress  competi- 
tion, and  bring  about  conditions  fa- 
vorable to  the  creation  of  monopolies, 
they  are  in  harmony  with  the  policy 
of  the  state,  which  is  to  promote 
commerce  by  facilitating  the  sale  and 
transfer  of  property.  Of  course,  if 
it  be  shown  that  the  main  purpose  of 
the  agreement  is  to  secure  a  monop- 
oly, and  that  the  purchase  of  the 
property  was  a  mere  incident  or 
means  to  that  end,  it  is  within  the 
rule  applicable  to  ordinary  combina- 
tions in  restraint  of  trade,  and  will 
not  be  enforced."  See,  however, 
Moore  v.  First  Nat.  Bank  of  Flor- 
ence, 139  Ala.  595,  36  So.  777,  which 
upholds  a  contract  whereby  a  con- 
tractor agreed  to  let  the  defendant 
take  the  contract  for  the  building  of 
a  mill  without  competition,  on  the 
ground  that  the  public  had  no  con- 
cern in  the  letting  of  the  contract  for 
the  mill  building  and  therefore  no 
business  in  maintaining  competition 
and  said  :  "The  withholding  by  agree- 
ment of  competition  for  business 
though  the  business  involved  but  a 
single  transaction  is  when  not  op- 
posed to  public  policy  a  valuable  con- 


1 51  CONTRACTS    IX    RESTRAINT    OF    TRADE.  §819 

§819.  "System"  of  contracts. — It  must  also  be  borne  in 
mind  that  a  "system"  of  contracts  may  present  a  very  different 
question  from  those  which  arise  when  a  single  contract  only  is 
involved.  A  single  contract  might  in  no  way  affect  the  public 
interest  while  a  large  number  might  do  so  and  might  also  deter- 
mine whether  the  restraint  imposed  on  trade  was  ancillary  or  the 
principal  object  of  the  agreement.'* 

§  820.  As  affected  by  nature  of  business. — The  nature  of 
the  business  in  its  bearing  on  the  validity  of  a  contract  in  restraint 
of  trade  is  of  scarcely  less  importance  than  the  element  of  space 
or  time.^'^  Thus  contracts  concerning  patents  and  secret  proc- 
esses which  contain  restrictions  that  would  render  invalid  an 
ordinary  contract  are  upheld." 

§  821.  Nature  of  business — Distinction  between  sale  of 
business  and  contracts  between  employer  and  employe. — 
It  has  already  been  pointed  out  that  there  is  a  distinction  between 
the  case  of  the  sale  of  a  business  and  the  case  of  a  master  binding 
his  servant  by  an  agreement  not  to  follow  his  trade,  profession, 
or  calling.  In  the  latter  case  the  restraint  on  the  servant  or  other 
party  from  earning  his  livelihood  in  the  manner  best  suited  to  his 
capacity  is  said  to  be  a  restriction  of  individual  liberty  in  which 

sideration  on  which  to  rest  the  agree-  923,    IZ    C    C    A.    157;    Vickery    v. 

ment."  Welch,  19  Pick.    (Mass.)    523;  Garst 

°  "A   common   purpose   unites   each  v.  Harris,  177  Mass.  12.  58  N.  E.  174; 

covenantee    to    every    other,    and   the  Thum   v.   Tloczynski,    114   Mich.    149. 

'system'    is   to   be   construed    as    'one  12   N.   W.    140,   38  L.   R.   A.   200,   68 

piece',  in  which  the  complainant  and  Am.  St.  469;  Hard  v.  Seeley,  47  Barb, 

every      assenting      dealer,      whether  (N.    Y.)     428;    Jarvis    v.     Peck,    10 

wholesaler    or    retailer,    is    a    party;  Paige    (N.   Y.)    118;    Alcock  v.   Gib- 

and    the    agreement    of    such    cov-  erton,  5  Deur   (N.  Y.)   76;  John  D. 

«nantee  to  sell  only  at  the  prices  die-  Park  &c.   Co.  v.  National   Wholesale 

tated  by  the  manufacturer  constitutes  Druggists'  .Assn.  (Sup.  Ct.  Spec.  T.), 

one    general    scheme.      The    question  30   Misc.    (N.   Y.)    675,   64    N.   Y.   S. 

here    is    therefore   one    of    a    totally  276,  54  App.  Div.  (N.  Y.)  223;  Tode 

<iifferent   character   from   that   which  v.  Gross,  127  N.  Y.  480.  28  N.  E.  469, 

would  arise  if  the  question   was  the  13  L.   R.   A.   652n,  24   .\m.   St.   475; 

more    simple    one    presented    by    a  Fowle  v.   Park.   131   U.   S.  88,  ZZ  L. 

breach  by  a  single  covenantee."    Park  ed.  67,  9  Sup.  Ct.  658. 

V.  Hartman,  153  Fed.  24,  12  L.  R.  A.  "  Harrison  v.  Glucose  Refining  Co., 

(N.  S.)  135:  W.  H.  Hill  Co.  v.  Gray  116  Fed.  304.  53  C  C.  A.  484.  58  L. 

(Mich.),  127  N.  W.  803.  R.  .•\.  915;  Brewer  v.  Lamar,  69  Ga. 

"  C.   F.   Simmons   Medicine   Co.   v.  656,  47  \m.  Rep.  766.    See  further  on 

Simmons,    81     Fed.     163 ;     .American  this  subject,  post,  §  833. 
Brake  Beam  Co.  v.   Pungs,   141   Fed. 


§    822  CONTRACTS.  1 52 

the  public  has  a  deep  interest,  and  which  will  render  void  con- 
tracts which  might  otherwise  be  valid."  In  the  case  of  an  em- 
ploye or  one  following  a  learned  profession  there  should  be  a  rea- 
sonable limit  as  to  time  so  as  to  prevent  the  contract  from  operat- 
ing with  unnecessary  harshness  against  the  person  who  is  to 
abstain  from  following  his  calling  or  practicing  his  profession  at 
a  time  when  his  so  doing  could  in  no  wise  benefit  the  other  con- 
tracting party,  whereas  in  the  case  of  the  sale  of  a  mercantile  or 
other  business,  such  limit  is  not  essential  to  the  validity  of  con- 
tracts but  the  restraint  may  often  be  indefinite.^* 

§  822.  Nature  of  business — Corporations  affected  with 
public  interest. — It  is  also  well  recognized  that  corporations 
affected  with  a  public  interest  such  as  railroads,  telegraph  com- 
panies, and  the  like,  cannot  ordinarily  be  placed  under  any  re- 
straint whatever  in  this  way  without  such  restraint  acting  to  the 
prejudice  of  the  public,  and  that  any  contract  whereby  a  restraint 
is  sought  to  be  imposed  upon  such  corporation,  however  impartial 
such  restraint  may  be,  will  be  void  as  against  public  policy.^* 
Corporations  cannot  contract  to  escape  public  duty.     Contracts 

""A  clear  distinction  must  be  chapter  XIX.  But  the  contract 
taken  between  the  class  of  cases  will  be  upheld  when  the  re- 
binding  one  who  has  sold  out  a  mer-  straint  benefits  the  public.  Wayne- 
cantile  of  other  kind  of  business,  and  Monroe  Tel.  Co.  v.  Ontario  Tel.  Co., 
the  good  will  therewith  connected,  60  Misc.  (N.  Y.)  435,  112  N.  Y.  S. 
not  to  again  engage  in  that  business  424.  See  also,  Home  Tel.  Co.  v. 
within  a  given  territory,  and  that  North  Manchester  Tel.  Co.,  47  Ind. 
class  of  cases  binding  one  to  desist  App.  411,  92  N.  E.  558,  rehearing  de- 
from  the  practice  of  a  learned  pro-  nied,  93  N.  E.  234;  Reed  v.  Saslaff, 
fession."  Rakestraw  v.  Lanier,  104  78  N.  J.  L.  158,  11  Atl.  1044  (agree- 
Ga.  188,  30  S.  E.  735,  69  Am.  St.  154.  ment  between  two  rolling-chair  pro- 
See  also,  McAuliffe  v.  Vaughan,  135  prietors  to  maintain  price  at  maxi- 
Ga.  852,  70  S.  E.  322,  11  L.  R.  A.  mum  charge  provided  bv  ordinance)  ; 
(N.  S.)  255.  Whitaker  v.  Kilby.  55  Misc.   (N.  Y.) 

'' Freudenthal  v.  Espy,  45  Colo.  488,  ZTH ,  106  N.  Y.  S.  511,  order  afifd.  122 

102   Pac.   280,  26  L.   R.   A.    (N.   S.)  App.  Div.   (N.  Y.)  895,  106  N.  Y.  S. 

961.     See    further,   ante,    §   812.  1149.      See    Merriman    v.    Cover,    104 

"Dunbar  v.  American  Tel.  &  T.  Va.  428,  51  S.  E.  817,  holding  that  a 
Co.,  238  111.  456,  87  N.  E.  521,  revg.  provision  in  a  contract  between  a 
decree  (1908),  142  111.  App.  6;  Chi-  firm  obtaining  a  right  of  way  for  a 
cago  Gaslight  &c.  Co.  v.  People's  Gas-  railroad  and  the  owner,  that  no  chest- 
light  &c.  Co.,  121  111.  530, 13  N.  E.  169,  nut  oak  bark  shall  be  shipped  over 
2  Am.  St.  124;  Keene  Syndicate  v.  the  road  when  constructed  except  to 
Wichita  Gas  &c.  Co.,  69  Kans.  284,  "the  owner,  unless  he  refuses  to  take 
76  Pac.  834,  (il  L.  R.  A.  61,  105  Am.  it  at  the  market  price,"  is  not  on  its 
St.  164;  West  Virginia  Transp.  Co.  face  void,  because  unreasonable  as 
V.  Ohio  River  Pipe  Line  Co.,  22  W.  between  the  parties  or  injurious  to 
Va.  600,  46  Am.  Rep.  527.    See  ante,  the  public. 


153  CONTRACTS    IN    RESTRAINT    OF    TRADE.  §    023 

which  affect  only  a  portion  of  a  person's  business  and  merely 
place  a  reasonable  restraint  upon  the  field  in  which  one  may  ex- 
ercise his  talents,  such  as  a  contract  by  one  who  sells  the  good  will 
of  his  business  not  to  again  carry  on  business  w^ith  his  old  cus- 
tomers, have  been  upheld.  Such  covenant,  however,  will  not  be 
extended  beyond  its  express  temis,  and  if  it  should  be  drawn 
so  as  to  restrain  the  covenantor  beyond  the  limit  intended  it  will 
be  pronounced  invalid/^ 

§  823.  Nature  of  business — Rule  further  illustrated. — 
In  case  the  contract  is  not  otherwise  unreasonable,  one  may  con- 
tract not  to  manufacture  a  particular  article,^"  or  not  to  engage 
in  a  business  similar  to  that  sold.'^  A  restraint  may  also  be 
placed  on  the  use  to  which  a  particular  piece  of  property  is  to  be 
put  if  such  restraint  is  not  unreasonable  and  not  larger  than 
necessary.^*  It  has  also  already  been  seen  that  one  may  bind 
himself  to  sell  a  particular  article  or  articles  only  to  the  cov- 
enantee.^® And,  on  the  other  hand,  one  may  agree  to  act  as  ex- 
clusive agent  for  a  certain  line  of  goods.-"  It  is  of  course  obvi- 
ous under  the  general  principles  which  have  been  enunciated  that 
should  one  bind  himself  not  to  engage  in  any  business  whatsoever 
within  a  given  space  and  time,  the  contract  will  be  void.'^^  One 
may,  however,  give  up  his  own  business  and  enter  into  a  contract 
for  pemianent  employment  w^ith  another.-- 

"  Hunlocke  v.   r.lacklove,  2   Saimd.  Dowden  v.  Pook,  IZ  Law  J.  K.  B.  38 

156;  Ward  v.  Byrne.  5  M.  &  W.  548;  (1904),  1  K.  B.  45,  89  Law  T.  688.  52 

Dubowski   V.  Goldstein    (1896),   1   Q.  Week.  Rep.  97,  20  Times  L.  R.  39. 

B.  478;  Baines  v.  Gearv,  35  Ch.  Div.  ''Hitchcock    v.    Anthony,    83    Fed. 

154 ;  Rannie  v.  Irvine,  8  Scott  N.  R.  779,   28  C.    C.   A.  80 :    Wittenberg  v. 

674;  Mills  v.  Dunham   (1891),  1  Ch.  Mollyneaux,  60  Nebr.  583,  83  N.  W. 

576;    Nicholls   v.    Strctton,    10   Q.    B.  842. 

346,    59    E.    C.    L.    344;    Warren    v.  '"  Blauncr  v.  Williams  Co.,  36  Misc. 

Jones,    51    INIaine    146;    Dethlefs    v.  (N.  Y.)    173,  ll  N.  Y.   S.   165.    See, 

Tamsen,  7  Dalv  (N.  Y.)  354.  however,     Pope-Turnbo    v.     Bedford 

'"GiHis   V.    Hall.   2    Brewst.    (Pa.)  (Mo.),  127  S.  W.  426. 

342.  7  Phila    (Pa  )  422.  =^Wieboldt    v.     Standard     Fashion 

"Ciissen  V.  O'Connor,  32  L.  R.  Ir.  Co.,  80  111.  App.  €1 .     See  ante.  §799. 

330;  Magnolia  Metal  Co.  v.  Price,  65  ^  Baker  v.  Hedgecock.  39  Ch.  Diy. 

-App.    Div.    (N.    Y.)    276;    Erwin    v.  520;  Perls  v.  Saalfeld   (1892),  2  Ch. 

Hayden  (Tex.),  43  S.  W.  610.     Such  149. 

contract  may,   however,  be   rendered  "Carnig  v.  Carr.  167  Mass.  544.  46 

void   because    the    agreement    is    un-  X.  E.   117,  35  L.  R.  A.  512,  57  Am. 

reasonably       extensive.        Davies     v.  St.  488. 
Davies,  36  Ch.  Div.  359.     See  also, 


§    824  CONTRACTS.  1 54 

•  §  824.  Good  will — Defined. — Good  will  has  been  variously 
defined.  Some  of  the  definitions  are  narrow;  others  are  broad. 
The  narrowest  definition  is  that  perhaps  which  defines  good  will 
as  "the  probability  that  the  old  customers  will  resort  to  the  old 
place.""  This  definition  is  too  narrow  in  that  it  limits  good  will 
to  a  place.  It  has  been  broadly  defined  as  "All  that  good  disposi- 
tion which  customers  entertain  toward  the  house  of  business, 
identified  by  the  particular  name  or  firm  and  which  may  induce 
them  to  continue  giving  their  custom  to  it."  And  further  it 
"must  mean  every  advantage  *  *  *  that  has  been  acquired  by 
the  old  firm  in  carrying  on  its  business,  whether  connected  with 
the  premises  in  which  the  business  was  previously  carried  on,  or 
with  the  name  of  the  late  firm,  or  with  any  other  matter  carrying 
with  it  the  benefit  of  the  business.""* 

§  825.    Sale  of  good  will  in  absence  of  restrictive  covenant. 

— The  law  recognizes  in  good  will  a  thing  of  value  which  may 
be  sold,  regardless,  however,  of  whatever  definition  of  good  will 
may  be  adopted.  It  is  held,  as  a  general  rule,  that  in  the  case  of  a 
transfer  thereof  the  assignor,  in  the  absence  of  any  express  agree- 
ment to  the  contrary,  may  carry  on  a  similar  business  in  the  same 
locality.  A  mere  sale  of  good  will,  in  the  absence  of  any  express 
restrictive  covenant,  does  not  import  an  agreement  by  the  vendor 
not  again  to  engage  in  a  competing  business.^^     But  while  there 

°  Cruttwell  V.  Lye,  17  Ves.  Jr.  335,  E.   720,  60   L.   R.   A.   291 ;   Beard   v. 

11  Rev.  Rep.  98;  Lufkin  Rule  Co.  v.  Dennis,  6  Ind.  200,  63  Am.  Dec.  380; 

Fringeli,   57   Ohio   St.   596.  49   N.   E.  Findlay  v.  Carson,  97  Iowa  537,  66  N. 

1030,   41   L.   R    A.    185,   63   Am.   St.  W.  759 ;  Drake  v.  Dodsworth,  4  Kans. 

736.  159;    Berjamini    v.    Bastian,    35    La. 

'^Churton  v.  Douglas,  John.  174.  Ann.  60,  48  Am.  Rep.  216;  Bassett  v. 
19  Eng.  Rul.  Cas.  666;  Von  Breman  Percival,  5  Allen  (Mass.)  345;  Hoxie 
V.  MacMonnies,  200  N.  Y.  41,  93  N.  v.  Chaney,  143  Mass.  592,  10  N.  E. 
E.  186,  32  L.  R.  A.  (N.  S.)  293.  For  713,  58  Am.  Rep.  149;  Smith  v.  Gibbs, 
a  review  of  the  various  definitions  of  44  N.  H.  335;  Von  Breman  v.  Mac- 
good  will  see  People  v.  Roberts,  159  Monnies,  200  N.  Y.  41,  93  N.  E.  186, 
N.  Y.  70,  53  N.  E.  685,  45  L.  R.  A.  32  L.  R.  A.  (N.  S.)  293;  Close  v. 
126.  Flesher  8  Misc.    (N.  Y.)   299,  59  N. 

''Churton  v.  Douglas,  Johns.  174;  Y.  St.  283,  28  N.  Y.  S.  737;  Moodv 

Trego  V.  Hunt  (1896),  A.  C  7;  La-  v.  Thomas.  1  Disney  (Ohio)  294,  12 

bouchere   v.    Dawson,   L.    R.    13   Eq.  Ohio    Dec.    630;    Rupp    v.    Over,    3 

322;  Jennings  v.  Jennings    (1898),   1  Brewst.   (Pa.)    133;  Tn  re  Hall's  Ap- 

Ch.     378;     Gillingham     v.     Beddow  peal,   60   Pa.   St.   458,    100   Am.   Dec. 

(1900),  2   Ch.   242;    Cottrell   v.   Bab-  584;    White   v.    Trowbridge,   216   Pa. 

cock  &c.  Mfg.  Co..  54  Conn.  122.6  Atl.  11.  64  Atl.   862;   Palmer  v.   Graham, 

791;    Porter   v.    Gorman,   65   Ga.    11;  1    Pars.  Eq.  Cas.    (Pa.)   476;  Zantur- 

Ranft  V.  Reimers,  200  111.  386,  65  N.  jian  v.  Boornazian,  25  R.  I.   151,  55 


155 


CONTRACTS    IX    RESTRAINT    OF    TRADE. 


826 


is  no  implied  covenant  not  to  engage  in  a  competing  business  in 
the  absence  of  a  restrictive  covenant  to  that  effect,  some  courts 
do,  nevertheless,  afford  the  vendee  a  measure  of  protection  and 
hold  that  by  a  voluntary  sale  of  such  good  will  the  vendor  pre- 
cludes himself  from  setting  up  a  competing  business  which  will 
derogate  from  the  good  will  which  he  has  sold."** 

§  826.  Sale  of  good  v/ill — Soliciting  old  customers. — Con- 
sequently it  is  held  as  a  general  rule  that  the  former  owner,  by  his 
voluntary  act  of  sale,  has  prohibited  himself  from  competing  wnth 
the  purchaser  of  the  good  will  to  the  extent  of  having  impliedly 
agreed  that  he  wdll  not  solicit  trade  from  the  customers  of  the 
old  business  and  he  will  be  enjoined  from  so  doing."  Thus,  a 
copartner  who  sells  his  interest  in  the  firm  business,  together 
with  the  good  will,  may  not  solicit  trade  from  the  customers  of 
the  old  firm,-^  as  where  two  dentists  dissolve  partnership,  one 
purchasing  the  business  and  good  will  from  the  other.  The 
vendor  may  not  solicit  the  customers  of  the  old  firm  or  act  so  as 


Atl.  199;  jMoreau  v.  Edwards,  2 
Tenn.  Ch.  347;  Bradford  v.  Mont- 
gomery Furniture  Co.,  115  Tenn.  610, 
92  S.  W.  1104,  9  L.  R.  A.  (N.  S.) 
979;  Snowden  v.  Noah,  Hopk.  Ch. 
(N.  Y.)  347,  14  Am.  Dec.  547;  White 
V.  Jones,  1  Robt.  (N.  Y.)  321;  Fish 
Bros.  Wagon  Co.  v.  La  Belle  Wagon 
Works,  82  Wis.  546,  52  N.  W.  595, 
16  L.  R.  A.  453,  33  Am.  St.  72. 

''Old  Corner  Book  Store  v.  Up- 
ham,  194  Mass.  101,  80  N.  E.  228,  120 
Am.  St.  532. 

"Trego  V.  Hunt  (1896),  A.  C  7; 
Labouchere  v.  Dawson,  L.  R.  13  Eq. 
322;  Jennings  v.  Jennings  (1898),  1 
Ch.  378;  Ranft  v.  Reimers,  200  111. 
386,  65  N.  E.  720.  60  L.  R.  A.  291; 
Mvers  v.  Kalamazoo  Buggy  Co.,  54 
Mich.  215,  19  N.  W.  961,  20  N.  W. 
545.  52  Am.  Rep.  811.  And  see 
Wentzel  v.  Barbin.  189  Pa.  St.  502, 
42  Atl.  44;  Zanturiian  v.  Boornazian, 
25  R.  I.  151.  55  Atl.  199.  "A  man 
may  not  derogate  from  his  own 
grant;  the  vendor  is  not  at  liberty  to 
destroy  or  depreciate  the  thing  which 
he  has  sold;  there  is  an  implied  cove- 
nant on  the  sale  of  good  will  that  the 
vendor   does   not    solicit   the   custom 


which  he  has  parted  with:  it  would 
be  a  fraud  on  the  contract  to  do  so. 
These,  as  it  seems  to  me,  are  only 
different  turns  and  glimpses  of  a 
proposition  which  I  take  to  be  ele- 
mentary. It  is  not  right  to  profess 
and  purport  to  sell  that  which  you 
do  not  mean  the  purchaser  to  have; 
it  is  not  honest  to  pocket  the  price, 
and  then  to  recapture  the  subject  of 
sale,  to  decoy  it  away  or  call  it  back 
before  the  purchaser  has  had  time  to 
attach  it  to  himself  and  make  it  his 
verv  own."  Von  Bremen  v.  Mac- 
Monnies,  200  N.  Y.  41,  93  N.  E.  186. 
32  L.  R.  A.  (N.  S.)  293.  quoting 
from  Trego  v.  Hunt  (1896),  A.  C 
7,  65  L.  J.  Ch.  (N.  S.)  1,  12  Eng.  Rul. 
Cas.  442. 

="Leggott  v.  Barrett.  L.  R.  15  Ch. 
Div.  306;  Ginesi  v.  Cooper.  L.  R.  14 
Ch.  Div.  596;  Mogford  v.  Courtenav, 
45  L.  T.  (N.  S.)  303;  Althen  v.  Vree- 
land  (N.  J.).  36  Atl.  479;  Von  Bre- 
man  v.  MacMonnies,  200  N.  Y.  41.  93 
N.  E.  186.  32  L.  R.  A.  (N.  S.)  293. 
refusing  to  follow  Marcus  Ward  & 
Co.  V.  Ward,  40  N.  Y.  St.  793,  15  N. 
Y.  S.  913. 


§  827 


CONTRACTS. 


1^6 


to  destroy  the  business  he  has  sold.'®  And  one  who  sells  a 
grocery  and  cigar  business,  together  with  the  good  will  thereof, 
will  be  enjoined  from  soliciting  customers  of  the  old  firm,  who 
were  such  at  the  time  of  the  sale,  to  trade  with  the  competing 
firm  subsequently  organized  by  him.^**  Even  though  the  retiring 
partner  reserves  the  right  to  engage  in  a  competing  business,  it 
has  been  held  that  he  cannot  personally  or  otherwise  apply  to  cus- 
tomers of  the  old  business  and  request  them  to  deal  with  him  in 
preference  to  the  old  firm.^ 

§  827.  When  old  customers  may  be  solicited. — However, 
it  has  been  held  that  such  retiring  partner  may  solicit  the  patrons 
of  the  old  firm  when  he  does  not  hold  himself  out  as  the  successor 
of  the  business  sold.^~  And  it  has  been  held  that  a  copartner  who 
transfers  his  interest  in  the  old  business  to  the  other  partners, 
whether  the  good  will  be  included  in  the  transfer  or  not,  has  the 
right,  not  only  to  advertise  his  new  business,  but  also  to  solicit 
the  customers  of  the  old  firm,  unless  he  has  bound  himself  not 
to  do  so  by  contract,  upon  subsequently  resuming  the  same  kind 
of  business.^^  It  has  also  been  held  that  a  retiring  partner  en- 
gaged in  a  competing  business  is  not  prohibited  from  dealing  with 
those  customers  of  the  old  firm  who  voluntarily  and  without 
solicitation  choose  to  deal  with  him.^* 


^Toss  V.  Roby,  195  Mass.  292,  81 
N.  E.  199,  10  L.  R.  A.  (N.  S.)   1200. 

'"Acker,  Merrall  &c.  Co.  v.  INIc- 
Gaw,  144  Fed.  864.  The  court  said: 
"It  would  be  a  reproach  to  the  law 
if  no  adequate  remedy  could  be  af- 
forded for  the  protection  of  a  prop- 
erty so  valuable  as  such  a  good  will 
against  the  attack  of  the  vendor  who 
had  sold  it,  and  who  afterward  at- 
tempts to  regain  it  to  the  damage  of 
his  vendee." 

"Burkhardt  v.  Burkhardt,  5  Ohio 
Dec.  185.  To  same  effect  Gillingham 
V.  Beddow  (1900),  2  Ch.  242. 

"Cottrell  V.  Babcock  Printing 
Press  Mfg.  Co.,  54  Conn.  122,  6  Atl. 
791.  To  same  effect,  Fish  Bros. 
Wagon  Co.  v.  Labelle  Wagon 
Works,  82  Wis.  546,  52  N.  W.  595,  16 
L.  R.  A.  453,  33  Am.  St.  72. 

'^  Williams  v.  Farrand,  88  Mich. 
473,  50  N.  W.  446,  14  L.  R.  A.  161. 


In  this  case  the  contract  included 
good  will.  The  court  took  as  its  princi- 
pal authority  the  case  of  Pearson  v. 
Pearson,  L.  R.  27  Ch.  Div.  145,  which 
overruled  Labouchere  v.  Dawson,  L. 
R.  13  Eq.  322,  which  was  in  turn  dis- 
approved by  the  case  of  Crego  v. 
Hunt,  1896,  A.  C.  7,  12  Eng.  Rul. 
Cas.  442,  and  which  restored  the  doc- 
trine of  Labouchere  v.  Dawson.  The 
Michigan  court  rendered  its  decision 
subsequent  to  the  Pearson  case  but 
prior  to  the  Crego  case, 

'*Leggott  V.  Barrett,  L.  R.  15  Ch. 
Div.  306.  Compare,  however,  with 
Curl  Bros.  v.  Webster  (1904),  1  Ch. 
685,  which  holds  that  the  customers 
of  the  old  firm  cannot  be  solicited 
who  had  voluntarily  and  before  so- 
licitation become  customers  of  the 
new  firm.  See  also,  Foss  v.  Roby,  195 
^Tass.  292,  81  N.  E.  199,  10  L.  R.  A. 
(N.  S.)  1200. 


157  COXTRACTS    IX    KE5TRAIXT    OI'    TRADE.  §    828 

§  828.  Sale  of  good  will  at  involuntary  sale. — The  fore- 
going principles  apply  only  in  the  case  of  V(>luntary  sales.  The 
good  will  which  the  owners  thereof  part  with  under  a  species  of 
compulsion,  as  in  bankruptcy  proceedings  or  by  operation  of  law. 
as  in  the  liquidation  of  a  partnership  by  the  lapse  of  time  or  its 
termination  by  the  death  of  one  of  the  parties  or  pursuant  to  the 
articles  of  the  corporation,  is  a  lesser  property  than  the  good  will 
which  is  subject  to  the  voluntary  sale  and  transfer  by  the  owner 
for  a  valuable  consideration.  In  sales  of  the  first  class,  the  for- 
mer owner  remains  under  no  legal  obligation  restricting  competi- 
tion on  his  part  in  the  slightest  degree.^^  Thus  a  bankrupt  after 
discharge  may  set  up  a  rival  business^"  and  may  solicit  patronage 
from  the  customers  of  the  old  business.^'  A  sale  of  good  will 
forced  upon  the  surviving  partner  by  the  death  of  the  other  mem- 
ber of  the  firm  does  not  prevent  such  surviving  partner  from  set- 
ting up  a  competing  business  and  soliciting  customers  of  the  old 
firm.^'^ 

§  829.  Holding  out  to  public  that  vendor  is  successor. — 
A  vendor  of  good  will  who  does  not  expressly  bind  himself  not  to 
set  up  a  competing  business  cannot  hold  out  to  the  public  that  he 
is  a  successor  to  the  business  sold.^^  But  a  vendor  of  good  will 
who  has  the  right  to  establish  a  competing  business  may  conduct 
such  business  under  his  own  name,  notwithstanding  it  may  corre- 

"  Von  Breman  v.  MacMonnies,  200  printing  plant  under  foreclosure  pro- 

N.  Y.  41,  93  N.  E.  186,  Z2  L.  R.  A.  ceedings  may  enjoin  the     mortgagor 

(N.    S.)    293.  from  publishing  a  newspaper  as  the 

"  Walker    v.    Mottran.    L.    R.    19,  successor  of  one  sold  under  the  mort- 

Ch.  Div.  335 ;  Hudson  v.  Osborne,  21  gage. 

L.  T.  (N.  S.)  386;  Cruttwell  v.  Lye,  '"Hutchison  v.  Xav,  187  Mass.  262. 

17  Ves.  Jr.  335.    See  also,  Vinall  v.  72  X.  E.  974,  68  L.  R.  A.  186,  105  Am. 

Hendricks,  Zl  Ind.  App.  413,  71  N.  E.  St.   390. 

682.  ^  Mjers  v.   Kalamazoo  Buggv  Co., 

"Walker    v.    Mottran.    L.    R.    19,  54  Mich.  215,   19  N.   W.  961,  20  N. 

Ch.   Div.   355;    Cruttwell   v.   Lye,    17  W.  545,  52  Am.   Rep.  811.   To  same 

Ves.  Jr.  335.     He  cannot  so  conduct  effect,  Kuedler  v.  Glaenzer.  14  U.  S. 

a  business,   however,   as  to   lead   the  App.  336,  55  Fed.  895,  5  C  C.  A.  305, 

public    to    believe    that    the    business  20  L.  R.  A.  Ill;   Fish  Bros.  Wagon 

set  up  by  him  is  the  same  or  is  a  Co.    v.    LaBelle    Wagon    \\'orks.    82 

continuation  of  that  which  was  for-  Wis.  546,  '^1  N.  W.  595.  16  L.  R.  A. 

merly   carried   on   bv   him.     Hudson  453,  o2>  Am.   St.  72.    See  also,  Mog- 

V.   Osborne,   21    L.   T.    (N.   S.)    386.  ford  v.  Courtenay,  45  L.  T.   (N.  S.) 

See  also.   Lawrence  v.   Times   Print-  303;    White   v.   Jones,    1    Rob.    (La.) 

ing  Co..  90  Fed.  24,  which  holds  that  321 ;   Hall's   Appeal,   60   Pa.   St.   458 

one  who  has   acquired   a  paper  and  100  Am.  Dec.  584. 


§    830  CONTRACTS.  1 58 

spond  to  the  name  under  which  the  old  business  was  conducted/** 
The  only  restraint  placed  upon  him  is  to  prevent  him  from  subse- 
quently employing  his  own  name  so  as  to  deceive  or  mislead  the 
public.*^  He  cannot,  however,  adopt  a  name  other  than  his  own 
and  such  as  was  used  to  designate  the  business  and  good  will 
sold." 

§  830.  Right  to  carry  on  competing  business. — The  fore- 
going would  naturally  lead  to  the  conclusion  that  in  case  of  a 
transfer  of  good  will,  the  assignor,  in  the  absence  of  an  express 
agreement  to  the  contrary,  may  enter  into  and  carry  on  a  com- 
peting business  in  the  same  locality  and  this  is  true  as  a  general 
rule/^  The  rule  is  otherwise,  however,  in  Massachusetts.  In 
that  jurisdiction  one  who  has  voluntarily  sold  the  good  will  of  his 
business  cannot  set  up  a  competing  business  in  derogation  of  his 
grant.**  The  courts  of  that  jurisdiction  hold  that  where  the 
good  will  of  a  business  is  sold  and  the  vendor  sets  up  a  competing 
business  it  is  a  question  of  fact  whether,  having  regard  to  the 
character  of  the  business  sold  and  that  set  up,  the  new  business 
does  or  does  not  derogate  from  the  grant  made  by  the  sale.*^ 

§  831.    Nature  of  business  as  affecting  sale  of  good  will. — 

The  nature  of  the  business  has  much  to  do  with  the  determination 
of  this  question.  In  a  mercantile  business  the  sale  of  the  good 
will  conveys  an  interest  in  a  commercial  business,  the  trade  of 
which  may  be  largely  if  not  wholly  dependent  upon  locality  and 
the  right  which  the  vendee  acquires  under  the  purchase  is  the 
chance  of  being  able  to  retain  the  trade  connection  with  the  busi- 
ness where  it  has  been  conducted,  while  in  the  practice  of  a  pro- 

"Ranft  V.  Reimers,  200  111.  386,  65  ''Von  Breman  v.  IMacMonnies,  200 

X.  E.  720,  60  L.  R.  A.  291 ;  Newark  N.  Y.  41,  93  N.  E.  186,  32  L.  R.  A. 

Coal   Co.  V.   Spangler,   54   N.   J.   Eq.  (N.  S.)   293. 

354,    34    Atl.   932;    White    v.    Trow-  "Hutchinson    v.    Nay,    187    Mass. 

bridge,  216  Pa.  11,  64  Atl.  862.  262,  72  N.   E.  974,  68  L.  R.  A.   186, 

"Vonderbank    v.    Schmitt,    44    La.  105   Am.   St.  390;   Gordon  v.   Knott, 

Ann.   264,    10    So.   616,   15   L.   R.   A.  199  Mass.    173,   85   N.   E.    184,   19  L. 

462n.  32  Am.  St.  336.  R.   A.    (N.   S.)    762n ;   Foss  v.   Roby, 

*^  Drake    v.    Dodsworth,    4    Kans.  195  Mass.  292,  81  N.  E.  199,  10  L.  R. 

159;  Myers  v.  Kalamazoo  Buggv  Co.,  A.   (X.  S.)   1200. 

54  Mich.  215,  20  N.  W.  545,  19  N.  W.  "'Old    Corner   Book   Store   v.   Up- 

961,    52    Am.    Rep.    811.     See    also,  ham,  194  Mass.  101,  80  N.  E.  228,  120 

Churton  v.  Douglas,  5  Jur.    (N.   S.)  Am.  St.  532. 
887,  John.  174,  19  Eng.  Rul.  Cas.  666. 


159 


CONTRACTS    IX    RESTRAINT    OF    TRADE. 


§    832 


fession  the  personal  qualities  of  integrity,  professional  skill,  and 
ability  attach  to  and  follow  the  person,  not  the  place.'" 

§  832.  Express  provision  against  competing  in  business. — 
The  preceding  matter  on  the  subject  of  good  will  has  had  to  do 
with  contracts  for  the  sale  of  good  will  which  did  not  expressly 
prohibit  the  vendor  from  engaging  in  a  competing  business.  It 
is  well  settled  that  a  contract  which  places  a  reasonable  restraint 
on  the  vendor  of  good  will  from  re-entering  into  a  competing 
business  to  the  derogation  of  the  good  will  sold  will  be  en- 
forced." This  is  true  even  though  no  tangible  property  passes ; 
if  the  business  sold  has  a  good  will  and  custom/^  such  as  an 
agency  for  the  sale  of  land,"  or,  in  a  proper  case,  an  agreement 
whereby  one  gives  up  his  own  business  and  enters  into  the  em- 
ployment of  another  agreeing  not  to  re-engage  in  such  business,^" 


^Toss  V.  Roby,  195  Mass.  292,  81 
N.  E.  199,  10  L.  R.  A.  (N.  S.)   1200. 

*' Mitchell  V.  Reynolds,  1  P.  Wms. 
181;  Rousillon  v.  Rousillon,  L.  R.  14 
Ch.  Div.  351;  Leather  Cloth  Co.  v. 
Lorsont,  L.  R.  9  Eq.  345;  Maxim 
&c.  Ammunition  Co.  v.  Nordenfelt 
(1893),  1  Ch.  630;  ]\Ioore  &c.  Hard- 
ware Co.  V.  Towers  Hardware  Co., 
87  Ala.  206,  6  So.  41,  13  Am.  St.  23; 
Hoyt  V.  Hollv,  39  Conn.  326,  12  Am. 
Rep.  390;  Hitchcock  v.  Anthony.  83 
Fed.  779,  28  C.  C.  A.  80;  Bullock  v. 
Johnson,  110  Ga.  486.  35  S.  E.  703; 
Ryan  v.  Hamilton,  205  111.  191,  68 
N.  E.  781,  revg.  103  III.  App.  212; 
Johnson  v.  Gwinn,  100  Ind.  466; 
Pohlman  v.  Dawson.  63  Kans,  471,  65 
Pac.  689,  54  L.  R.  A.  913.  88  Am.  St. 
249;  Grow  v.  Scligman.  47  Mich.  607, 
11  N.  W.  404.  41  Am.  Rep.  Ill;  Beal 
V.  Chase.  31  Mich.  490;  Hubbard  v. 
Miller,  27  Mich.  15,  15  Am.  Rep.  153; 
National  Benefit  Co.  v.  I'nion  Hospi- 
tal Co.,  45  Minn.  272,  47  N.  W.  806, 
11  L.  R.  A.  437;  Presbury  v.  Fisher, 
18  Mo.  50;  Downing  v.  Lewis.  59 
Nebr.  38,  80  N.  \V.  261 ;  Trenton  Pot- 
teries Co.  V.  Oliphant,  58  N.  J.  Eq. 
507,  43  Atl.  723,  46  L.  R.  A.  255,  78 
Am.  St.  612,  partly  affirming  and 
partly  reversing  56  N.  J.  Eq.  680,  39 
Atl.  923;  King  v.  Foimtain,  126  N. 
Car.  196,  35  S.  E.  427;  Paragon  Oil 
Co.  V.  Hall.  7  Ohio  C.  Ct.  240.  40 
Ohio  C.  D.  576;  Peterson  v.  Schmidt, 
13  Ohio  Cir.  Ct.  205,  7  Ohio  C.  D. 


202  (not  to  re-establish  business 
within  four  blocks  of  old  stand); 
Jackson  v.  Bvrnes.  103  Tenn.  698.  54 
S.  W.  984 ;  fobler  v.  Austin,  22  Tex. 
Civ.  App.  99,  53  S.  W.  706 ;  Fowle  y. 
Park,  131  U.  S.  88,  II  L.  ed.  67,  9 
Sup.  Ct.  658;  Washburn  v.  Dosch,  68 
Wis.  436,  Z2  N.  W.  551.  60  Am.  Rep. 
873.  Under  Civil  Code,  §  1673,  a  con- 
tract by  a  vendor  of  stock  in  a  cor- 
poration not  to  engage  in  the  busi- 
ness of  bill  posting  as  long  as  vendee 
should  engage  therein  is  invalid,  for 
the  reason  that  the  vendor  cannot 
sell  the  good  will  of  the  corporation, 
and  without  a  valid  sale  of  good  will 
a  contract  in  restraint  of  trade  is 
invalid.  Merchant's  Ad.  Sign  Co.  v. 
Sterling,  124  Cal.  429,  57  Pac.  468, 
46  L.  R.  A.  142.  71  Am.  St.  94.  Con- 
tracts of  this  character  have  been  up- 
held. Up  River  Ice  Co.  v.  Denier, 
114  Mich.  296.  72  N.  W\  157.  68  Am. 
St.  480;  Buckhout  v.  Witwer.  157 
^Nlich.  406.  122  N.  W.  184.  23  L.  R.  A. 
(N.  S.)  507;  Anders  v.  Gardner.  151 
N.  Car.  604.  66  S.  E.  665;  Kradwell 
V.  Thiesen,  131  Wis.  97,  111  N.  W. 
233. 

**  Bloom  V.  Home  Ins.  Asrency,  91 
Ark.  367.  121  S.  W.  293;  Wood  v. 
Whitehead  Bros.  Co.,  165  X.  Y.  545, 
59  N.  E.  357. 

"Wood  V."  Whitehead  Bros.  Co., 
165  N.  Y.  545.  50  N.  E.  357. 

^Anchor  Electric  Co.  v.  Hawkes, 
171    Mass.   101.   50   X.   E.   509.  41   L. 


§  833 


CONTRACTS. 


1 60 


or  an  agreement  whereby  an  employe  or  agent  covenants  not  to 
engage  in  a  competing  business  with  his  employer  after  the  term 
of  his  employment  ends.'^^  Copartners  who  sell  their  interest  in 
the  partnership  business  at  the  same  time  agreeing  not  to  again 
engage  in  that  line  of  business  are  bound  by  such  contract,  if, 
under  all  tlie  circumstances,  it:  is  reasonable/" 

§  833.  Patents  and  secret  processes. — One  who  invents  or 
discovers,  or  procures  another  to  invent  or  discover  for  him,  and 
keep  secret,  a  secret  process  or  trade  secret  has  a  qualified  right 
in  it  to  the  extent  that  he  has  a  right  to  maintain  its  secrecy  and 
prevent  its  disclosure  by  one  who  has  obtained  knowledge  thereof 
through  fraud,  breach  of  confidence,  or  a  violation  of  a  contract 
with  him.^^     The  right  to  use  such  secret  process  is  regarded  as 


R.  A.  189,  68  Am.  St.  403 ;  Carnig  v. 
Carr,  167  Mass.  544,  46  N.  E.  117,  35 
L.  R.  A.  512,  57  Am.  St.  488;  Kevil 
V.  Standard  Oil  Co.,  8  Ohio  N.  P. 
311.     See  also,  ante,  §  799. 

■^'Havnes  v.  Doman  (1899),  68  L. 
J.  Ch.'419,  80  L.  T.  (N.  S.)  569; 
Underwood  v.  Barker  (1899),  1  Ch. 
300,  80  L.  T.  (N.  S.)  306;  Dubow- 
ski  V.  Goldstein  (1896),  1  Q.  B.  478; 
S.  Jarvis  Adams  Co.  v.  Knapp,  121 
Fed.  34,  58  C.  C.  A.  1 ;  Harrison  v. 
Glucose  Sugar  Refining  Co.,  116  Fed. 
304,  53  C.  C.  A.  484,  58  L.  R.  A.  915 ; 
Carnig  v.  Carr,  167  Mass.  544,  46  N. 
E.  117,  35  L.  R.  A.  512,  57  Am.  St. 
488  (contract  for  permanent  employ- 
ment with  a  provision  not  to  engage 
in  business  so  long  as  employment 
was  furnished).  The  rule  has  been 
held  applicable  to  the  following  em- 
ployments: salesmen  (]\Iills  v.  Dun- 
ham (1891),  1  Ch.  576;  Carter  v. 
Ailing,  43  Fed.  208;  Sternberg  v. 
O'Brien,  48  N.  J.  Eq.  370,  22  Atl. 
348)  ;  teachers  (Herreshoff  v.  Bouti- 
neau,  17  R.  I.  3,  19  Atl.  712,  8  L.  R. 
A.  469,  23  Am.  St.  850  [covenant 
held  void,  however,  on  other 
grounds]  ;  Patterson  v.  Crabb 
(Tex.),  51  S.  W.  870)  ;  dentists  (Til- 
linghast  v.  Boothby,  20  R.  I.  59,  37 
Atl.  344).  A  contract  by  which  em- 
ploye covenanted  to  give  the  employer 
the  exclusive  right  to  a  machine  in- 
vented by  the  employe,  with  all  im- 
provements thereon.  Bonsack  Ma- 
chine   Co.    V.    Hulse,    57    Fed.    519; 


Morse  Twist  Drill  &c.  Co.  v.  Morse, 
103  ^lass.  73,  4  Am.  Rep.  513 

'-Hursen  v.  Gavin,  59  111.  App.  66, 
affd.,  162  111.  377,  44  N.  E.  735 ;  Hub- 
bard V.  Miller,  27  Alich.  15,  15  Am. 
Rep.  153;  American  Ice  Co.  v.  IMeck- 
el,  109  App.  Div.  (N.  Y.)  93,  95 
N.  Y.  S.  1060;  Curtis  v.  Gokey,  68 
N.  Y.  300;  Thomas  v.  Miles,  3  Ohio 
St.  274;  Lange  v.  Werk,  2  Ohio  St. 
519.  "It  is  thoroughly  settled  that 
the  good  will  of  business  concerns  is, 
though  intangible,  a  species  of  prop- 
erty transferable  from  hand  to  hand 
as  other  property."  Southworth  v. 
Davidson,  106  Minn.  119,  118  N.  W. 
363,  19  L.  R.  A.  (N.  S.)  769n. 

"John  D.  Park  &  Sons  Co.  v. 
Hartman,  153  Fed.  24,  12  L.  R.  A. 
(N.  S.)  135n,  82  C  C.  A.  158;  Stew- 
art V.  Hook,  118  Ga.  445,  45  S.  E. 
369,  63  L.  R.  A.  255;  Westervelt  v. 
National  Paper  &c.  Co.,  154  Ind.  673, 
57  N.  E.  552;  Peabody  v.  Norfolk, 
98  Mass.  452,  96  Am.  Dec.  664 ;  Chad- 
wick  V.  Covell,  151  Mass.  190,  23  N. 
E.  1068,  6  L.  R.  A.  839,  21  Am.  St. 
442;  Thum  v.  Tloczvnski,  114  Mich. 
149,  72  N.  W.  140,  38  L.  R.  A.  200, 
68  Am.  St.  469;  Watkins  v.  Landon, 
52  Minn.  389,  54  N.  W.  193,  19  L.  R. 
A.  236,  38  Am.  St.  560;  Vulcan  De- 
tinning  Co.  V.  American  Can  Co.,  67 
N.  J.  Eq.  243,  58  Atl.  290;  Taber  v. 
Hofifman,  118  N.  Y.  30,  23  N.  E.  12, 
16  Am.  St.  740;  O'Bear-Nester  Glass 
Co.  V.  Antiexplo  Co.,  101  Tex.  431, 
108  S.  W.  967,  109  S.  W.  931,  16  L. 


i6i 


COXTRACTS    IX    RESTRAIXT    OT    TRADE. 


§    834 


analogous  to  the  right  to  use  a  trade  mark,  copyright,  or  patent 
and  entitles  one  to  the  same  protective  remedy.*^*  Consequently 
the  owner  of  a  secret  process  will  be  protected  against  an  employe 
who  in  violation  of  a  contract  express  or  implied  undertakes  to 
apply  it  to  his  own  use  or  disclose  it  to  a  third  person. ^^ 

§  834.    Contracts     protecting     ownership     in. — Contracts 
which  merely  protect  one  in  the  ownership  of  a  secret  process  or 


R.  A.  (N.  S.)  520,  130  Am.  St.  865. 
The  owner  is  entitled  to  be  protected 
against  invasion  of  his  rights  in  the 
process  by  fraud  or  by  breach  of 
trust  or  contract.  Dr.  Miles  Med.  Co. 
V.  John  D.  Park  &  Sons  Co.,  220  U. 
S.  272,  55  L.  ed.  502,  31  Sup.  Ct.  276. 
It  must  be  borne  in  mind,  however, 
that  he  has  not  an  exclusive  right 
against  the  public,  or  those  who  in 
good  faith  acquire  a  knowledge  of  it. 
This  point  is  brought  out  in  the  cases 
cited  above. 

"  Vulcan  Detinning  Co.  v.  Amer- 
ican Can  Co.,  75  N.  J.  Eq.  542,  69 
Atl.   1103. 

"Yovatt  V.  Winyard,  1  Jac.  &  W. 
394,  27  Eng.  Reprint  425;  MerrA-- 
weather  V.  Moore  (1892),  2  Ch.  518; 
C.  F.  Simmons  Medicine  Co.  v.  Sim- 
mons, 81  Fed.  163 ;  Harrison  v.  Glu- 
cose Sugar  Refining  Co.,  116  Fed. 
304,  53  C.  C.  A.  484,  58  L.  R.  A.  915; 
H.  B.  Wiggins'  Sons  Co.  v.  Cott-A- 
Lap  Co.,  169  Fed.  150;  Peabodv  v. 
Norfolk.  98  Mass.  452,  96  Am.  Dec. 
664;  Thum  v.  Tloczvnski,  114  Mich. 
149,  72  X.  W.  140,  38  L.  R.  A.  200. 
68  Am.  St.  469:  Sanitus  Nut  Food 
Co.  V.  Cemer.  134  Mich.  370,  96  N. 
W.  454;  Elaterite  Paint  &c.  Co.  v.  S. 
E.  Frost  Co..  105  Minn.  239,  117  N. 
W.  388;  Salomon  v.  Hertz,  40  N.  J. 
Eq.  400.  2  Atl.  379 ;  Stone  v.  GrasselH 
Chemical  Co..  65  N.  J.  Eq.  756.  55 
Atl.  736,  103  Am.  St.  794,  62  L.  R.  A. 
344;  Tavlor  Iron  &c.  Co.  v.  Nichols, 
73  N.  J..Eq.  684.  69  Atl.  186,  133  Am. 
St.  753n ;  Little  v.  Callus.  4  App.  Div. 
(N.  Y.)  569.  38  N.  Y.  S.  487.  72  N. 
Y.  St.  643:  Baldwin  v.  Von  Micher- 
oux.  5  Misc.  (N.  Y.)  386,  25  N. 
Y.  S.  857.  affd.  in  83  Hun  (N.  Y.) 
43.  31  N.  Y.  S.  696;  Eastman  Ko- 
dak Co.  V.  Reichenbach.  20  N.  Y. 
S.    110,   47   N.   Y.    St.   435.   afifd.    in 


79  Hun  (N.  Y.)  183,  29  N.  Y.  S. 
1143,  62  N.  Y.  St.  97;  G.  F.  Harvey 
Co.  v.  Nat.  Drug  Co.,  75  App.  Div. 
(N.  Y.)  103,  77  N.  Y.  S.  674;  Mc- 
Call  Co.  V.  Wright,  133  App.  Div.  (N. 
Y.)  62,  117  N.  Y.  S.  775,  aflfd..  198 
N.  Y.  143,  91  N.  E.  516,  31  L.  R.  A. 
(N.  S.)  249n;  Magnolia  Metal  Co.  v. 
Price,  65  App.  Div.  (N.  Y.)  276,  72 
N.  Y.  S.  792;  Fralich  v.  Despar,  165 
Pa.  24,  30  Atl.  521  ;  Sterling  Varnisli 
Co.  V.  Macon,  217  Pa.  7,  66  At).  78: 
Chain  Belt  Co.  v.  Von  Spreckelsen. 
117  Wis.  106,  94  N.  W.  78.  The  courts 
have  gone  a  long  way  in  upholding 
contracts  of  this  character.  Wester- 
velt  V.  Nat.  Paper  &-c.  Co.,  154  Ind. 
672,  57  N.  E.  552.  Thus  a  contract 
by  which  T  was  to  keep  secret  for- 
ever all  the  inventions  which  he  made 
while  in  H's  employment,  has  been 
upheld.  "As  to  these  inventions,  Thi- 
bodeau's  agreement  was  perpetual, 
and  it  continues  to  bind  him,  notwith- 
standing his  employment  has  been 
ended.  This  contract  is  neither  un- 
conscionable nor  against  public  pol- 
icy. Such  an  agreement  is  not  un- 
commonly made  by  an  employe  with 
his  employer,  and  it  may  be  necessary 
for  the  reasonable  protection  of  the 
emplover's  business."  Thibodeau  v. 
Hildreth.  124  Fed.  892.  60  C.  C.  A. 
78,  63  L.  R.  A.  480.  A  contract 
against  disclosure  may  be  implied 
arising  from  the  confidential  relation 
resulting  from  the  employment  of 
one  to  perform  a  duty  which  will  of 
necessity  place  him  in  possession  of 
such  secret  or  process.  Tavlor  Iror 
&  Steel  Co.  v.  Nichols,  72  N.  J.  Eq 
684,  69  Atl.  186,  24  L.  R.  A.  (N.  S. 
933n.  133  .Am.  St.  753n.  See  also. 
Vulcan  Detinning  Co.  v.  American 
Can  Co..  70  N.  J.  Eq.  588.  62  A  I. 
881 ;    Baldwin   v.   Von   Micheroux.  5 


11 — CoxTR.^cTS,  Vol.  2 


§  834 


CONTRACTS. 


162 


trade  secret  are  not  in  restraint  of  trade. ^^  It  is  otherwise,  how- 
ever, when  the  terms  of  the  contract  binding  an  employe  not  to 
disclose  a  trade  secret  are  unreasonable  in  their  provisions  as 
when  unlimited  as  to  time  and  place  and  the  contract  as  a  whole 
savors  of  servitude.^^  The  law  recognizes  a  trade  secret  or 
secret  formula  as  a  thing  of  value  which  may  be  made  the  subject 
of  confidential  communication  and  of  sale  or  license  to  use  with 
restrictions  as  to  territory  and  prices.^^  And  when  the  owner 
of  such  secret  sells  it  under  an  agreement  on  his  part  not  to  use 
such  secret  himself  or  disclose  it  to  others  the  contract  is  neither 
in  restraint  of  trade  or  against  public  policy  and  will  be  enforced 
when  not  otherwise  objectionable.  When  the  restraint  is  no 
greater  than  that  necessary  to  protect  the  vendee  in  his  purchase 
he  is  entitled  to  be  protected  by  the  court  against  the  use  or  dis- 
closure of  the  secret  by  the  vendor.^^     Ordinarily  the  vendor  may 


Misc.  (N.  Y.)  386,  25  N.  Y.  S.  857; 
Silver  Spring  &c.  Co.  v.  Woolworth, 
16  R.  I.  729,  19  Atl.  528. 

"°  Thibodeau  v.  Hildreth,  124  Fed. 
892,  60  C.  C.  A.  78,  63  L.  R.  A.  480; 
Dr.  Miles  Med.  Co.  v.  Jaynes  Drug 
Co.,  149  Fed.  838;  Magnolia  Metal 
Co.  V.  Price,  65  App.  Div.  (N.  Y.) 
276,  72  N.  Y.  S.  792;  Chicago  Board 
of  Trade  v.  Christie  Grain  &c.  Co., 
198  U.  S.  236,  49  L.  ed.  1031,  25  Sup. 
Ct.  637.  The  names  of  customers  of 
a  business  whose  trade  and  patron- 
age have  been  secured  by  years  of 
business  effort  and  advertising  and 
the  expenditure  of  time  and  money 
stand  on  the  same  footing  as  a 
secret  of  compounding  some  article. 
Witkop  &  Holmes  Co.  v.  Boyce,  61 
i\Iisc.  (N.  Y.)  126,  112  N.  Y.  S.  874. 
See  also,  Kinney  v.  Scarbrough 
(Ga.),  74  S.  E.  772. 

''Taylor  Iron  &  Steel  Co.  v.  Nich- 

lols,  1Z  N.  J.  Eq.  684,  69  Atl.  186,  24 

' .  R.  A.   (N.  S.)  933n,  133  Am.   St. 

i3n.     To    same    effect,    Mallinckrodt 

Ihemical  Works  v.  Nemnich,  83  Mo. 

ipp.  6,  affd.,  169  Mo.  388,  69  S.  W. 

Dr.  Miles  Med.  Co.  v.  John  D. 
rk  &  Sons  Co.,  220  U.  S.  ?>1Z,  55 
ed.  502,  31  Sup.  Ct.  376;  Fowle  v. 
rk,  131  U.  S.  88,  Z?i  L.  ed.  67,  9 
Sip.  Ct.  658;  Chicago  Board  of 
Tiade  v.  Christie  Grain  &  Stock  Co., 
19$  U.  S.  236,  49  L.  ed.  1031,  25  Sup. 


Ct.  637  (sale  of  quotations  of  prices 
on  sales  of  grain  and  provisions  for 
future  delivery)  ;  Simmons  Medicine 
Co.  v.  Simmons,  81  Fed.  163 ;  Thum 
V.  Tloczynski,  114  Mich.  149,  12  N. 
W.  140,  38  L.  R.  A.  200.  68  Am.  St. 
469;  Grand  Rapids  Wood  Furnishing 
Co.  V.  Hatt,  152  Mich.  132,  115  N. 
W.  714,  15  Detroit  Leg.  N.  89  (sale 
of  furniture  polish  formula)  ;  Vulcan 
Detinning  Co.  v.  American  Can  Co., 
Q  N.  J.  Eq.  243,  58  Atl.  290:  Tode 
V.  Gross,  127  N.  Y.  480,  28  N.  E.  469, 
13  L.  R.  A.  652n,  24  Am.  St.  475.  To 
same  effect.  Grand  Rapids  Wood  Fin- 
ishing Co.  V.  Holt,  152  Mich.  132,  115 
N.  W.  714. 

"^  Harrison  v.  Glucose  Sugar  Refin- 
ing Co.,  116  Fed.  304,  53  C  C.  A.  484, 
58  L.  R.  A.  915;  Brewer  v.  Lamar, 
69  Ga.  656,  47  Am.  Rep.  766 ;  Vickerv 
V.  Welch,  19  Pick.  CMass.)  523; 
Fowle  V.  Park,  131  U.  S.  88,  IZ  L.  ed. 
67,  9  Sup.  Ct.  658;  IMorse  Twist  Drill 
&c.  Co.  V.  Morse,  103  Mass.  IZ,  4  Am. 
Rep.  513;  Thum  v.  Tloczynski,  114 
Mich.  149,  72  N.  W.  140,  38  L.  R.  A. 
200,  68  Am.  St.  469;  Grand  Rapids 
Wood  Finishing  Co.  v.  Hatt.  152 
Mich.  132,  115  N.  W.  714;  Jarvis  v. 
Peck,  10  Paige  (N.  Y.)  118;  Hard 
V.  Seelev,  47  Barb.  (N.  Y.)  428:  Tode 
v.  Gross,  127  N.  Y.  480,  28  N.  E.  469, 
13  L.  R.  A.  652n,  24  Am.  St.  475; 
National  Gum  &  Mica  Co.  v.  Braend- 
ly,  27  App.  Div.   (N.  Y.)  219,  51  N. 


1 63 


COXTRACTS    IX    KESTRAIXT    OF    TRADE. 


83s 


also  provide  in  the  terms  of  sale  that  the  secret  process  is  to  be 
used  or  sold  only  within  a  given  territory.*"" 

§  835.    Restricting  resale   of  article  produced  thereby. — 

The  manufacturer  of  an  article  produced  by  a  secret  process,  not 
protected  by  a  patent  or  copyright,  cannot,  however,  sell  the  same 
and  impose  conditions  as  to  the  terms  of  its  sale  which  follow  it 
into  the  hands  of  subsequent  purchasers.  A  contract  whereby  he 
attempts  to  restrict  its  resale  by  such  subsequent  vendee  who  has 
made  no  restrictive  covenant  is  contrary  to  the  common-law  rule 
against  monopoly  and  restraint  of  trade  and  the  provisions  of  the 
federal  antitrust  law.*'^     The  same  principle  applies  to  the  sale  of 


Y.  S.  93.  "There  can  be  no  question 
that  no  court  of  equity  would  permit 
a  person,  after  he  had  sold  the  abso- 
lute and  exclusive  property  in  a  pat- 
ent medicine  for  a  valuable  considera- 
tion, to  impart  the  formula  and  secret 
recipe,  which  are  the  most  valuable 
parts  of  the  purchase,  to  others,  that 
they  may  be  used  in  competition  with 
his  vendee.  Whatever  knowledge 
Mrs.  Simmons  possessed,  she  acquired 
as  wife  of  Dr.  M.  A.  Simmons;  and 
she  could  not  do  what  her  husband 
would  be  restained  from  doing,  and 
especially  if,  as  in  this  case,  nearly 
the  entire  consideration  was  paid  to 
her  as  voluntary  alimony.  To  permit 
this  would  enable  every  owner  of  a 
patent  medicine  to  sell  the  secret 
thereof  to  one  person,  and  have  his 
wife,  or  some  other  member  of  the 
family  to  whom  it  had  theretofore 
been  confided,  either  use  it,  or  sell  it 
to  others  to  be  used,  in  competition 
with  the  purchaser.  'Equity  prevails 
against  the  party  who  gets  the  secret 
of  another  delivered  to  him  in  breach 
of  contract  or  of  trust.' ''  C.  F.  Sim- 
mons Medicine  Co.  v.  Simmons,  81 
Fed.  163.  "Upon  the  sale  of  a  secret 
process,  a  covenant,  express  or  im- 
plied, that  the  seller  will  not  use  the 
process  himself  or  communicate  it  to 
any  other  person  is  lawful,  because 
the  process  must  be  kept  secret  in  or- 
der to  be  of  any  value,  and  the  pub- 
lic has  no  interest  in  the  question  by 
whom  it  is  used."  Central  Transp. 
Co.  V.  Pullman's  Palace  Car  Co.,  139 
U.  S.  24,  53,  35  L.  ed.  55.  11  Sup.  Ct. 
478.    One   who   sells   to   another   the 


exclusive  right  to  use  his  secret  proc- 
ess impliedly  agrees  that  he  will  not 
use  it  himself  or  disclose  it  to  others. 
Vickery  v.  Welch,  19  Pick.  (Mass.) 
523. 

^'Fowle  V.  Park,  131  U.  S.  88,  33 
L.  ed.  67,  9  Sup.  Ct.  658.  "The  prod- 
ucts being  made  under  trade  secrets 
of  which  complainants  are  the  exclu- 
sive owners,  and  no  other  person  hav- 
ing any  interest  in  or  right  to  the  se- 
cret formulas  under  which  the  arti- 
cles are  made,  or  to  the  articles  them- 
selves, the  manufacturers  may  with- 
hold them  entirely  from  sale,  may  sell 
them  on  such  terms  as  they  please, 
may  withhold  them  from  one  per- 
son while  selling  to  others,  and 
may  fix  any  price  in  their  sole  and 
exclusive  discretion.  This  rule  is 
abundantlv  settled."  Dr.  Miles  Med. 
Co.  v.  Piatt,  142  Fed.  606. 

""John  D.  Park  &  Sons  Co.  v. 
Hartman,  153  Fed.  24.  82  C.  C.  A.  158, 
12  L.  R.  A.  (x\.  S.)  135n.  The  above 
decision  was  written  by  Judge  Lurton 
and  is  an  exhaustive  one  reviewing 
many  authorities.  W.  H.  Hill  &  Co. 
v.  Gray  &  Worcester,  163  Mich.  12, 
127  N.  W.  803,  30  L.  R.  A.  (N.  S.) 
327;  Dr.  Miles  Med.  Co.  v.  John  D. 
Park  &  Sons  Co.,  220  U.  S.  373,  55 
L.  ed.  502,  31  Sup.  Ct.  376.  See  also. 
Lovejov  V.  Michels,  88  Mich.  15.  49 
N.  W.  901,  13  L.  R.  .\.  770.  In  the 
John  D.  Park  &  Sons  case  it  must 
be  borne  in  mind  that  the  purchaser 
of  the  goods  refused  to  enter  into 
any  contract  not  to  sell  them  below 
a  certain  figure.  The  vendee  obtained 
the  goods   by   lawful   means   without 


836 


CONTRACTS. 


164 


copyrighted  books  and  the  sole  right  to  vend  does  not  include  the 
ridit  to  so  restrict  resales.  ®- 


§  836.    Trade   secret — When   partnership   property. — The 

mere  existence  of  a  partnership  which  deals  in  a  product  manu- 
factured by  a  secret  process  does  not  of  itself  determine  the 
ownership  of  such  trade  secret.*'"  But  should  such  trade  secret 
actually  belong  to  the  partnership  either  partner  may,  upon  the 


making  any  restrictive  covenant  as  to 
his  right  to  resell.  It  was  the  policy 
of  the  company  to  sell  only  to  those 
who  agreed  to  resell  at  a  certain  fig- 
ure. The  action  was  brought  to  en- 
join defendant  from  in  anj^  manner 
inducing  or  persuading,  or  attempt- 
ing to  procure,  induce,  or  persuade, 
directly  or  indirectly,  any  breach  of 
any  such  sales  agreement  as  stated, 
and  from  procuring  or  attempting  to 
procure  in  any  way  plaintiff's  rem- 
edies and  medicines  directly  or  indi- 
rectly from  any  wholesaler  or  retailer 
who  had  executed  such  wholesale  or 
retail  agency  contract  with  plaintiff 
in  violation  of  the  same  and  from  ad- 
vertising, selling,  or  offering  plain- 
tiff's medicines  and  remedies.  The 
foregoing  case  may  be  distinguished 
from  that  of  Garst  v.  Flarris,  177 
IMass.  72,  58  N.  E.  174,  and  Clark 
v.  Frank,  17  Mo.  App.  602,  in  which 
cases  the  vendee  actually  entered  into 
a  contract  not  to  resell  the  goods  be- 
low a  stipulated  figure.  The  agree- 
ment was  upheld.  See  also,  Authors 
&  Newspapers  Assn.  v.  O'Gorman 
Co.,  147  Fed.  616.  Nor  is  the  John 
D.  Park  &  Sons  case  in  conflict  with 
those  decisions  which  merely  hold 
that  an  agreement  whereby  a  manu- 
facturer binds  the  vendee  not  to  re- 
sell goods  at  less  than  a  specified 
price  is  not  prohibited  by  a  particular 
statute  of  the  state.  Commonwealth 
v.  Grinstead,  111  Kv.  203,  63  S.  W. 
427,  23  Ky.  L.  590,  "56  L.  R.  A.  709. 
In  re  Greene,  52  Fed.  104.  Compare 
also,  with  Dr.  Miles  Medical  Co.  v. 
Piatt.  142  Fed.  606,  holding  that  de- 
fendant may  be  enjoined  from  in  any 
way  procuring  wholesalers  and  retail- 
ers to  violate  their  contracts.  To 
same  effect,  Grogan  v.  Chaffee,  156 
Cal.  611,  105  Pac.  745,  27  L.  R.  A. 
(N.  S.)   395n,  holding  that  a  manu- 


facturer of  olive  oil  may  enjoin  one 
who  has  contract  not  to  sell  such  oil 
for  less  than  a  certain  amount  from 
selling  it  for  less  than  the  amount 
specified.  Dr.  Miles  Med.  Co.  v. 
Jaynes  Drug  Co.,  149  Fed.  838;  Park 
&  Sons  Co.  V.  National  Wholesale 
Druggists  Assn.,  175  N.  Y.  1,  67  N. 
E.   136,  62  L.  R.  A.  632,  96  Am.  St. 

578.  Disapproved,  however,  in  Dr. 
.Aliles  .Med.  Co.  v.  John  D.  Park  & 
Sons  Co.,   164  Fed.  803,  90  C.  C.  A. 

579,  220  U.  S.  Z7i,  55  L.  ed.  502.  This 
latter  case  was  followed  in  Dr.  Miles 
Med.  Co.  V.  John  D.  Park  &  Sons 
Co.,  220  U.  S.  2,7 i,  55  L.  ed.  502,  31 
Sup.  Ct.  376.  Both  these  latter  cases 
draw  a  distinction  between  the  for- 
mula itself,  the  process  of  manufac- 
ture, and  the  manufactured  product, 
— an  article  of  commerce. 

""The  precise  question,  therefore, 
in  this  case  is,  does  the  sole  right  to 
vend  (named  in  §  4952)  secure  to  the 
owner  of  the  copyright  the  right, 
after  a  sale  of  the  book  to  a  pur- 
chaser, to  restrict  future  sales  of  the 
book  at  retail,  to  the  right  to  sell  it 
at  a  certain  price  per  copy,  because 
of  a  notice  in  the  book  that  a  sale  at 
a  different  price  will  be  treated  as  an 
infringement,  which  notice  has  been 
brought  home  to  one  undertaking  to 
sell  for  less  than  the  named  sum?  We 
do  not  think  the  statute  can  be  given 
such  a  construction  *  *  *  and  this 
is  purely  a  question  of  a  statutory 
construction.  There  is  no  claim  in 
this  case  of  contract  limitation,  nor 
license  agreement  controlling  the  sub- 
sequent sales  of  the  book."  Bobbs- 
Merrill  Co.  v.  Straus,  28  Sup.  Ct.  722. 
See  also,  Scribner  v.  Straus,  210  U.  S. 
352,  210  L.  ed.  1094.  28  Sup.  Ct.  735. 

•^  Morison  v.  i\Ioat,  9  Hare  241,  68 
Eng.  Reprint  492. 


165  CONTRACTS    IX    RESTRAINT    OF    TRADE.  §    837 

dissolution  of  the  firm  and  in  the  absence  of  any  agreement  to 
the  contrary,  use  the  same."* 

§  837.  Trade  secret  and  patent — Distinction  between. — 
The  principal  distinction  between  a  trade  secret  and  a  patent  is 
that  in  the  case  of  the  former,  while  the  owner  is  protected  against 
any  one  obtaining  and  using  tlie  secret  process  through  breach  of 
trust  or  contract,  on  the  other  hand,  one  is  free  not  only  to  use  the 
process  or  formula  if  discovered  by  skill  and  investigation  with- 
out breach  of  trust  but  also  to  make  or  sell  the  thing  or  prep- 
aration as  made  by  the  process  or  formula  of  the  original  discov- 
erer without  his  permission  or  against  his  will.  In  the  case  of  a 
patent,  however,  the  monopoly  endures  for  the  whole  term  of  the 
patent.  It  gives  the  patentee  the  right  to  control  the  use  of  his 
invention  during  the  entire  period  and  he  may  rightfully  protect 
by  contract  the  power  to  regulate  all  manufacture,  sale  or  use  of 
the  things  embodying  his  invention.  It  is  this  continuity  of  the 
right  granted  to  the  patentee  which  distinguishes  it  from  the  right 
to  manufacture,  sell,  or  use  unpatented  articles."^  Nor  does  the 
owner  "possess  his  patent  upon  the  condition  that  he  shall  make 
or  vend  the  article  patented,  or  allow  others  to  do  so  for  a  fair 
and  reasonable  compensation.  When  he  has  once  secured  his  pat- 
ent, he  may,  if  he  choose,  remain  absolutely  quiet,  and  not  only 
neglect  and  refuse  to  make  the  patented  article,  but  he  may  like- 
wise refuse  to  permit  any  one  else  to  do  so  on  any  terms.  *  *  * 
He  may  keep  such  right  to  himself,  or  make  the  machinery  or 
manufacture  the  patented  article  alone,  or  he  may  permit  others 
to  share  such  right  with  him,  or  he  may  allow  them  an  exclusive 
right,  and  retain  none  himself."*'® 

§  838.  Rights  of  owner  of  patent. — These  rights  and  pow- 
ers necessarily  confer  upon  the  holder  of  the  patent  the  right  to 
sell  it  to  another,  or  agree  with  him  that  he  will  permit  none 

"Baldwin     v.     VonMicheroux.     5  ton-Fastener    Case.    11   Fed.    288,   25 

Misc.  (N.  Y.)  386.  25  N.  Y.  S.  857.  C.  C.  A.  267,  47  U.   S.  App.   146,  35 

^^John    D.    Park    &    Sons    Co.    v.  L.  R.  A.  728;   E.  Bement  &  Sons  v. 

Hartman.  153  I'>d.  24.  %1  C.  C.  A.  158,  National   Harrow  Co..   186  U.   S.  70, 

12  L.  R.  A.   (N.  S.)   135n.  46  L.  ed.  1058,  22  Sup.  Ct.  747;  Paper 

"  Good  V.  Tucker  &c.  Co.,  121  N.  Y.  Bapr  Case.  210  U.   S.  405,   52  L.   ed. 

1,  24  N.  E.  15.    To  same  effect,  But-  1122,  28  Sup.  Ct.  748. 


§  839 


CONTRACTS. 


1 66 


other  than  such  person  to  use  it."'  The  rules  governing  contracts 
in  restraint  of  trade  do  not  apply  to  agreements  concerning  the 
sale,  assignment  or  licensing  of  a  patent.  A  patent  is  a  true  and 
absolute  monopoly,  is  granted  in  derogation  of  the  common  right, 
and  is  a  substantial  property  right  which  the  public  is  under  obli- 
gation to  respect  and  protect.*'^  The  holder  of  the  patent  may 
give  another  the  exclusive  right  to  use,  vend  or  lease  the  patented 
article  within  a  designated  territory,"^ 

§  839.  Transfer  by  owner  of  rights  under  patent. — It  is 
not  necessary  that  all  rights  under  the  patent  be  conferred  in  one 
and  the  same  contract.  The  right  to  manufacture,  the  right  to 
sell,  and  the  right  to  use  are  each  substantive  rights  and  may  be 
granted  separately  or  conferred  together  by  the  patentee.'"  The 
owner  of  the  patent  may  grant  to  another  the  right  to  use  the 
patented  article  and,  as  one  of  the  terms  of  the  grant,  bind  the 
licensee  to  buy  from  the  patentee  those  materials  necessary  to  the 
construction  or  operation  of  the  patented  article. '^^     The  patentee 


"'  Good  V.  Tucker  &c.  Co.,  121  N.  Y. 
1.  24  N.  E.  15.  "And,  of  course,  as  a 
patent  is  a  sort  of  monopoly,  the 
owner  may  manufacture  under  it  or 
not,  as  he  pleases ;  and  may  make 
either  a  partial  or  entire  assignment 
of  it;  and  may  protect  his  assignee, 
not  only  by  an  agreement  not  to  use 
the  patent  (which  would  be  unneces- 
sary, because  such  use  would  be  an 
infringement),  but  by  a  covenant  not 
to  interfere  in  any  way  with  the 
profits  to  be  derived  from  the  as- 
signed patent."  Vulcan  Powder  Co. 
V.  Hercules  Powder  Co.,  96  Cal.  510, 
31  Pac.  581,  31  Am.  St.  242,  Benj. 
Cont.  640,  641. 

"'Button-Fastener  Case,  11  Fed. 
288,  25  C.  C.  A.  267,  35  L.  R.  A.  728. 
To  same  effect,  American  Brake 
Beam  Co.  v.  Pungs,  141  Fed.  923,  12, 
C.  C.  A.  157;  Victor  Talking  Mach. 
Co.  V.  The  Fair,  123  Fed.  424,  61  C. 
C.  A.  58;  Rubber  Tire  Wheel  Co.  v. 
:\Iilwaukee  Rubber  W.  Co.,  154  Fed. 
358,  83  C.  C.  A.  336;  United  States 
&c.  Co.  V.  Griffin  &c.  Co.,  126  Fed. 
364.  61  C  C.  A.  334;  Morse  Twist 
Drill  &c.  Co.  V.  Morse,  103  Mass.  IZ, 
4  Am.  Rep.  513;  Standard  Fireproof- 
ing  Co.  V.  St.  Louis  Expanded  &c. 
Co.,  177  Mo.  559,  76  S.  W.  1008. 


"'  Whitson  V.  Columbia  Phono- 
graph Co.,  18  App.  (D.  C.)  565; 
Standard  Fireproofing  Co.  v.  St. 
Louis  Expanded  Metal  &c.  Co.,  177 
Mo.  559,  76  S.  W.  1008;  Bancroft  & 
Rich  V.  Union  Embossing  Co.,  12  N. 
H.  402,  57  Atl.  97,  64  L.  R.  A.  298; 
Sommers  v.  Myers,  69  N.  J.  L.  24,  54 
Atl.  812;  Consolidated  R.  Electric  &c. 
Co.  V.  United  States  &c.  Co.,  11  N.  J. 
Eq.  285,  78  Atl.  684  (patentees  may 
not  only  sell  their  various  patents  but 
may  also  contract  to  assign  any  pat- 
ents secured  on  improvements  on  the 
patents  assigned).  See  also,  in  con- 
nection with  the  case  last  cited, 
Squires  v.  Wason  Mfg.  Co.,  182  Mass- 
137,  65  N.  E.  32. 

'^  Button-Fastener  Case,  11  Fed. 
288,  25  C.  C.  A.  267,  35  L.  R.  A.  728 ; 
Henry  v.  A.  B.  Dick  Co.,  224  U.  S. 
1.  32  Sup.  Ct.  364;  Adams  v.  Burke, 
17  Wall.  (U.  S.)  453,  21  L.  ed.  700; 
Dorsey  Revolving  &c.  Rake  Co.  v. 
Bradley  Mfg.  Co.,  12  Blatchf.  (U.  S.) 
202,  Fed.  Cas.  No.  4015. 

"  Clark  v.  Cyclone  Woven-Wire 
Fence  Co.,  22  Tex.  Civ.  App.  41,  54 
S.  W.  392;  Henry  v.  A.  B.  Dick  Co., 
224  U.  S.  1,  Z2  Sup.  Ct.  364. 


167  CONTRACTS    IN    RESTRAINT    OF   TRADE.  §    84O 

may  fix  the  price  at  which  the  patented  article  or  product  shall  be 
marketed." 

§  840.  Contracts  which  owner  of  patent  is  prohibited  from 
making. — But  while  the  owuer  of  the  patent  is  given  an 
absolute  monopoly  and  while  he  may  sell  or  otherwise  dispose  of 
such  right  and  the  transfer  be  valid,  a  contract  made  in  connec- 
tion therewith  which  prohibits  the  vendor  from  manufacturing 
or  selling  any  article  similar  to,  but  not  covered  by  the  patent- 
right  sold  the  vendee,  will  be  declared  void  when  such  restraint  is 
unreasonable."  Neither  can  the  owners  of  two  or  more  distinct 
patents  enter  into  a  contract  or  system  of  contracts  which  has  for 
its  object  the  suppression  of  competition  and  the  restraint  of 
trade.'*  Nor  can  the  owner  of  a  patent  or  patents  who  uses  them 
in  a  business  affected  with  a  public  interest  or  permits  them  to  be 
so  used  discriminate  against  or  provide  for  discrimination  against 
patrons  or  classes  of  patrons  similarly  circumstanced ;  all  are  en- 
titled to  use  it  on  the  same  terms  as  other  persons  in  the  same 
class." 

§  841.  Construction. — It  is,  as  a  general  rule,  the  duty  of 
the  court  to  interpret  the  written  agreement  and  ascertain  the 

"Indiana  'Slig.  Co.  v.  J.  I.  Case  &c.  tides    under   them)    is   not   accepted 

Machine  Co.,  148  Fed.  21.  and  a  price  not  agreed  on,  the  same 

"  Gamewell  Fire-Alarm  &c.  Co.  v.  shall  be  withdrawn,  and  that  he  will 
Crane,  160  Mass.  50,  35  N.  E.  98,  22  not  dispose  of,  transfer,  or  assign  to 
L.  R.  A.  673,  39  Am.  St.  458.  To  same  any  other  person  any  such  patent. 
eflFect,  United  States  v.  Standard  device,  or  thing  (meaning  a  new  pat- 
Sanitary  Mfg.  Co.,  191  Fed.  172.  ent  or  article  under  it)." 
Compare  with  United  States  v.  Wins-  '^  Vulcan  Powder  Co.  v.  Hercules 
low,  195  Fed.  578.  He  may,  however,  Powder  Co..  96  Cal.  510,  31  Pac.  581, 
agree  to  assign  future  improvements  31  Am.  St.  242,  Benj.  Cont.  640;  In- 
on  the  patent  sold.  Consolidated  R.  diana  Mfg.  Co.  v.  J.  I.  Case  &c.  Mach. 
Elec.  &c.  Co.  v.  United  States  &c.  Co.,  Co.,  148  Fed.  21 ;  National  Harrow 
77  N.  J.  Eq.  285.  78  Atl.  684.  Com-  Co.  v.  Hench,  83  Fed.  36.  27  C  C.  A 
pare,  however,  with  the  case  of  Jones  349,  39  L.  R.  A.  299  \  National  Har- 
Cold  Store  Door  Co.  v.  Jones,  108  row  Co.  v.  Bement,  21  App.  Div.  (N. 
Md.  439,  70  Atl.  88,  129  Am.  St.  446,  Y.)  290,  47  N.  Y.  S.  462  (reversed 
declaring  against  public  policy  a  con-  on  another  point,  163  N.  Y.  505,  57 
tract  by  which  a  patentee  agreed  that  N.  E.  764). 

in   the   event    of    a   change,    "of    any        "^Delaware   &c.    Tel.    Co.   v.    State, 

patents   or   devices   in   use    (meaning  50   Fed.   677;    Chesapeake  &    P.    Tel. 

a  change  conceived  of  or  invented  by  Co.   v.    Baltimore   &   O.   Tel.   Co..   66 

a  new  patent),  then  he  agrees  to  sub-  Md.  399.  7  .Atl.  809,  59  Am.  Rep.  167; 

mit   the   same    (that   is,   the   changed  State  v.  Telephone   Co.,  36  Ohio  St. 

patent,  or  device),  and,   if  the  same  296;  Bell  Telephone  Co.  v.  Common- 

(meaning    the   new    patents    and   ar-  wealth  (Pa.),  3  .A.tl.  825;  Commercial 


842 


CONTRACTS. 


1 68 


meaning  of  the  parties,"  and  the  question  as  to  whether  or  not  it 
is  in  restraint  of  trade  is  one  of  law  for  the  coiirt.'^  I\Iany  cases 
lay  down  the  rule  that  all  contracts  in  restraint  of  trade  are 
prima  facie  void,  and  that  their  provisions  will  not  be  extended 
by  construction  or  implication  in  favor  of  the  party  seeking  their 
enforcement  beyond  what  the  terms  would  clearly  require.'^^ 

§  842.  The  rule  illustrated. — Thus,  a  contract  binding  the 
defendants  not  to  manufacture  truck  frames  "or  any  part  of  such 
frames,  when  made  of  pressed  metal,"  has  been  construed  as  only 
prohibiting  them  from  manufacturing  in  whole  or  part  plain- 


&c.  Co.  V.  New  England  &c.  Co.,  61 
Vt.  241,  17  Atl.  1071,  15  Am.  St.  893. 
See  ante,  chap.  XIX. 

''Mills  V.  Dunham  (1891),  1  Ch. 
576. 

"Dowden  v.  Pook,  IZ  L.  J.  (K.  B.) 
38  (1904),  1  K.  B.  45,  89  Law  T.  688, 
52  Wkly.  97,  20  T.  L.  R.  39;  Haynes 
V.  Doman  (1899),  2  Ch.  13;  Mallan 
V.  May,  1  M.  &  W.  653;  Linn  v. 
Sigsbee,  67  111.  75;  Knight  &c.  Co.  v. 
Miller,  172  Ind.  27,  87  N.  E.  823; 
Wiley  V.  Baumgardner,  97  Ind.  66, 
t9  Am.  Rep.  427 ;  Warren  v.  Jones, 
51  Maine  146;  Geiger  v.  Cawley,  146 
Mich.  550,  109  N.  W._  1064;  Erie 
County  Milk  Assn.  v.  Ripley,  18  Pa. 
Super.  Ct.  28;  Palmer  v.  Toms,  96 
Wis.  367,  71  N.  W.  654.  It  is  believed 
that  the  construction  of  the  contracts 
continues  to  be  a  question  of  law, 
notwithstanding  there  may  exist  some 
latent  ambiguity  or  other  factor  which 
requires  determination  by  a  jury.  It 
is  sometimes  necessary  as  aids  to  the 
court,  to  have  the  situation  of  the 
parties  at  the  time  of  the  execution 
of  the  contract,  and  all  the  facts  and 
circumstances  surrounding  it,  in  or- 
der to  enable  the  court  to  determine 
the  intent  of  the  parties ;  however, 
because  the  situation  is  such  that  it 
becomes  necessary  to  prove  these 
facts  and  circumstances,  the  question 
of  construction  is  not  transferred 
from  the  court  to  the  jury,  but,  in- 
stead, the  question  of  the  construc- 
tion of  the  contract  continues  to  be 
one  of  law  for  the  court,  the  facts 
and  circumstances  proved  being  avail- 
able for  the  purpose  of  ascertaining 
the  real  intent  of  the  parties.    Cohen 


V.  Berlin  &c.  Envelope  Co.,  166  N. 
Y.  292,  59  N.  E.  906.  See  also,  Dow- 
den  V.  Pook  (1904),  1  K.  B.  45;  Can- 
field  Lumber  Co.  v.  Kint  Lumber  Co., 
148  Iowa  207,  127  N.  W.  70. 

■'Underwood  v.  Barker  (1899),  1 
Ch.  300 ;  Mysterv  of  Gunmakers  Soc. 
v.  Fell,  Willes  388;  Mitchel  v.  Rey- 
nolds, 1  P.  Wms.  181,  1  Smith.  Lead. 
Cas.  (11th  ed.)  406;  Wiggins  Ferry 
Co.  v.  Ohio  &c.  R.  Co.,  72 
111.  360;  Talcott  v.  Brackett,  5 
111.  App.  60;  M.  M.  Mitchell 
Co.  V.  Mitchell,  134  111.  App. 
214;  Roller  v.  Ott.  14  Kans.  609  (sub- 
nomine  W.  W.  Roller  &  Co.)  ;  An- 
chor Electric  Co.  v.  Hawkes,  171 
Mass.  101,  50  N.  E.  509,  41  L.  R.  A. 
189,  68  Am.  St.  403 ;  Saddlery  &c.  Co. 
V.  Hillsborough  Mills,  68  N.  H.  216, 
44  Atl.  300,  IZ  Am.  St.  569;  Mande- 
ville  V.  Harmon,  42  N.  J.  Eq.  185,  7 
Atl.  Zl;  Weller  v.  Hersee.  10  Hun 
(N.  Y.)  431;  Chappel  v.  Brockway, 
21  Wend.  (N.  Y.)  157;  Ross  v.  Sadg- 
beer,  21  Wend.  (N.  Y.)  166;  Ste- 
phens V.  Aulls,  3  Thomp.  &  C.  (N. 
Y.)  781;  Greenfield  v.  Gilman,  140 
N.  Y.  168,  35  N.  E.  435;  Bingham 
V.  Maigne,  52  N.  Y.  Super.  Ct.  90; 
Seward  v.  Shields,  9  Pa.  Dist.  583. 
Many  authorities  declare,  in  sub- 
stance, that  all  restraints  are  pre- 
sumed to  be  bad,  but  if  the  circum- 
stances are  set  forth  the  presumption 
may  be  excluded,  and  the  court  judge 
of  these  circumstances  whether  the 
contract  be  valid  or  not.  Mallan  v. 
Mav,  11  M.  &  W.  653;  Callahan  v. 
Donnolly,  45  Cal.  152,  13  Am.  Rep. 
172,  ancl  note;  Tavlor  v.  Blanchard, 
\Z  Allen    (Alass.)  "370,  90  Am.  Dec. 


169  CONTRACTS    IN    RESTRAINT    OF    TRADE.  §    843 

tifif's  truck,  and  not  from  making  pressed  metal  parts  of  other 
kinds  of  truck  frames.'"  So  the  lease  of  a  store  for  five  years, 
coupled  with  a  covenant  on  the  part  of  the  lessor  not  to  engage  in 
a  competing  business,  prevents  him  from  so  doing  only  during  the 
five  years  period. ■*"  An  agreement  not  to  engage  in  the  general 
grocery  business  within  two  squares  of  the  store  sold  will  not  pre- 
vent the  covenantor  from  manufacturing  brushes  and  mops  and 
selling  them,  together  with  brooms,  buckets  and  woodenwares,  at 
wholesale  and  retail.*^  One  who  agrees  to  act  as  the  exclusive 
agent,  and  is  given  the  exclusive  agency  for  a  certain  furnace  in 
a  given  town,  does  not  violate  his  contract  to  act  as  exclusive 
agent  by  selling  airtight  stoves.*'  A  contract  which  bound  one 
not  to  "engage  directly  or  indirectly  in  the  business  of  buying  cot- 
ton waste  from  any  cotton  mills  in  any  part  of  the  United  States 
or  Canada"  has  been  held  not  to  prohibit  the  covenantor  from 
buying  cotton  waste  in  the  general  market,  or  from  other  sources 
not  mentioned  in  the  contract,  and  selling  it  in  the  United 
States.«3 

§  843.  Contracts  in  restraint  of  trade — Presumptions  as  to 
validity. — The  Sherman  Antitrust  Law  would  seem  to  ren- 
der all  contracts  in  restraint  of  trade  prima  facie  void.**  Other 
cases  adopt  a  more  liberal  construction,  and  deny  the  existence 
of  any  presumption  against  the  validity  of  such  contracts,  but  in- 
stead interpret  them  in  such  a  way  as  to  render  them  effectual 
instead  of  defeating  them.  An  illegal  restraint  is  not  implied 
from  doubtful  words,  and  within  the  last  two  or  three  decades 
there  has  been  a  strong  tendency  to  set  aside  the  narrow  and  ar- 

203;  Lange  v.  Werk,  2  Ohio  St.  519;  Compare  with  Geiger  v.  Cawlev.   146 

Kellogg  V.  Larkin.  3  Pin.  (Wis.)  123,  Mich.  550,    109   N.   W.    1064.   holding 

3  Chand.  133,  56  .^.m.  Dec.  164;  Ber-  that  a  contract  not  to  sell  hardware, 

lin  Machine  Works  v.  Perry,  71  Wis.  furniture,   implements   "and"   wagons 

495,   38    N.    W.    82,   5    Am.    St.   236;  was    broken    by    engaging    in    selling 

Kradwell  v.  Thiesen,  131  Wis.  97,  111  hardware     and     agricultural     imple- 

N.  W.  233.  mcnts,  "and"'  being  construed  as  "or". 

"  Fox    Solid    Pressed    Steel    Co.    v.  "^  Peck-Williamson  Heating  &c.  Co. 

Schoen  Mfg.  Co.,  84  Fed.  544,  28  C.  v.  Miller  (Ky.),  118  S.  W.  376. 

C.  \.  492.  "  Bauer  v.  International  Waste  Co., 

■^Long  V.  O'Bryan.  28  Ky.  L.  1062,  201  Mass.  197.  87  N.  E.  637. 

91  S.  W.  659.    See  also,  Broadbrooks  "  See  article  bv   Senator  Edmonds 

V.  ToUes,  114  App.  Div.  (N.  Y.)  646,  in   the  December.    1911.   issue  of   the 

99  X.  Y.  S.  996.  North  American  Review. 

"Goose  V.  Leonard,  14  Ky.  L.  174. 


§  844 


CONTRACTS. 


170 


bitrary  rules  of  construction  based  on  place  and  time  in  favor  of 
a  more  reasonable  vie\v.^° 

§  844.  Modern  doctrine. — The  modern  decisions  as  a  gen- 
eral rule  take  into  consideration  the  situation  of  the  parties,  the 
nature  of  the  business,  the  rights  of  the  one  in  whose  favor  the 
restriction  runs,  and  also  the  effect  of  such  restriction  upon  the 
public.*®  Thus,  when  the  contract  is  in  fact  beneficial  to  the  pub- 
lic, it  will  not  be  declared  unenforcible  because  in  restraint  of 
trade." 

§  845.  Rules  of  construction  illustrated  by  particular 
cases. — A  contract  to  sell  or  rent  certain  property  only  to 
persons  who  would  agree  to  buy  and  handle  the  beer  of  a  certain 
company  has  been  held  not  to  prevent  the  occupant  from  handling 
other  beers,  since  the  adverb  "only"  modifies  "sell  or  rent,"  and 
not  the  words  "buy  or  handle,"  and  for  that  reason  does  not  re- 
strain trade-**     The  word  "deal"  in  a  contract   not  to  "deal"  in 


''Mumford  v.  Gething,  7  C.  B.  (N. 
S.)  305,  97  E.  C.  L.  303;  Merchants" 
Ad.  Sign  Co.  v.  Sterling,  124  Cal.  429, 
57  Pac.  468,  46  L.  R.  A.  142,  71  Am. 
St.  94;  Anthony  v.  Hitchcock,  71  Fed. 
659;  Hubbard  v.  Miller,  27  Mich.  15, 
15  Am.  Rep.  153;  Caswell  v.  Gibbs,  33 
Mich.  331;  Trenton  Potteries  Co.  v. 
Oliphant,  58  N.  J.  Eq.  507,  43  Atl. 
723,  46  L.  R.  A.  255,  78  Am.  St.  612; 
Diamond  Match  Co.  v.  Roeber,  106 
N.  Y.  473.  13  N.  E.  419,  60  Am.  Rep. 
464;  Wood  v.  Whitehead,  165  N.  Y. 
545.  59  N.  E.  357.  See  ante,  §  794 
et  seq. 

*"  Smith  V.  Hancock  C1894),  2  Ch. 
377;  Alore  v.  Bonnet,  40  Cal  251,  6 
Am.  Rep.  621 ;  Long  v.  Towl,  42  Mo. 
545,  97  Am.  Dec.  355;  Trenton  Pot- 
teries Co.  V.  Oliphant,  56  N.  J.  Eq. 
680,  39  Atl.  923,  46  L.  R.  A.  255 ;  Oak- 
dale  Mfg.  Co.  V.  Garst,  18  R.  I.  484, 
28  Atl.  973,  23  L.  R.  A.  639,  49  Am. 
St.  784;  Oregon  Steam  Nav.  Co.  v. 
Winsor,  20  Wall.  (U.  S.)  64,  22  L. 
ed.  315. 

""The  contract  is  not  one  in  re- 
straint of  trade.  It  does  not  restrain 
appellees  from  suppb'ing  natural  gas 
to  the  city  of  Ft.  .Smith  under  the  or- 
dinance No.  634,  so  long  as  they  are 
willing  to  meet  a  'downward  revision' 


of  the  prices  of  natural  gas.  The  law 
prohibiting  contracts  in  restraint  of 
trade  does  not  prevent  one  from  mak- 
ing a  contract  by  which  he  agrees  to 
compete  with  others  in  the  price  of 
the  commodity  which  he  produces  for 
the  use  of  the  public.  One  purpose 
of  the  law  in  prohibiting  contracts 
in  restraint  of  trade  is  to  encourage 
competition,  and  thereby  lower  the 
prices  of  services  and  commodities  to 
the  public."  Ft.  Smith  Light  &c.  Co. 
V.  Kelley.  94  Ark.  461,  127  S.  W.  975 ; 
Wayne-Monroe  Tel.  Co.  v.  Ontario 
Tel.  Co.,  60  Misc.  (N.  Y.)  435,  112 
N.  Y.  S.  424.  See  also,  Forrest  Pho- 
tographic Co.  V.  Hutchinson  Grocery 
Co.  (Tex.  Civ.  App.),  108  S.  W.  768. 
*' Fleming  v.  Mulloy,  143  Mo.  App. 
309,  127  S.  W.  105.  Compare  with 
Ferris  v.  American  Brewing  Co.,  155 
Ind.  539,  58  N.  E.  701,  52  L.  R.  A. 
305  (agreement  not  to  sell  any  beer 
on  leased  premises  except  that  of  a 
named  company).  Compare  with 
Christ  Diehl  Brewing  Co.  v.  Konst, 
30  Ohio  C.  C.  782  (holding  that  les- 
see may  agree  to  sell  only  lessor's 
beer  on  the  premises)  ;  Huebner-To- 
ledo  Breweries  Co.  v.  Singlar,  28 
Ohio  C.  C.  329  (holding  invalid  a  con- 
tract by  which  a  lessee  bound  himself 


171  COXTRACTS    IX    RESTRAIXT    01-    TRADE.  §    846 

Stock,  cattle  or  horses  for  speculative  purposes  in  a  certain  vicin- 
ity, has  been  construed  to  mean  "to  engage  in  the  business  of 
buying  and  selling  such  property  with  the  object  of  gain.'"'' 
The  word  "at"  has  been  construed  as  synonymous  with  "near,""" 
and  the  word  "and"  as  "or."'''  So  a  contract  which  limits  the 
communication  of  what  the  plaintiff  might  have  refrained  from 
communicating  to  any  one  is  not  in  restraint  of  trade.®"  A 
butcher,  on  selling  his  business,  agreed  not  to  "enter  into  the 
butcher  business  nor  kill  any  animals  for  the  purpose  of  peddling 
or  sale  of  any  nature  only  for  his  own  private  use."  It  was  held 
that  this  contract  prohibited  the  vendor  from  competing  with  the 
vendee  either  himself  personally  or  in  any  other  manner,  directly 
or  indirectly,  as  by  becoming  the  employe  of  another  butcher.'*'^ 

§  846.  Recognition  taken  of  modern  conditions. — Recog- 
nition is  taken  of  the  great  change  that  has  taken  place  by  reason 
of  modern  inventions  and  means  of  communication  which  have 
removed  the  barrier  of  space,  so  far  as  the  majority  of  trades  and 
businesses  are  concerned.  This  has  resulted  in  the  modification 
of  the  old  principle  to  suit  present  day  conditions.''* 

§  847.  Divisibility  or  severability  of  contract. — Where  an 
agreement  in  restraint  of  trade  contains  a  stipulation  unlimited 

to  sell  only  lessor's  beer,  but  by  which  ter  of  the  village  of  L— ,  and  that 
the  lessor  was  not  bound  to  furnish  the  contract  was  not  void  for  failing 
the  same  to  the  lessee).  But  a  contract  to  state  a  period  within  which  the 
of  this  character  has  been  upheld,  defendant  was  not  to  practice  den- 
even  though  it  did  not  specifically  tistry  within  those  limits.  Cook  v. 
bind  the  plaintiff  to  furnish  the  de-  Johnson,  47  Conn.  175,  36  Am.  Rep. 
fendant  beer   at   any  time   when   the  64. 

plaintiff  tendered  its'elf  ready  to  fur-  "Geiger  v.  Cawley,  146  Mich.  550, 

nish  a  srnod  qualitv  of  beer  at  proper  109  N.  W.  1064. 

prices.    Feigenspan  v.  Nizolek,  71  N.  *' Chicago  Board  of  Trade  v.  Chris- 

J.  Eq.  382.  65  .\tl.  703,  affd.,  12  N.  J.  tie  Grain  &c.  Co..  198  U.  S.  236,  49 

Eq.  949.  68  Atl.  1116.  L.  ed.  1031,  25  Sup.  Ct.  637. 

*•  Wilson  v.  Delaney,  137  Iowa  636,  "'  Canady  v.   Knox,  48  Wash.   685, 

113  N   W   842  94  Pac.  652. 

•"Harris  v.  Theus.  149  Ala.  133.  43  "See  Maxim  Nordenfeld  Guns  &c 

So.   131,   10  L.  R.   A.    (N.   S.)   204n,  Co.  v.  Nordenfeld  (1893).  3  Ch.  122 

123  Am.  St.  17.     The  plaintiff  bought  62   L.   J.   Ch.   749;   United    States  _v 

the  defendant's  business  as  a  dentist,  Addyston  Pike  &c.  Co..  85  Fed.  271 

and  the  latter  executed  the  contract  29   C.   C   ^..   141.   46   L.   R.   .\.    122 

not    to    practice    dentistrv    within    a  Trenton    Potteries    Co.    v.    Oliphant 

radius  of  ten   miles  of  the  town  of  58  N.  J.  Eq.  507,  43  Atl.  Ill,  46  L.  R 

L— .    It  was  held  that  the  above  ex-  A.    255.    78   Am.    St.    612;    Diamond 

pression  meant  ten  miles  of  the  cen-  jNIatch  Co.  v.  Roeber,  106  N.  Y.  473, 


§    848  CONTRACTS.  1 72 

and  in  restraint  of  trade  and  another  provision  which  is  capable  of 
being  construed  divisibly  and  which  is  valid,  the  court  will  give 
effect  to  the  latter  and  will  not  hold  the  agreement  void  in  toto.^^ 
The  bad  is  rejected ;  the  good  retained.  Thus  a  telephone  com- 
pany which  put  a  switch  board  and  telephone  system  in  defend- 
rmt's  hotel  under  a  contract  that  it  should  have  the  exclusive  priv- 
ilege of  furnishing  such  hotel  with  telephone  facilities  might  en- 
join the  removal  of  its  switchboard  and  telephone  system  but 
could  not  restrain  defendant  from  permitting  the  instalation  of 
any  other  telephone  system  in  his  hotel.°° 

§  848.  Divisibility  as  to  territorial  extent — When  valid. — 
Contracts  in  restraint  of  trade  are  frequently  declared  divisible 
in  respect  either  to  territorial  extent  or  time.  "Where  the  re- 
straint imposed  by  the  contract  applies  to  a  limited  and  reasonable 
space,  and  is  also  extended  to  an  unlimited  or  unreasonable  space, 
the  contract  may  be  held  to  be  divisible  and  the  restriction  as  to 
the  reasonable  limit  expressed  may  be  enforced.'"^'  Consequently 
where  a  contract  prohibited  one  from  resuming  a  particular  busi- 
ness any  place  within  the  United  States,  this  stipulation  was  held 
divisible  from  the  rest  of  the  contract  and  since  the  remaining 
part  of  the  contract  was  based  on  a  sufficient  consideration  it  was 
en  forced. °^  Likewise  a  contract  which  bound  one  not  to  engage 
in  business  of  tlie  character  formerly  conducted  either  in  the  city 
of  Jersey  City  or  within  five  hundred  miles  of  that  city,  has  been 
held  divisible  and  so  far  as  it  embraces  territory  outside  of  Jersey 
City  declared  unreasonable  and  to  that  extent  invalid,  but  that 
in  respect  to  Jersey  City  itself  it  was  clearly  necessary  for  the 
protection  of  the  business  at  the  time  of  the  sale  and  to  that  ex- 
tent might  be  enforced."®     And  a  covenant  in  a  contract  for  the 

13  N.  E.  419,  60  Am.  Rep.  464;  Les-  Averill,  199  N.  Y.  128,  92  N.  E.  206, 

lie   V.   Lorillard,    110    N.    Y.   519,    18  139  Am.   St.  878. 

N.  E.  363,  1  L.  R.  A.  456.  "  Wiley   v.    Baumgardner,   97   Ind. 

»"  Ft.   Smith   &c.   Co.   v.   Kelley,  94  66,  49  Am.  Rep.  427. 

Ark    461,    127    S.    W.    975;    Central  "'Nicholson  v.   Ellis.   110  Md.  322, 

New  York  &c.  Co.  v.  Averill,  199  N.  12>  Atl.  17,  24  L.  R.  A.   (N.  S.)  942, 

Y.    128,  92   N.    E.   206,    139  Am.    St.  132  Am.  St.  445. 

878;     Oregon     Steam     Nav.     Co.     v.  ""  Fleckenstein   Bros.   Co.   v.  Fleck- 

Winsor,  20  Wall.    (U.  S.)   64,  22  L.  enstein,  76  N.  J.  L.  613,  71  Atl.  265, 

ed.  315.  24  L.  R.  A.   (N.   S.)   913.     To  same 

•*  Central    New    York    &c.    Co.    v.  effect,  Price  v.  Green,   16  M.  &  W. 


-^71 


CONTRACTS    IX    RESTRAINT    OF    TRADE.  §    849 


sale  of  a  pottery  manufacturing  business  which  prohibited  sellers 
from  engaging  in  such  business  "within  any  state  in  the  United 
States  of  America  or  within  the  District  of  Columbia  except  in 
the  state  of  Nevada  and  the  territory  of  Arizona"  was  severable 
and  might  be  enforced  in  the  state  of  New  Jersey,  that  being  the 
place  of  the  business,  the  place  of  the  contract  and  the  place 
where  it  was  being  violated.^  Agreements  not  to  re-enter  busi- 
ness in  a  certain  city,"  or  county."  or  any  other  place,  usually  in 
the  United  States,  have  been  declared  divisible  and  en  forcible  as 
to  the  city  or  county.  An  agreement  whereby  one  was  not  to 
carr>'  on  a  particular  trade  within  one-half  mile  of  the  residence 
of  the  one  who  had  taught  him  such  trade,  or  within  one-half 
mile  of  the  place  where  such  instructor  or  her  executors  or  ad- 
ministrators might  thereafter  move  has  also  been  declared  divis- 
ible and  en  forcible  as  to  the  first  restriction.*  But  where  the 
contract  contains  no  residuum  which  is  not  open  to  objection  the 
entire  agreement  is  void.^ 

§  849.  Divisibility  as  to  time. — Should  the  time  limit  be 
unreasonable  the  contract  may  be  enforced  in  a  proper  case  for 
such  time  as  under  the  circumstances  is  reasonable.*^  In  case 
there  is  no  limited  time  some  courts  construe  such  contract  as 
covenants  not  to  engage  in  the  business  sold  so  long  as  the  buyer 
remains  in  business.'^   It  has  also  been  held  that  to  the  extent  that 

346,  6  Eng.  Rul.   Cas.  406   (business  Ind.  560.  41   N.  E.   1048,  51  Am.   St. 

not  to  be  conducted  within  600  miles  193;    Roberts    v.    Lemont.    IZ    Nebr. 

of    London    or    Westminster.      Held  365.  102  N.  W.  770;  Althen  v.  Vree- 

cnforcible  as  to  cities  of  London  and  land  (N.  J.),  36  Atl.  479. 

Westminster  although  the  balance  of  "Oregon   Steam   Nav.  Co.  v.  Win- 

the  restriction   was   held   void).  sor,  20  Wall.    (U.   S.)    64,  22  L.  ed. 

^Trenton  Potteries  Co.  v.  Oliphant,  315. 

58  N.  J.  Eq.  507.  43  Atl.  723.  46  L.  ''Harris  v.  Theus.  149  Ala.  133.  43 

R.  A.  255.  78  Am.  St.  612.  So.   131.   10  L.   R.   A.    (X.   S.)    204n, 

•Citv  Carpet  Beating  Works  Co.  v.  123  Am.  St.  17;  Gregory  v.  Spieker. 

Jones,'  102    Cal.    506.    36    Pac.    841;  110  Cal.  150,  42  Pac.  576,  52  Am.  St. 

Peltz  V.  Eichele.  62  Mo.   171.  70.     In  case  the  contract  contained  a 

'Dean  v.  Emerson.  102  Mass.  480;  reasonable  time  limit  the  contract  will 

In  re  Smith's  .Appeal.  113  Pa.  579,  6  be  enforced  so  long  as  the  buyer  re- 

Atl.   251.  mains  in  business  not  exceeding  the 

*Chesman    v.    Nainbv.    2    Strange  entire    limit.      Meyers    v.    Merrillion. 

739.                                   '  118  Cal.  352.  50   Pac.  662    (this   rule 

•  See  Beetham  v.  Frazer,  21  Times  is  statutory  in  California).     See  also. 

L.   R.   8:    Hooper   v.   Willis.  93  "Law  Hauser  v.  Harding.  126  N.  Car.  295, 

T.  236.  21     Times    L.    R.   691;    Con-  35  S.  E.  586  (lifetime  of  covenantor), 
sumers  Oil   Co.   v.   Nunnemaker,    142 


b 


850  CONTRACTS.  1 74 


a  contract  restrains  the  defendant  from  engaging  to  work  for  any 
individual,  firm,  or  corporation  engaged  in  a  similar  line  of  busi- 
ness within  a  certain  territory  for  a  specified  time  it  may  be  as  to 
that  feature  void  and  unen forcible,  but  such  employe  may,  never- 
theless, be  restrained  from  interfering  with  the  trade  custom  or 
good  will  of  his  employer  and  from  making  use  of  the  knowl- 
edge or  information  gained  from  his  employment.® 

§  850.  Breach  of  contract. — Whether  or  not  the  breach  of 
a  contract  in  restraint  of  trade  is  actionable  or  can  be  prevented 
is  altogether  a  question  as  to  the  validity  of  the  contract  itself ;  if 
the  restraint  is  reasonable  and  otherwise  valid  the  contract  can  be 
enforced.  This  has  been  demonstrated  by  the  discussion  of  the 
preceding  sections  of  this  chapter.  The  present  section  is  more 
concerned  with  what  amounts  to  a  breach  than  the  liability  which 
may  result  from  a  breach  of  the  contract.  Where  a  physician 
has  entered  Into  an  agreement  not  to  practice  medicine  within  a 
given  district,  the  word  practice  has  been  construed  to  mean  the 
exercise  of  his  profession,  and  that  a  single  incursion  within  the 
prohibited  territory  was  a  violation  of  the  agreement.^  Agree- 
ments of  this  character  may  also  be  broken  by  the  promisor  be- 
coming the  member  of  a  firm  engaged  in  a  competing  business 
within  the  designated  district."  And  there  is  no  question  but 
that  the  agreement  is  broken  by  such  promisor  opening  an  office 
within  the  prescribed  district  and  entering  into  active  competition 
with  the  one  in  whose  favor  the  restraint  runs."  A  physician's 
contract  to  refrain  from  practicing  medicine  within  a  certain 
limit  is  also  broken  by  practicing  medicine  within  the  limits  of  the 
prescribed  district  notwithstanding  he  resides  outside  such  dis- 
trict.^^  But  one  who  establishes  his  office  outside  the  limit  pre- 
scribed is  not  prohibited  from  treating  patients  who  voluntarily 

*Witkop  &c.  Co.  V.  Boyce,  61  Misc.  573,  19  Atl.  704  (physician  opened  an 

(N.  Y.)    126,   112  N.  Y.  S.  874,  affg.  office  in  close  proximity  to  the  place 

without   opinion    115    N.    Y.    S.    1150.  where    his    former   office    was    main- 

"  Gaul    V.    Hoffman,    5    Pa.    County  tained).      See    also,    Freudenthal    v. 

Court  355.  Espey,  45  Colo.  488,  102  Pac.  280,  26 

^"Greenfield  v.   Gilman,    140   N.   Y.  L.  R.  A.   (N.  S.)  961. 

168,  35  N.  E.  435.  "Smith  v.  Smith,  4  Wend.  (N.  Y.) 

"Raub  V.   Van  Horn,   133   Pa.   St.  468. 


175  CONTRACTS    IN    RESTRAINT    OF    TRADE.  §    85 1 

come  to  him  even  though  they  Hve  within  the  territory  within 
which  he  is  not  to  practice  medicine.'^ 

§851.  Breach  of  contract— Partners  and  employer.— It 
has  already  been  mentioned  that  a  retiring  partner  who  sells  his 
interest  in  a  given  business  together  with  good  will  and  without 
any  restriction  on  his  right  to  engage  in  a  competing  business 
may  as  a  general  rule  establish  a  new  and  competing  business ; 
but  that  he  cannot  represent  himself  as  a  successor  of  the  old  firm 
or  solicit  its  customers  but  that  he  may  deal  with  them  if  they 
come  to  him  voluntarily.'*  One  who  enters  the  employment  of 
another  may  thereby  breach  a  covenant  not  to  engage  in  a  rival 
business,  as  where  on  the  dissolution  of  a  partnership  the  retir- 
ing partner  engages  not  to  conduct  the  same  business  heretofore 
conducted  by  them  in  the  same  city,  or  with  any  partner,  partner's 
firm,  company,  or  corporation  for  a  period  of  two  years,  it  was 
held  that  such  retiring  partner  violated  his  agreement  by  entering 
into  the  employment  of  another  who  has  engaged  in  a  compet- 
ing business  and  practically  acting  as  agent  and  manager  in  the 
conduct  thereof.'^ 

§852.  Breach  of  contract — Entering  another's  employ- 
ment— When  is. — The  following  has  been  stated  as  the  rule 
whereby  to  determine  whether  entering  another's  employment  is 
a  breach  of  a  covenant  not  to  engage  in  rival  business.  When  the 

"Dwight  V.  Hamilton,  133  Mass.  of  a  rival  shop);  Meyer  v.  Labau, 
175.  51  La.  Ann.  1726,  26  So.  463  (agree- 
"  See  ante.  §  824  et  seq.  ment  not  to  engage  in  mercantile 
"  Siegel  V.  Marcus,  18  N.  Dak.  214,  business  violated  by  taking  part  in 
119  N.  W.  358,  20  L.  R.  A.  (N.  S.)  conducting  a  rival  business  although 
769n.  For  other  cases  to  the  same  he  had  no  interest  as  owner)  ;  Em- 
effect,  see  Jefferson  v.  IMarkert.  112  ery  v.  Bradley,  88  Maine  357,  34  Atl. 
Ga.  498,  Z7  S.  E.  758  (employment  167  (the  promisor  carrying  on  or 
but  a  pretext  to  cover  violation  of  the  acting  as  clerk  or  agent).  See  also, 
agreement)  ;  Merica  v.  Burget,  36  Anderson  v.  Ross,  14  Ont.  L.  Rep. 
Ind.  App.  453,  75  N.  E.  1083  (held  683;  Boutelle  v.  Smith,  116  Mass. 
that  vendor  violated  his  agreement  by  111;  Geiger  v.  Cawley,  146  IMich.  550, 
taking  stock  in  and  becoming  assist-  109  N.  W.  1064;  Finger  v.  Hahn,  42 
ant  cashier  of  a  new  bank);  Tohl-  N.  J.  Eq.  606.  8  Atl.  654;  Corwin  v. 
man  v.  Dawson.  63  Kans.  471,  65  Pac.  Hawkins,  42  App.  Div.  (N.  Y.)  571, 
689,  54  L.  R.  A.  913,  88  Am.  St.  249  59  N.  Y.  S.  603;  American  Ice  Co. 
(barber  who  had  sold  out  under  a  v.  Meckel,  109  App.  Div.  (N.  Y.) 
contract  not  to  engage  in  the  barber  93,  95  N.  Y.  S.  1060;  Petejson  y. 
business  in  any  way  violating  his  Schmidt.  13  Ohio  C.  C.  205,  70  Ohio 
agreement   by   becoming   an   employe  C.  D.  202. 


§    853  CONTRACTS.  1 76 

scope  and  character  of  employment  is  such  as  to  result  in  all  like- 
lihood in  substantial  interference  with  the  business  which  was 
the  subject  of  the  contract  it  amounts  to  a  breach  of  the  covenant 
not  to  engage  in  a  rival  business/"^  Whether  or  not  accepting 
employment  with  another  is  a  breach  of  a  covenant  not  to  en- 
gage in  a  rival  business  also  depends  largely  upon  the  wording  of 
the  contract.^' 

§  853.    Acts  which  amount  to  a  breach  by  vendor. — It  is 

not  always  easy  to  determine  whether  the  acts  of  the  vendor 
amount  to  a  breach  of  his  contract  not  to  engage  in  a  specified 
business.  Many  cases  lay  down  the  rule  that  a  similar  business 
is  one  so  like  the  other  as  to  compete  with  it.^^  The  vendor  is 
also  required  to  exercise  good  faitli.^^  If  he  violates  the  letter 
and  spirit  of  his  agreement,"**  or  does  that  wdiich  it  is  evident  the 
agreement  intended  that  he  should  not  do/^  it  may  be  ground  for 
granting  an  injunction.  He  cannot  set  himself  up  without  the 
limits  of  the  prescribed  territory  and  solicit  patronage  within  the 
same/"  nor  create  the  impression  that  he  has  merely  moved  from 
one  place  of  business  to  another,  in  which  latter  location  he  will 
continue  his  former  business.^^     Nor  can  he  engage  in  such  busi- 

'nVilson  V.  Delanev,  137  Iowa  636,  Stuart    v.    Diplock.   43    Ch.    D.    343; 

113  N.  W.  842.     See  also,  Nelson  v.  Rousillon  v.  Rousillon,  L.  R.   14  Ch. 

Johnson,  38  Minn.  255,  36  N.  W.  868.  D.  351 ;  Caswell  v.  Johnson,  58  Maine 

Several   of   the  cases  above  cited   in  164;    Davis    v.    Barney,    2    Gill    &   J. 

effect  state  the  same  rule.  (Md.)    382;    Richardson   v.    Peacock, 

"  See   Battershell  v.   Bauer,  91   111.  33  N.  J.  Eq.  597 ;  Kelso  v.  Reid,  145 

App.  181.     For  other  cases  in  which  Pa.   St.  606,  23  Atl.  323,  27  Am.   St. 

it  is  held  that  a  contract  not  to  en-  716.     But   see   Clark  v.    Durland,   47 

gage     in    a     rival     business     is     not  Hun   (N.  Y.)   633,  13  N.  Y.  St.  427; 

breached    by    the    acceptance   of    em-  Breck   v.   Ringler    (Ct.   App.),   42   N. 

ployment,   see  Grimm  v.   Warner,  45  Y.    St.   356.     Secretly    manufacturing 

Iowa   106.     Compare  with  Wilson  v.  and  selling  the  same  compound  by  a 

Delaney,    137    Iowa   636,    113    N.    W.  different   name   and   through   a   third 

842;   Tabor  v.   Blake,  61    N.    H.   83;  person   is  a  breach  of  an  agreement 

Eastern   Express   Co.   v.   Meserve,  60  not  to  manufacture  or  sell  such  com- 

N.    H.    198;     Haley    Grocery   Co.    v.  pound.     Gregory  v.  Spieker,  110  Cal. 

Haley,  8  Wash.  75,  35  Pac.  595.  150,  42  Pac.  576,  52  Am.   St.  70. 

"See,    generally,    Vernon    v.    Hal-  ^*Heichew    v.    Hamilton,    3    Green 

lam,  34  Ch.  D.  748;  Pearson  v.  Pear-  (Iowa)   596. 

son,   27   Ch.    D.    145;    Labouchere   v.  ^"Richardson  v.   Peacock,  33  N.  J. 

Dawson,   L.    R.    13   Eq.   322;    Harms  Eq.   597. 

V.   Parsons,   32  Beav.   328;   Cruttwell  ^  Watts  v.  Smith,  62  L.  T.  (N.  S.) 

V.  Lye,  17  Ves.  Jr.  335;  Drew  v.  Guy  453. 

(1894),  3  Ch.  25;  Fitz  v.  lies  (1893),  "Duffy  v.  Shockey,  11  Ind.  70,  71 

1   Ch.  77,   following  Buckle  v.   Fred-  Am.  Dec.  348. 

ericks,  44  Ch.  D.  244,  distinguishing  °^  Wolmershausen    v.   O'Connor,    36 


/ 


177 


CONTRACTS    IX    RESTRAINT    OF    TRADE. 


§    854 


ness  under  cover  of  his  son's  name,"^  or  the  name  of  his  wife,-"^  or 
attempt  to  evade  his  contract  by  becoming  a  principal  stock- 
holder in  a  rival  corporation.-"  It  has  been  held,  however,  that  a 
covenant  not  to  engage  in  a  similar  or  competing  business  does 
not  prevent  the  covenantor  from  loaning  money  to  a  person  who 
is  engaged  in  such  trade  or  occupation,  or  who  desires  to  embark 
therein.-' 

§  854.  Rights  and  remedies — Injunction. — It  has  already 
been  seen  that  where  the  restraint  is  reasonable  and  is  supported 
by  a  valuable  consideration  the  contract  is  valid  and  en  forcible. -** 
In  case  the  contract  is  a  valid  and  en  forcible  one  the  remedy  fre- 
quently granted  is  that  of  injunction.  This  relief  is  usually 
granted  on  the  ground  that  adequate  damages  cannot  be  estimated 
or  recovered  for  a  breach  of  the  contract."^ 

§855.  Remedies — Injunction — When  may  issue. — The 
courts  have  frequently  enjoined  one  from  the  practice  of  his  pro- 
fession in  violation  of  a  valid  agreement  not  to  practice  for  a  spe- 


L.  T.  (X.  S.)  921 ;  In  re  Hall's  Appeal 
60  Pa.   St.  458,   100  Am.  Dec.  584. 

=^Guerand  v.  Bandelet,  32  Md.  561, 
3  Am.   Rep.   164. 

=*  Harris  v.  Theus,  149  Ala.  133.  43 
So.  131,  10  L.  R.  A.  (N.  S.)  204n, 
123  Am.  St.  17.  See  also,  Flecken- 
stein  Bros.  Co.  v.  Fleckenstein,  66  N. 
J.  Eq.  252.  57  Atl.  1025 ;  My  Laundry 
Co.  V.  Schmeling,  129  Wis.  597,  109 
N.  W.  540.  See,  however,  the  case 
of  Loe  V.  Lardener,  4  W.  R.  597, 
wliich  holds  that  where  the  cov- 
enantor married  and  assisted  her 
husband  in  his  business  within  the 
prescribed  area  she  had  not  violated 
the  agreement  not  to  take,  keep  or 
be  interested   in   anv  licensed   house. 

=' Kramer  v.  Old.  "ll9  N.  Car.  1,  56 
Am.  St.  650,  25  S.  E.  813,  34  L.  R. 
A.  389. 

"Bird  v.  Lake.  1  Hem.  &  M.  338; 
Gallup  Electric  Light  Co.  v.  Pacific 
Imp.  Co.,  16  N.  Mex.  86,  113  Pac. 
848;  In  re  Harkinson's  Appeal,  78 
Pa.  St.  196,  21  Am.  Rep.  9. 

"'  See,  generallv,  preceding  section. 

='Nicoll  v.  Beere,  53  L.  T.  (N.  S.) 
659;  Ragsdale  v.  Nagle.  106  Cal.  332. 
39   Pac.   628;    Brewer   v.   Lamar,   69 

12 — CoNTR.\crs,  Vol.  2 


Ga.  656,  47  Am.  Rep.  766;  Spier  v. 
Lambdin,  45  Ga.  319;  Cobbs  v.  Niblo, 
6  111.  App.  60;  O'Neal  v.  Hines,  145 
Ind.  32,  43  N.  E.  946;  Guerand  v. 
Bandelet,  32  Aid.  561,  3  Am.  Rep. 
164;  Hubbard  v.  Miller,  27  Alich.  15, 
15  Am.  Rep.  153;  Richardson  v.  Pea- 
cock, 33  N.  J.  Eq.  597;  Dethlefs  v. 
Tamsen,  7  Dalv  (N.  Y.)  354;  Bavies 
V.  Racer.  72  Hun  (N.  Y.)  43.  55  X. 
Y.  St.  191,  25  N.  Y.  S.  293;  Muller 
V.  Vettel,  25  How.  Pr.  (N.  Y.)  350; 
Diamond  Match  Co.  v.  Roeber.  106 
N.  Y.  473.  13  N.  E.  419.  60  Am.  Rep. 
464;  Francisco  v.  Smith,  143  N.  Y. 
488,  38  N.  E.  980;  Baumgarten  v. 
Broadaw^ay,  77  N.  Car.  8 ;  Kramer  v. 
Old,  119  N.  Car.  1,  25  S.  E.  813.  34 
L.  R.  A.  389,  56  Am.  St.  650;  Wilkin- 
son V.  Collev,  164  Pa.  St.  35,  30  Atl. 
286,  26  L.  R.  A.  114;  Gaul  v.  Hoff- 
man, 5  Pa.  Co.  Ct.  355.  But  see  Car- 
roll V.  Giles.  30  S.  Car.  412,  9  S.  E. 
422.  4  L.  R.  A.  154;  Patterson  v. 
Crabb  (Te.x.  Civ.  App.),  51  S.  W. 
870.  Injunctive  relief  has  also  been 
granted  on  the  ground  that  a  mul- 
tiplicity of  action  was  thereby 
avoided.  Sutton  v.  Head,  86  Ky.  156, 
5  S.  W.  410,  9  Am.  St.  274. 


\ 


§    855  CONTRACTS.  1 78 

cified  time  within  a  ^\ven  district  after  the  expiration  of  the  term 
of  employment  by  obligee.^"  In  case  the  contract  embraces,  not 
one  whole  area,  but  two  areas  disjunctively  described,  one  area  be- 
ing unreasonable  in  extent  and  the  other  not,  the  court  may  issue 
an  injunction  covering  the  district  within  which  the  restraint  is 
legal. ^^  In  a  case  where  the  contract  placed  no  limit  as  to  its 
duration  it  was  held  that  the  injunction  would  be  made  perma- 
nent during  the  lifetime  of  the  covenantor.^^  The  fact  that  the 
covenantor  is  insolvent  is  ground  for  granting  an  injunction  pro- 
hibiting the  breach  of  a  reasonable  contract  in  restraint  of 
trade.^^  An  injunction  has  even  been  issued  where  an  employe 
has  deposited  money  with  his  employers,  to  be  retained  by  the 
latter  as  liquidated  damages  should  the  employe  violate  his  con- 
tract.^* 

It  is  not  necessary  that  the  services  rendered  by  the  employe 
should  be  "unique,"  "peculiar,"  "individual"  or  "extraordinary" 
when  the  employer  alleges  no  damages  to  his  business  by  reason 
of  the  fact  that  the  employe  has  left  his  employment,  but  merely 
seeks  to  restrain  the  latter  from  committing  certain  acts  after  he 
has  left  the  employment  which  will  directly  injure  his  former  em- 
ployer's business,  and  which  in  his  contract  of  employment  he 
specifically  agreed  that  he  would  not  do.^^ 

'"Howard  v.   Woodward,  34  L.   J.  '^'Hauser  v.  Harding,   126  N.   Car. 

Eq.   (N.  S.)   47;   May  v.  O'Neill,  44  295,   35   S.   E.   586. 

L.  J.  Ch.  (N.  S.)  660;  Giles  v.  Hart,  '^  Paragon  Oil  Co.  v.  Hall,  7  Ohio 

5  Jur.   (N.  S.)   1381;  Gravely  v.  Bar-  C.  C.  240,  40  Ohio  C.  D.  576. 

nard,   L.    R.    18    Eq.   518;    Palmer   v.  '*A.    L.    &    J.   J.    Reynolds    Co.    v. 

Mallet,  L.  R.  36  Ch.  Div.  411;  Frue-  Dreyer,  12  Misc.  (N.  Y.)  368,  33  N. 

denthal   v.   Espey,   45   Colo.   488,   102  Y.   S.  649. 

Pac.  280,  26  L.   R.  A.    (N.   S.)   961;  '''Reasonable    restrictive    covenants 

Foss  V.   Roby,   195   Mass.  292,  81    N.  in  a  contract  of  employment,  designed 

E.    199,    10   L.    R.    A.    (N.    S.)    1200;  to  prevent  the  employe  from  injuring 

Turner  v.  Abbott,   116  Tenn.  718,  94  the  employer  in   his  business  by   so- 

S.  W.  64,  6  L.  R.  A.    (N.  S.)   892n,  liciting    the   latter's    patrons,    will   be 

8   Am.    &   Eng.    Ann    Cas.    150.  enforced    in    equity    for    the    reason 

"Althen   v.    Vreeland    (N.    J.),   36  that  an  action  at  law  for  their  breach 

Atl.  479;  Monongahela  River  &c.  Co.  would  no  more  furnish  an  adequate 

v.    Jutte,   210    Pa.   288,   59    Atl.    1088,  remedy  than  would  an  action  at  law 

105  Am.  St.  812,  2  Am.  &  Eng.  Ann.  for  the  breach  of   similar  covenants 

Cas.  951.    When  the  contract  is  prop-  in  a  contract  for  the  sale  of  a  busi- 

erly  restricted  as  to  place  an  injunc-  ness.     That  equity  alone  can  furnish 

tion    which    restrains   the   covenantor  an  adequate  remedy  in  such  cases  is 

from  engaging  in  business  anywhere  well    settled.      Eureka    Laundry    Co. 

is  too  broad.    Talcott  v.  Brackett,  5  v.    Long,    146   Wis.    205,    131    N.    W. 

111.  App.  60.  412,  35  L.  R.  A.  (N.  S.)  119  and  note. 


179 


COXTRACTS    IN    RESTRAIXT    OF    TRADE. 


§    856 


But  where  tlie  law  Is  unsettled  and  the  validity  of  the  contract 
uncertain  an  injunction  will  be  denied.""' 

§856.  Remedies — Action  for  damages  or  penalty. — In- 
junction is  not  the  exclusive  remedy.  It  has  been  held  that  one 
may  maintain  an  action  to  recover  damages  for  alleged  breach  of 
a  reasonable  contract  in  restraint  of  trade,  and  also  to  enjoin  fur- 
ther breach  thereof.^^  The  action  may  have  for  its  object  merely 
a  recovery  of  the  penalty  of  a  bond  given  for  the  performance  of 
the  agreement.^**  Or  an  action  may  be  maintained  to  recover 
damages  for  a  breach  of  such  an  agreement.^'*  On  the  other 
hand,  the  one  against  wdiom  the  restraint  runs  may  maintain  an 
action  to  recover  the  sale  price  of  the  business  transferred,  or  to 
enforce  any  other  provisions  of  a  valid  contract  made  in  restraint 
of  trade."" 

§  857.  Breach  of  contract — Parties  in  pari  delicto. — It  is 
of  course  apparent  that  no  relief  will  ordinarily  be  granted  to 
either  party  when  both  are  in  pari  delicto,  and  the  contract  is  in 
unreasonable  restraint  of  trade. "^    But  even  when  the  parties  are 


'"  Mandeville  v.  Harman,  42  N.  J. 
Eq.  185.  7  Atl.  2,7. 

''Buckhout  V.  Witwer,  157  Mich. 
406,  122  N.  VV.  184,  23  L.  R.  A.  (N. 
S.)  507.  The  above  case  holds  that 
a  stockholder  in  a  corporation,  who 
sells  his  stock,  agrees  not  to  engage 
in  a  business  in  competition  with  such 
corporation  and  stipulates  for  a  pen- 
alty on  a  violation  of  his  contract,  is 
hable  thereon  when  the  only  object  of 
the  restraint  is  to  protect  the  vendee 
in  his  purchase.  See  also.  Up  River 
Ice  Co.  V.  Denier.  114  Mich.  296, 
72  N.  W.  157.  68  Am.  St. 
480;  Kronschnabel-Smith  Co.  v. 
Kronschnabel.  87  Minn.  230,  91  N. 
VV.  892;  Fleckenstein  Bros.  Co.  v. 
Fleckenstein,  76  N.  J.  L.  613,  71  Atl. 
265,  24  L.  R.  A.  (N.  S.)  913;  Krad- 
well  v.  Thiesen,  131  Wis..  97,  111  N. 
W.  233.  See,  however.  Merchants 
Ad.  Sign  Co.  v.  Sterling,  124  Cal. 
429.  57  Pac.  468.  46  L.  R.  A.  142,  71 
.\m.  St.  94. 

''Mallan  v.  ]\Iav.  11  M.  &  W.  653.  6 
Eng.  Rul.  Cas.  393  :  Hastings  v.  Whit- 
ley, 2  Exch.  611;  Carnes  v.  Nesbitt, 
7  H.  &  N.  778. 


™  Edmundson  v.  Render,  90  L.  T. 
(N.  S.)  814;  Davis  v.  Mason,  5  T.  R. 
118. 

'"Nicholson  v.  Ellis.  110  ^Id.  322, 
72,  Atl.  17,  24  L.  R.  A.  (N.  S.)  942, 
132  Am.  St.  445. 

"Flowers  &  Peagler  v.  W.  T. 
Smith  Lumber  Co.,  157  Ala.  505,  47 
So.  1022  (breach  of  contract  in  un- 
reasonable restraint  not  actionable")  ; 
Farrington  v.  Stuck}',  165  Fed.  325, 
91  C.  C.  A.  311  (In  the  above  case 
the  plaintiff  sought  to  recover  a  sub- 
scription made  in  furtherance  of  an 
enforcible  contract.  The  court  said: 
"It  must  be  borne  in  mind  that  the 
plaintiff  is  here  asking  affirmative  re- 
lief and  he  pleads  his  own  wrong- 
doing as  the  ground  for  invoking  the 
aid  of  the  court.")  ;  Camors-McCon- 
nell  Co.  v.  McConnell.  140  Fed.  412, 
987.  revg.  152  Fed.  321,  81  C  C.  A. 
429;  Berger  v.  Armstrong.  41  Iowa 
447  (unreasonable  injunction  re- 
fused) ;  Openheimer  v.  Hirsh,  5 
App.  Div.  (N.  Y.)  232.  38  N. 
Y.  S.  311  (unreasonable  provi- 
sion, injunction  refused)  :  Culp  v. 
Love,     127     X.     Car.     457,     27     S. 


§    858  CONTRACTS.  180 

in  pari  delicto  the  courts  may  interfere  and  grant  relief  to  one 
of  the  parties  from  motives  of  public  policy." 

§  858.  Laches,  burden  of  proof,  assignability. — The  plain- 
tiff's right  of  action  may  also  be  barred  by  laches.**  The  general 
rule  is  that  a  party  who  seeks  to  enforce  a  contract  in  restraint  of 
trade  must  show  that  it  is  reasonable.  But  if  the  contract  upon 
its  face  shows  that  it  is  reasonable  and  the  defendant  seeks  to 
avoid  it  by  some  extrinsic  matter  which  renders  it  illegal,  the 
burden  is  upon  him  to  establish  such  illegality  as  in  other  cases 
where  the  illegality  of  a  contract  is  set  up  as  a  defense  to  a  con- 
tract valid  upon  its  face,  by  clear  and  satisfactory  evidence." 
Valid  contracts  in  restraint  of  trade  are  assignable.*^ 

E.  476  (action  in  damages  for  breach  *^  Smith   v.   Brown,    164   Mass.   584, 

of  contract)  ;   Gust   Feist  Co.   v.  Al-  42  N.  E.  101.    The  plaintiff  may,  how- 

bertype  Co.   (Tex.  Civ.  App.),  109  S.  ever,  be  entitled  to  injunctive  relief 

W.    1139;    Pocahontas    Coke    Co.    v.  even  though  he  is  able  to  prove  only 

Powhatan    Coal  &c.    Co.,  60   W.  Va.  nominal   damages.     Brown   v.   Kling, 

508,  56  S.  E.  264,  10  L.  R.  A.  (N.  S.)  101  Cal.  295,  35  Pac.  995. 

268n,     116     Am.     St.     901.      (In    the  "*  Merriman    v.    Cover    Drayton    & 

above     case     suit     was     brought     to  Leonard,    104  Va.  428,  51    S.   E.  817. 

enjoin     a    breach        of     contract    in  See    also,    Knapp    v.    Jarvis    Adams 

restraint     of     trade.)      It     is     gen-  Co.,  135  Fed.  1008,  70  C.  C.  A.  536; 

erally    true    that    the    law   does  not  Harbison-Walker  Refractories  Co.  v. 

prohibit   the   making  of  contracts   in  Stanton,  227   Pa.   55,   75   Atl.  988. 

restraint  of  trade,  but  merely  declines  ^"Anders  v.    Gardner,    151    N.    Car. 

to  enforce  them.    Heim  v.  New  York  604,   66   S.    E.  665.     To   same   effect. 

Stock   Exchange,   64   Misc.    (N.   Y.)  Welstead  v.  Hadley.  21  Times  L.  R. 

529,  118  N.  Y.  S.  591.     See  also,  post,  165     (sale    by     receiver).      Compare 

§  865.     See  chapter  XXI.  with   New   York   Bank   Note   Co.   v. 

^  Dunbar  v.  American  Tel.  &c.  Co.,  Hamilton    Bank    Note    &c.    Co.,    180 

238  111.  456,  87  N.  E.  521.  N.  Y.  280,  73  N.  E.  48. 


CHAPTER  XXIII. 


COMBINATIONS,  MONOPOLIES  AND  TRUSTS. 


§  865.  Generally. 

866.  Legislative  grant  of  a  monop- 

oly. 

867.  Definitions    of    terms    as    here 

used. 

868.  Judicial  attitude  toward. 

869.  Monopoly    need    not    be    com- 

plete. 

870.  Contracts      and      combinations 

among  manufacturers  or 
dealers  to  control  and  en- 
hance price. 

871.  Rule  further  illustrated. 

872.  Combination    or    monopoly 

must  be  merely  ancillary. 

873.  Rule  against  monopolies  as  ap- 

plied  to   dealers. 

874.  Rule  further  illustrated. 

875.  Contracts  restricting  sale  of  in- 

toxicating liquors. 

876.  Combinations  to  decrease  pro- 

duction or  withhold  from 
market. 

877.  "Corners"   and   combinations  to 

prevent  competition  in  other 
respects. 

878.  "Corners"   —   Forestalling,   re- 

grading  and  engrossing. 

879.  Combinations    relating   to  pub- 

lication of  news. 

880.  Combinations  relating  to  insur- 

ance. 

881.  When    statute   does   not   apply 

to  insurance. 

882.  Combinations    of   laborers   and 

other  workmen. 

883.  Right   to   organize   confers   no 

special   privilege. 

884.  Contracts    between    union    and 

employer. 

885.  Binding    force    of    constitution 

and  by-laws  of  union. 

886.  Strike  in  breach  of  contract. 

887.  Monopolies   at  common   law. 

888.  Modern  doctrine. 

889.  Monopolies  as  affected  by  state 

constitution. 


i  890.  Monopolies    under    state    stat- 
utes. 

891.  Grants   of   exclusive  rights   by 

government    authority. 

892.  Exclusive  grant  by  private  per- 

son. 

893.  Exclusive  grant  by  carriers. 

894.  Exclusive  grant  by  carriers  to 

hackmen — Right  to  dock  ves- 
sel. 

895.  Discrimination  —  Exclusive 

service  contract  with  patron. 

896.  What  are  illegal  trusts. 

897.  Form  not  controlling. 

898.  Rights  and  disabilities  of  mem- 

bers   of    trusts    as    between 
themselves. 

899.  Rule  further  illustrated. 

900.  Rights  and  disabilities  of  mem- 

bers    of     trusts     as     against 
third  persons. 

901.  The  rule  illustrated. 

902.  Rule    further    illustrated— De- 

struction of  property  and  the 
like. 

903.  Rights  of  thirds  persons. 

904.  Rights  of  third  persons  under 

statutes. 

905.  Rights  of   stockholder. 

906.  Antitrust     statutes  —  Constitu- 

tionality. 

907.  State     antitrust     acts— Limita- 

tions on  power  to  enact. 

908.  State     antitrust     acts — Consti- 

tutionality. 

909.  Antitrust   acts  of   Congress. 

910.  I'ederal      antitrust      act — Con- 

struction and  effect. 

911.  Federal    antitrust    act    given    a 

reasonable  construction. 

912.  Federal  antitrust  act — Applica- 

tion of. 

913.  Federal     antitrust     act — When 

inapplicable. 

914.  Federal  antitrust  act — Power  to 

pass. 

915.  State  antitrust  acts. 


i8i 


§  865  coxTRACTS,  182 

916.  State  antitrust  acts — General  918.  State  antitrust  acts — Applica- 
scope.  tion  to  insurance. 

917*  State  antitrust  acts — Applica-  919.  State  antitrust  acts — Exercise 
tion  to  labor  unions.  of  police  power. 

§  865.  Generally. — At  the  present  time  the  words  *'com- 
binations,"  "monopoly"  and  "trust"  are  commonly,  or  often,  used 
interchangeably.  This  has  not  always  been  so.  The  word  "mo- 
nopoly," in  its  original  sense,  was  an  exclusive  right,  granted  by 
the  state  to  one  or  a  few,  of  something  which  was  before  a  com- 
mon right. ^  Thus,  Lord  Coke  defined  a  monopoly  as  "an  insti- 
tution or  allowance  by  the  king  by  his  grant  to  any  person  of  or 
for  the  sole  buying,  selling,  making,  working,  or  using  of  any- 
thing."^ 

§  866.  Legislative  grant  of  a  monopoly. — The  power  to 
grant  monopolies  originally  rested  with  the  crown  but  owing 
to  the  abuse  of  this  prerogative  it  was  by  statute  vested  solely  in 
parliament.^  In  this  country  the  right  to  grant  monopolies  rests 
in  congress  and  the  various  state  legislatures,  subject  to  such  con- 
stitutional restrictions  as  exist.  Patents  and  copyrights  are  ex- 
amples of  monopolies  given  by  the  federal  government.*    Legis- 

^  Pocahontas    Coke   Co.   v.   Powha-  der    the    present    patent    laws,     see 

tan  Coal  &c.  Co.,  60  W.  Va.  508,  6  Henry  v.   A.   B.   Dick  Co.    (U.    S.), 

S.  E.  264,  10  L.  R.  A.  (N.  S.)  268n,  32  Sup.  Ct.  364,  holding  that  a  sale 

116  Am.  St.  901.  of    ink   to    a    purchaser   of   a    rotary 

"3  Cokes  Inst.  181.  To  same  ef-  mimeograph,  with  license  restricting 
feet,  4  Bl.  Com.  159.  See  also,  dis-  its  use  only  with  ink  made  by  the 
senting  opinion  of  Story,  J.,  in  patentee,  with  the  expectation  that  it 
Charles  River  Bridge  v.  Warren,  11  would  be  used  in  connection  with 
Pet.  (U.  S.)  420,  9  L.  ed.  ITh,  938.  such  mimeograph,  constitutes  con- 
The  case  of  State  v.  Duluth  Board  of  tributory  infringement  of  a  pat- 
Trade,  107  Minn.  506,  121  N.  W.  ent.  See  also,  United  States  v. 
395,  23  L.  R.  A.  CN.  S.)  673n,  also  Standard  Sanitary  Mfg.  Co.,  191 
draws  the  common-law  distinction  Fed.  172.  As  pointing  out  the  dis- 
between  a  monopoly  and  engrossing,  tinction  between  the  patent  and  copy- 

*21    Jas.    1,    Ch.   3.      See,    however,  right  laws,  see  Button-Fastener  Case, 

Case  of  ^lonopolies  (Darcy  v.  Allein,  11  Fed.  288,  25  C.  C.  A.  267.  47  U. 

11   Coke  84),  where  a  grant,  by  the  S.  App.   146,  35  L.  R.  A.  728;  John 

crown,  of  the  sole  making  of  cards  D.    Park    &c.    Co.    v.    Hartman,    153 

within    the    realm    was    held    utterly  Fed.  24,  82  C.  C.  A.  158,  12  L.  R.  A. 

void   for   two   reasons:    first,   that   it  CN.  S.)    13Sn.     The  establishment  of 

was  a  monopoly  and  against  the  com-  a   uniform   text   book   system   in   the 

mon  law;  second,  that  it  was  against  public   schools    (Leeper  v.   State,    103 

the  divers  acts  of  parliament.     This  Tenn.  500,  53  S.  W.  962,  48  L.  R.  A. 

case    was    decided   prior   to   the   acts  167;    Rand    v.    Hartranft,    29    Wash. 

above  cited.  591,  70  Pac.  11^,  and  letting  contracts 

*As     showing     how     complete     a  for   such   books    (Dickinson   v.    Cun- 

monopoly  is  granted  a  patentee  un-  ningham,   140  Ala.  527,  TH  So.   345 ; 


iS3 


COMBINATIONS,    MONOPOLIES    AND    TRCSTS. 


§    867 


lative  grants  which  create  a  monopoly  are  given  a  strict  construc- 
tion." 

§  867.  Definitions  of  terms  as  here  used. — This  chapter  is 
not  primarily  concerned,  however,  with  monoix>lies  which  result 
from  a  grant  by  the  state.  A  monopoly,  more  or  less  complete, 
may  also  be  created  by  a  mere  individual  or  corporation,  and  it  is 
witli  tliis  latter  class  of  monopolies  that  we  are  concerned.  In 
its  modern  sense  a  monopoly  "is  created  when,  as  a  result  of  ef- 
forts to  that  end,  previously  competing  businesses  are  so  concen- 
trated in  the  hands  of  a  single  person  or  corporation,  or  a  few 
persons  or  corporations  acting  together,  that  they  have  power  to 
practically  control  the  prices  of  commodities  and  thus  to  practi- 
cally suppress  competition.'"' 


B.  F.  Johnson  Pub.  Co.  v.  Mills,  79 
]\liss.  543,  31  So.  101),  have  been  up- 
held. See  also,  Drevfus  v.  Boone,  88 
Ark.  353,  114  S.  W.  718  (municipal 
grant  for  removal  of  offal)  ;  City  of 
Denver  v.  Hubbard,  17  Colo.  App. 
346  (contract  for  street  lights  for 
ten  vears)  ;  State  v.  Orr,  68  Conn. 
101,  '35  Atl.  770.  34  L.  R.  A.  279 
(contract  for  collection  and  disposal 
of  garbage)  ;  Vincennes  v.  Citizens 
Gas  Light  Co..  132  Ind.  114,  31  N.  E. 
573,  16  L.  R.  A.  485  (contract  for 
street  lights)  ;  Davenport  Gas  &c. 
Co.  V.  Davenport.  124  Iowa  22,  98 
N.  W,  892  (contract  for  lights  for 
certain  period)  ;  State  v.  Robb,  100 
^^Faine  180.  60  Atl.  874  (removal  of 
offal)  ;  Grand  Rapids  v.  De  Vries, 
123  Mich.  570,  82  N.  W.  269  (re- 
moval of  garbage)  ;  Ludington  Water 
Supplv  Co.  V.  Ludington.  119  Mich. 
480,  78  X.  W.  558  (contract  with 
water  companv)  ;  Reid  v.  Trow- 
bridge, 78  Miss'.  542,  29  So.  167  (con- 
tract to  light  streets  for  ten  ^-ears). 
See,  however.  Her  v.  Ross,  64  Nebr. 
710,  90  N.  W.  869,  57  L.  R.  A.  895, 
97  Am.  St.  676,  denying  right  of  city 
to  give  one  individual  the  sole  right 
to  collect  garbage.  A  grant  of  the 
exclusive  privilege  to  construct  a 
water-works  system  has  been  held  to 
violate  the  provision  of  the  state  con- 
stitution against  perpetuities  and 
monopolies.  Thrift  v.  Elizabeth  City, 
122  N.  Car.  31,  30  S.  E.  349,  44  L. 
R.  A.  427.     The  law  does  not  look 


with  favor  upon  monopolies,  and  the 
power  to  create  them  will  not  l)e  im- 
plied to  a  municipal  corporation. 
Kirkwood  v.  Meramee  Highlands  Co., 
94  Mo.  App.  637,  68  S.  W.  761.  See, 
ante,  §  833. 

'Wilmington  City  R.  Co.  v.  Wil- 
mington &c.  R.  Co..  8  Del.  Ch.  468, 
511,  46  Atl.  12,  22.  See  Saginaw  Gas- 
light Co.  v.  Saginaw,  28  Fed.  529; 
Omaha  Horse  R.  Co.  v.  Cable  Tram- 
way Co.,  30  Fed.  324;  Interstate 
Stock- Yards  Co.  v.  Indianapolis 
Union  R.  Co.,  99  Fed.  472;  Capital 
City  Light  &c.  Co.  v.  Tallahassee.  42 
Fla.  462.  28  So.  810;  State  v.  Cin- 
cinnati Gas  &c.  Co..  18  Ohio  St.  262; 
Appeal  of  Scranton  Electric  &c.  Co., 
122  Pa.  St.  154,  15  Atl.  446,  1  L.  R. 
A.  285,  9  Am.  St.  79;  Brummit  v. 
Ogden  Water-works  Co.,  33  Utah  289, 
93  Pac.  828.  In  the  absence  of  any 
express  provision  creating  a  monop- 
oly a  grant  will  not  be  construed  as 
granting  an  exclusive  right,  except 
by  unavoidable  implication.  See  also, 
National  Fireproofing  Co.  v.  Mason 
Builders'  Assn.,  169  Fed.  259,  94  C. 
C.  A.  535,  26  L.  R.  A.  (N.  S.)  148n, 
affg.  145  Fed.  260. 

^  United  States  v.  American  To- 
l)acco  Co.,  164  Fed.  700.  "As  now 
used  and  understood,  monopoly  em- 
braces any  combination  the  tendency 
of  which  is  to  prevent  competition  in 
its  broad  and  general  sense,  and  to 
control^  prices  to  the  detriment  of  the 
public."      Pocahontas    Coke    Co.    v. 


§    86/  CONTRACTS.  1 84 

The  word  "trust"  also  has  a  double  meaning;  originally  it 
signified  that  one  person  held  property  for  the  benefit  of  another, 
called  a  beneficiary.  This  meaning  is  by  no  means  obsolete,  and 
is  still  used  in  that  sense  in  the  law  governing  trustees."  As  the 
term  "trust''  is  here  used,  however,  it  means  an  entity  which  re- 
sults from  a  contract  whereby  a  combination  or  federation  is 
formed,  or  an  understanding,  express  or  implied,  is  reached  be- 
tween two  or  more  persons  to  control  the  price  of  a  commodity  or 
services  for  the  benefit  of  the  parties  thereto,  and  to  the  injury  of 
tlie  public,  and  which  creates  or  tends  to  create  a  monopoly.®  In 
common  usage  the  word  "trust"  is  applied  indiscriminately  to  any 
business  conducted  on  a  large  scale,  especially  when  carried  on  by 
a  corporation.  It  also  signifies  the  methods  by  which  a  combina- 
tion in  trade  is  effected,  and  generally  implies  the  organization 
of  a  corporation  and  the  issuance  to  the  several  parties  in  interest 
of  a  proportionate  amount  of  stock  represented  by  certificates.^ 
Considered  in  connection  with  the  foregoing  definitions,  it  is  un- 
necessary to  attempt  any  definition  of  the  word  "combination." 
As  here  used  it  is  a  general  term  which  includes  monopolies, 
trusts  or  any  device  or  conspiracy  by  which  two  or  more  persons 
seek  to  destroy  competition  and  control  trade  in  a  certain  com- 
modity or  commodities,  to  the  detriment  of  the  public. 

Powhatan   Coal  &c.   Co.,  60  W.  Va.  75  Pac.  89.    "A  combination  of  many 

508,  56  S.   E.  264,   10  L.   R.   A.    (N.  competing  concerns  under  one  man- 

S.)  268n,  116  Am.  St.  901.     See  also,  agement,   which   thereby   reduces   the 

Herriman  v.  Menzies,  115  Cal.  16,  44  cost,  regulates  the  amount  of  produc- 

Pac.   660,  46   Pac.   730,   35   L.   R.    A.  tion  and  increases  the  price  for  which 

318,  56  Am.   St.  81 ;   Burrows  v.   In-  the    article    is    sold.      It    is    either    a 

terborough     Metropolitan     Co.,     156  monopoly   or   an    endeavor   to   estab- 

Fed.   389;    Jones   v.    Carter,   45   Tex.  lish    a    monopoly.    *    *    *    The    term 

Civ.  App.  450,  101   S.  W.  514.  "trust"    is    popularly    applied    to    all 

^  See  ante.  §  167,  also  chap.  XVII.  methods  of  effecting  a  combination  in 

*  Pocahontas    Coke    Co.    v.    Powha-  trade."   W.  W.  Cook  on  Trusts,  p.  4. 

tan  Coal  &  Coke  Co.,  60  W.  Va.  508,  "  But      "it      makes      no      difference 

56  S.   E.  264,   10  L.   R.  A.    (N.   S.)  whether  the  combination   is   effected 

268n,    116    Am.    St.    901.     See    also,  through  the   instrumentality  of  trus- 

State    V.    Fireman's    Fund    Ins.    Co.,  tees  and  trust  certificates,  or  whether 

152  Mo,  1,  43,  52  S.  W.  595,  607,  45  it  is  effected  by  creating  a  new  cor- 

L.  R.  A.  363,  ZTd.     It  has  also  been  poration  and  conveying  to  it  all  the 

defined  as  "any  form  of  combination  property   of   the   competing   corpora- 

between  corporations  or  corporations  tions.     The  test  is,  whether  the  nec- 

and  natural  persons,  for  the  purpose  essary   consequence   of   the   combina- 

of  regulating  production  and  repres-  tion   is  the  controlling  of   prices,   or 

sing    competition  by  means  of  the  pow-  limiting   of   production,   or   suppress- 

er  thus    centralized."    MacGinniss  v.  ing  of  competition,  in  such  a  way  as 

Boston  &c.   Min.  Co.,  29  Mont.  428,  thereby  to  create  a  monopoly."  Hard- 


185  COMBINATIONS,    MONOPOLIES    AND    TRUSTS.  §    868 

§  868.  Judicial  attitude  toward. — The  attitude  of  the 
courts  of  this  country  toward  combinations,  monopolies  and 
trusts  has  been  expressed  as  follows :  "Monopoly  in  trade  or  in 
any  kind  of  business  in  this  country  is  odious  to  the  government. 
It  is  sometimes  permitted  to  aid  the  government  in  carrying  on  a 
great  public  enterprise,  or  public  work  under  governmental  con- 
trol, in  the  interest  of  the  public.  Its  tendency  is,  however,  de- 
structive of  free  institutions,  and  repugnant  to  the  instincts  of  a 
free  people,  and  contrary  to  the  whole  scope  and  spirit  of  the 
federal  constitution,  and  is  not  allowed  to  exist  under  express 
provisions  in  several  of  our  state  constitutions.  *  *  *  It  is  al- 
ways destructive  of  individual  rights,  and  of  that  free  competi- 
tion which  is  the  life  of  business,  and  it  revives  and  perpetuates 
one  of  the  great  evils  which  it  was  the  object  of  the  framers  ot 
our  form  of  government  to  eradicate  and  prevent.  It  is  alike 
destructive  to  both  individual  enterprise  and  individual  prosper- 
ity, whether  conferred  upon  corporations  or  individuals,  and 
therefore  public  policy  is,  and  ought  to  be,  as  well  as  public  senti- 
ment, against  it."^" 

§  869.  Monopoly  need  not  be  complete. — It  is  not  essen- 
tial that  the  monopoly  or  combination  be  complete  before  it  is 
illegal.  If  it  tends  to  the  injury  of  the  public,  through  the  sup- 
pression of  competition  or  otherw'ise,  it  will  be  declared  illegal 
although  the  restraint  imposed  is  only  partial." 

§  870.  Contracts  and  combinations  among  manufacturers 
or  dealers   to   control   and   enhance   price. — The    foregoing 

ing  V.  American  Glucose  Co.,  182  111.  right   that   it   may   not   only   be   pro- 

551,  55  N.  E.  577,  64  L.  R.  A.  738n,  tected  by  the  courts,  but  it  is  not  with- 

74  Am.   St.   189n.  in  the  power  of  a  legislature  to  deny 

'"Merchants'     &c.    Storage     Co.    v.  it."     Denver   Jobbers'   Assn.   v.    Peo- 

Rohrman.    138    Ky.    530.    128    S.    W.  pie    (Colo.),  122  Pac.  404. 

599.     quoting     from     Richardson     v.  "  Dunbar  v.  American  Tel.  &c.  Co., 

Buhl,  n   Mich.  632,  43  N.  W.   1102,  224  111.  9.  79  X.  E.  423.  115  Am.  St. 

6  L.  R.  A.  457.     See  also,  Tousev  v.  132;  Hunt  v.  Riverside  Co-Operative 

Indianapolis    (Ind.),   94    N.    E.   225;  Club.   140  Mich.  538.   104  X.  W.  40, 

Lufkin  Rule  Co.  v.  Fringeli.  57  Ohio  112   Am.    St.    420;    State   v.   Eastern 

St.   596.  49  N.   E.   1030,  63   Am.    St.  Coal  Co..  29  R.  I.  254.  70  Atl.  1.  132 

736.      In    a    recent    case    it    is    said:  Am.  St.  817:  Pocahontas  Coke  Co.  v. 

"The  right  of  freedom  of  trade  be-  Powhatan   Coal   Co.,  60  W.  Va.  508, 

longing  to  every  citizen,  and  the  free-  56   S.    E.   264,    10   L.   R.   A.    (N.    S.) 

dom    from   oppression    by   monopoly,  268n,   116  Am.  St.  901. 
is  such  an  inherent  and  constitutional 


§  S-o 


CONTRACTS. 


1 86 


propositions  apply  to  contracts  and  combinations  among  manu- 
facturers or  dealers  to  control  and  enhance  prices  when  the  pri- 
mary purpose  and  necessaiy  tendency  of  the  contract  is  to  so 
restrict  competition  as  to  form  a  monopoly  or  trust.  Thus,  a 
voluntary  association  of  salt  manufacturers,  which  had  for  its 
object  the  fixing  of  the  price  of  salt  and  the  establishment  of  a 
monopoly,  has  been  declared  illegal.^-  The  same  has  been  held 
true  of  a  contract  whereby  an  ice  plant  concern  sought  to  obtain 
the  plant  business  and  good  will  of  the  other  ice  manufacturers 
in  a  certain  city,  with  a  view  to  consolidating  them  under  one 
management,  and  thus  control  the  ice  trade  in  such  city.^^  This 
has  also  been  held  true  of  an  association  which  has  for  its  pur- 
pose an  increase  in  the  price  and  a  decrease  in  the  number  of 
candles  manufactured  within  a  specified  territory.^*  Trade 
agreements,  the  purpose  of  which  was  to  fix  the  price  of  wire 
cloth,^^  the  price  of  gas,^''  or  the  manufacture  and  sale  of  beer 
and  other  distilled  products,^'  have  in  each  case  been  declared 
illegal  and  void ;  as  have  contracts  by  which  brick  manufacturers 


^Clancey  v.  Onodaga  Salt  Mfg. 
Co.,  62  Barb.  (N.  Y.)  395;  Central 
Ohio  Salt  Co.  v.  Guthrie,  35  Ohio 
St.  666. 

^^  ^Merchants'  Ice  &c.  Co.  v.  Rohr- 
man,  138  Ky.  530,  128  S.  W.  599,  137 
Am.  St.  390.  In  the  above  case  it 
was  sought  to  refrain  the  defendant 
from  violating  his  contract  not  to 
engage  in  the  manufacturing  of  ice  in 
such  cit\'  for  a  period  of  ten  years. 
The   injunction   was   denied. 

"  Emery  v.  Ohio  Candle  Co.,  47 
Ohio  St.  320,  24  N.  E.  660,  21  Am. 
St.  819. 

"DeWitt  Wire  Cloth  Co.  v.  New 
Jersey  &c.  Co.,  16  Daly  (N.  Y.)  529, 
14  N.  Y.  S.  277. 

'"  State  V.  Portland  &c.  Oil  Co.,  153 
Tnd.  483,  53  N.  E.  1089,  53  L.  R.  A. 
413,  74  Am.  St.  314.  To  same  ^effect, 
Chicago  Gas  &c.  Co.  v.  People's  Gas 
&c.  Co..  121  111.  530,  13  N.  E.  169, 
2  Am.  St.  124 ;  People  v.  Chicago  Gas 
Trust  Co.,  130  111.  268,  22  N.  E.  798, 
8  L.  R.  A.  497,  17  Am.  St.  319;  San 
Antonio  Gas  Co.  v.  State,  22  Tex. 
Civ.  App.  118.  54  S.  W.  289.  Com- 
pare, however,  with  the  foregoing 
cases,  that  of  Rafferty  v.  Buffalo  City 


Gas  Co.,  Zl  App.  Div.  (N.  Y.)  618. 
56  N.  Y.  S.  288,  which  seems  to  hold 
a  combination,  which  has  for  its  ob- 
ject the  prevention  of  ruinous  com- 
petition, proper  and  not  invalid  by 
creating  a  monopoly.  See  also,  in 
connection  with  this  latter  case,  that 
of  United  States  Vinegar  Co.  v. 
Foehrenbach,  148  N.  Y.  68,  42  N.  E. 
403,  which  lays  down  the  rule  that 
"not  all  combinations  are  condemned, 
and  self-preservation  may  justify  pre- 
vention of  undue  and  ruinous  com- 
petition, when  the  prevention  is 
sought  by  fair  and  legal  methods." 
This  case  was  an  action  to  recover 
unpaid  subscriptions  to  the  capital 
stock  of  the  plaintiff  corporation.  De- 
fendant set  up  that  the  plaintiff  was 
incorporated  for  the  illegal  purpose 
of  controlling  and  limiting  the  pro- 
duction .  of  vinegar  throughout  the 
United    States. 

"  Distilling  &c.  Feeding  Co.  v.  Peo- 
ple, 156  111.  448,  41  N.  E.  188,  47  Am. 
St.  200;  State  v.  Nebraska  Distilling 
Co.,  29  Nebr.  700,  46  N.  W.  155 ;  An- 
heuser-Busch Brew.  Assn.  v.  Houck 
(Tex.  Civ.  App.),  27  S.  W.  692. 


187  COMBIXATIOXS,    MOXOPOI.IKS    AND    TRUSTS,  §    87I 

seek  to  control  the  price  of  brick/**  and  also  an  agreement  to 
secure  co-operation  in  the  business  of  manufacturing  preserves, 
\\hich  in  effect  formed  all  those  engaged  in  such  business  in  an 

immense  combination.'" 

§871.  Rule  further  illustrated. — A  combination  among 
the  .manufacturers  of  pipe  iron  by  wiiich  the  territory  was  divided 
up  among  them,  the  territory  set  apart  to  one  to  be  free  from 
competition  from  the  others,  although  a  semblance  of  competi- 
tion was  to  be  maintained  by  means  of  pretended  bids  at  prices 
previously  arranged,  has  been  declared  illegal  both  at  common 
law  and  under  the  federal  antitrust  laws.""  Combinations  among 
manufacturers  of  lumber,-^  druggists,-"  manufacturers  of  pow- 
der," manufacturers  of  gelatine  capsules-^  and  manufacturers  of 
wooden  ware"''  have  been  declared  illegal. 

§  872.  Combination  or  monopoly  must  be  merely  ancil- 
lary.— Various  schemes  have  been  devised  by  which  it  has 
been  sought  to  avoid  the  prohibition  against  combinations  and 
monopolies,  such  as  an  agreement  in  the  form  of  a  lease  whereby 
one  manufacturer  was  paid  a  certain  sum  to  keep  his  plant  idle,^" 
or,  without  any  sale,  entering  into  an  agreement  whereby  one  is 
prohibited  from  manufacturing  a  certain  commodity,^'  How- 
ever, as  in  the  case  of  contracts  in  restraint  of  trade,  if  the  ten- 
dency of  the  contract  to  create  a  combination,  monopoly  or  trust 
is  merely  ancillary,  and  is  necessary  to  protect  the  covenantee  in 
the  enjoyment  of  his  contract  and  the  public  is  not  injuriously 
affected  thereby  it  may  be  upheld.-*     Thus  the  mere  fact  that 

"Jackson  v.  Akron  Brick  Assn..  53  E.  136,  (2  L.  R.  A.  632,  96  Am.  St. 

Ohio  St.  303,  41  N.  E.  257,  35  L.  R.  578. 

A.  287,  -:>l  Am.  St.  (iZT.  ^  Vulcan   Powder   Co.   v.   Hercules 

"Bisliop    V.    American    Preservers  Powder  Co.,  96  Cal.  510,  31  Pac.  581, 

Co.,  157  111.  284,  41  N.  E.  765,  48  Am.  31   Am.    St.  242. 

St.  317.  ^JMerz     Capsule     Co.     v.     United 

="  United  States  v.  Addystone  Pipe  States   Capsule  Co.,   67   Fed.   414. 

&c.  Co.,  85  Fed.  271.  affd.  175  U.  S.  ==  Cravens   v.    Carter-Crum   Co.,  92 

211,  44  L.  ed.  136,  20  Sup.  Ct.  96,  46  Fed.  479.  34  C.  C.  A.  479. 

L.   R.  A.   122.  =°  American      Strawboard      Co.     v. 

^  Santa    Clara    S:c.    Lumber   Co.   v.  Peoria   Strawboard   Co.,  65   111.  App. 

Hayes,  76  Cal.  l%1,  18  Pac.  391,  9  Am.  502. 

St.  211.  -'^Fox  &c.  Steel  Co.  v.  Schoen,  V 

"=  John  D.  Park  &c.  Co.  v.  National  Fed.  29. 

\yholesale    Druggists'    Assn.,    50    N.  ^  For  a  case  giving   expression  to 

Y.  S.   1064,  revd.  175  N.  Y.  1,  67  N.  this  distinction,  see  United  States  v. 


§    8/3  CONTRACTS.  1 88 

one  enlarges  his  business  by  purchasing  other  plants,^®  or  that  one 
sells  the  entire  output  of  his  plant  to  another,^"  or  closes  up  his 
business  and  enters  the  permanent  employment  of  another,^^  is 
not  necessarily  illegal. 

§  873.  Rule  against  monopolies  as  applied  to  dealers. — 
The  same  general  principles  that  govern  contracts  among  manu- 
facturers are  also  applicable  to  dealers  in  various  commodities. 
Producers  and  vendors  have  the  right  to  use  all  legitimate  effort 
to  obtain  the  best  price  for  the  article  in  which  they  deal,  but 
agreements  to  artificially  enhance  prices  and  suppress  competi- 
tion are  not  recognized  as  legitimate.  Thus,  contracts  among 
producers  or  vendors  of  coal  by  which  they  seek  to  enhance  prices 
by  suppressing  or  keeping  out  of  the  market  the  products  of  oth- 
ers, and  bind  themselves  to  withhold  their  supply  or  to  refrain 
from  engaging  in  competition,  have  been  uniformly  held  against 
public  policy  and  unen forcible.^"  Where  the  defendants,  dealers 
in  plumbers'  supplies,  agreed  to  keep  the  selling  price — both  the 
wholesale  and  retail  selling  price — at  a  fixed  or  graduated  fig- 
ure, such  agreement  was  held  void  because  they  undertook  to 
create  a  monopoly  of  the  business  of  selling  plumbers'  supplies  in 
the  city  of  Detroit  and  to  secure  to  themselves  the  profits  of  that 
monopoly.^' 

§  874.  Rule  further  illustrated.— The  same  has  been  held 
true  of  similar  agreements  between  ice  dealers,^*  commercial 

Addystone  Pipe  &c.  Co.,  85  Fed.  271,  State  v.   Eastern   Coal   Co.,  29  R.   I. 

affd.  175  U.  S.  211,  44  L.  ed.  136,  20  254,  70  Atl.  1,  132  Am.  St.  817.    The 

Sup.  Ct.  96,  46  L.  R.  A.  122.  above  case  lays  down  the   rule  that 

^  Coquard  v.   National  Linseed-Oil  if  it  is  unlawful   for  one  person  to 

Co.,  171  111.  480,  49  N.  E.  563.  fix  the  price  at  which  coal  shall  be 

^°  Cartcr-Crume     Co.     v.     Perrung,  sold    within    the    limits    of    the    citj% 

86  Fed.  439,  30  C.  C.  A.  174.  it  is  also  unlawful  for   several   per- 

"  Carnig  v.  Carr,  167  Mass.  544,  46  sons    to    combine    for    that    purpose. 

N.   E.  117,  35  L.  R.  A.  512,  57  Am.  Pocahontas    Coke    Co.    v.    Powhatan 

St.  488.  Coal  &c.  Co.,  60  W.  Va.  508,  56  S.  E. 

'='Arnot  v.   Pittston   &c.    Coal   Co.,  264,   10  L.  R.  A.    (N.  S.)   268n,   116 

68  N.  Y.  558,  23  Am.  Rep.  190;  Drake  Am.  St.  901. 

V.   Siebold,  81   Hun   (N.  Y.)    178,  30        ""Hunt   v.    Riverside   Co-Operative 

N.   Y.   S.   697;   People  v.   Fisher,   14  Club,  140   Mich.  538,   104  N.  W.  40, 

Wend.   (N.  Y.)  9,  28  Am.  Dec.  501;  112  Am.   St.  420. 
Morris  Run  Coal  Co.  v.  Barclay  Coal        "*  Griffin  v.  Piper,  55  111.  App.  213 

Co.,  68  Pa.  St.  173,  8  Am.  Rep.  159;  See  also,  infra,  §  780. 


189  COMBINATIONS,    MONOPOLIES    AND    TRUSTS.  §    8/5 

firms,^'  grocers,'"  milk  dealers,"  grain  dealers,^'  and  stock  raisers 
and  butchers.^"  An  association  of  large  stock  dealers  organized 
ostensibly  to  promulgate  and  enforce  among  the  members  correct 
and  higli  moral  principles  in  the  transaction  of  business,  but  the 
real  purpose  of  which  was  to  prevent  the  competition  and  main- 
tain uniform  prices,  has  been  declared  an  unlawful  combination.*" 

§  875.  Contracts  restricting  sale  of  intoxicating  liquors. — 
Some  authorities  hold  that,  since  it  is  the  policy  of  the  law  to  dis- 
courage the  sale  of  intoxicating  liquors  as  a  beverage,  contracts 
restricting  the  sale  are  not  void  at  common  law.^^  Such  liold- 
ings  do  not.  however,  meet  the  approval  of  all  courts.  These 
latter  cases,  while  admitting  that  it  is  the  policy  of  the  law  to  re- 
strict the  sale  of  liquors,  nevertheless  declare  contracts  to  be  ille- 
gal which  restrain  trade  therein,  on  the  ground  that  outside  the 
restrictions  imposed  by  state  statutes  and  municipal  ordinances 
the  law  permits  perfect  freedom  in  the  sale  of  intoxicating  liq- 
uors, and  that  since  the  law  recognizes  it  as  a  commodity  courts 
should  refuse  to  aid  in  any  attempt  at  the  imposition  upon  the 
public  by  means  of  illegal  combinations.*"  The  state  statutes 
against  combinations  may,  of  course,  be  brought  about  to  include 
contracts  or  combinations  among  liquor  dealers."     An  authority 

'°  India  Bagging  Assn.  v.  Kock,  14  46  Pac.  190.     To  same  effect.  United 

La.  Ann.  168.  States  v.   Hopkins,  82  Fed.  529,   ap- 

'"  Denver  Jobbers'  Assn.  v.   People  pealed  Hopkins  v.  United  States.  171 

(Colo.  App.),   122  Pac.  404;  Chapin  U.  S.  578,  43  L.  ed.  290,  19  Sup.  Ct. 

V.    Brown.   83    Iowa    156,   48    N.    W.  40. 

1074,    12   L.    R.   A.   428,   32   Am.   St.        "Sell  v.  Branen,  70  111.  App.  471. 

297.  in  which  it  is  said:    "Contracts  held 

"Ford    V.    Chicago    Milk   Shippers'  void  because  of  being  in  restraint  of 

Assn.,   155  111.   166,  39  N.  E.  651,  27  trade   are   so  held  upon   the  ground 

L.    R.    A.   298;    People   v.    Milk    Ex-  of  public  policy.     It  is  difficult  for  us 

change.  145  N.  Y.  267.  39  N.  E.  1062,  to  see  how  a  contract  restricting  the 

27  L.  R.  A.  437.  45  .\m.  St.  609.  retail    traffic    of    intoxicating    liquors 

^  Pacific    Factor    Co.    v.    Adler,   90  in  a  town  can  be  considered  against 

Cal.  110.  27  Pac.  36.  25  Am.  St.  102.  public  policy."     Harrison  v.  Lockhart, 

The  case  above  cited  had  to  do  with  25    Ind.    112;    Anheuser-Busch   Brew, 

a  contract  for  the  sale  of  grain  bags  Assn.  v.  Houck  (Tex.  Civ.  App.),  27 

entered   into  as  a   part  of  a   scheme  S.  W.  692. 

to   gain    a    monopolv   of   grain    bags.        *^  See   State  v.   Nebraska  Distilling 

Craft   V.    McConnoughy,   79   111.   346,  Co.,   29   Nebr.    700.    46    N.    W.    155; 

22  Am.  Rep.   171;   Star  Mill  &c.   Co.  Nestor   v.    Continental    Brewing    Co., 

V.  Ft.  Worth  &c.  Elevator  Co.  (Tex.  161  Pa.  St.  473.  29  Atl.  102.  24  L.  R. 

Civ.  App.).  146  S.  \V.  604.  A.  247.  41  Am.  St.  894. 

"Judd    V.    Harrington,    139   N.    Y.        "Anheuser-Busch    Brew.    Assn.    v. 

105.  M  N.  E.  790.  Houck    (Tex.   Civ.  App.),  27   S.   W. 

**' Greer  v.  Payne,  4  Kans.  App.  153,  692,  affd.  88  Tex.  184,  30  S.  W.  869; 


§    876  CONTRACTS.  I9O 

which  is  close  to  the  border  line  and  which  illustrates  at  least  one 
distinction  between  contracts  which  are  in  restraint  of  trade  and 
those  which  are  not  is  the  case  in  which  two  parties,  each  of  whom 
contemplated  applying  for  the  franchise  to  construct  a  water- 
works, agreed  that  but  one  of  them  should  apply  for  a  franchise 
that  could  be  granted  to  but  one.  The  party  withdrawing  agreed 
for  a  consideration  to  assist  the  other  in  procuring  the  franchise. 
An  action  was  brought  to  recover  the  agreed  compensation.  It 
was  held  that  under  the  circumstances  there  might  be  a  recov- 
ery." 

§  876.  Combinations  to  decrease  production  or  w^ithhold 
from  market. — It  is  true  generally  that  any  combination  the 
result  or  tendency  of  which  is  the  control  of  prices,  the  limitation 
of  production,  or  the  suppression  of  competition  in  such  a  way  as 
to  create  a  monopoly  is  contrary  to  public  policy  and  void.*^ 
Consequently  a  combination  of  the  manufacturers  of  red  cedar 
shingles  in  a  given  state  which  was  a  combination  to  control  the 
production  and  to  diminish  competition  in  the  production  of  shin- 
gles as  well  as  to  advance  their  price  has  been  declared  illegal.*" 
The  same  has  been  held  true  of  the  combination  among  lumber 
dealers  in  the  vicinity  to  limit  the  supply  for  that  season.*^ 
However,  where  the  main  object  among  producers  who  combine 
is  not  to  limit  the  output  or  to  secure  a  monopoly  and  the  public 
is  in  no  way  injured  by  such  agreement  it  may  be  upheld.*®  And 
where  an  agreement  was  entered  into  among  a  number  of  owners 
of  stone  quarries  looking  toward  the  securing  of  "a  fair,  propor- 

Texas  Brew.  Assn.  v.  Templeman,  90  "  Santa    Clara    Vallev    &c.    Co.    v. 

Tex.    27,    38    S.    W.    27;    Fuqua    v.  Hayes,   76   Cal.   387,    18   Pac.   391,  9 

Pabst  Brew.  Co.,  90  Tex.  298,  38  S.  Am.  St.  211.     See  also,  ante,  §  780. 

W.  750,  35  L.  R.  A.  241 ;  Texas  Brew-  •"  Meredith  v.   New  Jersey  Zinc  & 

jng  Co.  V.  Anderson  (Tex.  Civ.  App.),  Iron   Co.,  55   N.  J.   Eq.  211,  Zl  Atl. 

40  S.  W.  1Z1.  539,   affd.   56  N.  J.   Eq.  454,   41   Atl. 

**  Oakes  v.  Cottaraugus  Water  Co.,  1116.     In  the  above  case  the  owner- 

143  N.  Y.  430,  38  N.  E.  461,  26  L.  R.  ship  of  ores   in   a  certain   mine   was 

A.  544.  so  involved  as  to  practically  prevent 

"  Harding     v.     American     Glucose  the  working  of  the  mine.     The  rival 

Co.,    182    111.    551,    55    N.    E.    577,   64  interests    were   permitted   to    consoli- 

L.  R.  A.  738,  74  Am.  St.  189;  Charles-  date  notwithstanding  such  consolida- 

ton  Gas  Co.  v.  Kanawha  Gas  Co.,  58  lion    also    involved    the   purchase   of 

W.  Va.  22,  50  S.  E.  876.  other   mines   and   plants   in   different 

*"  Gibbs  V.  McNeeley,  118  Fed.  120,  parts  of  the  country. 
55  C.  C.  A.  70,  60  L.  R.  A.  152. 


191  COMBIXATIOXS,    MONOPOLIES    AND    TRUSTS.  §    S77 

tionate  sale  of  the  product  of  all  quarries  at  uniform  prices  and 
living  rates,"  and  the  tenns  of  the  agreement  restricted  the  pro- 
duction of  stone  within  certain  territory,  put  the  sale  in  the  hands 
of  one  agent,  who  should  sell  for  all  the  parlies  in  interest,  pre- 
scribed a  committee  of  five  with  power  to  modify  prices  and  set- 
tle complaints,  and  imposed  a  penalty  of  one  hundred  dollars  for 
every  sale  made  in  violation  of  the  agreement,  and  suit  was 
brought  to  enforce  the  penalty,  the  court  upheld  the  agreement 
and  gave  judgment  accordingly," 

§  877.  "Comers"  and  combinations  to  prevent  competi- 
tion in  other  respects. — A  "corner"  is  merely  one  method 
out  of  many  by  which  competition  is  restricted  and  a  temporary 
monopoly  established.  A  "corner"  is  a  contract  of  purchase  and 
sale  by  which  a  "short"  vendor  agrees  to  deliver  the  commodity 
sold  at  a  future  date  which  obligation  he  is  unable  to  fulfil  by 
reason  of  the  available  supply  of  such  commodity  being  in  the 
hands  and  under  the  control  of  the  vendee  who  thereby  creates 
an  artificial  demand.^"     In  such  a  transaction  the  object  of  the 


**  Skrainka  v.  Scharringhausen,  8 
Mo.  App.  522.  The  contract  in  this 
case  was  upheld  on  the  theory  that 
it  was  hmited  both  as  to  time  and 
place,  a  theory  which,  under  the  facts 
of  the  case,  would  seem  improper. 
Compare  with  Finck  v.  Schneider 
Granite  Co.,  187  Mo.  244.  86  S.  W. 
213.  106  Am.  St.  452.  See  also.  On- 
tario Salt  Co.  V.  Merchants'  Salt  Co., 

18  Grant  Ch.  540;  Hearn  v.  Griffin, 
2  Chitty  407;  Hare  v.  London  &c.  R. 
Co.,  2  Johns.  &  H.  80;  Central  Trust 
Co.  V.  Ohio  Cent.  R.  Co..  23  Fed. 
306;  United  States  v.  Trans-Mis- 
souri    Freight     Assn.,     58     Fed.     58, 

19  U.  S.  App.  36,  24  L.  R.  A.  7Z,  7 
C.  C.  A.  15.  8  Am.  R.  &  Corp. 
523;  Gloucester  Isinglass  &  Glue  Co. 
V.  Russia  Cement  Co.,  154  Mass.  92. 
27  N.  E.  1005.  12  L.  R.  A.  563.  26 
Am.  St.  214;  Manchester  &  L.  R.  R. 
Co.  V.  Concord  R.  R.  Co.,  66  N.  H. 
100.  20  Atl.  383.  9  L.  R.  A.  689.  49 
Am.  St.  582.  3  Am.  R.  &  Corp. 
22;  Queen  Ins.  Co.  v.  State.  86 
Tex.  250,  24  S.  W.  397.  8  Am.  R.  & 
Corp.  Rep.  491.  "A  contract  which  is 
charged  to  be  in  restraint  of  trade 
is  not  to  be  tested  by  what  has  been 


done  under  it,  but  by  what  may  be 
done  under  it;  not  by  its  perform- 
ance, but  by  its  powers  of  perform- 
ance when  fully  exercised."  Poca- 
hontas Coke  Co.  V.  Powhatan  Coal 
&  Coke  Co.,  60  W.  Va,  508,  56  S.  E. 
264,  116  Am.  St.  901. 

'"United  States  v.  Patten,  187  Fed. 
664.  In  the  case  of  Samuels  v.  Oli- 
ver, 130  111.  72,,  22  X.  E.  499,  a  wit- 
ness defined  a  "corner"  as  follows: 
"By  'cornering'  the  market  I  mean 
when  parties  have  contracts  on  hand 
for  a  greater  amount  than  the  sellers 
have  cash  grain  to  deliver."  And  in 
the  case  of  Wright  v.  Cudahv,  168 
111.  86.  48  N.  E.  39,  a  "corner"  was 
defined  by  a  witness  as  "where  some- 
body succeeds  in  buying  for  future 
delivery  more  property  of  a  given 
kind,  than  is  possible  for  the  seller 
to  deliver  before  the  day  of  maturity 
of  the  contract."  For  additional 
cases  illustrating  "corners"  see.  Rank 
of  Montreal  v.  Waite.  105  111.  App. 
2>72>:  Foss  v.  Cummings,  149  III.  353, 
36  \.  E.  553  (corn)  :  Ex  parte  Young, 
6  Biss.  (U.  S.)  53.  Fed.  Cas.  No. 
18145  (oats).  See  further  as  to  cor- 
ners, Wright  v.  Crabbs.  78  Ind.  487 


I    878  CONTRACTS.  1 92 

vendee  is  to  buy  up  all  or  practically  all  of  the  available  supply  of 
a  o-iven  commodity  and  withhold  the  same  from  sale  until  the  de- 
mand  becomes  so  great  as  to  abnormally  enhance  the  price.  The 
same  general  principles  are  applicable  to  "corners"  as  applied  to 
other  instances  of  combinations,  monopolies,  or  trusts.  When 
the  effect  of  a  contract  or  combination  among  dealers  in  a  com- 
modity is  to  destroy  competition  between  them  and  others  so  that 
the  parties  to  the  contract  or  combination  may  obtain  increased 
prices  for  themselves,  such  contract  or  combination  amounts  to  a 
restraint  of  trade  in  the  commodity  even  though  contracts  to  buy 
such  commodity  at  the  enhanced  price  are  constantly  being 
made.^^ 

§  878.  "Corners" — Forestalling,  regrading  and  engross- 
ing.— In  so  far  as  the  law  governing  monopolies  is  sought  to 
be  applied  the  question  of  the  legality  of  agreements  for  future 
delivery  is  immaterial.  The  common-law  term  "forestalling" 
when  applied  to  monopolies  meant  practically  the  same  as  the 
modern  word  "corner."  "The  forestaller  intercepted  goods  on 
their  way  to  market  and  bought  them  up  so  as  to  be  able  to  com- 
mand w^hat  price  he  chose  when  he  got  to  the  market."^^  The 
common-law  term  "engrossing"  and  its  synonym  "regrading" 
meant  "the  buying  of  corn  or  other  dead  victual  in  any  market  and 
selling  it  again  in  the  same  market"  thus  enhancing  the  price  of 
the  provision  as  every  successive  seller  must  have  a  successive 
profit.^^  The  terms  "forestalling,"  "engrossing"  and  "regrading" 

(wheat);  Klingel's  Pharmacy  v.  "Dutton  v.  Mayor  &c.  on  Knox- 
Sharp,  104  Md.  218,  64  Atl.  1029,  7  ville  (Tenn),  113  S.  W.  381.  "What- 
L.  R.  A.  (N.  S.)  976n,  118  Am.  St.  soever  person  or  persons  *  *  * 
399;  Sampson  v.  Shaw,  101  Mass.  145,  shall  engross^  or  get  into  his  or  their 
3  Am.  Rep.  327  (railroad  stock);  hands  by  buying,  contracting  or  prom- 
Raymond  V.  Leavitt,  46  IMich  447,  9  ise-taking,  other  than  by  demise, 
N.  W.  525,  41  Am.  Rep.  170;  Kirk-  grant,  or  lease  of  land,  or  tithe,  any 
Patrick  v.  Bonsall,  72  Pa.  St.  155 ;  corn  growing  in  the  fields,  or  any 
Wells  V.  McGeoch,  71  Wis.  196,  35  other  corn  or  grain,  butter,  cheese, 
N.  W.  769.  fish,   or  other  dead   victuals   whatso- 

"  See,  Klingel's  Pharmacy  v.  Sharp,  ever,  within  the  realm  of  England,  to 

104  Md.  218,  64  Atl.  1029,  7  L.  R.  A.  the    intent    to    sell    the    same    again, 

(N.  S.)  976n,  118  Am.  St.  399.  shall  be  accepted,  reputed,  and  taken 

"3   Stephen's   History  of   Criminal  an  unlawful  engrosser  or  engrossers." 

Law  of  England,  chap.  30,  page  199.  Standard  Oil  Co.  v.  United  States,  221 

See   also,  3    Cokes   Inst.,      chap.   89.  U.  S.  1,  55  L.  ed.  619,  31  Sup.  Ct.  502, 

Pettamberdass  v.  Thackoorsevdass,  7  34  L.  R.  A.  (N.  S.)  834n,  taken  from 

Moore  P.  C.  C  239.  Statute  5  &  6  Edw.  VI,  chap.  14;  3 


193  COMBINATIONS,    MONOPOLIES    AND    TRUSTS.  §    8/9 

are  not  altogether  obsolete/*  "Cornering"  or  forestalling  the  mar- 
ket or  dealing  in  futures  is  at  the  present  time  perhaps  generally 
termed  gambling  or  wagering  contracts  and  will  be  treated  more 
fully  in  the  chapter  on  this  latter  subject."  As  indicated  at  the 
beginning  of  this  chapter  the  difference  in  meaning  between  the 
various  terms  used  to  designate  combinations  against  public  pol- 
icy is  slight.  That  which  differentiates  a  "corner"  from  a  pool  or 
trust  exists  only  in  form.  A  "corner"  has  special  reference  to 
the  raising  of  prices;  a  pool  refers  more  particularly  to  the  dis- 
tribution of  profits  among  its  members.^" 

§  879.  Combinations  relating  to  publication  of  news. — In 
order  to  build  up  a  trade  and  make  those  newspapers  which  are 
their  customers  absolutely  dependent  upon  them  for  news  items, 
a  news  agency  usually  binds  its  customers  not  to  purchase  news 
from  any  source  other  than  it  itself,  on  pain  of  being  cut  off  from 
all  service.  A  provision  of  this  character  which  sought  to  ex- 
clude from  publication  by  any  of  its  members,  news  procured 
from  any  corporation  or  source  which  the  agency  has  declared 
antagonistic,  has  been  declared  illegal  and  void  because  of  the 
tendency  of  such  provision  to  create  a  monopoly  in  favor  of  such 
news  agency  and  to  prevent  its  members  from  procuring  news 
from  others  engaged  in  the  same  character  of  work.^^    However, 

Stevens  History  of  Criminal  Law  of  ancc  is  not  an  article  of  merchandise 
England,  chap.  30,  page  199.  or  manufacture,  or  one  of  the  'neces- 
"  See,  Dutton  v.  Mayor  &c.  of  saries  of  life,'  or  of  prime  necessity, 
Knoxville  (Tenn.),  113  S.  W.  281.  within  the  spirit  of  the  laws  against 
The  above  case  passes  on  the  valid-  engrossing."  Harris  v.  Common- 
ity  of  a  city  ordinance,  passed  under  wealth  (Va.),  12)  S.  E.  561. 
a  city  charter  which  gave  it  the  right  "  See,  post,  chap.  XXIV. 
"to  restrain  and  punish  forestalling  ""  Pooling  is  "an  aggregation  of 
and  regrading  of  provisions."  See  property  or  capital  belonging  to  dif- 
also,  Klingel's  Pharmacv  v.  Sharp,  ferent  persons,  v>-ith  a  view  to  com- 
104  ]\Id.  218.  64  Atl.  1029',  7  L.  R.  A.  mon  liabilities  and  profits."  Ameri- 
(N.  S.)  976n,  118  Am.  St.  399.  The  can  Biscuit  &c.  Co.  v.  Klotz,  44  Fed. 
offense  of  engrossing  was  a  part  of  721.  "Pooling  may  be  as  well  af- 
the  common  law  adopted  by  Colora-  fected  by  a  concert  in  fixing  in  ad- 
do  Rev.  St.  1908,  §  6295.  Denver  vance  the  rates  which  in  the  aggre- 
Jobbers'  Assn.  v.  People  (Colo,  gate  would  accumulate  the  earnings 
App.),  122  Pac.  404.  (The  above  of  naturally  competing  lines,  as  by 
case  contains  an  exhau.stive  review  depositing  all  such  earnings  to  a  com- 
of  the  common  law  on  the  subject  of  mon  account  and  distributing  them 
engrossing.)  State  v.  Eastern  Coal  afterward."  Tift  v.  Southern  R.  Co., 
Co.,  29  r:  I.  254.  70  Atl.  1.  132  Am.  138  Fed.  753. 

St.  817    (engrossing   a   common   law  "Inter-Ocean     Publishing     Co.     v. 

offense   in    Rhode    Island).     "Insur-  Associated  Press,  184  111.  438,    56  N. 

13 — Contracts,  Vol.  2 


§  8/9 


CONTRACTS. 


194 


the  New  York  Court  of  Appeals,  in  answering  the  contention  that 
a  by-law  by  which  a  newspaper  was  not  to  publish  news  from 
any  other  source  than  a  specified  agency  was  unreasonable  and 
oppressive  and  tended,  and  was  expressly  intended,  to  restrain 
trade  competition  and  to  create  a  monopoly,  while  admitting  that 
if  the  by-law  did  accomplish  these  results  it  would  be  illegal, 
held  that  as  construed  by  that  court  it  did  not  tend  to  improperly 
restrain  trade.^*  The  Supreme  Court  of  Missouri  has  also  re- 
fused to  compel  the  Associated  Press  to  furnish  to  a  certain  paper 
the  budget  of  news  collected  daily  by  the  former.^^     A  decision 


E.  822,  48  L.  R.  A.  568,  75  Am.  St. 
184. 

'"^  In  the  above  case  the  court  also 
held  that  the  manner  in  which  the 
corporation  had  used  its  franchise 
had  charged  its  business  with  a  pub- 
lic interest,  and  that  it  must  submit 
to  be  controlled  by  the  public  for  the 
common  good  to  the  extent  of  the 
interest  it  has  thus  created  in  the 
public  in  its  private  property.  Mat- 
thews V.  Associated  Press,  136  N.  Y. 
333,  32  Am.  St.  741.  In  the  above 
case  the  court  apparently  disregard- 
ed the  tendency  of  such  contract  to 
foster  a  news  monopoly  and  decided 
the  case  upon  the  ground  that  the  re- 
straint imposed  upon  the  customer 
was  not  unreasonable  and  also  ob- 
served :  "The  latest  decisions  of  the 
courts  in  this  country  and  in  England 
show  a  strong  tendency  to  very  great- 
ly circumscribe  and  narrow  the  doc- 
trine of  avoiding  contracts  in  re- 
straint of  trade." 

''The  plaintiff  set  out  that  it  had 
been  ready  and  willing  for  a  long 
time  to  enter  into  a  proper  contract 
with  the  said  Associated  Press,  etc. 
The  grounds  upon  which  relief  was 
urged  so  far  as  material  to  the  sub- 
ject of  monopolies  were:  "That  the 
gathering  of  general  news  for  publi- 
cation in  a  daily  newspaper  is  a  pub- 
lic employment,  which  must  be  exer- 
cised by  those  who  engage  in  it  for 
all  publishers  of  dailies  who  may  de- 
sire it,  upon  equal  terms  and  without 
discrimination;  3.  That  the  Associ- 
ated Press  has  by  its  charter  assumed 
this  public  employment  and  so  is 
bound  to  exercise  it  on  behalf  of  the 
relator,  upon,  tender  of  compensation 


equal  to  that  paid  by  other  publishers 
similarly  situated  and  receiving  a 
similar  service;  4.  That  the  Associ- 
ated Press  has  broken  down  all  com- 
petitors and  secured  a  monopoly  of 
the  business  of  news-gathering,  in 
consequence  of  which  it  is  not  prac- 
ticable to  publish  a  daily  newspaper 
without  the  aid  of  its  service;  5. 
That  the  Associated  Press  has  been 
granted  telegraph  and  telephone  fran- 
chises by  the  states  of  Illinois  and 
Missouri,  and  also  possesses  the  pow- 
er of  eminent  domain ;  6.  That  the 
by-law  of  the  Associated  Press  which 
makes  the  consent  of  existing  mem- 
bers a  condition  of  admitting  new 
members  in  any  locality  is  in  viola- 
tion of  the  anti-trust  laws  of  Mis- 
souri, Illinois,  and  the  United  States." 
The  court  said :  "The  controlling 
element  which  gave  origin  to  the 
opinion  relied  on  (Munn  v.  Illinois, 
94  U.  S.  113)  seems  to  have  been 
that  of  a  monopoly.  But,  of  course, 
that  element  can  have  no  place  in  the 
present  instance,  because  respondent 
has  been  granted  no  special  or  ex- 
clusive right  or  privilege  by  the  state, 
nor  has  it  received  any  benefits  from 
that  quarter.  Nor  has  the  respondent 
acquired  any  additional  right,  by  rea- 
son of  its  incorporation,  to  that  it 
possessed  before.  Every  one  is  at  lib- 
erty to  gather  news,  and  the  fact 
that  one  has  greater  facilities  or 
finances  for  gathering  and  transmit- 
ting news,  or  that  the  business  has 
grown  into  one  of  great  magnitude, 
widespread  in  its  ramifications,  or 
that  mere  incorporation  has  been 
granted  a  company  organized  for  the 
purpose  of  gathering  news,  does  not. 


195 


COMBINATIONS,    MONOPOLIES    AND    TRUSTS, 


880 


handed  down  by  the  Supreme  Court  of  Illinois  seems  more  in 
accord  with  the  modem  trend  of  judicial  thought  on  the  subject 
of  monopolies."" 

§  880.  Combinations  relating  to  insurance. — The  great 
majority  of  decisions  relative  to  combinations  to  secure  uniform 
insurance  rates  have  been  handed  down  subsequent  to  the  passage 
of  antitrust  laws.  However,  the  New  Jersey  Equity  Court  has 
taken  a  broad  general  view  of  the  subject  and  held  that  a  con- 
tract or  combination  entered  into  among  fire  insurance  com- 
panies, foreign  and  domestic,  the  necessary  effect  and  the  actual 
results  of  which  are  to  control  such  business  within  a  certain  area 
and  within  such  district  to  fix  and  regulate  prices  and  to  limit  or 
eliminate  competition  to  the  injury  of  the  public  is  contrary  to 
public  policy  and  may  be  restrained  in  equity."^  Statutes  which 
in  general  terms  prohibit  combinations  in  restraint  of  trade  are 
usually  held  to  apply  to  combinations  of  agencies  or  underwriters 


and  cannot,  of  itself  give  the  state 
the  right  to  regulate  what  before  in- 
corporation was  but  a  natural  right. 
*  *  *  And,  even  if  the  business  of 
respondent  can  justly  be  deemed  a 
monopoly,  then  relator's  efforts 
should  be  directed  toward  the  de- 
struction of  that  monopoly,  and  not 
toward  obtaining  the  mandate  of  this 
court  compelling  relator's  admission 
into  that  'real  genuine  article,'  as 
counsel  are  pleased  to  designate  it. 
Conceding  respondent's  business  to 
be  in  truth  a  monopoly  would  fur- 
nish an  all-sufficient  reason  and  an- 
swer for  denying  the  relief  relator 
asks,  because  the  addition  of  one  or 
more  monopolist  to  a  monopolistic 
organization  would  not  lessen  its 
monopolistic  features,  or  abate  its 
vicious  tendencies.  But  there  is  noth- 
ing here  on  which  a  monopoly  can 
attach.  The  business  is  one  of  mere 
personal  service;  an  occupation.  Un- 
less there  is  'property'  to  be  'affected 
with  a  public  interest,'  there  is  no 
basis  laid  for  the  fact  or  the  charge 
of  a  monopoly."  State  v.  Associated 
Press.  159  Mo.  410,  60  S.  W.  91,  81 
Am.  St.  368. 

***  Compare   McCarter  v.   Firemen's 
Ins.  Co.,  74  N.  J.  Eq.  Zll,  7Z  Atl.  80, 


29  L.  R.  A.  (X.  S.)   1194n,  135  Am. 
St.  708. 

"  McCarter  v.  Firemen's  Ins.  Co., 
74  N.  J.  Eq.  372,  7i  Atl.  80,  29  L.  R. 
A.  (N.  S.)  1194n.  135  Am.  St.  708. 
Compare  with  this  case  People  v. 
New  York  Board  of  Fire  Under- 
writers, 54  How.  Pr.  (N.  Y.)  240, 
which  holds  that  a  corporation  formed 
for  the  purpose  of  establishing  uni- 
form insurance  rates  and  requiring 
its  members  to  follow  such  rates  was 
held  to  have  the  power  to  accomplish 
these  ends  and  that  a  by-law  which 
bound  the  members  to  maintain  the 
rates  of  insurance  agreed  upon  was 
directly  within  the  powers  conferred 
and  could  not  be  attacked  as  in  re- 
straint of  trade  or  convening  public 
policy.  See  also,  Continental  Ins.  Co. 
V.  Fire  Underwriters,  67  Fed.  310,  in 
which  an  association  of  underwriters 
had  rates  similar  to  those  of  the  above 
corporation.  Such  an  association  was 
held  not  to  be  an  unlawful  combina- 
tion at  common  law.  Freed  v.  Amer- 
ican Fire  Ins.  Co.,  90  Miss.  72,  43  So. 
947,  11  L.  R.  A.  (X.  S.)  368.  122  .\m. 
St.  307  (recognizes  the  unlawfulness 
of  a  combination  among  insurers  but 
holds  to  the  fact  that  the  insurer  is 
a   member  of  an  unlawful  combina- 


§  88i 


CONTRACTS. 


196 


for  the  purpose  of  regulating  and  controlling  rates  to  be  charged 
for  insurance.*'^ 

§  881.  When  statute  does  not  apply  to  insurance. — How- 
ever, a  statute  which  made  unlawful  combinations  to  create  or 
carry  out  restrictions  in  trade — "trade"  being  defined  as  com- 
merce or  traffic  in  merchandise,  produce  or  commodities — was 
held  not  to  cover  a  combination  of  insurance  agents  the  object  of 
which  was  to  monopolize  the  business  and  to  control  rates  and 
commissions.^^  Such  agreements  are,  of  course,  in  violation  of 
those  statutes  which  specifically  prohibit  combinations  among  in- 
surers to  control  the  rates  of  premiums."*  Statutes  of  this  char- 
acter have  been  held  constitutional. '^^  However,  combinations 
relating  to  insurance,  the  principal  purpose  of  which  is  to  pro- 
mote the  business,  welfare  and  convenience  of  the  parties  thereto, 
and  not  to  control  or  enhance  prices,  are  usually  upheld  both  at 
common  law  and  under  statutes  which  forbid  combinations 
among  insurers  to  control  the  rates  of  premiums.""     Such  organ- 


tion  does  not  defeat  the  insurer's 
rights  to  sue  upon  an  agreement 
which  is  entirely  collateral  to  the 
contract  forming  the  illegal  combina- 
tion) ;  Queen  Ins.  Co.  v.  State,  86 
Tex.  250,  24  S.  W.  397,  22  L.  R.  A. 
483,  revg.  (Tex.  Civ.  App.)  22  S.  W. 
1048  (In  its  discussion  the  court 
places  a  rather  narrow  construction 
on  what  could  be  the  subject  of  a 
monopoly  at  common  law.)  ;  Harris  v. 
Commonwealth  (Va.),  IZ  S.  E.  561 
(prosecution  for  criminal  conspir- 
acy). For  a  case  holding  a  combina- 
tion unlawful  at  common  law  where 
its  purpose  is  to  regulate  and  control 
the  rate  of  premiums  charged  on  in- 
surance, the  effect  being  to  enhance 
the  price,  see.  People  v.  Aachen  &c. 
Ins.  Co.,  126  111.  App.  636. 

•"In  re  Pfnkney,  47  Kans.  89,  27 
Pac.  179;  American  Fire  Ins.  Co.  v. 
State,  75  Miss.  24,  22  So.  99;  State  v. 
American  Surety  Co.  (Xebr.)  135  N. 
W.  365.  See,  however,  Aetna  Ins. 
Co.  V.  Commonwealth,  106  Ky.  864, 
51  S.  W.  624,  45  L.  R.  A.  355. 

'"Queen  Ins.  Co.  v.  State,  86  Tex. 
250,  24  S.  W.  397,  22  L.  R.  A.  483, 
revg.  (Tex.  Civ.  App.)  22  S.  W.  1048. 


**  Aetna  Fire  Ins.  Co.  v.  Kennedy, 
161  Ala.  600,  50  So.  11,  135  Am.  St. 
160;  Continental  Ins.  Co.  v.  Parkes, 
142  Ala.  650,  39  So.  204;  Hartford 
Fire  Ins.  Co.  v.  State,  76  Ark.  303,  89 
S.  W.  42;  Hartford  Fire  Ins.  Co.  v. 
Raymond,  70  Mich.  485,  38  N.  W. 
474. 

^  Carroll  v.  Greenwich  Ins.  Co., 
199  U.  S.  401,  50  L.  ed.  246,  26  Sup. 
Ct.  66.  The  court  said :  "If  the  leg- 
islature of  the  state  of  Iowa  deems 
it  desirable  artifically  to  prevent,  so 
far  as  it  can,  the  substitution  of  com- 
bination for  competition,  this  court 
cannot  say  that  fire  insurance  may 
not  present  so  conspicuous  an  exam- 
ple of  what  that  legislature  thinks 
an  evil  as  to  justify  special  treat- 
ment." See  also.  State  v.  American 
Surety  Co.  (Nebr.),  135  N.  W.  365. 

®°  Workman  v.  London  &c.  Fire  Ins. 
Co.,  19  Times  L.  R.  360;  Bloom  v. 
Home  Ins.  Agency,  91  Ark.  367,  121 
S.  W.  293.  See,  Louisville  Board  of 
Fire  Underwriters  v.  Johnson,  133 
Ky.  797,  119  S.  W.  153,  24  L.  R.  A. 
(N.  S.)  153n;  Childs  v.  Firemen's 
Ins.  Co.,  66  Minn.  393,  69  N.  W.  141, 
35  L.  R.  A.  99. 


197 


COMBINATIONS,    MONOPOLIES    AND    TRUSTS. 


§    882 


ization  or  agreement  must  not,  however,  be  merely  a  device  by 
which  to  evade  the  antitrust  laws  against  combinations  to  keep 
up  insurance  rates.  Thus,  an  organization  known  as  the  Under- 
writers' Social  Club  has  been  termed  a  trust,  and  dealt  with  ac- 
cordingly, where  it  appeared  that  the  members  of  the  club  had  an 
oral  agreement  to  abide  by  the  rates  fixed,  on  penalty  of  a  fine, 
the  violaters  of  the  agreement  being  tried  by  the  club.^' 

§  882.    Combinations  of  laborers  and  other  workmen. — 

It  is  well  settled  that  individuals  have  a  perfect  legal  right  to 
form  labor  organizations  for  the  protection  and  promotion  of  the 
interests  of  laboring  people. ''^  This  right  to  organize  is  said  to 
be  "an  exercise  of  the  common-law  right  of  every  citizen  to  pur- 
sue his  calling,  whether  of  labor  or  business,  as  he  in  his  judg- 
ment thinks  fit."*'"  As  a  general  rule  the  legality  of  unincor- 
porated labor  organizations  is  recognized  under  common-law 
principles. ^"^  The  incorporation  of  such  organizations  is  now 
legalized  by  the  statutes  of  many  jurisdictions.^^    The  union  may 


"The  proceeding  in  this  case  was 
by  a  quo  warranto  to  oust  seventy- 
three  fire  insurance  companies  of 
their  corporate  rights,  privileges  and 
franchises,  under  the  law  of  Missouri 
relating  to  pools,  trusts  and  conspira- 
cies, unlawful  combinations.  The 
judgment  of  the  court  was  that  the 
defendants  be  ousted  of  all  rights, 
privileges  and  franchises  conferred 
by  the  laws  of  Missouri,  and  their 
certificate  to  do  business  at  all  times 
under  the  insurance  laws  of  Mis- 
souri. State  v.  Firemen's  Fund 
Ins.  Co.  (Mo.),  52  S.  W.  595. 
See  also,  Fire  Ins.  Co.  v.  State,  75 
Miss.  24,  22  So.  99.  See  also,  post, 
§  915. 

•"  Allis-Chalmers  Co.  v.  Iron  Mold- 
ers'  Union,  150  Fed.  155;  Rohlf  v. 
Kasemeier,  140  Iowa  182.  118  \.  W. 
276.  23  L.  R.  A.  (N.  S.)  1284,  132 
Am.  St.  261 ;  Lohse  Patent  Door  Co. 
V.  Fuelle,  215  Mo.  421.  114  S.  \V.  9^7, 
22  L.  R.  A.  (N.  S.)  607,  128  Am.  St. 
492,  and  cases  cited. 

"Pickett  V.  Walsh,  192  Mass.  572. 
78  N.  E.  753.  6  L.  R.  A.  (N.  S.) 
1067n.  116  Am.  St.  272.  See  also. 
United  States  v.  Moore,  129  Fed.  630. 

^^  Allis-Chalmers  Co.  v.  Iron  Mold- 


ers'  Union,  150  Fed.  155;  Rohlf  v. 
Kasemeier,  140  Iowa  182,  118  N.  W. 
276,  23  L.  R.  A.  (X.  S.)  1284,  132 
Am.  St.  261.  See,  Beck  v.  Railway 
Teamsters  Protective  Union,  118 
^lich.  497,  n  X.  W.  13,  42  L.  R.  A. 
407,  74  Am.  St.  421. 

"  Special  provision  is  made  there- 
for by  act  of  Congress  of  June  29, 
1886  (24  Stat.  Laws  86).  See  act  of 
June  1,  1898  (30  Stat.  Laws  427). 
See,  Arthur  v.  Oakes,  63  Fed.  310.  11 
C.  C.  A.  209,  25  L.  R.  A.  414,  431 
(7th  C,  1894).  So  bv  La.  Rev.  Stat. 
(1  Wolff's  ed.,  1904).  p.  223;  Md. 
Pub.  Gen.  Laws  (1904),  art.  23.  §  41. 
See,  Lucke  v.  Clothing  Cutters'  &c. 
Assemblv.  V  Md.  396.  26  Atl.  505, 
19  L.  R.'A.  408,  39  Am.  St.  421 ;  Mich. 
Comp.  Laws  1897.  pp.  2343  ct  seq. ; 
N.  J.  Gen.  Stat.  1895.  p.  167:  Pa.  2  P. 
&  L.  Dig.,  p.  2915  (see  p.  2913).  See 
Flaccus  V.  Smith.  199  Pa.  St.  128,  48 
Atl.  894,  54  L.  R.  A.  640.  85  Am.  St. 
779;  Tex.  Laws  1899,  ch.  153.  See 
Colo.  Rev.  Stat  1908,  §  3924;  Mass. 
Rev.  Laws  1902.  ch.  125.  §§  13-16. 
.And  while  not  made  so  by  express 
provision  it  is  doubtless  true  that,  in 
many  instances,  the  incorporation  of 
a  labor  union   is  authorized  by  the 


§  883 


CONTRACTS. 


198 


have  for  its  purpose  the  procurement  of  an  advance  in  the  wages 
of  its  several  members." 

§  883.  Right  to  organize  confers  no  special  privilege. — 
But  notwithstanding  the  foregoing  and  the  fact  that  there  is  a 
great  clamor  against  trusts  and  combinations  on  the  one  hand 
and  for  the  privilege  of  combining  upon  the  other  the  law  refuses 
to  create  or  recognize  a  privileged  class.  The  right  which  the 
law  recognizes  is  nothing  more  than  that  conceded  to  every  citi- 
zen regardless  of  his  position  or  occupation.  While  the  law  rec- 
ognizes the  right  of  labor  to  organize  and  exist  as  an  organiza- 
tion in  order  to  obtain  a  lawful  benefit  to  themselves  it  gives  no 
legal  sanction  to  combinations  which  have  for  their  immediate 
purpose  the  hurt  of  another."  The  rights  of  others  must  be  re- 
spected.'* The  very  fact  that  every  citizen  has  the  right  to  pur- 
sue his  calling  whether  of  labor  or  business  as  he  in  his  judgment 
thinks  fit  limits  that  which  may  be  done  by  a  labor  organiza- 
tion."    "It  is  the  absolute,  unqualified  right  of  every  employe, 


provisions  of  a  general  statute.  As 
to  English  Trade  Union  Act  of  1871, 
see  Chamberlain's  Wharf  v.  Smith, 
2  Ch.  (1900)  605.  As  to  relief 
granted  to  such  corporation  because 
of  injury  to  individual  members,  see 
Master  Horseshoers'  &c.  Assn.  v. 
Quinlivan,  83  App.  Div.  (N.  Y.)  459, 
82  N.  Y.  S.  288  (1903). 

'^Rohlf  V.  Kasemeier,  140  Iowa 
182,  118  N.  W.  276,  23  L.  R.  A.  (N. 
S.)  1284,  132  Am.  St.  261;  Beck  v. 
Railway  Teamsters  Protective  Union, 
118  Mich.  497,  n  N.  W.  13,  42  L.  R. 
A.  407,  74  Am.  St.  421;  City  Trust, 
Safe  Deposit,  &c.  Co.  v.  Waldhauer, 
47  Misc.  (N.  Y.)  7,  95  N.  Y.  S.  222. 
"They  have  labor  to  sell.  If  they 
stand  together,  they  are  often  able, 
all  of  them,  to  command  better  prices 
for  their  labor  than  when  dealing 
singly  with  rich  employers,  because 
the  necessities  of  the  single  employe 
may  compel  him  to  accept  any  terms 
offered  him.  The  accumulation  of  a 
fund  for  the  support  of  those  who 
feel  that  the  wages  offered  are  below 
market  prices  is  one  of  the  legitimate 
objects  of  such  an  organization." 
Thomas  v.  Cincinnati  &c.  R.  Co.,  62 
Fed.  803.  Many  more  adjudications 
of  the  same  nature  exist  and  might 


be  cited,  but,  as  there  is  no  conflict 
between  thq  modern  decisions  upon 
this  question,  it  would  be  a  useless 
waste  of  time  and  labor  to  cite  more. 
These  decisions  are  based  upon  the 
law  which  permits  every  one  to  en- 
ter into  any  kind  of  a  contract  which 
has  for  its  object  and  purpose  the 
protection  and  promotion  of  the  in- 
terest of  the  parties  thereto,  as  well 
as  the  betterment  of  their  condition 
in  Hfe;  and  that  right  to  so  contract 
is  not  curtailed  or  abridged  if,  per- 
chance, the  contract  indirectly  or  in- 
cidentally operates  in  restraint  of 
trade."  Lohse  Patent  Door  Co.  v.  Fu- 
elle,  215  Mo.  421,  114  S.  W.  997,  128 
Am.  St.  492. 

"Queen  v.  Rowlands,  17  Q.  B.  671. 
To  same  effect,  A.  R.  Barnes  &  Co.  v. 
Chicago  Typographical  Union,  232 
111.  424,  83  N.  E.  940,  14  L.  R.  A.  (N. 
S.)  1018;  W.  P.  Davis  Machine  Co. 
V.  Robinson,  41  Misc.  (N.  Y.)  329,  84 
N.  Y.  Supp.  837;  Curran  v.  Galen,  152 
N.  Y.  Zl,  46  N.  E.  297,  37  L.  R.  A.  802, 
57  Am.  St.  496;  Longshore  Printing 
Co.  v.  Howell,  26  Ore.  527,  38  Pac. 
547,  28  L.  R.  A.  464n,  46  Am.  St.  640. 
^*  United  States  v.  Cassidy,  67  Fed. 
698,  721. 
'"Goldfield  Consolidated  Mines  Co. 


199 


COMBINATIONS,    MONOPOLIES    AND    TRUSTS. 


§    884 


as  well  as  of  every  other  person,  to  go  about  his  legal  business 
unmolested  and  unobstructed,  and  free  from  intimidation,  force 
or  duress."^" 

§  884.  Contracts  between  union  and  employer. — Concern- 
ing contracts  between  the  union  and  an  employer  engaged  in  a 
private  enterprise,  by  the  terms  of  which  the  employer  binds  him- 
self to  employ  only  union  men,  the  leading  case  on  this  subject 
was  understood  to  hold  such  contracts  illegal.''^  In  a  subsequent 
case  the  same  court  construed  the  former  case  so  as  to  make  it 
apply  only  to  those  instances  in  which  the  contract  was  between 
a  union  and  an  association  of  employers  carrying  on  the  same  line 
of  business  in  a  given  community  and  a  contract  between  a  union 
and  a  single  employer  was  upheld  on  the  ground  that  in  the  lat- 
ter case  the  restrictions  were  not  of  an  oppressive  nature  operat- 
ing generally  in  the  community  to  prevent  a  laborer  from  obtain- 
ing any  employment  and  from  earning  his  livelihood.^®     It  has 


V.  Goldfield  Miners'  Union,  159  Fed. 
500 ;  Pickett  v.  Walsh,  192  Mass.  572, 
78  N.  E.  753,  6  L.  R.  A.  (N.  S.) 
1067n,  116  Am.  St.  212\  Marietta 
Casting  Co.  v.  Thuma,  12  Pa.  Dist. 
552. 

""The  right  of  a  labor  association 
to  strike  is  no  higher  than  the  right 
of  a  non-union  workman  to  take  em- 
ployment in  place  of  the  strikers." 
Pierce  v.  Stablemen's  Union  (Cal.), 
103  Pac.  324.  To  same  effect,  Purvis 
V.  Local  No.  500  United  Brotherhood 
of  Carpenters,  214  Pa.  St.  348,  63  Atl. 
585,  12  L.  R.  A.  (X.  S.)  642n,  112 
Am.  St.  757.  If  the  workmen  may 
decline  to  work  the  employer  may 
decline  to  employ.  People  v.  IMarcus, 
185  N.  Y.  257,  V  N.  E.  1073,  7  L.  R. 
A.  (N.  S.)  282,  113  Am.  St.  902; 
National  Protection  Assn.  v.  Cum- 
ming,  170  N.  Y.  315,  63  N.  E.  369, 
58  L.  R.  A.  135,  88  Am.  St.  648;  City 
Trust,  Safe  Deposit,  &c.  Co.  v.  Wald- 
hauer.  47  Misc.  (X.  Y.)  7,  95  N.  Y. 
S.  222.  See  also,  Lohse  Patent  Door 
Co.  V.  Fuelle,  215  Mo.  421,  114  S.  W. 
997,  22  L.  R.  A.  (N.  S.)  607,  128  Am. 
St.   492. 

"Curran  v.  Galen.  152  N.  Y.  ZZ, 
46  N.  E.  297,  37  L.  R.  A.  802,  57 
Am.  St.  496. 

"The  case  of  Curran  v.  Galen  was 


said  to  stand  unaffected  as  to  au- 
thority. Jacobs  V.  Cohen,  183  N.  Y. 
207,  76  N.  E.  5,  2  L.  R.  A.  (N.  S.) 
292,  111  Am.  St.  730.  To  same  ef- 
fect. Mills  V.  United  States  Printing 
Co.,  99  App.  Div.  (N.  Y.)  605.  91 
N.  Y.  S.  185.  In  the  latter  case  while 
the  result  is  the  same  the  decision 
is  based  on  different  grounds.  The 
union  agreed  to  give  nonunion  men 
the  privilege  of  joining,  and  the  court 
upheld  the  contract  for  the  reason 
that  it  thus  was  made  to  appear  that 
its  aim  was  not  the  discharge  of  non- 
union men  as  individuals  and  to  secure 
the  employment  of  union  men  in  their 
places,  but  to  secure  co-operation 
among  all  employes.  See  also,  Kis- 
sam  V.  United  States  Printing  Co., 
199  N.  Y.  76.  92  N.  E.  214.  affg.  128 
App.  Div.  (N.  Y.)  889,  112  N.  Y.  S. 
1134.  Under  the  foregoing  decisions 
the  present  attitude  of  the  courts  of 
New  York  on  this  question  may  be 
expressed  as  follows  :  An  agreement 
between  a  union  and  an  association 
of  all  the  employers  of  laborers  en- 
gaged in  a  certain  line  of  work  in  a 
single  community  by  which  the  lat- 
ter agreed  to  employ  union  men  ex- 
clusively is  invalid,  while  a  contract 
between  an  individual  employer  and 
a  labor  union  by  which  the  former 


88  i 


CONTRACTS. 


200 


also  been  held  that  where  the  object  of  the  contract  was  to  bene- 
fit the  parties  and  not  to  injure  the  complainant  or  other  person 
in  a  similar  situation,  it  will  be  upheld.'^  A  contract  which  pro- 
vided that  a  manufacturer  should  not  keep  in  his  employment  an 
employe  who  was  objectionable  to  the  union  from  any  cause 
after  receiving  notice  thereof  from  the  union  has  been  held 
illegal.^" 

§  885.  Binding  force  of  constitution  and  by-laws  of  union. 
— One  who  joins  a  union  is  considered  as  having  declared  his 
submission  to  its  constitution,  rules  and  by-laws.^^  The  consti- 
tution, rules  and  by-laws  of  such  organizations  constitute  a  con- 
tract between  the  union  and  its  members^  ^  and  are  binding  both 
on  the  individual  members  inter  se  and  the  union. ®^  This  is  not 
true,  however,  when  such  rules  and  regulations  are  in  contraven- 
tion of  law  and  against  public  policy.^^ 


is  to  employ  only  union  workmen  is 
upheld.  A  court  may  restrain  the 
calling  of  a  strike  where  it  has  for 
its  object  the  obtaining  of  a  complete 
monopoly  of  the  labor  market  in  a 
particular  business.  Folsom  v.  Lew- 
is, 208  Mass.  336,  35  L.  R.  A.  (N.  S.) 
787n,  94  N.  E.  316. 

'*  National  Fire  Proofing  Co.  v. 
l\Iason  Builders'  Assn.,  169  Fed.  259, 
94  C.  C.  A.  535,  26  L.  R.  A.  (N.  S.) 
148n,  affg.  145  Fed.  260.  See  also, 
Pickett  V.  Walsh,  192  Mass.  572,  78 
N.  E.  753,  6  L.  R.  A.  (N.  S.)  1067n, 
116  Am.  St.  272. 

^''"The  case  of  Curran  v.  Galen, 
152  N.  Y.  33,  46  N.  E.  297,  37  L.  R. 
A.  802,  57  Am.  St.  496,  in  the  decision 
of  which  the  judges  of  the  Court  of 
Appeals  were  unanimous,  fully  cov- 
ers the  present  case.  The  principle 
involved  in  each  of  the  two  cases  is 
the  same  and  the  language  of  the 
opinion  in  that  case,  in  its  applica- 
tion to  this,  is  decisive."  Berry  v. 
Donovan,  188  Mass.  353,  74  N.  E. 
603,  5  L.  R.  A.  (N.  S.)  899,  108  Am. 
St.  499.  See  also,  Birmingham  Paint 
&  Roofing  Co.  v.  Crampton  (Ala),  39 
So.  1020;  Adams  v.  Brenan,  177  111. 
194,  52  N.  E.  314,  42  L.  R.  A.  718,  69 
Am.  St.  222 ;  Fiske  v.  People,  188  111. 
206,  58  X.  E.  985,  52  L.  R.  A.  291; 


Holden  V.  Alton,  179  111.  318,  53  N.  E. 
556;  Fabacher  v.  Bryant,  46  La.  Ann. 
820,  15  So.  181.;  Brenan  v.  United 
Hatters  of  North  America,  73  N.  J. 
L.  729,  65  Atl.  165,  9  L.  R.  A.  (N.  S.) 
254,  118  Am.  St.  727. 

*See  Harington  v.  Sendall  (1903), 
1  Ch.  921,  72  L.  J.  Ch.  396,  88  Law 
Times  323. 

^Harrington  v.  Sendall  (1903),  .1 
Ch.  921,  72  L.  J.  Ch.  396,  88  L.  T. 
323;  Brown  v.  Stoerkel,  74  Mich. 
269,  41  N.  W.  921,  3  L.  R.  A.  430; 
Council  V.  Stalker,  21  Misc.  (N.  Y.) 
609,  48  N.  Y.  S.  77.  And  see  4  Cyc. 
Associations  305.  Weatherby  v.  Mont- 
gomery County  Medical  &c.  Society, 
76  Ala.  576;  Grand  Grove,  U.  A.  O. 
D.  v.  Garibaldi  Grove  No.  Seventy- 
one,  130  Cal.  116.  62  Pac.  486,  80  Am. 
St.  80;  Levy  v.  Magnolia  Lodge  No. 
29  I.  O.  O.  F.,  110  Cal.  297,  42  Pac. 
887;  Hammerstein  v.  Parsons,  38  Mo. 
App.  332. 

^  Brenan  v.  United  Hatters  of 
North  America.  73  N.  J.  L.  729,  65 
Atl.  165,  9  L.  R.  A.  (N.  S.)  254,  118 
Am.  St.  727.  See  also,  4  Cyc.  Asso- 
ciations 305. 

^*  Schneider  v.  Local  Union  No.  60, 
116  La.  270,  40  So.  70O,  5  L.  R.  A. 
(N.  S.)  891,  114  Am.  St.  549. 


201  COMBINATIONS,    MONOPOLIES   AND   TRUSTS.  §    886 

§  886.  Strike  in  breach  of  contract. — It  is  unlawful  for 
employes  to  go  on  a  strike  in  breach  of  their  contract  of  em- 
ployment.** In  case  of  persons  under  a  contract  to  work,  a 
strike,  or  combination  not  to  work,  in  violation  of  that  contract, 
to  secure  something  not  due  them  under  that  contract,  would  be 
a  combination  interfering,  without  justification,  with  the  employ- 
er's business. *° 

§  887.  Monopolies  at  common  law. — As  stated  in  the  first 
section  of  this  chapter,  a  monopoly  was  originally  defined  as  an 
institution  or  allowance  by  the  king  by  his  grant  to  any  person 
of  or  for  the  sole  buying,  selling,  making,  working  or  using  of 
anything.*^  The  common  law  has  always  considered  monopolies 
against  public  policy  and  unlawful.  Even  though  the  monopoly 
was  granted  by  the  crown,  it  might  be  declared  utterly  void  on 
the  ground  that  it  was  against  the  common  law  and  the  divers 
acts  of  parliament.®^  Subsequently  parliament,  by  the  statute 
of  21  James  i,  ch.  3,  declared  all  existing  monopolies,  with  cer- 
tain exceptions,  abolished  and  deprived  the  crown  of  the  power 
to  create  new  monopolies.  Among  the  exceptions  were  grants 
and  privileges  under  acts  of  parliament  such  as  patents,  copy- 
rights, and  manufacturers  of  certain  warlike  materials.®^ 

I 

^  State  V.  Stockford,  11  Conn.  227,  of   trade  unions   and   trade   disputes 

58  Atl.  769,    107   Am.   St.  28;   A.   R.  enacted  December  21,  1906.    See  also. 

Barnes  &  Co.  v.  Berry,  156  Fed.  72;  Mapstrick  v.  Ramge,  9  Nebr.  390,  2 

Wabash    R.    Co.    v.    Hannahan,    121  N.  W.  739,  31  Am.  Rep.  415. 
Fed.    563;    Reynolds    v.    Davis,    198        ^  See   ante,    §   865.     In    Harris   v. 

Mass.  294,  84  N.  E.  457,  17  L.  R.  A.  Commonwealth  (Va.),73  S.  E.  560,  it 

(N.    S.)    162n.     And   see   Branch   v.  is  said  that  there  was  no  prohibition 

Roth,    10   Ont.   Law    (Canada)    284;  at  common  law  against  the  creation 

United  States  v.   Haggerty,  116  Fed.  of  a  monopoly  by  individuals,  citing 

510;    Mapstrick   v.    Ramge,    9    Nebr.  Standard   Oil    Co.   v.   United    States, 

390,  2  N.  W.  739,  31  Am.  Rep.  415.  221   U.   S.   1,  55  L.  ed.  619,  31   Sup. 

'"Reynolds    v.     Davis,     198    Mass.  Ct.   502,   34   L.   R.   A.    (N.    S.)    834. 

294,  84  N.  E.  457,  17  L.  R.  A.  (N.  S.)  There  is  of  course  a  distinction  be- 

162n.     See    also.    Commonwealth    v.  tween  a  monopoly  and  a  contract  in 

Hunt,  4  Mete.    (Mass.)    Ill,  38  Am.  restraint  of  trade,  but  compare  with 

Dec.  346.    In   England  this  rule  has  §  790. 

been    changed    by    a    statute    which        **  See  Case  of   Monopolies,   Darcv 

provides  "that  an  act  done  by  a  per-  v.   Allein,   11    Coke  84.     See  ante,   § 

son  in   contemplation  or  furtherance  865. 

of  a  trade  dispute  shall  not  be  action-        **  See     Norwich     Gaslight     Co.     v. 

able  on   the  ground  only  that  it   in-  Norwich  City  Gas  Co.,  25  Conn.  19; 

duces  some  other  person  to  break  a  Livingston  v.  Van  Ingen,  9  Johns  (N. 

contract  of  employment."  Section  3  of  Y.)   507. 
the  Act  to  provide  tor  the  regulation 


}  888 


CONTRACTS. 


202 


§  888.  Modem  doctrine. — The  modern  doctrine  as  supple- 
mented by  statutes  recognizes  that  the  public  cannot  compel  com- 
petition at  all ;  but  the  law  in  the  interest  of  public  policy  can  and 
will  remove  unreasonable  restraints  by  contract  upon  competi- 
tion by  refusing  to  enforce  the  contract  and  leaving  the  parties 
free  to  compete  if  they  choose.^"  Modern  statutes  have  also 
given  the  government  and  third  persons  who  have  been  injured 
by  such  monopoly  the  right  to  invoke  the  courts  for  aid.''^  The 
common-law  terms  of  forestalling,  engrossing  and  regrading 
have  already  been  defined  and  briefly  discussed  in  the  section  on 
,"  'Corners'  and  combinations  to  prevent  competition  in  other  re- 
spects" and  it  is  not  thought  necessary  to  give  them  further  men- 
tion.^^^ 

§  889.   Monopolies  as  affected  by  state  constitution. — The 

'constitutions  of  a  number  of  the  states  of  the  union  declare  in 
effect,  if  not  in  so  many  words,  that  perpetuities  and  monopolies 
are  contrary  to  the  genius  of  a  free  government  and  shall  never 


''Pacific  Factor  Co.  v.  Adler,  90 
'Cal.  110,  27  Pac.  36,  2  Am.  St.  102; 
,  Santa  Clara  &c.  Co.  v.  Hayes,  76  Cal. 
387,  18  Pac.  391,  9  Am.  St.  211;  Fish- 
burn  V.  Chicago,  171  111.  338,  49  N.  E. 
532,  39  L.  R.  A.  482,  63  Am.  St.  236 ; 
People  V.  Chicago  Live  Stock  Ex- 
change, 170  111.  556,  48  N.  E.  1062, 
39  L.  R.  A.  Z73,  62  Am.  St.  404;  Peo- 
ple V.  Chicago  Gas  Trust  Co.,  130 
111.  268,  22  N.  E.  798,  8  L.  R.  A.  497n, 
17  Am.  St.  319;  Chicago  Gas  &c.  Co. 
V.  People's  Gas  &c.  Co.,  121  111.  530, 
13  N.  E.  169,  2  Am.  St.  124 ;  Craft  v. 
McConoughy,  79  111.  346,  22  Am.  Rep. 
171;  Anderson  v.  Jett,  89  Ky.  375, 
'11  Ky.  Law  570.  12  S.  W.  670. 
6  L.  R.  A.  390;  Alger  v.  Thacher,  19 
Pick.  (Mass.)  51.  31  Am.  Dec.  119; 
People  V.  Milk  Exchange,  145  N.  Y. 
267,  39  N.  E.  1062,  27  L.  R.  A.  437, 
45  Am.  St.  609;  People  v.  Sheldon, 
139  N.  Y.  251,  34  N.  E.  785,  23  L.  R. 
A.  221,  36  Am.  St.  690 ;  Judd  v.  Har- 
rington, 139  N.  Y.  105,  34  N.  E.  790; 
Leonard  v.  Poole,  114  N.  Y.  371,  21 
N.  E.  707,  4  L.  R.  A.  728,  11  Am.  St. 
667;  Arnot  v.  Pittston  &c.  Coal  Co., 
68  N.  Y.  558,  23  Am.  Rep.  190;  Heim 
V.  New  York  Stock  Exch.,  64  Misc. 
(N.  Y.)  529,  118  N.  Y.  S.  591;  Cen- 


tral Ohio  Salt  Co.  V.  Guthrie,  35 
Ohio  St.  666;  Crawford  v.  Wick,  18 
Ohio-  St.  190,  98  Am.  Dec.  103 ;  Nes- 
ter  V.  Continental  Brewing  Co.,  161 
Pa.  St.  473,  29  Atl.  102,  24  L.  R.  A. 
247,  41  Am.  St.  894 ;  Morris  Run  Coal 
Co.  V.  Barclay  Coal  Co.,  68  Pa.  St. 
173,  8  Am.  Rep.  159;  Texas  Stand- 
ard Cotton-Oil  Co.  V.  Adoue,  83  Tex. 
650,  19  S.  W.  274,  15  L.  R.  A.  598, 
29  Am.  St.  690;  West  Virginia 
Transp.  Co.  v.  Ohio  River  Pipe  Line 
Co.,  22  W.  Va.  600,  46  Am.  Rep.  527 ; 
Pocahontas  Coke  Co.  v.  Powhatan 
&c.  Coal  Co.,  60  W.  Va.  508,  56  S.  E. 
264,  10  L.  R.  A.  (N.  S.)  268n, 
116  Am.  St.  901.  See  also,  Den- 
ver Jobbers'  Assn.  v.  People  (Colo. 
App.),  122  Pac.  404,  holding  that 
the  common-law  rule  against  monop- 
olies is  not  one  of  passive  in- 
action, a  court  of  equity  neither  en- 
joining the  enforcement  of  monopo- 
listic contracts  nor  aiding  in  their 
fulfilment,  but  instead  such  court 
will  in  a  proper  case  enjoin  unlawful 
combinations. 

"  See  post,  §  903.  See  also,  Denver 
Jobbers'  Assn.  v.  People  (Colo. 
App.),  122  Pac.  404. 

"a  See  §  877. 


203 


COMBIXATIONS,    MOXOPOLIES    AXD    TRUSTS. 


§    890 


be  allowed. °^  Since  a  inonopoly  is  opposed  to  public  policy,  a 
monopoly  created  by  legislative  grant  has  been  held  illegal  even 
in  the  absence  of  a  constitutional  restriction  prohibiting  the  crea- 
tion of  a  monopoly,  a  constitutional  prohibition  being  unneces- 
sary to  render  it  void."^  It  would  seem,  however,  that  in  the  ab- 
sence of  a  constitutional  restriction  a  monopoly  created  by  public 
authority  would  be  valid,  especially  since  the  fact  that  it  is  cre- 
ated by  public  authority  is  generally  conclusive  upon  the  question 
of  public  policy."^ 

§  890.  Monopolies  under  state  statutes.:— Practically  ev- 
ery state  of  the  union  has  what  is  popularly  termed  an  antitrust 
act.  These  statutes  vary  more  or  less  in  their  wording  and  the 
construction  that  has  been  placed  upon  them.  It  is  impractica- 
ble to  set  them  out  in  a  work  of  this  character;  however,  addi- 
tional mention  will  be  given  them  in  a  subsequent  section  of  this 
chapter."^ 


•*  Arkansas  Const.  1874  art.  2,  §  19; 
Maryland  Declaration  of  Rights,  art. 
41 ;  Xorth  Carolina  Declaration  of 
Rights,  art.  1,  §  31;  Oklahoma  Const., 
art.  2,  §  2i2\  Tennessee  Const.,  art. 
1,  §  22 ;  Texas  Const.,  art.  1,  § 
26;  Wyoming  Const.,  art.  1,  §  30. 
Under  such  a  provision  the  grant  of 
an  exclusive  privilege  by  a  munici- 
pality to  a  water  company  to  furnish 
water  for  fire  hydrants  has  been  held 
void.  Hartford  Fire  Ins.  Co.  v. 
Houston  (Tex.  Civ.  App.),  110  S.  W. 
973.  ^ 

"  Norwich  Gas  Light  Co.  v.  Nor- 
wich City  Gas  Co.,  25  Conn.  19. 
See  also,  Saginaw  Gas  Light  Co.  v. 
City  of  Saginaw,  28  Fed.  529;  Citi- 
zens' Gas  &c.  Co.  V.  Elwood,  114 
Ind.  ZZ2,  16  N.  E.  624;  Canal  &c.  R. 
Co.  V.  Crescent  Citv  R.  Co.,  41  La. 
Ann.  561,  6  So.  849;  Thrift  v.  Eliza- 
beth City,  122  X.  Car.  31.  30  S.  E. 
349,  44  L.  R.  A.  427;  Ft.  Worth 
St.  R.  Co.  V.  Rosedale  St.  R.  Co., 
68  Tex.  169,  4  S.  W.  534. 

**  Stewart  v.  Erie  &c.  Transporta- 
tion Co.,  17  Minn.  372.  See  also, 
Slaughter  House  Cases,  16  Wall.  (U. 
S.)  36,  21  L.  cd.  394;  New  Orleans 


Gas  Co.  V.  Louisiana  Light  Co.,  115 
U.  S.  650,  29  L.  ed.  516,  6  Sup.  Ct. 
252;  City  R.  Co.  v.  Citizens'  St.  R. 
Co.,  166  U.  S.  557,  41  L.  ed.  1114,  17 
Sup.  Ct  653 ;  Bancroft  v.  Thaver, 
5  Sawy.  (U.  S.)  502,  2  Fed.  Cas.  No. 
835;  Vermont  &c.  R.  Co.  v.  Ver- 
mont Central  R.  Co.,  34  Vt.  249.  The 
establishment  of  a.  state  dispensary 
has  been  upheld.  The  court  said, 
quoting  from  Scott  v.  Donald,  165  U. 
S.  104,  17  Sup.  Ct.  274:  "Granting' 
that  the  act  gives  the  state  itself  a 
monopoly  of  all  traflic  in  such  liquors, 
it  is  not  a  monopoly  in  the  ordinary 
or  odious  sense  of  the  term,  where 
one  individual  or  corporation  is  giv- 
en the  right  to  manufacture  or  trade 
which  is  not  open  to  others,  but  a 
monopoly  for  the  benefit  of  the  whole 
people  (of  the  district),  the  profits 
of  which,  if  any,  are  enjoyed  by  the 
whole  people ;  in  short,  a  monopoly  in 
the  same  sense  in  which  the  post- 
ofiice  department  and  the  right  to 
carry  the  mails  is  a  monopoly  of  the 
federal  government."  Guv  v.  Cum- 
berland County,  122  N.  Car.  471,  29 
S.  E.  771. 
"See  post,  §  915  et  seq. 


§891  CONTRACTS.  204 

§891.  Grants  of  exclusive  rights  by  governmental  au- 
thority.— Grants  of  an  exclusive  character  may  emanate 
from  governmental  authority  or  from  the  acts  of  private  individ- 
uals. This  is  not  the  place  to  discuss  when,  how  and  by  what 
state  agency  a  monopoly  may  be  granted.  It  is  sufficient  to  say 
that  a  valid  grant  of  this  character  becomes  a  contract  after  the 
party  to  whom  the  grant  is  made  has  complied  with  the  condi- 
tions thereof  and  comes  within  the  protection  of  that  clause  of 
the  constitution  of  the  United  States  which  prohibits  the  impair- 
ment of  the  obligations  of  a  contract.^^  The  grantee  will  be  pro- 
tected in  the  enjoyment  of  his  grant.^'  However,  regardless  of 
whether  the  exclusive  grant  is  made  by  the  state^^  or  a  municipal 
corporation,^^  it  will  be  strictly  construed. 

§892.  Exclusive  grant  by  private  person. — The  validity 
of  an  exclusive  grant  by  a  private  person  or  corporation  depends 
upon  whether  or  not  the  rights  of  the  public  are  in  any  way  im- 
paired. If  the  rights  of  the  public  are  impaired  the  grant  is  in- 
valid, if  not  the  grant  is  valid.  Contracts  of  exclusive  agency 
are  usually  upheld.^ 

§  893.  Exclusive  grant  by  carriers. — The  question  as  to 
the  validity  of  an  exclusive  grant  by  a  common  carrier  frequently 
arises.  So  long  as  the  privilege  granted  in  no  way  interferes 
with  the  rights  of  the  public  and  does  not  cripple  the  carrier  in 
the  performance  of  its  public  duty  it  would  seem,  on  principle, 
that  the  grant  should  be  held  valid.     The  carrier  owes  a  duty  to 

"'  Ratcliffe  v.  Pulaski  Turnpike  Co.,  Proprietors  v.    Hoboken    Land    &c. 

69  Ark.  264,  63   S.  W.  70;   Citizens  Co.,   1  Wall.   (U.   S.)    116,  17  L.  ed. 

Water   Co.   v.   Bridgeport   Hydraulic  571.                         „      ,           r.  t  ^ 

Co.    55  Conn.  1 ;  Long  v.  Duluth,  49  "  Livingston  v.  Van  Ingen,  9  Johns. 

Minn.  280,  51  N.  W.  913,  32  Am.  St.  (N.  Y.)   507. 

547;   St.  Louis  Gas  Light  Co.  v.  St.  "^Capitol    City    Light    &c.    Co.     v. 

Louis  Gas  &c.  Co.,  16  Mo.  App.  52;  Tallahasee,  42  Fla.  462,  28  So.  810; 

In  re  Binghamton  Bridge,  3  Wall.  (U.  Betts  v.  Manard,  1   111.  395 ;   Tucka- 

S.)   51,  18  L.  ed.  137;  St.  Tammany  hoe  Canal   Co.  v.  Tuckahoe  &c.  R.  Co., 

Water-works  v.  New  Orleans  Water-  11  Leigh   (Va.)  42,  36  Am.  Dec.  374. 

works,   120  U.   S.  64,  30  L.  ed.  563,  **  Citizens'   St.   R.  Co.  v.  Jones,  34 

7   Sup.   Ct.  405;   Louisville  Gas.   Co.  Fed.  579;  Long  v.  Duluth,  49  Minn. 

V.    Citizens'    Gas    Light    Co.,    115   U.  280,  51   N.  W.  913  32,  Am    St.  547; 

S.  683,  29  L.  ed.  510.  6  Sup.  Ct.  265;  St.  Louis  Gaslight  Co.  v.   St    Louis 

New  Orleans  Gas  Light  Co.  v.  Louis-  Gas  &c.  Co.,   16  Mo.  App.  52. 

iana  Light  &c.  Co.,  115  U.  S.  650,  29  'See  ante,  chap.  XXII. 
L.  ed.  516,  6   Sup.   Ct.  252;   Bridge 


20  = 


COMBIXATIONS,    MONOPOLIES    AND    TRUSTS. 


§    894 


the  public,  but  it  has  a  right  to  choose  the  inslrumentahties  to  be 
used  in  the  performance  of  that  duty.  Thus,  it  has  been  held 
that  a  railroad  company  or  other  carrier  may,  and  that  it  is  to 
the  advantage  of  the  public  that  it  should,  grant  to  a  particular 
person  engaged  in  transferring  passengers  and  baggage  the  ex- 
clusive right  to  keep  a  representative  on  its  trains  or  private 
grounds  or  property  to  solicit  patronage."  It  has  also  been  held 
that  a  carrier  may  grant  to  one  individual  or  corporation  the  ex- 
clusive right  to  handle  its  express  business,^  although  there  are 
cases  holding  to  the  contrary.* 

§  894.  Exclusive  grants  by  carriers  to  hackmen — Right  to 
dock  vessel. — It  is  also  held  by  the  weight  of  authority  that  a 
carrier  may  confer  upon  selected  hackmen  or  expressmen  the 
exclusive  right  to  solicit  patronage  within  its  depot  grounds.'^ 
There  are  many  cases,  however,  which  deny  the  right  of  the  car- 


*  Kates  V.  Atlanta  Baggage  &c.  Co., 
107  Ga.  636,  34  S.  E.  372,  46  L.  R.  A. 
431 ;  Dingman  v.  Duluth  &c.  R.  Co., 
164  Mich.  328,  130  N.  W.  24.  32  L.  R. 
A.  (N.  S.)  1181;  Godbout  v.  St.  Paul 
Union  Depot  Co.,  79  Minn.  188,  81 
N.  W.  835.  47  L.  R.  A.  532;  Barney 
V.  Oyster  Bay  &c.  Co.,  67  N.  Y.'301, 
23  Am.  Rep.  115;  Lewis  v.  Weather- 
ford  &c.  R.  Co.,  36  Tex.  Civ.  App. 
48,  81  S.  W.  Ill;  Barney  v.  Martin, 
11  Blatchf.  (U.  S.)  233,  Fed.  Cas.  No. 
1030 ;  Jencks  v.  Coleman,  2  Sumn. 
(U.  S.)  221,  Fed.  Cas.  No.  7258. 

*  Express  Companies'  Cases,  117  U. 
S.  1.  29  L.  ed.  791,  6  Sup.  Ct.  542, 
overruling  numerous  federal  cases. 
See  also,  Blank  v.  Illinois  &c.  R.  Co., 
182  111.  332.  55  N.  E.  Z2>2\  Louisville 
&c.  R.  Co.  V.  Keefer,  146  Ind.  21, 
44  N.  E.  796,  38  L.  R.  A.  93,  58  Am. 
St.  348 ;  Dulanev  v.  United  Railways 
&c.  Co.,  104  Md.  423.  65  Atl.  45 ;  At- 
lantic Exp.  Co.  v.  Wilmington  &c.  R. 
Co..  Ill  N.  Car.  463,  16  S.  E.  393, 
18  L.  R.  A.  393,  2,2  Am.  St.  805. 

*  New  England  Exp.  Co.  v.  Main 
R.  Co.,  57  Maine  188,  2  Am.  Rep. 
31  (statutorv)  ;  Kidder  v.  Fitchburg 
R.  Co.,  165  Mass.  398,  43  N.  E.  115 
(statutorv)  ;  McDuffee  v.  Portland 
&c.  R.  Co..  52  N.  H.  430,  13  Am. 
Rep.  72;  Sanford  v.  Catawissa  &c. 
R.  Co..  24  Pa.  St.  378,  64  Am.  Dec. 


667],  Texas  v.  Missouri  &c.  R.  Co., 
99  Tex.  516,  91  S.  W.  214,  5  L.  R.  A. 
(N.  S.)  783  (statutory).  For  cases 
illustrating  similar  agreements  with 
stockyard  companies,  see  Butchers  & 
Drover's  Stockyards  Co.  v,  Louis- 
ville &c.  R.  Co.,  67  Fed.  35,  14  C.  C. 

A.  290;  Covington  Stockyards  Co.  v. 
Keith,  139  U.  S.  128,  35  L.  ed.  73 ; 
Likewise  with  sleeping-car  companies, 
Chicago  &c.  R.  Co.  v.  Pullman  South- 
ern Car  Co.,  139  U.  S.  79,  35  L.  ed. 
97,  11  Sup.  Ct.  490;  Fort  Worth  &c. 
R.  Co.  v.  State.  99  Tex.  34,  87  S.  W. 
Z2>6,  70  L.  R.  A.  950. 

'Barker  v.  IMidland  R.  Co.,   18  C. 

B.  46;  Beadell  v.  Eastern  Counties 
R.  Co.,  2  C.  B.  (N.  S.)  509;  Painter 
v.  London.  B.  &  S.  C.  R.  Co.,  2  C.  B. 
(N.  S.)  702;  Union  Depot  &  R.  Co. 
v.  Meeking,  42  Colo.  89,  94  Pac.  16, 
126  Am.  St.  145;  New  York  N.  H. 
&  H.  R.  Co.  v.  Scovill,  71  Conn. 
136,  41  Atl.  246,  42  L.  R.  A.  157.  71 
Am.  St.  159;  Kates  v.  Atlanta  Bag- 
gage &  Cab  Co.,  107  Ga.  636,  34  S. 
E.  Z72,  46  L.  R.  A.  431 ;  Hart  v.  At- 
lanta Terminal  Co.,  128  Ga.  754,  58 
S.  E.  452;  Old  Colony  R.  Co.  v. 
Tripp,  147  Mass.  35,  17  N.  E.  89,  9 
.\m.  St.  661:  Boston  &  A.  R.  Co.  v. 
Brown.  177  Mass.  65,  58  N.  E.  189, 
52  L.  R.  A.  418;  Boston  &  M.  R.  Co. 
v.  Sullivan,  177  Mass.  230,  58  N.  E. 


§  894 


CONTRACTS. 


206 


rier  to  confer  upon  selected  hackmen  or  expressmen  the  exclusive 
right  to  solicit  patronage  within  its  station  grounds.*^  A  railroad 
company  may  also  grant  the  exclusive  privilege  to  a  certain  per- 
son or  persons  to  enter  upon  its  grounds  and  trains  for  the 
purpose  of  selling  lunches  or  to  solicit  orders  from  passengers  for 
the  sale  of  lunches/     It  has  been  held  that  a  railroad  company 


689,  83  Am.  St.  275;  Godbout  v.  St. 
Paul  Union  Depot  Co.,  79  Minn.  188, 
81  N.  W.  835,  47  L.  R.  A.  532;  Red- 
ding V.  Galagher,  72  N.  H.  Ill,  57 
AtL  225,  64  L.  R.  A.  811,  overruling 
69  N.  H.  650,  45  Atl.  96,  76  Am. 
St.  204,  and  70  N.  H.  631,  47  Atl. 
614;  Barney  v.  Oyster  Bay  &  H.  S. 
B.  Co.,  67  N.  Y.  301,  23  Am.  Rep. 
115;  Snyder  v.  Union  Depot  Co.,  19 
Ohio  C.  C.  368,  revg.  7  Ohio  N.  P. 
64;  State  v.  Union  Depot  Co.,  71 
Ohio  St.  379,  12>  N.  E.  633,  68  L.  R. 
A.  792 ;  Donovan  v.  Pennsylvania  Co., 
199  U.  S.  279,  50  L.  ed.  192,  26  Sup. 
Ct.  91 ;  Jencks  v.  Coleman,  2  Sumn. 
(U.  S.)  221,  Fed.  Cas.  No.  7258; 
The  D.  R.  Martin,  11  Blachf.  (U.  S.) 
233,  Fed.  Cas.  No.  1030;  Oregon 
Short  Line  R.  Co.  v.  Davidson,  Z2> 
Utah  370,  94  Pac.  10,  16  L.  R.  A. 
(N.  S.)  777n.  This  right  of  the  car- 
rier to  grant  an  exclusive  privilege 
to  certain  parties  to  solicit  business 
on  the  grounds  of  the  company  does 
not  prevent  a  driver  of  any  vehicle 
from  entering  upon  such  space  and 
ground  to  fulfill  a  contract  of  em- 
ployment with  a  passenger  or  in- 
tended passenger;  it  merely  prohibits 
him  from  going  on  the  grounds  to 
solicit  business.  See  New  York  N. 
H.  &  H.  R.  Co.  v.  ScoviU,  71  Conn. 
136,  41  Atl.  246,  42  L.  R.  A.  157,  41 
Am.  St.  159;  Union  Depot  &c.  Co.  v. 
Meeking,  42  Colo.  89,  94  Pac.  16, 
126  Am.  St.  145;  Boston  &  A.  R. 
Co.  v.  Brown,  177  Mass.  65,  58  N.  E. 
189,  52  L.  R.  A.  418:  Godbout  v. 
St.  Paul  Union  Depot  Co.,  79  Minn. 
188,  81  N.  W.  835,  47  L.  R.  A.  532. 
S  i  also,  Griswold  v.  Webb,  16  R.  I. 
649.  19  Atl.  143,  7  L.  R.  A.  302 ;  New 
York  N.  H.  &  H.  R.  Co.  v.  Bork, 
23  R.  I.  218,  49  Atl.  965. 

•In  re  Palmer,  L.  R.  C.  P.  194; 
Marriott  v.  London  &  S.  W.  R.  Co., 
1  C.  B.  (N.  S.)  499;  Indianapolis 
Union  R.  Co.  v.   Dohn,   153  Ind.   10, 


53  N.  E.  937,  45  L.  R.  A.  427,  74  Am. 
St.  274 ;  McConnell  v.  Pedigo,  92  Ky. 
465,  13  Ky.  L.  689,  18  S.  W.  IS; 
Kalamazoo  Hack  &  Bus  Co.  v.  Soot- 
sma,  84  Mich.  194,  47  N.  W.  667,  10 
L.  R.  A.  819,  22  Am.  St.  693;  State 
V.  Reed,  76  Miss.  211,  24  So.  308,  43 
L.  R.  A.  134,  71  Am.  St.  528;  Mon- 
tana Union  R.  Co.  v.  Langlois,  9 
Mont.  419,  24  Pac.  209,  8  L.  R.  A. 
753,  18  Am.  St.  745.  See  also,  Penn- 
sylvania Co.  V.  Chicago,  181  111.  289, 
34  N.  E.  825,  53  L.  R.  A.  223 ;  Mark- 
ham  V.  Brown,  8  N.  H.  523,  31  Am. 
Dec.   209. 

'  "We  cannot  believe  that  there  is 
a  sort  of  right  of  common  lodged  in 
the  public  at  large  to  enter  upon 
lands  on  which  railroads  are  located, 
and  over  which  they  have  secured  the 
right  of  way.  Such  lands  the  rail- 
road companies  may  inclose  by 
fences  if  they  choose  to  do  so,  and 
exclude  any  and  all  persons  whomso- 
ever. Their  dominion  over  the  same 
is  no  less  complete  or  exclusive  than 
that  which  every  owner  has  over 
his  property.  If  they  do  not  choose 
to  erect  fences  and  make  enclosures, 
they  may,  by  mere  orders,  keep  off 
intruders,  and  they  may  treat  as  in- 
truders all  who  come  to  transact 
their  own  business  with  passengers, 
or  with  persons  other  than  the  com- 
panies themselves.  To  do  this,  how- 
ever, they  must  give  fair  notice;  in- 
asmuch as  by  a  sort  of  common  law 
or  common  understanding  in  this 
country,  an  unforbidden  entry  on  un- 
inclosed  lands  is  not  a  trespass,  un- 
less the  intruder  comes  for  some  im- 
proper purpose,  or  to  remain  an  un- 
due or  unnecessary  length  of  time. 
It  is  manifest  that  the  grant  of  the 
privilege  to  one  or  more  is  no  right- 
ful cause  of  complaint  on  the  part 
of  others  to  whom  a  like  privilege  is 
denied.  The  right  to  make  such  dis- 
criminations is  incident  to  the  owner- 


207 


COMBINATIONS,    MONOPOLIES    AND    TRUSTS. 


894 


which  owns  a  private  pier  may  grant  the  right  to  dock  and  un- 
dock  all  vessels  at  the  pier  exclusively  to  tow-boats  owned  by  a 
designated  person  when  the  contract  is  for  the  benefit  both  of  the 
shippers  and  the  railroad.^  If  contracts  of  the  character  men- 
tioned in  the  foregoing  part  of  this  section  are  to  be  held  invalid, 
it  would  seem  more  rational  to  place  the  invalidity  on  the  ground 
that  they  are  ultra  vires  the  corporation  instead  of  on  the  theory 
that  they  tend  to  create  a  monopoly.  The  right  of  a  carrier  to 
exercise  a  good  faith  discretion  in  the  selection  of  the  instrumen- 
talities to  be  employed  in  serving  the  public  and  the  right  to  ex- 
clude from  its  premises  those  whom  it  pleases  when  they  come 
to  transact  their  own  private  business  with  passengers  or  third 
persons  is  not  to  be  confused  with  the  duty  of  the  carrier  topper- 
form  the  public  duty  imposed  upon  it  without  discrimination.  As 
among  members  of  the  general  public  seeking  accommodation  it 
must  extend  the  same  class  of  service  to  all  without  discrimina- 
tion and  on  equal  terms.^ 


ship  of  all  property  which  is  not  de- 
voted to  some  use  that  in  and  of 
itself  involves  an  invitation  to  the 
public  to  enter  and  enjoy  for  the 
time  being."  Fluker  v.  Georgia  Rail- 
road &  Banking  Co.,  81  Ga.  461,  2 
L.  R.  A.  843,  8  S.  K  529,  12  Am.  St. 
328,  329. 

"  Baker  Whiteley  Coal  Co.  v. 
Baltimore  &c.  R.  Co.,  176  Fed.  632. 

*  See  Hays  &  Co.  v.  Pennsylvania 
Co.,  12  Fed.  309;  Burlington  C.  R. 
&  N.  R.  Co.  v.  Northwestern  Fuel 
Co.,  31  Fed.  652;  Kinslev  v.  Buffalo, 
N.  Y.  &  P.  R.  R.  Co.,  'n  Fed.  181; 
West  Coast  Naval  Stores  Co.  v. 
Louisville  &  N.  R.  R.  Co.,  121  Fed. 
645.  57  C.  C.  A.  671;  Blair  v.  Sioux 
Citv  &  Pac.  R.  Co..  109  Iowa  369, 
80  N.  W.  673;  Louisville  &  N.  R.  Co. 
V.  Pittsburg  &  K.  Coal  Co.,  Ill  Ky. 
960.  23  Ky.  L.  1318,  64  S.  W.  969,  55 
L.  R.  A.  601.  98  Am.  St.  447;  State 
V.  Southern  R.  Co.,  125  N.  Car.  666, 
34  S.  E.  527  ;  Schofickl  v.  Lake  Shore 
&c.  R.  C0..43  Ohio  St.  571,3  N.  E.907, 
54  Am.  Rep.  846;  Baltimore  &  O.  R. 
Co.  V.  Diamond  Coal  Co.,  61  Ohio 
St.  242,  55  N.  E.  616;  Memphis 
News  Pub.  Co.  v.  Southern  R.  Co., 
110  Tenn.  684,  75  S.  W.  941,  63  L.  R. 
A.    150;    Hill    v.    St.    Louis    South- 


western R.  Co.  (Tex.  Civ.  App.),  75 
S.  W.  874;  Northwestern  Warehouse 
Co.  V.  Oregon  R.  &c.  Co.,  32  Wash. 
218,  IZ  Pac.  388.  See  also,  ante.  chap. 
XIX.  It  has  also  been  held  that 
a  contract  or  lease  whereby  a 
railroad  company  granted  to  a 
telegraph  company  the  exclusive  use 
of  railroad  right  of  way  for  the  erec- 
tion of  its  poles  and  the  mainten- 
ance of  its  wires  is  void  upon  ground 
of  public  policy  as  being  in  restraint 
of  trade  and  creating  a  monopoly. 
Western  Union  Telegraph  Co.  v. 
Burlington  &c.  R.  Co.,  11  Fed.  1; 
Baltimore  &  O.  Tel.  Co.  v.  Western 
Union  Tel.  Co.,  24  Fed.  319;  Western 
Union  Telegraph  Co.  v.  Baltimore 
&:c.  Telegraph  Co.,  23  Fed.  12; 
Georgia  R.  &  Banking  Co.  v.  At- 
lantic Postal  Tel.  Cable  Co.,  152  Fed. 
991 ;  Western  Union  Tel.  Co.  v. 
American  Union  Tel.  Co.,  65  Ga. 
160,  38  Am.  Rep.  781  ;  St.  Louis  &c. 
R.  Co.  v.  Postal  Teleg.  Co.,  173  111. 
508,  51  N.  E.  382;  Mobile  &  O.  R. 
Co.  V.  Postal  Telegraph  Cable  Co., 
1(>  Aliss.  731.  26  So.  370.  45  L.  R.  A. 
223.  In  the  absence  of  any  statute 
giving  the  telegraph  company  the 
power  to  condemn  a  right  of  way  it 
is   difficult  to  see,  on   principle,   why 


§  89: 


CONTRACTS. 


208 


§  895.  Discrimination — Exclusive  service  contract  v^ith 
patron. — One  of  the  reasons  advanced  for  requiring  the  car- 
rier to  ser\'e  the  general  public  without  discrimination  is  that  if 
it  were  pennitted  to  discriminate  it  could  thereby  build  up  a 
monopoly.'"  The  patron  of  a  public  service  corporation  is  not 
as  a  general  rule  bound  by  his  contract  to  give  exclusive  patron- 
age to  a  particular  company.' ' 

§  896.  What  are  illegal  trusts. — The  test  question  by 
which  to  determine  the  illegality  of  a  trust  is  whether  or  not  a 
combination  or  conspiracy  exists  which  is  injurious  or  which  nat- 
urally tends  to  injure  the  public.  Courts  will  not  stop  to  inquire 
as  to  the  degree  of  injury  inflicted.  It  is  enough  to  know  that 
the  natural  and  inevitable  tendency  of  such  contract  is  injuri- 
ous.'^ In  order  to  determine  whether  or  not  the  contract  will 
result  in  injury  to  the  public,  its  necessary  consequences  and 


the  railroad  company  might  not  grant 
to  a  telegraph  company  the  exclu- 
sive right  to  construct  a  telegraph 
line  along  its  right  of  way  on  any 
grounds  other  than  that  of  ultra 
vires. 

'"Louisville  E.  &  St.  L.  &c.  R.  Co. 
V.  Wilson,  132  Ind.  517,  32  N.  E. 
311,  18  L.  R.  A.  lOSn;  Messenger  v. 
Pennsylvania  R.  Co.,  Z1  N.  J.  L.  531, 
18  Am.  Rep.  754.  See  Scofifield  v. 
Lake  Shore  &c.  R.  Co.,  43  Ohio  St. 
571,  3  N.  E.  907,  54  Am.  Rep.  846. 
See  also,  ante,  chap.  XIX. 

"Central  New  York  &c.  Co.  v. 
Averill,  199  N.  Y.  128,  92  N.  E.  206, 
32  L.  R.  A,  (N.  S.)  494.  See  also, 
ante,  chap.  XIX.  As  to  the  right  of 
local  telephone  companies  operating 
in  different  fields  for  exclusive  phys- 
ical connections  for  long  distance 
business,  see  Home  Tel.  Co.  v.  Sar- 
coxie  Light  &c.  Co.,  236  Mo.  114, 
139  S.  W.  108,  36  L.  R.  A.  (N.  S.) 
124  and  note.  See  also,  Cumberland 
&c.  Tel.  Co.  V.  State  (Miss.),  54  So. 
670,  39  L.  R.  A.  (N.  S.)  277. 

"  Nester  v.  Continental  Brew.  Co., 
161  Pa.  St.  473,  29  Atl.  102,  24  L.  R. 
A.  247,  41  Am.  St.  894.  See  also, 
Tuscaloosa  Ice  Mfg.  Co.  v.  Williams, 
127  Ala.  110,  28  So.  669,  50  L.  R.  A. 
175,  85  Am.  St.  125;  People  v.  Sacra- 
mento Butchers'  Protective  Assn.,  12 
Cal.  App.  471,  107  Pac.  712;  Stewart 


V.  Stearns  &c.  Timber  Co.,  56  Fla. 
570,  48  So.  19,  24  L.  R.  A.  (N.  S.) 
649n ;  Chicago  &c.  Coal  Co.  v.  People, 
114  111.  App.  75,  affd.  214  111.  421, 
IZ  N.  E.  770;  Consumers'  Oil  Co.  v. 
Nunnemaker,  142  Ind.  560,  41  N.  E. 
1048,  51  Am.  St.  193;  State  v.  Cream- 
ery Package  ]\Ifg.  Co.,  110  Minn.  415, 
126  N.  W.  126,  136  Am.  St.  514;  Peo- 
ple v.  Duke,  19  Misc.  (N.  Y.)  292, 
11  N.  Y.  Cr.  472,  44  N.  Y.  S.  336; 
Morris  Run  Coal  Co.  v.  Barclay  Coal 
Co.,  68  Pa.  St.  173,  8  Am.  Rep.  159; 
State  V.  Eastern  Coal  Co.,  29  R.  I. 
254,  70  Atl.  1,  132  Am.  St.  798 ;  State 
V.  Erickson,  54  Wash.  472,  103  Pac. 
796;  Milwaukee  Masons  &c.  Assn.  v. 
Niezerowski,  95  Wis.  129,  70  N.  W. 
166,  Zl  L.  R.  A.  127,  60  Am.  St.  97. 
"In  determining  the  validity  at  com- 
mon law  of  such  combinations,  and 
contracts  which  are  essential  parts  of 
them,  the  true  test  is  whether  they 
afford  fair  and  just  protection  to  the 
parties,  or  whether  they  are  so  broad 
as  to  'interfere  with  the  interests  of 
the  pul)lic'."  Finck  v.  Schneider,  187 
^lo.  244,  86  S.  W.  213,  106  Am.  St. 
452.  A  newspaper  may  refuse  to 
employ  as  carriers  those  who  refuse 
to  protect  its  interests  by  refraining 
from  aiding  its  competitors.  Staroske 
V.  Pulitzer  Pub.  Co.,  235  Mo.  67,  138 
S.  W.  36. 


209 


COMBINATIONS,    MONOPOLIES   AND   TRUSTS. 


897 


tendency  to  control  prices,  limit  production,  or  suppress  compe- 
tition and  thus  restrain  trade  and  create  a  monopoly  in  the  dis- 
trict within  which  it  operates,  control.^^  In  case  injury  to  the 
public  exists  the  contract  is  void  as  against  public  policy.^* 

§  897.    Form  not  controlling. — The  form  which  the  trust 
assumes  is  not  controlling  in  detemiining  its  validity.^^     It  may 


"As  to  tests  of  illegality,  see  Tus- 
caloosa Ice.  Mfg.  Co.  V.  Williams, 
127  Ala.  110,  28  So.  669,  50  L.  R.  A. 
175,  85  Am.  St.  125;  Pacific  Factor 
Co.  V.  Adler,  90  Cal.  110,  27  Pac.  36, 
25  Am.  St.  102;  Western  Union  Tel. 
Co.  V.  American  Union  Tel.  Co.,  65  Ga. 
160,  38  Am.  Rep.  781n ;  More  v.  Ben- 
nett, 140  111.  69,  29  N.  E.  888,  15  L. 
R.  A.  361,  33  Am.  St.  216;  Bishop  v. 
American  Preservers'  Co.,  157  111. 
284,  41  N.  E.  765,  48  Am.  St.  317; 
Inter-Ocean  Pub.  Co.  v.  Associated 
Press,  184  111.  438,  56  N.  E.  822,  48 
L.  R.  A.  568,  75  Am.  St.  184;  People 
V.  Chicago  Gas  Trust  Co.,  130  111. 
268,  22  N.  E.  798.  8  L.  R.  A.  497,  17 
Am.  St.  319;  Chicago  Gas-Light  &c. 
Co.  V.  People's  Gas-Light  &c.  Co.,  121 
111.  530,  13  N.  E.  169,  2  Am.  St.  124; 
Harding  v.  American  Glucose  Co., 
182  111.  551,  53  N.  E.  577,  64  L.  R.  A. 
738,  74  Am.  St.  189;  Craft  v.  McCon- 
oughy,  79  111.  346.  22  Am.  Rep.  171; 
Distilling  &  Cattle  Feeding  Co.  v. 
People,  156  111.  448,  41  N.  E.  188,  47 
Am.  St.  200;  State  v.  Portland  Nat. 
Gas  &c.  Co.,  153  Ind.  483,  53  N.  E. 
1089,  53  L.  R.  A.  413,  74  Am.  St. 
314;  Chapin  v.  Brown,  83  Iowa  156, 
48  N.  W.  1074,  12  L.  R.  A.  428,  32 
Am.  St.  297 ;  Anderson  v.  Jett,  89  Ky. 
375,  11  Ky.  L.  570,  12  S.  W.  670,  6 
L.  R.  A.  390;  India  Bagging  Assn.  v. 
Kock.  14  La.  Ann.  168;  Richardson 
V.  Buhl,  77  Mich.  632,  43  N.  W.  1102, 
6  L.  R.  A.  457;  Stewart  v.  Erie  &c. 
Transp.  Co.,  17  Minn.  372;  Cum- 
mings  V.  Union  Blue  Stone  Co.,  164 
N.  Y.  401.  58  N.  E.  525,  52  L.  R.  A. 
262;  People  v.  Sheldon,  139  N.  Y. 
251,  34  N.  E.  785,  23  L.  R.  A.  221,  36 
Am.  St.  690;  .Arnot  v.  Pittston  &c. 
Coal  Co.,  68  N.  Y.  558,  23  Am.  Rep. 
190;  Stanton  v.  Allen,  5  Denio  (N. 
Y.)  434.  49  Am.  Dec.  282;  People  v. 
Milk  Exch.,  145  N.  Y.  267,  39  N.  E. 


1062,  27  L.  R.  A.  437,  45  Am.  St. 
609;  Strait  v.  National  Harrow  Co., 
18  N.  Y.  S.  224;  Central  Ohio  Salt 
Co.  V.  Guthrie,  35  Ohio  St.  666; 
Fisher  v.  Flickinger  Wheel  Co.,  28 
Ohio  C.  C.  501 ;  Anderson  v.  Shaw- 
nee Compress  Co.,  17  Okla.  231,  87 
Pac.  315,  15  L.  R.  A.  (N.  S.)  846n ; 
Nester  v.  Continental  Brewing  Co., 
161  Pa.  St.  473,  29  Atl.  102,  24  L.  R. 
A.  247,  41  Am.  St.  894;  Morris  Run 
Coal  Co.  V.  Barclay  Coal  Co.,  68  Pa. 
St.  173,  8  Am.  Rep.  159;  Bailey  v. 
Master  Plumbers'  Assn.,  103  Tenn. 
99.  52  S.  W.  853,  46  L.  R.  A.  561; 
Texas  Standard  Oil  Co.  v.  Adoue, 
83  Tex.  650,  19  S.  W.  274,  15  L.  R. 
A.  598,  29  Am.  St.  690.  It  is  the 
consensus  of  the  authorities  that  a 
monopoly,  within  the  meaning  of  the 
anti-trust  laws,  is  created  when,  as  a 
result  of  any  contract  or  combination, 
previously  competing  businesses  are 
so  concentrated  into  the  hands  of  a 
single  individual  or  corporation,  or 
of  a  few  individuals  or  incorpora- 
tions acting  in  concert|  that  they 
thereby  have  the  power  to  practically 
control  the  prices  of  commodities, 
and  thus  practically  suppress  compe- 
tition. State  v.  Standard  Oil  Co.,  218 
Mo.  1,  116  S.  W.  902,  1045. 

"  See  cases  cited  ante  in  the  pre- 
ceding note. 

"  People  V.  Sacramento  Butchers' 
&c.  Assn.,  12  Cal.  App.  471,  107  Pac. 
712;  Harding  v.  American  Glucose 
Co.,  182  111.  551.  55  N.  E.  577,  64  L. 
R.  A.  738.  74  Am.  St.  189;  Yazoo  &c. 
R.  Co.  v.  Searles,  85  Miss.  520,  37 
So.  939,  68  L.  R.  A.  715.  A  mere 
social  organization  among  under- 
takers does  not  came  within  the 
statute  against  monopolies.  Wag- 
oner Undertaking  Co.  V.  Jones 
(Mo.),  114  S.  W.  1049. 


14 — Contracts,  Vol.  2 


898 


CONTRACTS. 


210 


be  in  the  form  of  a  copartnership,"  or  a  holding  company*^  or 
an  agreement  among  corporations  to  pool  their  earnings/*  Or  it 
may  be  formed  by  the  stockholders  in  a  corporation/^  or  by  the 
execution  of  a  lease  to  a  rival  concern/"  Nor  does  the  trust  or 
combination  lose  its  illegal  character  by  reason  of  a  mere  altera- 
tion of  the  organization,  as  by  a  transfer  of  the  properties  of  the 
combined  companies  to  a  new  company  organized  for  that  pur- 
pose."^ The  intent  of  the  parties  becomes  important  only  when 
the  acts  are  not  sufficient  in  themselves  to  produce  a  monopoly 
but  require  further  acts  in  addition  to  the  mere  forces  of  nature 
in  order  to  bring  that  result  to  pass ;  an  intent  to  bring  it  to  pass 
is  then  necessary  in  order  to  produce  a  dangerous  probability  that 
it  will  happen.-^ 

§  898.  Rights  and  disabilities  of  members  of  trusts  as  be- 
tween themselves. — In  accordance  with  the  principles  that 
courts  will  not  lend  their  aid  to  enforce  the  performance  of  a 
contract  which  is  contrary  to  public  policy  but  will  leave  the  par- 
ties in  the  plight  in  which  their  own  illegal  conduct  has  placed 
them,'^  no  proceeding  can  as  a  general  rule  be  maintained  as 


"  Bishop  V.  American  Preservers* 
Co.,  157  111.  284.  41  N.  E.  765,  48  Am. 
St.  317;  Harding  v.  American  Glu- 
cose Co.,  182  111.  551,  55  N.  E.  577, 
64  L.  R.  A.  738,  74  Am.  St.  189 ;  Peo- 
ple V.  North  River  Sugar  Refining 
Co.,  121  N.  Y.  582,  24  N.  E.  834,  9 
L.  R.  A.  33,  18  Am.  St.  843,  32  Am. 
&  Eng.  Corp.  Cas.  149;  State  v. 
Standard  Oil  Co.,  49  Ohio  St.  137, 
30  N.  E.  279,  15  L.  R.  A.  145,  34  Am. 
St.  541,  36  Am.  &  Eng.  Corp.  Cas.  1 ; 
-\Iallory  v.  Hananer  Oil  Works,  86 
Tenn.  598,  8  S.  W.  396,  20  Am.  & 
Eng.  Corp.  Cas.  478. 

"  People  V.  Chicago  Gas.  Trust  Co., 
130  111.  268,  22  N.  E.  798,  8  L.  R.  A. 
497n,  17  Am.  St.  319;  State  v.  Cream- 
erv  Package  Mfg.  Co.,  110  Minn. 
415,  126  N.  W.  126,  136  Am.  St.  514; 
Woodbury  v.  McClurg,  78  Miss.  831, 
29  So.  514;  Southern  Electric  Secur- 
ities Co.  V.  State,  91  Miss.  195,  44 
So.  785,  124  Am.  St.  638;  State  v. 
Standard  Oil  Co.,  218  Mo.  1,  116  S. 
W.  902;  Northern  Securities  Co.  v. 
United  States,  193  U.  S.  197,  48  L. 
ed.  679,  24  Sup.  Ct.  436. 


"White  Star  Line  v.  Star  Line  of 
Steamers,  141  Mich.  604,  105  N.  W. 
135,  113  Am.  St.  551. 

"  Ford  V.  Chicago  Milk  Shippers' 
Assn.,  155  111.  166,  39  N.  E.  651,  27 
L.  R.  A.  298.  See  also.  National 
Lead  Co.  v.  S.  E.  Grote  Paint  Store 
Co.,  80  Mo.  App.  247. 

™  American  Strawboard  Co.  v. 
Peoria  Strawboard  Co.,  65  111.  App. 
502 ;  Anderson  v.  Shawnee  Compress 
Co.,  17  Okla.  231,  87  Pac.  315,  15  L. 
R.  A.  (N.  S.)  846n.  See  also,  Fisher 
v.  Flickinger  Wheel  Co.,  28  Ohio  C. 
C.  501. 

^  Harding  v.  American  Glucose 
Co.,  182  111.  551,  55  N.  E.  577,  64 
L.  R.  A.  738,  74  Am.  St.  189;  Distil- 
ling &  Cattle  Feeding  Co.  v.  People, 
156  III.  448,  41  N.  E.  188,  47  Am.  St. 
200. 

^  Bigelow  v.  Calument  &c.  Min. 
Co.,  167  Fed.  721,  94  C.  C.  A.  13; 
Swift  &  Co.  V.  United  States,  196 
U.  S.  375,  49  L.  ed.  518,  25  Sup.  Ct. 
276. 

^  See  Chicago  &c.  R.  Co.  v.  Wabash 
&c.  R.  Co.,  61  Fed.  993,  9  C.  C.  A. 


211 


COMBIXATIOXS,    MOXOPOLIES    AND    TRUSTS. 


§    898 


between  the  parties  to  such  illegal  combination  to  enforce  any 
provision  of  the  agreement,-*  such  as  an  action  to  enjoin  a  breach 
of  the  agreement,"  or  to  compel  admission  to  membership  in  the 
trust,*"  or  to  collect  the  penalty  which  the  contract  provides  shall 
be  due  and  payable  upon  the  breach  of  the  agreement,"  or  to  re- 
cover damages  for  its  breach,-'*  or  a  proceeding  in  equity  by  which 
a  judgment  creditor  seeks  to  enforce  the  collection  of  a  judg- 
ment recovered  upon  an  illegal  contract, -°  or  an  action  to  obtain 
one's  share  of  the  profits  or  earnings  claimed  to  be  due  under  an 
illegal  combination,^"  or  enforce  contribution  toward  the  pay- 


659,  27  U.  S.  App.  1 ;  Phoenix  Bridge 
Co.  V.  Keystone  Bridge  Co.,  142  N. 
Y.  425,  Zl  N.  E.  562. 

"  Urmston  v.  Whitelegg,  63  L.  T. 
R.  (N.  S.)  455;  Bement  v.  National 
Harrow  Co.,  186  U.  S.  70,  46  L.  ed. 
1058,  22  Sup.  Ct.  747  (agreement  in 
violation  of  federal  anti-trust  act)  ; 
Burlington  C.  R.  &  N.  R.  Co.  v. 
Northwestern  Fuel  Co.,  31  Fed.  652; 
National  Harrow  Co.  v.  Hench,  76 
Fed.  667;  Cravens  v.  Carter-Crume 
Co.,  92  Fed.  479,  34  C  C.  A.  479; 
Indiana  Mfg.  Co.  v.  J.  I.  Case 
Threshing  Mach.  Co.,  148  Fed.  21; 
McConnell  v.  Camors-McConnell  Co., 
152  Fed.  321.  81  C.  C.  A.  429;  Stew- 
art V.  Stearns  &  Culver  Lumber  Co., 
56  Fla.  570.  48  So.  19,  24  L.  R.  A. 
(N.  S.)  649n;  :\Iore  v.  Bennett,  140 
111.  69,  29  N.  E.  888,  15  L.  R.  A.  361, 
'h'i  Am.  St.  216;  Keene  Syndicate  v. 
Wichita  Gas,  Electric  Light  &  Power 
Co.,  69  Kans.  284,  76  Pac.  834,  67 
L.  R.  A.  61,  105  Am.  St.  164;  Chippe- 
wa Lumber  Co.  v.  Tremper,  75  ^lich. 
36,  42  N.  W.  532,  4  L.  R.  A.  ZIZ,  13 
Am.  St.  420;  Judd  v.  Harington,  139 
N.  Y.  105,  34  N.  E.  790;  Cohen  v. 
Berlin  &  Jones  Envelope  Co.,  166  N. 
Y.  292.  59  N.  E.  906;  Hartford  & 
New  Haven  R.  Co.  v.  N.  Y.  &  New 
Haven  R.  Co.,  26  N.  Y.  Super.  Ct. 
411;  National  Harrow  Co.  v.  E. 
Bement  &  Sons,  21  App.  Div.  (N. 
Y.)  290.  47  N.  Y.  S.  462;  Coverly  v. 
Terminal  Warehouse  Co.,  85  App. 
Div.  (N.  Y.)  488,  83  N.  Y.  S.  369,  affd. 
in  178  N.  Y.  602.  70  N.  E.  1097; 
Culp  V.  Love,  127  N.  Car.  457,  Zl 
S.  E.  476:  Central  Ohio  Salt  Co.  v. 
Guthrie,  35  Ohio  St.  666;  Columbia 
Carriage  Co.  v.  Hatch,  19  Tex.  Civ. 


App.  120,  47  S.  W.  288;  Hartford 
Fire  Ins.  Co.  v.  City  of  Houston 
(Tex.  Civ.  App.),  110  S.  W. 
973;  Slaughter  v.  Thacker  Coal  & 
Coke  Co.,  55  W.  Va.  642,  47  S.  E. 
247.  65  L.  R.  A.  342,  104  Am.  St. 
1013;  Charleston  Gas  (To.  v.  Kanawha 
Gas  Co.,  58  W.  Va.  22,  50  S.  E.  876, 
112  Am.  St.  936;  Pocahontas  Coke 
Co.  V,  Powhatan  Coal  &  Coke  Co., 
60  W.  Va.  508,  56  S.  E.  264,  10  L.  R. 
A.  (N.  S.)  268,  116  Am.  St.  901.  See 
also,  Perry  v.  United  States  School 
Furniture  Co.,  232  111.  101,  83  N.  E. 
444. 

**  Pocahontas  Coke  Co.  v.  Powha- 
tan Coal  &  Coke  Co.,  60  W.  Va.  508, 
56  S.  E.  264,  10  L.  R.  A.  (N.  S.) 
268,  116  Am.  St.  901. 

^  Froelich  v.  Musicians'  Mut.  Ben. 
Assn.,  93  Mo.  App.  383;  O'Brien  v. 
Musical  Mut.  &c.  Union,  64  N.  J.  Eq. 
525,  54  Atl.  150. 

"  Finck  V.  Schneider  Granite  Co., 
187  Mo.  244,  86  S.  W.  213,  106  Am. 
St.  452. 

^Arctic  Ice  Co.  v.  Franklin  &c.  Ice 
Co.,  145  Ky.  32,  139  S.  W.  1080 ;  Star 
Mill  &  Elevator  Co.  v.  Ft.  Worth  &c. 
Elevator  Co.  (Tex.  Civ.  App.),  146 
S.  W.  604. 

^  Perry  v.  United  States  School 
Furniture  Co.,  232  111.  101,  83  N.  E. 
444.  See  also,  American  Handle  Co. 
V.  Standard  Handle  Co.  (Tenn.),  59 
S.  W.  709;  Chicago  M.  &  St.  P.  R. 
Co.  v.  Wabash  &c.  R.  Co.,  61  Fed. 
993.  9  C.  C.  A.  659. 

'"Chicago  M.  &  St.  P.  R.  Co.  v. 
Wabash  &c.  R.  Co.,  61  Fed.  993,  9  C. 
C.  .A..  650;  Arnold  v.  Jones  Cotton  Co. 
(Ala.),  44  So.  662,  12  L.  R.  A.  (N. 
S.)   150;  Vulcan  Powder  Co.  v.  Her- 


§  899 


CONTRACTS. 


212 


ment  of  a  claim  which  accrued  while  the  parties  were  members 
of  an  unlawful  combination,^^  or  to  collect  instalments  of  rents 
upon  a  steamer  leased  in  order  to  stifle  competition,^^  or  to  com- 
pel payment  of  a  subscription  for  stock  in  a  corporation  formed 
to  take  over  the  interests  of  several  corporations  and  thus  form 
a  monopoly, ^^  or  to  enforce  any  of  its  provisions  when  so  to  do 
would  be  to  give  effect  to  the  illegal  combination.^"^ 

§  899.  Rule  further  illustrated. — Where  a  number  of  per- 
sons or  firms  have  conspired  together,  in  violation  of  a  statute  or 
penal  code,  to  do  acts  injurious  to  trade,  for  instance,  to  unlaw- 
fully advance  the  price  of  an  article  of  food,  the  courts  will  not 
intervene  in  favor  of  any  one  of  the  parties  to  give  him  redress 
for  frauds  perpetrated  by  another  to  his  detriment  in  carrying 
out  the  unlawful  enterprise.  It  does  not  affect  the  question  that 
the  party  complained  of  as  guilty  of  the  fraud  was  acting  as 
agent  for  the  others.  All  those  who  knowingly  promote  and  par- 
ticipate in  carrying  out  a  criminal  scheme  are  principals,  and  the 


cules  Powder  Co.,  96  Cal.  510,  31  Pac- 
581,  31  Am.  St.  242 ;  Meyers  v.  Meril- 
lion.  118  Cal.  352,  50  Pac.  662;  Craft 
^IcConoughy,  79  111.  346,  22  Am.  Rep. 
171 ;  Texas  &  Pacific  R.  Co.  v.  South- 
ern Pacific  R.  Co.,  41  La.  Ann.  970, 
6  So.  888,  17  Am.  St.  445 ;  Hooker  v. 
Vandewater,  4  Denio  (N.  Y.)  349,  47 
Am.  Dec.  258;  Stanton  v.  Allen,  5 
Denio  (N.  Y.)  434,  49  Am.  Dec.  282; 
Gray  v.  Oxnard,  59  Hun  (N.  Y.) 
387,  36  N.  Y.  St.  237,  13  N.  Y.  S.  86; 
Emery  v.  Ohio  Candle  Co.,  47  Ohio 
St.  320,  24  N.  E.  660,  21  Am.  St.  819; 
Morris  Run  Coal  Co.  v.  Barclay  Coal 
Co.,  68  Pa.  St.  173,  8  Am.  Rep.  159; 
Nester  v.  Continental  Brewing  Co., 
161  Pa.  St.  473,  29  Atl.  102,  24  L.  R. 
A.  247,  41  Am.  St.  894 ;  Texas  Stand- 
ard Oil  Co.  V.  Adoue,  83  Tex.  650,  19 
S.  W.  274,  15  L.  R.  A.  598,  29  Am. 
St.  690;  Wiggins  v.  Bisso,  92  Tex. 
219,  47  S.  W.  (ill,  71  Am.  St.  837; 
See  also,  elaborate  discussion  in  Mc- 
Mullen  V.  Hoffman,  174  U.  S.  639, 
43  L.  ed.  1117,  19  Sup.  Ct.  839.  See, 
however.  Central  Trust  Co.  v.  Ohio 
Central  R.  Co.,  23  Fed.  306,  in  which 
recovery  was  permitted  of  the 
amount  due  under  a  railroad  pooling 


contract.  For  a  criticism  of  the 
above  case  see  Chicago  &c.  R.  Co.  v. 
Wabash  &c.  R.  Co.,  61  Fed.  993,  9 
C.  C.  A.  659. 

^^  White  Star  Line  v.  Star  Line  of 
Steamers,  141  Mich.  604,  105  N.  W. 
135,  113  Am.  St.  551. 

^'  Darius  Cole  Transp.  Co.  v.  White 
Star  Line,  186  Fed.  63,  108  C.  C.  A. 
165. 

^'Euston  V.   Edgar,  207    Mo.    287, 

105  s.  w.  m. 

^*  See,  generally,  Greer  v.  Stoller,  11 
Fed.  1 ;  American  Biscuit  &c.  Co.  v. 
Klotz,  44  Fed.  721 ;  Greer  v.  Payne, 
4  Kans.  App.  153,  46  Pac.  190;  Uncles 
V.  Colgate,  148  N.  Y.  529,  43  N.  E. 
59;  Bailey  v.  Master  Plumbers,  103 
Tenn.  99.  52  S.  W.  853,  46  L.  R.  A. 
561 ;  Milwaukee  &c.  Builders'  Assn.  v. 
Niezerowski,  95  Wis.  129,  70  N.  W. 
166,  Zl  L.  R.  A.  127,  60  Am.  St.  97.  See 
also,  American  Handle  Co.  v.  Stand- 
ard Handle  Co.  (Tenn.),  59  S.  W. 
709.  See,  however,  National  Wall 
Paper  Co.  v.  Hobbs,  90  Hun  (N.  Y.) 
288,  70  N.  Y.  St.  599,  35  N.  Y.  S. 
932;  Noble  v.  McGurk,  16  Misc.  (N. 
Y.)  461,  39  N.  Y.  S.  921. 


213 


COMBINATIONS,    MONOPOLIES    AND    TRUSTS. 


§    900 


fact  that  one  acts,  in  some  respects,  in  subordination  to  the  others, 
does  not  render  him  any  the  less  a  principal.^^ 

§  900.  Rights  and  disabilities  of  members  of  trusts  as 
against  third  persons. — But  where  one  enters  into  and  is  the 
innocent  victim  of  an  unlawful  conspiracy  in  restraint  of  trade 
he  may  have  the  contract  set  aside  and  be  restored  to  his  rights.^'* 
The  rule  as  to  the  illegality  of  the  acts  of  the  trust  or  its  members 
applies  only  to  those  acts  done  in  connection  with  and  in  further- 
ance of  the  trust.^**  Since  even  the  parties  to  an  illegal  combina- 
tion may,  as  between  themselves,  enforce  an  agreement  unrelated 
to  the  illegal  restriction,"  a  fortiori  is  this  true  as  between  a  third 
person  and  a  party  to  the  illegal  combine.'^ 

§  901.  The  rule  illustrated. — Thus  it  is  as  a  general  rule 
no  defense  to  an  action  for  goods  sold  and  delivered  that  plaintiff 
is  a  member  of  an  illegal  trust  or  combination  to  interfere  with 
the  freedom  of  trade  commerce  since  the  illegality  of  the  com- 
bination is  collateral  to  the  contract  of  sale  and  cannot  taint  it 


'=  Leonard  v.  Poole,  114  N.  Y.  371, 
21  N.  E.  707.  4  L.  R.  A.  728,  11  Am. 
St.  667.  And  see  Cobb  v.  Prell,  15 
Fed.  774;  Bartlett  v.  Smith,  13  Fed. 
263,  4  McCrary  (U.  S.)  388.  See 
also,  Levin  v.  Chicago  Gaslight  & 
Coke  Co.,  64  111.  App.  393,  holding 
that  a  stockholder  who  has  partici- 
pated in  and  accepted  the  proceeds  of 
an  illegal  combination  cannot  sub- 
sequently invoke  the  aid  of  a  court 
of  equity  to  set  aside  the  contract 
on  its  proving  unprofitable.  See  also, 
post,  §  903  et  seq. 

^^aDisbrow  v.  Creamery  Package 
Mfg.  Co.,  110  Minn.  237,  125  N.  W. 
115! 

'^  See  Wiley  v.  National  Wall  Pa- 
per Co.,  70  111.  543;  Barton  v.  Mul- 
vane,  59  Kans.  913,  52  Pac.  883;  In- 
ternational Harvester  Co.  v.  Eaton 
Circuit  Judge,  163  ^lich.  55,  127  N. 
W.  695,  30  L.  R.  A.  (N.  S.)  580n, 
Ann.  Cas.  1912A.  1022  and  note 
(suit  to  recover  money  in  hands 
of  agents) ;  Springfield  &c.  Ins. 
Co.  V.  Cannon  (Tex.  Civ.  App.) 
46  S.  W.  375;  Anheuser-Busch 
Brew.  Assn.  v.  Houck,  aflfd.,  88  Tex. 
184,.  27     S.     W.    692,    30    S.     W. 


689.  See  also,  Arnot  v.  Pitts- 
ton  &c.  Coal  Co.,  68  N.  Y.  558,  23 
Am.  Rep.  190.  See  also,  Steele  v. 
United  Fruit  Co.,  190  Fed.  631. 

"  Hadley  Dean  Plate  Glass  Co.  v. 
Highland  Glass  Co.,  143  Fed.  242,  74 
C.  C.  A.  462;  IMetcalf  v.  American 
School  Furniture  Co.,  122  Fed.  115; 
Buckhorn  Plaster  Co.  v.  Consolidated 
Plaster  Co.,  47  Colo.  516,  108  Pac. 
27  (mill  lease).  See  also,  Cincinnati 
&c.  Packet  Co.  v.  Bav,  200  U.  S.  179, 
50  L.  ed.  428,  26  Sup.  Ct.  208. 

^^  Western  L^nion  Tel.  Co.  v.  Bur- 
lington &  S.  W.  R.  Co.,  11  Fed.  1; 
Harrison  v.  Glucose  Sugar  Refining 
Co.,  116  Fed.  304,  53  C.  C.  A.  484,  58 
L.  R.  A.  915;  Matthews  Glass  Co.  v. 
Eurk,  162  Ind.  608,  70  N.  E.  371; 
State  V.  New  Orleans  Warehouse 
Co.,  109  La.  64,  33  So.  81 ;  Hartford 
&  New  Haven  R.  Co.  v.  N.  Y.  & 
New  Haven  R.  Co.,  26  N.  Y.  Super. 
Ct.  411;  United  States  &c.  Vinegar 
Co.  V.  Schlegel,  143  N.  Y.  537,  38 
N.  E.  729  (suit  on  subscription  to 
capital  stock)  ;  L^nited  States  Vinegar 
Co.  V.  Foehrcnbach,  148  N.  Y.  58,  42 
N.  E.  403:  Hoffman  v.  Brooks,  6 
Ohio  Dec.  1215. 


§    902  CONTRACTS.  214 

with  illegality  or  make  it  contrary  to  public  policy,^®  although 
this  defense  may  be  made  available  by  statute/**  It  is  no  defense 
to  a  suit  for  the  infringement  of  a  patent  that  the  complainant 
and  third  parties  have  entered  into  an  unlawful  combination.*^ 
Nor  can  a  railroad  refuse  to  furnish  cars  to  a  shipper  because  he 
is  a  member. of  an  illegal  combination.*^  Membership  in  such 
combine  does  not  defeat  the  right  of  one  to  recover  for  services 
rendered." 

§  902.  Rule  further  illustrated — Destruction  of  property 
and  the  like. — The  property  of  an  unlawful  monopoly,  trust 
or  combine  or  of  a  member  thereof  cannot  be  either  intentionally 
or  negligently  destroyed  by  another  and  the  owner  denied  a  rem- 
edy or  right  of  redress  on  account  of  membership  in  the  com- 
bine.** The  fact  that  an  insurance  company  is  a  member  of  a 
combination  does  not  defeat  its  right  of  subrogation  to  the  claim 
against  one  wrongfully  destroying  the  insured  property.*^  Nor 
does  the  fact  that  the  insured  is  a  member  of  a  trust  defeat  his 
right  to  recover  on  the  policy.*"  A  railroad  company  has  been 
granted  an  injunction  against  the  purchasers  of  tickets  from  re- 

'» Chicago  Wall  Paper  Mills  V.  Gen-  Fed.  115,  102  C.  C  A.  413;  Johns- 
eral  Paper  Co.,  147  Fed.  491, -78  C.  Ullman,  186  Fed.  174;  Virtue  v. 
C.  A.  607;  Bessire  &  Co.  v.  Corn  Creamery  Package  Mfg.  Co.,  179 
Products  Mfg.  Co.,  47  Ind.  App.  298,  Pratt  Co.  v.  Sachs  Co.,  175  Fed.  70, 
94  N.  E.  353 ;  Moroney  Hardware  99  C.  C.  A.  92 ;  Motion  Picture  Pat- 
Co.  V.  Goodwin  Pottery  Co.  (Tex.  ents  Co.  v.  Laemmle,  178  Fed.  104; 
Civ.  App.),  120  S.  W.  1088;  Connolly  United  States  Fire  Escape  &c.  Co.  v. 
V.  Union  Sewer  Pipe  Co.,  184  U.  S.  Joseph  Halsted  Co.,  195  Fed.  295. 
540,  46  L.  ed.  679,  22  Sup.  Ct.  "Midland  Valley  R.  Co.  v.  Hoff- 
431;  National  Distilling  Co.  v.  man  Coal  Co.,  91  Ark.  180,  120  S. 
Cream   City   Importing   Co.,  86  Wis.  W.  380. 

352,  56  N.  W.  864,  39  Am.  St.  902.  "  See  Charles  E.  Wisewall,  74  Fed. 
But  it  is  otherwise  where  the  sale  802,  affd.  86  Fed.  671,  30  C.  C.  A. 
and  delivery  were  made  to  effectuate  339,  42  L.  R.  A.  5.  In  the  above  case 
a  combine.  Continental  Wall  Paper  it  is  held  that  recovery  may  be  had 
Co.  V.  Louis  Voight  &  Sons,  212  U.  for  services  rendered  by  tugs  the 
S.  227,  53  L.  ed.  486,  29  Sup.  Ct.  280.  owners  of  which  belonged  to  a  corn- 
See  ante,  §  680.  bine. 

*'See   Ferd   Heim   Brewing  Co.  v.  "Louisville   &c.    R.    Co.   v.   Burley 

Belinder,  97   Mo.  App.  64,  71    S.  W.  Tobacco  Co.,   147  Ky.  22,   143  S.  W. 

691 ;    Wagner    v.    Minnie    Harvester  1040.     See  also,  ante,  chap.  XXI. 

Co.,  25  Okla.  558,  106  Pac.  969.     See  "^  Freed  v.  American  Fire  Ins.  Co., 

also,    Frank    A.    Menne    Factory    v.  90  Miss.  72,  43  So.  947,  11  L.  R.  A. 

Harback,    85    Ark.    278,    107    S.    W.  (N.  S.)  368,  122  Am.  St.  307. 

991 ;  Columbia  Carriage  Co.  v.  Hatch,  '"  Sprmgfield    Fire   &c.    Ins.    Co.   v. 

19  Tex.  Civ.  App.  120,  47  S.  W.  288.  Cannon   (Tex.  Civ.  App.),  46  S.  W. 

See  ante,  chap.  XXI.  375. 

*^  Motion    Picture    Patents    Co.    v.  . 


215  COMCIXATIONS,    MONOPOLIES    AXD    TRUSTS.  §    903 

selling  them  to  others,  in  contravention  of  the  terms  under  which 
they  were  sold,  notwithstanding  such  railroad  company  may  have 
been  a  party  to  an  illegal  combination.*^  Recovery  may  be  had 
on  a  note  and  mortgage  given  to  a  commission  company  which 
was  a  member  of  an  unlawful  combination  when  such  note  and 
mortgage  did  not  further,  and  were  not  given  to  further,  the  pur- 
poses of  an  illegal  combination.**  Nor  can  a  defendant  retain 
possession  of  property  under  a  lease  and  avoid  liability  for  rent 
upon  the  ground  that  the  defendant  company  was,  to  the  lessor's 
knowledge,  incorporated  for  the  purpose  of  creating  a  monopoly 
in  the  manufacture  and  sale  of  a  commodity.*"  On  the  other 
hand,  each  member  of  an  unlawful  combination  may  be  held 
liable  not  only  for  his  own  acts  but  for  those  of  his  coconspira- 
tors.'" 

§  903.  Rights  of  third  persons. — The  term  "third  persons," 
as  here  used,  excludes  all  persons  who  have  contracted  directly 
with  the  trust  or  monopoly  and  seek  to  defend  or  maintain  an  ac- 
tion on  such  contract.  It  is  held  by  the  weight  of  authority  that 
at  common  law  a  contract  which  created  or  tended  to  create  a 
monopoly  gave  no  right  of  action  to  third  persons  for  an  injury 
sustained  merely  by  reason  of  the  existence  of  such  combination 
either  by  way  of  injunction^^  or  for  damages.'" 

The  cases  which  so  hold  are  decided  on  the  theory  that  it  would 
be  unreasonable  to  multiply  suits  by  giving  every  one  who  was 
or  might  be  injured  by  the  existence  of  such  monopoly  a  separate 
right  of  action.'^    The  common  law  considered  the  disadvantages 

"Kinner  v.  Lake  Shore  &c.  R.  Co.,  148;    Downes    v.    Bennett,   63    Kans. 

€9  Ohio  St.  339,  69  N.  E.  614.  653,  66  Pac.  623.  55  L.  R.  A.  560.  88 

**  Boatmen's    Bank  v.    Fritzlen,    175  Am.    St.   256;    Russell   v.    New   York 

Fed.    183.      Compare    with    State    v.  Produce  Exchange,  27  Misc.  (N.  Y.) 

Wilson,  11  Kans.  334,  80  Pac.  639,  84  381,  58  N.  Y.  S.  842. 
Pac.  in,   117  Am.  St.  479,  and  note.        "Brewster  v.  C  Miller's  Sons  Co., 

"Brooklyn  Distilling  Co.  v.  Stand-  101  Kv.  368,  19  Kv.  L.  593,  41  S.  W. 

ard  Distilling  &c.  Co..  120  App.  Div.  301,  38  L.  R.  .\.  505;  Bohn  Mfg.  Co. 

(N.  Y.)  237,  105  X.  Y.  S.  264.  v.   Northwestern  Lumbermen's  Assn., 

"State  V.   Kansas  City  Live  Stock  54  Minn.  223,  55  N.  W.  119.  21  L.  R. 

Exch.,  211   Mo.   181.   109   S.  W.  675,  A.  ZZl,  40  Am.  St.  319;  Macaulev  v. 

124  Am.   St.  776.     See  also.  Puring-  Tiernev.   19  R.   L  255,  Zi  Atl.   1,'  11 

ton    V.    Hinchliff,    120   111.    App.   523,  L.  R.  A.  455,  61  Am.  St.  770;  West 

219  111.  159,  76  N.  E  47.  Virginia  Transp.  Co.  v.  Standard  Oil 

"^  National      Fireproofing      Co.      v.  Co.,  50  W.  Va.  611.  40  S.  E.  591,  56 

Mason  Builders'  Assn.,  169  Fed.  259,  L.  R.  A.  804,  88  Am.  St.  895. 
94  C.  C.  A.  535,  26  L.  R.  A.  (N.  S.)        "See  4  BI.  Com.  167. 


§  904 


CONTRACTS. 


2l6 


imposed  by  reason  of  the  imenforcibility  of  the  contract  a  suf- 
ficient protection  to  the  pnbHc.^*  There  are  cases,  however, 
which  hold  that  at  common  law  a  third  person  who  sustains  an 
injury  in  his  business  by  reason  of  the  existence  of  such  mon- 
opoly is  entitled  to  relief  by  injunctions^  or  to  maintain  an  action 
to  recover  damages.^^  There  seems  to  be  a  growing  tendency  on 
the  part  of  the  courts  to  adopt  this  latter  view.^' 

§  904.  Rights  of  third  persons  under  statutes. — The  right 
of  a  third  party  to  maintain  an  action  under  the  various  statutes 
depends  upon  their  wording.  Thus  under  the  federal  antitrust 
act  a  third  party  cannot  maintain  an  action  for  injunctive  relief^* 
although  it  expressly  provides  that  a  third  party  injured  in  his 
business  by  an  unlawful  trust  or  monopoly  may  maintain  an  ac- 
tion for  treble  damages.^*  Many  of  the  antitrust  statutes  of  the 
various  states  permit  either  an  action  to  restrain  the  carrying  out 
of  the  contract®*  or  for  damages.®^     An  action  may  also  be 


"See  Bohn  Mfg.  Co.  v.  Hollis,  54 
Minn.  223,  55  N.  W.  1119,  21  L.  R. 
A.  2,2>7,  40  Am.  St.  319. 

"Leonard  v.  Abner-Drury  Brew. 
Co.,  25  App.  D.  C.  161;  Blindell  v. 
Hagen,  54  Fed.  40,  affd.,  56  Fed.  696, 
6  C.  C.  A.  86;  Gulf  &c.  R.  Co.  v. 
I^Iiami  &c.  Co.,  86  Fed.  407,  30  C.  C. 
A.  142,  52  U.  S.  App.  732.  See  also, 
Denver  Jobbers'  Assn.  v.  People 
(Colo.),  122  Pac.  404. 

^  Hawarden  v.  Youghiogheny  &c. 
Coal  Co.,  Ill  Wis.  545,  87  N.  W. 
472,  55  L.  R.  A.  828. 

"  See  Leonard  v.  Abner-Drury 
Brew.  Co.,  25  App.  D.  C.  161 ;  Kling- 
el's  Pharmacy  v.  Sharpe,  104  Md. 
218,  64  Atl.  1029,  7  L.  R.  A.  (N.  S.) 
976n,  118  Am.  St.  399,  9  Am.  &  Eng. 
Ann.  Cas.  1184;  Kellogg  v.  Sowerby, 
190  N.  Y.  370,  83  N.  E.  47. 

**  National  Fireproofing  Co.  v. 
Mason  Builders'  Assn.,  169  Fed.  259, 
94  C.  C.  A.  535,  26  L.  R.  A.  (N.  S.) 
148;  Blindell  v.  Hagan,  54  Fed.  40, 
afifd.,  56  Fed.  696,  6  C.  C.  A.  86;  Pid- 
cock  V.  Harrington,  64  Fed.  821 ; 
Greer  Mills  &c.  Co.  v.  Stoller,  77 
Fed.  1 ;  Southern  Indiana  Express 
Co.  V.  United  States  Co.,  88  Fed.  659, 
affd.,  92  Fed.  1022,  35  C.  C.  A.  172. 

"*  Wheeler-Stenzel  Co.  v.  National 
Window    Glass    Jobbers'    Assn.,    152 


Fed.  864,  81  C.  C.  A.  658,  10  L.  R.  A. 
(N.  S.)  972;  Mines  v.  Scribner,  147 
Fed.  927;  Monarch  Tobacco  Works 
V.  American  Tobacco  Co.,  165  Fed. 
774;  Thomsen  v.  Union  Castle  Mail 
S.  S.  Co.,  166  Fed.  251,  92  C.  C.  A. 
315;  Loewe  v.  Lawlor,  208  U.  S.  274, 
52  L.  ed.  488,  28  Sup.  Ct.  301,  13  Am. 
&  Eng.  Ann.  Cas.  815 ;  American 
Banana  Co.  v.  United  Fruit  Co.,  213 
U.  S.  347,  53  L.  ed.  826,  29  Sup.  Ct. 
511. 

"» Knight  &c.  Co.  V.  Miller,  172  Ind. 
27,  87  N.  E.  823;  Walsh  v.  Associa- 
tion of  Master  Plumbers,  97  Mo.  App. 
280,  71  S.  W.  455;  Currier  v.  Concord 
R.  Corp.,  48  N.  H.  221;  Morrill  v. 
Boston  &  M.  R.  R.  Co.,  55  N.  H.  531 ; 
Straus  V.  American  Publishing  Assn., 
177  N.  Y.  473,  69  N.  E.  1107,  64 
L.  R.  A.  701,  101  Am.  St.  819.  Com- 
pare the  foregoing  New  York  case 
with  Locker  v.  American  Tobacco 
Co.,  121  App.  Div.  (N.  Y.)  443,  106 
N.  Y.  S.  115. 

"Rourke  V.  Elk  Drug  Store,  75 
App.  Div.  CN.  Y.)  145,  77  N.  Y.  S. 
2)72i.  Under  the  New  York  statute, 
however,  it  is  held  that  the  injured 
party  must  allege  and  prove  that  the 
combination  complained  of  was  in- 
tended to  injure  him.  Kellogg  v. 
Sowebry,  190  N.  Y.  370,  83  N.  E.  47. 


21/  COMBINATIONS,    MONOPOLIES    AND    TRUSTS.  §    905 

brought  by  the  state  on  behalf  of  the  public  for  relief  against  a 
restriction  upon  competition.  This  action  is  usually  brought  by 
the  attorney-general.'*'' 

§  905.  Rights  of  stockholder. — A  stockholder  in  a  corpor- 
ation seems  to  stand  in  a  position  similar  to  that  occupied  by  a 
third  person.  Thus,  it  has  been  held  that  under  the  Sherman 
antitrust  act  a  stockholder  in  a  corporation  could  not  bring  an 
action  to  restrain  a  rival  corporation  from  buying  a  controlling 
interest  in  the  corporation  in  which  he  was  a  stockholder.  The 
corporation  and  not  the  stockholder  had  the  right  of  action.**^ 
In  several  of  the  state  courts  a  stockholder  is  permitted  to  re- 
strain the  carrying  out  of  a  scheme,  plan,  or  conspiracy  by  which 
the  corporation  in  which  he  is  a  stockholder  becomes  a  party  to 
an  unlawful  combine.^* 

§  906.  Antitrust  statutes — Constitutionality. — The  con- 
stitutionality of  the  federal  antitrust  act  popularly  known  as  the 
Sherman  antitrust  law  has  been  affirmed  by  many  decisions. 
Power  is  conferred  upon  congress  to  enact  legislation  of  this 
character  by  that  clause  of  the  federal  constitution  which  pro- 
vides that  congress  shall  have  power  to  "regulate  commerce  with 
foreign  nations,  and  among  the  several  states,  and  with  the  In- 
dian tribes.'"*^    The  power  thus  conferred  upon  congress  to  regu- 

See   also,    Cleland   v.   Anderson,   66  Tel.  Co..  224  111.  10,  79  N.  E.  423,  115 

Nebr.  292,  92  N.  W.  306,  96  N.  W.  Am.  St.  132,  8  Am.  &  Eng.  .A.nn.  Cas. 

212,  98  N.  W.  1075,  5  L.  R.  A.   (N.  57,  238  111.  456,  87  N.  E.  521;  Hard- 

S  )  136  ing  V.  American  Glucose  Co.,  182  111. 

•"See  Denver  Jobbers' Assn.  v.  Peo-  551,  55  N.  E.  577,  64  L.  R.  A.  738, 
pie  (Colo.),  122  Pac.  404;  People  v.  74  Am.  St.  189;  MacGmniss  v.  Bos- 
Aachen  &c.  Fire  Ins.  Co.,  126  111.  ton  &  M.  Consol.  &c.  Min.  Co.,  29 
App.  636;  Attorney-General  v.  Fire-  IMont.  428,  75  Pac.  89;  Anderson  v. 
men's  Ins.  Co.,  74  N.  J.  Eq.  372,  73  Shawnee  Compress  Co.,  17  Okla.  231, 
Atl.  80.  29  L.  R.  A.  (N.  S.)  1194.  135  87  Pac  315,  15  L.  R.  A.  (N.  S.)  846n. 
Am.  St.  708.  See  also.  Tibbey  Bros.  ""'It  is  therefore  well  settled  that 
Glass  Co.  V.  Pennsylvania  R.  Co.,  219  it  does  not  apply  to  restraints  or 
Pa.  430,  68  Atl.  975.  monopolies  as  such,  but  only  to  those 

'"Ames  V.  American  Tel.  &  T.  Co.,  which    directly    and    immediately,    or 

166  Fed.  820.  See,  however,  the  case  those  which  necessarily,  affect  com- 
of  Bigelow  V.  Calumet  &c.  Min.  Co.,  merce  among  the  states  or  with  for- 
155  Fed.  869.  See  also,  subsequent  eign  nations."  Bigelow  v.  Calumet 
hearings  of  same  case,  167  Fed.  704,  S:c.  Mm.  Co.,  167  Fed.  721,  94  C.  C. 

167  Fed.  721.  94  C.  C.  A.  13.  A.    13.      See   also.    United    States    v. 
"See  Continental   Securities  Co    v.     Tnint    Traffic    Assn.,    171    U.    S.    505, 

Tntcrborough  Rapid  Transit  Co..  165  43  L.  ed.  259,  19  Sup.  Ct.  25;  State 
Fed.  945;  Dunbar  v.  .\merican  Tel.  Si    v.  Duluth  Board  of  Trade,  107  Minn. 


§  907 


CONTRACTS. 


2l8 


late  interstate  or  foreign  commerce  carries  with  it  the  right  to 
legislate  upon  the  subject  of  private  contracts  in  respect  to  such 
commerce.*^"  The  constitutional  guarantee  of  liberty  to  contract 
does  not  prevent  congress  from  legislating  upon  the  subject  of 
contracts  in  restraint  of  interstate  or  foreign  commerce."  Nei- 
ther is  it  unen forcible  on  the  ground  that  congress  is  thereby  en- 
abled to  go  outside  the  scope  of  its  authority  and  deal  with  mere 
questions  of  production  of  commodities  within  the  state.^® 

§  907.  State  antitrust  acts — Limitations  on  power  to 
enact,— The  scope  of  a  state  law  against  combinations  and 
monopolies  is  limited  in  several  ways.  Such  a  statute  is,  generally 
speaking,  limited  as  to  its  effect  to  the  confines  of  the  state  which 
enacts  it.*^"  The  power  of  a  state  to  enact  such  legislation  is  also 
limited  by  that  provision  of  the  federal  constitution  which  con- 
fers upon  congress  the  power  "to  regulate  commerce  with  foreign 
nations  and  among  the  several  states  and  with  the  Indian 
tribes."'"  The  state's  power  in  this  respect  is  further  limited  by 
that  part  of  the  fourteenth  amendment  to  the  constitution  of  the 
United  States  which  forbids  a  state  to  "deny  to  any  person 
within  its  jurisdiction  the  equal  protection  of  the  laws."^^ 


506,  121  N.  W.  395,  23  L.  R.  A.  (N. 
S.)  1260n.  As  to  the  constitution- 
ality of  the  Criminal  section  see : 
United  States  v.  Winslow,  195  Fed. 
578. 

^  See  Addyston  Pipe  &c.  Co.  v. 
United  States,  175  U.  S.  211,  44  L. 
ed.  136,  20  Sup.  Ct.  96.  See  also, 
Northern  Securities  Co.  v.  United 
States,  193  U.  S.  197,  48  L.  ed.  679, 
24  Sup.  Ct.  436.  "  'The  power  to  regu- 
late is  the  power  to  prescribe  the 
rule  by  which  the  subject  regulated 
is  to  be  governed.' "  In  re  Charge  to 
Grand  Jury,  151  Fed.  834.  Wheeler- 
Stenzel  Co.  v.  National  Window 
Glass  Jobbers  Assn.,  152  Fed.  864, 
81  C.  C.  A.  658,  10  L.  R.  A.  (N.  S.) 
972. 

"Addyston  Pipe  &c.  Co.  v. 
United  States,  175  U.  S.  211,  44  L. 
ed.  136,  20  Sup.  Ct.  96.  The  argu- 
ments that  the  statute  impairs  the 
right  of  property  and  destroys  the 
freedom  of  contract  or  trade  have 
no  foundation  when  the  contract   is 


given  a  reasonable  construction. 
Standard  Oil  Co.  v.  United  States, 
221  U.  S.  1,  55  L.  ed.  619,  31  Sup. 
Ct.  502,  519,  34  L.  R.  A.  (N.  S.)  834. 

^Standard  Oil  Co.  v.  United 
States,  221  U.  S.  1,  55  L.  ed.  619,  31 
Sup.  Ct.  502,  34  L.  R.  A.  (N.  S.) 
834,  disapproving  United  States  v. 
E.  C.  Knight  Co.,  156  U.  S.  1,  39  L. 
ed.  325,  15  Sup.  Ct.  249. 

""  State  v.  Associated  Press,  159 
^lo.  410,  60  S.  W.  91,  51  L.  R.  A. 
151.  81  Am.  St.  368.  See  also,  State 
V.  Lancashire  Fire  Ins.  Co.,  66  Ark. 
466,  51   S.  W.  633,  45  L.  R.  A.  348. 

™  Frank  A.  Menne  Factory  v.  Har- 
back,  85  Ark.  278,  107  S.  W.  991; 
Hadlev  Dean  Plate  Glass  Co.  v. 
Highland  Glass  Co.,  143  Fed.  242, 
74  C.  C  A.  462;  Commonwealth  v. 
Strauss,  191  Mass.  545,  78  N.  E.  136, 
11  L.  R.  A.  (N.  S.)  968;  State  v. 
Virginia-Carolina  Chemical  Co.,  71 
S.  Car.  544,  51  S.  E.  455. 

"  In  re  Giest,  79  Fed.  627 ;  Connol- 
ly v.  Union  Sewer  Pipe  Co.,  184  U. 


219 


COMBINATIONS,    MONOPOLIES    AND    TRUSTS. 


§    908 


§  908.  State  antitrust  acts — Constitutionality. — Conse- 
quently, it  has  been  held  that  a  state  statute  which  contained  a 
provision  that  it  should  not  apply  to  agricultural  products  or 
livestock  in  the  hands  of  the  producer  or  raiser  was  repugnant 
to  the  provisions  of  the  fourteenth  amendment  of  the  constitu- 
tion of  the  United  States  because  it  denied  the  equal  protection 
of  the  laws  of  that  state  to  those  within  its  jurisdiction  who  were 
not  producers  of  agricultural  products  or  raisers  of  livestock.'^" 
A  statute  which  especially  excepted  labor  unions  from  its  opera- 
tion has  also  been  declared  invalid  for  the  same  reason'^  but  the 
statute  declared  invalid  by  the  federal  court  for  this  reason  has 
been  declared  valid  in  a  subsequent  decision  by  the  state  Supreme 
Court,  on  the  ground  that  labor  unions  did  not  come  within  the 
general  provisions  of  the  act  and  that  the  proviso  excepting  them 


S.  540,  46  Law  ed.  679,  22  Sup.  Ct. 
431 ;  Grenada  Lumber  Co.  v.  Missis- 
sippi, 217  U.  S.  433,  54  L.  ed.  832 
(holding  the  Mississippi  statute  con- 
stitutional under  this  provision  of 
the  constitution).  See  also,  State  v. 
Shippers'  Compress  &c.  Co.,  95  Tex. 
603,  69  S.  W.  58. 

"  Brown  v.  Jacobs  Pharmacy  Co., 
lis  Ga.  429,  41  S.  E.  553,  57  L.  R. 
A.  547,  90  .Am.  St.  126;  Connolly  v. 
Union  Sewer  Pipe  Co.,  184  U.  S. 
540,  46  L.  ed.  679,  22  Sup.  Ct.  431. 
See  also,  Kellvville  Coal  Co.  v.  Har- 
rier, 207  111.  624,  69  N.  E.  927,  99 
Am.  St.  240;  State  v.  Cudahy  Pack- 
ing Co.,  33  Mont.  179,  82  Pac.  833, 
114  Am.  St.  804.  See,  however, 
Owen  Co.  Burley  Tobacco  Soc.  v. 
Brumback,  32  Ky.  L.  916,  107  S. 
\V.  710,  which  upholds  a  statute 
which  legalizes  the  pooling  of  farm 
products  for  the  purpose  of  classify- 
ing, grading,  and  selling  the  same, 
in  order  that  a  higher  price  might  be 
obtained  for  the  products  than  could 
be  received  if  they  were  sold  by  the 
individuals  owning  them,  and,  fur- 
ther, to  authorize  the  parties  form- 
ing the  pool  to  select  its  agents  to 
hold  the  crops  pooled  for  the  pur- 
pose of  classifying,  grading,  and  dis- 
posing of  them.  The  court  said  that 
a  contract  under  this  statute  by 
which  it  was  sought  to  obtain  more 
than  the  real  value  of  the  article 
would  be  invalid.  See  also,  Common- 


wealth V.  International  Harvester 
Co.,  131  Ky.  551,  115  S.  W.  703,  133 
Am.  St.  256.  The  above  case  draws 
a  distinction  between  the  case  then 
before  the  court  and  the  case  of  Con- 
nolly v.  Union  Sewer  Pipe  Co.,  184 
U.  S.  540,  46  L.  ed.  679,  22  Sup.  Ct. 
431,  saying  that  in  the  latter  case 
certain  acts,  when  done  by  any  one 
other  than  a  farmer,  were  made 
criminal,  while  the  Kentucky  statute 
confers  a  right  on  farmers  not  neces- 
sarily withheld  from  all  others.  See 
also,  preceding  case.  International 
Harvester  Co.  v.  Commonwealth,  147 
Ky.  564,  144  S.  W.  1064;  Louis- 
ville &c.  R.  Co.  V.  Burlev  Tobacco 
Society,  147  Ky.  22,  143  S.  W.  1040 
(holding  tobacco  raisers  may  pool 
their  crops  so  long  as  they  do  not 
attempt  to  raise  the  price  of  leaf 
tobacco  above  its  real  value).  To 
same  effect,  International  Harvester 
Co.  V.  Commonwealth,  147  Kv.  795, 
146  S.  W.  12;  Stahr  v.  Hi'ckman 
Grain  Co.,  132  Ky.  496,  116  S.  W. 
784  (as  to  the  necessity  of  showing 
that  the  combine  had  for  its  object 
the  depressing  of  the  price  at  which 
it  bought  and  the  enhancing  of  the 
sale    price). 

"  Niagara  Fire  Ins.  Co.  v.  Cor- 
nell, 110  Fed.  816  (construing  Ne- 
braska statute)  ;  People  v.  Butler 
Street  Foundry  &c.  Co.,  201  111.  236, 
66  N.  E.  349. 


§    90S  CONTRACTS.  220 

was  mere  surplusage.'*  This  latter  statement  suggests  an  im- 
portant distinction.  The  legislature  may  make  a  reasonable 
classification,  (one  not  a  mere  cloak  or  cover  for  an  arbitrary 
exemption  of  certain  persons  or  certain  classes  of  persons,  but  a 
natural  and  proper  selection  of  those  who,  upon  a  reasonable 
view  of  the  mischief  to  be  met,  should  be  subject  to  the  regula- 
tion prescribed)  the  law  being  made  to  operate  generally  and 
uniformly  upon  all  of  the  classes  so  constituted."^  Thus,  the 
antitrust  statute  may  have  for  its  object  the  suppression  of  com- 
binations entered  into  for  the  accomplishment  of  certain  purposes 
and  not  be  made  to  apply  generally  to  all  combinations,'^^  such 
as  pools  and  trusts  organized  to  fix  or  regulate  the  price  of  any 
article  or  commodity  or  to  fix  or  limit  the  amount  or  quantity 
of  any  article,  commodity,  or  merchandise  to  be  produced  or  sold 
within  the  state.''  The  fact  that  the  federal  constitution 
guarantees  liberty  of  contract  does  not  prohibit  the  legislature 
from  passing  laws  which  forbid  combinations  the  primary  pur- 
pose of  which  is  to  place  a  restriction  upon  competition.'^  "Hav- 
ing the  power  to  pass  laws  of  this  character,  of  course  the  state 
may  provide  for  proceedings  to  enforce  the  same.  The  state, 
keeping  within  constitutional  limitations,  may  provide  its  own 
method  of  procedure  and  determine  the  methods  and  means  by 
which  such  laws  may  be  made  effectual."'^  State  antitrust  laws 
may  also  contravene  the  constitution  of  the  state  which  enacts 
them,  but  those  parts  of  the  various  state  constitutions  which  bear 
upon  the  subject  under  discussion  do  not  as  a  general  rule  differ 

^*Cleland    v.    Anderson,    66    Nebr.  "State   v.    Standard    Oil    Co.,    218 

252,  92  N.  W.  306,  5  L.  R.  A.  (N.  S.)  Mo.   1,   116   S.     W.     902;     Waters- 

136.  Pierce  Oil   Co.   v.   Texas,  212  U.   S. 

''Cleland   v.   Anderson,   66     Nebr.  86,  53  L.  ed.  417,  29   Sup.   Ct.  220; 

252,  92  N.  W.  306,  5  L.  R.  A.  (N.  S.)  Smiley  v.   Kansas,   196  U.   S.  447  25 

136.     See  also.  State  v.  Standard  Oil  Sup.  289,  49  L.  ed.  546,  afifg.  State  v. 

Co.,   Ill    Minn.   85,   126   N.   W.   527;  Smiley,  65  Kans.  240,  69  Pac.  61  L. 

State  V.  Duluth  Board  of  Trade,  107  R.  A.  903 ;   National  Cotton  Oil  Co. 

Minn.  506,   121  N.  W.  395,  22>  L.  R.  v.  State   (Tex.),  72  S.  W.  615,  affd. 

A.    (N.   S.)    1260n;     State  v.   Stand-  197  U.  S.  115,  49  L.  ed.  689,  25  Sup. 

ard   Oil   Co.,  218  Mo.   1,   116  S.  W.  Ct.  379;  Carroll  v.  Greenwich  Ins.  Co. 

902.  199  U.  S.  401,  50  L.  ed.  246,  26  Sup. 

'"  State  V.  Duluth  Board  of  Trade,  Ct.  66,  revg.  Greenwich  Ins.  Co.  v. 

107  Minn.  506,  121  N.  W.  395,  32  L.  Carroll,  125  Fed.  121. 

R.  A.  (N.  S.)   1260n.  '"Waters-Pierce  Oil   Co.  v.  Texas, 

"Rohlf  V.  Casemire,  140  Iowa  182,  212  U.   S.  86,  53  L.  ed.  417,  29  Sup. 

118  N.  W.  276,  23  L.  R.  A.   (N.  S.)  Ct.  220. 
11284,  132  Am.  St.  261. 


221  COMBINATIONS,    MONOPOLIES    AND    TRUSTS.  §    QOQ 

materially  from  those  contained  in  the  federal  constitution.  It 
is  impracticable  to  give  a  detailed  review  of  the  various  state 
constitutions  and  their  bearing  on  antitrust  laws  which  have  been 
enacted.®" 

§  909.  Antitrust  acts  of  congress. — The  vital  part  of  the 
federal  antitrust  laws  provides  "that  every  contract,  combination 
in  the  form  of  trust  or  otherwise,  or  conspiracy,  in  restraint  of 
trade  or  commerce  among  the  several  states,  or  with  foreign 
nations,  is  hereby  declared  to  be  illegal.  *  *  *  Every  person 
who  shall  monopolize,  or  attempt  to  monopolize,. or  combine  or 
conspire  with  any  other  person  or  persons,  to  monopolize  any 
part  of  the  trade  or  commerce  among  the  several  states,  or  with 
foreign  nations,  shall  be  deemed  guilty  of  a  misdemeanor."^^ 
The  statute  also  provides  that  one  who  is  injured  in  his  business 
by  reason  of  the  existence  of  such  monopoly  may  recover  treble 
damages.--  One  who  violates  its  provisions  is  on  conviction  lia- 
ble to  a  fine  not  exceeding  five  thousand  dollars  or  imprison- 
ment not  exceeding  one  year  or  both  of  such  punishments  in  the 
discretion  of  the  court.  The  constitutionality  of  this  statute  has 
been  upheld.  ^^ 

§  910.    Federal  antitrust  act — Construction  and  effect. — 

The  construction  to  be  placed  on  this  statute  has  been  a  matter  of 
much  controversy.  The  courts  at  first  seemed  inclined  to  con- 
strue its  words  literally  and  to  hold  that  it,  by  its  terms,  embraced 

^'"The  power  of  the  legislature  to  stricken    from    the   Constitution   and 

prohibit     trusts,     combinations,     con-  laws  without  affecting  the  validity  of 

tracts  and  agreements  inimical  to  the  the  law.     It  is  for  the  legislature  to 

public  welfare,  is  not  derived  from  or  declare    what    is    inimical    to    public 

dependent  on  section  198  of  the  state  welfare,  and  it  is  only  when  it  tran- 

Constitution    of    1890,    which    neither  scends  the  limit  of  legislative  power 

confers   nor   limits   its   power,   which  that  the  courts  may  interpose  to  shield 

exists  by  virtue  of  the  general  grant  the  fundamental  law  from  violation." 

of    legislative    power.      This    section  State  v.  Jackson   Cotton  Oil   Co.,  95 

imposes   on   the  legislature   the   duty  Miss.  6,  48  So.  300.    See  further,  post, 

to  pass  such  laws,  and  the  use  of  the  §  915. 

expression  'inimical     to     the     public  "26  U.   S.   Statutes  at   Large  209, 

welfare'    by    the    legislature    has    no  chap.    647 ;    United    States    Compiled 

effect,   except   to  show   Vhat  what   it  Statutes   1901  page  3200. 

prohibits  is  by  it  regarded  as  of  that  *'  See  ante,   §  903  et  seq. 

character.    That  expression  might  be  ^  See  ante,  §  906. 


§   9IO  CONTRACTS.  222 

all  contracts  in  restraint  of  trade  whether  they  were  reasonable  or 
unreasonable.^*  But  the  Supreme  Court  finally  decided  otherwise 
in  view  of  the  common  law  and  the  law  of  this  country  relative  to 
restraints  on  trade  and  the  fact  that  where  words  are  employed  in 
a  statute  which  had  at  the  time  a  well-known  meaning  at  common 
law  or  in  the  law  of  this  country  they  are  presumed  to  have  been 
used  in  that  sense  unless  the  context  is  to  the  contrary.^*^  "It  ap- 
pears," said  the  court,  "That  the  context  manifests  that  the  stat- 
ute was  drawn  in  the  light  of  the  existing  practical  conception  of 
the  law  of  restraint  of  trade,  because  it  groups  as  within  that  class, 
not  only  contracts  which  were  in  restraint  of  trade  in  the  subjective 
sense,  but  all  contracts  or  acts  which  theoretically  were  attempts 
to  monopolize,  yet  which  in  practice  had  come  to  be  considered 
as  in  restraint  of  trade  in  a  broad  sense.  That  in  view  of  the 
many  new  formfe  of  contracts  and  combinations  which  were  being 
evolved  from  existing  economic  conditions,  it  was  deemed  essen- 
tial by  an  all-embracing  enumeration  to  make  sure  that  no  form 
of  contract  or  combination  by  which  an  undue  restraint  of  inter- 
state or  foreign  commerce  was  brought  about  could  save  such  re- 
straint from  condemnation.  The  statute  under  this  view  evi- 
denced the  intent  not  to  restrain  the  right  to  make  and  enforce 
contracts,  whether  resulting  from  combinations  or  otherwise, 
which  did  not  unduly  restrain  interstate  or  foreign  commerce,  but 
to  protect  that  commerce  from  being  restrained  by  methods, 
whether  old  or  new,  which  would  constitute  an  interference, — ^that 
is,  an  undue  restraint.  And  as  the  contracts  or  acts  embraced  in 
the  provision  were  not  expressly  defined,  since  the  enumeration 
addressed  itself  simply  to  classes  of  acts,  those  classes  being  broad 
enough  to  embrace  every  conceivable  contract  or  combination 
which  could  be  made  concerning  trade  or  commerce  or  the  subjects 
of  such  commerce,  and  thus  caused  any  act  done  of  the  enumer- 

**  See  Trans-Missouri  Freight  Case,  United    States    v.    America    Tobacco 

166  U.  S.  290,  41  L.  ed.  1007,  17  Sup.  Co.   (U.  S.),  31   Sup.  Ct.  632. 

Ct    540;  United  States  v.  Joint  Traf-  "^  Sweanngen  v.  United  States,  161 

fie  Assn.   171  U.  S.  505,  43  L.  ed.  259,  U.  S.  446,  40  L.  ed.  765,  16  Sup.  Ct. 

19  Sup.  Ct.  25.     See  also  the  dissent-  562 ;    United    States    v.    Wong    Kim 

ing  opinion  of  Harlan  J.,  in  Stand-  Ark,  169  U.  S.  649,  42  L.  ed.  890,  18 

ard  Oil  Co.  v.  United  States,  221  U.  Sup.  Ct.  456;  Keck  v.  United  States, 

S    1,  55  L.  ed.  619,  31   Sup.  Ct.  502,  172  U.  S.  434,  43  L.  ed.  505,  19  Sup. 

34  L.   R.   A.    (N.   S.)   834,  and  also  Ct.  254;  Kepner  v.  United  States,  195 

the    dissent   by   the    same   judge   in  U.  S.  100,  49  L.  ed.  114,  24  Sup.  Ct. 

797. 


223  COMBINATIONS,    MONOPOLIES    AND    TRUSTS.  §911 

atecl  methods  anywhere  in  the  whole  field  of  human  activity  to 
be  illegal  if  in  restraint  of  trade,  it  inevitably  follows  that  the 
provision  necessarily  called  for  the  exercise  of  judgment  which 
required  that  some  standard  should  be  resorted  to  for  the  pur- 
pose of  determining  whether  the  prohibition  contained  in  the 
statute  had  or  had  not  in  any  given  case  been  violated.  Thus 
not  specifying,  but  indubitably  contemplating  and  requiring  a 
standard,  it  follows  that  it  was  intended  that  the  standard  of 
reason  which  had  been  applied  at  the  common  law  and  in  this 
country  in  dealing  with  subjects  of  the  character  embraced  by  the 
statute  was  intended  to  be  the  measure  used  for  the  purpose  of 
determining  whether,  in  a  given  case,  a  particular  act  had  or  had 
not  brought  about  the  wrong  against  which  the  statute  pro- 
vided."«« 

§911.  Federal  antitrust  act  given  a  reasonable  construc- 
tion.— In  other  words  the  court  gave  the  statute  a  reasonable 
construction,  and  attempted  to  give  effect  to  its  spirit  and  thus 
make  it  the  agent  of  that  public  policy  which  it  was  intended  to 
serve.  If  the  welfare  of  the  public  is  the  supreme  law,  those  con- 
tracts which  benefit  the  public  even  though  they  incidentally  re- 
strain trade  should  not  be  declared  invalid.  This  would  be  the 
case  if  the  statute  were  interpreted  literally,  and  it  would  thus 
defeat  the  purpose  for  which  it  was  enacted.^''     Nor  does  this 

""The  court  said  further  "a  con-  ably  restrict  the  right  to  contract  and 
sideration  of  the  text  of  the  2d  sec-  unreasonably  operate  upon  the  right 
tion  serves  to  establish  that  it  was  to  acquire  and  hold  property.  Stand- 
intended  to  supplement  the  1st  and  ard  Oil  Co.  v.  United  States,  221  U. 
to  make  sure  that  by  no  possible  S.  1,  55  L.  ed.  619,  31  Sup.  Ct. 
guise  could  the  public  policy  em-  502,  34  L.  R.  A.  (N.  S.)  834.  To 
bodied  in  the  1st  section  be  frus-  same  effect,  United  States  v.  Amer- 
trated  or  evaded."  Standard  Oil  Co.  ican  Tobacco  Co.,  221  U.  S.  106,  5 
V.  United  States,  221  U.  S.  1,  55  L.  L.  ed.  663.  31  Sup.  Ct.  632.  The  fed- 
ed.  619,  31  Sup.  Ct.  502,  34  L.  R.  A.  eral  antitrust  act  does  not  prohibit  a 
(N.  S.)  834.  To  same  effect.  United  restraint  no  greater  than  required 
States  V.  American  Tobacco  Co.,  for  the  protection  of  the  legitimate 
221  U.  S.  106,  35  L.  ed.  663,  31  Sup.  interests  of  the  vendee.  Darius  Cole 
Ct.  632;  Phillips  v.  lola  Portland  Transp.  Co.  v.  White  Star  Line,  186 
Cement  Co.,  125  Fed.  593,  61  C.  C.  A.  Fed.  63.  108  C.  C.  A.  165.  However, 
19.  See  also.  United  States  v.  Win-  it  is  not  necessary  that  a  direct  re- 
slow,  195  Fed.  578.  straint  of  trade  affect   an   unreason- 

"  It   is   suggested  by  Chief   Justice  ably    great    amount    of   commerce    in 

White  that  a  literal  interpretation  of  order   to   be    within    the    prohibition, 

the  statute  might   render  it  unconsti-  From  the   standpoint   of   reason   it   is 

tutional  since  it  then  might  unreason-  not   the   amount    of    merchandise    or 


§   912 


CONTRACTS. 


224 


construction  nullify  the  act.  Under  a  reasonable  construction 
every  conceivable  act  which  could  possibly  come  within  the  spirit 
or  purpose  of  the  prohibition  of  the  law,  without  regard  to  the 
garb  in  which  such  acts  were  clothed,  would  be  embraced  there- 

8S 


in 


§  912.  Federal  antitrust  act — Application  of. — The  stat- 
ute applies  to  restraints  of  interstate  commerce  resuking  from 
unlawful  combinations  of  labor.^^  Under  the  Sherman  antitrust 
law,  a  combination  of  publishers  and  booksellers  to  fix  prices  and 
compel  publishers  and  dealers,  by  means  of  rewards  and  punish- 
ments, to  sell  at  the  prices  so  fixed,  has  been  declared  imenforci- 
ble.^"  A  combination  among  brewers  to  control  the  brewing 
and  sale  of  beer  and  the  price  at  which  and  to  whom  it  shall  be 


traffic  affected  by  the  restriction  but 
it  is  the  character  and  extent  of  the 
restriction  itself;  and  if  such  re- 
striction reasonably  pertains  to  law- 
ful results,  it  is  not  of  itself  neces- 
sarily forbidden.  But  a  direct  and 
absolute  restraint  which  bears  no 
reasonable  relation  to  lawful  means 
of  accomplishing  lawful  ends  is  not 
justified  merely  because  the  volume 
of  traffic  affected  is  not  very  great. 
Steers  v.  United  States,  192  Fed.  1, 
112  C.  C.  A.  423. 

**  United  States  v.  American  To- 
bacco Co.,  221  U.  S.  106,  55  L.  ed. 
663,  31  Sup.  Ct.  632,  648.  To  same 
effect.  Standard  Oil  Co.  v.  United 
States,  221  U.  S.  1,  55  L.  ed.  619,  31 
Sup.  Ct.  502,  34  L.  R.  A.  (N.  S.) 
834.  "The  recent  decisions  of  the 
Supreme  Court  make  it  equally  clear 
that  a  combination  cannot  escape  the 
condemnation  of  the  antitrust  act 
merely  by  the  form  it  assumes  or  by 
the  dress  it  wears.  It  matters  not 
whether  the  combination  be  'in  the 
form  of  a  trust  or  otherwise,' 
whether  it  be  in  the  form  of  a  trade 
association  or  a  corporation,  if  it 
arbitrarily  uses  its  power  to  force 
weaker  competitors  out  of  business, 
or  to  coerce  them  into  a  sale  to  or 
union  with  the  combination,  it  puts  a 
restraint  upon  interstate  commerce, 
and  monopolizes  or  attempts  to  mo- 
nopolize a  part  of  that  commerce,  in 
a    sense   that   violates    the    antitrust 


act."  United  States  v.  E.  I.  Du 
Pont  De  Nemours  &  Co.,  188  Fed. 
127,  151. 

"'Lawlor  v.  Loewe,  187  Fed.  522, 
109  C.  C.  A.  228.  In  Loewe  v.  Law- 
lor,  208  U.  S.  274,  52  L.  ed.  488,  28 
Sup.  Ct.  301,  13  Am.  &  Eng.  Ann. 
Cas.  815,  the  statute  was  held  to  ap- 
ply to  any  unlawful  combination  re- 
sulting in  restraint  of  interstate  com- 
merce. In  that  case  the  damages 
sued  for  were  occasioned  by  acts 
which,  among  other  things,  did  in- 
clude the  circulation  of  advertise- 
ments. But  the  principle  announced 
by  the  court  was  general.  It  cov- 
ered any  illegal  means  by  which 
interstate  commerce  is  restrained, 
whether  by  unlawful  combinations  of 
capital,  or  unlawful  combination  of 
labor;  and  we  think,  also,  whether 
the  restraint  occasioned  by  unlawful 
contracts,  trusts,  pooling  arrange- 
ments, blacklists,  boycotts,  coercion, 
threats,  intimidation,  and  whether 
these  be  made  effective,  in  whole  or 
in  part,  by  acts,  words,  or  printed 
matter."  Gompers  v.  Bucks  Stove 
&c.  Co.,  221  U.  S.  418,  55  L.  ed.  797, 
31   Sup.  Ct.  492. 

•"  Bobbs-Merrill  Co.  v.  Straus,  139 
Fed.  155,  affd.,  147  Fed.  15,  11  C.  C. 
A.  607,  210  U.  S.  339,  52  L.  ed.  1086, 
28  Sup.  Ct.  722,  15  L.  R.  A.  (N.  S.) 
766.  Compare  the  foregoing  case 
with  Straus  v.  American  Pub.  Assn., 

177  N.  Y.  473,  69  N.  E.  1107,  64  L. 


225 


COMBINATIONS,    MONOPOLIES    AND    TRUSTS. 


913 


sold  is  a  trust  or  conspiracy  under  the  act."^  A  contract  to 
strangle  a  threatened  competition  by  preventing  the  construction 
of  an  immediately  projected  line  of  railway,  which,  if  con- 
structed, would  naturally  and  substantially  compete  with  an  ex- 
isting line  for  interstate  traffic,  is  in  violation  of  the  antitrust 
law.""  The  criterion  as  to  whether  any  given  business  scheme 
falls  within  the  prohibition  of  the  statute  is  its  effect  upon  inter- 
state commerce,  which  need  not  be  a  total  suppression  of  trade 
nor  a  complete  monopoly;  it  is  enough  if  its  necessary  operation 
tends  to  restrain  interstate  commerce  and  to  deprive  the  public 

of  the  advantages  that  flow  from  free  competition.^^  , 

I 

§  913.  Federal  antitrust  act — When  inapplicable. — But 
the  mere  acquisition  of  the  material  sources  of  wealth  or  the  en- 
largement of  business  and  traffic,  accomplished  without  the  illegal 
combination  or  conspiracy  denounced  by  the  act,  is  not  unlaw- 
ful.®* There  must  be  the  meeting  of  the  minds  of  two  or  more  to 
accomplish  some  purpose  violative  of  the  act.  A  person  cannot 
conspire  with  himself.®^     Neither  does  it  render  invalid  a  con- 


R.  A.  701,  101  Am.  St.  819,  second 
appeal,  193  N.  Y.  496,  86  X.  E.  525. 
To  same  effect,  Scribner  v.  Straus, 
139  Fed.  193;  Mines  v.  Scribner,  147 
Fed.  927;  Loder  v.  Javne,  142  Fed. 
1010,  revd.,  Jayne  v.  Loder.  149  Fed. 
21,  78  C.  C.  A.653,7L.  R.A.  (X.  S.) 
984;  Ellis  v.  Inman,  Poulsen  &  Co., 
131  Fed.  182,  65  C.  C.  A.  488;  United 
States  V.  Jeilico  Mountain  &c.  Coke 
Co.,  46  Fed.  432,  12  L.  R.  A.  753,  3 
Inter  Com.  626.  Compare  Whitwell 
V.  Continental  Tobacco  Co.,  125  Fed. 
454,  60  C.  C.  A.  290,  64  L.  R.  A.  689. 

*'  Leonard  v.  Abner-Drury  Brew- 
ing Co.,  25  App.  D.  C.  161. 

""United  States  v.  Union  Pac.  R. 
Co.,  188  Fed.  102.  See  also.  United 
States  V.  Reading  Co.,  183  Fed.  427. 

'^  United  States  v.  IMacAndrews  & 
Forbes  Co.,  149  Fed.  823. 

***  United  States  v.  Reading  Co., 
183  Fed.  427.  457.  See  also,  Xorth- 
western  Consol.  Milling  Co.  v.  Wil- 
liam Callam  &  Son,  177  Fed.  786; 
United  States  v.  American  Naval 
Stores  Co.,  172  Fed.  455 :  Bigelow  v. 
Calumet  &c.  Min.   Co.,  94   C.  C.  A. 


13,  167  Fed.  721;  United  States  v. 
American  Tobacco  Co.,  191  Fed.  371. 
'*' United  Pac.  Coal  Co.  v.  United 
States,  173  Fed.  737,  97  C.  C.  A.  578; 
United  States  v.  Reading  Co..  183 
Fed.  427,  455 ;  United  States  v.  Santa 
Rita  Store  Co.,  16  N.  Mex.  3,  113 
Pac.  620.  As  used  in  the  Sherman 
law,  the  word  "conspiracy"  has  sub- 
stantially the  same  meaning  as  the 
word  "contract."  United  States  v. 
Kissel,  173  Fed.  823.  There  may  be  a 
conspiracy  under  the  act  with  re- 
ference to  a  single  shipment  only. 
Steers  v.  United  States,  192  Fed.  1, 
112  C.  C.  A.  423.  The  Sherman  law 
does  not  prevent  a  coal  company 
from  selecting  its  customers  and  fix- 
ing the  price  at  which  it  will  sell  to 
each  customer.  Union  Pac.  Coal 
Co.  V.  United  States,  173  Fed. 
737,  97  C.  C.  A.  578.  But  it  does  pro- 
hibit a  number  of  operators  from 
entering  into  a  contract  by  which 
a  corporation  is  to  take  over  their  en- 
tire output  and  to  sell  it  at  no  less 
than  a  minimum  price  to  be  fi.xed  by 
an  executive  appointed  by  the  oper- 


15 — Contracts,  Vol.  2 


§  914 


CONTRACTS. 


226 


tract  which  by  a  collateral  provision  may  place  an  ancillary  re- 
straint on  trade  or  competition,^*  such  as  contracts  of  sole 
agency.®'  A  railroad  company  engaged  in  interstate  commerce 
may  grant  to  a  private  individual  the  exclusive  right  to  develop 
for  it  a  given  trade  along  its  route.®* 

§  914.  Federal  antitrust  act — Power  to  pass. — ^The  au- 
thority of  congress  to  pass  the  Sherman  law  or  any  other  anti- 
trust act  of  a  general  application  is  found  in  that  clause  of  the 
federal  constitution  which  provides  that  congress  shall  have 
power  "to  regulate  commerce  with  foreign  nations,  and  among 
the  several  states,  and  with  the  Indian  tribes.'"'^  The  power  ex- 
ercised under  this  clause  can  be  no  greater  than  that  conferred. 
Consequently,  the  act  applies  only  to  interstate  commerce.^     In- 


ators.  Chesapeake  &c.  Fuel  Co.  v. 
United  States,  115  Fed.  610,  53  C. 
C.  A.  256. 

"  Union  Pac.  Coal  Co.  v.  United 
States,  173  Fed.  lil,  97  C.  C.  A.  578; 
Bigelow  V.  Calumet  &c.  Min.  Co., 
94  C.  C  A.^  13,  167  Fed.  721 ;  In- 
graham  V.  National  Salt  Co.,  130 
Fed.  676,  65  C.  C.  A.  54,  certiorari 
denied,  201  U.  S.  641,  50  L.  ed. 
902,  Id  S.  Ct.  760;  Phillips  v. 
lola  Portland  Cement  Co.,  125 
Fed.  593,  61  C.  C.  A.  19;  Ar- 
kansas Brokerage  Co.  v.  Dunn,  173 
Fed.  899,  97  C  C.  A.  454,  35 
L.  R.  A.  (X.  S.)  464,  (organization 
of  jobbers  for  purchase  of  sup- 
plies) ;  Gallup  Electric  Light  Co.  v. 
Pacific  Imp.  Co.,  16  X.  Mex.  86,  113 
Pac.  848;  Harbison- Walker  Refrac; 
tories  Co.  v.  Stanton,  227  Pa.  55,  75 
Atl.  988  (agreement  by  vendor  not 
to  engage  in  same  business  in  same 
territory  during  fixed  period).  See 
also,  Steele  v.  United  Fruit  Co.,  190 
Fed.  631. 

*^  Virtue  v.  Creamery  Package  Mfg. 
Co.,  179  Fed.  115,  102  C.  C  A.  413. 

**  Delaware  &c.  R.  Co.  v.  Kutter, 
147  Fed.  51,  n  C.  C.  A.  315. 

*See  ante,  §  906. 

^See  Texas  &  P.  R.  Co.  v.  Inter- 
state Commerce  Commission,  162  U. 
S.  197,  40  L.  ed.  940.  16  Sup.  Ct.  666. 
"That  (the  federal  antitrust)  law 
deals  only  with  contracts  which  di- 
rectly   affect    interstate    or     foreign 


commerce  by  way  of  restraint  of 
trade  or  the  creation  of  a  monopoly, 
and  it  does  not  touch  contracts  which 
affect  interstate  commerce  only  indi- 
rectly." Commonwealth  v.  Strauss, 
191  Mass.  545,  78  X.  E.  136,  11  L.  R. 
A.  (X.  S.)  968.  "The  federal  anti- 
trust act  necessarily  applied  only  to 
contracts,  combinations,  and  conspira- 
cies in  restraint  of  interstate  and  in- 
ternational trade  and  commerce,  and 
soon  after  its  passage  the  states  be- 
gan to  enact  similar  statutes  for  the 
purpose  of  reaching  agreements  and 
combinations  which  were  beyond  the 
reach  of  the  federal  power."  State  v. 
Duluth  Board  of  Trade,  107  Minn. 
506,  121  X.  W.  395,  23  L.  R.  A.  (N. 
S.)  1260;  Locker  v.  American  To- 
bacco Co.,  121  App.  Div.  (X.  Y.)  443, 
106  X.  Y.  S.  115.  The  federal  statute 
does  not  apply  to  a  contract  made  in 
Missouri  for  the  sale  and  future  de- 
livery of  wheat  and  to  be  performed 
there.  C.  H.  Albers  Commission  Co. 
V.  Spencer,  205  Mo.  105.  103  S.  W. 
523,  11  L.  R.  A.  (N.  S.)  1003.  "There 
must  be  some  direct  and  immediate 
effect  upon  interstate  commerce  in  or- 
der to  come  within  the  act."  Hop- 
kins V.  United  States,  171  U.  S.  578, 
43  L.  ed.  290,  19  Sup.  Ct.  40.  To  same 
effect.  United  States  v.  Union  Pac. 
R.  Co.,  188  Fed.  102;  Field  v.  Bar- 
ber Asphalt  Co.,  194  U.  S.  618,  48  L. 
ed.  1142,  24  Sup.  Ct.  784;  Anderson 
v.  United  States,  171  U.  S.  604,  43  L. 
ed.  300,  19  Sup.  Ct  50.    An  associa- 


22^ 


COMBINATIONS,    MONOPOLIES    AND    TRUSTS. 


§    914 


terstate  commerce  consists  essentially  in  transportation,^  trans- 
portation between  points  within  a  state  or  transactions  carried  on 
wholly  within  a  state  being  excluded  under  this  clause  of  the 
federal  constitution.^ 


tion  of  meat  dealers  carrying  on  an 
extensive  interstate  commerce  is 
within  the  provisions  of  the  federal 
antitrust  law.  United  States  v.  Swift 
&  Co.,  122  Fed.  529,  modified  196  U. 
S.  375,  49  L.  ed.  518,  25  Sup.  Ct.  276. 
But  the  rules  of  a  live  stock  exchange 
have  been  held  not  within  the  provi- 
sion of  the  antitrust  act.  Hopkins  v. 
United  States,  171  U.  S.  578,  43  L. 
ed.  290,  19  Sup.  Ct.  40.  "The  con- 
tract must  clearly  appear  to  be  with- 
in the  provisions  of  the  act."  Poca- 
hontas Coke  Co.  V.  Powhatan  Coal 
&c.  Co.,  60  W.  Va.  SOS,  56  S.  E.  264, 
10  L.  R.  A.  (N.  S.)  268,  116  Am.  St. 
901.  However,  the  Sherman  antitrust 
law  applies  to  a  combination  in  re- 
straint of  trade  in  a  single  city  of  a 
territory  of  the  United  States.  Tribo- 
let  V.  United  States,  11  Ariz.  436,  95 
Pac.  85,  16  L.  R.  A.  (N.  S.)  223. 

*  Niagara  Fire  Ins.  Co.  v.  Cornell, 
110  Fed.  816,  which  holds  insurance 
not  commerce  from  one  state  to  an- 
other. See  also.  Steers  v.  United 
States,  192  Fed.  1,  112  C.  C.  A.  423. 

"Gibbs  V.  McNeelev,  102  Fed.  594; 
The  Charles  E.  Wiswall,  86  Fed.  671, 
30  C.  C.  A.  339,  42  L.  R.  A.  85; 
United  States  v.  American  Tobacco 
Co.,  164  Fed.  700;  Addyston  Pipe  & 
Steel  Co.  v.  United  States,  175  U.  S. 
211,  44  L.  ed.  136,  20  Sup.  Ct.  96.  But 
as  to  a  territory,  see  Moore  v.  United 
States,  85  Fed.  465.  29  C.  C.  A.  269. 
See  Federal  act,  §  189 ;  People  v.  But- 
ler Street  Foundry  &  Iron  Co.,  201 
111.  236,  66  N.  E.  349;  State  v.  Jack, 
69  Kans.  387,  76  Pac.  911,  915,  1  L. 
R.  A.  (N.  S.)  167n.  However,  inter- 
state commerce  consists  of  goods 
transported  between  two  points  in 
the  same  state  where  the  route  over 
which  they  are  shipped  extends 
through  another  state  or  territory. 
Hanley  v.  Kansas  Citv  &c.  R.  Co.,  187 
U.  S.  617.  47  L.  ed.  'ZZ\  23  Sup.  Ct. 
214.  Compare,  however,  with  Cincin- 
nati &c.  Packet  Co.  v.  Bav.  200  U.  S. 
179,  50  L.  ed.  428,  26  Sup.  Ct.  208 
(transportation  between  two  points 
in    state    over    river    forming    state 


boundary).  See  also,  Pennsylvania 
Sugar  Ref.  Co.  v.  American  Sugar 
Ref.  Co.,  166  Fed.  254.  92  C.  C.  A. 
318.  The  Federal  antitrust  statute 
applies  when  the  contract  in  question 
affects  commerce  among  the  several 
states  or  with  foreign  nations.  It 
does  not  affect  transactions  carried 
on  wholly  within  the  state.  Moore 
V.  United  States,  85  Fed.  465,  29  C. 
C.  A.  269,  56  U.  S.  App.  471 ;  Robin- 
son v.  Suburban  Brick  Co.,  127  Fed. 
804,  62  C.  C.  A.  484;  Slaughter  v. 
Thacker  Coal  &c.  Co.,  55  W.  Va.  642, 
47  S.  E.  247.  65  L.  R.  A  342,  104  Am. 
St.  1013;  National  Distilling  Co.  v. 
Cream  City  Importing  Co.,  86  Wis. 
352,  56  N.  W.  864,  39  Am.  St.  902. 
For  border  line  cases  in  which  the 
federal  law  was  held  to  apply,  see 
W.  W.  Montague  &  Co.  v.  Lowry, 
193  U.  S.  38,  48  L.  ed.  608,  24  Sup.  Ct. 
307;  Swift  &  Co.  v.  United  States, 
196  U.  S.  375,  49  L.  ed.  518,  25  Sup. 
Ct.  276.  For  cases  in  which  it  was 
held  not  to  apply,  see  Phillips  v.  lola 
Portland  Cement  Co.,  125  Fed.  593, 
61  C.  C.  A.  19;  Davis  v.  A.  Booth  & 
Co.,  131  Fed.  31,  65  C.  C.  A.  269; 
Whitwell  v.  Continental  Tobacco  Co,. 
125  Fed.  454,  60  C.  C.  A.  290,  64  L. 
R.  A.  689;  Dueber  Watch  Case  Mfg. 
Co.  V.  E.  Howard  Watch  &  Clock 
Co.,  66  Fed.  637,  14  C  C.  A.  14,  35 
U.  S.  App.  16;  Bancroft  v.  Union 
Embossing  Co.,  72  N.  H.  402.  57  Atl. 
97,  64  L.  R.  A.  298;  Brett  v.  Ebel,  29 
App.  Div.  (N.  Y.)  256,  51  N.  Y.  S. 
573;  Walsh  v.  Dwight,  40  App.  Div., 
(N.  Y.)  513,  58  N.  Y.  S.  91;  Cincin- 
nati P.  B.  S.  &  P.  Packet  Co.  v.  Bay, 
200  U.  S.  179,  50  L.  ed.  428,  26  Sup. 
Ct.  208;  Field  v.  Barber  Asphalt  Pav- 
ing Co.,  194  U.  S.  618,  48  L.  ed.  1142, 
24  Sup.  Ct.  784 ;  Pocahontas  Coke  Co. 
V.  Powhatan  Coal  &c.  Co.,  60  W.  Va. 
508,  56  S.  E.  264.  10  L.  R.  A.  (N.  S.) 
268,  116  Am.  St.  901.  The  character 
of  interstate  commerce  attaches  when 
the  commodity  is  delivered  to  the 
carrier  to  be  transported  by  continu- 
ous voyage  or  trip  beyond  the  con- 
fines of  the  state.    Houston  &c.  Nav. 


§  9^5 


CONTRACTS. 


221 


§  915.  State  antitrust  acts. — It  is  impossible  to  give  any 
extensive  review  of  state  antitrust  legislation.  As  a  general  rule, 
it  is  more  or  less  closely  modeled  after  the  Sherman  antitrust 
law.*  The  constitutional  limitations  upon  state  legislation  of 
this  character  have  already  been  mentioned.^  While  the  several 
state  antitrust  acts  are  of  the  same  general  character,  some  are 
broad  in  their  scope  and  impose  heavy  penalties  while  others  have 
a  very  limited  application.^  Thus  the  act  of  Florida  relates  only 
to  restraint  in  the  sale  of  fresh  meats.^ 

§  916.  State  antitrust  acts — General  scope. — As  a  general 
rule,  the  state  antitrust  acts  do  not  render  void  and  unenforcible 
those  contracts  innocently  made  that  are  only  in  partial  restraint 
of  trade  and  which  do  not  tend  to  injure  the  public,  the  restraint 


Co.  V.  Insurance  Co.  of  North  Amer- 
ica, 89  Tex.  1,  32  S.  W.  889,  30  L.  R. 
A.  713,  59  Am.  St.  17.  See  also,  In 
re  The  Daniel  Ball,  10  Wall  (U.  S.) 
557,  19  L.  ed.  999;  Ex  parte  Koehler, 
Rec,  30  Fed.  867.  It  does  not  lose 
this  character  by  temporary  stoppage 
in  transitu.  Delaware  &  Hudson  Co. 
V.  Commonwealth,  2  I.  C.  R.  222. 
;When  the  commodity  reaches  the 
point  to  which  it  was  consigned  it 
loses  its  character  of  interstate  com- 
merce and  further  shipment  by  the 
consignee  to  a  point  within  the  state 
to  which  it  was  consigned  is  con- 
trolled by  the  laws  of  such  state. 
Gulf  &c.  R.  Co.  V.  Texas,  204  U.  S. 
403,  51  L.  ed.  540,  27  Sup.  Ct.  360. 

*See  State  v.  Duluth  Board  of 
Trade,  107  Alinn.  506,  121  N.  W.  395, 
23  L.  R.  A.  (N.  S.)  1260n  (reviewing 
the  federal  and  also  many  state  stat- 
utes) ;  Smith  v.  Morgantown  Ice  Co. 
1(N.  Car.),  74  S.  E.  961.  They  are 
usually  a  codification  of  the  common 
law  on  the  subject  of  monopolies.  In 
re  Consolidated  Gas  Co.,  56  Misc.  (N. 
iY.)  49,  106  N.  Y.  S.  407,  affd.  124 
App.  Div.  (N.  Y.)  401,  108  N.  Y.  S. 
823. 

°See  ante,  §  906.  For  a  discussion 
of  the  constitutionality  of  such  legis- 
lation and  the  construction  to  be 
placed  on  it,  see  Knight  &c.  Co.  v. 
Miller,  172  Ind.  27,  87  N.  E.  823. 
For  a  review  of  the  statutes  of  a 
number  of  the  states  see  State  v.  Du- 
luth Board  of  Trade,  107  Minn.  506, 


121  N.  W.  395,  23  L.  R.  A.  (N.  S.) 
1260n.  See  also,  Niagara  Fire  Ins. 
Co.  V.  Cornell,  110  Fed.  816;  Com- 
monwealth V.  International  Harvester 
Co.,  131  Ky.  551,  115  S.  W.  703,  133 
Am.  St.  256;  Grenada  Lumber  Co.  v. 
Mississippi,  217  U.  S.  433,  54  L.  ed. 
826,  30  Sup.  Ct.  535. 

•*  Statutes  prohibiting  monopolies 
and  trusts  are  not  in  derogation  but 
they  aid  the  common  law  and  should 
be  construed  in  accordance  with  the 
plain  intention  of  the  legislature. 
State  V.  Standard  Oil  Co.,  218  Mo.  1, 
116  S.  W.  902;  Gen.  Stat.  1906, 
§§  3160-3164. 

^The  laws  of  Florida  also  contain 
provisions  relating  to  coercing  em- 
ployes, criminal  conspiracies,  and 
combinations  against  workmen.  Gen. 
Stat.  1906,  §§  3233,  3514,  3515.  Those 
jurisdictions  that  have  not  enacted 
broad,  comprehensive  statutes  on  the 
subject  are  not,  for  that  reason,  with- 
out law  applicable  to  combinations 
and  monopolies.  In  practically  all  the 
states  of  the  union,  the  principles  of 
the  common  law,  when  not  modified 
by  express  enactments  or  rules  or  by 
the  requirements  of  governmental 
conditions,  are  in  force  as  a  part  of 
the  system  of  laws.  Stewart  v. 
Stearns  &c.  Co.,  56  Fla.  570,  48  So. 
19,  24  L.  R.  A.  (N.  S.)  649n.  See 
also,  State  v.  Armour  Packing  Co., 
173  Mo.  356,  7Z  S.  W.  645,  61  L.  R. 
A.  464,  96  Am.  St.  515. 


229                  COMBINATIONS,    MONOPOLIES   AND   TRUSTS,  §    916 

placed  on  trade  being  merely  ancillary/  Nor  do  they,  as  a  gen- 
eral rule,  render  invalid  a  contract  whereby  one  agrees  to  sell 
only,  and  is  given  the  exclusive  sale  of  a  certain  article  or  articles 
in  a  designated  district,"  although  it  is  otherwise  if  the  object 

'Hitchcock  V.  Anthony,  83  Fed.  1905  provides:  "All  agreements  and 
119,  28  C.  C.  A.  80;  Lanyon  v.  Gar-  contracts  by  which  any  person,  co- 
den  City  Sand  Co.,  223  111.  616,  79  partnership  or  corporation  promises 
N.  E.  313,  9  L.  R.  A.  (N.  S.)  446;  or  agrees  not  to  engage  in  any  avoca- 
Espenson  v.  Koepke,  93  Minn.  278,  tion,  employment,  pursuit,  trade,  pro- 
101  N.  W.  168;  State  v.  Duluth  Board  fession  or  business,  whether  reason- 
of  Trade,  107  Minn.  506,  121  N.  W.  able  or  unreasonable,  partial  or  gen- 
395,  2Z  L.  R,  A.  (N.  S.)  1260n  (hold-  era!,  limited  or  unlimited,  are  hereby 
ing  that  the  adoption  of  a  uniform  declared  to  be  against  public  policy 
commission  for  scHing  grain  was  not  and  illegal  and  void." 
within  the  Minnesota  statute)  ;  Cum-  *  Heimbuecher  v.  Goff,  119  111.  App. 
berland  Tel.  &c.  Co.  v.  State  (Miss.)  2)1Z  (contract  for  sale  of  entire  out- 
54  So.  670  (contract  between  tele-  put)  ;  Lanyon  v.  Garden  City  Sand 
phone  companies.  Case  holds  that  Co.,  223  111.  616,  79  N.  E.  313,  9  L.  R. 
validity  of  the  contract  depends  upon  A.  (N.  S.)  446n  (contract  for  sale 
the  facts  and  circumstances  of  each  of  output)  ;  Over  v.  Byram  Foundry 
case.)  ;  Downing  v.  Lewis,  56  Xebr.  Co.,  Zl  Ind.  App.  452,  11  N.  E.  302, 
386,  76  N.  W.  900;  People  v.  Amer-  117  Am.  St.  327  (contract  for  sale 
ican  Ice  Co.,  135  App.  Div.  (N.  Y.)  of  entire  output);  State  v.  St.  Paul 
180,  120  N.  Y.  S.  41  (purchase  of  Gaslight  Co.,  92  Minn.  467,  100  N. 
business  of  competitors  and  prohibit-  W.  216  (sale  of  entire  output  of 
ing  them  from  re-engaging  in  busi-  coke)  ;  Houck  v.  Wright,  11  Miss, 
ness)  ;  Wooten  v.  Harris,  153  N.  Car.  476,  27  So.  616;  Walter  A.  Wood  &c. 
43,  68  S.  E.  898  (sale  of  good  will)  ;  Co.  v.  Greenwood  Hardware  Co.,  75 
Kevil  v.  Standard  Oil  Co.,  8  Ohio  N.  S.  Car.  378,  55  S.  E.  973,  9  L.  R.  A. 
P.  311;  Queen  Ins.  Co.  v.  State,  86  (N.  S.)  501n;  Butterick  Pub.  Co.  v. 
Tex.  250,  24  S.  W.  397,  22  L.  R.  A.  Rose,  141  Wis.  533.  124  N.  W.  647. 
483;  Gates  v.  Hooper,  90  Tex.  563,  See  also,  Butterick  Pub.  Co.  v.  Fisher, 
39  S.  W.  1079 ;  Crump  v.  Ligon,  ^1  203  Mass.  122,  89  N.  E.  189,  133  Am. 
Tex.  Civ.  App.  172,  84  S.  W.  250;  St.  281  (does  not  prohibit  a  sale  at 
Malakoff  Gin  Co.  v.  Riddlesperger  a  reduced  rate  in  consideration  of  a 
(Tex.  Civ.  App.),  133  S.  W.  519  contract  to  sell  only  the  vendor's 
(sale  of  cotton  gin  and  grist  mill,  goods)  ;  Commonwealth  v.  Strauss, 
vendor  agreeing  not  to  engage  in  191  Mass.  545,  78  N.  E.  136,  11  L.  R. 
operation  of  cotton  gin  or  grist  mill  A.  (N.  S.)  968;  Norton  v.  W.  H. 
in  same  community  so  long  as  the  Thomas  &  Sons  Co.,  99  Tex.  578,  91 
purchasers  operated  a  gin  and  grist  S.  W.  780  (pointing  out  that  there  is 
mill)  ;  Wheatlev  V.  Kallear  (Tex.  Civ.  a  distinction  between  the  antitrust  act 
App.),  133  S.  W.  903  (agreement  by  of  1889  and  1899);  Vandeweghe  v. 
landlord  on  leasing  certain  premises  Am.  Brewing  Co.  (Tex.  Civ.  App.), 
not  to  lease  other  property  on  same  61  S.  W.  526  (decided  under  the  au- 
street  for  a  similar  purpose).  See,  thority  of  Gates  v.  Hooper  (Tex.), 
however.  Merchants'  Ad-Sign  Co.  v.  39  S.  W.  1079,  holding  that  there  can 
Sterling,  124  Cal.  429,  57  Pac.  468,  be  no  combination  without  a  union 
46  L.  R.  A.  142,  71  Am.  St.  94;  Ring-  or  association  by  two  or  more  of  their 
ham  V.  Brands,  119  Mich.  225,  11  N.  capital,  skill  or  acts).  The  Texas 
W.  940;  Comer  v.  Burton-Lingo  Co.,  statute  does  not  prohibit  one  from 
24  Tex.  Civ.  App.  251,  58  S.  W.  969  undertaking  to  induce  his  employes 
(object  of  the  contract  was  to  sup-  to  trade  with  appellee  and  from  giv- 
press  competition)  ;  Texas  &c.  Coal  ing  appellee  the  exclusive  right  to  sell 
Co.  V.  Lawson,  89  Tex.  394,  32  S.  W.  poods  on  his  premises.  Redland  Fruit 
871,  34  S.  W.  919.  Section  1.  page  507,  Co.  v.  Sargent.  51  Tex.  Civ.  App.  619, 
Act    No.    329,    Michigan    Pub.    Acts  113  S.  W.  330.    See  also,  in  connec- 


§  917 


CONTRACTS. 


230 


of  the  restriction,  such  as  a  restriction  upon  the  class  of  persons 
to  whom  a  commodity  shall  be  sold  or  from  whom  it  is  to  be 
bought,  is  to  create  a  monopoly  in  that  particular  locality,^"  such 
as  contracts  fixing  the  price  at  which  a  commodity  shall  be  sold 
and  dividing  the  territory." 

§  917.    State  antitrust  acts — Application  to  labor  unions. 

— The  majority  of  the  state  antitrust  laws  prohibit  combinations 
and  agreements  which  tend  to  restrain  trade  and  limit,  restrict  or 
regulate  the  production,  price  and  distribution  of  merchandise  or 
any  commodity  or  article  intended  for  sale,  barter,  use,  or  con- 
sumption in  the  state.  These  statutes  are  held  not  to  prohibit 
labor  unions  which  have  for  their  object  the  control  of  the  price 
of  labor."   The  words  "merchandise,"  "commodity"  and  synony- 


tion  with  this  case,  Thousand  Island 
Park  Assn.  v.  Tucker,  173  N.  Y.  203, 
65  N.  E.  975,  60  L.  R.  A.  786.  See, 
however,  Detroit  Salt  Co.  v.  Na- 
tional Salt  Co.,  134  Mich.  103,  96  N. 
W.  1  (sale  of  entire  output.  Con- 
tract said  not  to  be  void  on  its  face 
but  that  since  the  vendor  knew  the 
object  of  the  vendee  was  to  obtain  a 
monopoly,  it  was,  under  the  Michi- 
gan statute,  void)  ;  Poue-Turnbo  v. 
Bedford,  147  Mo.  App.  692,  127  S.  W. 
426;  State  v.  Racine  Sattley  Co.  (Tex. 
Civ.  App.),  134  S.  W.  400  (decided 
under  Laws  1903,  ch.  94)  ;  Texas 
Brewing  Co.  v.  Templeman,  90  Tex. 
277,  38  S.  W.  27;  Fuqua  v.  Pabst 
Brewing  Co.,  90  Tex.  298,  38  S.  W. 
29,  35  L.  R.  A.  241;  Texas  Brewing 
Co.  V.  Anderson  (Tex.  Civ.  App.),  40 
S.  W.  Til',  Texas  Brewing  Co.  v. 
Durrum  (Tex.  Civ.  App.),  46  S.  W. 
880;  Columbia  Carriage  Co.  v.  Hatch, 
19  Tex.  Civ.  App.  120,  47  S.  W.  288; 
S.  S.  White  Dental  Mfg.  Co.  v. 
Hertzberg  (Tex.  Civ.  App.),  51  S. 
W.  355 ;  Francis  T.  Simmons  &  Co. 
V.  Terry  (Tex.),  79  S.  W.  1103; 
Pasteur  Vaccine  Co.  v.  Burkey,  22 
Tex.  Civ.  App.  232,  54  S.  W.  804. 
See  also,  ante,  ch.  XXII. 

^"Denver  Jobbers'  Assn.  v.  People 
(Colo.),  122  Pac.  404  (association  of 
wholesale  and  retail  grocers  in  the 
state  of  Colorado)  ;  Knight  &c.  Co. 
V.  Miller,  172  Tnd.  27,  87  N.  E.  823; 
Hunt  V.  Riverside  Co-operative  Club, 
140  Mich.  538,  104  N.  W.  40,  112  Am. 


St.  420;  Ertz  v.  Produce  Exch.  Co., 
82  Minn.  173,  84  N.  W.  743,  51  L.  R. 
A.  825,  83  Am.  St.  419;  Walsh  v. 
Master  Plumber's  Assn.,  97  Mo.  App. 
280,  71  S.  W.  455 ;  Ferd  Heim  Brew- 
ing Co.  V.  Belinder,  97  Mo.  App.  64, 
71  S.  W.  691  (The  above  case  lays 
down  the  rule  that  if  the  combina- 
tion tends  to  restrict  competition  it 
will  be  declared  illegal  even  though 
the  object  which  it  sought  to  obtain 
was  a  worthy  one.)  ;  Smith  v.  Mor- 
gantown  Ice  Co.  (N.  Car.),  74  S.  E. 
961  (action  for  civil  damages).  Com- 
pare with  the  foregoing  case  Brews- 
ter v.  C.  Miller's  Sons  Co.,  101  Ky. 
368,  19  Ky.  L.  593,  41  S.  W.  301,  38 
L.  R.  A.  505;  Straus  v.  American 
Pub.  Assn.,  177  N.  Y.  473,  69  N.  E. 
1107,  64  L.  R.  A.  701n,  101  Am.  St. 
819;  Bailey  v.  Master  Plumbers' 
Assn.,  103  Tenn.  99,  52  S.  W.  853,  46 
L.  R.  A.  561.  See  also,  applying  fed- 
eral statute,  W.  W.  Montague  &  Co. 
V.  Lowry,  115  Fed.  27,  52  C.  C.  A.  621, 
63  L.  R.  A.  58,  affd.,  193  U.  S.  38,  48 
L.  ed.  608,  24  Sup.  (Tt.  307 ;  Barataria 
Canning  Co.  v.  Joulian,  80  Miss.  555, 
31  So.  961.  See,  however,  the  case  of 
Martell  v.  White,  185  Mass.  255,  69 
N.  E.  1085,  64  L.  R.  h.  260,  102  Am. 
St.  341.  This  case  is  not,  however, 
decided  under  a  statute,  but  is  based 
on  common-law  principles. 

"  State  V.  Adams  Lumber  Co.,  81 
Nebr.  392,  116  N.  W.  302. 

"  Rohlf  V.  Kasemeier,  140  Iowa  182, 
118  N.  W.  276,  23  L.  R.  A.   (N.  S.) 


231 


COMBINATIONS,    MONOPOLIES    AND    TRUSTS. 


918 


mous  terms  do  not  cover  combinations  to  control  the  price  of 
labor^^  or  personal  services." 

§  918.  State  antitrust  acts — Application  to  insurance. — 
Insurance  has,  however,  been  held  a  "commodity"  within  a  stat- 
ute prohibiting  any  pool,  trust,  agreement,  combination  or  feder- 
ation to  regulate  or  fix  the  price  of  any  commodity  or  article 
whatever.^'  And  a  statute  prohibiting  trusts  and  unlawful  con- 
spiracies against  trade  or  business  applies  to  insurance." 

§  919.  State  antitrust  acts — Exercise  of  police  power. — 
As  a  general  rule  state  antitrust  legislation  is  upheld  on  the 
ground  that  it  is  a  valid  exercise  of  its  police  power, ^^  It  has 
been  held  that  a  state  under  its  police  power  may  declare  invalid 
a  provision  in  a  sale  of  goods  to  be  resold  that  the  purchaser  shall 
not  sell  or  deal  in  the  goods,  wares  or  merchandise,  of  any  other 


1284,  132  Am.  St.  261;  State  v.  Du- 
luth  Board  of  Trade,  107  Minn.  506, 
121  N.  W.  395,  23  L.  R.  A.  (N.  S.) 
1260n.   1281. 

"  Hunt  V.  Riverside  Co-operative 
Club,  140  ^lich.  538,  104  N.  W.  40, 
112  Am.  St.  420;  Lohse  Patent  Door 
Co.  V.  Fuelle,  215  Mo.  421,  114  S.  W. 
997,  22  L.  R.  A.  (N.  S.)  607,  128 
Am.  St.  458n;  State  v.  Standard  Oil 
Co.,  218  Mo.  1,  116  S.  W.  902;  Jacobs 
v.  Cohen,  183  N.  Y.  207,  Id  N.  E.  5, 
2  L.  R.  A.  (N.  S.)  292,  111  Am.  St. 
730.  See  also,  Cleland  v.  Anderson, 
66  Nebr.  252,  92  N.  W.  306,  96  N.  W. 
212,  98  N.  W.  1075,  5  L.  R.  A.  (N. 
S.)  136;  People  v.  McFarlin,  43  Misc. 
(N.  Y.)  591,  18  N.  Y.  Cr.  412,  89  N. 
Y.  S.  527. 

'"  Rohlf  v.  Kasemeier,.  140  Iowa  182, 
118  N.  W.  276.  23  L.  R.  A.  (N.  S.) 
1284,  132  Am.  St.  261;  State  v.  Du- 
luth  Board  of  Trade,  107  Minn.  506, 
121  N.  W.  395,  23  L.  R.  A.  (N.  S.) 
1260n;  State  v.  Associated  Press,  159 
Mo.  410,  60  S.  W.  91,  51  L.  R.  A. 
151,  81  Am.  St.  368.  See,  however. 
More  v.  Bennett,  140  111.  69,  29  N.  E. 
888,  15  L.  R.  A.  361,  ZZ  Am.  St.  216; 
State  V.  Wilson.  11  Kans.  334,  80  Pac. 
639,  84  Pac.  m,  117  Am.  St.  479; 
Froelich  v.  Musician's  Mut.  Ben. 
Assn.,  93  Mo.  App.  383.   Neither  does 


a  statute  which  prohibits  combina- 
tions to  fix  the  price  of  articles  of 
merchandise,  manufacture,  mechan- 
ism, commodity,  convenience,  repair 
or  the  product  of  mining  or  any  ar- 
ticle or  thing  whatsoever  include  pas- 
senger and  freight  rates  especially 
when  passenger  and  freight  rates  had 
been  the  subject  of  separate  and  in- 
dependent legislation.  State  v.  Chi- 
cago &c.  R.  Co.,  95  Ark.  114,  128  S. 
W.  555. 

"Beechley  v.  Mulville,  102  Iowa 
602,  70  N.  W.  107,  71  N.  W.  428.  63 
Am.  St.  479.  Insurance  has  been  held 
not  commerce.  Niagara  Fire  Ins.  Co. 
v.  Cornell,  110  Fed.  816. 

*"  State  V.  American  Surety  Co. 
(Nebr.),  135  N.  W.  365. 

"  Knight  &c.  Co.  v.  Miller,  172  Ind. 
27,  87  N.  E.  823;  In  re  Opinion  of  the 
Justices,  193  Mass.  605,  81  N.  E.  142 ; 
State  v.  Standard  Oil  Co.,  Ill  Minn. 
85,  126  N.  W.  527 ;  State  v.  Standard 
Oil  Co.,  218  Mo.  1,  116  S.  W.  902; 
State  v.  Gage.  12  Ohio  St.  210,  IZ  N. 
E.  1078;  State  v.  Huegin,  110  Wis. 
189,  85  N.  \\.  1046,  62  L.  R.  A.  700n. 
Congress  derives  its  power  from  the 
commerce  clause  of  the  constitution. 
See  ante,  §  914.  But  see  Russell  v. 
Murdock,  79  Iowa  101,  44  N.  W.  237, 
18  Am.  St.  348. 


§919  CONTRACTS.  232 

person,  firm  or  corporation,  or  association  of  persons.^^  The 
question  as  to  whether  or  not  a  given  contract  falls  within  the 
prohibition  of  a  state  antitrust  act  depends  largely  on  the  circum- 
stances of  each  case.^° 

"The  statute  does  not  prohibit  the  78  N.  E.  136,  11  L.  R.  A.   (N.  S.) 

appointment  of  agents  or  sole  agents  968.                                     _ 

for  the  sale  of.  nor  the  making  of,  "See  People  v.  American  Ice  Co., 

contracts   for   the   exclusive   sale  of  135  App.  Div.   (N.  Y.)    180,  120  N. 

goods,  wares,  or  merchandise.    Com-  Y.  S.  41. 
monwealth  v.  Strauss,  191  Mass.  545, 


CHAPTER  XXIV. 


VIOLATION   OF   SUNDAY   LAWS. 


§  925.  Generally.  §  943. 

926.  The  English  statute.  944. 

927.  Sunday    laws    in     the    United 

States.  945. 

928.  Eflfect  of  the  omission   of   the 

words  "ordinary  calling".  946. 

929.  Statutes    prohibiting    business       947. 

on  Sunday. 

930.  Illegal  business  transactions.  948. 

931.  Statutes    prohibiting   labor   but 

not  business.  949. 

932.  Performance    of    contract    for 

labor  on  Sunday.  950. 

933.  The    exceptions     of     necessity 

and  charity.  951. 

934.  Suits  to  enforce  contracts  made       952. 

on  Sunday. 

935.  Payments  for  Sunday  labor.  953. 

936.  Sunday  laws — How  construed.         954. 

937.  Sales  made  on  Sunday. 

938.  Delivery  of  goods  without  pay-       955. 

ment. 

939.  Sunday  contract  fully  executed.       956. 

940.  Telegrams  on  Sunday.  _  957. 

941.  Contracts  of  common  carriers. 

942.  Duty  of  carrier  independent  of 

contract. 


Loaning  money  on  Sunday. 

Deeds,  mortgages  and  sealed 
instruments    made  on  Sunday. 

Rule  as  to  deeds  and  mort- 
gages illustrated. 

Notes  and  bills. 

Bona  fide  holder  of  a  note 
made  on  Sunday. 

Ratification  of  contracts  made 
on  Sunday — General  rule. 

Minority  rule — D  i  s  t  i  n  c  t  i  o  n 
drawn. 

Completion  of  contract  on 
secular  day. 

Delivery  on  secular  day. 

Executed  and  executory  Sun- 
day contracts. 

Executed  by  one  party. 

Conflict  of  laws  as  to  Sunday 
contracts. 

Void  where  made  void  every- 
where and  vise  versa. 

Law  of  place  of  performance. 

Not  void  on  ground  of  public 
policy. 


§  925.  Generally. — A  large  class  of  illeg  .1  agreements 
under  modern  statutes  consists  of  so-called  Sunday  contracts. 
The  common  law,  however,  made  no  distinction  between  con- 
tracts entered  into  on  Sunday  and  those  made  on  any  other  day.^ 
Contracts  entered  into  on  Sunday  were  as  valid  as  those  made  on 
any  other  day."  The  invalidity  of  Sunday  contracts  rests  entirely 


^Heavenridge  v.  Mondv,  34  Ind.  28; 
Banks  v.  Werts,  13  Ind.'  203;  Wool- 
dridge  v.  Wooldridge,  69  W.  Va.  554, 
72  S.  E.  654. 

^  Comyns  v.  Boyer,  Cro.  Eliz.  485; 
Rex  v.  Brotherton,  1  Stra.  702;  King 
V.  Whitnash.  7  B.  &  C.  596;  Swann 
v.  Swann.  21  Fed.  299;  Hooks  v. 
State,  58  Fla.  57,  50  So.  586;  Davis 


V.  Barger,  57  Ind.  54 ;  Steere  v.  Treb- 
ilcock.  108  Mich.  464,  66  N.  W.  342; 
Rodman  v.  Robinson,  134  N.  Car.  503, 
47  S.  E.  19.  65  L.  R.  A.  682,  101  Am. 
St.  877;  Amis  v.  Kvle.  2  Yerg. 
(Tenn.)  31.  24  Am.  Dec.  463.  Lord 
Mansfield,  in  Drury  v.  Defontaine,  1 
Taunt.  131,  said  that  "it  does  not  ap- 
pear that  the  common  law  ever  con- 


233 


§  926 


CONTRACTS. 


234 


upon  statuton'  enactment.^  However,  it  is  not  necessary  that  such 
statutes  contain  an  express  declaration  of  the  invaHdity  of  Sun- 
day contracts  since  by  prohibiting  labor  or  business  and  by  an- 
nexing a  penalty  to  a  violation  of  their  acts  such  contracts  may 
be  made  illegal.'*  In  England  and  generally  in  this  country  laws 
more  or  less  stringent  have  been  enacted  prohibiting  all  the  ordi- 
nary labor  or  business  on  Sunday  and  imposing  fixed  penalties.^ 

§  926.  The  English  statute. — The  principal  English  stat- 
ute on  this  subject  provides  that  persons  shall  not  "do  or  exercise 
any  worldly  labor,  business  or  work  of  their  ordinary  callings, 
upon  the  Lord's  day,  or  any  part  thereof  (works  of  necessity  and 
charity  only  excepted)."^  According  to  the  original  interpreta- 
tion of  this  language,  it  was  confined  to  work  or  business  done  by 
persons  in  their  ordinary  calling.  Thus  in  one  case  the  plaintiff 
had  sent  his  horse  to  an  auctioneer,  who  sold  him  on  Sunday  to 
the  defendant  by  private  contract.    In  an  action  for  the  price  of 


sidered  those  contracts  as  void  which 
were  made  on  a  Sunday."  See  also, 
Eden  v.  People,  161  111.  296,  43  N. 
E.  1108,  32  L.  R.  A.  659,  52  Am.  St. 
365.  Redfield,  J.,  in  Adams  v.  Gay, 
19  Vt.  358,  said,  in  effect,  that  no  case 
could  be  found  holding  a  contract  to 
be  void  at  common  law  because  exe- 
cuted on  Sunday.  But  see  contra, 
Morgan  v.  Richards,  1  Brown's  (Pa.) 
171. 

'  Hooks  V.  State,  58  Fla.  57,  50  So. 
586. 

*  Coleman  v.  Henderson,  Litt.  Sel. 
Cas.  (Ky.)  171,  12  Am.  Dec.  200, 
note;  Allen  v.  Gardiner,  7  R.  I.  22; 
Lyon  v.  Strong,  6  Vt.  219. 

°7  Waits'  Actions  and  Defenses, 
114;  2  Addison  on  Contracts  8th  ed. 
754,  notes.  The  constitutionality  of 
such  acts  has  been  sustained.  Frolick- 
stein  V.  Mobile,  40  Ala.  725;  Shover 
V.  State,  10  Ark.  259;  Scales  v.  State, 
47  Ark.  476,  1  S.  W.  769,  58  Am.  Rep. 
768;  Ex  parte  Andrews,  18  Cal.  678, 
and  cases  cited ;  Warner  v.  Smith,  8 
Conn.  14;  In  re  King,  46  Fed.  905; 
Karwisch  v.  Atlanta,  44  Ga.  204; 
Langabier  v.  Fairbury  P.  &  N.  W.  R. 
Co.,  64  111.  243,  16  Am.  Rep.  550; 
Foltz  v.  State,  33  Ind.  215;  Slate  v. 
Judge,  39  La.  Ann.  132;  Judefind  v. 
State,  78  Md.  510,  28  Atl.  405,  22  L. 


R.  A.  721,  and  note;  O'Brien  v.  Shea, 
208  Alass.  528,  95  N.  E.  99 ;  Common- 
wealth V.  Has,  122  Mass.  40;  Linden- 
muller  v.  People,  33  Barb.  (N.  Y.) 
548;  Neuendorff  v.  Duryea,  69  N.  Y. 
557,  25  Am.  Rep.  235 ;  Specht  v.  Com- 
monwealth, 8  Pa.  St.  312,  49  Am.  Dec. 
518;  Gabel  v.  Houston,  29  Texas  335. 
Article  on  "The  Constitutionality  of 
Sunday  Laws,"  by  George  Stewart 
Patterson,  32  Am.  L.  Reg.  &  Rev. 
437  (1893),  in  answer  to  article  by 
James  T.  Ringgold,  31  Am.  L.  Reg. 
&  Rev.  723. 

*29  Car.  11,  ch.  7,  familiarly  known 
as  the  Lord's  day  act.  Every  species 
of  labor,  business,  or  work,  whether 
public  or  private,  in  the  ordinary  call- 
ing of  tradesman,  artificer,  workman, 
laborer,  or  other  person,  is  within  the 
prohibition  of  the  statute..  Fenncll  v. 
Ridler,  5  B.  &  C.  406,  11  Eng.  C.  L. 
517  was  an  action  on  the  war- 
ranty of  a  horse.  The  court  decided 
that  the  purchase  of  a  horse,  by  a 
horse  dealer,  was  in  the  exercise  of 
the  business  of  his  ordinary  calling, 
that  the  statute  extends  to  private 
as  well  as  public  sales,  and  that  the 
plaintiff  could  not  maintain  any  action 
upon  a  contract  for  the  sale  and  war- 
ranty of  a  horse,  made  by  him  upon 
Sunday. 


235  VIOi^ATIOX    OF    SUNDAY    LAWS.  §    927 

this  horse,  the  court  held  that  the  auctioneer  was  not  in  the  exer- 
cise of  his  ordinary  calHng  when  he  sold  the  horse  by  private  con- 
tract; and,  therefore,  as  neither  the  plaintiff  nor  his  agent  was  in 
the  exercise  of  their  ordinary  calling,  the  sale  was  not  void.  The 
court  held  that  if  a  man  in  the  exercise  of  his  ordinary  calling 
should  make  a  contract  on  Sunday,  that  contract  would  be  void ; 
that  is,  void  so  far  as  to  prevent  a  party  privy  to  it  from  suing  in 
a  court  of  law.^  However,  in  a  subsequent  case  it  was  said, 
"The  expression  'any  worldly  labor,'  cannot  be  confined  to  a 
man's  ordinar\^  calling,  but  applies  to  any  business  he  may  carry 
on,  whether  in  his  ordinary  calling  or  not."*  This  point,  how- 
ever, was  not  raised  by  the  case,  and  no  opinion  was  expressed 
upon  it  by  the  other  judges,  and  afterward  the  doctrine  of  Drury 
V.  De  Fontaine  was  fully  sustained." 

§  927.  Sunday  laws  in  the  United  States. — Most  of  the 
states  of  the  union,  if  not  all,  have  what  are  familiarly  known  as 
Sunday  laws,  and  while  they  differ  in  their  phraseology  they  are 
substantially  the  same  in  their  general  scope.  Of  these  laws 
there  has  been  a  great  diversity  of  interpretation,  some  courts 
holding  to  them  with  great  strictness,  while  others  have  construed 
them  with  some  liberality."  They  are  mostly  modeled  upon  the 
English  statute,  but  in  many  of  them  the  words  "ordinary  call- 
ings" are  omitted.     This  circumstance  accounts  for  the  discrep- 

^  Drury  v.  Defontaine,  1  Taunt.  131.  "  Philadelphia,  Wilmington  &  B.  R- 
The  same  construction  was  given  to  Co.  v.  Lehman,  56  Md.  209,  40  Am. 
the  statute  in  King  v.  Whitnash,  7  B.  Rep.  415.  Statutes  for  the  observance 
&  C  596.  This  was  a  case  in  which  of  Sunday  are  remedial  in  their  char- 
there  was  a  contract  of  hiring  made  acter,  and  should  be  liberally  con- 
on  Sundav  between  a  farmer  and  a  strued.  Smith  v.  Wilcox,  24  N.  Y. 
laborer  for  a  year.  It  was  objected  353,  82  Am.  Dec.  302.  The  contract 
that  the  contract  was  under  the  stat-  itself  is  to  be  construed  in  a  man- 
ute  void,  but  it  was  held  valid  as  not  ner  that  will  make  it  lawful,  if  pos- 
being  in  the  course  of  the  ordinary  sible.  The  law  does  not  presume  that 
calling  of  the  parties  so  not  within  the  parties  contracted  to  do  an  un- 
the  statute.  Bloxsome  v.  Williams,  3  lawful  thing  or  violate  a  statutory 
B.  &  C.  232,  10  Eng.  Com.  L.  113.  prohibition    carrying    out    its    terms. 

*  Smith  v.  Sparrow,  4  Bing.  84.  Zenatello  v.  Hammerstein.  231  Pa.  56, 

•  Scarfe  v.  Morgan,  4  M.  &  W.  270.  79  Atl.  922.  To  same  effect.  Keith  v. 
The  doctrine  is  also  recognized  in  Kellerman,  169  Fed.  196;  Lippert  v. 
Wolton  V.  Gavin.  16  Q.  B.  48,  hold-  Garrick  Theater  Co.,  144  Wis.  413, 
ing  that  the  enlistment  of  a  recruit  129  N.  W.  409. 

is  not  within  the  ordinary  calling  of 
a  soldier. 


s 


928  CONTRACTS.  236 


ancy  on  this  point  between  the  English  and  many  of  the  American 
decisions.  ^^ 

§  928.    Effect  of  the  omission  of  the  words  "ordinary  call- 
ing."— By  the  omission  of  the  clause  confining  the  prohibi- 
tions to  the  exercise  of  the  "ordinary  callings"  of  persons,  and 
extending  it  so  as  to  include  "any  manner"  of  labor,  business  or 
work,  as  in  Massachusetts  and  some  other  states,  the  intention 
seems  to  have  been  to  comprehend  within  the  prohibition  all  acts 
of  a  secular  nature  connected  with  ordinary  business  or  common 
worldly  affairs,  although  they  might  not  fall  within  the  line  of 
the  daily  business  or  occupation  in  which  a  person  happened  to 
be  employed.     So  a  contract  entered  into  on  a  Sabbath,  within 
the  hours  designated  in  the  statute,  would  be  tainted  with  illegal- 
ity, although  it  had  no  connection  with  the  particular  calling  or 
business  in  which  either  of  the  parties  was  usually  engaged  at  the 
time  the  transaction  took  place.'-     The  execution  of  a  release  by 
a  creditor  to  an  assignee  by  delivery  on  Sunday  is  not  void  under 
the  Rhode  Island  statute,  which  prohibits,  under  a  penalty,  any 
person  from  doing  or  exercising  "any  labor,  or  business,  or  work 
of  his  ordinary  calling,  on  the  first  day  of  the  week,"  works  of 
necessity  or  charity  excepted."    A  contract  of  marriage,  although 
a  civil  contract,  is  not  invalid  when  entered  into  on  Sunday.'* 
Where  a  debt  was  paid  on  Sunday  it  was  held  to  be  an  extinguish- 
ment of  the  debt.'^ 

"Bailey's  Conflict  of  Judicial  De-  are  illegal,  and  the  payment  operates 

cisions  54.  to    discharge    the    debt.     Jameson    v. 

"Bennett     v.     Brooks,     9     Allen  Carpenter,  68  N.  H.  62,  36  Atl.  554. 

(Mass.)    118;    George   v.   George,   47  A  gift   completed   and   executed   has 

N.  H.  n  (discussing  the  effect  of  the  none  of  the  elements  of  a  contract, 

change     in     substituting     the     word  and  does  not  come  within  the  prohibi- 

"secular"  for  the  word  "ordinary"  in  tion    of    the    statute    which    declares 

the    English   act)  ;    Smith   v.    Foster,  contracts     made     on     Sunday     void. 

41   N.   H.  215    (ordinary  and  secular  Wheeler  v.  Glasgow,  97  Ala.  700,  11 

calling  distinguished).  So.  758.    A  promise  made  on  Sunday 

"Allen  V.  Gardiner,  7  R.  I.  22.  will  not  remove  the  bar  of  the  stat- 

"  Bennett  v.  Brooks,  9  Allen  ute  of  limitations.  Pillen  v.  Erick- 
(Mass.)  118.  A  marriage  settlement  son,  125  Mich.  68,  83  N.  W.  1023.  A 
is  not  prohibited  by  a  statute  which  contract  void  under  the  statute  of 
prohibits  people  from  following  their  frauds  cannot  be  taken  out  of  the 
"ordinary  calling"  on  Sunday.  Hay-  statute  by  acts  performed  on  Sun- 
den  V.  Mitchell,  103  Ga.  431,  30  S.  E.  day,  when  such  acts  are  prohibited 
287  hy  statute.    Ash  v.  Aldrich,  67  N.  H. 

"■  Johnson  v.  Willis,  7  Gray  (Mass.)  581,  39  Atl.  442. 
164.    Both   payment   and   acceptance 


2iy  VIOLATION    OF   SUNDAY    LAWS.  §    929 

§  929.  Statutes  prohibiting  business  on  Sunday. — It  seems 
to  be  the  common  expression  of  the  courts  that  the  making  of  a 
contract  is  business,  and  embraced  within  prohibitions  against  all 
"work,  business  or  lalx)r"  on  that  day.'"  In  Massachusetts, 
Maine  and  Alichigan  the  statutoiy  words  are:  "No  person  shall 
do  any  manner  of  labor,  business  or  work,  except  only  works  of 
necessity  or  charity,  on  the  Lord's  day."  In  New  Hampshire, 
Vermont,  Connecticut  and  many  other  states,  the  prohibitions 
are  variously  expressed,  but,  when  the  word  "business"  is  used 
to  indicate  a  thing  forbidden,  it  is  held  that  contracts  made  on 
Sunday  are  void  unless  within  some  statutory  exception.^' 

§  930.  Illegal  business  transactions. — A  sale  or  exchange 
of  horses,  attended  with  the  circumstances  which  usually  attend 
those  exchanges,  is  a  secular  labor  or  employment  within  the 
meaning  of  the  statute  for  the  observance  of  the  Sabbath.'* 
In  Rhode  Island  the  letting  of  a  horse  on  Sunday  by  a  liv- 
ery stable  keeper,  in  the  ordinary  course  of  his  calling,  when 
uncalled  for  by  necessity  or  charity,  is  an  illegal  contract  and 
cannot  be  enforced.'^     The  same  is  true  of  a  note  executed 

"  O'Rourke  v.  O'Rourke,  43  Mich,  of  this  bond  was  a  work  of  necessity 
58,  4  N.  \V.  531 ;  Bloom  v.  Richards,  or  charity.  Was  its  execution  'any 
2  Ohio  St.  387  (pointing  out  the  dis-  manner  of  labor,  business  or  work', 
tinction  between  "labor"  and  "busi-  within  the  meaning  of  the  statute? 
ness")  ;  Amis  v.  Kyle,  2  Yerg.  Certainly  it  was.  The  legislature  in- 
(Tenn.)  31,  24  Am.  Dec.  463.  As  to  tended  to  prohibit  secular  business  on 
the  validity  of  Sunday  contracts  gen-  the  Lord's  daj%  and  did  not  confine 
erally,  see  O'Donnell  v.  Sweeney,  5  the  prohibition  to  manual  labor,  but 
Ala.  467,  39  Am.  Dec.  336;  Mueller  v.  extended  it  to  the  making  of  bar- 
State,  76  Ind.  310,  40  Am.  Rep.  245;  gains,  and  all  kinds  of  trafficking." 
Parker  v.  Pitts,  1Z  Ind.  597,  38  Am.  Webb  v.  Kennedy,  20  Minn.  419  (con- 
Rep.  155;  Adams  v.  Hamell.  2  Doug,  tract  of  hiring);  Durant  v.  Rhenier, 
(Mich.)  12>,  43  Am.  Dec.  455  (prom-  26  Minn.  362,  4  N.  W.  610  (formation 
issory  note  given  on  Sunday  void)  ;  of  a  partnership)  ;  Herndon  v.  Hen- 
Allen  V.  Deming.  14  N.  H.  133,  40  derson.  41  Miss.  584;  Chenette  v.  Tee- 
Am.  Dec.  179;  Kepner  v.  Keefer.  6  han,  63  N.  H.  149  (contract  for  bail- 
Watts.  (Pa.)  231,  31  Am.  Dec.  460;  ment)  ;  Steflfens  v.  Earl.  40  N.  J.  L. 
Lovejoy  v.  Whipple.  18  Vt.  379,  46  128,  29  Am.  Rep.  214;  Smith  v.  Chi- 
Am.  Dec.  157;  Deforth  v.  Wiscon-  cago  &c.  R.  Co.,  83  Wis.  271,  50  N. 
sin  &c.  R.  Co.,  52  Wis.  320,  9  N.  W.  \N .  497,  53  N.  W.  550  (agreement 
17,  38  Am.  Rep.  IVl.  "Sunday  Con-  consenting  to  laying  railroad  tracks 
tracts.  When  Void  and  When  Bind-  across  land  void  when  made  on  Sun- 
ing,"  article  bv  J.  H.  Lind,  17  Am.  dav). 
L.  Reg.  (N.  S.)  281.  "Lvon  v.  Strong.  6  Vt.  219. 

'■  In    Pattee    v.    Greelv,    13    Mete.  "  Whelden  v.  Chappel.  8  R.  I.  230 ; 

(Mass.)  284,  Shaw.  C.  J.,  said:    "The  Smith  v.  Rollins.  11  R.  I.  464.  23  Am. 

statement  of  fact  admits  that  there  is  Rep.  509    (trover  for  the  conversion 

nothing  to  show   that  the   execution  of     a     horse,     buggy     and     harness. 


§931  CONTRACTS.  238 

as  part  of  a  transaction  connected  with  the  maker's  usual  or 
ordinary  calling.^"  But  a  statute  prohibiting  one  from  fol- 
lowing his  ''ordinary  calling"  on  Sunday  does  not  apply  to  a 
marriage  settlement  entered  into  on  that  day.^^  Under  a  statute 
of  this  character  it  would  seem  that  a  Sunday  contract  is  not 
void  unless  it  relates  to  the  ordinary  calling  or  business  of  the 
party  who  assumes  the  obligation."  In  Connecticut  it  was  said 
by  the  court  that  the  execution  of  written  instruments  on  Sunday, 
between  sunrise  and  sunset,  has  always  been  held  as  falling 
within  the  description  of  "secular  business",  and  been  adjudged 
void  under  the  statutes  of  that  state.^^  Under  a  statute  which 
forbade  the  keeping  open  of  places  of  public  amusement  on  Sun- 
day, such  as  theaters,  etc.,  a  contract  providing  for  the  appear- 
ance and  exhibition  of  certain  persons  as  performers  on  Sunday 
in  theaters  cannot  be  enforced,  in  so  far  as  it  includes  Sunday 
exhibitions."* 

§  931.    Statutes    prohibiting    labor    but    not    business. — 

Where  the  statute  prohibits  labor  on  Sunday,  but  not  business, 
the  courts  are  not  agreed  as  to  whether  that  embraces  business  so 
as  to  invalidate  contracts  made  on  that  day.^^  In  such  cases  con- 
tracts generally  are  upheld  .as  not  constituting  labor  within  the 
purview  of  the  statute.^*  Under  the  rule  that  contracts  to  do  a 
thing  prohibited  by  statute  are  void,  it  is  held  that  all  contracts  for 

Where   a   plaintiff's   cause  of   action  ^*  La    Crandall    v.    Ledbetter,    159 

arises   from  a   violation  of  law,  the  Fed.  702,  86  C  C  A.  570.   Equity  has 

suit  cannot  be  sustained).  no  jurisdiction  to  restrain  the  police 

''"Smith    V.    Christian,    6    Ga.    App.  from  arresting  a  person  for  violating 

259,   64   S.    E.    1002    (note   given   by  the  Sunday  laws.   Eden  Musee  Amer- 

farmer  for  purchase  of  a  mule  and  ican   Co.  v.   Bingham,    110   N.   Y.   S. 

buggy).  210. 

""  Hayden  v.  Mitchell,  103  Ga.  431,  ''  Harris  on  Sunday  Laws  93. 

30  S.  E.  287.  '°In    California   contracts  on    Sun- 

"  Borough  V.  Equitable  Mortg.  Co.,  day    are    not    prohibited    by    statute. 

118  Ga.  178,  45  S.  E.  22;  Rodman  v.  Moore    v.     Murdock,    26    Cal.    514; 

Robinson,   134  N.  Car.  503,  47  S.  E.  Hooks   v.   State,   58   Fla.   57,   50   So. 

19,  65  L.  R.  A.  682,  101  Am.  St.  877.  586.    Here  a  sale  of  watermelons  was 

See,    however,    Williams    v.    Allison  upheld.  The  court  said:  "Our  Florida 

(Ga.  App.),  74  S.  E.  442,  holding  a  statute  on  the  subject   (§  3565,  Gen. 

contract  made  by  the  owner  of  real  St.  1906)  provides  as  follows:    'Who- 

estate  and  personal  property  with  a  ever  follows  any  pursuit,  business  or 

real  estate  agent,  placing  the  property  trade   on   Sunday,   either   by   manual 

in  the  hands  of  the  agent  to  be  sold,  labor  or   with  animal   or  mechanical 

unen forcible.  power,   except  the  same  be  work  of 

^  Gould,  J.,  in  Fox  v.  Abel,  2  Conn,  necessity,  shall  be  punished  by  a  fine 

541.  not  exceeding  fifty  dollars.'    This  be- 


239 


VIOLATION    OF   SUNDAY    LAWS. 


§    931 


work  or  labor  to  be  performed  on  Sunday  are  void  unless  such 
work  comes  within  the  exception  of  necessity  or  charity,^^  as  an 
agreement  to  carry  an  advertisement  in  the  Sunday  edition  of 
plaintiff's  paper."^ 


ing  a  pena!  statute,  of  course,  the 
same  must  be  strictly  construed. 
What  pursuit,  business,  or  trade  does 
it  inhibit  the  following  or  perform- 
ance of  on  Sunday?  Clearly  such  as 
requires  manual  labor  or  animal  or 
mechanical  power  to  perform  it.  The 
execution  of  a  note,  mortgage,  or 
other  contract  requires  neither  man- 
ual labor  nor  any  animal  or  mechan- 
ical power,  and  we  do  not  think  that 
their  execution  on  Sunday  is  pro- 
hibited by  this  statute,  and  that,  con- 
sequently, the  validity  of  any  contract 
made  in  this  state  is  not  affected  by 
the  fact  that  it  was  executed  or  de- 
livered on  Sunday.  The  purpose  of 
our  statute,  when  all  of  its  provisions 
are  considered,  seems  to  be  to  pro- 
hibit the  performance  on  Sunday  not 
only  of  those  works  or  pursuits  that 
from  their  nature  have  to  be  per- 
formed in  public,  and  that  may,  there- 
fore, be  offensive  to  the  sensibilities 
of  the  Christian  community  in  which 
they  are  carried  on,  if  followed  on 
the  Lord's  Day."  In  Illinois  there  is 
no  prohibition  of  the  transaction  of 
business  on  Sunday,  but  only  of  the 
disturbance  of  "the  peace  and  good 
order  of  society  by  labor."  A  Sunday 
contract  is  valid.  McCurdy  v.  Alaska 
&c.  Commercial  Co.,  102  111.  App.  120 ; 
Richmond  v.  Moore,  107  111.  429,  47 
Am.  Rep.  445  (an  extended  review 
of  the  law  of  Sunday  as  it  exists  in 
that  state").  The  same  is  true  in 
Kansas  [Birks  v.  French,  21  Kans. 
238;  Holden  v.  O'Brien,  86  Minn. 
297,  99  N.  W.  531  (casual  execution 
and  delivery  of  notes  or  contracts 
not  prohibited)!;  Missouri,  where 
the  prohibition  of  the  statute  is  "to 
labor  or  perform  any  work"  (Glover 
V.  Cheatham,  19  Mo.  App.  656)  ;  Ne- 
braska [Fitzgerald  v.  Andrews,  15 
Nebr.  52,  17  N.  W.  370;  Bloom  v. 
Richards,  2  Ohio  St.  3S7  (holding 
that  a  sale  of  land  on  Sunday,  a  sin- 
gle transaction,  involving,  in  the  opin- 
ion of  the  court,  no  labor,  was  not 


prohibited  by  statute)! ;  nor  in  Texas. 
Behem  v.  Ghio,  75  Texas  87,  12  S. 
W.  996;  Krohn  v.  Krohn,  5  Tex.  Civ. 
App.  125,  23  S.  W.  848.  See  also, 
Rodman  v.  Robinson,  134  N.  Car. 
503,  47  S.  E.  19,  65  L.  R.  A.  682,  101 
Am.  St.  877.  In  Indiana  the  making 
of  a  contract  on  Sunday  is  common 
labor.  Link  v.  Clemmens,  7  Blackf. 
(Ind.)  479  (bond)  ;  Reynolds  v.  Stev- 
enson, 4  Ind.  619  (making  a  note). 
See  also.  Hill  v.  Kite,  85  Fed.  268,  29 
C.  C.  A.  549  (decided  under  Arkansas 
statute). 

*' Phillips  V.  Innes,  4  C  &  F.  234 
(shaving  on  Sunday)  ;  Gauthier  v. 
Cole,  17  Fed.  716;  Bendross  v.  State, 
5  Ga.  App.  175,  62  S.  E.  728;  Pate 
V.  Wright,  30  Ind.  476,  95  Am.  Dec. 
705 ;  Johnson  v.  Brown,  13  Kans. 
529;  Hazard  v.  Day,  14  Allen  (Mass.) 
487.  92  Am.  Dec.  790 ;  Allen  v.  Duffy, 
43  Mich.  1,  4  N.  W.  427,  38  Am.  Rep. 
159;  Handy  v.  St.  Paul  Globe  Pub. 
Co.,  41  Minn.  188,  42  N.  W.  872,  4 
L.  R.  A.  466.  16  Am.  St.  695.  De- 
cisions as  to  what  is  and  what  is  not 
unlawful  Sundav  labor,  see  note  to 
Quarles  v.  State,' 55  Ark.  10,  17  S.  W. 
269,  14  L.  R.  A.  192.  Under  a  stat- 
ute which  prohibited  worldly  employ- 
ment on  Sunday  it  has  been  held  that 
compensation  could  not  be  recovered 
for  services  rendered  in  delivering 
papers  on  Sunday.  Knight  v.  Press 
Co..  227  Pa.   185.  75  Atl.   1083. 

^*  Publishers  :  Geo.  Knapp  &  Co.  v. 
Culbertson,  152  :\Io.  App.  147,  133  S. 
W.  55,  in  which  case  the  advertise- 
ment was  inserted  and  suit  subse- 
quently brought  to  recover  the  con- 
tract price.  It  was  held  there  could 
be  no  recovery,  and  that  the  defense 
that  the  contract  called  for  Sunday 
labor  might  be  set  up  at  any  stage  of 
the  action.  It  would  seem,  however, 
that  it  is  not  the  duty  of  the  court 
to  interfere  and  of  its  own  motion 
sustain  tiie  defense  when  it  is  not  set 
up.  O'Brien  v.  Shea,  208  Mass.  528, 
95  N.  E.  99. 


§   932  CONTRACTS.  24O 

§  932.    Performance  of  contract  for  labor  on  Sunday. — 

In  a  case  where  there  was  a  contract  for  services  to  be  rendered 
on  Saturday,  Sunday  and  ]\Ionday,  it  was  held  that  there  could  be 
no  recovery  at  all  for  compensation,  if  the  contract  was  an  entire 
one.  If  the  contract  was  not  entire  the  rule  might  be  otherwise 
and  recovery  be  had  as  upon  quantum  meruit.^^  It  was  held  in 
New  York,  where  the  statute  provided  that  "all  labor  on  Sunday 
is  prohibited,"  that  a  contract  entered  into  on  Sunday  was  not 
void,  and  did  not  violate  the  statute  providing  for  Sunday  ob- 
servance, unless  the  work  to  be  done  was  to  be  performed  on 
Sunday.^'^  In  the  same  jurisdiction  it  has  been  held  that  the 
statute  renders  void  a  contract  of  employment  by  an  actor  to 
perform  and  render  services  on  Sunday.^^  A  clerk  in  an  attor- 
ney's office  was  not  allowed  to  recover  of  his  principal  for  extra 
services  performed  on  Sunday.^^ 

§  933.    The  exceptions  of  necessity  and  charity. — It  has 

been  said  of  the  exceptions  in  the  English  statute  that  they  are 
"vague  and  indefinite,"  and  "extremely  loose."^'  The  words 
"necessity"  and  "charity"  have  never  received  a  very  strict  con- 
struction. The  work  of  clergymen,  physicians,  nurses,  apothe- 
caries, and  undertakers  is  by  general  concession  within  the  excep- 
tion. The  work  of  those  employed  in  furnishing  articles  of  daily 
and  general  need,  like  gas,  water,  milk,  mails  and  telegrams,  has 
at  least  a  certain  popular  sanction  as  permitted  labor.^*     The  law 

"Williams  v.   Hastings,  59  N.  H.  ''Watts  v.  Van  Ness,   1  Hill   (N. 

373  Y.)  76;  Palmer  v.  New  York,  2  Sand. 

'"Merritt  v.   Earle,  29  N.   Y.    115,  (N.  Y.)  318. 

86  Am.  Dec.  292 ;   Boynton  v.   Page,  "^  Rex  v.  Younger,  5  T.  R.  449. 

13   Wend.    (N.   Y.)    425    (sale   of   a  ** Donovan   v.   McCarty,   155   Mass. 

horse)  ;  Eberle  v.  Mehrbach,  55  N.  Y.  543,  30  N.  E.  221    (a  controversy  in 

682;  Batsford  v.  Every,  44  Barb.  (N.  relation  to  an  instrument  of  assign- 

Y.)    618;    Hamilton    v.    Gridley,    54  ment  much  resembling  a  will  executed 

Barb.  (N.  Y.)  542.  on   Sunday).    It   is  a  task  of   much 

^'In  re  Hammerstein,  57  Misc.   (N.  difficulty,  and  one  that  a  court  ought 

Y.)   52,  108  N.  Y.  S.  197;  Hallen  v.  not  unnecessarily  to  attempt,  to  draw 

Thompson,  48  Misc.   (N.  Y.)   642,  96  a    line   that    shall   clearly    distinguish 

N.  Y.  S.  142;  Albera  v.  Sciaretti,  72  works   of   necessity   from   those   that 

Misc.  (N.  Y.)  496,  131  N.  Y.  S.  889.  are  not.   McGatrick  v.  Wason,  4  Ohio 

But  a  contract  of  this  character  has  St.  566  (in  this  case  the  question  was 

been  upheld  under  a  statute  provid-  whether  the  danger  of  a  closing  of 

ing    for   the   punishment   of    persons  navigation  by  cold   weather  justified 

found   sporting  or  at  common   labor  loading  a  vessel,  and  it  was  held  that 

on    Sunday.     Wirth    v.    Calhoun,    64  it  did). 
Nebr.  316,  89  N.  W.  785. 


241 


V^OLATIOX    OF   SUNDAY    LAWS. 


§  933 


regards  that  as  necessary  which  the  common  sense  of  the  country, 
in  its  ordinary  modes  of  doing  its  business,  regards  as  necessar)'." 
It  is  sufficient  that  the  act  is  one  morally  fit  and  proi)er  to  be  done 
on  Sunday,  under  the  particular  circumstances  of  the  case.^" 
The  ordinary  domestic  duties  may  be  performed,  and  persons  and 
brutes,  as  well  as  proi>erty,  rescued  from  danger."  It  need  not 
be  shown  that  the  property  was  of  great  value,  but  the  circum- 
stances of  the  owner,  and  the  value  of  the  property  to  him,  are 
to  be  considered.^^  In  Vermont  it  was  held  that  it  might  be 
necessary  in  some  cases  to  work  in  making  maple  sugar  "in  order 
to  save  a  great  waste  of  sap."^**  Raising  subscriptions  on  the 
Lord's  day  to  purchase  a  church  has  been  held  to  be  a  work  of 
charity/"  The  execution  and  delivery  of  a  promissory  note  is 
not  prima  facie  a  work  of  necessity  and  charity.  If  any  special 
facts  exist  to  make  it  so,  they  should  be  introduced  as  evidence." 
The  question  of  what  is  to  be  classed  as  a  "necessity"  or  "charity" 
must  be  decided  according  to  the  circumstances,  and  it  is  there- 
fore more  a  question  of  fact  than  of  law."     The  burden  has  been 


''  Commonwealth  v.  Nesbit,  34  Pa. 
St.  398. 

'"Dovle  V.  Lvnn  Sec.  R.  Co.,  118 
^lass.  "195,  19  Am.  Rep.  431;  Com- 
monwealth V.  Knox,  6  ^Nlass.  76; 
Flagg  V.  Millburv.  4  Cush.  (Mass.) 
243;  McClary  v.  Lowell,  44  Vt.  116, 
8  Am.  Rep.  366.  The  word  "neces- 
sity" should  be  given  a  reasonable 
construction.  State  v.  Chicago  &c.  R. 
Co..  239  Alo.  196,  143  S.  W.  785. 

^' McGatrick  v.  Wason,  4  Ohio  St. 
566. 

^Johnson  v.  People,  42  111.  App. 
594  (reaping  a  field  of  oats). 

^Whitcomb  v.  Gilman,  35  Vt.  297: 
"The  individual  condition  and  neces- 
sities of  each  man  may  go  far  to  de- 
termine whether  it  is  his  duty  to  la- 
bor on  Sunday  to  save  property  from 
destruction.'' 

"Allen  V.  Duffv.  43  Mich.  1,  4  N. 
W.  427,  38  Am.  Rep.  159  and  note. 
In  Wilkinson  v.  State,  59  Ind.  416,  26 
Am.  Rep.  84,  it  was  held  to  be  a 
work  of  necessity  to  gather  melons 
on  Sunday  so  as  to  prevent  waste. 

"Burns  v.  Moore,  76  Ala.  339,  52 
Am.  Rep.  332   (no  emergency  shown 


which  excused  taking  of  the  note  on 
Sunday)  ;  Sayre  v.  Wheeler,  32  Iowa 
559.  A  note  given  an  attorney  for 
services  rendered  in  securing  bail  for 
a  prisoner  has  been  held  collectable, 
although  executed  on  Sunday,  since 
the  services  were  in  the  nature  of  a 
"work  of  charity."  Few  v.  Gunter 
(Ga.  App.),  72  S.  E.  720. 

^^  Mueller  v.  State,  76  Ind.  310,  40 
Am.  Rep.  245.  What  labor  would  be 
work  is  a  question  of  fact  for  the 
jury  (Edgerton  v.  State,  67  Ind.  588, 
33  Am.  Rep.  110)  ;  such  as  shaving 
of  a  customer  by  a  barber  on  Sun- 
day (Ungericht  v.  State,  119  Ind.  379, 
21  N.  E.  1082,  12  Am.  St.  410). 
Where  the  evidence  is  of  such  a 
character  that  there  can  be  but  one 
conclusion  logically  deducible  from 
it,  the  court  may,  as  a  matter  of  law, 
construe  it,  but  when  different  con- 
clusions are  deducible  from  it  the 
court  must  submit  the  question  to  the 
jurv.  Western  Union  Tel.  Co.  v. 
Eskridge.  7  Ind.  App.  208.  33  N.  E. 
238.  Of  keeping  open  a  shop,  etc..  it 
was  said  in  Commonwealth  v.  Har- 
rison, 11   Gray   (Mass.)   308:    "It  is 


16 — CoNTR.\CTS,  Vol.  2 


§    C)34  CONTRACTS.  242 

held  to  be  on  a  party  claiming  to  be  within  the  exception  of  a 
Sunday  statute  to  prove  that  he  is  so."*^ 

§  934.    Suits  to  enforce  contracts  made   on   Sunday. — A 

contract  or  agreement  made  on  Sunday,  in  states  where  such  laws 
exist,  will  not  be  enforced  in  a  court  of  law."  The  ground  upon 
which  courts  have  refused  to  maintain  actions  on  contracts  made 
in  contravention  of  statutes  for  the  observance  of  Sunday  is  the 
elementary  principle  that  one  who  has  participated  in  a  violation 
of  law  cannot  be  permitted  to  assert  in  a  court  of  justice  any  right 
founded  upon  or  growing  out  of  the  illegal  transaction.*^  The 
plaintiff  cannot  recover  where,  in  order  to  sustain  his  supposed 
claim,  he  must  set  up  an  illegal  agreement  to  which  he  himself 
has  been  a  party.*^  It  is  upon  this  principle  that  a  bond,  promis- 
sory note  or  other  executory  contract,  made  and  delivered  on 
Sunday,  is  incapable  of  being  enforced,  or  as  is  sometimes  said, 
absolutely  void,  as  between  the  parties.*^ 

§  935.  Payments  for  Sunday  labor. — Payments  fully  made 
for  Sunday  labor  cannot  be  recovered  on  the  ground  that  the 
original  contract  was  invalid.  The  courts  will  neither  assist  in 
enforcing  such  contract,  nor  in  recovering  what  has  been  paid 

for  them  (the  jury)  to  decide  on  the  ^^  See  ante,  ch.  XXI. 

whole  evidence  whether  the  acts  were  *'  Towle  v.  Larrabee,  26  Maine  464 ; 

acts  of  necessity  and  charity."  Pope  v.    Linn,   50   Maine  83;    Pattee 

'"Troewert  v.   Decker,  51  Wis.  46,  v.    Greely,    13    Mete.     (Mass.)    284; 

8  N.  W.  26,  Z1  Am.  Rep.  808.  Merriam  v.  Stearns,  10  Cush.  (Mass.) 

"Cameron  v.  Peck,  11  Conn.  555;  257;  Day  v.  McAllister,  15  Gray 
First  Nat.  Bank  v.  Kingsley,  84  (Mass.)  433;  Allen  v.  Deming,  14 
Maine  111,  24  Atl.  794;  Hill  v.  Sher-  N.  H.  133,  40  Am.  Dec.  179.  This  is 
wood,  3  Wis.  343;  Melchoir  v.  Mc-  true  although  the  note  is  made  pay- 
Carty,  31  Wis.  252,  11  Am.  Rep.  605,  able  in  another  state.  Arbuckle  v. 
is  to  'the  same  effect,  and  there,  too,  Reaume,  96  Mich.  243,  55  N.  W.  808. 
was  a  subsequent  promise.  As  to  the  The  decision  in  Lea  v.  Hopkins,_  7 
duty  of  the  court  of  his  own  notion  Pa.  St.  492,  indicates  that  an  in- 
to interfere  and  rule  that  an  action  strument  executed  on  Sunday,  on 
on  a  Sunday  contract  cannot  be  which  a  suit  cannot  be  maintained, 
maintained  when  the  defense  is  not  may  be  admitted  in  court  as  evidence 
pleaded,  see  O'Brien  v.  Shea,  208  to  establish  an  indebtedness,  in  ac- 
Mass.  528,  95  N.  E.  99,  Ann.  Cas.  knowledgment  of  which  such  instru- 
i912A.  1030  and  note.  ment  was  given.    An  agreement  made 

^'Collins  v.   Collins,   139   Iowa  703,  on    Sunday,    void    under   the    statute, 

117  N.  W.  1089,  18  L.  R.  A.   (N.  S.)  may    be    proved    as    the    declarations 

1176n;    Cranson  v.   Gross,   107  Mass.  or  admissions  of  the  plaintiff,  which 

439.  9  Am.  Rep.  45 ;  Publishers :  Geo.  form     a     part    of     the     res     gestae. 

Knapp  &  Co.  v.  Culbertson,  152  Mo.  Rainey  v.  Capps,  22  Ala.  288. 
App.  147,  133  S.  W.  55. 


243  VIOLATION    OF   SUNDAY    LAWS.  §    936 

under  it,  but  will  leave  the  parties  where  they  have  put  them- 
selves, they  being  in  pari  delicto.''®  A  distinction  is  made  by  the 
authorities,  between  a  suit  to  enforce  a  promise  or  undertaking 
entered  into  on  Stmday  for  work  and  labor,  and  for  the  doing 
of  anything,  where  the  thing  to  be  done  is  afterward  performed 
by  the  party.  It  would  be  a  fraud  in  one  who  has  received  the 
consideration  of  the  contract  on  a  week  day  to  set  up  the  invalid- 
ity of  the  contract  because  made  on  Sunday.  He  reaffinns  the 
contracts  by  receiving  the  consideration.  At  any  rate,  he  is 
bound  for  the  value  of  the  services." 

§  936.  Sunday  laws — How  construed. — Laws  governing 
the  observance  of  Sunday  should  l^e  construed  so  as  to  give  them 
full  effect,  but  not  at  the  expense  of  all  the  rules  of  common 
honesty.  It  would  be  inequitable  to  allow  one  who  has  had  the 
benefit  of  an  illegal  contract  to  plead  that  illegality,  and  at  the 
same  time  to  hold  on  to  the  benefit  he  derived  therefrom.^"  A 
municipal  officer  will  not  be  permitted  to  shield  himself  from 
responsibility  arising  from  his  official  bond,  by  alleging  that  it 
was  executed  upon  the  Sabbath,  for  the  parties  to  be  protected 
by  the  bond  are  ignorant  of  the  violation  of  law  committed  in 
the  execution  and  delivery  of  it,  and  they  should  not  be  compelled 

**  Calkins  v.  Seabury  &c.  Min.  Co.,  months  is  not  void  because  the  salary 

5  S.  Dak.  299,  58  N.  W.  797.  by  the  terms  of  the  contract  was  to 

"Meriwether  v.  Smith,  44  Ga.  541.  commence     on    Sunday.      Lippert    v. 

The  courts  in  the  later  cases  are  sel-  Garrick   Theater    Co.,    144   Wis.   413, 

dom  at  a  losb  to  fall  upon  some  ex-  129  N.  W.  409.     See  also,  Rollins  v. 

pedient    to    reach    the    ends    of    sub-  Woodman,  117  Cal.  516.  49  Pac.  455, 

stantial  justice,  and  in  doing  so  show  which  holds  that  a  recital  in  a  cer- 

a  disposition  to  recede  from  the  se-  tificate   for  a  tax  deed  which   speci- 

verer    rules    declared    in    the    earlier  fies  Sunday  as  the  day  on  which  the 

cases.      Many  of  them  now  hold  the  purchaser    shall    be    entitled    to    his 

parties  to  the  performance  of  a  Sun-  deed   does  not  affect   the  validity  of 

day  contract  whenever  it  is  necessary  the  deed  since  the  certificate  merely 

to    prevent    fraud.      Harris    on    Sun-  fixed  the  time  when   the  purchaser's 

dav  Laws,  126.  note.     See  post,  §  948.  right  to  the  deed  would  be  fixed.  Nor 

"Haacke  v.  Knights  of  Liberty  &c.  is  the  tax  lien   defeated  by  the   fact 

Gub,  76   Md.   429.   25    Atl.   422.     To  that  the  tax  deed  is  dated  on  Sunday, 

same  effect,   Tenncnt-Stribbing   Shoe  especially  where  it  appeared  that  the 

Co.  V.   Roper,  94  Fed.  739,  36  C.   C.  fact  that  the  deed  was  dated  on  Sun- 

A.  455.    A  contract  for  the  perform-  day   was    not    discovered    until    more 

ance   of   services    entered    into    on    a  than  four  years  after  the  sale.  Schif- 

secular  day  and  which  was  acted  on  fer    v.    Douglass,    74    Kans.    231,    86 

by    the    parties    thereto    for    several  Pac.  132. 


§937  CONTRACTS.  244 

to  suffer  from  the  illegality  of  an  act  over  which  they  have  no 
control.^^ 

§  937.  Sales  made  on  Sunday. — Sales  made  on  Sunday  are 
in  violation  of  the  statute ;  they  constitute  a  transaction  of  busi- 
ness, acts  of  common  labor,  or  work  of  one's  ordinary  calling, 
and  make  the  parties  liable  to  the  penalties  provided.^^  Thus  a 
statute  which  prohibited  any  person  from  pursuing  his  business 
or  the  work  of  his  ordinaiy  calling  on  Sunday  has  been  held  to 
render  invalid  a  contract  whereby  the  owner  of  a  newspaper  sold 
it  to  the  plaintiff  who  was  connected  with  another  newspaper. '^^ 
Neither  party  is  bound  by  contracts  wholly  executory  on  both 
sides,  mere  contracts  to  buy  and  sell.  If  the  sale  is  wholly  exe- 
cuted on  both  sides,  and  the  property  is  delivered,  and  the  money 
paid,  it  is  generally  agreed  that  both  parties  are  bound.  The 
seller  cannot  recover  his  property  nor  the  buyer  his  money.^* 
The  statement  of  the  principle  is  that  when  both  parties  enter 
into  an  illegal  contract,  without  fraud  upon  the  part  of  either, 
the  courts  will  leave  the  contract  as  they  find  it,  and  deny  a  rem- 
edy to  either  party.^"  A  delivery  of  the  goods  on  the  following 
day,  in  order  to  make  a  sale,  must  be  accompanied  by  circum- 
stances which  in  themselves  supply  the  necessary  elements  of  a 
contract,  without  depending  upon  the  Sunday  transaction  for  any 
essential.^^ 

§  938.  Delivery  of  goods  writhout  payment. — Where  the 
property  is  sold  and  delivered  on  Sunday,  but  not  paid  for,  the 

^  Commonwealth  v.  Kendig,  2   Pa.  men    was    not    buying    and    selling 

St.   448.  newspapers." 

"'Cameron  v.   Peck,  Z1  Conn.  555;  "Moore  v.  Murdock,  26  Cal.  514; 

Calhoun   v.    Phillips,  87   Ga.   482,    13  Horton  v.  Buffington,  105  Mass.  399; 

S.  E.  593   (A  contract  of  sale  made  Cranson    v.    Goss,    107    Mass.    439,    9 

on   Sunday  with  no   delivery  of   the  Am.  Rep.  45 ;  Block  v.  McMurry,  56 

property,     then     or     afterwards,     is  Miss.  217,  31   Am.   Rep.   357;    Foster 

void.)  ;  Mueller  v.  State,  76  Ind.  310,  v.   Wooten,  67  Miss.  540,  7   So.  501 ; 

40  Am.  Rep.  245;  Thompson  v.  Will-  Chestnut    v.    Harbaugh    78    Pa.    St. 

iams,  58  N.  H.  248.  473.     See  also,  post,§  948  et  seq. 

"McAuhffe    V.    Vaughan,    135    Ga.  "' See  also,  Smith  v.  Bean,  15  N.  H. 

852,  70   S.  E.  322,  ZZ  L.   R.   A.    (N.  577;  Cohn  v.  Heimbauch,  86  Wis.  176, 

S.)  255.     The  court  said:  "We  think  56   N.   W.  638. 

that  the  contract  before  us  does  not  "'Aspell  v.   Hosbein,  98  Mich.   117, 

escape   the   test   of   having  been    ex-  57  N.  W.  27;  Curtin  v.  People's  Nat. 

ecuted  on  Sunday  on  the  ground  that  Gas.    Co.,    233    Pa.    397,    82    Atl.    503 

the   ordinary   business   of   these   two  (sale   upheld   where  negotiations   be- 


245  VIOLATION    OF  SUNDAY   LAWS.  g    939 

vendor  cannot  recover  the  price  on  the  Sunday  bargain,  whether  it 
be  an  oral  promise  or  the  note  of  the  buyer.''^  There  is  some  con- 
flict of  authorities  upon  the  question  whether  a  vendee  will  be  al- 
lowed to  retain  the  property  without  paying  the  price.  The  Ver- 
mont court  has  held  that  in  all  cases  of  contracts  entered  into  upon 
Sunday,  if  either  party  has  done  anything  in  execution  of  a  con- 
tract, it  is  competent  for  him  upon  another  day  to  demand  of 
the  other  party  a  return  of  the  thing  delivered,  or,  where  that  is 
impracticable,  com])ensation ;  and  if  the  other  party  refuse,  the 
original  contract  becomes  thereby  affirmed.^** 

§  939.  Sunday  contract  fully  executed. — Possession  ac- 
quired from  an  illegal  transaction,  or  by  a  contract  fully  executed, 
will  often  avail  the  party  holding  it  as  a  sufficient  title.  Neither 
party  is  allowed  to  impeach  its  validity  by  asserting  the  illegality 
of  his  own  act.  The  court  does  not  give  it  effect,  but  simply 
refuses  its  aid  to  undo  what  the  parties  have  already  done.^^  The 
illegality  of  the  contract  can  be  set  up  neither  as  a  basis  of  action 
nor  as  a  ground  of  defense.*'*'  Where  parties  exchanged  horses 
on  Sunday,  in  violation  of  the  Sunday  law,  it  was  held  that  one 
of  the  parties  could  not  tender  back  the  horse  received  by  him 
and  maintain  replevin  to  recover  possession  of  the  one  parted 
with.^^     But  there  are  conflicting  decisions  on  this  point,  and  in 

gan  on  Saturday,  continued  through  on   Sunday,  unless  the   facts  or  cir- 

Sunday,   and    were   consummated   on  cumstances   exist   which    withdraw   it 

Monday).    See  post,  §  948  et  seq.  from    the    operation    of    the    statute. 

"  O'Donnell  v.  Sweeney,  5  Ala.  467,  Action  to  recover  on  notes  for  pur- 

39    Am.    Dec.    336    (assumpsit    on    a  chase-price.     Wadsworth  v.  Dunnam, 

promissory  note  given  on  Sunday  in  117  Ala.  661,  23  So.  699. 

consideration    for   the   purchase-price  '*  Adams  v.   Gay,   19  Vt.   358.     See 

of   a   horse)  ;    Tucker    v.    West,    29  post,   §  948  et  seq. 

Ark.  386  (giving  a  review  of  cases);  ''"Myers    v.    Meinrath,     101     Mass. 

Pike  V.  King.   16  Iowa  49 ;   Foreman  366. 

V.    Ahl,    55    Pa.    St.   325    (action    on  ""Brazee  v.   Bryant,   50   Mich.    136, 

promissory   note   given    for   property  15  N.  W.  49. 

sold  on  Sundav)  ;  Troewert  v.  ^  Kelley  v.  Co.sgrove.  83  Iowa  229, 
Decker,  51  Wis.  46.  8  N.  W.  26,  Zl  48  N.  W.  979,  17  L.  R.  A.  779  and 
Am.  Rep.  808  (a  well-considered  note.  Where  a  horse  had  been  de- 
case).  Under  a  statute  which  pro-  livered  under  a  contract  made  on 
vides  that  "all  contracts  made  on  Sunday,  and  retaken  by  force,  it  was 
Sunday,  unless  for  the  advancement  held  that  the  vendee  could  maintain 
of  religion,  or  in  the  execution,  or  replevin  therefor,  on  the  ground  that 
for  the  performance  of  some  work  of  the  plaintiff  will  not  be  allowed  to  re- 
chari^ty,  or  in  case  of  necessity,  are  cover  by  force  what  the  law  would 
void,"  a  merchant  or  shopkeeper  can-  not  have  aided  him  to  recover  peace- 
not  make  a  sale  or  any  other  contract  fully.       Kinnev     v.     McDermott,     55 


§    940  CONTRACTS.  246 

Michigan  replevin  was  held  maintainable  for  a  horse  sold  by  the 
plaintiff  on  Sunday,  where  on  a  subsequent  day  he  had  tendered 
back  the  purchase-price  and  demanded  the  property.*'^ 

§  940.  Telegrams  on  Sunday. — The  question  has  fre- 
quently arisen  whether  a  contract  by  a  telegraph  company  to 
transmit  a  message  on  Sunday  falls  within  the  exception  in  favor 
of  works  of  necessity  and  charity.  Telegraph  companies  are 
permitted  to  keep  open  their  offices,  for  the  transmission  of  mes- 
sages, on  Sunday,  because  there  are  emergencies,  involving  some- 
times life  and  sometimes  great  public  and  private  interests,  re- 
quiring that  messages  be  transmitted  on  that  day.  Ordinarily  a 
contract  made  on  Sunday  is  invalid,  but  a  contract  to  transmit  a 
message,  if  a  necessity  is  shown  for  receiving  or  transmitting  it 
on  Sunday,  is  valid. "^  A  contract  made  on  Sunday,  for  the 
transmission  and  delivery  of  a  telegram  from  one  brother  to 
another,  announcing  the  death  of  their  father,  is  within  the 
exception  of  cases  of  necessity,  if  not  within  the  exception  in 
favor  of  works  of  charity,  in  a  liberal  sense  of  that  term."*  The 
sending  of  a  telegram  is  an  act  of  necessity  or  of  charity  when  it 
is  sent  from  a  husband  to  his  wife,  and  its  purpose  is  to  explain 
a  protracted  absence  of  the  former  from  home,  and  to  announce 
the  time  of  his  return.^^  An  emergency  requiring  immediate 
action  to  prevent  serious  loss  or  injury  may  occur  in  a  person's 
usual  vocation,  which  would  make  the  work  of  delivering  and 

Iowa  674,  8  N.  W.  656,  39  Am.  Rep.  23,  where  a  party  sent  to  his  brother 

191.  on    Sunday    this    telegram:     "Father 

"^  Winfield  v.  Dodge,  45  Mich.  355,  died  this  p.  m.  Come  at  once."  The 
7  N.  W.  906,  40  Am.  Rep.  476 ;  Tucker  company  having  negligently  failed  to 
V.  Mowrey,  12  Mich.  378,  where  a  deliver  this  telegram  in  time,  jury 
horse  was  sold  and  paid  for  on  Sun-  gave  damages  ($275).  On  appeal, 
day,  and  on  a  subsequent  day  the  judgment  affirmed, 
sellers  tendered  back  the  purchase-  "^  Western  Union  Tel.  Co.  v.  Full- 
price,  and  brought  replevin  for  the  ing  (Ind.  App.),  96  N.  E.  967  (tele- 
horse,  held  that  the  sale  was  illegal,  gram  by  which  husband  informed 
null  and  void,  and  the  sellers  could  wife  that  "late  trains  prevent  be- 
recover  the  horse  if  not  restored  on  ing  home  till  morning")  ;  Burnett  v. 
demand.  Western  Union  Tel.  Co.,  39  Mo.  App. 

^  Western  Union  Tel.  Co.  v.  Yopst,  599.     The  telegram  sent  was  as  fol- 

118  Ind.  248,  20  N.  E.  222,  3  L.  R.  A.  lows:      "I    will    be    home    to-night." 

224n,  25  Am.  &  Eng.  Corp.  Cas.  519;  Action  brought  for  statutory  penalty. 

Gulf   &c.   R.    Co.   V.   Levy,   59   Texas  See  opinion  by  Thompson,  J.,   for  a 

542,  5  Ky.  L.  66,  46  Am.  Rep.  269.  discussion  of  definitions  of  necessity 

"Western  Union  Tel.   Co.  v.  Wil-  and  charity  in  this  connection, 
son,  93  Ala.  32,  9  So.  414,  30  Am.  St. 


247 


VIOLATION    OF   SUNDAY    LAWS.  §    94 1 


transmitting  a  telegraphic  message  one  of  necessity."  A  penalty 
cannot  be  recovered  for  the  failure  to  perform  an  illegal  contract. 
A  message  reading  thus:  "Come  up  in  the  morning;  bring  all," 
is  not  one  which  comes  within  the  statute  permitting  the  perform- 
ance of  works  of  necessity."  It  has  been  held,  however,  that  the 
company  might  affirm  a  Sunday  contract  to  send  a  message  by 
delivering  the  message  on  a  subsequent  week  day.®* 

§  941.  Contracts  of  common  carriers. — A  common  carrier 
is  not  relieved  from  liability  because  the  contract  for  carriage  was 
made  on  Sunday.  His  liability  does  not  rest  in  contract  alone, 
but  is  one  imposed  by  law.""  A  contract  entered  into  on  Sunday, 
by  which  the  carrier  attempts  to  limit  its  common-law  liability,  is 
invalid  in  some  jurisdictions.'"  A  passenger  traveling  on  a  Sun- 
day excursion  train,  who  is  wrongfully  ejected  from  the  train, 
may  recover  the  damages  he  sustains,  the  fact  of  traveling  on 
that  day  not  barring  his  right  of  recovery.''^ 

§  942.  Duty  of  carrier  independent  of  contract. — The  duty 
imposed  by  law  upon  the  carrier  of  passengers  to  carry  them 
safely,  as  far  as  human  skill  and  foresight  can  go,  exists  inde- 
pendently of  contract.  For  a  negligent  injury  to  a  passenger  an 
action  lies  against  the  carrier,  although  there  be  no  contract,  and 
the  service  he  is  rendering  is  gratuitous ;  and,  whether  the  action 
is  brought  upon  contract  or  for  failure  to  perform  the  duty,  the 
liability  is  the  same."     According  to  the  principles  of  the  com- 

*>  Western  Union  Tel.  Co.  v.  Yopst,  N.  H.  568.  78  Atl.  621,  34  L.  R.  A. 

118  Ind.  248,  20  N.  E.  222,  3  L.  R.  A.  (N.   S.)   67n. 

224n.  "Chicago  &c.  R.  Co.  v.  Graham,  3 

"Rogers    v.    Western    Union    Tel.  Ind.  App.  28,  29  N.  E.   170,  50  Am. 

Co.,  78  Ind.  169;  Thompson  v.  West-  Rep.  256. 

em  Union  &c.  Co.,  Z2  Mo.  App.  191,  "Carrol   v.    Staten    Island   R.    Co.. 

where  the  dispatch  was  on  ordinary  58  N.  Y.  126,  17  Am.  Rep.  221,  where 

business,  and  the  company  was  pro-  the    passenger    took    his    passage    on 

hibited  from  transmitting  it  unless  a  Sunday,    and    was    being    carried    on 

work  of  necessity.  that  day  when  the  accident  happened 

"Hoyt  V.  Western  Union  &c.  Co.,  by    which    he    was    injured,    and    the 

85  Ark.  473,  108  S.  W.  1056.  See,  contract  was  illegal  on  his  part,  be- 
however,  Rogers  v.  Western  Union  ing  in  violation  of  the  law  which 
Tel.  Co.,  78  Ind.  169,  41  Am.  Rep.  prohibited  traveling  on  that  day,  ex- 
558.  cept  in  cases  of  necessity  or  charity. 

"Merritt   v.    Earle,  29  N.   Y.    115,     Hutchinson  on  Carriers,  §  503.     See 

86  Am.  Dec.  292.  also.    4    Elliott    R.    R.    (2d    ed.).    §§ 
'"Lovell  V.   Boston  &c.   R.   Co.,  75     1693-1696.   In  Carroll  v.  Staten  Island 


§   943  CONTRACTS  248 

mon  law,  applicable  to  common  carriers,  a  railroad  company  hav- 
ing accepted  the  stock  to  be  transported  over  its  road,  in  the  usual 
course  of  transit,  it  at  once  became  its  duty  to  forward  the  same 
without  unnecessary  delay  or  detention.  And  if  injury  be  sus- 
tained by  reason  of  any  neglect  of  this  duty,  or  other  wrongful 
act,  in  the  carrying  or  delivery  of  the  cattle,  the  fact  of  their 
having  been  received  to  be  carried,  or  having  been  carried  on 
Sunday,  can  afford  no  excuse  or  exoneration  of  liability.' 


73 


§  943.  Loaning  money  on  Sunday. — In  states  where  secu- 
lar business  is  forbidden  on  Sunday,  the  loaning  of  money,  to  be 
paid  on  demand,  is  business  within  the  meaning  of  the  statute, 
and  therefore  illegal  if  done  on  that  day,  and  it  has  been  held  that 
the  mere  fact  that  a  person  borrowing  money  on  Sunday  retains 
it  and  converts  it  to  his  own  use  does  not  raise  an  implied  promise 
binding  in  law,  upon  which  an  action  can  be  maintained/*  Where 
the  defendant  borrowed  a  simi  of  money  of  the  plaintiff  on 
Sunday,  it  was  held  that  an  action  could  not  be  maintained  to 
recover  it,  whether  the  promise  to  repay  was  evidenced  by  a 
written  memorandum  or  by  a  verbal  promise,  or  rested  upon  an 
implied  one,  as  the  contract  was  illegal  because  made  on  a  day 
when  the  making  of  contracts  was  forbidden,  and  the  plaintiff 
could  not  recover  upon  an  act  forbidden  by  the  statute."  Where 
money  was  deposited  on  Sunday  for  safe-keeping,  and  the  party 
with  whom  it  was  deposited  kept  it  until  Monday  or  a  later  day, 

R.  Co.,  65  Barb.  (N.  Y.)  32,  the  court  company    as    a    common    carrier    of 

said :   "It  would  be  a  great  perversion  live  stock,  and  not  upon  any  special 

of  right  and  law,  in  my  opinion,  to  contract). 

hold  that  a  common  carrier  may  in-  "Finn  v.  Donahue,  35  Conn.  216; 

vite  and  receive  into  his  conveyance  Troewert   v.    Decker,   51    Wis.   46,    8 

a    passenger    for    transportation    for  N.  W.  26,  Zl  Am.  Rep.  808. 

hire  on   Sunday,  and  be   freed   from  '*  Meader   v.    White,   66    Maine  90, 

all   such   duty  and   responsibility   for  22  Am.  Rep.  551.     In  Maine  the  stat- 

his   preservation   and   safety  on   that  ute  now  provides  that  the  party  who 

day  as  is  clearly  due  and  required  by  sets    up    the    illegality    of    a    Sunday 

law   on    the    other    six    days    of    the  contract  by  way  of  defense,  before  he 

week."     "Rights  of  a  Person  Suffer-  can    invoke   that    illegality,    must    re- 

ing  Injury  When  Violating  the  Sun-  store   whatever  consideration  he  has 

day  Law,"  21  Cent.  L.  J.  525.  received  under  such  contract.     (Laws 

'^  Philadelphia  &c.   R.   Co.   v.   Leh-  of   1880,   Ch.   194.)     First   Nat.   Bank 

man,   56   Md.  209,   40  Am.   Rep.  415  v.    Kingsley,   84   Maine    111,   24   Atl. 

(action    for    damages    for    delay    in  794;    Berry   v.    Clary,   11   Maine  482, 

transporting  cattle  founded  upon  the  1  Atl.  360;  Wentworth  v.  Woodside» 

common-law  duty  and  liability  of  the  79  Maine  156,  8  Atl.  763. 


249  VIOLATION    OF   SUNDAY    LAWS.  §    944 

and  then  used  it,  this  was  held  to  be  a  conversion,  for  which  an 
action  would  lie ;  and  the  depositor  may  waive  the  tort  and  main- 
tain an  action  for  money  had  and  received,  such  waiver  having 
the  effect  of  converting  the  tort  into  a  constructive  contract,  tak- 
ing effect  as  such  at  the  time  of  the  conversion.'" 

§  944.  Deeds,  mortgages  and  sealed  instruments  made  on 
Sunday. — The  effect  of  the  statute  upon  a  sealed  instrument 
is  the  same  as  upon  all  other  contracts.  A  bond  actually  made 
and  delivered  upon  that  day  cannot  be  the  basis  of  a  suit."  Deeds 
and  mortgages  executed  and  delivered  on  Sunday  in  violation  of 
law  are  void." 

However,  in  most  states,  the  courts,  as  a  rule,  do  not  interfere 
with  them,  for  the  reason  that  a  party  to  such  a  contract  is  not  in 
a  position  to  invoke  the  aid  of  the  court.  In  a  case  in  Georgia 
where  a  trade  was  made  on  Sunday  whereby  a  tract  of  land  was 
sold  in  1865  for  ninety-two  thousand  dollars  in  confederate 
money,  and  the  deed  was  made  and  the  money  paid  on  that  day, 
and  suit  was  afterward  brought  for  the  land,  it  was  held  that 
while  the  contract  was  illegal,  the  parties  being  in  pari  delicto, 
the  courts  would  not  interfere.'^  The  signing  of  an  instrument 
on  Sunday  which  does  not  take  effect  until  delivery  does  not  in- 
validate the  instrument.'*" 

§  945.  Rule  as  to  deeds  and  mortgages  illustrated. — 
A  bond  signed  on  Sunday,  but  not  delivered  until  a  secular  day, 
is  held  good  on  the  elementary  principle  of  law  that  a  bond  is  not 

"Tamplin  v.  Still's  Admr.,  11  Ala.  deemed  void  because  it  is  made  on 

374;  Flanagan  v.  Meyer,  41  Ala.  132.  the   Sabbath   dav." 

"Fox    V.    Mensch,    3    Watts    &    S.  "Ellis    v.    Hammond,   57   Ga.    179. 

(Pa.)  444.    See  also,  Carrick  v.  iMor-  See   also,   Jacobson   v.   Bentzler,    127 

rison,   2    Marv.    (Del.)    157,   42    Atl.  Wis.  566,   107   N.   W.   7,  4  L.   R.   A. 

447.  (N.  S.)    1151.  115  Am.  St.   1052.     In 

"Hill  V.  Hite,  85   Fed.  268,  29  C.  Ohio   it   has   been   held   that   a   deed 

C.  A.  549.     A  deed  executed  and  de-  made  on    Sunday   is   valid.     Swisher 

livened  on  Sunday  is,  under  the  laws  v.  Williams,  Wright  (Ohio)  754.  See 

of    Alabama,    void,    and    is    not    ad-  Tracy    v.    Jenks,    15    Pick.     (Mass.) 

missible    in    evidence.      Williams    v.  465. 

Armstrong.  130  Ala.  389,  30  So.  553.  "^  Hall  v.   Parker,  37  Mich.  590,  26 

See,   however.   Wooldridge  v.   Wool-  Am.  Rep.  540;  In  re  Beitenman's  .Ap- 

dridge   (W.  Va.),  12  S.>..  654.  up-  peal,  55  Pa.  St.  183.     See  post,  §  948 

holding    a    deed    where    the    statute  et  seq. 
provided  that,  "No  contract  shall  be 


§    946  CONTRACTS.  25O 

executed  until  delivered.®^  The  acceptance  of  a  bond  on  a  sec- 
ular day  which  was  signed  on  Sunday  is  not  a  violation  of  law. 
If  some  steps  are  taken  toward  the  execution  of  a  contract  on 
that  day,  but  it  is  not  fully  consummated  until  a  secular  day,  the 
contract  so  executed  is  not  in  contravention  of  the  statute.^^  A 
deed  may  be  drawn  up,  signed,  and  even  acknowledged  on  Sun- 
day, but  if  not  delivered  until  a  subsequent  day  it  is  a  valid  deed, 
whatever  might  be  the  effect  of  the  acknowledgment  made  on 
Sunday. ^^  A  deed  previously  signed  and  acknowledged  but  de- 
livered on  Sunday,  will  pass  the  title  to  the  grantee.^*  In  South 
Carolina,  where  the  English  statute  has  been  re-enacted,  it  was 
held  that  the  execution  of  a  mortgage  on  Sunday  did  not  fall 
within  the  penalty  of  the  act,  as  it  was  not  an  act  done  within  the 
ordinary  calling  of  the  parties.''  A  mortgage,"'  deed"'  or  guar- 
anty'' executed  on  Sunday  has  been  held  valid  when  it  appeared 
that  the  party  to  whom  it  was  given  had  no  knowledge  that  the 
instrument  was  executed  on  Sunday.'® 

§  946.    Notes  and  bills. — A  note  made  on  Sunday  is  not 
void  at  common  law,  and  in  a  suit  on  a  foreign  note  any  foreign 

"State    V.    Young,    23    Minn.    551.  ^"  Hellams    v.    Abercombie,    15    S. 

See  post,  §  948  et  seq.  Car.   110,  40  Am.  Rep.  684. 

*'  Evansville  v.  Morris,  87  Ind.  269,  '°  Wilson  v.  Winter,  6  Fed.  16. 

44    Am.    Rep.    763,    and    cases    cited.  "  Duggan    v.    Champlm,     75     Miss. 

In    Smith    v.    Sparrow,    4    Bing.    84,  441,  23  So.  179.     See  also,  Schiffer  v. 

Best,    C.   J.,   said   he   would  not   say  Douglass,  74  Kans.  231,  86  Pac.  132. 

that    the    mere    inception    of    a    con-  ^Diamond  Glass  Co.  v.  Gould   (N. 

tract   on    Sunday   would   avoid   it,   if  J.  L.),  61  Atl.   12.     Gibbs  &  S.  Mfg. 

completed  the  next  day,  but  if  most  Co.  v.  Brucker,   111  U.  S.  597,  28  L. 

of    the    terms   were    settled   on    Sun-  ed.    534,    4    Sup.    Ct.    572.     (Contract 

day,  and  the  mere  signature  referred  signed   and   delivered   on    Sunday   to 

to  the  next  day,  such  a  contract  could  an  agent  who  did  not  have  the  power 

scarcely   be   supported.  to  conclude  the  contract,  accepted  by 

^  Love    v.    Wells,    25    Ind.    503,    87  agent's  principal  on  week  day  without 

Am.    Dec.    375.      The    fact    that    the  knowledge    that    it    had   been    drawn 

acknowledgment  was  taken  on    Sun-  up    on    Sunday.)      It    has    been    held 

day  is  immaterial.     Schwab  v.  Rigby,  that  a  convict  bond  executed  on  Sun- 

38  Minn.  395,  38  N.  W.  101.  day   is   not    invalid    for   that    reason 

**Shuman    v.    Shuman,   27    Pa.    St.  Ex  prate  Millsap,  39  Tex.  Cr.  93,  45 

90.    Delivery  of  the  deed  is  the  con-  S.  W.  20. 

summation  of  the  transaction  through  ^'A  deed  of  gift  executed  on  Sun- 

which    the    title    is    transferred,    and  day  has  been  held  valid  under  a  stat- 

when  this  has  been  done  the  contract  ute    forbidding   the    following   of    an 

is  fully  executed  and  no  relief  from  ordinary   calling.     Dorough   v.    Equi- 

the  illegal  transaction  can  be  had  in  table  Mortg.   Co.,  118  Ga.   178,  45   S. 

the    law.      Greene    v.     Godfrey,    44  E.  22. 
Maine  25. 


VIOLATION    OF   SUNDAY    LAWS. 


§    946 


Statute  invalidating  it  must  be  proved. °°  Unless  restrained  by 
statute  a  party  may  draw,  make,  indorse  or  accept  bills  and  notes 
on  Sunday,  and  such  acts  will  be  as  valid  as  if  done  on  any  other 
day.°^  Where,  by  statute,  contracts  cannot  be  entered  into  on 
Sunday  or  secular  business  legally  conducted,  bills  and  notes  exe- 
cuted and  delivered  on  that  day  fall  within  the  interdiction."^ 
Notes  made  on  Sunday  are  generally  spoken  of  as  void,  but  noth- 
ing more  is  meant  than  that  such  notes  are  void  for  the  purpose 
for  which  they  are  attempted  to  be  used ;  void  as  the  foundation 
of  claims  sought  to  be  established  by  them.°^  But  it  is  delivery 
that  completes  a  contract,  and  if  the  bill  or  note  be  delivered  on 
another  day,  it  will  be  valid,  although  dated  and  signed  on  Sun- 
day.'** The  indorsement  of  a  bill  or  note  on  Sunday  stands  on 
the  same  footing  as  drawing  a  bill  or  making  a  note,  and  the 
indorsee  cannot  sue  upon  such  an  indorsement,  either  in  his  own 
name  or  in  another's  for  his  benefit."^  The  indorser  of  a  note, 
when  the  indorsement  was  not  made  on  Sunday,  is  estopped  in 


•"O'Rourke  V.  O'Rourke,  43  Mich. 
58,  4  N.  W.  531.  In  Missouri  a  prom- 
issory note  executed  and  delivered 
on  Sunday  is  not  void.  Glover  v. 
Cheatham,  19  Mo.  App.  656.  Like- 
wise, in  the  state  of  Washington, 
Main  v.  Johnson,  7  Wash.  321,  35 
Pac.  67.     See  ante,  §  931. 

"  Begbie  v.  Levi,  1  Cromp.  &  Jerv. 
180,  1  Tyr.  130. 

"Fivaz  V.  Nicholls.  2  C.  B.  501; 
Moseley  v.  Selma  Nat.  Bank  (Ala.), 
S7  So.  91;  Ball  v.  Powers,  62  Ga. 
757;  Pope  v.  Linn,  50  Maine  83;  Ar- 
buckle  V.  Reaume,  96  IMich.  243,  55 
N.  W.  808;  Finnev  v.  Callendar.  8 
Gil.  (Minn.)  2Z;  Brimhall  v.  Van 
Campen,  8  Minn.  13,  82  Am.  Dec. 
118.  See  al.'^o,  Terry  v.  Piatt,  1  Pen- 
new.  (Del.)  185.40Atl.  243;  Reynolds 
V.  Stevenson,  4  Ind.  619,  suit  on  a 
note.  Plea,  that  the  note  was  made, 
executed  and  delivered  on  Sunday. 
Demurrer  to  the  plea  ordered,  and 
on  error,  the  court  said :  "It  is  ad- 
mitted that  the  note  in  question  was 
made  on  Sunday.  Tiien  the  record 
presents  this  question :  Did  the  mak- 
ing of  it  constitute  an  act  of  'com- 
rnon  labor?'  We  think  the  statute 
intended  to  prohibit  every  descrip- 
tion of  secular  business  not  with  the 


exceptions  pointed  out  by  itself.  The 
executing  of  this  note  was  secular 
business,  and  not  embraced  by  the 
exceptions."  In  an  action  on  a  note 
dated  on  Sunday  the  burden  is  on  the 
plaintifif  to  show  that  it  was  in  fact 
executed  on  a  day  which  w-as  not 
Sunday.  Hauerwas  v.  Goodloe,  101 
Ala.  162,  13  So.  567. 

■"Pope  v.  Linn,  50  Maine  83.  "A 
note  executed  on  Sunday  in  violation 
of  the  provisions  of  Code,  §  5040,  is 
not  absolutely  void,  but  is  voidable 
only."  Collins  v.  Collins  (Iowa),  117 
N.  W.  1176,  18  L.  R.  A.  (N.  S.) 
1176. 

"^  Terry  v.  Piatt,  1  Pennew.  (Del.) 
185,  40  Atl.  243 ;  King  v.  Fleming.  72 
111.  21,  22  Am.  Rep.  131;  Conrad  v. 
Kinzie,  105  Ind.  281,  4  N.  E.  863; 
Hofer  v.  Cowan,  McClung  &  Co.,  24 
Ky.  L.  355,  68  S.  W.  438;  Hilton  v. 
Houghton,  35  Maine  143;  Barger  v. 
Farnham,  130  Mich.  487,  90  N.  W. 
281 ;  Lovejoy  v.  Whipple,  18  Vt.  379. 
46  Am.  Dec.  157;  O'Day  v.  ^leyers, 
147  Wis.  549,  133  N.  W.  605.  See 
also,   ante,    §  942. 

""  First  Nat.  Bank  v.  Kingsley,  84 
:^raine  111,  24  Atl.  794;  Benson  v. 
Drake,  55  Maine  555.  See  post,  § 
947. 


§    947  CONTRACTS.  252 

an  action  on  the  note  from  setting  up  its  invalidity  on  the  ground 
that  it  was  executed  by  the  maker  on  that  day.^^ 

§  947.    Bona  fide  holder  of  a  note  made  on  Sunday. — A 

promissor}-  note,  given  and  received  on  Sunday,  and  void  as  be- 
tween the  original  parties,  might  be  equally  void  in  the  hands  of 
a  subsequent  holder  who  took  it  with  notice  of  the  original  ille- 
gality.'*^ But  even  if  the  note  bore  date  on  Sunday,  that  fact 
would  not  be  conclusive  evidence  that  the  holder  took  it  with  such 
notice ;  for,  although  dated  on  Sunday,  it  might  have  been  deliv- 
ered on  another  day,  and  so  be  valid  even  as  between  the  original 
parties.'*^  Where  a  party  makes  and  puts  in  circulation  a  nego- 
tiable note,  purporting  to  be  made  and  bearing  date  on  some 
secular  day,  he  is  estopped  as  against  an  innocent  holder,  from 
showing  that  it  was  actually  executed  and  delivered  on  Sunday.^" 
A  negotiable  promissory  note,  made  and  delivered  on  Sunday, 
although  illegal  and  voidable  as  between  the  original  parties 
thereto,  yet,  when  indorsed  before  maturity,  to  a  bona  fide  and 
innocent  holder,  without  notice  of  any  defect,  cannot  be  im- 
peached in  the  hands  of  such  innocent  indorsee.^  Thus  in  one 
case  it  appeared  that  the  contract  which  was  the  considera- 
tion of  the  note  in  suit  was  made  on  Sunday,  and  the  note  was 
made,  signed  and  fully  delivered  on  Sunday,  to  the  original  payee, 
but  bore  date  of  a  secular  day.    The  plaintiff  was  a  bona  fide 

^  Prescott  Nat.  Bank  v.  Butler,  157  day)  ;  Greathead  v.  Walton,  40  Conn. 

Mass.  548,  32  N.  E.  909.     See  also,  226  (note  endorsed  on  Sunday)  ;  Do- 

Moseley  v.  Selma  Nat.  Bank  (Ala.),  honey  v.  Dohoney,  7  Bush  (Ky.)  217; 

57   So.  91,   reviewing  the  authorities.  Ray    v.    Catlett,    12    B.    Mon.    (Ky.) 

■"Cranson  v.   Goss,    107   Mass.  439,  532;    Beman    v.    Wessels,    53    Mich. 

9  Am.  Rep.  45;  Allen  v.  Deming,  14  549,  19  N.  W.  179.    Contra,  Parker  v. 

N.  H.   133,  40  Am.  Dec.   179.  Pitts,  11  Ind.  597,  38  Am.   Rep.   155 

•^Hilton    V.    Houghton,    35    Maine  (note  signed  by  surety  on  Sunday)  ; 

143;  Hill  V.  Dunham,  7  Gray  (Mass.)  Gilbert  v.  Vachon,  69  Ind.  372;  Davis 

543.     The  administrator  of  the  payee  v.   Barger,  57  Ind.   54    (overruled  by 

of  a  note  may  enforce  the  same  virhen  Evansville  v.  Morris,  87  Ind.  269,  44 

it    appears    that    the    payee    did    not  Am.  Rep.  763). 

know  that  the  note  was  and  did  not  **  Moseley  v.  Selma  Nat.  Bank  (Ala. 

intend  that  it  should  be  executed  on  App.),    57    So.   91    (reviewing    many 

Sunday.     In  order  to  defeat  recovery  authorities)  ;     Johns     v.     Bailey,     45 

it  must  be  shown  that  the  payee  was  Iowa  241 ;  Knox  v.  Clifford,  38  Wis. 

a    party    to    the    illegal    transaction.  651,  20  Am.  Rep.  28. 

Collins  V.  Collins,  139  Iowa  703,  117  'Gordon  v.  Levine,  197  Mass.  263, 

N.   W.    1089,    18   L.    R.    A.    (N.    S.)  83  N.   E.  861,   15  L.   R.   A.    (N.   S.) 

1176n.    See  also,  Heise  v.   Bumpass,  243n,  125  Am.  St.  361;  State  Capita^ 

40  Ark.  545  (note  endorsed  on  Sun-  Bank  v.  Thompson,  42  N.  H.  369. 


253  VIOLATION'    OF    SUNDAY    LAWS.  §    94S 

holder  of  the  note  for  a  vaUuible  consideration,  and  took  it  before 
it  became  due,  without  notice  of  any  defect,  illegality  or  other  in- 
firmity. It  was  held  that  the  plaintiff,  not  having  participated  in 
any  violation  of  law  and  having  taken  the  note  before  its  matur- 
ity for  good  consideration,  and  without  notice  of  any  illegality 
in  its  inception,  might  maintain  an  action  thereon  against  the 
maker.  To  hold  otherwise  would  be  to  allow  that  party,  who 
alone  had  been  guilty  of  a  breach  of  the  law,  to  set  up  his  own 
illegal  act  as  a  defense  to  the  suit  of  an  innocent  party. - 

§  948.  Ratification  of  contracts  made  on  Sunday — General 
rule. — It  is  a  general  rule  that  wdiere  the  consideration  of  a 
contract  is  either  wicked  in  itself  or  prohibited  b>^  law  the  con- 
tract is  absolutely  void  and  incapable  of  ratification.^  This  rule 
has  been  applied  to  contracts  made  in  violation  of  Sunday  laws.* 
Consequently,  many  jurisdictions  hold  that  a  contract  made  on 
Sunday  cannot  be  confirmed  or  ratified  by  any  act  of  the  parties 
done  on  a  subsequent  week  day  which  does  not  amount  to  the 
formation  of  a  new  contract.'"'     In  accordance  with  this  principle 

-Cranson   v.   Goss,   107   Mass.   439,  64  Atl.  838;  Bradley  v.  Rea,  103  Mass. 

9  Am.  Rep.  45.     The  current  Ameri-  188,  4  Am.  Rep.  524;  Gordon  v.  Le- 

can  and  English  decisions  concur  in  vine,  197  ]\Iass.  263,  83  N.  E.  861,  Id 

this  view.     Begbie  v.  Levi,  1  Cromp.  L.  R.  A.   (N.  S.)   243n,   125  Am.  St. 

&   Jerv.    180-    Houliston    v.    Parsons,  361;  International  Te.xt  Book  Co.  v. 

9  U.  Can.    (Q.   B.)    681;   Crombie  v.  Ohl,    150   Mich.    131,   111    N.  W.  768, 

Overholtzer.  11  U.  C  Q.  B.  55;  Salt-  13  L.   R.  A.    (N.   S.)    1157.   121   Am. 

marsh  v.  Tuthill,  13  Ala.  390;  .Mose-  St.    612;    Acme    Electrical    &c.    Co. 

ley  v.  Selma  Nat.  Bank  (Ala.  App.),  v.  Vanderbeck.   127  Mich.  341,  86  N. 

57   So.  91;    Bank   of    Cumberland   v.  W.    786,    89    Am.    St.    476;    Ryno    v. 

Mayberry,    48    Maine    198.      A    note  Darby,  20   N.  J.   Eq.  231;   Reeves  v. 

actuallv  made  on  Sunday,  but  dated  Butcher,  31  N.  J.  L.  224.     A  Sunday 

on  the   following  Monday  to  give  it  contract  cannot  be  directly  enforced 

credit,  is  not  necessarily  void.  Though  or  be  interposed  as  a  defense  to  an 

made  contrary  to  and  in  violation  of  otherwise     well-grounded     cause     of 

law,    the    statute    has    not    declared  action.       Horn     v.     Dorchester,     199 

them    void    under   all    circumstances;  IMass.  534,  85   N.   E.  853.     The  stat- 

the   invalidity    is    only    implied    from  ute  of  West  Virginia  provides,  how- 

the   prohibition   of    Sunday   business,  ever,     that     "no     contract     shall     be 

and  a  bona  fide  holder  of  such  note  deemed   void  because   it   is   made  on 

is    protected.      Vinton    v.     Peck,     14  the     Sabbath    dav."     Wooldridge     v. 

Mich.  287.  citing  Rockwell  v.  Charles,  Wooldridge,  69  W.  Va.  554,  72  S.  E. 

2  Hill  (N.  Y.)  499;  Vallett  v.  Parker,  654. 
6  Wend.   (N.  Y.)  615.  » Butler  v.  Lee,  11  Ala.  885,  46  .A.m. 

'.Armstrong  v.  Toler,  11  Wheat.  Dec.  230;  Spahn  v.  Willman.  1  Pen- 
(U.  S.)  258.  6  L.  ed.  468;  Coppell  new.  (Del.)  125.  39  .Atl.  7d>7 ;  Plaisted 
V.  Hall.  7  Wall.  (U.  S.)  542,  19  L.  v.  Palmer.  63  Maine  576;  Day  v.  Me- 
ed.   244,    2    Kent's    Commentaries.  Allistcr,  15  Gray  (Mass.)  433;  Acme 

*Finn   v.   Donahue,   35   Conn.   216;  Electrical    &:c.    Co.    v.    Van    Derbeck, 

Carson   v.    Calhoun,    101    Maine   456,  127  Mich.  341,  86  N.  W.  786,  89  Am. 


^  949 


CONTRACTS. 


254 


it  has  been  held  that  a  promissory  note  given  on  Sunday  is  void, 
as  between  the  parties,  and  a  subsequent  promise  to  pay  it  will 
not  make  it  valid.^  The  reason  given  by  the  courts  why  such  a 
contract  is  incapable  of  being  confirmed  or  ratified  is  that,  in  su- 
ing upon  the  original  contract  after  its  ratification  by  the  defend- 
ant, it  would  still  be  necessary  for  the  plaintiff  in  proving  his  case 
to  show  his  own  illegal  act  in  making  the  contract  at  first, ^  and 
for  the  further  reason  that  where  a  contract  is  illegal  because 
made  on  Sunday  it  cannot  be  validated  by  the  subsequent  ratifica- 
tion, because  the  parties  have  no  power  to  give  life  to  an  act 
which  from  reasons  of  public  policy  has  been  ordained  by  the 
legislative  authority  to  be  absolutely  void.® 

§  949.  Minority  rule — Distinction  drawn. — Many  cases, 
however,  term  Sunday  contracts  void,  but  nevertheless  hold  that 
such  contracts  may  be  affirmed,  ratified  or  adopted  on  a  secular 
day.**  Most  of  the  cases  that  so  hold  fail  to  draw  a  distinction 
between  contracts  that  have  grown  out  of  transactions  entered 


St.  476;  Winfield  v.  Dodge,  45  Mich. 
355,  7  N.  W.  906,  40  Am.  Rep.  476; 
Kountz  V.  Price,  40  Miss.  341 ;  Gwinn 
V.  Simes,  61  Mo.  335 ;  Riddle  v.  Kel- 
ler, 61  N.  J.  Eq.  513,  48  Atl.  818; 
Gennert  v.  Wuestner,  53  N.  J.  Eq. 
302,  31  Atl.  609;  Cannon  v.  Ryan,  49 
N.  J.  L.  314,  8  Atl.  293;  Nibert  v. 
Baghurst,  47  N.  J.  Eq.  201,  20  Atl. 
252,  25  Atl.  474;  Sherry  v.  Madler, 
123  Wis.  621,  101  N.  W.  1095.  A 
contract  made  on  Sunday  cannot  be 
validated  by  proving  facts  tending 
to  show  a  ratification,  because  such 
a  contract  is  void  and  not  susceptible 
of  ratification.  King  v.  Graef,  136 
Wis.  548.  117  N.  W.  1058,  20  L.  R. 
A.  (N.  S.)  86,  128  Am.  St.  1101.  To 
same  effect,  Jacobson  v.  Benzler,  127 
Wis.  566,  107  N.  W.  7,  4  L.  R.  A. 
CN.  S.)  1151,  115  Am.  St.  1052.  A 
Sunday  contract  cannot  be  ratified, 
"but  the  consideration  emanating 
from  the  tainted  contract  will  be 
sufficient  to  form  the  foundation  for 
a  new  express  promise,  on  which  re- 
covery may  be  had."  Brewster  v. 
Banta,  66  N.  J.  L.  367,  49  Atl.  718. 

•Pope  v.  Linn,  50  Maine  83.  "If 
the  note  was  made  in  violation  of 
law  and  was  therefore  illegal,  a  sub- 


sequent promise  to  pay  it  would  not 
make  it  any  the  less  illegal.  The 
transaction,  illegal  at  its  inception, 
would  not  be  purged  of  its  illegality 
by  a  subsequent  promise  to  perform 
it.  The  doctrine  of  ratification  is 
not  applicable  to  such  a  case."  Whit- 
mire  V.  Montgomery,  165  Pa.  St.  253, 
30  Atl.   1016,  to  contrary  effect. 

''Day  V.  McAllister,  15  Gray 
(Mass.)  433;  Cranson  v.  Goss,  107 
Mass.  439,  9  Am.  Rep.  45. 

*Burr  V.  Nivinson,  75  N.  J.  Eq. 
241,  72  Atl.  12,  138  Am.  St.  554.  Com- 
pare with  the  foregoing  case,  Telfer 
V.  Lambert   (N.  J.),  75  Atl.  779. 

"McKinney  v.  Demby,  44  Ark.  74; 
Van  Hoven  v.  Irish,  3  McCrary  (U. 
S.)  443;  Hoyt  v.  Western  Union  &c. 
Co.,  85  Ark.  473,  108  S.  W.  1056;  J. 
B.  Bostic  Co.  V.  Eggleston,  7  Ind. 
Ter.  134,  104  S.  W.  566;  Kuhns  v. 
Gates,  92  Ind.  66,  citing  as  its  au- 
thority Evansville  v.  Morris,  87  Ind. 
269,  44  Am.  Rep.  763,  which  latter 
case  only  holds  that  the  contract 
may  be  consummated  on  a  secular 
day.  It  was  not  even  averred  that 
the  contract  was  executed  on  Sun- 
day. Heavenridge  v.  Mondy,  34  Ind. 
28;    Banks   v.   Werts,    13   Ind.   203; 


-o:) 


VIOLATION    OF    SUNDAY    LAWS. 


§  949 


into  upon  Sunday,  but  finally  closed  upon  a  secular  day,  and  those 
cases  in  which  negotiations  were  entered  into  on  Sunday  and 
finally  closed  on  that  day.    Contracts  partially  completed  on  Sun- 


Catlett  V.  M.  E.  phurch,  62  Ind.  365, 
30   Am.    Rep.    19?    (ratification    must 
be,  in  effect,  a  new  contract)  ;   Rus- 
sell V.  iMurdock,  79  Iowa  101,  44  N. 
W.  237,  18  Am.  St.  348;  Harrison  v. 
Colton,  31  Iowa  16;  Smith  v.  Case,  2 
Ore.    190;   Corey  v.   Boynton,  82   Vt. 
257,  n  Atl.  987;   Adams  v.  Gay,   19 
Vt.   358;   Williams  v.   Lane,  87   Wis. 
152,  58  N.   W.  n.     See  also,   Helm 
V.  Briley,   17  Okla.  314,  87  Pac.  595; 
Melchoir    v.    McCarty,    31    Wis.    252, 
11  Am.  Rep.  605.     "One  class  of  de- 
cisions   holds    that,    if     the     contract 
was  void  because  made  on  Sunday  in 
connection   with  the  business  of  one 
of   the   parties,   it   could   not   become 
valid    by    a    subsequent    ratification. 
The    other    class    holds    that    the    il- 
legality   which    infects    such    a    con- 
tract is  not  general  in  its  character; 
that  it  does  not  consist  in  any  wrong 
or  impropriety  in  the  contract  itself, 
but  simply  in  the  time  of  its  making; 
that    if    it    were    a    contract     which 
would  be  valid  if  made  on  a  week 
day,    and    both    parties    recognize    it 
on  such  a  day,  after  it  is  made,  and 
proceed  to  carry  it  out,  they  thereby 
ratify  the  contract,  and  purge  it  of 
the   illegality   arising    from    the   time 
when  it  was  entered  into.    See  Adams 
v.  Gay,  19  Vt.  358;  Sumner  v.  Jones, 
24  Vt.  317;  Jacobson  v.  Bentzler,  127 
Wis.  566,   107  N.  W.  7,  4  L.  R.  A. 
(N.   S.)    1151,    115   Am.    St.    1052,   7 
A.    &    E.    Ann.    Cas.    634   and    note. 
Though    there    may    be     some     pre- 
ponderance of  authority  against  rati- 
fication, this  court  has  taken  its  stand 
with  those  courts  which   hold  in   fa- 
vor  of   the   doctrine,   at   least   where 
the  parties  on  a  subsequent  day  pro- 
ceed to  carry  out  a  contract  made  on 
Sunday.      Aleriwether    v.    Smith,    44 
Ga.    541 ;    Bryant    v.    Booze,    55    Ga. 
438,       Following      these      decisions, 
the    uncontradicted    evidence  showed 
a      ratification,      and      the      parties 
were     bound     as     if     the     contract 
had  been  signed  on  a  day  other  than 
Sundav."     xMcAuliffe  v.  Vaughan,  135 
Ga.  852.  70  S.  E.  Ill,  ZZ  L.  R.  A.  (N. 
S.)    255.       The     case    of     Cook     v. 
Forker,  1-93  Pa.  St.  461.  74  Am.   St. 


699,    lays    down    the    rule   that    "con- 
tracts on  Sunday  are  not  void  in  the 
sense  that  they  do  not  admit  of  rati- 
fication, though  so  long  as  they  are 
executory  the  law  will  refuse  to  en- 
force  them,   and   acts   of    ratification 
will  make  them  new  contracts  which 
parties    will    be    bound    to    perform." 
Where  a  note  was  given  on   Sunday 
for  the  price  of  a  horse  sold  on  that 
day,  and   the  buyer  afterward   made 
payments  on  account  of  the  note,  it 
was  held  that  these  payments,  coupled 
with   his    retaining   the   horse   in    his 
possession,  were  a  ratification  of  the 
contract   entitling  the   vendor  to   re- 
cover the  sum  remaining  due  on  the 
note.     Sumner  v.   Jones,  24  Vt.  317. 
Other  cases   have   been   held   capable 
of  being  ratified  on  the  now  general- 
ly repudiated  doctrine  that  contracts 
of    this    character    are    not    rendered 
void  as  being  illegal  at  common  law, 
but  their  illegality  consists  merely  in 
being    mala    proliibita,    not    mala    in 
se,  and  they  may  be  made  obligatory 
by  the  subsequent  act  of  the  parties. 
Perkins  v.  Jones,  26  Ind.  499.     In  a 
case  in  Rhode  Island,  where  the  plain- 
tiff sold  and   delivered  to  defendant 
on  Sunday  a  pair  of  horses,  and  on 
Tuesday  following  paid  two  hundred 
dollars  and  gave  a  note  for  one  hun- 
dred   forty   dollars,    which    was   sued 
upon,  the  court  held  that  as  the  con- 
tract was  invalid  only  on  account  of 
the  time,   reason  and   the   weight   of 
authority  were  in   favor  of  allowing 
a   ratification,   more  especially  where 
the    defendant    retains    the    property. 
And  either  on  the  ground  of  ratifica- 
tion or  of  a  new  promise,  for  which 
the  retention  of  the  property  would 
be     a     sufficient     consideration,     the 
plaintiff     was     entitled     to     recover. 
Sayles  v.  Wcllman,  10  R.  I.  465.  See 
also,  Heavenridge  v.  Mondv,  34  Ind. 
28;  Banks  v.  Werts,  13  Ind.  203.    A 
contract   illegal   because   entered   into 
on   Sunday  cannot  be  ratified,  but  it 
may   be    adopted    subsequently    with- 
out   formalitv.      Miles    v.    Janevrin, 
200   Mass.   514,  86   N.   E.   785.     The 
term    "adopt"    as    used    in    this    case 
would    seem    to    signify    the    actual 


^  950 


CONTRACTS. 


256 


day,  but  which  are  perfected  on  a  week  day,  are,  as  a  general  rule, 
held  valid  and  not  within  the  operation  of  the  Sunday  law/" 

§  950.    Completion  of  contract  on  secular  day. — Bonds  or 
contracts  of  guaranty  signed  or  agreed  upon  on  Sunday  but  de- 


making  of  a  contract  of  similar  im- 
port to  the  contract  which  they  had 
previously  attempted  to  make.  In 
Lovell  V.  Boston  &c.  R.  Co.,  75  N.  H. 
568,  78  Atl.  621,  34  L.  R.  A.  (N.  S.) 
67n,  it  seems  to  be  conceded  that  a 
Sunday  contract  may  be  afterward 
ratified,  but  it  is  held  that  the  facts 
of  the  case  were  not  sufficient  to 
show  a  ratification.  See  also.  Covey 
V.  Boynton,  82  Vt.  257,  72  Atl.  987; 
Flinn  v.   St.  John,  51  Vt.  334. 

"McKinnis  v.  Estes,  81  Iowa  749, 
46  N.  W.  987  (terms  of  mortgage 
talked  over  on  Sunday  but  actually 
agreed  to  and  consummated  on  week 
day)  ;  Dickinson  v.  Richmond,  97 
]\Iass.  45  (offer  made  on  Sunday,  ac- 
cepted on  business  day)  ;  Tuckerman 
V.  Hinkley,  9  Allen  (Mass.)  452 
(contract  for  personal  services  con- 
summated on  secular  dav)  ;  Wooliver 
V.  Boylston  Ins.  Co.,  104  Mich.  132, 
62  N.  W.  149  (a  fire  insurance  policy, 
the  terms  of  which  were  not  com- 
pleted until  the  following  Monday)  ; 
Duggan  v.  Champlin,  75  Miss.  441, 
23  So.  179  (deed  of  trust  delivered 
to  beneficiary  on  week  day,  where  he 
had  no  knowledge  that  it  had  been 
drawn  up  on  Sundav)  ;  Provenchee 
V.  Piper,  68  N.  H.  31,  36  Atl.  552 
(sale  of  chattel  mortgage  broached 
on  Sunday,  but  the  actual  transaction 
made  wholly  on  Monday)  ;  McDon- 
ald v.  Fernald,  68  N.  H.  171,  38  Atl. 
729  (offer  made  on  Sunday,  accept- 
ance made  on  day  following)  ;  Stack- 
pole  v.  Symonds,  23  N.  H.  229  (offer 
made  on  Sunday,  accepted  following 
day)  ;  Merrill  v.  Downs,  41  N.  H. 
72  (paj^ment  made  on  a  secular  day 
could  be  recovered  where  an  agree- 
ment was  not  contemplated,  notwith- 
standing it  had  been  made  on  Sun- 
day) ;  Burr  v.  Nivison,  75  N.  J.  Eq. 
241,  72  Atl.  12,  138  Am.  St.  554  (ne- 
gotiations concerning  sale  of  real  es- 
tate entered  into  on  Sunday)  ;  Curtin 
V.  People's  Nat.  Gas  Co.,  233  Pa. 
397,  82  Atl.  503    (negotiations  begun 


on  Saturday,  continued  through  Sun- 
day, and  were  completed  Monday)  ; 
IMoseley  v.  Vanhooser,  6  Lea 
(Tenn.)  286,  40  Am.  Rep.  Zl  (terms 
of  sale  agreed  upon  on  Sunday,  but 
sale  not  actually  executed  until  week 
day)  ;  Taylor  v.  Young,  61  Wis.  314, 
21  N.  W.  408  (agreement  for  the 
payment  of  damages  perfected  on  a 
week  day).  A  contract  negotiated 
on  Sunday  between  one  party  there- 
to and  the  agent  of  the  other,  such 
agent  not  having  the  power  to  close 
or  conclude  the  same,  is  binding 
when  accepted  by  the  agent's  prin- 
cipal on  a  week  day.  Burr  v.  Niv- 
ison, 75  N.  J.  Eq.  241,  72  Atl.  72, 
138  Am.  St.  554.  To  same  effect, 
Gibbs  &c.  Mfg.  Co.  v.  Brucker,  111 
U.  S.  597,  28  L.  Ed.  534,  4  Sup.  Ct. 
572.  See  also,  the  case  of  Helm  v. 
Briley,  17  Okla.  314,  87  Pac.  595. 
From  the  opinion  given  in  the  case 
it  can  hardly  be  determined  whether 
the  court  deemed  the  subsequent  acts 
a  ratification  or  a  new  contract.  The 
court  said :  "The  question  here  pre- 
sented is  before  this  court  for  the 
first  time,  and  we  are  now  called 
upon  for  a  rule  of  law  governing 
Sunday  contracts  subsequently  recog- 
nized upon  a  secular  day.  That  the 
contract  when  executed  was  void,  and 
not  enforcible  under  the  provisions 
of  our  statute,  we  do  not  hesitate  to 
declare,  and,  with  reference  to  a  sub- 
sequent recognition  of  the  agreement 
on  a  secular  day,  we  are  of  the  opin- 
ion, and  therefore  hold,  that  a  direct 
subsequent  recognition  of  debt  on  a 
week  day,  which  amounts  at  that  time 
to  an  acknowledgment  of  indebted- 
ness, is  a  new  agreement,  and  thence- 
forth binding  upon  the  parties,  and 
in  the  case  now  under  consideration 
we  hold  that  the  payment  of  $10  on 
a  secular  day,  upon  a  debt  of  $60, 
the  price  of  a  mule  sold  on  a  pre- 
vious Sunday,  was  such  an  acknowl- 
edgment of  existing  indebtedness  as 
to  amount  to  a  contract  and  promise 


257  VIOLATION    OF    SUNDAY    LAWS.  §    95 1 

livered  on  a  secular  day  have  been  held  valid."  The  same  rule 
has  been  applied  to  notes  made  on  Sunday  but  not  delivered  until 
the  following  Monday,  or  on  some  other  business  day.^' 

§951.  Delivery  on  secular  day. — Many  cases  hold  that 
when  the  delivery  of  a  thing  bargained  for  or  the  delivery  of  the 
contract  itself  takes  place  on  a  secular  day  the  transaction  will 
be  upheld,  notwithstanding  such  delivery  was  made  pursuant  to 
an  agreement  made  on  Sunday.  The  theory  is  that  the  act  was 
formed  by  the  parties  upon  a  secular  day,  and  was  sufficient  in 
itself  to  constitute  a  complete  contract,  regardless  of  what  may 
have  taken  place  upon  Sunday,^^  as  where  potatoes  were 
weighed,  delivered,  and  payment  made  on  Monday,  pursuant  to 
an  agreement  entered  into  on  Sunday,  the  transaction  was  up- 
held on  the  ground  that  the  actual  performance  on  Monday  was 
not  merely  incident  to  the  transaction  on  Sunday,  but  compre- 
hended all  the  elements  necessary  to  make  a  complete  contract  in 

to  pay  at  that  time,  -and  is  therefore  day)  ;  Hilton  v.  Houghton,  35  Maine 

enforcible  in  the  courts  of  this   ter-  143;    Barger   v.    Farnham,    130   Mich, 

ritory."  487,  90  N.  W.  281   (note  executed  on 

"  Tyler  v.   Waddingham,   58   Conn.  Sunday  in  consideration  of  borrowed 

375,   20   Atl.   335,    8    L.    R.    A.    657;  money.    A  part  of  the  sum  borrowed 

Evansville  v.  Morris,  87  Ind.  269,  44  was  paid  over  to  the  maker  of  the 

Am.    Rep.    763,    overruling    Davis    v.  note  on  the  day  it  was  made.     The 

Barger,  57   Ind.   54    (Evansville  case  remainder   was   paid   by   check   on   a 

frequently  cited  as  upholding  ratifica-  week  day.)  ;  Lovejoy  v.  Whipple,  18 

tion   of    Sunday   contracts);    Prather  Vt.    379,   46  Am.    Dec.    157;    Goss   v. 

V.     Harlan,     6     Bush     (Ky.)      185;  Whitney,     24     Vt.     187;     O'Day     v. 

Hall    V.    Parker,    Zl    Mich.    590,    26  Meyers.    147    Wis.    549,    133    N.    W. 

Am.   Rep.   540 ;    State   v.    Young,   2Z  605.     Compare   the   foregoing   cases, 

Minn.    551 ;    Diamond    Glass    Co.    v.  however,    with    Cook   v.    Forker,    193 

Gould    (N.    J.),    61    Atl.    12;    In    re  Pa.  St.  461,  44  Atl.  560,  74  Am.  St. 

Beitenman's  Appeal,  55  Pa.  183 ;  Com-  699. 

monwealth   v.  Kendig,  2  Pa.   St.  448        "King  v.  Graef.  136  Wis.  548,  117 

(bond  signed  by  one  surety  on   Sat-  N.    W.    1058,    20    L.    R.   A.    (N.    S.) 

urday,  by  other  on  Sunday,  but  bond  86n,  128  Am.  St.  1101.  To  same  eflfect 

not   delivered   until    Mondav)  ;   Gibbs  Bloxsome    v.    Williams,    3    B.    &    C. 

&c.   Mfg.   Co.  V.   Brucker,   111    U.   S.  232;   Butler  v.   Lee,    11    Ala.   885,   46 

597,  28  L.  ed.  534,  4  Sup.  Ct.  572.  Am.  Dec.  230 ;  Tvler  v.  \\'adingham, 

"King  V.  Fleming.  72  111.  21,  22  58  Conn.  375.  20  Atl.  335.  8  L.  R.  A. 
Am.  Rep.  131;  Bell  v.  Mahin,  69  657;  P.  J.  Bowlin  Liquor  Co.  v.  Bran- 
Iowa  408.  29  N.  W.  331;  Hofer  v.  denburg,  130  Iowa  220,  106  N.  W. 
McClung.  24  Ky.  L.  355.  68  S.  W.  497;  Rosenblatt  v.  Townslev,  IZ  Mo. 
438;  Dohoney  v.  Dohoney.  7  Bush  536;  Luebbcring  v.  Oberkoetter.  1 
(K^^)  217;  Campbell  v.  Young.  9  ^io.  App.  393;  McDoonald  v.  Fern- 
Bush  240  (note  signed  by  maker  and  aid,  68  N.  H.  171,  38  Atl.  729;  Mc- 
two  sureties  on  Sunday,  but  signed  Donald  v.  Fernald,  68  N  H  171 
by  third  surety  and  delivered  on  week  38  Atl.  729;  Smith  v.  Bean,  15  N.  H. 

17 — Contracts,  Vol.  2 


§  952 


CONTRACTS. 


258 


itself.^*  It  has  been  held,  however,  that  a  mere  delivery  of  the 
goods  on  a  secular  day  would  not,  in  itself,  supply  a  necessary 
element  to  the  contract  and  for  that  reason  was  insufficient  to 
validate  a  sale  made  on  Sunday.^"*  A  contract  may  be  complete, 
notwithstanding  certain  executory  acts  remain  to  be  done  in  the 
future." 

§  952.  Executed  and  executory  Sunday  contracts. — A  dis- 
tinction must  also  be  drawn  between  the  executory  and  executed 
Sunday  contract.  No  executory  contract  or  sale  made  upon  Sun- 
day can  be  enforced  but  an  executed  contract,  though  made  on 
Sunday,  cannot  be  avoided  merely  because  it  was  entered  into  on 
that  day."  Thus  it  has  been  held  that  a  principal  could  not  repu- 
diate a  contract  made  and  executed  on  Sunday  by  his  agent  in 


577;  Helm  v.  Briley,  17  Okla.  314, 
87  Pac.  595 ;  Everet  v.  Kleimenhagen, 
6  S.  Dak.  221,  60  N.  W.  851 ;  Moseley 
V.  Vanhooser,  6  Lea  (Tenn.)  286, 
40  Am.  Rep.  Zl ;  Bland  v.  Brook- 
shire,  3  Tex.  App.  Civ.  Cas.  (Will- 
son)  539;  Hopkins  v.  Stefan,  11  Wis. 
45,  45  N.  W.  676;  Allen  v.  Green- 
wood, 147  Wis.  1094,  133  N.    W.  1094. 

"King  V.  Graef,  136  Wis.  548, 
117  N.  W.  1058,  20  L.  R.  A.  (N.  S.) 
86n,  128  Am.  St.  1101.  A  transaction 
of  this  character  is  sometimes  termed 
a  ratification.  Orr  v.  Kenworthy, 
143  Iowa  6,  121  N.  W.  539,  134  Am. 
St.  402. 

"Aspell  V.  Hosbein,  98  Mich.  117, 
57  N.  W.  27.  See  the  case  of  Brad- 
ley V.  Rea,  96  Mass.  20,  second  ap- 
peal, 103  Mass.  188,  4  Am.  Rep. 
524,  which  holds  that  where  de- 
livery was  made  on  Monday  pur- 
suant to  a  contract  entered  into  on 
Sunday  the  price  agreed  upon  on 
Sunday  could  not  be  recovered,  but 
that  plaintiff  could  recover  only  on 
the  implied  assumpsit,  and  since 
nothing  was  said  about  the  price  on 
Monday  the  law  would  imply  a  fair 
price.  See  also,  Kountz  v.  Price,  40 
Miss.  341.  (In  this  case  the  goods 
were  actually  delivered  on  Sunday, 
the  only  thing  being  done  on  the  sub- 
sequent day  being  the  execution  of  a 
promissory  note  in  payment  there- 
for.) Jacobson  v.  Bentzler,  127  Wis. 
566,  107  N.  W.  7.  4  L.  R.  A.  (N.  S.) 
1151,  115  Am.  St.  1052,  which  holds 
that  the  receipt  of  money  on  a  check 
made  and  delivered  on  Sunday  does 


not  relieve  the  transaction  from  the 
operation  of  the  Sunday  law.  It  lays 
down  the  rule  that  acts  done  on 
Monday  which  were  mere  incidents 
to  the  Sunday  transaction  would  not 
save  it  from  the  condemnation  of  the 
statute.  See  also,  Williams  v.  Paul, 
6  Bing.  653,  4  M.  &  P.  532 ;  Foreman 
V.  Ahl,  55  Pa.  St.  325. 
"Hamilton  v.  Standard  Metal  Co., 

81  N.  J.  L.  247,  79  Atl.  1031. 
"Catlett  V.   M.   E.   Chuch,  62  Ind. 

365,  30  Am.  Rep.  197;  Rickards  v. 
Rickards,  98  Md.  136,  56  Atl.  397,  63 
L.  R.  A.  724,  103  Am.  St.  393 ;  Rosen- 
baum  V.  Hayes,  10  N.  Dak.  311,  86  N. 
W.  973.  "The  court  will  not  aid  a 
party  to  recover  on  a  Sunday  trans- 
action on  the  one  hand ;  but  on  the 
other  hand  it  will  not  treat  as  a  nul- 
lity what  was  done  on  Sunday  in  per- 
formance of  a  valid  contract;  it  will 
on  the  contrary  give  to  the  act  done 
on  Sunday  its  legal  effect  when  set 
up  in  defense."  Gordon  v.  Levine, 
197  Mass.  263,  83  N.  E.  861,  125  Am. 
St.  361.  It  will  not,  however,  be 
given  an  independent  affirmative  ef- 
fect beyond  mere  performance. 
Horn  V.  Dorchester  &c.  Ins.  Co.,  199 
Mass.  534,  85  N.  E.  853.  It  would 
seem  that  a  third  party  cannot  at- 
tack the  validity  of  an  executed  Sun- 
day contract.  Tennet-Stribbing  Shoe 
Co.  v.  Roper,  94  Fed.  739,  36  C.  C. 
A.  455.     See  also,  Corey  v.  Boynton, 

82  Vt.  257,  72  Atl.  987,  which  terms 
the  execution  and  acting  on  the 
agreement  ratification. 


259 


VIOLATION    OF    SUNDAY   LAWS. 


§  953 


violation  of  the  Sunday  laws  when  the  contract  itself  was  within 
the  scope  of  the  agent's  authority/* 

§  953.  Executed  by  one  party. — However,  if  the  contract 
has  been  executed  by  only  one  of  the  parties  and  is  executory  as 
to  the  other,  this  fact  has  been  held  insufficient  to  make  the  agree- 
ment binding  on  the  latter.  Thus  it  has  been  held  that  a  contract 
to  render  services  on  Sunday  will  not  support  an  action  to  recover 
for  services  actually  rendered.^®  And  a  contract  of  release  exe- 
cuted on  Sunday  is  not  rendered  binding  by  the  fact  that  wages 
and  medical  bills  had  been  paid  in  pursuance  of  the  agreement. '^^ 
A  promissory  note  executed  on  Sunday  is  not  ratified  by  the  sub- 
sequent payment  of  interest  thereon.^^ 

§  954.  Conflict  of  laws  as  to  Sunday  contracts. — Generally 
contracts  are  governed  by  the  lex  loci  contractus."  This  is  true 
of  Sunday  contracts.  They  are  usually  governed  as  to  their  le- 
gality by  the  law  of  the  place  where  made.''^    Where  this  rule  is 


"  Rickards  v.  Rickards,  98  Md.  136, 
56  Atl.  397,  63  L.  R.  A.  724,  103  Am. 
St.  393. 

"Carson  v.  Calhoun,  101  Maine 
456,  64  Atl.  838;  Stewart  v.  Thayer, 
168  Mass.  519,  47  N.  E.  420,  60  Am. 
St.  407  (quantum  meruit  cannot  be 
recovered)  ;  Shepley  v.  Henry  Siegel 
Co.,  203  Mass.  43,  88  N.  E.  1095; 
Knight  V.  Press  Co.,  227  Pa.  185,  75 
Atl.  1083.  See  also,  International 
Text  Book  Co.  v.  Ohl,  150  Alich.  131, 
111  N.  W.  768,  13  L.  R.  A.  (N.  S.) 
1157,  121  Am.  St.  612.  Work 
performed  by  a  servant  on  Sunday 
not  required  by  the  contract  and 
which  was  not  a  work  of  necessity 
and  the  doing  of  which  was  a  mis- 
demeanor cannot  be  recovered  for. 
Barney  v.  Spangler,  131  Mo.  App. 
58,  109  S.  W.  855.  It  would  seem 
that  the  rule  is  otherwise  where  the 
services  called  for  by  a  contract  en- 
tered into  on  Sunday  are  performed 
on  a  week  dav.  Bollin  v.  Hooper, 
127  Mich.  287,  86  N.  W.  795. 

^Hamilton  v.  Standard  Metal  Co., 
81  N.  J.  L.  247.  79  Atl.  1031. 

="  Reeves  v.  Butcher,  31  N.  J.  L. 
224.  Nor  will  the  retention  of  the 
property   obtained     under   the     con- 


tract amount  to  a  ratification  of  a 
Sunday  agreement.  In  Simpson  v. 
Nicholls,  3  M.  &  W.  240.  it  was 
held  that  a  replication  was  bad  which 
set  up  a  promise  implied  from  the  re- 
tention by  the  defendant  of  goods 
which  had  been  sold  to  him  on  Sun- 
day. The  courts,  in  some  states, 
seem  inclined  to  follow  this.  Butler 
V.  Lee,  11  Ala.  885,  46  Am.  Dec.  230; 
Day  V.  McAllister,  15  Gray  (Mass.) 
433.  In  Tuckerman  v.  Hinkley,  9  Al- 
len (iMass.)  452,  it  is  said  that  "the 
case  of  Williams  v.  Paul,  6  Bing.  653, 
*  *  *  is  not  to  be  relied  on." 
In  Boutelle  v.  Melendy,  19  N.  H. 
196,  Williams  v.  Paul,  6  Bing.  653, 
was  repudiated,  and  the  case  of 
Simpson  v.  Phillips,  3  M.  &  W.  244, 
followed,  and  the  court  held  that 
"an  illegal  contract  is  incapable  of 
ratification  or  of  becoming  the  con- 
sideration of  a  subsequent  promise." 

"^  See  post,  ch.  XXIX. 

'^  Swann  v.  Swann,  21  Fed.  299; 
King  V.  Fleming,  12  111.  21.  22  Am. 
Rep.  131  ;  Murphy  v.  Collins.  121 
Mass.  6;  O'Rourke  v.  O'Rourke,  43 
Mich.  58.  4  X.  W.  531;  Steere  v. 
Trebilock.  108  Mich.  464.  66  N.  W. 
342;   McKee  v.   Jones,  67  Miss.  405, 


s  955 


CONTRACTS.  26o 


adhered  to,  a  Sunday  contract  valid  by  the  law  of  the  place  where 
made  will  usually  be  enforced/*  and  a  contract  invalid  by  such 
law  will  be  declared  invalid^^  by  a  foreign  jurisdiction. 

§  955.  Void  where  made  void  everywhere  and  vice  versa. 
— However,  it  has  been  held  that  where  a  contract  is  drawn 
up,  signed,  and  delivered  to  the  plaintiff's  agent  on  Sunday  in  a 
state  under  whose  laws  the  doing  of  all  work  on  Sunday  is  pro- 
hibited and  made  illegal,  it  will  not  be  enforced  in  such  state  even 
though  the  contract  did  not  become  a  binding  obligation  until 
accepted  by  the  agent's  principal  in  a  foreign  state  under  whose 
laws  it  might  have  been  valid  and  binding.  The  laws  of  a  foreign 
jurisdiction  cannot  make  valid  an  act  which  is  illegal  by  the  laws 
of  the  state  where  it  took  place.^"  On  the  other  hand,  it  is  held 
that  the  courts  of  a  state  in  which  the  contract  is  completed  will 
enforce  the  agreement  if  by  its  laws  the  contract  is  valid." 

§  956.  Law  of  place  of  performance. — There  are  cases 
which  hold  that  the  validity  of  a  Sunday  contract  is,  in  accord- 
ance with  the  presumed  intention  of  the  parties,  to  be  determined 
by  the  law  of  the  place  of  performance.^^     On  the  other  hand, 

7  So.  348;  Strouse  v.  Lanctot  (Miss),  =°Lovell  v.  Boston  &c.  R.  Co.,  75 
27  So.  606;  Northrup  v.  Foot,  14  N.  H.  568,  78  Atl.  621,  34  L.  R.  A. 
Wend  (N.  Y.)  248;  Lovell  v.  Bos-  (N.  S.)  67n;  Northrup  v.  Foot,  14 
ton  &c.  R.  Co.,  75  N.  H.  568,  78  Atl.  Wend.   (N.  Y.)  248. 

621   34  L.  R.  A.  (N.  S.)  67n ;  Brown  =*  International   Text   Book   Co.   v. 

V    Browning,  15  R.  I.  422,  7  Atl.  403,  Ohl,   150  Mich.   131,   111   N.  W.  768, 

2   Am.    St.   908;    Adams   v.    Gay,    19  13  L.   R.  A.   (N.   S.)    1157,  121  Am. 

Vt.  358.     For  additional  cases  which  St.  612. 

assume  that  a  contract  is  governed  as  ^  Burr   v.    Navison,   75    N.   J.    Eq. 

to    its    validity    by    the    law    of    the  241,  12  Atl.  72,  138  Am.  St.  554,  20 

place   but    which    in   the   absence   of  Am.  &  Eng.  Ann.  Cas.  35. 

proof  as  to  the  law  of  the  place  as-  '"  Thayer  v.  Elliott,  16  N.  H.  102; 

sume  that  it  is  the  same  as  the  law  Brown  v.  Gates,  120  Wis.  349  97  N. 

of  the  forum  and  hold  the  contract  W.  221,  98  N.  W.  205,  1  Am.  &  Eng. 

invalid  under  the  law   of  the  latter,  Ann.  Cas.  85.     Compare  the  .forego- 

see    Hill    v     Wilker     41    Ga.    449,    5  ing'  New   Hampshire   case   with   that 

Am.  Rep.  540;  Savre  v.  Wheeler,  32  of  Lovell  v.  Boston  &  Maine  R.  Co., 

Iowa  599;  Brimhall  v.  Van  Campen,  75  N.  H.  568,  78  Atl.  621,  34  L.   R. 

8  Gil.  (Minn.)  1,  82  Am.  Dec.  118.  A.  (N.  S.)  67n,  which  sums  up  the 
This  latter  case  is  overruled,  how-  situation  in  that  jurisdiction  as  fol- 
ever,  by  Mvers  v.  Chicago  &c.  R.  Co.,  lows:  "In  other  words,  a  contract 
69  Minn.  476,  72  N.  W.  694,  65  Am.  the  lex  loci  contractus  forbids  the 
St.  579,  the  latter  case  holding  that  party  to  make  will  not  be  enforced 
there  is  no  presumption  that  the  in  this  Jurisdiction  (Davis  v.  Us- 
statutory  law  is  the  same.  sood,   69   H.    H.   427    44   Atl.   432), 

**King  V.    Fleming,   72   111.   21,   22    but   one   which   is  valid  where   it   is 
Am    Rep    131  rnade  will  usually  be  enforced  here. 


26l  VIOLATION    OF    SUNDAY    LAWS. 


957 


it  has  been  stoutly  denied  that  the  law  of  the  place  of  perform- 
ance controls.-"  But  wliile  there  may  be  some  question  as  to 
whether  the  validity  of  an  executory  Sunday  contract  is  to  be  de- 
termined by  the  law  of  the  place  of  the  contract  or  the  law  of  the 
place  of  performance,  it  seems  to  be  settled  that  when  the  con- 
tract is  to  be  performed  on  Sunday  in  a  specified  state  the  validity 
of  the  agreement  is  to  be  determined  by  the  law  of  the  place  of 
performance.^'^ 

§  957.  Not  void  on  ground  of  public  policy. — It  occasion- 
ally happens  that  a  suit  is  brought  in  a  forum  other  than  that  in 
which  the  contract  is  made  or  in  which  it  is  to  be  performed.  In 
cases  of  this  character  regardless  of  which  law  is  considered  as 
governing,  the  courts  of  the  forum  will  not  refuse  to  enforce  a 
Sunday  contract  assumed  to  be  valid  by  its  proper  law  on  the 
ground  that  it  would  be  contrary  to  the  public  policy  of  the 
forum  to  enforce  such  a  contract. ^^ 

°°  "Parties  cannot  be  allowed  to  de-  and  that  there  are  wide   differences 

fy  our  laws  and  recover  upon  a  con-  of  opinion  and  practice  in  regard  to 

tract   void    from    its   inception   under  the  observances  of  Sunday.    Brown  v. 

our    statutes,    by    making    the    place  Browning,    15   R.    I.   422,   7   Atl.   403, 

of   payment    out    of   the   state."   Ar-  2  Am.  St.  908;  Adams  v.  Gay,  19  Vt. 

buckle  v.   Reaume,  96  Mich.  243,   55  358.     In   the   above   case   it    is   said : 

N.  W.  808.    See  also,  cases  cited  ante,  "It  is  in  no  just  sense  a  moral  senti- 

note  28.  ment     at    all     which     impels     us     to 

^°  Said  V.    Stromberg,  55   Mo.   App.  the  observance  of  Sunday,  for  religi- 

438  (sale  of  bar  privileges  on  a  Sun-  ous    purposes,    more   than    any   other 

day  excursion  to  be  run  to  a  point  in  day.     It  is  but  education  and  habit  in 

Illinois).      See  also.    Western   Union  the    main,    certainly.      Moral    feeling 

Tel.  Co.  v.  Way,  83  Ala.  542,  4  So,  might  dictate  the  devotion  of  a  por- 

844.  tion    of   our   time   to   religious   rites 

^  See  Swann  v.  Swann,  21  Fed.  299,  and  solemnities,  but  could  never  in- 
pointing  out  that  at  common  law  dicate  any  particular  time  above  all 
contracts  made  on  Sunday  were  valid  others." 


CHAPTER  XXV. 


USURY. 


§  960.  Violation  of  statute  as  to  usury    §  975. 
— Generally. 

961.  Usury  a  personal   defense. 

962.  Rule  further  illustrated.  976. 

963.  Usurious      note      secured      by 

mortgage.  977. 

964.  Largely  a  matter  of  statutory 

regulation. 

965.  Bona     fide     holders— Usurious       978. 

contract      between      original       979. 
parties. 

966.  Usury  as  a  matter  of  intent.  980. 

967.  Substance   and   not   form   con- 

trols. 981. 

968.  Usually  applies  to  contracts  of       982. 

borrowing  and  lending. 

969.  Application     to     contracts     of       983. 

purchase  and  sale. 

970.  Resale  to  vendor.  984. 

971.  Deferred    payments    for    work       985. 

and  labor. 

972.  Grantee  of   real  estate  assum- 

ing mortgage.  986. 

973.  Discounting  commercial  paper.       987. 

974.  Restricting      commissions — Ex- 

empting   building    and    loan 
associations. 


Incidental  expenses  incurred  in 
making  or  collecting  loan  not 
usury. 

Incidental  expenses  —  Hiring 
agent  to  negotiate  loan. 

Liability  of  principal  for  acts 
of  agent — Rule  further  con- 
sidered. 

Time  of  payment. 

Interest  becoming  principal — 
Weight  of  authority. 

Renewal  bill  or  note — Exten- 
sions. 

Corporations. 

Remedies  under  national  bank- 
ing act. 

Rule  as  to  the  application  of 
payments    of    usury    interest. 

Recovery  of  usurious   interest. 

Recovery  of  usurious  interest 
— Rights  as  affected  by  fed- 
eral statute. 

Set-off  under  state  laws. 

Who  may  recover  usurious  in- 
terest. 


§  960.    Violation  of  statute  as  to  usury — Generally. — It  is 

no  longer  questioned  that  the  legislature  may  limit  the  amount 
which  may  be  charged  as  interest  upon  loans.  Statutes  on  the  sub- 
ject of  usury  will  be  held  valid  in  this  respect  unless  the  legisla- 
ture has  exceeded  its  authority  by  imposing  such  arbitrary  restric- 
tions upon  the  individual  and  his  business  or  occupation  as  are 
palpably  foreign  to  the  legitimate  purposes  sought  to  be  accom- 
plished by  the  legislature.^    The  general  rule  is  that  contracts  to 

"  State  V.   Gary,   126  Wis.   135,   105  senting  opinion   of   CuUen.   C.  J.,  in 

N.  W.  792,  11  L.  R.  A.  (N.  S.)  174n.  Schlesinger  v.  Gilhooly,  189  N.  Y.  1, 

See  also,   State  v.   Griffith,  83  Conn.  81  N.  E.  619;  Fahringer  v.  State,  148 

1,   74   Atl.    1068;   Edwards   v.    State  Wis.  291,   134  N.  W.  406;   State  v. 

(Fla.),   56   So.   401.     See  also,   dis-  Sherman,  18  Wyo.  169,  105  Pac.  299, 

262 


263 


USURY. 


§    961 


pay  usurious  interest  are  void  and  unen forcible,  or  at  least  void- 
able at  the  option  of  the  borrower  or  those  in  privity  with  him, 
since  that  which  the  statute  declares  unlawful  and  void  can  have 
no  validity  beyond  the  extent  specified."  This  rule  applies  to  an 
action  by  a  payee  on  a  note  tainted  with  usury  and  such  a  defense 
is  good  as  to  him.^ 

§  961.    Usury  a  personal  defense. — Usury  is  a  defense  per- 
sonal to  the  debtor*  and  his  privies  in  relation."     So  where  one 

27  L.  R.  A.  (N.  S.)  898n.  Usury  is 
a  matter  of  statute.  There  is  no 
common-law  rule  regulating  the 
amount  of  interest  to  be  recovered 
for  the  use  of  money.  Banov  v. 
Bank  of  Charleston,  79  S.  Car.  404, 
60  S.  E.  942. 

'  Sapp  V.  Cobb,  60  Ark.  367,  30  S. 
W.  349;  Maxell  v.  Jacksonville 
Loan  &  Imp.  Co.,  45  Fla.  425,  34  So. 
255 ;  Lyle  v.  Winn,  45  Fla.  419,  34  So. 
158;  Howell  v.  Pennington,  118  Ga. 
494,  45  S.  E.  272;  Guenther  v.  Wis- 
dom, 27  Ky.  L.  230,  84  S.  W.  771; 
George  N.  Fletcher  &  Sons  v.  Al- 
pena Cir.  Judge,  136  Mich.  511,  99 
N.  W.  748;  Missouri  Real  Estate 
Sjndicate  v.  Sims,  179  Mo.  679,  78 
S.  W.  1006;  Vette  v.  Geist,  155  Mo. 
27,  55  S.  W.  871;  Osborn  v.  Payne, 
111  Mo.  App.  29,  85  S.  W.  667; 
Cowgill  v.  Jones,  99  Mo.  App.  390,  73 
S.  W.  995 ;  Hare  v.  Hooper,  56  Nebr. 
480,  76  N.  W.  1055;  Clarke  v.  Day, 
72  N.  J.  L.  75,  60  Atl.  39;  Union 
Credit  &  Investment  Co.  v.  Union 
Stockvard  &  Market  Co.,  46  Misc. 
(N.  Y.)  431,  92  N.  Y.  269;  Reich  v. 
Cochran.  41  Misc.  (N.  Y.)  621,  85  N. 
Y.  S.  247;  Erwin  v.  Morris,  137  N. 
Car.  48,  49  S.  E.  53;  Churchill  v. 
Turnage,  122  N.  Car.  426.  30  S.  E. 
122;  Metz  v.  Winne,  15  Okla.  1,  79 
Pac.  223;  Lorentz  v.  Pinnell,  55  W. 
Va.  114,  46  S.  E.  796.  See  also, 
Matz  V.  A  rick,  76  Conn.  388,  56  Atl. 
630.  If  one  is  financially  embar- 
rassed and  he  employs  another  to  as- 
sist him,  and  the  value  of  his  serv- 
ices is  afterward  agreed  upon  and 
paid  by  a  promissory  note,  it  is  not 
usury.  Noyes  v.  Landon.  59  Vt.  569, 
10  Atl.  342. 

*  Howell  V.  Pennington,  118  Ga. 
494,  45   S.  E.  272;   McLean  v.  La- 


fayette Bank,  Fed.  Cas.  No. 
3  McLean  (U.  S.)  587;  Angier  v. 
Smith,  101  Ga.  844,  28  S.  E.  167;  Ar- 
mour v.  Moore,  5  111.  App.  433;  Par- 
doe  v.  Iowa  State  Nat.  Bank,  106 
Iowa  345,  76  N.  W.  800;  Johnson  v. 
Joyce,  90  Minn.  377,  97  N.  W.  113; 
Citizens'  Nat.  Bank  v.  Donnell,  172 
Mo.  384,  72  S.  W.  925,  affd.,  195  U. 
S.  369,  49  L.  ed.  238,  25  Sup.  Ct.  49; 
Allen  V.  Dunn,  71  Nebr.  831,  99  N. 
W.  680;  Strickland  v.  Henry,  66  App. 
Div.  (N.  Y.)  23,  73  N.  Y.  S.  12;  Dun- 
ham V.  Dey,  13  Johns.  (X.  Y.)  40; 
Ketchum  v.  Barber,  4  Hill  (N.  Y.) 
224;  Webb  v.  Galveston  &  H.  Inv. 
Co.,  32  Tex.  Civ.  App.  515,  75  S.  W. 
355.  See  also,  Peterson  v.  Berrv, 
125  Fed.  902,  60  C.  C.  A.  610:  Scott 
V.  Kennedy,  201  Pa.  462,  51  Atl.  384. 

*  Nance  v.  Gray,  143  Ala.  234,  38 
So.  916,  Faison  v.  Grandy,  128  N. 
Car.  438,  38  S.  E.  897,  83  Am.  St. 
693;  Zeigler  v.  Maner.  53  S.  Car.  115, 
30  S.  E.  829,  69  Am.  St.  842 ;  Bird  v. 
Kendall,  62  S.  Car.  178,  40  S.  E. 
142;  Barbour  v.  Tompkins,  31  W.  Va. 
410,  7  S.  E.  1,  3  L.  R.  A.  (N.  S.) 
715;  Smith  v.  McMillan,  46  W.  Va. 
577,  33  S.  E.  283 ;  Chenoweth  v.  Nat. 
Bldg.  Assn.,  59  W.  Va.  653.  53  S.  E. 
559;  Harper  v.  Middle  States  &c. 
Const.  Co.,  55  W.  Va.  149,  46  S.  E. 
817. 

'Ford  v.  Washington  Nat  Bldg.  Src. 
Assn..  10  Idaho  30,  76  Pac.  1010.  109 
Am.  St.  192 ;  Lemmon  v.  Whitman, 
75  Ind.  318,  39  Am.  Rep.  150:  Laux 
V.  Gildersleeve,  23  App.  Div.  (N.  Y.) 
352,  48  N.  Y.  S.  301.  See  Crawford 
v.  Nimmons,  180  111.  143.  54  N.  E. 
209,  revg.  80  111.  App.  543.  Examine 
generallv,  Ford  v.  Washington  Nat. 
Bldg.  &c.  Assn..  10  Idaho  30,  76  Pac. 
1010,  109  Am.  St.  192. 


962 


CONTRACTS. 


264 


seeking  relief  was  neither  a  party  nor  privy  the  defense  has  been 
refused.''  Such  defense,  it  is  declared,  is  available  against  per- 
sonal representatives.''  It  is,  in  general,  however,  so  it  is  deter- 
mined, a  personal  defense  limited  to  immediate  parties  or  the 
debtor,®  and  one  who  purchases  mortgaged  property  subject  to 
the  mortgage  cannot  avail  himself  of  the  defense;^  nor  as  against 
an  indorser  can  usury  between  maker  and  payee  be  set  up  i^"  nor, 
as  against  the  payee,  is  usury  between  the  payee  and  acceptor  of  a 
bill  a  defense,^^  although  it  is  held  that  usury  on  the  part  of  the 
maker  is  available  in  behalf  of  an  accommodation  indorser,^^  or 
of  an  acceptor  of  a  bill  in  an  action  by  the  holder," 

§  962.  Rule  further  illustrated. — But  as  against  a  surety 
an  usurious  contract  between  the  principal  and  holder  of  a  note 
constitutes  no  defense,^*  although  it  is  held  that  if  collateral  has 


"Vette  V.  Geist,  155  Mo.  27,  55  S. 
W.  871.  See  generally,  Missouri 
Real  Estate  Syndicate  v.  Sims,  179 
Mo.  679,  78  S.  W.  1006;  Biedler  v. 
Malcolm,  121  App.  Div.  (N.  Y.) 
145,  105  N.  Y.  S.  642 ;  Grubb  v.  Stew- 
art, 47  Wash.  103,  91  Pac.  562. 

^Fox  V.  Whitney,   16  Mass.    118. 

^Stickney  v.  Moore,  108  Ala.  590, 
19  So.  76;  Cain  v.  Gimon,  36  Ala. 
168;  Loomis  v.  Eaton,  32  Conn.  550; 
Anderson  v.  Oregon  Mortg.  Co.,  8 
Idaho  418,  69  Pac.  130;  Crawford 
V.  Nimmons,  180  111.  143;  54  N.  E. 
209,  revg.  80  111.  App.  543;  Conger 
V.  Babbet,  67  Iowa  13,  24  N.  W. 
569;  Savage  v.  Fox,  60  N.  H.  17; 
Bullard  v.  Raynor,  30  N.  Y.  197; 
Faison  v.  Grandv,  128  N.  Car.  438, 
38  S.  E.  897,  83  Am.  St.  693 ;  Zeigler 
V.  Maner,  53  S.  Car.  115,  30  S.  E. 
829,  69  Am.  St.  842;  Smith  v.  Mc- 
Millan, 46  W.  Va.  577,  33  S.  E.  283. 
But  see  Prather  v.  Smith,  101  Ga. 
283,  28  S.  E.  857;  Akers  v.  Demond, 
103  Mass.  318.  Examine  generally. 
Bacon  v.  Iowa  Savings  &  Loan  Assn., 
121^  Iowa  449,  96  N.  W.  977;  Peo- 
ple's Building,  Loan  &c.  Assn.  v. 
Pickard,  2  Nebr.  (Unof.)  144.  96 
N.  W.  337;  People's  Building,  Loan 
&c.  Assn.  V.  Palmer,  2  Nebr.  (Unof.) 
460,  89  N.  W.  316;  Bird  v.  Kendall, 
62  S.  Car.  178,  40  S.  E.  142;  Har- 
per V.  Middle  States  Loan  &c.  Co.,  55 


W.  Va.  149,  46  S.  E.  817.  Receivers 
may  set  up  defense.  Short  v.  Post, 
58  N.  J.  Eq.  130,  42  Atl.  569.  In 
an  action  against  a  co-partner  upon 
a  note  tainted  with  usury,  usury 
may  be  pleaded  by  such  co-partner, 
he  being  personally  liable  as  a  mem- 
ber of  the  firm  and  as  surety  for 
his  co-partner.  Bolen  v.  Wright,  89 
Nebr.  116,  131  N.  W.  185.  The  crea- 
tion of  a  corporation  to  take  over  a 
partnership  business  does  not  purge 
of  its  illegality  a  usurious  firm  con- 
tract. Chas.  S.  Riley  &  Co.  v.  W. 
T.  Sears  &  Co.,  154  N.  Car.  509,  70 
S.  E.  997. 

'  See  post,  §  969. 

"Challiss  v.  McCrum,  22  Kans. 
157,  31  Am.  Rep.  181;  McKnight  v. 
Wheeler,  6  Hill  (N.  Y.)  492;  Bly  v. 
Bank,  79  Pa.  St.  453. 

"Woolfolk  v.   Plant,  46  Ga.  422. 

"Newport  Nat.  Bank  v.  Tweed, 
4  Houst.  (Del.)  225;  Nat.  Bank  of 
Auburn  v.  Lewis,  75  N.  Y.  516,  31 
Am.  Rep.  484,  revg.  10  Hun  (N.  Y.) 
468. 

"Jackson  v.  Fassit,  33  Barb  (N. 
Y.)  645,  21  Howard  Pr.  (N.  Y.) 
279,  12  Abb.  Pr.  (N.  Y.)  281. 

"Sanner  v.  Smith,  89  111.  123,  31 
Am.  Rep.  70;  Jenness  v.  Cutler,  12 
Kans.  500;  Burks  v.  Wonterline,  6 
Bush  (Ky.)  20;  Brown  v.  Prophit, 
53  Miss.  649;  Cole  v.  Hills,  44  N.  H. 


265  USURY.  §    963 

been  pledged  by  a  surety  for  payment  he  may  set  up  this  de- 
fense;"* and  where  the  principal  has  obtained  an  extension  by  an 
usurious  cont»-act  the  surety  is  entitled  to  the  benefit  of  the  pay- 
ments made/"  but  an  indorser  has  been  denied  such  a  defense/' 
tliough  it  has  been  held  available  to  a  surety  against  one  who 
purchases  the  paper  after  maturity/*  But  in  construing  the  lan- 
guage used  the  words  will  not  be  strained  to  sustain  such  a  de- 
fense/^ Again,  where  an  usurious  loan  has  been  obtained  by  a 
pledge  of  notes  fraudulently  obtained  the  owner  may  set  up  the 
defense  of  usury  under  a  statute  making  a  pledge  based  on  usury 
illegal  and  void/"  An  employer  when  sued  for  wages  due  an 
employe  by  an  assignee  of  such  employe  cannot  defend  that  the 
assignment  of  wages  by  the  employe  was  a  part  of  an  usurious 
contract/^ 

§  963.  Usurious  note  secured  by  mortgage. — So,  a  mort- 
gage given  to  secure  an  usurious  note  will,  so  it  is  decided,  be  like- 
wise affected/^  and  so  discharge  the  mortgagor  from  paying  in- 
terest in  certain  cases,-^  So,  the  defense  of  usury  is  open  to  a 
trustee  who  has  mortgaged  the  trust  estate.^*  But  the  fact  that 
a  larger  per  cent,  has  been  charged  than  the  usual  time  prices  does 
not  make  usurious  a  bond  and  mortgage  given  for  personalty 
purchased  /^  and  in  case  of  a  junior  mortgage,  the  debtor  being 

227;  First  Nat.  Bank  v.  Garlinghouse,  ^Western     Union     Tel.     Co.     v. 

22  Ohio   St.   492.   10  Am.   Rep.   751 ;  Rvan,  126  Ga.  191,  55  S.  E.  21. 

Selscr  V.  Brock,  3  Ohio  St.  302 ;  La-  "  Krumsieg   v.    Missouri    K.   &   T. 

moile    County    Xat.    Bank    v.    Bing-  Trust  Co.,  71  Fed.  350 ;   Kleeman  v. 

ham,   50   Vt.    105.   28   Am.    Rep.   490;  l-risbie,  63  111.  482;  Farmland  Secur- 

Davis  V.  Converse,  35  Vt.  503;  Ward  itv   Co.  v.   Nelson.  52   Nebr.  624,  72 

V.  Whitney.  32  Vt.  89.  X.  W.  1048;  Beard  v.  Bingham,  76  N. 

"  Buquo  V.  Bank  of  Erin   (Tenn.),  Car.    285;    Erhardt    v.    Varn,    51    S. 

52  S.  W.  775.  Car.  550,  29  S.  E.  225.     See  Bouker 

•"Lemmon    v.    Whitman,    75      Ind.  v.  Galligan  (N.  J.  Eq.),  57  Atl.  1010. 

318,  39  Am.  Rep.  150.  Examine   Sherwood     v.     Hanev,     63 

"Stewart    v.    Bramhall,    74    N.    Y.  Ark.  249,  38  S.  W.  IS;  In  re  Kellogg, 

85.  affd.  11  Hun  (N.  Y.)  139;  Union  113    Fed.    120;    Elder   v.    Elder,    119 

Nat.  Bank  v.  Wheeler,  60  N.  Y.  612.  Ga.    174.   45    S.    E.   990;   Burdette   v. 

"Maher  v.  Lanfrom.  86  111.  513.  Robertson,  97  Ga.  612,  25  S.  E.  349. 

"Hamilton  v.  La  Grange,  2  H.  Bl.  ="  Mav  v.  Folsom,  113  Ala.   198.  20 

144.  So.    984.     See    Wallace    v.    Goodlett, 

="Keim   v.   Vette.   167  Mo.   389,  67  104  Tenn.  670,  58  S.  W.  343. 

S.    W.    223.      Examine    Chambers    v.  "*Wagnon    v.    Pease,    104    Ga.    417, 

Gilbert,  68  Minn.  183,  70  N.  W.  1077.  30^  S.   E.  895. 

See  generallv,  Osborn   v.   Payne,   HI  ^Churchill     v.     Turnage,     122     N. 

Mo.  App.  29,'  85  S.  W.  667.  Car.  426,  30  S.  E.  122. 


§    964  CONTRACTS.  266 

insolvent,  it  is  held  that  the  former  cannoi  avail  himself  of  the 
defense  of  usury  against  a  prior  incumbrancer.-'^  So,  an  agree- 
ment to  extend  the  time  for  payment  given  in  consideration  of  the 
payment  of  usurious  interest  does  not  taint  with  usury  the  orig- 
inal note  and  mortgage  which  were  not  so  tainted  f  nor  does  the 
receiving,  after  maturity,  usurious  interest  invalidate  a  note  and 
mortgage  not  othei-wise  tainted  with  usury  ;-^  for  receiving  such 
usurious  interest  on  a  note  after  it  becomes  due  does  not  consti- 
tute usury,  such  note  not  being  originally  tainted  with  usury. ^^ 
So,  a  note  for  prior  advances  and  a  mortgage  for  future  advances 
will  be  valid  as  to  such  of  the  secured  debts  as  are  not  usurious.""'* 
Again,  the  validity  of  a  note  is  not  destroyed  by  the  taking  of  a 
separate  note  under  an  usurious  contract.^^  A  mortgage  note 
may  provide  for  a  greater  than  a  legal  rate  of  interest  after  its 
maturity.^^ 

§  964.     Largely  a  matter  of  statutory  regulation. — The 

question  of  the  availability  of  the  defense  of  usury  in  actions  on 
bills,  notes,  or  the  like,  is  so  largely  a  matter  of  statutory  regula- 
tion in  different  jurisdictions,  and  is  so  largely  dependent  there- 
upon that  recourse  must  be  had  to  those  statutes  to  determine  who 
is  entitled  and  who  not  to  make  such  a  defense,  and  the  relative 
and  respective  rights  of  the  parties.^^    It  may  be  stated,  however, 

'"Stickney  v.   More,   108  Ala.   590,  1875,   p.    105);   Anderson  v.   Oregon 

19  So    76  Mortg.  Co.,  8  Idaho  418  69  Pac.  130; 

*"  Morse  v.  Wellcome,  68  Minn.  Carter  v.  Moses,  39  111.  539  (111. 
210,  70  X.  W.  978,  64  Am.  St.  471.  Acts  1845.  §  1857)  ;  Hemenway  v. 
So  the  refusal  to  extend  the  time  of  Cropsey,  Z7  111.  357  (111.  Acts  1849); 
a  mortgage  unless  another  claim  is  Tuxbury  v.  Abbott,  59  Maine  466; 
paid  is  not  necessarily  usurious.  North  Bridgewater  Bank  v.  Cope- 
Miller  V.  Bank  of  Harvey  (N.  Dak.),  land,  7  Allen  (Mass.)  139;  Kendall 
134  N.  W.  745.  V.  Robertson,  12  Cush.   (Mass.)    156; 

"^McEwin  V.     Humphrey,     1     Ind.  Coatsworth    v.    Barr,    11    Mich.    198 

Ter.  550,  45  S.  W.  114.  (Mich.  Comp.  Laws,  §  1316)  ;  Rozelle 

'^Dell  V.  Openheimer,  9  Nebr.  454,  v.    Dickerson,   63    Miss.    538;    Claflin 

4   N.   W.   51;    Mahler  v.   Merchant's  v.  Boorum,   122  N.  Y.  385,  25  N.  E. 

Nat.   Bank,  65   Minn.  Z7,   67  N.   W.  360  (4  Rev.  St.,  p.  2513,  §  5)  ;  Ward 

655.  V.   Sugg,   113   N.   Car.  489,    18   S.   E. 

^Atkinson   v.    Burt,   65    Ark.    316,  717,  24  L.  R.  A.  280  (N.  Car.  Code, 

SZ  S.  W.  404.  §    3836)  ;    Gaillard   v.    LeSeigneur,    1 

'' Cooper  V.  Tappan,  4  Wis.  362.  McMul.    (S.    Car.)    225;    Lynchburg 

^^  Sloane  v.  Lucas,  Z7  Wash.  348,  79  Nat.   Bank  v.    Scott,  91  Va.  652,  22 

Pac.  949.  S.  E.  487,  29  L.  R.  A.  827,  50  Am. 

'"Matz  V.  Arick,  76  Conn.  388,  56  St.   860.     Upon   this   subject   of   the 

Atl.   630    (Gen.   Stat.    1902,   §   4599)  ;  effects    of    statutory    provisions    and 

Lanier  v.  Cox,  65  Ga.  265  (Ga.  Acts  the  rights  of  parties  with  relation  to 


T.d'J  USURY.  §    965 

that  the  repeal  of  a  statute  which  vaHdates  an  usurious  note  does 
not  make  the  note  invahd  and  subject  to  the  defense  of  usury  ;^* 
and  where  a  subsequent  statute  reduces  the  rate  of  interest,  con- 
tinuing to  pay  the  former  legal  rate  does  not  constitute  usury ;" 
nor  does  the  enactment  of  a  statute  with  reference  to  usury  make 
it  retroactive  as  to  contracts  existing  at  the  time  it  became  a  law.^'' 
Under  the  Xew  York  statute,  which  makes  it  lawful  to  receive, 
to  contract  to  receive  and  collect,  any  sum  agreed  upon  in  writing 
by  the  parties,  for  the  making  advances  of  money  repayable  on 
demand  to  an  amount  not  less  than  five  thousand  dollars,  upon 
bills  of  exchange  or  other  negotiable  instruments  as  collateral 
security  for  such  repayment,  it  is  held  that  such  excess  of  the 
legal  rate  of  interest  upon  loans  so  made  is  not  usurious  even 
though  orally  agreed  upon.^^  Again,  actions  at  law  and  in  equity 
are  within  the  meaning  of  the  term  "action"  in  a  usury  statute. ^^ 

§  965.  Bona  fide  holders — Usurious  contract  between  orig- 
inal parties, — Whether  paper  based  on  a  usurious  contract 
between  the  original  parties  is  or  is  not  subject  to  the  defense  of 
usury  as  against  a  bona  fide  holder  before  maturity,  without  no- 
tice, and  for  value,  is  a  question  upon  which  the  decisions  are  far 
from  being  in  harmony.  The  general  rule,  however,  seems  to  be 
that  such  a  defense  is  not  available  against  such  holder  in  the  ab- 

defenses  under  usurious  contracts  see  Faison  v.   Grandy,   126  N.   Car.  827, 

generally  the   following  cases:    Tur-  Z^    S.    E.   276;    Waldner   v.    Bowden 

ner    v.    Merchants'    Bank.    126    Ala.  State  Bank,  13  N.  Dak.  604,  102  N. 

397,  28  So.  469   (Code  1886,  §  4140)  W.   169   (Rev.  Codes   1899,   §  4066); 

(discount  bv  banks).     In  re  Samuel  Metz  v.  Winne,  15  Okla.   1,  79  Pac. 

Wilde's    Soils,    133    Fed.    562;    First  223;  Newton  v.  Woodley,  55  S.  Car. 

Nat.    Bank  v.    Glenn,    10   Idaho  224,  132,  32  S.  E.  531,  7>l  S.  E.  1 ;  Ridg- 

n  Pac.  623,  109  Am.  St.  204;  Finney  way  v.  Davenport,  Zl  Wash.  134,  79 

V.   Moore,  9  Idaho  284,  74   Pac.  866  Pac.    606. 

(Rev.    Stat.    1887,    §    1266);    Tomlin  '*  First  Ecclesiastical  Soc.  v.  Loom- 

V.   Morris,  26  Kv.  L.  681,  82  S.  W.  is,  42  Conn.  570. 

yiZ  (Kv.  Stat.  1903,  §  2219);  Beck-  'Hlastin  v.  Cochran's  Exr.,  25  Ky. 
er  V.  Headsten,  137  Mich.  478,  100  L.  712,  !(,  S.  W.  343. 
N.  W.  752  (Comp.  Laws,  §  4857);  "*  North  Bridgewater  Bank  v.  Cope- 
Green  V.  Grant,  134  Mich.  462,  96  land,  7  Allen  (:\Iass.)  139.  See  Hack- 
N.  W.  583;  Lee  v.  Melby,  93  Minn.  4.  ley  v.  Sprague,  10  Wend.  (N.  Y.) 
100  N.   W.  379:  Vette  v.   Geist,   155  113. 

Wo.  27,  55  S.  W.  871  (Laws  1891,  p.  "In  re,  Samuel  Wilde's  Sons,  133 

170)  ;   Davis,    McDonald    &   Davis  v.  Fed.  562. 

Tandv.  107  Mo.  App.  437.  81  S.  W.  "^  Coatsworth   v.    Barr,     11     Mich. 

457   (Rev.  Stat.  \m\  §  3710)  ;  Allen  198,   construing   Mich.   Comp.   Laws, 

V.  Dunn,  71  Nebr.  831,  99  N.  W.  680;  §  1316. 


965 


CONTRACTS. 


268 


sence  of  a  statutory  provision  making  such  paper  absolutely  void.^* 
In  several  jurisdictions,  however,  such  a  defense  is  good  against  a 
bona  fide  holder"  where  such  an  instrument  is  expressly  declared 


^Tilden  v.  Blair,  21  Wall.  (U.  S.) 
241,  21  L.  ed.  632;  Palmer  v.  Call,  2 
.McCrary  (U.  S.)  522.  See  Orr  v. 
Sparkman,  120  Ala.  9,  23  So.  829; 
Tucker  v.  Wilamouicz,  8  Ark.  157; 
Hemenway  v.  Cropsey,  2il  111.  357; 
Sherman  v.  Blackman,  24  111.  346; 
Conckling  v.  Underbill,  3  Scam. 
(111.)  388.  See  Harbaugh  v.  Tanner, 
163  Ind.  574,  71  N.  E.  145;  Dicker- 
man  V.  Day,  31  Iowa  444,  7  Am.  Rep. 
156;  Brown  v.  Wilcox,  15  Iowa  414; 
Gross  V.  Funk,  20  Kans.  655;  Roby 
V.  Sharp,  6  T.  B.  Mon.  (Ky.)  375; 
Owings  V.  Grimes,  5  Litt.  (Ky.)  331; 
Gwv-nn  v.  Lee,  9  Gill.  (Aid.)  137; 
Burt  V.  Gwinn,  4  Har.  &  J.  (Md.) 
507;  Towne  v.  Rice,  122  Mass.  67; 
Ayer  v.  Tilden,  15  Gray  (Mass.)  178, 
77  Am.  Dec.  355 ;  Robinson  v.  Smith, 
(2  Minn.  62,  64  N.  W.  90 ;  First  Nat. 
Bank  v.  Bentley,  27  Alinn.  87,  6  N. 
W.  422;  Cheney  v.  Janssen,  20  Nebr. 
128,  29  N.  W.  289;  Sedgwick  v. 
Dixon,  18  Nebr.  545,  26  N.  W. 
247;  Evans  v.  De  Roe,  15  Nebr.  630, 
20  N.  W.  99;  Cheney  v.  Cooper,  14 
Nebr.  415,  16  N.  W.  471 ;  State  Sav. 
Bank  v.  Scott,  10  Nebr.  83,  4  N.  W. 
314;  Wortendyke  v.  Meehan,  9  Nebr. 
221,  2  N.  W.  339.  (See  Bovier  v.  Mc- 
Carthy, 4  Nebr.  (unofficial)  490,  94 
N.  W.  965)  ;  Young  v.  Berkley,  2  N. 
H.  410;  Long  Island  Bank  v.  Boyn- 
ton,  105  N.  Y.  656,  11  N.  E.  837,  1 
Silvernail  Ct.  App.  448;  Chatham 
Bank  V.  Betts,  Z1  N.  Y.  356,  affg.  9 
Bosw.  (N.  Y.)  552,  23  How.  Pr.  (N. 
Y.)  476;  Farmers'  &  Merchants' 
Bank  of  Genesee  v.  Parker,  Zl  N. 
Y.  148;  Kitchel  v.  Schenck,  29  N. 
Y.  515;  Bank  v.  Flanigan,  39  Leg. 
Int.  (N.  Y.)  264;  Hackley  v. 
Sprague,  10  Wend.  (N.  Y.)  113; 
Munn  V.  Commission  Co.,  15  Johns. 
(N.  Y.)  44,  8  Am.  Dec.  219;  Odell 
V.  Greenly.  11  N.  Y.  Super.  Ct.  358. 
See  McWhirter  v.  Longstreet,  39 
Misc.  (N.  Y.)  831,  81  N.  Y.  S.  334; 
Coor  V.  Spicer,  65  N.  Car.  401 ;  Ely 
V.  Second  Nat.  Bank,  79  Pa.  St.  453 ; 
Creed  v.  Stevens,  4  Whart.  (Pa.) 
223;  Foltz  v.  Mey,  1  Bay   (S.  Car.) 


486;  Bradshaw  v.  Van  Valkenburg, 
97  Tenn.  316,  Zl  S.  W.  88;  Lynchburg 
Nat.  Bank  v.  Scott,  91  Va.  652,  22 
S.  E.  487,  29  L.  R.  A.  827,  50  Am.  St. 
860;  Fleckner  v.  Bank  of  United 
States,  8  Wheat.  (U.  S.)  338,  5  L. 
ed.  631.  See  also,  Wilson  v.  Knight, 
59  Ala.  172;  Saylor  v.  Daniels,  Zl  111. 
331,  87  Am.  Dec.  250;  Robinson  v. 
Smith,  62  Minn.  62,  64  N.  W.  90; 
Holmes  v.  State  Bank,  53  Minn.  350, 
55  N.  W.  555;  Mason  v.  Anthony,  42 
N.  Y.  (3  Keyes)  609,  35  How.  Pr. 
477,  3  Abb.  Dec.  207;  Holmes  v. 
Williams,  10  Paige  (N.  Y.)  326,  40 
Am.  Dec.  250;  Ramsey  v.  Clark,  4 
Humph.  (Tenn.)  244,  40  Am.  Dec. 
645;  Fant  v.  Miller,  17  Grat.  (Va.) 
47,  11;  Otto  v.  Durege,  14  Wis.  621. 
In  an  action  against  payee  as  indorser 
by  bona  fide  holder  the  originally 
usurious  contract  is  not  available  as  a 
defense.  McKnight  v.  Wheeler,  6 
Hill  (N.  Y.)  492.  Usurious  contract 
between  intermediate  holders  of 
paper  transferred  before  maturity 
cannot  be  set  up  against  indorsee 
without  notice.  King  v.  Johnson,  3 
AlcCord  (S.  Car.)  365.  However, 
the  original  payee  may  be  required 
to  refund  to  the  maker  the  usurious 
interest  which  the  latter  has  been 
compelled  to  pay  the  bona  fide  pur- 
chaser before  maturity.  Culver  v. 
Osborne,  231  111.  104,  83  N.  E.  110, 
121  Am.  St.  302;  Woodworth  v. 
Huntoon,  40  111.  131,  89  Am.  Dec. 
340. 

*»  Young  v.  Wright,  1  Camp.  139; 
Orr  V.  Sparkman,  120  Ala.  9,  23  So. 
829;  Pearson  v.  Bailey,  23  Ala.  537; 
Townsend  v.  Bush,  1  Conn.  260; 
Hamilton  v.  Fowler,  99  Fed.  18, 
40  C.  C.  A.  47;  Walton  Guano  Co.  v. 
Copelan,  112  Ga.  319,  11  S.  E.  411, 
52  L  R.  A.  268;  Clarke  v.  Havard, 
111  Ga.  242,  36  S.  E.  837,  51  L.  R.  A. 
499;  Angier  v.  Smith,  101  Ga.  844,  28 
S.  E.  167;  Laramore  v.  Bank  of 
America,  69  Ga.  722;  Bacon  v.  Lee, 
4  Iowa  490 ;  True  v.  Triplett,  4  Mete. 
(61  Ky.)  57;  Early  v.  McCart,  2 
Dana  (Ky.)  414;  Cockey  v.  Forrest, 


269 


USURY. 


966 


void  by  statute,"  although  the  term  "unlawful"  in  a  statute  is  held 
not  to  have  such  an  effect."*-  Again,  although  there  has  been  a 
waiver  of  all  defenses  as  against  a  bona  fide  holder,  the  statutory 
defense  of  usurious  contract  may  be  sustained,^^  and  knowledge 
or  notice  of  this  statutory  infirmity  in  the  paper  precludes  recov- 
ery.** 

§  966.  Usury  as  a  matter  of  intent. — Usury  is  frequently 
declared  to  be  a  mere  matter  of  intention  on  the  part  of  the  par- 
ties to  the  agreement. *°  Thus  a  miscalculation  innocently  com- 
mitted or  the  mistake  of  a  scrivener  in  putting  one  rate  for  an- 
other will  not  taint  the  transaction  with  usury.*" 

§  967.  Substance  and  not  form  controls. — But  the  state- 
ment that  usury  is  mere  matter  of  intention  is  not  to  be  given 
too  broad  an  interpretation,  nor  in  all  cases  a  literal  one.     It  is 


3  Gill.    (Md.)    482;    Burt   v.    Gwinn, 

4  Har.  &  J.  (Md.)  507;  Whitten  v. 
Hayden,  7  Allen  (Mass.)  407;  North 
Bridgewater  Bank  v.  Copeland,  7 
Allen  (Alass.)  139;  Svlvester  v. 
Swan,  5  Allen  (Mass.)  134,  81  Am. 
Dec.  734n ;  Knapp  v.  Briggs,  2  Allen 
(Mass.)  551;  Union  Bank  of  Roches- 
ter V.  Gilbert.  83  Hun  (N.  Y.)  417. 
31  N.  Y.  S.  945;  Clark  v.  Loomis,  5 
Duer   (N.  Y.)   468;   Clark  v.   Sisson, 

4  Duer  (N.  Y.)  408;  Powell  v. 
Waters,  8  Cow.  (N.  Y.)  669;  Faison 
V.  Grandy,  128  N.  Car.  438,  38  S.  E. 
897,  83  Am.  St.  693.  See  also,  Ack- 
land  V.  Pearce,  2  Camp.  599;  Lowe 
V.  Waller,  2  Doug.  736;  Lowes  v. 
]\Iazzaredo.  1  Starkie  385 ;  Chapman 
V.  Black,  2  Barn.  &  Aid.  588;  Hen- 
derson V.  Benson,  8  Price  281  ;  Ro- 
decker  v.  Littauer,  59  Fed.  857,  8  C. 
C.  A.  320;  Aebv  v.  Rapelve,  1  Hill 
(N.  Y.)  9;  Lynchburg  v.  Norvell 
(Powell),  20  Grat.    (Va.)   601. 

*"  Pearson  v.  Bailey,  23  Ala.  537; 
Faris  V.  King,  1  Stew.  (Ala.)  255; 
In  re  Kellogg,  113  Fed.  120  (under 
laws  of  New  York)  ;  Rodecker  v. 
Littauer,  59  Fed.  857.  8  C.  C  A.  320; 
True  V.  Triplett,  4  Mete.  (61  Kv.) 
57;  Bridge  v  Hubbard.  15  Mass.  96, 
8  Am.  Dec.  86;  Claflin  v.  Boorum, 
122  N.  Y.  385.  25  N.  E.  360;  Solo- 
mons V.  Jones.  3  Brev.   (S.  Car.)   54, 

5  Am.  Dec.  538;  Payne  v.  Trezevant, 
2  Bay  (S.  Car.)  23.    However,  it  has 


been  held  in  New  York  that  when  a 
usurious  note  passes  into  the  hands 
of  a  bona  fide  holder  and  the  maker 
subsequently  makes  a  payment  there- 
on and  gives  a  new  note  therefor,  the 
new  note  is  valid.  Armstrong  v. 
^liddaugh,  74  Misc.  (N.  Y.)  45,  133 
N.  Y.  S.  647. 

*"  Pickaway  County  Bank  v.  Pra- 
ther,  12  Ohio  St.  497.  See  Ewell  v. 
Daggs,  108  U.  S.  143,  27  L.  ed.  682, 
2  Sup.  Ct.  408. 

"  Union  Nat.  Bank  v.  Eraser,  63 
Miss.  231. 

"^Torrey  v.  Grant,  10  Sm.  &  M. 
(Miss.)  89;  Berry  v.  Thompson,  17 
Johns.  (N.  Y.)  436.  Negotiable  paper 
purchased  by  a  national  bank  with 
knowledge  that  it  is  based  on  a  usu- 
rious consideration  is  subject  to  the 
defense  of  usury  the  same  as  if  it 
had  remained  in  the  hands  of  the 
original  pavee.  Schlesinger  v.  Leh- 
maier,  191  N.  Y.  69,  83  N.  E.  657,  16 
L.  R.  A.  (N.  S.)  626n,  123  Am.  St. 
591. 

"  Cooper  V.  Nock.  27  111.  301 ;  Gale 
V.  Grannis,  9  Ind.  140;  Von  Haus  v. 
Soule,  131  N.  Y.  S.  512;  Covington 
V.  Fisher,  22  Okla.  207,  97  Pac.  615; 
Daniels  v.  Mowrv.  1  R.  I.  151 ;  Chil- 
ders  V.  Deane,  4  Rand.  (Va.)  406. 

*"Childers  v.  Deane.  4  Rand.  (Va.) 
406.  See  also.  Merchants'  &  Plant- 
ers' Bank  v.  Sarratt.  11  S.  Car.  141, 
57  S.  E.  621,  122  Am.  St.  562. 


§    967  CONTRACTS.  27O 

true,  in  a  general  way,  that  the  requisite  intent  must  be  present 
to  constitute  the  defense  of  usury  but  such  intent  is  to  be  deducted 
from  and  determined  from  the  acts.  The  intent  which  enters 
into  and  is  essential  to  constitute  usury  is  simply  the  intent  to  take 
and  reserve  more  than  that  permitted  by  statute  for  the  loan  and 
forbearance  of  money.  One  cannot  avoid  the  consequences  of 
an  act  by  testifying  that  he  did  not  intend  to  take  usury.  That 
is,  he  cannot  intend  to  give  the  transaction  a  different  name  from 
that  which  the  law  gives  it  and  call  that  a  purchase  and  sale  which 
the  law  calls  a  loan  of  money  secured  by  a  mortgage.  The  vol- 
untary taking  or  reservation  of  a  greater  interest  or  compensation 
for  the  loan  or  forbearance  of  money  than  that  allowed  by  law  is 
'per  se  usurious,  but  if  taken  by  mistake  or  accident  it  is  not  usury. 
If  the  party  intend  to  take  and  receive  the  amount  paid,  the  law 
condemns  the  act  if  it  is  within  the  condemnation  of  the  law 
against  usury. *^  It  is  the  substance  and  effect  of  the  transaction 
which  controls  and  not  its  form.**  Every  agreement  to  pay  inter- 
est in  excess  of  the  legal  rate,  however  well  the  unlawful  interest 
may  be  disguised,  is  a  violation  of  law  and  usurious.*^  When  it  is 
made  to  appear  that  the  transaction  is  a  mere  scheme  or  device 
to  evade  the  usury  laws  it  falls  within  the  prohibition  of  such 
laws.'" 

'     "Fiedler  v.  Darin,  50  N.  Y.  437;  *' Rosen    v.    Rosen,    159    Mich.    12, 

Chas.    S.    Riley    &    Co.    v.    W.    T.  123  N.  W.  559,  134  Am.  St.  712.     To 

Sears  &  Co.,   154  N.  Car.  509,  70  S.  same  effect,  In  re  Fishel,  Nessler  & 

E.  997;  See  also,  Plyler  v.  McGee,  76  Co.,   192  Fed.  412. 

S.   Car.  450,  57   S.   E.   180,   121   Am.  '"Title   Guaranty  &   Surety   Co.  v. 

St.  950.  Klein,  178  Fed.  689,  102  C.  C.  A.  189, 

'     "Falls    V.    United    States    Savings  29  L.  R.  A.    (N.   S.)   620n;   Ford  v. 

&c.   Co.,  97  Ala.   417,   13   So.  25,  24  Washington  Nat.  Bldg.  &c.  Assn.,  10 

L.  R.  A.   174,  38  Am.  St.  194;  Ford  Idaho  30,  76  Pac.   1010,  109  Am.  St. 

V.  Washington  Nat.  Bldg.  Assn.,  110  192;   Cobe  v.   Guyer,  237  111.  568,  86 

Idaho  30,  76  Pac.  1010,   109  Am.   St.  N.   E.   1088;   State  v.   Martin,  76  N. 

192;   Clemens  v.   Crane,   234   111.  215,  J.    L.   292,  69   Atl.    1091;    Willson   v. 

84  N.  E.  884;  Home  Bldg.  &c.  Assn.  Fisher,  75  Misc.   (N.  Y.)  382,  135  N. 

V.  McCav,  217  111.  551,  75  N.  E.  569,  Y.   S.  532;  Missouri,  K.  &  T.  Trust 

108  Am.  St.  263;  Meroney  v.  Atlanta  Co.   v.   Krumseig,    172  U.    S.   351,  43 

Bldg.  &  Loan  Assn.,  116  N.  Car.  882,  L.  ed.  474,  19  Sup.  Ct.  179.   When  the 

21    S.   E.  924,  47  Am.   St.  841.     The  contract  is  not  usurious  on  its  face, 

clear  legal  effect  of  a  contract  makes  the  party  alleging  it  to  be  usurious 

unimportant  the  intent  with  which  it  has    the    burden    of    proof.      In    re 

was  made,  when  it  is  sought  to  en-  Fishel,  Nessler  &  Co.,   192  Fed.  412; 

force  it  according  to  its  terms.    Stir-  Continental    Nat.    Bank    v.    Fleming 

ling    V.    Gogebic    Lumber    Co.,    165  (Mich.),  134  N.  W.  656.     Where  the 

Mich.  498,  131   N.  W.   109,  35  L.  R.  written  contract  is  not  upon  it.s  face 

A.   (N.  S.)   1106n.  usurious  parol  evidence  is  admissible 


2/1 


USURY. 


§    968 


§  968.  Usually  applies  to  contracts  of  borrowing  and  lend- 
ing.— It  is  true  generally  that  agreements  are  not  held  usuri- 
ous except  in  cases  where  the  transaction  is  a  loan  of  money,  or 
the  extension  of  a  pre-existing  debt."  But  the  statute  concern- 
ing usury  may  be  broad  enough  to  include  any  and  all  contracts 
and  assurances/'" 

§  969.  Application  to  contracts  of  purchase  and  sale. — 
Since  usury  statutes  as  a  general  rule  apply  to  a  contract  of  bor- 
rowing and  lending  exclusively  such  statutes  have  no  application 
to  good  faith  contracts  of  purchase  and  sale.  As  a  general  rule, 
the  vendor  has  a  right  to  demand  any  price  he  may  designate  for 
the  goods  sold,  and  if  the  goods  are  sold  on  credit  he  may  demand 
and  the  vendee  agree  to  pay  a  higher  price,  in  which  case  no  usury 
exists  because  of  the  absence  of  any  borrowing  or  lending.^* 


to  show  that  the  writing  is  a  mere  de- 
vice resorted  to  for  the  purpose  of 
conceahng  the  usurious  nature  of  the 
transaction.  Interstate  Sav.  &  Trust 
Co.  V.  Hornsby  (Tex.  Civ.  App.), 
146  S.  W.  960.  To  same  effect,  In 
re  Canfield,  193  Fed.  934. 

""It  has  long  been  well  settled  by 
the  decisions  of  the  court  of  last  re- 
sort in  the  state  of  New  York,  as 
well  as  elsewhere,  that  such  usury 
laws  are  applicable  only  to  a  loan  of 
money,  and  that  the  terms  'interest' 
and  'forbearance'  cannot  be  predi- 
cated of  anything  other  than  a  loan 
of  monev."  Title  Guarantv  &c.  Co. 
V.  Klein,'  178  Fed.  689,  102  C.  C.  A. 
189,  29  L.  R.  A.  (N.  S.)  620.  To 
same  effect.  Real  Estate  &c.  Co.  v. 
Wilmington  &c.  Elec.  R.  Co.  (Del.), 
n  Atl.  756;  Dry  Dock  Bank  v.  Amer- 
ican Life  Ins.  &c.  Co.,  3  N.  Y.  344; 
Smithwick  v.  Whitley,  152  N.  Car. 
366,  67  S.  E.  914,  28  L.  R.  A.  (N.  S.) 
113n;  Doster  v.  English.  152  N.  Car. 
339,  67  S.  E.  754.  See  also.  Tate  v. 
Wellings,  3  T.  R.  531;  Morrison  v. 
]\IcKinnon,  12  Fla.  552;  Easterlin  v. 
Rylander.  59  Ga.  292;  First  Nat. 
Bank  v.  Owen,  23  Iowa  185 ;  Gilmore 
V.  Ferguson,  28  Iowa  220;  Bull  v. 
Rice.  5  N.  Y.  315;  Hall  v.  Haggart, 
17  Wend.  (N.  Y.)  280;  Curtis  v. 
Leavitt.  17  Barb.  (N.  Y.)  309;  Spen- 
cer v.  Tilden,  5  Cow.  (N.  Y.)  144; 
Holmes  v.  Wctmore,  5  (Tow.  (N.  Y.) 


149n;  Cummings  v.  Williams,  4 
Wend.  (N.  Y.)  679;  Marshall  v. 
Rice,  85  Tenn.  502,  3  S.  W.  177; 
Doak  v.  Snapp's  Exrs.,  1  Cold. 
(Tenn.)  180.  To  the  same  effect, 
Hamlin  v.  Fitch,  Kirby  (Conn.)  260, 
5  Cow.  149n ;  Wadsworth  v.  Cham- 
pion, 1  Root  (Conn.)  393;  Whipple 
v.  Powers,  7  Vt.  457;  Steptoe's 
Admrs.  v.  Flarvey's  Exrs.,  7  Leigh 
(Va.)  501.  See  also.  Continental  Nat. 
Bank  v.  Fleming  (Mich.),  134  N.  W.. 
656,  in  which  case  one  corporation 
loaned  to  another  corporation  a  large 
amount  of  money.  It  was  also  provided 
that  two  officers  in  the  corporation 
making  the  loan  should  be  employed 
bv  the  borrowing  corporation  at  sal- 
aries of  $2,000  each  per  year.  The 
contract  was  held  not  usurious.  The 
decision  is  based,  however,  upon  the 
ground  that  the  burden  of  proving 
usury  is  on  the  party  alleging  it  and 
that  in  this  case  that  burden  had  not 
been  met.  See  also,  the  dissenting 
opinion. 

"  Rosen  v.  Rosen,  159  Mich.  72,  123 
N.  W.  559,  134  Am.  St.  712.  See 
also,  Newkirk  v.  Burson,  21  Ind.  129; 
Crawford  v.  Tohnson.  11  Ind.  258; 
Torrey  v.  Grant.  10  Sm.  &  M. 
(Miss.)  89;  Parchman  v.  McKinney, 
12  Sm.  &  M.  (Miss.)  631;  Fisher  v. 
Hoover,  3  Tex.  Civ.  App.  81.  21  S. 
W.  930. 

"Beete  v.  Bidgood,  7  B.  &  C.  453; 


§  970 


CONTRACTS. 


272 


And  it  is  immaterial  whether  the  enhanced  price  is  ascertained 
by  the  simple  addition  of  a  lump  sum  to  the  cash  price  or  by 
naming  a  particular  sum  as  principal  and  declaring  that  it  shall 
draw  interest  at  a  rate  which  would  be  usurious  were  the  transac- 
tion one  of  borrowing  and  lending.^* 

§  970.  Resale  to  vendor. — Under  this  principle  it  is  proper 
for  one  person  to  buy  property  from  another  and  agree  to  re- 
sell it  to  the  vendor  at  a  higher  price  payable  in  the  future.^^ 
If  such  be  the  actual  transaction  the  law  will  enforce  it.  It 
is  frequently  difficult,  however,  in  cases  of  this  character  to 
determine  whether  in  a  given  instance  the  parties  intended  a 
sale  or  a  mortgage  and  loan  on  the  property.  In  the  latter  in- 
stance the  transaction  will  be  treated  as  a  mere  device  to  evade  the 
statute  against  usury  and  will  be  governed  by  the  statutes  appli- 
cable to  usury  contracts.^*' 


Ellenbogen  v.  Griffey,  55  Ark.  268, 
18  S.  W.  126;  Brooks  v.  Avery,  4  N. 
Y.  225;  Hogg  v.  Ruffner,  1  Black  (U. 
S.)  115;  Myers  v.  Williams,  85  Va. 
621,  8  S.  E.  483;  Thomson  v.  Koch, 
62  Wash.  438,  113  Pac.  1110  (defining 
commercial  paper  under  Washington 
statute).  Davidson  v.  Davis,  59  Fla. 
476,  52  So.  139,  28  L.  R.  A.  (N.  S.) 
102,  and  note.  In  the  above  case  it 
is  said:  "The  law  is  well  settled  that 
usury  can  only  attach  to  a  loan  of 
money,  or  to  the  forbearance  of  a 
debt,  and  that  on  a  contract  to  secure 
the  price  or  value  of  work  and  labor 
done,  or  to  be  done,  or  of  property 
sold,  the  contracting  parties  may 
agree  upon  one  price  if  cash  be  paid, 
and  upon  as  large  an  addition  to  the 
cash  price  as  may  suit  themselves  if 
credit  be  given ;  and  it  is  wholly  im- 
material whether  the  enhanced  price 
be  ascertained  by  the  simple  addition 
of  a  lumping  sum  to  the  cash  price, 
or  by  a  percentage  thereon.  In 
neither  case  is  the  transaction  usu- 
rious. It  is  neither  a  loan  nor  the 
forbearance  of  a  debt,  but  simply  the 
contract  price  of  work  and  labor 
done  and  property  sold ;  and  the  dif- 
ference between  cash  and  credit  in 
such  cases,  whether  6,  10,  or  20  per 
cent.,  must  be  left  exclusively  to  the 
contract     of     the     parties,     and     no 


amount    of    difference    fairly    agreed 
upon  can  be  considered  illegal." 

"Dykes  v.  Bottoms,  101  Ala.  390, 
13  So.  582;  Ellenbogen  v.  Griffey,  55 
Ark.  268.  18  S.  W.  126;  Davidson  v. 
Davis,  52  Fla.  139,  52  So.  476,  28  L. 
R.  A.  (N.  S.)  102  and  note;  Tousey 
V.  Robinson,  1  Met.  (Ky.)  663;  Cut- 
ler V.  Wright,  22  N.  Y.  472;  Brown 
V.  Gardner,  4  Lea  (Tenn.)  145;  Bank 
V.  Mann,  94  Tenn.  17,  27  S.  W.  1015, 
27  L.  R.  A.  565n ;  Garrity  v.  Cripp,  4 
Baxt.  (Tenn.)  86;  Hansbrough  v. 
Peck,  5  Wall.  (U.  S.)  497,  18  L.  ed. 
520;  Graeme  v.  Adams,  23  Grat. 
(Va.)  225,  14  Am.  Rep.  130;  Reger 
v.  O'Neal,  33  W.  Va.  159,  10  S.  E. 
375,  6  L.  R.  A.  427;  Swavne  v.  Rid- 
dle 37  W.  Va.  291,  16  S.  E.  512. 

•^^  Sherwood  v.  Burgess,  1  Hayw.  & 
H.  (D.  C.)  132,  Fed.  Gas.  No.  12775; 
Barfield  v.  Jefferson,  78  Ga.  220,  2 
S.  E.  554;  Rogers  v.  Bluenstein,  124 
Ga.  501,  52  S.  E.  617,  3  L.  R.  A.  (N. 
S.)  213;  Mills  v.  Crocker,  9  La.  Ann. 
334;  Philbps  v.  Mason,  66  Hun  (N. 
Y.)  580,  50  N.  Y.  St.  104,  21  N.  Y. 
S.  842;  Connolv  v.  Keenan,  42  Misc. 
(N.  Y.)  589,  87  N.  Y.  S.  630;  Yar- 
borough  V.  Hughes,  139  N.  Car.  199, 
51   S.  E.  904. 

■^"Tillar  v.  Cleveland,  47  Ark.  287, 
1  S.  W.  516;  Sparks  v.  Robinson,  66 
Ark.  460,  51   S.  W.  460;   Mitchell  v. 


^77> 


USL'RY, 


971 


§  971.  Deferred  payments  for  work  and  labor. — It  has 
been  held  that  an  agreement  which  stipulates  that  deferred  pay- 
ments for  work  and  labor  or  the  purchase-price  of  property  shall 
bear  interest  in  excess  of  that  allowed  to  a  lender  of  money  is 
valid/^  although  there  are  cases  which  do  not  give  assent  to  this 
view.°^  Many  cases  which  uphold  this  latter  view,  however, 
were  decided  under  a  statute  which  placed  all  agreements  for  the 
payment  of  interest  on  the  same  footing  and  no  discrimination 
is  made  in  favor  of  those  not  founded  upon  a  borrowing  or  lend- 
ing of  money.^® 

§  972.  Grantee  of  real  estate  assuming  mortgage. — A 
grantee  of  land  who  expressly  agrees  to  pay  a  mortgage  thereon 
or  who  takes  it  subject  to  the  mortgage,  the  amount  thereof  hav- 
ing been  deducted  from  the  purchase-price,  cannot  interpose  the 
defense  of  usury  in  an  action  on  such  mortgage.""     This  rule  also 


Preston,  5  Day  (Conn.)  100;  Stark- 
weather V.  Prince,  1  MacArth.  (D. 
C.)  144;  Morrison  v.  Markham,  78 
Ga.  161,  1  S.  E.  425;  Wilkinson  v. 
Wooten,  59  Ga.  584;  Baggett  v.  Tru- 
lock,  11  Ga.  369.  3  S.  E.  162 ;  Monroe 
V.  Foster,  49  Ga.  514;  Ferguson  v. 
Sutphen,  3  Gilm.  (III.)  547;  Delano 
V.  Rood,  1  Gilm.  (III.)  690;  Wormley 
V.  Hamburg,  46  Iowa  144;  Hevtle  v. 
Logan,  1  A.  K.  Marsh.  (Ky.j  529; 
Shanks  v.  Kennedy,  1  A.  K.  I\Iarsh. 
65;  Knox  v.  Black,  1  A.  K.  Marsh. 
(Kv.)  298;  Barnev  v.  Tontine  Sur- 
ety'Co.,  131  Mich.  192.  91  N.  W.  140; 
Fielder  v.  Darrin.  50  N.  Y.  437; 
Brown  v.  Dewey,  1  Sandf.  Ch.  (N. 
Y.)  56,  revd.  2  Barb.  (N.  Y.)  28; 
Clarkson's  Admr.  v.  Garland,  1  Leigh 
(Va.)  147;  Phelps  v.  Bellows'  Estate, 
53  Vt.  539.  See  also.  Johnson  v. 
Grayson.  230  Mo.  380,  130  S.  W.  dlZ. 
Under  the  Missouri  statute  a  pledge 
of  personal  property  to  secure  a 
usurious  debt  is  void.  The  property 
is  wrongfully  or  illegally  in  the 
hands  of  the  pledgee  and  may  be 
taken  from  him  by  replevin  without 
a  tender  of  the  sum  legally  due. 
Holmes  v.  Schmeltz,  161  Mo.  App. 
470.  143  S.  W.  539.  To  same  effect, 
Milholem  v.  Meyer  161  Mo.  App.  491, 
143  S.  W.  540. 

"  Graeme     v.     Adams,     23     Grat. 
(Va.)  225,  14  Am.  Rep.  130. 
18 — CoNTR.vcTS,  Vol.  2 


"'Irvin  V.  Mathews,  75  Ga.  739; 
Scofield  V.  McNaught.  52  Ga.  69; 
Ozmore  v.  Coram,  133  Ga.  250,  65 
S.  E.  448 ;  Compton  v.  Compton,  5 
La.  Ann.  615 ;  ^litchell  v.  Griffith,  22 
Mo.  515;  Hartranft  v.  Uhlinger,  115 
Pa.  St.  270,  8  Atl.  244 ;  Evans  v.  Neg- 
lev,  13  Serg.  &  R.  (Pa.)  218;  Thomp- 
son v.  Nesbit,  2  Rich.  (S.  Car.)  IZ. 

^''Newkirk  v.  Burson,  21  Ind.  129; 
Crawford  v.  Johnson,  11  Ind.  258; 
Torey  v.  Grant,  10  Sm.  &  M.  (Miss.) 
89;  Parchman  v.  INIcKinnev,  12  Sm, 
&  M.  (Miss.)  631;  Fisher  v.  Hoover, 
3  Tex.  Civ.  App.  81,  21  S.  W.  938. 

""Hiner  v.  Whitlow,  66  Ark.  121, 
49  S.  W.  353,  74  Am.  St.  74 ;  Spinney 
V.  Miller,  114  Iowa  210,  86  N.  W. 
317,  89  Am.  St.  351;  Tidball  v. 
Schmeltz,  11  Kans.  440.  94  Pac.  794, 
127  Am.  St.  424:  Scanlan  v.  Grim- 
mer 71  Minn.  351.  74  N.  W.  146,  70 
Am.  St.  326;  Terminal  Bank  v.  Du- 
broff,  66  Alisc.  (N.  Y.)  100.  120  N. 
Y.  S.  609;  Aggelson  v.  Middle  States 
Loan  &c.  Co.,^  61  W^  Va.  139.  56  S. 
E.  177;  Stuckv  v.  IMiddle  States  Loan 
&c.  Co.  (W.  Va.),  55  S.  E.  996.  See 
also,  cases  cited  in  note  in  78  Am. 
Dec.  87.  A  purchaser,  subject  to  the 
mortgage,  of  mortgaged  premises  at 
a  sale  of  the  same  in  bankruptcy, 
cannot  question  such  mortgage  on 
the  ground  of  usury.  "The  reason 
of  the  rule  is  obvious.     The  statute 


§  973 


CONTRACTS. 


2/4 


applies  to  the  purchaser  of  a  mere  equity  of  redemption  in  prem- 
ises covered  by  a  usurious  mortgage,^^  and  to  the  vendee  of  prem- 
ises at  a  sale  in  bankruptcy."  But  when  the  amount  of  the  mort- 
gage is  not  deducted  from  the  purchase-price  and  when  the 
grantee  does  not  expressly  assume  the  payment  thereof  he  is  in 
privity  with  the  mortgagor  and  may  interpose  the  defense  of 
usury.^' 

§  973.  Discounting  commercial  paper. — Unless  the  dis- 
counting of  commercial  paper  at  a  greater  rate  of  interest  than 
that  permitted  by  law  is  declared  usurious  by  statute,  such  paper 
may  be  bought  and  sold  on  such  terms  as  may  be  agreed  upon  by 
the  vendor  and  purchaser,  however  small  the  price  paid,  if  there 
is  a  good  faith  transaction  which  is  not  a  mere  device  to  disguise 
a  borrowing  and  lending  of  money.^*     But  it  would  seem  that 


against  usury  is  designed  to  give  pro- 
tection to  the  borrower  against  the 
greed  of  the  lender,  and  not  to  afford 
any  mere  adventurer  who  may  hap- 
pen to  sHp  into  the  seat  of  the  bor- 
rower a  right  to  speculate  on  a  viola- 
tion of  law  which  has  done  him  no 
harm  and  caused  him  no  loss.  When 
the  borrower  sells  his  interest  in  the 
land  he  has  pledged  for  the  payment 
of  a  usurious  debt,  subject  to  that 
debt,  he  acknowledges  the  validity  of 
the  debt  and  waives  the  defense  of 
the  statute."  Higbee  v.  .Etna  Build- 
ing &c.  Assn.,  26  Okla.  ZZl ,  109  Pac. 
236,  quoting  from  Lee  v.  Stiger,  30 
N.  J.  Eq.  610.  "It  is  undoubtedly  a 
sound  proposition  that,  if  one  buys 
property  and  agrees  to  pay  or  take 
up  a  note  afifected  with  usury  as  a 
part  of  the  purchase  price,  he  cannot 
maintain  the  defense  of  usury  against 
the  note,  and  for  the  very  sufficient 
reason  that  as  to  him  the  obligation 
is  not  for  the  loan  of  money."  Riley 
V.  Sears,  154  N.  Car.  509,  70  S.  E. 
997. 

"Scull  V.  Idler  (N.  J.),  81  Atl.  746. 

'^  Higbee  v.  ^tna  Building  &  Loan 
Assn.,  26  Okla.  327,  109  Pac.  236. 

*"  Pearsall  v.  Kingsland,  3  Edw.  Ch. 
(N.  Y.)  195;  Ford  v.  Washington 
Nat.  Bldg.  &  Loan  Invest.  Assn.,  10 
Idaho  30,  16  Pac.  1010,  109  Am.  St. 
192;  Maher  v.  Lanfrom,  86  111.  513; 
First  Nat.  Bank  v.  Drew,  226  111.  622, 


80  N.  E.  1082,  117  Am.  St.  271;  Stev- 
ens Inst.  V.  Sheridan,  30  N.  J.  Eq. 
23;  Smith  v.  Cross,  16  Hun  (N.  Y.) 
487;  Grove  v.  Great  Northern  Loan 
Co.,  17  N.  Dak.  352,  116  N.  W.  345, 
138  Am.  St.  707.  See  also,  Banks  v. 
McClellan,  24  Md.  62,  87  Am.  Dec. 
594;  National  Mut.  Bldg.  &c.  Assn. 
V.  Retzman,  69  Nebr.  667,  96  N.  W. 
204;  Newman  v.  Kershaw,  10  Wis. 
ZZZ;  Ludington  v.  Harris,  21  Wis. 
239. 

'^  Capital  City  Ins.  Co.  v.  Quinn,  12> 
Ala.  558;  Alabama  Gold  Life  Ins.  Co. 
V.   Hall,  58  Ala.   1;   Lloyd  v.   Keach, 

2  Conn.  175,  7  Am.  Dec.  256;  Cole- 
hour  V.  State  Sav.  Inst.,  90  111.  152; 
Shackleford  v.  Morriss,  1  J.  J. 
^larsh.  (Ky.)  497;  Metcalf  v.  Pil- 
cher,  6  B.  Mon.  (Ky.)  529;  Newell  v. 
National  Bank,  12  Bush  (Ky.)  57; 
Byrne  v.  Grayson,  15  La.  Ann.  457; 
People's  Bank  &c.  Co.  v.  Fenwick 
Sanitarium  (La.),  58  So.  523;  Orch- 
ard V.  School  Dist.  No.  70,  14  Nebr. 
378,  15  N.  W.  730;  Donnington  v. 
Meeker,  11  N.  J.  Eq.  362;  Cobb  v. 
Titus,  10  N.  Y.  198;  Holmes  v.  Wil- 
liams, 10  Paige  (N.  Y.)  326,  40  Am. 
Dec.  250;  Cram  v.  Hendricks,  7 
Wend.   (N.  Y.)  569;  Rice  v.  Mather, 

3  Wend.  (N.  Y.)  62;  Utica  Ins.  Co. 
V.  Bloodgood,  4  Wend.  (N.  Y.)  652; 
Siewert  v.  Harnel  91  N.  Y.  199; 
Munn  V.  Commission  Co.,  15  Johns. 
(N.  Y.)  44,  8  Am.  Dec.  219;  Bailey 


275 


USURY. 


§  974 


such  rule  would  not  apply  to  a  bill  or  note  which  had  its  inception 
only  at  the  time  of  being  discounted  upon  such  usurious  con- 
tract."" 


§  974.  Restricting  commissions — Exempting  building  and 
loan  associations. — It  has  also  been  held  that  the  legislature 
may  restrict  the  amounts  charged  for  commissions,  examinations 
and  renewals  in  connection  with  a  loan  of  money.*®  So,  on  the 
other  hand,  it  is  held  as  a  general  rule  that  the  legislature  has  the 
right  to  exempt  building  and  loan  associations  from  the  operation 
of  the  general  usury  laws,"  although  there  is  a  conflict  of  author- 


V.  Smith,  14  Ohio  St.  396,  84  Am. 
Dec.  385 ;  Harick  v.  Jones,  4  McCord 
(S.  Car.)  402;  Ramsey  v.  Clark,  4 
Humph.  (Tenn.)  244,  40  Am.  Dec. 
645;  Judv  v.  Gerard,  4  McLean  (U. 
S.)  360,  "Fed.  Cas.  No.  7571;  Lafay- 
ette Bank  v.  State  Bank.  4  McLean 
(U.  S.)  208;  Wycoff  v.  Longhead,  2 
Dall.  (U.  S.)  92,  1  L.  ed.  303;  Crump 
V.  Nicholas,  5  Leigh  (Va.)  251; 
iMosely  v.  Brown,  Id  Va.  419.  Such 
a  transaction,  while  not  usurious  as 
between  the  maker  and  indorsee,  may 
be  usurious  as  between  the  indorser 
and  indorsee.  Scdbury  v.  Duffy  (N. 
Car.),  74  S.  E.  355.  It  is  generally 
true,  however,  that  when  a  corpora- 
tion borrows  money  and  issues  its 
bonds  therefor  at  a  discount  the 
transaction  will  be  considered  a  usu- 
rious one.  Stirling  v.  Gogebic  Lum- 
ber Co.,  165  Mich.  498,  131  N.  W. 
109,  35  L.  R.  A.  (N.  S.)  1106  and 
note.  Compare,  however,  with  Clear- 
water County  State  Bank  v.  Bagley- 
Ogema  Tel.  Co.,  116  Minn.  4.  133  N. 
W.  91,  36  L.  R.  A.  (N.  S.)  1132. 

"Simpson  v.  Hefter,  42  Misc.  (N. 
Y.)  482.  87  N.  Y.  S.  243.  To  same 
effect,  Sabine  v.  Paine.  132  N.Y.  S. 
813,  also  holding  that  the  note  is  pre- 
sumed to  have  been  given  for  a  good 
consideration.. 

"-"State  V.  Gary.  126  Wis.  135,  105 
N.  W.  792,  11  L.  R.  A.  (N.  S.)  174n. 
One  lending  his  own  money  cannot 
charge  a  commission.  Johnson  v. 
Grayson,  230  Mo.  380,  130  S.  W.  673. 

"  Montgomery  Mut.  Bldg.  Assn.  v. 
Robinson.  69  Ala.  413;  Bever  v.  Na- 
tional Bldg.  &c.  Assn.,  131  Ala.  369. 
31  So.  113;  Welch  v.  Wadsworth,  30 


Conn.  149,  79  Am.  Dec.  236;  Union 
Savings  &c.  Co.  v.  Dottenheim,  107 
Ga.  606,  34  S.  E.  217;  Cook  v. 
Equitable  Bldg.  &c.  Assn.,  104  Ga. 
814,  30  S.  E.  911;  Winget  v.  Quincy 
Bldg.  &c.  Assn.,  128  111.  67,  21  N.  E. 
12;  McLaughlin  v.  Citizens'  Bldg.  &c. 
Assn.,  ^2  Ind.  264;  International  &c. 
Bldg.  Assn.  V.  Wall,  153  Ind.  554,  55 
N.  E.  431 ;  Racer  v.  International 
Bldg.  &c.  Assn.  (Ind.  App.),  63  N. 
E.  772,  revd.  159  Ind.  697,  65  N.  E. 
1124;  Iowa  Savings  &c.  Assn.  v. 
Heidt,  107  Iowa  297,  11  N.  W.  1050, 
43  L.  R.  A.  689,  70  Am.  St.  197; 
LeMars  &c.  Bldg.  Assn.  v.  Burgess, 
129  Iowa  422,  105  N.  W.  641 ;  Spith- 
over  V.  Jefferson  Bldg.  &c.  Assn., 
225  Mo.  660,  125  S.  W.  766,  26  L. 
R.  A.  (N.  S.)  1135n;  Zenith  Bldg. 
&c.  Assn.  V.  IIeinl)ach,  11  Minn.  97, 
79  N.  W.  609;  Livingston  Loan  &c. 
Assn.  V.  Drummond,  49  Nebr.  200,  68 
N.  W.  375;  South  Omaha  Loan  &c. 
Assn.  V.  Wireck.  63  Nebr.  598.  88  N. 
W.  694;  Preston  v.  Rockev,  185  N. 
Y.  186,  n  N.  E.  1156,  7  Am.  &  Eng. 
Ann.  Cas.  315 ;  Vermont  Loan  &c. 
Qo.  V.  Whithed,  2  N.  Dak.  82,  49 
N.  W.  318;  Cramer  v.  Southern  Ohio 
Loan  &c.  Co.,  72  Ohio  St.  395,  74 
N.  E.  200,  69  L.  R.  A.  415,  2  Am. 
&  Eng.  Ann.  Cas.  990;  Spies  v. 
Southern  Ohio  Loan  &c.  Co.,  24  Ohio 
C.  C.  40;  Brooklyn  Bldg.  &  L.  Assn. 
V.  Desnoyers,  26  Ohio  C.  C.  352;  Car- 
michael  v.  Indemnity  Sav.  &  L.  Co., 
15  Ohio  Dec.  341 ;  Smoot  v.  People's 
&c.  Bldg.  Assn..  95  Va.  686,  29  S. 
E.  746,  41  L.  R.  A.  589;  Bryan  v. 
August  &c.  Loan  Assn.,  104  Va.  611, 
52   S.   E.  357;   Bosang  v.   Iron   Belt 


§  975 


CONTRACTS. 


276 


ity  upon  this  question.*'® 

§  975.  Incidental  expenses  incurred  in  making  or  collect- 
ing loan  not  usury. — There  are  also  numerous  charges  which 
the  lender  may  require  the  borrower  to  pay  unless  specifically 
prohibited  by  law  from  making  such  charges,  such  as  requiring 
the  borrower  to  furnish  an  abstract  of  title  and  pay  for  having  it 
examined  when  money  is  to  be  loaned  on  real  estate.®^  A  pro- 
vision in  a  note  or  mortgage  to  the  effect  that  upon  default  of 
payment  of  the  loan  the  borrower  shall  bear  the  expense  of  col- 
lection, such  as  cost  of  suit,  attorney's  fees  or  the  like,  does  not 
render  the  instrument  usurious.'^"  In  case  there  is  no  usurious 
intent  the  lender  may  be  reimbursed  for  his  trouble,  time,  and 
expense  in  collecting  or  procuring  the  money  for  the  loan.^^ 


Bldg.  &c.  Assn.,  96  Va.  119,  30  S. 
E.  440;  Archer  v.  Baltimore  Bldg  &c. 
Assn.,  45  W.  Va.  Z7 ,  30  S.  E.  241. 

*^  Henderson  Bldg.  &c.  Assn.  v. 
Johnson,  88  Ky.  191,  10  Ky.  L.  830, 
10  S.  W.  787,  3  L.  R.  A.  289 ;  Hender- 
son Bldg.  &c.  Assn.  v.  Zeller,  11  K3^ 
L.  702,  12  S.  W.  945;  Locknane  v. 
United  States  Sav.  &c.  Co.,  103  Ky. 
265,  19  Ky.  L.  1984,  44  S.  W.  977; 
James  v.  James,  21  Ky.  L.  1401,  55 
S.  W.  193;  Mack  v.  Workingmen's 
Bldg.  &c.  Assn.,  5  Ky.  L.  520;  Simp- 
son V.  Kentucky  Citizens'  Bldg.  &c. 
Assn.,  101  Ky.  496,  41  S.  W.  570,  42 
S.  W.  834;  Safety  Bldg.  &c.  Assn.  v. 
Ecklar,  106  Ky.  115,  50  S.  W.  50; 
Gordon  v.  Winchester  Bldg.  &c.  Fund 
Assn.,  12  Bush  (Ky.)  110,  23  Am. 
Rep.  713;  Citizens'  &c.  Land  Co.  v. 
Uhler,  48  Md.  455. 

'"  See  Ellenbogen  v.  Griffey,  55  Ark. 
268,  18  S.  W.  126;  Humphrey  v.  Mc- 
Cauley,  55  Ark.  143,  17  S.  W.  713; 
Goodwin  V.  Bishop,  145  111.  421,  34 
N.  E.  47;  Cobe  v.  Guyer,  237  111.  516, 
86  N.  E.  1071,  139  111.  App.  592;  Daley 
V.  Minnesota  Loan  &c.  Co.,  43  Minn. 
517  45  N.  W.  1100;  White  v.  Dwyer, 
31  N.  J.  Eq.  40 ;  Dayton  v.  Moore,  30 
N.  J.  Eq.  543. 

"'Shelton  v.  Aultman  &c.  Co.,  82 
Ala.  315,  8  So.  232;  Williams  v. 
Flowers,  90  Ala.  136,  7  So.  439,  24 
Am.  St.  772 ;  Munter  v.  Linn,  61  Ala. 
492;  Athens  Nat.  Bank  v.  Danforth, 
80  Ga.   55;   Haldeman  v.   Massachu- 


setts &c.  Ins.  Co.,  120  111.  390,  11  N. 
E.  526;  Barton  v.  Farmer's  &c.  Bank, 
122  111.  352,  13  N.  E.  503;  Matzen- 
baugh  V.  Troup,  Zd  111.  App.  261 ; 
Dorsey  v.  Wolff,  142  111.  589,  32  N. 
E.  495,  18  L.  R.  A.  428,  34  Am.  St. 
99;  Farmers'  &c.  Bank  v.  Barton,  21 
111.  App.  403 ;  Smith  v.  Silvers,  32  Ind. 
321;  Churchman  v.  Martin,  54  Ind. 
380;  Billingsley  v.  Dean,  11  Ind.  331; 
First  Nat.  Bank  v.  Canatsey,  34  Ind. 
149;  Weatherly  v.  Smith,  30  Iowa 
131,  6  Am.  Rep.  663;Gaar  v.  Louis- 
ville Banking  Co.,  11  Bush  (Ky.) 
180,  21  Am.  Rep.  209;  Duluth  Loan 
&c.  Co.  V.  Klovdahl,  55  Minn.  341,  56 
N.  W.  1119;  Johnston  Harvester  Co. 
V.  Clark,  30  Minn.  308,  15  N.  W.  252; 
Bank  of  Commerce  v.  Fuqua,  ll 
Mont.  285,  28  Pac.  291,  14  L.  R.  A. 
588,  28  Am.  St.  461;  National  Bank 
V.  Thompson,  90  Nebr.  223,  133  N.  W. 
199;  Miner  v.  Paris  Exchange  Bank, 
53  Tex.  559.  The  charging  of  an  at- 
torney's fee  may,  however,  be  a  mere 
device  to  evade  the  law.  London 
Realty  Co.  v.  Riordon,  133  N.  Y.  S. 
595. 

"  Bennett  v.  Ginsberg,  141  App.  Div. 
(N.  Y.)  66,  125  N.  Y.  S.  650.  See 
also.  Citizen's  Bank  v.  Murphy,  83 
Ark.  31,  102  S.  W.  697;  In  re  Fishel, 
Nessler  &  Co.,  192  Fed.  412.  See, 
however.  Bank  of  Pocahontas  v. 
Browning,  111  Va.  237,  68  S.  E.  1000, 
where  in  consideration  of  an  exten- 
sion of  time  and  the  dismissal  of  a 


^17 


USURY. 


§    976 


§  976.  Incidental  expenses — Hiring  agent  to  negotiate 
loan. — The  borrower  may  also  hire  an  agent  to  negotiate  the 
loan  for  him  and  the  compensation  which  he  pays  this  agent  can- 
not impress  the  transaction  as  between  the  borrower  and  lender 
with  a  taint  of  usury."  In  case  the  mediator  between  borrower 
and  lender  is  the  agent  of  the  lender  a  different  rule  may  apply. 
In  this  case  it  becomes  a  question  of  whether  or  not  the  lender  is 
to  profit  either  directly  or  indirectly  by  a  commission  or  bonus 
paid  to  his  agent.  In  case  he  has  no  knowledge  of  any  commis- 
sion paid  to  his  agent  and  does  not  knowingly  receive  any  benefit 
from  such  commission  he  is  not  subject  to  the  penalties  of  usury 
for  the  reason  that  he  has  neither  usurious  intent  nor  usurious 
profit." 


pending  suit  defendant  executed  a  re- 
newal note  which  included  $600  at- 
torney's fees  contracted  in  prosecut- 
ing the  suit  and  $87.74  costs.  It  was 
held  usury.  See  also,  Continental  Nat. 
Bank  v.  Fleming  (Mich.),  134  N.  W. 
656. 

"Fisher  v.  Porter,  23  Fed.  162; 
Equitable  Mort.  Co.  v.  Craft,  58  Fed. 
613;  Ginn  v.  New  England  Mortg. 
&c.  Co.,  92  Ala.  135,  8  So.  388;  May 
V.  Flint,  54  Ark.  573,  16  S.  W.  575; 
Baird  v.  Milliwood,  51  Ark.  548,  11  S. 
W.  881;  Richardson  v.  Shattuck,  57 
Ark.  347,  21  S.  W.  478;  Vahlberg  v. 
Keaton,  51  Ark.  534,  11  S.  W.  878, 
4  L.  R.  A.  462,  14  Am.  St.  11 ;  Merck 
V.  American  F.  L.  M.  Co.,  79  Ga.  213. 
7  S.  E.  265;  Telford  v.  Garrels,  132 
111.  550,  24  N.  E.  573;  Haldeman  v. 
Massachusetts  Mut.  &c.  Ins.  Co.,  120 
111.  390,  11  N.  E.  526;  Ballenger  v. 
Bourland,  89  111.  513.  29  Am.  Rep. 
69;  Pass  v.  New  England  &c.  Co.,  66 
Miss.  365,  6  So.  239;  Philo  v.  Butter- 
field,  3  Nebr.  256;  Baldwin  v.  Dov- 
ing,  114  N.  Y.  452,  21  N.  E.  1007; 
Terminal  Bank  v.  Dulroff,  66  Misc. 
(N.  Y.)  100,  120  N.  Y.  S.  609.  (In  the 
above  case  the  one  who  negotiated 
loan  for  the  borrower  was  not  only 
the  agent  of  the  borrower  but  was 
also  connected  with  the  lender.) 
Eddy  V.  Badger.  8  Biss.  (U.  S.)  238, 
Fed.  Cas.  No.  4276;  Ottillie  v.  Waech- 
ter,  Zl  Wis.  252. 

"Vahlberg  v.  Keaton,  51  Ark.  534, 


11  S.  W.  878,  4  L.  R.  A.  462,  14  Am. 
St.  IZ ;  Rogers  v.  Buckingham,  ZZ 
Conn.  81 ;  Dryfus  v.  Burnes,  53  Fed. 
410;  Cox  V.  Massachusetts  Mut.  Life 
Ins.  Co.,  113  111.  382;  Massachusetts 
&c.  Ins.  Co.  V.  Boggs,  121  111.  119,  13 
N.  E.  550;  Ballinger  v.  Bourland,  87 
111.  513,  29  Am.  Rep.  69;  Smith  v. 
Wolf,  55  Iowa  555,  8  N.  W.  429; 
Stein  V.  Swensen,  44  Alinn.  218,  46 
N.  W.  360;  Philo  v.  Butterfield,  3 
Nebr.  256 ;  Manning  v.  Young,  28  N. 
J.  Eq.  568;  Lane  v.  Washington  Life 
Ins.  Co.,  46  N.  J.  Eq.  316,  19  Atl. 
618;  jNIuir  v.  Newark  Sav.  Inst.,  16 
N.  J.  Eq.  537;  Condit  v.  Baldwin,  21 
N.  Y.  219,  78  Am.  Dec.  137;  Phillips 
V.  MacKellar,  92  N.  Y.  34;  Stillman 
V.  Northrup,  109  N.  Y.  473,  17  N.  E. 
379;  Lee  v.  Chadsey,  3  Abb.  App. 
Dec.  (N.  Y.)  43;  Silverman  v.  Katz, 
120  N.  Y.  S.  790;  Williams  v.  Brvan, 
68  Tex.  593,  5  S.  W.  401;  Call  v. 
Palmer,  116  U.  S.  98,  29  L.  ed.  559, 
6  Sup.  Ct.  301 ;  Palmer  v.  Call,  7  Fed. 
IZI,  2  McCrarv  (U.  S.)  522,  aff'd., 
116  U.  S.  98,  29  L.  ed.  559,  6  Sup. 
Ct.  301.  See  also.  Short  v.  Pullen, 
63  Ark.  385,  38  S.  W.  1113;  Whaley 
V.  American  Freehold  Land  Mortgage 
Co.,  74  Fed.  IZ,  20  C.  C.  A.  306,  42 
U.  S.  App.  90 ;  Knoup  v.  Carver,  74 
N.  J.  Eq.  449,  70  Atl.  660  (principal 
had  the  benefit  of  the  usury")  ; 
Franzen  v.  Hammond,  136  Wis.  239, 
116  N.  W.  169,  19  L.  R.  A.  (N.  S.) 
399,  128  Am.  St.  1079. 


'§  977  coxTRACTS.  278 

§  977.  Liability  of  principal  for  acts  of  agent — Rule  further 
considered. — In  cases  of  this  character  the  rule  has  been  thus 
stated :  "If  *an  agent  entrusted  with  money  to  invest  at  legal  in- 
terest' exacts  'a  bonus  for  himself  as  the  condition  of  making  a 
loan,  without  the  knowledge  or  authority  of  his  principal'  such 
circumstance  does  'not  constitute  usury  in  the  principal  nor  affect 
the  security  in  his  hands'."^*  However,  it  has  been  held  that  if 
an  agent  is  authorized  to  make  a  loan  to  a  person  and  is  entrusted 
with  a  certain  sum  of  money  for  that  purpose,  and  he  violates  the 
usury  laws,  the  principal  is  responsible  for  such  unlawful  exac- 
tions by  his  agent,  and  cannot  maintain  that  the  contract  is  not 
usurious.  The  rule  of  respondeat  superior  applies  according  to 
this  view.'^^  So,  a  principal  may  be  bound  by  notice  to  his  agent 
that  a  note  purchased  by  the  latter  is  tainted  with  usury.'^ 

§  978.  Time  of  payment. — One  of  the  essentials  of  a  usuri- 
ous contract  is  that  something  must  be  exacted  for  the  use  of  a 
loan  in  excess  of  what  is  allowed  by  law.  The  mere  fact  that 
interest  is  made  payable  at  frequent  recurring  intervals,  such  as 
semiannually  or  quarterly  or  at  such  times  as  the  parties  may 
agree  upon,  does  not  make  the  contract  usurious  where  the 
amount  charged  is  not  in  excess  of  that  allowed  by  law."     Nor 

'*Franzen  v.  Hammond,  136  Wis.  88  N.  W.  845,  89  Am.  St.  541.  See 
239,  116  N.  W.  169,  19  L.  R.  A.  (N.  also,  Beach  v.  Lattner,  101  Ga.  357, 
S.)  399,  128  Am.  St.  1079.  In  the  28  S.  E.  110;  Ridgway  v.  Davenport, 
above  case  it  is  said:  "The  doctrine  Zl  Wash.  134,  79  Pac.  606.  Knowl- 
above  stated  seems  to  be  sound.  It  edge  of  the  agent's  acts  is  imputed 
is  not  writhin  the  apparent  scope  of  to  the  lender.  American  Mortg.  Co. 
a  legitimate  business  agency  to  vio-  v.  Woodward,  83  S.  Car.  521,  65  S. 
late  the  law.  So  where  an  agent  E.  739.  The  device  frequently  em- 
loans  money,  exacting  a  bonus  for  ployed  to  effect  usury  is  through  the 
himself,  the  presumption  is  rather  use  of  the  name  of  some  personal  or 
that  it  is  without  the  knowledge  of  family  friend  for  whom  the  lender 
the  principal  than  with  such  knowl-  acts  as  ostensible  agent,  such  agent 
edge.  It  logically  follows  that  the  exacting  all  the  "commission"  pos- 
circumstance  of  a  principal  accepting  sible.  When  it  appears  that  this  ar- 
securities  from  his  agent  covering  rangement  is  a  mere  scheme  to  con- 
the  exact  amount  of  money  loaned  ceal  usury  the  taint  of  usury  attaches 
and  showing  on  their  face  that  the  to  the  transaction.  France  v.  Munro, 
loan  was  legitimate  and  insisting  138  Iowa  1,  115  N.  W.  577,  19  L.  R. 
upon  enforcing  the  same  after  obtain-  A.  (N.  S.)  391n. 
ing  knowledge  of  the  excess  the  agent  "  Haynes  v.  Gay,  Zl  Wash.  230,  79 
charged    solely    for    his   own    benefit,  Pac.  794. 

does  not  make  the  transaction  as  to  "Barnes  v.  Worlich,  Cro.  Jac.  25; 

the  lender  usurious."  Mowry  v.    Shumway,   44   Conn.   493; 

^"Robinson  v.   Sims,  85  Minn.  242,  Hatch  v.  Douglas,  48  Conn.   116.  40 


279 


USURY. 


978 


does  an  agreement  to  pay  interest  in  advance  constitute  usury. '^^ 
As  a  general  rule  it  is  held  not  to  be  usurious  to  compute  interest 
according  to  Rowlelt's  Tables  by  which  thirty  days  constitute  a 
month  or  three  hundred  and  sixty  days  a  year/'  Nor  is  a  trans- 
action rendered  usurious  by  a  provision  to  the  effect  that  interest 
if  not  paid  at  maturity  shall  become  principal  and  bear  interest  at 


the  agreed  rate.* 


Am.  Rep.  154;  Quinn  v.  First  Nat. 
Bank,  8  Ga.  App.  235,  68  S.  E.  1010 
(interest  may  be  made  payable 
monthlv)  ;  Goodrich  v.  Reynolds,  31 
111.  4y0,  83  Am.  Dec.  240;  Ragan  v. 
Day,  46  Iowa  239;  Hawlev  v.  How- 
ell, 60  Iowa  79,  14  N.  W.  199 ;  Brown 
V.  Vandyke,  8  N.  J.  Eq.  795,  55  Am. 
Dec.  250;  INlowrv  v.  Bishop,  5  Paige 
(N.  Y.)  98;  Cook  v.  Courtright,  40 
Ohio  St.  248,  48  Am.  Rep.  681; 
Meyer  v.  Muscatine,  1  Wall.  (U.  S.) 
384,  17  L.  ed.  564;  Tallman  v.  Trues- 
dell,  3  Wis.  393. 

"  Auriol  V.  Thomas,  2  T.  R.  52 ; 
Marsh  v.  Martindale,  3  Bos.  &  P.  154; 
Lloyd  V.  Williams,  2  W^  Bl.  792; 
Bank  of  Newport  v.  Cook,  60  Ark. 
288,  30  S.  W.  35,  29  L.  R.  A.  761,  46 
Am.  St.  171 ;  Vahlberg  v.  Keaton,  51 
Ark.  534,  11  S.  W.  878,  4  L.  R.  A. 
462,  14  Am.  St.  72> ;  National  Bank  v. 
Smoot,  2  McArth.  (D.  C.)  371;  Mac- 
kenzie V.  Flannerv,  90  Ga.  590.  16 
S.  E.  710;  Telford  v.  Garrels,  31  111. 
App.  441  ;  Ma.xwcll  v.  Willctt,  49  111. 
App.  564;  Telford  v.  Garrels,  132 
111.  550,  24  N.  E.  573 ;  McGill  v.  Ware, 
4  Scam.  (111.)  21;  National  Life  Ins. 
Co.  V.  Donovan.  238  111.  283.  87  N.  E. 
356;  Cobe  v.  Guver,  237  111.  516.  86 
N.  E.  1071,  139  111.  App.  592;  Eng- 
lish V.  Smock,  34  Ind.  115,  7  Am. 
Rep.  215;  Ticonic  Bank  v.  Johnson. 
31  Maine  414;  Rose  v.  ]\Iumford.  36 
Nebr.  148,  54  N.  W.  129;  New  York 
&c.  Ins.  Co.  V.  Sturges,  2  Cow.  (N. 
Y.)  664;  Manhattan  Co.  v.  Osgood, 
15  Johns.  (N.  Y.)  162;  Bank  of  Uti- 
ca  V.  Phillips,  3  Wend.  (N.  Y.)  408; 
State  Bank  v.  Hunter,  1  Dev.  (N. 
Car.)  100;  Thornton  v.  Bank  of 
Washington,  3  Pet.  (U.  S.)  40;  Fow- 
ler V.  Equitable  Trust  Co.,  141  U.  S. 
384.  35  L.  ed.  786,  12  Sup.  Ct.  1; 
Fleckner  v.  Bank  of  United  States, 
8  Wheat.  (U.  S.)  338,  5  L.  ed.  631; 
Parker  v.  Cousins,  2  Grat.  (Va.)  Z72, 


44  Am.  Dec.  388;  Stribbling  v.  Bank 
of  the  Valley,  5  Rand.   (Va.)    132. 

™Patton  V.  Bank  of  Lafayette,  124 
Ga.  965,  53  S.  E.  664,  5  L.  R.  A.  (N. 
S.)  592;  Planter's  Bank  v.  Bass,  2 
La.  Ann.  430;  Agricultural  Bank  v. 
Bissell,  12  Pick.  (Mass.)  586;  Plant- 
ers' Bank  v.  Snodgrass,  4  How. 
(Miss.)  573;  Merchants'  &  Planters' 
Merchants'  Bank  v.  Sarratt,  77  S. 
Car.  141,  57  S.  E.  621,  122  Am.  St. 
562;  Parker  v.  Cousins,  2  Gratt.  (Va.) 
2>72,  44  Am.  Dec.  388.  See,  however. 
Bank  of  Utica  v.  Wagar,  8  Cow.  (N. 
Y.)  398;  Utica  Ins.  Co.  v.  Tilman,  1 
Wend.  (N.  Y.)  555.  To  same  effect, 
Haas  V.  Flint,  8  Blackf.  (Ind.)  67.  If 
the  statute  provides  that  a  certain  per 
cent,  is  the  legal  rate  of  interest  and 
that  if  a  higher  rate  is  charged  there 
must  be  a  special  contract  to  that  ef- 
fect, it  will  be  usury  to  discount  the 
principal  more  than  the  legal  rate  of 
interest  unless  there  is  some  instru- 
ment in  writing  connected  with  the 
transaction  which  authorizes  discount 
at  a  greater  per  cent.  Merchants'  & 
Planters'  Bank  v.  Sarratt,  77  S.  Car. 
141,  57  S.  E.  621,  122  Am.  St.  562. 

'"Palm  V.  Fancher,  95  J^liss.  785, 
48  So.  818,  ZZ  L.  R.  A.  (N.  S.)  295. 
In  the  above  case  it  is  said:  "Under 
the  facts  of  this  case  there  is  no 
stipulation  compelling  the  borrower 
to  pay  compound  interest,  except  in 
the  event  of  his  failure  to  pay  the 
annual  interest  at  maturity.  If  the 
borrower,  under  the  agreement  in  this 
case,  fulfil  his  contract,  it  is  impos- 
sible for  the  lender  to  collect  more 
than  the  legal  contractual  rate  of  in- 
terest. *  *  *  It  would  never  be 
doubted  that  the  parties  might,  under 
a  separate  agreement,  after  the  inter- 
est became  due  and  default  therein, 
have  executed  a  second  note  for  the 
interest  and  made  this  second  note 
for  the  arrearage  in  interest  become 


,§  979 


CONTRACTS. 


280 


§  979.    Interest  becoming  principal — Weight  of  authority. 

— This  doctrine,  while  the  more  rational,  is  not,  however,  entirely 
in  accord  with  what  is  perhaps  the  weight  of  authority/^     But 


interest-bearing  principal.  It  would 
not  be  seriously  contended  that  such 
an  agreement  would  constitute  usury, 
though  interest  was  thereby  com- 
pounded. *  *  *  Conceding  this,  we 
fail  to  see  why  parties  may  not  pro- 
vide in  the  same  instrument  for  the 
compounding  of  interest,  when  the 
stipulations  of  the  contract  are  not 
such  as  to  require  a  compounding  of 
interest  as  a  part  of  the  contract,  not 
leaving  any  option  or  right  in  the  bor- 
rower to  avoid  paying  compound  in- 
terest." To  same  effect,  Carney  v. 
Matthewson,  86  Ark.  25,  109  S.  W. 
1024;  Scott  V.  Saffold,  Z1  Ga.  384; 
Merck  v.  American  Freehold  Land 
Mortgage  Co.,  79  Ga.  213,  7  S.  E.  265; 
Ellard  v.  Scottish-American  Mort- 
gage Co.,  97  Ga.  329,  22  S.  E.  893; 
Folly's  Admr.  v.  Hook  (Ky.),  113  S. 
W.  105;  Pawling's  Exrs.  v.  Pawling's 
Admrs.,  4  Yates  (Pa.)  220;  Hale  v. 
Hale,  1  Cold.  (Tenn.)  233,  78  Am. 
Dec.  490;  Woods  v.  Rankin,  2  Heisk. 
(Tenn.)  46;  Lewis  v.  Paschal's  Admr., 
n  Tex.  315;  Yaws  v.  Jones  (Tex.), 
19  S.  W.  443.  This  rule  has  been 
made  statutory  in  some  states. 
Yndart  v.  Den,  116  Cal.  533,  48  Pac. 
618,  58  Am.  St.  200;  Scottish-Amer- 
ican Mortg.  Co.  v.  Ogden,  49  La. 
Ann.  8,  21  So.  116;  Stanford  v.  Co- 
ram, 26  ]Mont.  285,  67  Pac.  1005.  See 
also,  statutes  of  Idaho,  Missouri  and 
Nevada.  A  contract  which  grants  an 
option  to  pay  before  maturity  and 
where  the  interest  grows  into  a  usuri- 
ous rate  before  such  maturity  is  a 
usurious  contract  and  does  not  fall 
within  the  rule  announced  by  the 
courts  permitting  a  higher  rate  by 
way  of  penalty  after  maturity  where 
the  debt  is  not  paid  at  maturity.  Ford 
v.  Washington  Nat.  Bldg.  &c.  Assn., 
10  Idaho  30,  76  Pac.  1010,  109  Am.  St. 
192.  Compare  with  Smithwick  v. 
Whitley,  152  N.  Car.  366.  67  S.  E. 
914,  28  L.  R.  A.  (N.  S.)  113,  and 
note,  in  which  case  the  debtor  desired 
to  pay  the  obligation  before  maturity. 
The  contract  contained  no  provision 
for  payment  before  maturity,  and  the 
creditor  required  payment  of  interest 
in   full  to  maturity  before  he  would 


discharge  the  obligation.  The  debtor 
paid  and  then  brought  suit  to  recover 
interest  paid  which  was  not  due  at  the 
time  the  principal  was  discharged. 
Held,  not  usurious  and  that  there 
could  be  no  recovery. 

"  Sir  Thomas  Meers  Case,  cited  in 
1  Atk.  304,  and  Talb.  Cas.  40  (a 
covenant  in  mortgage  that  if  interest 
were  not  paid  when  due  it  should  be 
turned  into  principal  and  bear  inter- 
est) ;  Ossulston  v.  Yarmouth,  2  Salk. 
449  (covenant  in  mortgage  that  if  in- 
terest be  behind  six  months,  it  should 
become  principal  and  bear  interest)  ; 
Eslava  v.  Lepretre,  21  Ala.  504,  56 
Am,  Dec.  266  (agreement  for  con- 
troverting interest  in  arrears  into 
principal)  ;  Hochmark  v.  Richler,  16 
Colo.  263,  26  Pac.  818  (note  included 
interest  to  maturity  and  was  to  bear 
interest  thereafter)  ;  Drury  v.  Wolfe, 
134  111.  294,  25  N.  E.  626;  Bowman 
v.  Neely,  137  111.  443,  27  N.  E.  758 
(interest  if  not  paid  annually,  to  be- 
come principal,  and  bear  interest)  ; 
Breckenridge  v.  Brooks,  2  A.  K. 
Marsh.  (Ky.)  335,  12  Am.  Dec.  401 
(interest  to  be  compounded  annually 
if  not  paid)  ;  Henry  v.  Flagg,  13  Met. 
(Mass.)  64  (guaranty  of  compound 
interest)  ;  Hoyle  v.  Page,  41  Mich. 
533,  2  N.  _W.  665  (interest  to  be- 
come principal  if  not  paid  annually)  ; 
Gay  V.  Berkey,  137  Mich.  658,  100 
N.  W.  920  (agreement  before  inter- 
est due  to  compound  it)  ;  Mason  v. 
Callender,  2  Minn.  350,  72  Am.  Dec. 
102  (after  maturity  of  obligation  in- 
terest to  be  paid  on  principal  and  in- 
terest) ;  Lee  v.  Melby,  93  Minn.  4, 
100  N.  W.  379  (interest  in  arrears  to 
bear  interest  thereafter)  ;  Perkins  v. 
Coleman,  51  Miss.  298  (interest  to  be 
made  part  of  principal  and  to  carry 
interest)  ;  Hager  v.  Blake,  16  Nebr. 
12,  19  N.  W.  780  (overdue  interest  to 
bear  interest)  ;  Cox  v.  Smith,  1  Nev. 
161,  90  Am.  Dec.  476  (interest  not 
paid  when  due  to  be  added  to  prin- 
cipal and  bear  interest)  ;  Levens  v.. 
Briggs,  21  Ore.  33.3,  28  Pac.  15,  14 
L.  R.  A.  188  (interest  not  paid  at  the 
expiration  of  each  year  to  be  added 
to  principal  and  bear  like  interest  per 


28l 


USURY. 


980 


while  the  authorities  differ  as  to  whether  interest  upon  interest 
may  be  stipulated  for  at  the  time  of  the  loan  or  contract  they  all 
agree  that  if  after  the  interest  is  due  an  agreement  is  made  that  it 
shall  in  the  future  carry  interest  such  agreement  is  valid  and 
should  be  enforced.®"  In  accordance  with  this  principle  it  has 
been  held  that  upon  renewing  a  note  for  a  debt  the  accrued  inter- 
est may  be  added  to  the  principal  and  the  combined  amount  form 
the  principal  of  the  new  note  without  violating  the  usur}'  laws.^^ 

980.  Renewal  bill  or  note — Extensions. — A  renewal  note 
is  tainted  with  usury  where  the  original  note  was  so  tainted,®*  for  a 
note  is  not  purged  of  the  taint  of  usury  by  a  mere  renewal  of  the 


annum  from  the  date  of  expiration 
of  each  year,  to  be  paid  in  same  man- 
ner as  the  original).  See  also.  Cham- 
bers V.  Goldwin,  9  Ves.  Jr.  254; 
Drury  v.  Wolfe,  134  111.  294,  25  N. 
E.  626.  Those  jurisdictions  which  ad- 
here to  the  rule  that  interest  upon  in- 
terest cannot  be  stipulated  for  at  the 
time  of  the  loan  or  contract  usually 
make  interest  coupons  an  exception 
to  this  rule  treating  them  as  valid 
written  contracts  for  the  payment  of 
a  definite  sum  of  money  on  a  given 
day  which  bear  interest  from  matu- 
rity. New  England  INIortg.  Co.  v. 
Vader,  28  Fed.  265 ;  Graham  v.  Fitts 
(Fla.),  43  So.  512;  Drurv  v.  Wolfe, 
134  111.  294,  25  N.  E.  626;  Bowman 
V.  Neely,  137  111.  443,  27  N.  E.  758; 
Hoyle  V.  Page.  41  Mich.  533,  2  N.  W. 
665;  Lee  v.  Melby,  93  Minn.  4,  100 
N.  W.  379. 

•"Porter  v.  Price,  80  Fed.  655,  26 
C  C.  A.  70,  49  U.  S.  App.  295;  Es- 
lava  V.  Lepretre,  21  Ala.  504,  56  Am. 
Dec.  266;  Hochmark  v.  Richler,  16 
Colo.  263,  26  Pac.  818;  Camp  v.  Bates, 
11  Conn.  487;  Rose  v.  Bridgeport,  17 
Conn.  243 ;  Meeker  v.  Hill,  23  Conn. 
574;  Thayer  v.  Wilmington  Star 
Min.  Co.,  105  111.  540;  Drury  v. 
Wolfe,  134  111.  294,  25  N.  E.  626; 
Niles  V.  Sinking  Fund  Comrs.,  8 
Elackf.  (Tnd.)  158;  Grimes  v.  Blake, 
16  Ind.  160;  Otis  v.  Lindsev,  10  Maine 
315;  Fitzhugh  v.  McPherson.  3  Gill. 
(Md.)  408;  Banks  v.  McClellan,  24 
Aid.  62,  87  Am.  Dec.  594;  Wilcox  v. 
Rowland,  23  Pick.  Mass.)  167;  Von 
Hemert  v.  Porter,  11  Met.  (Mass.) 
210;  Ferry  v.  Ferry,  2  Cush.  (Mass.) 


92;  Hoylc  v.  Page,  41  Mich.  533,  2 
N.  W.  665 ;  Gay  v.  Berkey,  137  Mich. 
658,  100  N.  W.  920;  Mason  v.  Cal- 
lender,  2  Minn.  350,  12  Am.  Dec.  102; 
Perkins  v.  Coleman,  51  Miss.  298; 
Sanford  v.  Lundquist,  80  Nebr.  414, 
118  N.  W.  129,  18  L.  R.  A.  (X.  S.) 
633n ;  National  Bank  v.  Thompson,  90 
Nebr.  223,  133  N.  W.  199  (separate 
notes  given  for  past  due  interest)  ; 
Young  V.  Hill,  67  N.  Y.  162,  23  Am. 
Rep.  99;  Van  Benschooten  v.  Law- 
son,  6  Johns.  Ch.  (N.  Y.)  313,  10 
Am.  Dec.  ZZZ ;  Mowry  v.  Bishop,  5 
Paige  (N.  Y.)  98;  Toll  v.  Hiller,  11 
Paige  (N.  Y.)  228;  Kellogg  v.  Hick- 
ok,  1  Wend.  (N.  Y.)  521;  Townsend 
V.  Corning,  1  Barb.  (N.  Y.)  627; 
Forman  v.  Forman,  17  How.  Prac. 
(N.  Y.)  255;  Howard  v.  Farley,  3 
Robt.  (N.  Y.)  308;  Hathawav  v. 
Meads,  11  Ore.  66.  4  Pac.  519;  Bura 
v.  Thompson,  2  Clark  (Pa.)  143; 
Stokely  V.  Thompson,  34  Pa.  St.  210; 
Pindall's  Exrx.  v.  Marietta  Bank,  10 
Leigh  (Va.)  481;  Childers  v.  Deane, 
4  Rand.  (Va.)  406;  Genin  v.  Inger- 
soll,  11  W.  Va.  549;  Craig  v.  McCul- 
loch,  20  W.  Va.  148;  Stansburv's 
Admr.  v.  Stansbury,  24  W.  Va.  634; 
Barbour  v.  Tompkins,  31  W.  Va.  410, 
7  S.  E.  1.  3  L.  R.  A.  (N.  S.)  715. 

"Bramblett  v.  Deposit  Bank  of 
Carlvle.  122  Ky.  324.  25  Ky.  L.  1228, 
92  S.  W.  283,  6  L.  R.  A.  (N.  S.) 
612,  and  note.     See  post,   §  980. 

*•  Pardoe  v.  Iowa  State  Nat.  Bank, 
106  Iowa  345,  76  N.  W.  800;  Clark 
v.  Sisson,  11  N.  Y.  Super.  Ct.  408; 
Macungie  Sav.  Bank  v.  Hottenstein, 
89  Pa.   St.  328.    See  Ives  v.  Bosley, 


98o 


CONTRACTS. 


282 


note  without  changing  the  contract  or  restoring  the  overcharge  of 
interest/^  So,  the  original  transaction  is  not  purged  by  taking 
a  renewal  note,  no  rights  of  bona  fide  holders  being  involved;^"" 
and  a  transaction  may  be  usurious  as  to  a  renewal  note,  although 
it  bears  the  legal  rate  of  interest  where  the  note  is  but  an  agree- 
ment to  pay  an  old  debt  with  usurious  interest.*^  But  an  accom- 
modation note  delivered  in  payment  of  another  and  usurious  note 
is  not  a  renewal  of  the  latter  so  as  to  permit  of  the  defense  of 
usury  ;^^  and  if  it  is  a  new  note,  not  tainted  with  usury,  it  may  be 
valid  in  a  bona  fide  holder's  hands. ^^  Nor  will  the  usurious  con- 
tract as  to  the  original  note  be  a  defense  to  a  renewal  note  while 
in  the  hands  of  a  bona  fide  holder,  where  such  holder  could  other- 
wise be  free  from  such  defense  of  usury."'*  A  bonus  for  extend- 
ing the  time  of  payment  of  a  note  when  bearing  the  full  legal  rate 
of  interest  precludes  recovery  of  the  bonus  ;®^  and  if  the  time  of 
payment  is  extended,  the  test  of  whether  the  contract  is  usurious 
or  not  is  the  rate  of  interest  borne  by  the  debts  for  which  there  is 


35  Md.  262,  6  Am.  Rep.  411;  Union 
Nat.  Bank  v.  Fraser,  63  Miss.  231 ; 
Wild  V.  Howe,  74  Mo.  551;  Denick 
V.  Hubbard,  27  Hun  (N.  Y.)  347; 
Niblack  v.  Champeny,  10  S.  Dak.  165, 
72  N.  W.  402 ;  Fay  v.  Tower,  58  Wis. 
286,  16  N.  W.  558. 

"Nicrosi  V.  Walker,  139  Ala.  369, 
Zl  So.  97;  Johnson  v.  Grayson  (Mo.), 
130  S.  W.  673. 

^  Nicrosi  V.  Walker,  139  Ala.  369, 
37  So.  97.  It  may  be  otherwise  where 
the  renewal  note  is  given  to  a  bona 
fide  purchaser  of  the  old  note.  Arm- 
strong V.  Middaugh,  74  Misc.  (N.  Y.) 
45,  133  N.  Y.  S.  647. 

*^  Citizens'  Nat.  Bank  v.  Donnell, 
195  U.  S.  369,  49  L.  ed.  238,  25  Sup. 
Ct.  49,  affg.  172  Mo.  384,  72  S.  W. 
925.  "No  matter  how  many  renew- 
als may  have  been  made,  if  the  bank 
has  charged  a  greater  rate  of  inter- 
est than  the  law  allows,  it  must,  if 
the  forfeiture  clause  of  the  statute 
be  relied  on,  and  the  matter  is  thus 
brought  to  the  attention  of  the  court, 
lose  the  entire  interest  which  the  note 
carries  or  which  has  been  agreed  to 
be  paid."  Brown  v.  Marion  Nat. 
Bank,  169  U.  S.  416,  42  L.  ed.  801,  18 
Sup.  Ct.  390.    The  original  taint  at- 


taches to  all  consecutive  obligations 
or  securities  growing  out  of  the  orig- 
inal vicious  transaction,  and  none  of 
the  descendant  obligations,  however 
remote,  can  be  free  from  it,  if  the 
descent  can  be  traced.  Thompson  v. 
Prettyman,  231  Pa.  1,  79  Atl.  874. 

^  Palmer  v.  Carpenter,  53  Nebr. 
394,  12>  N.  W.  690. 

^*  Flight  V.  Reed,  1  H.  &  C.  703; 
Houser  v.  Planters'  Bank,  57  Ga.  95. 

'"Cuthbert  v.  Haley,  8  T.  R.  390; 
Masterson  v.  Grubbs,  1^  Ala.  406; 
Mitchell  V.  McCullough,  59  Ala.  179; 
Palmer  v.  Carpenter,  53  Nebr.  394,  TZ 
N.  W.  690 ;  Kent  v.  Walton,  7  Wend. 
(N.  Y.)  256;  Smalley  v.  Doughty,  6 
Bosw.  (N.  Y.)  66;  Brinckerhofif  v. 
Foote,  1  Hoff.  Ch.  (N.  Y.)  291; 
Powell  V.  Waters,  8  Cow.  (N.  Y.) 
669;  Smith  v.  White  (Tex.  Civ. 
App.),  25  S.  W.  809;  Keys  v.  Cle- 
burne Bldg.  &c.  Assn.  (Tex.  Civ. 
App.),  25  S.  W.  809;  Palmer  v.  Call, 
2  McCrary  _(U.  S.)  522,  7  Fed.  IZl . 

°^  Missouri  Real  Estate  Syndicate  v. 
Sims,  179  Mo.  679,  78  S.  W.  1006; 
Cooper  v.  Rothman  (Fla.),  57  So. 
985 ;  Milholen  v.  Meyer,  161  Mo.  App. 
491,  143  S.  W.  540.  See  also.  Green 
V.  Lake,  2  Mackey  (D.  C.)   162. 


283 


USURY. 


§    981 


a  forbearance.®"  But  the  taking  of  usury  for  forbearance  in  ex- 
tending the  time  is  held  not  to  make  usurious  a  note  and  mortgage 
originally  valid."^ 

§  981.  Corporations. — Corporations  are  generally  subject 
to  the  usury  laws  to  the  same  extent  as  in  the  case  of  individuals,®* 
although  there  are  exceptions,®^  and  where  this  defense  is  not 
available  to  a  corporation  it  will  not  be  sustained  when  urged  by 
indorsers  in  actions  against  them.°°  Again,  by  the  national  bank- 
ing act,  the  local  law  as  to  the  rates  of  discount  controls  banking 
associations,  unless  a  special  rate  is  allowed  to  banks  of  issue 
organized  under  the  state  laws,  or  unless  no  rate  is  specified,  in 
which  case  the  rate  is  fixed  by  the  state  statutes,  and  if  a  rate 
is  charged  in  violation  of  these  provisions  it  will  be  a  good  de- 
fense to  the  recovery  of  interest;®^  but  under  the  federal  banking 
act  the  principal  of  the  note  cannot  be  avoided  by  reason  of  usury 


""Kassing  v.  Ordway,  100  Iowa  611, 

69  N.  W.  1013. 

^  ^lorse  V.  Wellcome,  68  Minn.  210, 

70  N.  W.  978.  64  Am.  St.  471. 

°*  National  Bank  v.  Evre,  52  Iowa 
114,  2  N.  W.  995;  Maine  Bank  v. 
Butts,  9  Mass.  49;  Farmers'  &  Trad- 
ers' Bank  v.  Harrison,  57  Mo.  503; 
Bank  of  Utica  v.  Hillard,  5  Cow.  (N. 
Y.)  153;  Niagara  County  Bank  v. 
Baker,  15  Ohio  St.  68;  Chafin  v.  Lin- 
coln Sav.  Bank,  7  Heisk.  (Tenn.) 
499. 

'°Ex  parte  Avnsworth,  4  Ves.  678; 
Freese  v.  Brownell,  35  N.  J.  L.  285, 
10  Am.  Rep.  239.  See  2  Cummings  & 
Gilberts  Gen.  Laws  N.  Y.,  p.  1994; 
Freese  v.  Brownell,  35  N.  J.  L.  285, 
10  Am.  Rep.  239. 

""':\raine  Bank  v.  Butts,  9  Mass. 
49;  Union  Nat.  Bank  v.  Wheeler,  60 
N.  Y.  612;  Rosa  v.  Butterfield,  33  N. 
Y.  665;  Stewart  v.  Bramhall,  11  Hun 
(N.  Y.)  139;  Luddington  v.  Kirk.  16 
Misc.  (N.  Y.)  301,  74  N.  Y.  St.  295, 
37  N.  Y.  S.  1141.  affd.,  17  Misc.  (N. 
Y.)  129,  39  N.  Y.  S.  419;  Chafin  v. 
Lincoln  Sav.  Bank.  7  Heisk.  (Tenn.) 
499.  But  see  Ilungerford's  Bank  v. 
Potsdam  &c.  R.  Co.,  10  Abb.  Pr.  (N. 
Y.)  24,  revg.  9  Abb.  Pr.  (N.  Y.)  124; 
Hungerford's  Bank  v.  Dodge,  30 
Barb.  (N.  Y.)  626.  19  How.  Pr.  (N. 
Y.)  39;  Bock  v.  Lauman,  24  Pa.  St. 


435.  As  to  sureties,  see  Freese  v. 
Brownell,  35  N.  J.  L.  285.  10  Am. 
Rep.  239.  As  to  accommodation  ac- 
ceptor who  is  liable  as  a  surety,  see 
First  Nat.  Bank  v.  Morris,  1  Hun 
(N.  Y.)   680. 

*'Tomblin  V.  Higgins,  53  Nebr.  92, 
73  N.  W.  461,  68  Am.  St.  596;  Nor- 
folk Nat.  Bank  v.  Schwenk,  46  Nebr. 
381,  64  N.  W.  1073;  Wachovia  Nat. 
Bank  v.  Ireland,  122  N.  Car.  571,  29 
S.  E.  835;  Guthrie  v.  Reid,  107  Pa. 
St.  251.  See  First  Nat.  Bank  v.  Mc- 
Carthy, 18  S.  D.  218,  100  N.  W.  14; 
First  Nat.  Bank  v.  Ledbetter  (Tex.), 
34  S.  W.  1042;  U.  S.  Rev.  St.  (1901), 
§§  5197,  5198.  See  Citizens'  Nat. 
Bank  v.  Donnell,  195  U.  S.  369,  49 
L.  ed.  238,  25  Sup.  Ct.  49.  affg.  172 
Mo.  384,  72  S.  W.  925;  First  Nat. 
Bank  v.  Lasatcr,  196  U.  S.  115,  49  L. 
ed.  408,  25  Sup.  Ct.  206,  revg.  (Tex. 
Civ.  App.),  72  S.  W.  1054.  This  act 
supersedes  state  usury  laws  as  to  na- 
tional banks.  Nat.  Bank  v.  Eyre,  52 
Iowa  114,  2  N.  W.  995;  Davis  v.  Ran- 
dall. 115  Mass.  547,  15  Am.  Rep.  146; 
Central  Nat.  Bank  v.  Pratt,  115  Mass. 
539.  15  Am.  Rep.  138;  Bramhall  v. 
Atlantic  Nat.  Bank,  36  N.  J.  L.  243; 
First  Nat.  Bank  v.  Garlinghouse,  22 
Ohio  St.  942,  10  Am.  Rep.  751.  Com- 
pare Hintermister  v.  First  Nat.  Bank, 
3  Hun  (N.  Y.)  345,  5  Thomp.  &  C. 


§  98^ 


CONTRACTS. 


284 


charged  by  a  national  bank.^^  Nor  can  a  bank,  by  offering  to 
remit  the  excess,  evade  the  statute  as  to  forfeiture  on  the  entire 
interest.®^ 

§  982.  Remedies  under  national  banking  act. — But  it  is 
held  that  an  action  for  the  statutory  penalty  is  the  only  remedy 
for  the  recovery  of  usury/  It  has  also  been  held  that  the  na- 
tional banking  act  supersedes  all  state  laws  on  the  subject  of 
usury,  and  the  national  bank  which  acquires,  in  good  faith  for 
value,  commercial  paper  void  between  the  parties  for  usury  may 
recover  thereon.^ 

§  983.  Rule  as  to  the  application  of  payments  of  usury  in- 
terest.— The  rule  relative  to  the  application  of  payments  of 


484  (declaring  the  contract  void  for 
usury)  ;  Importers'  &c.  Nat.  Bank  v. 
Littell,  46  N.  J.  L.  506.  Compare 
First  Nat.  Bank  v.  Lamb,  50  N.  Y. 
95,  10  Am.  Rep.  438,  revg.  57  Barb. 
(N.  Y.)  429.  For  permitting  a  mis- 
demeanor, see  Slaughter  v.  First  Nat. 
Bank,  109  Ala.  157,  19  So.  430.  Ac- 
commodation and  business  paper  are 
within  the  intent  of  the  United  States 
statutes.  Johnson  v.  National  Bank, 
74  N.  Y.  329;  Barbour  v.  National 
Exch.  Bank,  45  Ohio  St.  133,  12  N. 
E.  5;  Barrett  v.  National  Bank,  85 
Tenn.  426,  3  S.  W.  117;  Hill  v.  Barre, 
56  Vt.  582;  Rev.  St.  U.  S.,  §§  5197, 
5198. 

'*  Stephens  v.  Monongahela  Nat. 
Bank,  111  U.  S.  197,  28  L.  ed.  399, 
4  Sup.  Ct.  336.  "(1)  Where  illegal 
interest  has  been  knowingly  stipu- 
lated for,  but  not  paid,  there  only  the 
sum  lent  without  interest  can  be  re- 
covered. (2)  Where  such  illegal  in- 
terest has  been  paid,  then  twice  the 
amount  so  paid  can  be  recovered  in  a 
penal  action  of  debt  or  suit  in  the  na- 
ture of  such  action,  brought  by  the 
person  paying  the  same,  or  their  le- 
gal representative."  Cox  v.  Beck,  83 
Fed.  269 ;  Chase  Nat.  Bank  v.  Faurot, 
149  N.  Y.  532,  44  N.  E.  164,  35  L.  R. 
A.  605.  See  Second  Nat.  Bank  v. 
Fitzpatrick,  27  Ky.  L.  283,  84  S.  W. 
1150. 

**  Citizens'  Nat.  Bank  v.  Donnell, 
195  U.  S.  369,  49  L.  ed.  238,  25  Sup. 
Ct.  49,  affg.  172  Mo.  384,  72  S.  W. 


925;  Rev.  Stat.  U.  S.,  §  5198,  U.  S. 
Comp.  Stat.  1901,  p.  3493. 

'  Cox  v.  Beck,  83  Fed.  269 ;  Marion 
Nat.  Bank  v.  Thompson,  101  Ky.  277, 
19  Ky.  L.  436,  40  S.  W.  903;  Mont- 
gomery V.  Albion  Nat.  Bank,  50  Nebr. 
652,  70  N.  W.  239;  Lanham  v.  Bank, 
46  Nebr.  663,  65  N.  W.  786 ;  Norfolk 
Nat.  Bank  v.  Schwenk,  46  Nebr.  381, 
64  N.  W.  1073;  Nat.  Bank  v.  Du- 
shane,  96  Pa.  St.  340 ;  Comanche  Nat. 
Bank  v.  Dabney  (Tex.),  44  S.  W. 
413;  Driesbach  v.  National  Bank,  104 
U.  S.  52,  26  L.  ed.  658;  Barnet  v. 
National  Bank,  98  U.  S.  555,  25  L.  ed. 
212.  Examine  Citizens'  Nat.  Bank 
V.  Donnell,  195  U.  S.  369,  49  L.  ed. 
238,  25  Sup.  Ct.  49,  affg.  172  Mo.  384, 
12  S.  W.  925.  Demand  is  unnecessary 
to  recover  penalty.  First  Nat.  Bank 
V.  Turner,  3  Kan.  App.  352,  42  Pac. 
936. 

^  "The  right  to  create  and  protect 
national  banks,  although  not  named 
in  the  constitution,  is  well  established 
by  the  decisions  of  the  highest  fed- 
eral court,  and  any  attempt  to  limit 
the  powers  and  functions  of  such 
banks  is  an  attempt  to  limit  a  law 
which  is  'necessary  and  proper'  for 
carrying  into  execution  powers  vested 
by  the  constitution  in  the  government 
of  the  United  States.  In  view  of  the 
dual  character  of  our  government,  the 
one  state  and  the  other  national, 
when  the  latter  has  jurisdiction  over 
a  subject,  its  action,  of  necessity,  is 
paramount,  and,  to  the  extent  of  any 


285 


USURY. 


§    983 


usurious  interest  is  determined,  in  the  main,  by  statutory  enact- 
ment. In  many  states  a  payment  of  usurious  interest  is  applied 
first  to  the  interest  which  is  lawfully  due,  and  second  to  the  prin- 
cipal, regardless  of  any  agreement  between  the  parties.^     Conse- 


conllict  between  state  and  national 
legislation,  must  render  nugatory^  all 
state  acts  repugnant  thereto.  The 
argument  that  a  state  cannot  grant 
an  exceptional  privilege  to  a  state 
bank  because  it  would  be  class  legis- 
lation is  foreclosed  by  the  settled  law 
that  the  state  banks  knowingly  taking 
usury  forfeit  the  interest  only,  the 
same  as  national  banks ;  whereas,  all 
other  corporations,  as  well  as  all  per- 
sons and  firms,  forfeit  both  principal 
and  interest.  The  right  to  give  this 
exclusive  privilege  to  state  banks  is 
thoroughly  supported  by  authority.  A 
classification  is  justified  which  frees 
state  banks  from  injurious  competi- 
tion with  national  banks  by  placing 
the  former  in  the  same  position  as  the 
latter  with  reference  to  the  subject 
of  usury.  Without  prolonging  the 
discussion,  I  think  that  the  national 
banking  act  was  intended  to  super- 
sede all  state  laws  on  the  subject  of 
usury  as  applied  to  national  banks, 
and  that  Congress  had  power  to  pass 
the  act  as  thus  construed."  Schle- 
singer  v.  Gilhooly,  189  N.  Y.  1,  81 
N.  E.  619.  See  the  vigorous  dissent- 
ing opinion  of  CuUen,  C.  J.,  and  sub- 
sequent explanation.  To  same  effect, 
Schlesinger  v.  Kelly,  114  App.  Div. 
(N.  Y.)  546,  99  N.  Y.  S.  1083.  Com- 
pare the  foregoing  cases  with  that 
of  Schlesinger  v.  Lehmaier,  191  N. 
Y.  69,  83  N.  E.  657,  16  L.  R.  A.  (N. 
S.)  626n,  123  Am.  St.  591.  This  case 
decides  that  when  a  national  bank 
knowingly  purchases  a  negotiable  in- 
strument affected  with  usury,  such 
instrument  is  subject  to  the  defense 
of  usury  to  the  same  extent  as  if  it 
remained  in  the  hands  of  the  orig- 
inal payee.  The  foregoing  cases 
would  seem  to  leave  the  law  in  New 
York  in  question,  although  the  effect 
of  the  Gilhooly  case  as  stated  in  the 
text  is  the  interpretation  given  it  by 
Cullen,  C.  J.,  in  the  subsequent  Leh- 
maier case.  However,  in  the  latter 
case  fSchlesinecr  v.  Lehmaier,  191  N. 
Y.  69,  83  N.  E.  657,  16  L.  R.  A.  (N. 
S.)    626,    123   Am.   St.   591)    Bartlett, 


J.,  explains  that  he  concurred  with 
the  dissenting  opinion  of  Cullen,  C. 
J.,  in  the  prior  case  (Schlesinger  v. 
Gilhooly,  189  N.  Y.  1,  81  N.  E.  619), 
except  as  to  the  effect  of  the  nego- 
tiable instruments  law,  and  it  seems 
that  he  concurred  "in  result,  on  the 
ground  that  under  the  negotiable  in- 
struments law  a  bona  fide  purchaser 
takes  a  note  free  from  the  defense 
of  usury."  Since  it  does  not  appear 
that  any  judge  other  than  Bartlett 
accepted  the  view  expressed  by  him 
the  decision  in  the  Gilhooly  case  rests 
on  a  very  insecure  basis,  for  it  thus 
becomes  apparent  that  a  majority  of 
the  court  actually  dissented  from  the 
reasoning  and  conclusions  expressed 
in  the  opinion  reported  as  the  prevail- 
ing one,  i.  e.,  that  a  national  bank 
which  became  the  innocent  and  good- 
faith  purchaser  of  a  negotiable  in- 
strument affected  with  usury  was  con- 
trolled exclusively  by  the  federal  laws 
on  usury.  For  a  case  holding  that 
one  who  maintains  a  place  of  busi- 
ness in  which  the  law  concerning 
usury  is  habitually  violated  is  guilty 
of  keeping  a  disorderly  house,  see 
State  v.  Martin,  11  N.  J.  L.  652,  11 
Atl.  548,  24  L.  R.  A.  (N.  S.)  507n, 
134  Am.  St.  814.  For  a  vigorous 
criticism  of  this  case  see  the  note  in 
134  Am.  St.  819. 

'Nicrosi  v.  Walker,  139  Ala.  369, 
2)1  So.  97  (true  even  though  the  pay- 
ments are  termed  interest)  ;  Gage  v.  J. 
F.  Smyth  ^Mercantile  Co.,  160  Fed.  425, 
87  C.  C.  A.  Zll  (construing  Missouri 
statute)  ;  Atlanta  Sav.  Rank  v.  Spen- 
cer. 107  Ga.  629,  7>Z  S.  E.  878;  Quinn 
v.  First  Nat.  Bank,  8  Ga.  .\pp.  235,  68 
S.  E.  1010  (suit  on  renewal  notes)  ; 
Madsen  v.  Whitman.  8  Idaho  762,  71 
Pac.  152  (excessive  "premiums"  ap- 
plied to  principal)  ;  Brown  v.  Lacy, 
83  Tnd.  436;  New  Hampshire  Bank- 
ing Co.  v.  Waller,  5  Kans.  App.  881, 
47  Pac.  543;  Crenshaw  v.  Crenshaw, 
24  Kv.  L.  600,  69  S.  W.  711;  Cren- 
shaw V.  Duff's  Exr..  113  Kv.  912, 
24  Ky.  L.  718,  69  S.  W.  962;  Hill  v. 
Cornwall's   Assignee,  95   Ky.   512,   16 


983 


CONTRACTS. 


286 


quently,  where  a  payment  of  usurious  interest  equals  the  amount 
of  interest  lawfully  due,  a  suit  to  foreclose  because  of  failure  to 
pay  interest  is  premature  and  cannot  be  maintained.*  And  if  the 
payment  of  usurious  interest  does  not  exceed  the  amount  of  in- 
terest lawfully  due  there  is  nothing  to  be  applied  to  the  principal.'' 
The  borrower  has  a  right  to  elect  that  the  excessive  interest  be 
applied  to  the  principal,  so  long  as  any  part  of  the  principal  sum  re- 
mains due  and  unpaid.^  Consequently,  usury  will  not  be  regarded 
as  having  been  paid  until  the  legal  interest  and  principal  have  been 
satisfied.^  On  the  other  hand,  when  the  principal,  with  lawful 
interest  thereon,  has  been  repaid  the  debtor  is  entitled  to  have  the 
obligation  discharged.^  Nor  is  any  tender  of  any  amount  on  the 
part  of  the  debtor  necessary.^  The  creditor  is  required  to  allow 
all  payments  of  interest  in  excess  of  the  legal  rate  as  credit  upon 
the  principal."     However,  a  payment  of  usurious  interest  on  one 


Ky.  L.  97,  26  S.  W.  540;  Kendall  v. 
Crouch,  88  Ky.  199,  10  Ky.  L.  993, 
11  S.  W.  587;  Ellis  v.  Brannin's 
Exrs.,  1  Duv.  (Kv.)  48;  Stone  v.  Mc- 
Connell,  1  Duv.  (Ky.)  54;  New  York 
Security  &c.  Co.  v.  Davis,  96  Md. 
81,  53  Atl.  669;  Kohn  v.  Kelley,  76 
N.  J.  Eq.  132,  79  Atl.  419,  affd.  77  N. 
J.  Eq.  273,  79  Atl.  686  (mortgage 
foreclosure  proceeding)  ;  Baum  v. 
Daniels,  55  Tex.  Civ.  App.  273,  118 
S.  W.  754.  Under  the  Texas  stat- 
ute, however,  one  may  waive  the 
right  to  have  usurious  interest  cred- 
ited on  the  principal,  and  seek  an 
abatement  of  further  interest.  Taylor 
v.  Shelton  (Tex.  Civ.  App.),  134  S. 
W.  302.  When  a  borrower  goes  into 
a  court  of  equity  to  seek  relief  from 
a  usurious  contract,  he  should  be 
required  to  pay  the  amount  of  the 
principal  and  lawful  interest  as  a 
condition  for  such  relief.  Bolen  v. 
Wright.  89  Nebr.  116,  131  N.  W.  185. 

^Leipziger  v.  VanSaun,  64  N.  J. 
Eq.  Z7,  53  Atl.  1. 

"Munford  v.  McVeigh's  Admr.,  92 
Va.  446,   23   S.   E.   857. 

'Devon  v.  Naunheim's  Admr.,  7 
Ky.  L.  222. 

'Paine  v.  Levy,  142  Kv.  619,  134 
S.  W.  1160;  Hill  v.  Deposit  Bank,  10 
Ky.  L.  448.  See  also,  Werner  v. 
Lorentzer,  3  Alaska  275;  Murphy  v. 


Citizen's  Bank,  82  Ark.  131,  100  S. 
W.  894,  11  L.  R.  A.  (N.  S.)  616n. 
See,  however,  Taylor  v.  Shelton 
(Tex.  Civ.  App.),  134  S.  W.  302. 

*  Hughson  V.  Newark  Mortg.  Loan 
Co.,  57  N.  J.  Eq.  139,  41  Atl.  492. 
See,  however,  Shawmut  Commercial 
Paper  Co.  v.  Brigham  (Mass.),  97 
N.  E.  636. 

®  Jordan  v.  Warner's  Estate,  107 
Wis.  539,  83  N.  W.  946. 

"Humphrey  v.  McCauley,  55  Ark. 
143,  17  S.  W.  713;  Madsen  v.  Whit- 
man, 8  Idaho  762,  71  Pac.  152 ;  Woolley 
V.  Alexander,  99  111.  188;  Musselman 
V.  McElhenny,  23  Ind.  4,  85  Am.  Dec. 
445 ;  Alexander  v.  First  Nat.  Bank, 
114  Ky.  683,  71  S.  W.  883;  Equitable 
Loan  &c.  Assn.  v.  Smith,  23  Ky.  L. 
1567,  65  S.  W.  609;  New  York  Se- 
curity &c.  Co.  V.  Davis,  96  Md.  81, 
53  Atl.  669;  Spooner  v.  Roberts,  180 
Mass.  191,  62  N.  E.  4;  Citizens'  Nat. 
Bank  v.  Donnell,  172  Mo.  384,  72  S. 
W.  925;  Rawles  v.  Reichenbach,  65 
Nebr.  29,  90  N.  W.  943;  Knox  v. 
Williams,  24  Nebr.  630,  39  N.  W. 
786,  8  Am.  St.  220;  Hughson  v. 
Newark  Mortg.  Loan  Co.,  57  N.  J. 
Eq.  139,  41  Atl.  492;  Arnold  v.  Mac- 
donald.  22  Tex.  Civ.  App.  487,  55  S. 
W.  529;  Fowler  v.  Equitable  Trust 
Co.,  141  U.  S.  384,  35  L.  ed.  786,  12 
Sup.  Ct.   1    (under  Illinois  law). 


287 


USURY. 


984 


note  cannot  be  considered  as  a  part  payment  on  another  note/* 

§  984.  Recovery  of  usurious  interest. — The  common  law 
permitted  one  who  had  paid  usurious  interest  to  recover  the 
same.*^  This  rule  obtains  in  many  states,  because  the  common- 
law  principle  has  either  been  adopted  or  exists  in  the  form  of  a 
statute."  Should  the  debtor  pay  the  usurious  obligation  by  a 
transfer  of  realty  it  has  been  held  that  he  may  recover  the  differ- 
ence between  the  principal  legally  due  with  legal  interest  thereon 
and  the  actual  value  of  the  realty  conveyed."  The  statutes  of 
some  jurisdictions  provide  that  the  debtor  may  recover  double  the 
amount  of  usurious  interest  paid."  But,  under  such  4  statute, 
there  can  be  no  recovery  in  the  absence  of  actual  payment.*®  Thus 
it  has  been  held  that  the  giving  of  a  new  note  which  includes 


"Carter  v.  Farthing,  115  Ky.  123, 
24  Ky.  L.  1927.  72  S.  W.  745;  In  re 
Maher's  Appeal,  91   Pa.  St.  516. 

"Clarke  v.  Shee,  Cowp.  197.  The 
above  case  refused  to  follow  Tom- 
kins  V.  Bernet,  1  Salk.  22.  This  lat- 
ter refused  to  release  on  the  ground 
that  the  parties  were  in  pari  delicto. 
First  Nat.  Bank  v.  Davis,  135  Ga. 
687,  70  S.  E.  246,  36  L.  R.  A.  (N. 
S.)  134;  Wheaton  v.  Hibbard,  20 
Johns.  (N.  Y.)  290,  11  Am.  Dec. 
284. 

"Baum  V.  Thorns,  150  Ind.  378,  50 
N.  E.  357.  65  Am.  St.  368;  Green  v. 
National  Building  &c.  Assn.  (Kv.),  64 
S.  W.  751;  Kirkpatrick  v.  Wherritt, 
7  B.  Mon.  (Ky.)  388;  Shannon  v. 
Georgia  &c.  Loan  Assn.,  78  Miss. 
955,  30  So.  51,  57  L.  R.  A.  800,  84 
Am.  St.  657;  Brown  v.  Mcintosh.  39 
N.  J.  L.  22 ;  Cheek  v.  Iron  Belt  Bldg. 
&c.  Assn..  127  N.  Car.  121,  Zl  S.  E. 
150,  denying  rehearing,  126  N.  Car. 
242,  35  S.  E.  463;  Smith  v.  Old  Do- 
minion Bldg.  &c.  Assn.,  119  N.  Car. 
249,  26  S.  E.  41;  contra.  Latham  v. 
Washington  &c.  Loan  Assn.,  11  N. 
Car.  145;  Wilson  v.  Selbie.  7  S.  Dak. 
494,  64  N.  W.  537 ;  Rosetti  v.  Lozano, 
96  Tex.  57,  70  S.  W.  204;  Bexar 
Bldg.  &c.  Assn.  v.  Robinson,  78  Tex. 
163,  14  S.  W.  227,  9  L.  R.  A.  292. 
22  Am.  St.  36;  Baum  v.  Daniels,  55 
Tex.  Civ.  App.  273,  118  S.  W.  754 
(may  recover  in  absence  of  statute)  ; 


Nichols   v.   Bellows,  22   Vt.   581,   54 
Am.   Dec.  85. 

"First  Nat.  Bank  v.  Davis,  135  Ga. 
687,  70  S.  E.  246,  36  L.  R.  A.  (N.  S.) 
134  and  note;  Paducah  Banking  Co. 
V.  Ragsdale,  24  Ky.  L.  683,  69  S.  W. 
796. 

"Carter  v.  Life  Insurance  Co.,  142' 
N.  Car.  338,  30  S.  E.  341 ;  Rosetti  v. 
Lozano,  96  Tex.  57,  70  S.  W.  204; 
Smith  v.  Chilton,  90  Tex.  447,  39  S. 
W.  287.  This  is  also  true  of  the 
Federal  law  governing  National 
Banks.  The  amount  recoverable  de- 
pends upon  the  statutes  of  the  various 
states  to  which  reference  must  be 
had.  Melton  v.  Snow,  24  Okla.  780, 
104  Pac.  40.  See  Turregano  v.  Bar- 
nett  (La.),  53  So.  884  (whole  amount 
of  interest  paid  recoverable).  A  stat- 
ute authorizing  a  recovery  of  double 
the  amount  of  usurious  interest  paid 
has  been  construed  as  not  limiting 
the  right  of  recovery  to  double  the 
amount  of  interest  paid  in  excess  of 
the  lawful  contractual  rate,  but  dou- 
ble the  whole  amount  of  interest 
received.  Tavlor  v.  Shelton  (Tex. 
Civ.  App.),  134  S.  W.  302;  Nocona 
Nat.  Bank  v.  Bolton  (Tex.  Civ. 
App.).  143  S.  W.  242. 

"Union  Alortg.  &c.  Co.  v.  Hagood, 
97  Fed.  360  (South  Carolina  con- 
strued) ;  Chas.  S.  Rilev  &  Co.  v.  W. 
T.  Seers  &  Co.,  154  N.  Car.  509,  70 
S.  E.  997. 


§    985  CONTRACTS.  288 

usurious  interest  is  not  payment."  Nor  can  there,  as  a  general 
rule,  be  a  recover}^  of  the  usurious  interest  unless  the  amount 
actually  paid  exceeds  the  amount  lawfully  due/^  Statutes  which 
provide  for  the  recovery  of  usurious  interest  usually  fix  a  com- 
paratively short  period  of  limitation  within  which  such  action 
must  be  brought.^®  And  no  action  can  be  maintained  after  the 
expiration  of  the  period  fixed  by  statute.^*'  The  statutes  of  other 
jurisdictions  merely  prevent  the  enforcement  of  the  usurious 
agreement  while  it  remains  executory,  and  after  the  payment  of 
the  entire  debt,  usury  and  all,  the  usurious  interest  cannot  be 
recovered.^^ 

§  985.  Recovery  of  usurious  interest — Rights  as  affected 
by  federal  statute. — The  federal  statutes  provide  that  a  per- 
son paying  usurious  interest  to  a  national  bank  may  recover  twice 
the  amount  of  the  usuiy  thus  paid."     This  is  true  regardless  of 

"Rushing  v.   Bivens,    132   N.   Car.  Washington  Nat.  &c.  Assn.  v.  Wend- 

273,  43  S.  E.  798  (the  usury  must  be  hng,  102  Va.  279,  46  S.  E.  296.     In 

paid  in  money  or  money's  worth).  the  following  within  two  years :   Rob- 

"  Kendall    v.    Davis    (sub    nomine  erts   v.    Life    Ins.    Co.,    118   N.   Car. 

Josey  V.  Davis),  55  Ark.  318,   18  S.  429,  24  S.  E.  780. 

W.    185;    Alexander    v.     First     Nat.  ^Roberts  v.  Life  Ins.  Co.,  118  N. 

Bank,    114   Ky.   683,   71    S.   W.   883;  Car.  429,  24  S.  E.  780. 

Crenshaw    v.    Duff's    Exr.,    113    Ky.  ^  Hadden   v.    Innes,    24    111.    381; 

912,   24   Ky.   L.   718,   69   S.   W.  962;  Tompkins  v.   Hill,  28   111.  519;   Per- 

Cambron   'v.    Boldrick,    147    Kv.   524,  kins  v.   Conant,  29  111.   184,  81   Am. 

144  S.  W.  374.    Under  this  rule  sums  Dec.  305 ;  Manny  v.  Stockton,  34  111. 

intended  for  the  payment  of  usurious  306 ;  Pitts  v.  Cable,  44  111.  103 ;  Lake 

interest  will  be  applied  to  the  prin-  v.   Brown,   116  111.  83,  4  N.   E.  n2>\ 

cipal  and  lawful  interest.     See,  how-  Mason  v.  Pierce,   142  111.  331,  31   N. 

ever,    Tavlor   v.    Shelton    (Tex.    Civ.  E.   503;   Anderson  v.   Chicago   Trust 

App.),  134  S.  W.  302;   Nocona  Nat.  &c.  Bank,  195  111.  341,  63  N.  E.  203, 

Bank   v.    Bolton    (Tex.    Civ.    App.),  affg.  93  111.  App.  347;  Drake  v.  Lux, 

143   S.  W.  242;   Cotton  States  Bldg.  233   111.  522,  84  N.   E.  693;   Citizens' 

Co.   V.    Peightal.   28   Tex.   Civ.   App.  State  Bank  v.  Frazee,  9  Kans.  App. 

575,  Q  S.  W.  524.  889,  58  Pac.  280;  Thompson  v.  Ware, 

"In  the  following  jurisdiction  the  8  B.  Mon.  (Ky.)  26;  Williamson  v. 
action  must  be  brought  within  six  Cole,  26  Ohio  St.  207;  Hopkins  v. 
years:  Steere  v.  Oakley,  5  Pa.  Super.  West,  83  Pa.  St.  109.  See  also,  Fel- 
Ct.  46.  In  the  following  one  year:  lows  v.  Christensen  (S.  Dak.),  133 
Gunby  v.  Armstrong,  133  Fed.  417,  N.  W.  814,  construing  Wisconsin 
66  C.  C.  A.  627  (under  Louisiana  statute.  Suit  by  payee,  statute  pro- 
statute)  ;  dramling  v.  Pool,  111  Ga.  viding  that  no  interest  could  be  re- 
93,  Zd  S.  E.  430;  Burnside  v.  Mealer,  covered  on  a  usurious  contract.  Held, 
26  Ky.  L.  79,  80  S.  W.  785;  Parker  "contract  either  was  or  was  not 
V.  Zwaigart,  22  Ky.  113,  56  S.  W.  usurious  at  its  inception,  and_  pay- 
678;  Rvan  v.  Logan  County  Bank,  21  ments  or  want  of  payments  in  no 
Ky.  1518,  35  S.  W.  714;  Chadwick  v.  manner  changed  same." 
Menard,  104  La.  38,  28  So.  933 ;  Palen  ^  First  Nat.  Bank  v.  Davis,  135 
v.    Johnson,   46   Barb.    (N.   Y.)    21;  Ga.  687,  70  S.  E.  246,  36  L.  R.  A.  (N. 


289 


USURY. 


§   985 


whether  the  payment  is  made  by  an  artificial  or  a  natural  person.*^ 
Under  this  statute  only  interest  which  has  been  paid  may  be  re- 
covered.-* Consequently,  it  has  been  held  that  the  including  of 
usurious  interest  in  the  principal  of  a  renewal  note,-°  the  charging 
of  unlawful  rate  of  interest  on  an  open  account,-''  or  the  deduc- 
tion of  interest  in  advance,^^  does  not  amount  to  payment  as 
defined  by  the  statute,  and  that  the  debtor's  remedy  lies  in  his 
right  to  resist  payment  of  so  much  of  the  unpaid  obligation  as 
exceeds  the  principal  advanced.  So  the  deducting  of  interest  at 
lawful  rate  by  a  national  bank  from  the  amount  credited  to  one 
for  whom  a  note  is  discounted  is  not  a  payment  of  unlawful  inter- 
est which  will  sustain  an  action  to  recover  double  its  amount. ^^ 
Even  where  usurious  interest  has  been  retained  by  a  bank  there 
exists  from  the  origin  of  the  loan,  from  the  retaining  of  the  first 
discount,  through  all  the  renewals,  up  to  the  principal  or  up  to  the 
time  of  entering  judgment,  a  locus  poenitentiae  for  the  party 
taking  the  excessive  interest.^"  Nor  can  the  statutory  penalty 
be  recovered  when  suit  is  brought  and  judgment  rendered  for 


S.)  134;  First  Nat.  Bank  v.  Barnett, 
51  Nebr.  397,  70  N.  W.  937. 

^^  Albion  Nat.  Bank  v.  Montgom- 
ery, 54  Nebr.  681.  74  N.  W.  1102. 

"*  First  Nat.  Bank  v.  Davis,  135  Ga. 
687,  70  S.  E.  246,  36  L.  R.  A.  (N. 
S.)  134;  Talbot  v.  First  Nat.  Bank, 
185  U.  S.  172,  46  L.  ed.  857.  22  Sup. 
Ct.  612;  Brown  v.  Marion  Nat.  Bank, 
169  U.  S.  416,  42  L.  ed.  801,  18  Sup. 
Ct.  390. 

"^  Sydner  v.  r^It.  Sterlinsr  Nat.  Bank, 
94  Kv.  231.  21  S.  \V.  1050;  Lanham 
V.  National  Bank.  42  Nebr.  757,  60 
N.  W.  1041;  Osborn  v.  First  Nat. 
Bank.  175  Pa.  St.  494.  34  Atl.  858; 
Daingerfield  Nat.  Bank  v.  Ragland, 
181  U.  S.  45,  45  L.  ed.  738,  21  Sup. 
Ct.  536:  Brown  v.  Marion  Nat. 
Bank.  169  U.  S.  416,  42  L.  ed.  801, 
18  Sup.  Ct.  390. 

"Davey  v.  National  Bank,  8  S. 
Dak.  214,  66  N.  W.  122. 

"  Citizens'  Nat.  Bank  v.  Gentry 
(sub  nomine  Forman's  Assignee"), 
111  Kv.  206,  63  S.  \V.  454.  56  L.  R. 
A.  673n.  See  63  S.  W.  757  for  dis- 
senting opinion.  Marion  National 
Bank  v.  Thompson.  101  Kv.  277.  19 
Ky.  L.  436.  40  S.  W.  903;  Haseltine 
V.  National  Bank,  155  Mo.  66,  56  S. 

1<^ — CoNTH.-xcTS.  ^'■o^.  2 


W.  895;  Hade  v.  McVay,  31  Ohio 
St.  231. 

*®  Citizens'  Nat.  Bank  v.  Gentrv, 
111  Ky.  206,  63  S.  W.  454,  56  L.  R. 
A.  673;  Haseltine  v.  National  Bank, 
155  Mo.  66,  56  S.  W.  895  (writ  of 
error  dismissed,  183  U.  S.  130,  46  L. 
ed.  117,  22  Sup.  Ct.  49;  Lanham 
V.  National  Bank,  42  Nebr.  757,  60 
N.  W.  1041;  Auburn  Nat.  Bank  v. 
Lewis.  81  N.  Y.  15.  75  N.  Y.  516.  31 
Am.  Rep.  484;  Higley  v.  National 
Bank,  26  Ohio  St.  75,  20  Am.  Rep. 
759. 

^Duncan  v.  First  National  Bank. 
Fed.  Cas.  No.  4135.  To  same  ef- 
fect, Higlev  V.  National  Bank.  26 
Ohio  St.  75.  20  Am.  St.  759.  Com- 
pare Citizens'  Nat.  Bank  v.  Dnnnell. 
195  U.  S.  369.  49  L.  ed.  238.  25  Sup. 
Ct.  49,  in  which  it  is  said.  "We  per- 
ceive no  warrant  in  the  statute  or  the 
cases  for  the  contention  that  the 
bank,  when  it  brings  the  action  and 
is  met  by  the  plea  of  usury,  may 
avoid  the  forfeiture  imposed  bv  Rev. 
Stat..  §  5198.  U.  S.  Comp.  Stat.  1^01. 
p.  3493.  in  absolute  terms,  by  then 
declaring  an  election  to  remit  the  ex- 
cessive interest." 


§  985 


CONTRACTS. 


290 


only  the  principal  and  lawful  interest.^"  The  statute  provides 
that  an  action  to  recover  usurious  interest  actually  paid  must  be 
brought  within  two  years  after  the  payment  thereof  and  no  action 
can  be  maintained  after  the  expiration  of  this  period. ^^ 

The  provisions  of  the  federal  statute  specifying  the  remedy 
where  payment  for  usurious  interest  has  been  made  to  national 
banks  are  exclusive  and  prevent  the  application  of  state  laws.^^ 
Consequently,  in  an  action  upon  a  note  held  by  a  national  bank 
there  cannot  be  a  set-off  of  the  interest  or  the  penalty  provided 
for  therein. ^^  The  penalty  prescribed  cannot  be  set  off  against  the 
principal.^*  This  has  been  held  true  even  where  the  note  was 
given  by  the  debtor  to  the  president  of  the  bank  as  trustee  for 
the  bank  and  as  collateral  security  for  the  former's  note  held  by 
the  bank,  the  usurious  interest  being  charged  upon  the  collateral 
note.^*     However,  where  a  claim  for  usurious  interest  has  been 


""Talbot  V.  First  Nat.  Bank,  185 
U.  S.  172,  46  L.  ed.  857,  22  Sup.  Ct. 
612. 

"" Talbot  V.  Sioux  Nat.  Bank,  111 
Iowa  583,  82  N.  W.  963. 

''  Slaughter  v.  First  Nat.  Bank,  109 
Ala.  157,  19  So.  430;  First  National 
Bank  v.  McEntire,  112  Ga.  232,  Zl 
S.  E.  381;  Winterset  Nat.  Bank  v. 
Eyre,  52  Iowa  114,  2  N.  W.  995; 
Peterborough  National  Bank  v. 
Childs,  133  Mass.  248,  43  Am.  Rep. 
509;  Central  National  Bank  v.  Hasel- 
tine,  155  Mo.  58,  55  S.  W.  1015,  85 
Am.  St.  531 ;  Lanham  v.  Bank,  46 
Nebr.  663,  65  N.  W.  786;  Norfolk 
National  Bank  v.  Schwenk,  46  Nebr. 
381,  64  N.  W.  1073;  Higlev  v.  First 
Nat.  Bank,  26  Ohio  St.  75,  20  Am. 
Rep.  759;  Haseltine  v.  National  Bank 
CNo.  2),  183  U.  S.  132,  46  L.  ed. 
118,  22  Sup.  Ct.  50.  See  also,  infra, 
§  981. 

^Danforth  v.  National  State  Bank, 
48  Fed.  271,  1  C.  C  A.  62,  17  L.  R.  A. 
622:  Lloyd  v.  First  National  Bank, 
5  Kans.  App.  512,  47  Pac.  575; 
Stephens  v.  Monongahela  Bank,  111 
U.  S.  197,  28  L.  ed.  399;  National 
Bank  V.  Davis,  8  Biss.  CU.  S.)  100, 
Fed.  Cas.  No.  10038;  Haseltine  v. 
Central  Nat.  Bank,  183  U.  S.  132,  46 
L.  ed.  118,  22  Sup.  Ct.  50.  But  see 
Montgomery  v.  Albion  Nat.  Bank,  50 
Nebr.  652,  70  N.  W.  239;  Lanham  v. 


First  Nat.  Bank,  46  Nebr.  663,  65  N. 
W.  786;  Norfolk  Nat.  Bank  v. 
Schwenk,  46  Nebr.  381,  64  N.  W. 
1073;  National  Bank  v.  Lewis,  75  N. 
Y.  516,  31  Am.  Rep.  484;  National 
Bank  v.  Dushane,  96  Pa.  St.  340,  over- 
ruling Lucas  V.  Government  Nat. 
Bank,  28  P.  F.  Smith  (Pa.)  228; 
Overholt  v.  National  Bank,  1  Norris 
(Pa.)  490;  Comanche  Nat.  Bank  v. 
Dabney  (Tex.),  44  S.  W.  413.  "It 
seems  to  be  settled  law  that  a  defend- 
ant cannot  offset  against  principal, 
usurious  interest  actually  paid  by 
him ;  that  his  only  remedy  for  illegal 
interest  actually  paid  is  the  right 
given  by  the  statute  to  recover  back 
tv/ice  the  amount  so  paid,  the  penalty 
prescribed  by  §  5198,  for  the  unlawful 
taking  of  usurious  interest."  Na- 
tional Bank  v.  Lynch  (W.  Va.),  71 
S.  E.  389. 

^*  Marion  Nat.  Bank  v.  Thompson, 
101  Kv.  277,  19  Ky.  L.  436,  40  S.  W. 
903. 

^°  Schuyler  Nat.  Bank  v.  Gadsden, 
191  U.  S.  451,  48  L.  ed.  258,  24  Sup. 
Ct.  129,  revg.  Gadsden  v.  Thrush,  63 
Nebr.  881,  89  N.  W.  403.  Certain 
state  courts  have,  however,  held  the 
state  laws  applicable  to  usurious  con- 
tracts entered  into  by  national  banks. 
Farrow  v.  First  National  Bank,  20 
Kv.  L.  1413,  47  S.  W.  594;  White- 
hall First  Nat.  Bank  v.  Lamb,  50  N. 


291  USURY.  §    986 

reduced  to  judgment,  the  provisions  of  the  statute  do  not  apply 
and  one  judgment  is  available  as  a  set-off  against  the  other." 

§  986.  Set-off  under  state  laws. — As  a  general  rule,  under 
the  state  laws,  usury  is  available  as  a  defense  by  way  of  set-off  in 
an  action  brought  on  the  instrument  by  the  payee  or  an  assignee 
with  notice.^^  And  it  is  also  held  to  be  so  available  in  an  action 
upon  a  renewal  note  purged  of  usury.^®  The  right  of  a  party  to 
set  off  a  payment  of  usury  is  held  not  to  be  affected  by  the  fact 
that  the  amount  so  paid  cannot  be  recovered  in  a  separate  action.'" 
In  some  states  the  rule  prevails  that  usury  can  only  be  recouped.*" 
The  right  of  a  defendant  to  avail  himself  of  a  set-off  of  this 
character  is  not  defeated  by  the  statute  of  limitations."  But 
where  a  surety  pays  a  debt  of  the  principal  upon  the  request  of 
the  latter,  who  stands  by  and  permits  him  to  make  such  payment 
in  ignorance  of  the  fact  that  it  is  tainted  with  usury,  the  principal 
w^ill  not  be  permitted,  in  an  action  against  him  by  the  surety  on  an 
obligation  subsequently  given  by  the  former  to  the  latter  to  secure 
him  for  making  such  payment,  to  avail  himself  of  a  set-off  of  the 
usury  contained  in  the  original  debt.  Nor  can  the  principal,  in 
an  action  by  the  surety  on  a  note  paid  by  the  latter,  set  off  against 
such  note  usurious  interest  which  was  previously  paid  by  him  to 
the  creditor  and  of  which  the  surety  had  no  notice  or  knowl- 
edge.*^ Again,  where  several  acceptances  are  given  by  joint 
makers  for  portions  of  the  original  obligation  which  contained 

Y.   95,    10    Am.    Rep.   438;    State    v.  Misc.   (N.  Y.)  97,  117  N.  Y.  S.  1014 

First    Nat.   Bank,  2   S.   Dak.   568,  51  (individual     banker)  ;     Caponigri     v. 

N.  W.  587,  3  S.  Dak.  52,  51  N.  W.  Altieri.   165   N.   Y.  255,  59  N.   E.  87 

780.      It    would    seem,    however,    that  (individual  banker).     Also,   Pinch  v. 

the  decisions  of  the   Supreme  Court  Willard,  108  Mich.  204,  66  N.  W.  42. 

of  the  United   States   determine   the  '^  McGee  v.  Long,  83  Ga.  156,  9  S. 

question  otherwise  and  that  they  are  E.   1107;   Harris  v.  Bressler,   119  111. 

final.  467,  10  N.  E.  188;  Morrison  v.  State 

'°Llovd  V.  First  Nat.  Bank,  5  Kans.  Bank,  3  Kans.  App.  201,  43  Pac.  441; 

App.  512,  27  Pac.  575.  Knapp   v.    Briggs.   2   Allen    (Mass.) 

"Wilkinson  V.  Wooten,  59  Ga.  584;  551. 

House  V.  Davis,  60  111.  367;  Lemmon  ^Mitchell    v.    Lvman,    77    111.    525. 

V.  Whitman,  75  Ind.  318.  39  Am.  Rep.  Compare  Sims  v.  Squires.  80  Ind.  42. 

150;  First  National  Bank  v.  Turner,  '"Holcraft  v.  Mellott,  57  Ind.  549; 

3  Kans.  App.  352.  42  Pac.  936;  Craig  Craig  v.  Butler,  9  Mich.  21. 

V.    Butler,    9    Mich.    21;    Thomas    v.  "Union    Nat.    Bank   v.   Eraser,   63 

Shoemaker,  6  Watts  &  S.   (Pa.)  179;  Miss.  231. 

Lewis   V.    Jewett,    51    Vt.    378.      See,  *=  Blakelev  v.  Adams,   113  Ky.  392, 

however,    Hessberg    v.     Matter,    64  24  Ky.  L.  263,  68  S.  W.  393. 


§    987  CONTRACTS.  292 

usiir}',  it  is  held  that  in  an  action  on  the  acceptances  so  given  there 
can  only  be  a  pro  rata  set-off  of  the  usury  which  was  paid  by  them 
jointly/^  Usury,  to  be  available  as  a  set-off,  must  attend  the 
same  contract.  So  where  a  party  indorsed  a  note  for  the  balance 
due  on  a  usurious  account  between  the  maker  and  payee,  and  he 
subsequently  took  up  such  note  and  gave  his  own  to  the  payee 
therefor,  it  was  decided  in  an  action  against  him  on  his  own  note 
that  he  could  not  deduct  the  original  usury.**  And  an  usurious 
payment  made  on  a  note  will  not  be  available  as  a  set-off  in  an 
action  upon  another  note,  though  the  parties  to  the  action  and 
to  the  notes  are  the  same.*^ 

§  987.  Who  may  recover  usurious  interest. — When  recov- 
ery is  permitted  the  debtor  who  has  paid  the  usurious  interest 
may  recover  the  same.***  Where  the  maker  of  a  note  bearing 
usurious  interest  conveys  certain  land  to  his  surety  in  considera- 
tion of  the  latter  assuming  the  obligation  of  such  note,  it  has 
been  held  that  the  maker  thereof  who  was  thereby  discharged 
may  recover  of  the  payee  the  usury  theretofore  paid  by  him.*^ 
In  case  the  promissory  note  or  other  evidence  of  indebtedness 
containing  the  usury  has  been  assigned  before  maturity  to  an 
innocent  purchaser  and  the  defense  of  usury  thereby  cut  off  under 
the  statute  and  the  maker  has  been  compelled  to  pay  the  note  to 
the  assignee  the  payor  may  recover  from  the  original  payee  the 
usurious  interest  that  the  former  has  been  compelled  to  pay." 

"Deposit    Bank    v.    Robertson,    17  equity  of  redemption  to  recover  the 

Ky.  L.  1252,  34  S.  W.  23.  difference  between  the  amount  of  the 

**  Craig  V.   Butler,  9  Mich.  21.  debt   and    the    legal    interest    thereon 

*^  Barnet   v.    National   Bank,  98  U.  and  the  amount  extorted  by  the  mort- 

S.  555,  25  L.  ed.  212;  Ewing  v.  Gris-  gagor  from  the  purchaser  of  the  right 

wold    43  Vt.  400.  to  redeem,  see  Ellis  v.  Winlock,   110 

^'Webb  V.  Wilshire,  19  Maine  406;  Ky.  676,  23  Ky.  L.  60,  62  S.  W.  495, 
Davis  V.  Hoy,  2  Aik.  (Vt.)  303.  holding  that  the  mortgagee  may  re- 
See  also,  Cable  v.  Duke,  132  Mo.  cover  the  difference. 
App.  334,  111  S.  W.  909.  Each  trans-  *' Culver  v.  Osborne,  231  111.  104. 
feree  of  a  usurious  note  to  whom  83  N.  E.  110,  121  Am.  St.  302;  Wood- 
usurious  interest  has  been  paid  may  worth  v.  Huntoon,  40  111.  131,  89  Am. 
be  required  to  refund  the  same  to  Dec.  340;  Anderson  v.  Trimble,  18 
the  maker.  Eltonhead  v.  Found,  153  Ky.  L.  507,  37  S.  W.  71;  Hanson  v. 
111.  App.  191.  See,  however,  White-  Cummings  State  Bank,  6  N.  Dak.  212, 
head  v.  Peck,  1  Ga.  140;  Hahn  v.  59  N.  W.  202.  See  also,  in  connec- 
Walker,  3  Dana  (Ky.)    183.  tion   with  this   case.    Grove  v.    Great 

"Mann    v.    Bank    of    Ellston,    104  Northern  Loan  Co.,  17  N.  Dak.  352, 

Ky.  852-,  48   S.   W.  413.     As   to  the  116  N.  W.  345,  138  Am.  St.  707.  See 

right  of   a  mortgagee  who   sells   his  also,  infra,  §  969  et  seq. 


293  USURY.  §    987 

The  assignee  may,  in  a  proper  case,  recover  usurious  interest 
exacted  from  him  by  the  creditor.""  The  federal  statute  control- 
ing  national  banks  permits  the  assignee  to  recover  twice  the 
amount  of  interest  paid.^"  The  assignee  or  receiver  of  an  insol- 
vent or  bankrupt  may  recover  usurious  interest.^^  Under  the 
statutes  of  some  jurisdictions  the  personal  representative  of  a 
deceased  cannot  recover  usurious  interest  paid  by  him."  How- 
ever, if  the  usurious  payment  was  made  after  the  debtor's  death 
it  has  been  held  that  it  may  be  recovered  by  his  personal  repre- 
sentative." The  right  to  recover  usury  is,  as  a  general  rule,  held 
personal  to  the  debtor  and  his  privies  in  relation.  Consequently, 
it  has  been  held  that  a  surety  cannot  recover  usury  paid  by  his 
principal,  nor  have  such  payment  applied  on  his  liability.'^*  Nor 
can  one  creditor  recover  usurious  interest  paid  by  his  debtor  to  a 
second  creditor.^^  One  who  pays  the  debt  of  another,  though  it 
be  infected  with  usury,  cannot  ordinarily  recover  the  usurious  in- 
terest so  paid  by  him.°" 

**  Turner    v.    Interstate    &c.    Loan  165,  40  S.  E.  138;  Garris  v.  Thomas, 

Assn.,  47  S.  Car.  397,  25  S.  E.  278.  66  S.  Car.  57,  44  S.  E.  374. 

"•  Louisville     Trust     Co.     v.     Ken-  ''  Coon  v.  Swan,  30  Vt.  6. 

tucky  Nat.   Bank,  87  Fed.   143.     See  "Roberts    v.    Coffin.    22   Tex.    Civ. 

also,  ante.  §  985.  App.   127,  53  S.  W.  597. 

"Tamplin  v.  Wentworth,  99  Mass.  ""Lee    v.     Fellowes,     10    B.    :Mon. 

63;  Chas.   S.   Rilev  &  Co.  v.  W.  T.  (Ky.)    117.     "The  right  to  raise  the 

Seers  &  Co.,  154  N.  Car.  509,  70  S.  question  of  usury  is  personal  to  the 

E.  997;  Corcoran  v.  Powers,  6  Ohio  borrower,     and,     if     he     ratifies     the 

St.  19.     See  also,  Washington-Alaska  usurious    transactions    others    cannot 

Bank  v.    Stewart,    184   Fed.   673,   108  assume   a   contrary   attitude."    Grove 

C.  C.  A.  273.    Compare  with  IMurphv  v.   Great   Northern  Loan   Co.,   17  N. 

V.   Citizens'   Bank,   82   Ark.    131.    100  Dak.   352,   116   N.   W.   345,    138   Am. 

S.  W.  894,  11  L.  R.  A.  (N.  S.)  616n,  St.  707.     See.  however.  In  re  Miller, 

which  holds  that  the  receiver  cannot  118  Fed.  360;  McKinncy  v.  Memphis 

recover  voluntary  payments  of  prin-  Overton  Hotel  Co.,  12  Heisk.  (Tenn.) 

cipal  and  lawful  interest  made  on  a  104. 

usurious  contract  before  the  appoint-  '"'  First  Nat.  Bank  v.  Davis,  135  Ga. 

ment   of  the  receiver.  69,7,   70   S.   E.  246,  36  L.  R.  A.    (N. 

"See  Butler  v.  Butler,  62  S.  Car.  S.)   134. 


CHAPTER  XXVI. 


GAMING  AND  WAGERING. 


990. 
991. 
992. 
993. 
994. 

995. 
996. 

997. 


998. 

999. 

1000. 

1001. 

1002. 
1003. 

1004. 

1005. 

1006. 
1007. 
1008. 

1009. 

1010. 

1011. 

1012. 


Generally.  §  1013. 

Change  of  attitude  toward.  1014. 

Early  statutes  against. 

Modern  statutes  against. 

Gambling    contracts    generally 

invalid   thereunder.  1015. 

Futures. 

Must  intend  and  agree  to  de- 
liver goods.  1016. 

Kentucky  statute  —  Contracts 
for  future  delivery — Various 
forms  of.  1017. 

Intention  not  to  deliver  must 

be  mutual.  1018. 

Rule  as  to  mutual  intention 
further  considered. 

When  intention  of   one  party        1019. 
may  defeat  contract. 

Subsequent  agreement  as  to 
delivery.  1020. 

Futures — Margin  transactions. 

Test    by    which    to    determine        1021. 
validity  of. 

Presumption     as     to     margin        1022. 
transactions — Illustrations.  1023. 

Legislative  enactment  con- 
cerning. 1024. 

Futures — Options.  1025. 

Rule   further  illustrated. 

Puts    and    calls,    assignments,        1026. 
resale,   ringing  out. 

Other  forms  of  wagering  con-        1027. 
tracts — Election   debts. 

Other    forms    of    wagering—       1028. 
Horse  racing. 

Gaming  as  defined  by  statute        1029, 
— Generally. 

Games  on  behalf  of  charity. 


Bohemian  oats  speculation. 

Rights  of  parties — Validity  of 
bills,  notes  or  other  obliga- 
tions given  in  payment  of 
gambling  debts. 

As  between  the  immediate 
parties  and  those  with  no- 
tice. 

Special  statutory  enactments 
concerning  recovery  there- 
on. 

Note  given  in  an  option  or 
"future"  deal. 

Presumptions  concerning  and 
validity  of  note  given  for 
gambling  debt. 

Recovery  of  money  lost  at 
gaming,  wagering  or  deal- 
ing in  futures. 

Illustration  of  rule  concern- 
ing recovery. 

Rights  and  liabilities  of  third 
persons. 

Prize  contests. 

Further  examples  of  valid  and 
invalid  prize  contests. 

Collateral  agreements. 

Collateral  contracts  —  Lender 
must  be  a  confederate. 

Examples  of  invalid  collateral 
contracts. 

Examples  of  valid  collateral 
contracts. 

Securities  given  for  gambling 
debt — Securities. 

New  contract — Ratification — 
Executed  margin  transac- 
tion. 


§  990.  Generally. — After  the  mutual  promise  had  become 
established  as  a  contract,  vaHd  and  binding  on  the  parties,  the 
wager  was  recognized  as  a  valid  form  of  contract.  It  was  appar- 
ent, no  other  element  entering  in,  that  if  mutual  promises  were 

294 


295  GAMING    AXD    WAGERING.  §    99 1 

each  a  sufficient  consideration  for  the  other,  wager  contracts 
came  within  the  rule.  Consequently  a  promise  to  do  and  perform 
a  certain  act  upon  tlie  determination  or  ascertainment  of  an 
uncertain  event  was  upheld/  Lord  Mansfield  held  that  an  action 
might  be  maintained  to  recover  money  won  on  a  wager  as  to  the 
result  of  a  law  suit.-  There  was  also  a  similar  holding  where 
two  rather  dissolute  characters  placed  a  wager  on  the  lives  of 
their  respective  fathers.  The  one  who  first  lost  his  father  was  to 
pay  a  certain  amount  to  the  other.^ 

§  991.  Change  of  attitude  tovi^ard. — Suits  on  wagering  con- 
tracts soon  became  a  source  of  vexation  and  annoyance.  This 
reached  a  culmination  in  a  suit  on  a  wager  as  to  the  sex  of  a  cer- 
tain person.  The  judges  ultimately  threw  the  case  out  of  court.'' 
From  that  time  forward  wagering  and  gambling  contracts  have 
carried  on  a  losing  fight  to  hold  their  position  against  the  policy 
of  the  law.  The  early  judges  seem  to  have  considered  the  valid- 
ity of  such  contracts  too  well  established  to  deny  them  recogni- 
tion of  any  sort.  They  refused  recovery,  however,  on  grounds 
often  ingenious  but  sometimes  ridiculous.^  Thus  a  wager  placed 
on  the  future  amount  of  hop  duty  was  declared  void  because  it 
might  expose  to  the  world  the  amount  of  the  public  revenue,*'  and 
a  bet  between  two  carriage  men  that  a  designated  person  would 
go  to  the  assembly  rooms  in  the  carriage  of  one  rather  than  the 
other  was  declared  void  on  the  ground  that  it  exposed  one  of  the 
public  to  the  inconvenience  of  being  importuned  by  rival  coach- 

'  See,  generally,  Walker  v.  Walker,  Moore  P.   C.  300,  4  Moo.  Ind.  App. 
Holt.   K.   B.  328,  5   Mod.,   13,  Comb.  339,   12  Jur.  315:     "I   regret  to  say, 
303;  Hard's  Case,  1  Salk.  23;  Bovey  that   we   are   bound   to    consider   the 
V.  Castleman,  1  L.  D.  Ryam  69 ;  Smith  common  law  of  England  to  be,  that 
V.  Airey,  2  L.   D.   Ryam   1034,   Holt,  an   action    may   be    maintained   on    a 
K.   B.  329.     "Undoubtedly  under  the  wager,  although    the  parties   had   no 
common  law  all  wagers  or  bets  were  previous  interest   in   the  question  on 
not  illegal."     Thomson  v.  Hayes,  111  which  it  is  laid,  if  it  be  not  against 
N.  Y.  S.  495.  the  interests  or  feelings  of  third  per- 
^  Jones  V.  Randall.  1  Cowp.  Z7.  sons,   and   does  not  lead  to  indecent 
*  March  v.  Pigot,  5  Burr.  2802.  The  evidence,  and  is  not  contrary  to  pub- 
father    of    one    of    the    parties    was  lie  policy.     I  look  with  concern,  and 
actually  dead  at  the  time  the  wager  almost  with  shame  on  the  subterfuges 
was    made,    although    this    fact    was  and    contrivances    and    evasions,    to 
unknown  to  either  party.  which    judges    in    England    long    re- 
*Da   Costa  v.   Jones.  2  Cowp.   729.  sorted  in  struggling  against  this  rule.'' 
*It  was  said  by  Lord  Campbell  in  '  Ahterfold  v.   Beard,  2  T.   R.  610. 
Thackoorseydass     v.     Dhondmull,     6 


§    99-  CONTRACTS.  296 

men."  A  bet  as  to  the  duration  of  Napoleon's  life  was  declared 
void  for  the  reason  that  it  tended  to  weaken  the  patriotism  of  one 
of  the  parties  for  England  and  encouraged  the  other  to  assassinate 
a  foreign  ruler  and  in  this  manner  would  provoke  retaliation  upon 
the  English  sovereign.®  In  this  country  at  least  legislative  action 
has  intervened  in  almost  every  state  and  thus  assisted  the  courts 
to  establish  the  principle  that  gambling  and  wagering  contracts 
are  demoralizing  and  against  public  policy.^ 

§  992.  Early  statutes  against. — One  of  the  early  English 
statutes  was  passed  to  accomplish  what  seems  to  us  a  curious 
purpose.  It  was  intended  to  encourage  warlike  pastimes  and  to 
discourage  or  prohibit  those  games  which  diverted  the  people 
from  martial  exercises.^"  Other  early  English  statutes,  however, 
recognized  gambling  as  injurious  per  se  and  condemned  it  as 
such  when  indulged  in  by  certain  classes  of  people  or  carried  on 
fraudulently  or  to  excess,  or  when  engaged  in  in  the  form  of  cer- 
tain games.  ^^  Gambling  among  the  poor  or  among  all  below  the 
rank  of  gentlemen  and  to  excess  by  the  rich  was  prohibited. ^^ 
These  statutes  did  not,  as  a  rule,  attempt  to  prohibit  the  king  from 
indulging  in  sports  forbidden  his  subjects.^^ 

^  Eltham  v.  Kingsman,  1  B.  &  Aid.  taining  artillery  and  the  debarring  of 

683.  unlawful  games." 

'  Gilbert   v.    Sykes,    16   East   150.  "  See  Act  16,  Car.  II,  C  7.   Of  this 

'As  popularly  understood,  a  wager  statute   it  was   said:    "It  both   in   its 

relates    to    contracts    of    a    gambling  title  and  preamble  appears  to  be  di- 

or     sporting     character.       However,  rected  solely  against   fraudulent  and 

aleatory    agreements    in    their    broad  excessive,    and   to   be    in   no    respect 

sense     include     insurance     contracts  pointed  at  moderate  play  when  there 

since    they    require    the    pavment    of  is  no  fraud."  Applegarth  v.  Colley,  10 

money  upon  the  happening  of  an  un-  M.  &  W.  723.  See  Jenks  v.  Turpin,  13 

certain    event,    but,    notwithstanding  Q.    B.    D.    504,    519.      See   also,    Acts 

this    fact,   they  are  held   valid   when  9  and  ch.   14.     This  act  rendered  no 

the  insurer  has  an  insurable  interest  game    unlawful    except    excessive    or 

in  the  life  or  property  insured.     The  fraudulent  gaming,  which  was  made 

essential  thing  is  that  the  policy  shall  an  indictable  offense.     Jenks  v.  Tur- 

be  obtained  in  good  faith  and  not  for  pin,   13  Q.  B.  D.  504,  519.     See  also, 

the  purpose  of  speculating  upon  the  statutes,    12    George    II,    ch.    28,    13 

hazard  of  a  life  in  which  the  insurer  George  II,  ch.   19,   18  George  II,  ch. 

has  no  interest.     McRae  v.  Warmack,  34,  which  forbade  certain  games  un- 

98  Ark.  52,   135  S.  W.  807,  33  L.  R.  der  penalty  and  also  prohibited  bet- 

A.    (N.    S.)    949;    Rupp   v.    Western  ting    more    than    ten    pounds    at    any 

Life  Indemnity  Co.,  138  Ky.  18,  127  S.  one    time    or    twenty    pounds    withm 

W.   490,   29   L.    R.   A.    (N.    S.)    675;  twenty-four  hours.     Jenks  v.  Turpm, 

Connecticut    Mut.    Life    Ins.    Co.    v.  13  Q.  B.   Div.   504,  519. 

Schaefer,  94  U.  S.  457,  24  L.  ed.  251.  ''See  Act  33,  Henry  VIII,  ch.  9,  4 

"See   Act   33,    Henry   the    Eighth,  Bl.   Com.   171. 

Ch.  9.  entitled  "The  bill  for  the  main-  "16  Car.  II,  ch.  7;  9  Anne,  ch.  14, 


297  GAMIN'G    AND    WAGERING.  §    993 

§  993.  Modern  statutes  against. — Modern  statutes  both  in 
England  and  the  United  Slates  recognize  gambhng  as  an  evil 
to  be  suppressed  in  the  interests  of  the  public  welfare  and  the 
state  at  large.  These  modern  statutes  either  make  merely  a 
direct  attack  on  gambling  or  also  prohibit  contracts  collateral  to 
gambling  agreements,  or  also  render  unen forcible  securities  given 
for  a  gambling  consideration.  These  various  statutory  enact- 
ments cannot  be  set  out,  and  will  not  be  discussed  except  incident- 
ally in  connection  with  decided  cases.  In  so  far  as  the  various 
statutes  against  gambling  declare  invalid  gambling  and  wagering 
contracts  they  are  remedial  and  not  penal  and  are  to  be  given 
a  liberal  construction." 

§  994.  Gambling  contracts  generally  invalid  thereunder. — 
Practically  all  gambling  and  wagering  contracts  are  rendered 
invalid  under  the  modern  statutes.  In  agreements  of  this  char- 
acter, as  in  the  case  of  other  contracts,  the  law  looks  to  the  sub- 
stance and  not  the  form.  It  makes  no  difference  that  a  bet  or 
wager  is  made  to  assume  the  form  of  a  contract.  Gambling  is 
gambling  even  if  it  is  carried  on  under  the  guise  of  legitimate 
trade.^°     A  gambling  contract  declared  illegal  by  law  is  invalid, 

§  9.    See  also,  Jenks  v.  Turpin,  13  Q.  Turner    v.    Warren,    2    Stra.    1079; 

B.    Div.    504,    519;    Hedgeborrow    v.  Bones  v.  Booth,  2  W.  Bl.  1226.  When 

Rosenden,    1    Vent.    253 ;    Dickson   v.  penal    they    are    given    a    strict    con- 

Pawlet,  1  Salk.  345 ;  Bentinck  v.  Con-  struction.     In  re  Dorr,  186  Fed.  276. 

nop,  5  Q.  B.  693,  48  E.  C.  L.  693.  108  C.   C   A.  322;   Taylor  v.   Sebas- 

"Larned  v.   Tiernan,   110   111.   173;  tian  (Mo.  App.),  138  S.  W.  549. 

Ellis     V.      Beale.      18      Maine     ZZ7,  "  Marden  v.  Phillips,  103  Fed.  196; 

36    Am.    Dec.    726;    Grace    v.    Mc-  Love  v.  Harvey,  114  Mass.  80;  Bur- 

Elroy,       1       Allen       (Mass.)       563;  ney  v.  Blanks   (Tex.  Civ.  App.),  136 

Wall    V,    Metropolitan    Stock    Exch.,  S.  W.  806.     "It  makes  no  diflference 

168  Mass.  282,  46  N.  E.  1062 ;  Shea  v.  that  a  bet  or  wager  is  made  to  assume 

Metropolitan  Stock  Exch.,  168  Mass.  the  form  of  a  contract.    Gambling  is 

284,    note,    47    N.    E.    1113;    Meech  none  the  less  such  because  it  is  car- 

V.   Stoner,    19   N.   Y.  26;    Arrieta  v.  ried   on   in   the   form  or  guise  of   a 

Morrissey,    1    Abb.    Pr.    (N.   S.)    (N.  legitimate    trade."      Wade    v.    United 

Y.)   439;   McDougall   v.   Walling,  48  States  (App.  D.  C),  20  L.  R.  A.  (N. 

Barb.  (N.  Y.)  364;  Collins  v.  Ragrew,  S.)   347,  quoting  from  Irwin  v.  Wil- 

15  Johns.   (N.  Y.)    5;  Zeltner  v.   Ir-  liar,   110  U.   S.  499.  28  L.  ed.  225.  4 

win.  21   Misc.   (N.  Y.)    13,  46  N.  Y.  Sup.  Ct.  160.     It  is  the  law  in  force 

S.   852,   affg.  20   IMisc.    (N.   Y.)    398,  at   the   time   the   contract   was   made 

45  N.  Y.  S.  1036;  O'Keefe  v.  Weber,  which    determines    its    validity.      A 

14  Ore.  55.     To  the  same  effect  see  subsequent  statute  will  not  affect  the 

the  following  English  cases:    Hedge-  substantive  rights  of  the  parties;  but 
borrow    v.    Rosenden,    I   Vent.   253; 


995 


CONTRACTS. 


298 


no  matter  what  form  it  may  assume.  The  ingenuity  of  the  de- 
vice does  not  make  it  legal.^°  The  only  instances  which  might  be 
termed  exceptions  are  those  in  which  the  state  courts  hold  gam- 
bling contracts  valid  at  common  law  and  the  legislature  has  de- 
clared such  contracts  invalid,  not  by  a  general  statute,  but  by  an 
enumeration  of  certain  kinds  of  gambling  contracts.  Those 
kinds  of  gambling  contracts  which  are  omitted  from  the  enumer- 
ation either  deliberately  or  accidentally  are  held  valid." 

§  995.  Futures. — According  to  the  generally  accepted  doc- 
trine, a  contract  for  the  sale  of  goods  or  property  to  be  delivered 
at  a  future  day  is  valid  when  the  parties  really  intend  and  agree 
that  the  goods  are  to  be  delivered  by  the  seller,  and  the  price 
thereupon  paid  by  the  buyer/^  even  though  the  property  which 
is  the  subject  of  the  executory  contract  is  not  then  in  existence." 
The  rule  is  the  same  where  the  vendor  or  vendee  does  not  have 
the  property  on  hand  at  the  time  the  contract  is  made,  but  must 
buy  it  to  perform  the  contract.^"     Nor  does  the  mere  fact  that  the 


generally  statutory  alterations  in  the 
rules  and  methods  of  procedure,  in- 
cluding rules  of  evidence,  are  retro- 
active. Birmingham  Trust  &c.  Sav. 
Co.  V.  Currey   (Ala),  57  So.  962. 

"Creston  First  Nat.  Bank  v.  Car- 
roll, 80  Iowa  11,  35  N.  W.  304,  8  L. 
R.  A.  275;  Richter  v.  Poe,  109  Md. 
20,  71  Atl.  420,  22  L.  R.  A.  (N.  S.) 
174n;  Sharp  v.  Stalker,  63  N.  J.  Eq. 
596,  52  Atl.  1120;  G.  G.  Edgerton  & 
Son  V.  J.  T.  Edgerton  &  Bro.,  153 
N.  Car.  167,  69  S.  E.  53;  Durr  v. 
Barclay,  8  Pa.  County  Court  285.  A 
contract  to  pay  for  threshing  a  field 
of  wheat  in  consideration  of  receiving 
the  entire  yield  less  a  fixed  number  of 
bushels  has  been  held  void  as  a 
gambling  contract.  Jacobus  v.  Haz- 
lett,  78  111.  App.  239. 

"  See  Kinney  v.  Hvnds,  7  Wyo.  22, 
49  Pac.  403,  52  Pac.  1081,  which  holds 
that  money  lost  in  a  licensed  faro 
game  cannot  be  recovered. 

"Goodspeed  v.  Smith,  162  Mich. 
641,  127  N.  W.  813;  Crawford  v. 
Spencer,  92  Mo.  498,  4  S.  W.  713,  1 
Am.  St.  745.  See  Fearon  v.  Little, 
227  Pa.  348,  76  Atl.  72,  holding  that 
stock  transactions  are  not  to  be 
judged  wagering  merely  because  the 


losing  party  indulged  beyond  the 
point  of  prudence  as  measured  by 
his  financial  ability.  To  same  effect, 
Pelouse  V.  Slaughter,  241  111.  215, 
89  N.  E.  259;  Western  Union  Tel. 
Co.  V.  Bradford,  52  Tex.  Civ.  App. 
392,  114  S.  W.  686.  See  also,  cases 
cited,  post,  in  this  section. 

"Forsyth  Mfg.  Co.  v.  Castlen,  112 
Ga.  199,  n  S.  E.  485,  81  Am.  St.  28. 
Products  of  the  soil  yet  to  be  grown 
may  be  the  subject  of  a  valid  agree- 
ment to  sell.  Gann  v.  W.  R.  Long  & 
Sons  (Ala.),  56  So.  606.  See  also, 
note  on  sales  of  property  not  then  in 
existence,  in  81  Am.  St.  42. 

'"Hill  V.  Levy,  98  Fed.  94;  Farm- 
ers' Oil  &c.  Co.  V.  Rosenthal  (Ga. 
App.),  IZ  S.  E.  428;  Forsyth  Mfg. 
Co.  V.  Castlen,  112  Ga.  199,  Zl  S.  E. 
485,  81  Am.  St.  28 ;  Gardner  v.  Meek- 
er, 169  111.  40,  48  N.  E.  307,  affg.  69 
111.  App.  422;  Richter  v.  Poe,  109 
Md.  20,  71  Atl.  420,  22  L.  R.  A.  (N. 
S.)  174n;Tavlor  v.  Seba.stian  158  Mo. 
App.  147,  138  S.  W.  549;  Rogers  v. 
Marriott,  59  Nebr.  759,  82  N.  W.  21 ; 
Kahn  v.  Walton,  46  Ohio  St.  195,  20 
N.  E.  203;  Potts  v.  Dunlap,  110  Pa. 
St.  177,  20  Atl.  413 ;  Hallet  v.  Agger- 
gaard,  21  S.  Dak.  554,  114  N.  W.  696, 


299 


GAMING    AXD    WAGERIXG. 


§    996 


vendee  purchases  the  property  merely  as  a  speculation  render  the 
contract  of  purchase  invaHd." 

§  996.  Must  intend  and  agree  to  deliver  goods. — But  such 
contract  is  only  valid  when  the  parties  really  intend  and  agree 
that  the  goods  are  to  be  delivered  by  the  seller,  and  the  price  to 
be  paid  by  the  buyer,  and  if  under  guise  of  such  a  contract  the 
real  intent  be  merely  to  speculate  in  the  rise  or  fall  of  prices,  and 
the  goods  are  not  to  be  delivered,  but  instead  one  party  is  merely 
to  pay  the  other  the  difference  between  the  contract  price  and  the 
market  price  of  the  goods  at  the  date  fixed  for  executing  the  con- 
tract, then  the  whole  transaction  constitutes  nothing  more  than 
a  wager,  and  is  null  and  void.'^ 


14  L.  R.  A.  (N.  S.)  1251 ;  Clews  v. 
Jamieson,  182  U.  S.  461,  45  L.  ed. 
1183,  21  Sup.  Ct.  845,  revg.  96  Fed. 
648,  38  C.  C.  A.  473;  Bibb  v.  Allen, 
149  U.  S.  481,  2>7  L.  ed.  819,  13  Sup. 
Ct.  950. 

^Laughton  v.  Griffin  (1895),  A.  C. 
104;  Forget  v.  Ostigny  (1895),  A. 
C.  318:  Raymond  v.  Parker,  84 
Conn.  694.  81  Atl.  1030;  Gregory  v. 
Wendell.  40  Mich.  432;  Goodhart  v. 
Rastert.  7  Ohio  N.  P.  (O.  S.)  534; 
Stewart  v.  Parnell,  147  Pa.  St.  523.  23 
Atl.  838;  Burr  v.  Davis  (Tex.  Civ. 
App.)  27  S.  W.  589. 

"  Universal  Stock  Exchange  v. 
Strachan  (1896)  A.  C.  166.  In  re 
Gieve  (1899),  1  Q.  B.  794;  Peet  v. 
Hatcher,  112  Ala.  514.  21  So.  711.  57 
Am.  St.  45 ;  Birmingham  Trust  Co. 
V.  Curry,  160  Ala.  370,  49  So.  319, 
135  Am.  St.  102;  Metropolitan  Nat. 
Bank  v.  Jansen,  108  Fed.  572,  47  C. 
C.  A.  497:  Waldron  v.  Johnson.  86 
Fed.  757;  Morris  v.  Norton,  75  Fed. 
912.  24  C.  C.  A.  553;  Chicago  v.  L. 
A.  Kinsey  Co.,  125  Fed.  72;  Ware  v. 
Pearsons.  173  Fed.  878.  98  C.  C.  A. 
324;  Benton  v.  Singleton,  114  Ga. 
548.  40  S.  E.  811.  58  L.  R.  A.  181; 
Forsyth  Mfg.  Co.  v.  Castlen,  112  Ga. 
199.  Z7  S.  E.  485.  81  Am.  St.  28: 
Stewart  v.  Postal  Tel.  &c.  Co..  131 
Ga.  31.  61  S.  E.  1045.  18  L.  R.  A.  (N. 
S.)  692,  127  Am.  St.  212;  First  Nat. 
Bank  v.  Miller.  235  111.  135,  85  X.  E. 
312;  Central  Stock  &c.  Exch.  v.  Chi- 
cago, 196  111.  396,  63  N.  E.  740,  aflfg. 


98  111.  App.  212;  Jamieson  v.  Wal- 
lace, 167  111.  388.  47  N.  E.  762,  59  Am. 
St.  302.  affg.  60  111.  App.  618;  Miles  v. 
Andrews.  153  111.  262.  38  X.  E.  644, 
affg.  40  111.  App.  155;  Illinois  Trust 
&c.  Bank  v.  La  Touche,  101  111.  App. 
341;  Watte  v.  Costello,  40  111.  App. 
307;  Wheeler  v.  McDermid,  Z6  111. 
App.  179;  Pratt  v.  Ashmore,  224  111. 
587,  79  N.  E.  952 ;  Pearce  v.  Dill,  149 
Ind.  136,  48  X.  E.  788;  Sondheim  v. 
Gilbert,  117  Ind.  71,  18  X.  E.  687,  5 
L.  R.  A.  432,  10  Am.  St.  23n;  Hoff- 
man v.  Farmer's  &c.  Shipping  Assn., 
78  Kans.  561,  97  Pac.  440 ;  Boyd  Com- 
mission Co.  v.  Coates,  24  Kv.  L.  730, 
69  S.  W.  1090;  Beadles  v.  McElrath, 
85  Kv.  230,  8  Ky.  L.  848.  3  S.  W.  152; 
E.  O.  Standard  Milling  Co.  v. 
Flower.  46  La.  Ann.  315,  15  So.  16; 
Morris  v.  Western  Union  Tel.  Co.,  94 
Maine  423,  47  Atl.  926;  Lancaster  v. 
Ames,  103  Maine  87.  68  Atl.  533,  17 
L.  R.  A.  (X.  S.)  229n.  125  Am.  St. 
286;  Billingslea  v.  Smith,  77  Md.  504, 
26  Ad.  1077;  Wilson  v.  Head,  184 
Mass.  515.  69  N.  E.  317;  Harvev  v. 
Merrill,  150  Mass.  1,  22  X.  E.  49,  5  L. 
R.  A.  200.  15  Am.  St.  159;  Donavan 
V.  Daiber,  124  Mich.  49.  82  X.  W.  848;  • 
McCarthy  v.  Weare  Commission  Co., 
87  Minn.  11,  91  X.  W.  ZZ;  Mohr  v. 
Miesen.  47  Minn.  228.  49  N.  W.  862; 
Campbell  v.  New  Orleans  X^at.  Bank, 
74  Miss.  526,  21  So.  400,  23  So.  25; 
Connor  v.  Black.  119  Mo.  126,  24  S. 
W.  184;  Crawford  v.  Spencer,  92 
Mo.  498,  4  S.  W.  713,  1  Am.  St.  745; 


§  997 


CONTRACTS. 


300 


§  997.  Kentucky  statute — Contracts  for  future  delivery — 
Various  forms  of. — Under  the  Kentucky  statutes  a  place 
where  futures  are  continually  dealt  in  is  a  disorderly  house.^^ 
Contracts  for  future  delivery  may  take  a  variety  of  forms  such 
as  options,  puts,  calls  and  the  like.  The  question  as  to  whether 
the  agreement  is  illegal  on  account  of  being  a  gaming  or  wagering 
contract  often  depends  on  the  circumstances  of  each  case."*     Fu- 


Scott  V.  Brown,  54  Mo.  App.  606; 
Hingston  v.  Montgomery,  121  Mo. 
App.  451,  97  S.  W.  202;  Merrill  v. 
Garver,  4  Nebr.  (Unof.)  830,  96  N. 
W.  619;  Ives  v.  Boyce,  85  Nebr.  324, 
123  N.  W.  318,  25  L.  R.  A.  (N.  S.) 
157n;  Mendel  v.  Boyd,  3  Nebr. 
(Unof.)  473,  91  N.  W.  860;  Rogers 
V.  Marriott,  59  Nebr.  759,  82  N. 
W.  21 ;  Sprague  v.  Warren,  26  Nebr. 
326,  41  N.  W.  1113,  3  L.  R.  A.  679; 
Wheeler  v.  Metropolitan  Stock  Ex- 
change, 12  N.  H.  315,  56  Atl.  754; 
Sharp  V.  Stalker,  63  N.  J.  Eq.  596, 
52  Atl.  112Q;  Minzesheimer  v.  Doo- 
little,  60  N.  J.  Eq.  394,  45  Atl.  611; 
Pratt  V.  Boodv,  55  N.  J.  Eq.  175,  35 
Atl.  1113;  Weld  v.  Postal  Tel.  &c. 
Co.,  199  N.  Y.  88,  92  N.  E.  415,  revg. 
132  App.  Div.  (N.  Y.)  924,  116  N. 
Y.  S.  1150;  Cantwell  v.  Boykin,  127 
N.  Car.  64,  2>1  S.  E.  72;  Edgerton  v. 
Edgerton,  153  N.  Car.  167,  69  S.  E. 
53;  Dows  V.  Glaspel,  4  N.  Dak.  251, 
60  N.  W.  60 ;  Lester  v.  Buel,  49  Ohio 
St.  240,  30  N.  E.  821,  34  Am.  St.  556; 
Kahn  v.  Walton,  46  Ohio  St.  195,  20 
N.  E.  203 ;  In  re  Taylor's  Estate,  192 
Pa.  St.  304,  43  Atl.  973,  IZ  Am.  St. 
812;  Wagner  v.  Hildebrand,  187  Pa. 
St.  136,  41  Atl.  34 ;  Dauler  v.  Hartley, 
178  Pa.  St.  23,  35  Atl.  857;  Hop- 
kins V.  O'Kane,  169  Pa.  St.  478,  Z2  Atl. 
421 ;  Gist  V.  Western  Union  Tel.  Co., 
45  S.  Car.  344,  23  S.  E.  143,  55  Am. 
St.  IdZ;  Waite  v.  Frank,  14  S.  Dak. 
626,  86  N.  W.  645 ;  Allen  v.  Dunham, 
92  Tenn.  257,  21  S.  W.  898;  Mc- 
Grew  V.  City  Produce  Exch.,  85 
Tenn.  572,  4  S.  W.  38,  4  Am.  St.  771 ; 
iNIechanic's  Sav.  &c.  Co.  v.  Duncan 
(Tenn.),  36  S.  W.  887;  Pearce  v. 
Rice,  142  U.  S.  28,  35  L.  ed.  925,  12 
Sup.  Ct.  130;  Irwin  v.  Williar,  110  U. 
S.  499,  28  L.  ed.  225,  4  Sup.  Ct.  160 ; 
Bartlett  v.  Collins,  109  Wis.  477,  85 
N.  W.  703,  83  Am.  St.  928;  Atwater 
V.  Manville,  106  Wis.  64,  81  N.  W. 


985;  Carson  v.  Milwaukee  Produce 
Co.,  133  Wis.  85,  113  N.  W.  393.  The 
character  of  the  transaction  is  de- 
termined by  its  substance  and  not 
its  form.  Fiske  v.  Doucette,  206 
Mass.  275,  92  N.  E.  455.  "The  words 
'dealing  in  options,  futures,  or  mar- 
gins' are  well  understood  to  mean  a 
mere  speculative  contract,  in  which 
the  parties  speculate  in  the  rise  or 
fall  of  prices,  and  imply  a  con- 
tract in  relation  to  the  price  of  the 
article,  and  not  the  article  itself." 
Plank  V.  Jackson,  128  Ind.  424,  26  N. 
E.  568,  27  N.  E.  1117.  See  also,  14 
Am.  &  Eng.  Encyc.  of  Law  609,  note 
4.  for  numerous  cases  declaring  such 
deals  invalid. 

^*  Kneffer  v.  Commonwealth,  94  Ky. 
359,  22  S.  W.  446;  Arenz  v.  Com- 
monwealth, 31  Ky.  L.  321,  102  S.  W. 
238. 

"*  See  Birmingham  Trust  &  Sav- 
ings Co.  V.  Curry,  160  Ala.  370,  49 
So.  319,  135  Am.  St.  102;  Taylor  v. 
Sebastian,  158  Mo.  App.  147,  138  S. 
W.  549;  Zeller  v.  Leiter,  189  N. 
Y.  361,  82  N.  E.  158.  Even  delivery 
of  the  thing  sold  does  not  necessar- 
ily render  the  entire  contract  valid. 
Thus,  where  the  defendant  sold  and 
delivered  to  the  plaintifif  cotton  at 
the  market  price  of  cotton  at  the  time 
and  place  of  the  sale,  and  as  a  part 
of  the  contract  of  sale  the  parties 
agreed  that,  if  the  same  grade  of  cot- 
ton should  advance  in  price/  within  a 
certain  time,  the  defendant  should 
have  the  right,  upon  demand,  to  col- 
lect from  the  plaintiff  the  difference 
between  the  price  of  such  cotton  at 
the  time  the  demand  was  made  and 
the  price  which  the  plaintiff  had 
paid  defendants  for  it.  On  the  other 
hand,  if  the  market  went  down,  plain- 
itiff  was  given  the  right  to  demand 
the  difference.  This  optional  feature 
was    held    uncnforcible.      Operations 


301 


GAMING   AND    WAGERING. 


§   998 


tures,  as  above  defined,  in  cotton/ 
tions^^  have  been  held  invalid.-^ 


grain,*'*  and  stock  transac- 


§  998.  Intention  not  to  deliver  must  be  mutual. — It  must 
be  borne  in  mind,  however,  that,  as  a  general  rule,  the  intention  to 
make  no  actual  delivery  but  merely  to  receive  or  pay  the  differ- 
ence between  the  contract  and  the  market  price  must  be  mutual. 
Both  parties  must  so  understand  the  transaction.  A  transaction 
which  on  its  face  is  legitimate  will  not  usually  be  held  void  as  a 
wagering  contract  upon  a  showing  that  only  one  party  to  the 
agreement  understood  and  meant  it  to  be  such.  The  rights  of 
one  party  will  not  be  prejudiced  by  the  intentions  of  the  other.^" 


on  the  rise  and  fall  of  commodities 
constitute  gambling  contracts  on 
which  an  action  at  law  cannot  be 
maintained  where  they  could  not 
have  been  followed  by  delivery  and 
could  not  because  of  the  position  of 
one  of  the  parties  entering  into  them 
ever  end  in  any  real  delivery,  but 
were  only  intended  for  a  settlement 
of  differences.  Morris  v.  Brault,  23 
Rap.  Jud.  Que.  (C.  S.)  190.  See  also, 
cases  cited  ante  this  section. 

^  Birmingham  Trust  &  Sav.  Co.  v. 
Curry.  CO  Ala.  370,  49  So.  319,  135 
Am.  St.  102;  Parker  v.  Moore  111 
Fed.  470 ;  James  v.  Haven  &  Clement, 
185  Fed.  692,  107  C.  C.  A.  640;  Min- 
zesheimer  v.  Doolittle,  60  N.  J.  Eq. 
394,  45  Atl.  611;  Riordan  v.  Dotv,  50 
S.  Car.  537.  27  S.  E.  939;  Embrev  v. 
Jemison.  131  U.  S.  336,  33  L.  ed.  'l72, 
9  Sup.  Ct.  776. 

*  Metropolitan  Nat.  Bank  v.  Jan- 
son,  108  Fed.  572,  47  C  C.  A.  497; 
New  York  &c.  Exchange  v.  Mellen,  27 
111.  App.  556.  Where  a  pretended  sale 
of  oats,  to  be  delivered  in  the  future, 
is  intended  by  all  concerned  to  be 
closed  by  settling  the  difference  in 
the  price,  such  a  transaction  is  a  mere 
wager  and  the  courts  will  not  enforce 
it.  Scott  V.  Brown,  54  Mo.  App.  606. 
No  recovery  can  be  had  for  money 
advanced  and  services  rendered  in 
purchasing  wheat  for  one  who  stated 
to  plaintiff's  agent,  at  the  time  of  mak- 
ing the  contract,  that  he  was  merely 
buving  options.  Dwight  v.  Badglcv, 
75  Hun  (N.  Y.)  174,  58  N.  Y.  St.  585, 
27  N.  Y.  S.  107. 


"Ubben  v.  Binnian,  182  111.  508, 
55  N.  E.  552,  revg.  78  111.  App.  330: 
Lancaster  v.  Ames,  103  Maine  87,  17 
L.  R.  A.  (N.  S.)  229n,  68  Atl.  533, 
125  Am.  St.  286;  Morris  v.  Western 
Union  Tel.  Co.,  94  Maine  423.  47 
Atl.  926;  Marks  v.  Metropolitan 
Stock  Exchange,  181  Mass.  251.  63 
N.  E.  410;  McCarthv  v.  Weare  Com- 
mission Co.,  87  Alinn.  11,  91  X.  W. 
33;  Flagg  v.  Gilpin,  17  R.  I.  10,  19 
Atl.  1084. 

"*  See  also.  Edwards  v.  Hoeffinghoff, 
37  Fed.  635 ;  Sampson  v.  Camper- 
down  Cotton  Mills,  82  Fed.  833.  It 
is  otherwise,  however,  where  the  pur- 
chases were  made  in  good  faith  by 
an  agent,  his  principal  having  con- 
cealed the  fact  that  he  was  merely 
speculating  on  the  rise  and  fall  of 
the  market.  Parker  v.  Moore,  115 
Fed.  799,  53  C.  C.  A.  369. 

^Johnston  v.  IMiller,  67  Ark.  172, 
53  S.  W.  1052;  Ponder  v.  Cotton 
Co.,  100  Fed.  373,  40  C.  C.  A.  416; 
Hill  v.  Lew,  98  Fed.  94;  Edwards 
V.  Hoeffinghoff,  38  Fed.  635;  In  re 
A.  B.  Baxter  &  Co.,  152  Fed.  137, 
81  C.  C.  A.  355:  Farmers  Oil  &c.  Co. 
V.  E.  W.  Rosenthal  &  Co.  (Ga.  App.), 
73  S.  E.  428;  Scanlon  v.  Warren, 
169  111.  142,  48  N.  E.  410,  affg.  68 
111.  App.  213;  Jamieson  v.  Wallace, 
167  111.  388.  47  \.  E.  762,  59  Am.  St. 
302,  affg.  60  111.  App.  618;  Warren  v. 
Scanlon,  59  111.  App.  138;  Ennis  v. 
Edgar,  154  111.  App.  543;  Counsel- 
man  V.  Reichart,  103  Iowa  430,  72 
N.  W.  490:  Barnes  v.  Smith,  159 
Mass.  344.  34  N.  E.  403;  Harvey  v. 
Merrill,    150   Mass.   1,  22   N.  E.   49, 


§   999  CONTRACTS.  "  3O2 

In  such  case  the  contract  is  enforcible  at  the  option  of  the  one 
who  enters  into  it  in  good  faith.^** 

§  999.  Rule  as  to  mutual  intention  further  considered. — 
Thus  in  an  action  by  cotton  factors  for  commission  earned  and 
advances  made  the  defense  was  that  the  contracts  from  which 
the  claims  accrued  were  wagering  contracts.  However,  it  was 
held  that  the  evidence  failed  to  show  an  understanding  between 
the  parties  that  the  goods  were  not  to  be  delivered,  and  it  was 
shown  that  rules  of  the  cotton  exchange  at  which  the  purchases 
were  made  recognized  no  contracts  except  those  made  for  the 
purchase,  sale  and  delivery  of  the  actual  cotton.  Under  these 
circumstances  the  defense  was  not  sustained  by  the  evidence. ^^ 
A  contract  for  future  purchase  and  sale  is  not  a  wagering  agree- 
ment as  between  seller  and  purchaser  unless  both  parties  under- 
stood that  no  delivery  was  to  be  made  and  the  question  as  to  the 
purchaser's  intention  is  not  to  be  left  to  conjecture.^^     Where  the 

5  L.  R.  A.  200,  15  Am.  St.  159;  E.  B.  ages  cannot  be  recovered  for  breach 

Cadwell     &     Co.     v.     Lean's     Estate  of  the  contract.    Alex.  Sprunt  &  Sons 

(Mich.),    134  N.   W.    1110;   Donovan  v.  May,  156  N.  Car.  388.  72  S.  E.  821. 

V.    Daiber,    124   Mich.   49,   82   N.   W.  ""Winward    v.    Lincoln.    23    R.    L 

848;    IMcCarthy    v.    Weare    Commis-  476,   51   Atl.   106,  64  L.   R.   A.    160n. 

sion  Co.,  87  I\iinn.  11,  91   N.  W.  33;  See  cases  cited  ante  this  section.  But 

A.    G.    Edwards    Brokerage    Co.    v.  the  party  guilty  of  the  gambling  in- 

Stevenson,    160    Mo.    516,    61    S.    W.  terest    cannot    enforce    the    contract. 

617;  Mulford  v.  Caesar,  53  Mo.  App.  Nash-Wright  Co.  v.  Wright,  156  111. 

263;    Rogers    v.    Marriott,    59    Nebr.  App.  243. 

759,  82  N.  W.  21 ;  McDonald  v.  Ges-  ''  Gavlord  v.  Durvea,  95  I\Io.  App. 
sler,  208  Pa.  177,  57  Atl.  361;  Bibb  574,  69  S.  W.  607  (purchase  of 
V.  Allen,  149  U.  S.  481,  37  L.  ed.  stock  and  grain)  ;  Springs  v.  James, 
819,  13  Sup.  Ct.  950;  Irwin  v.  Wil-  137  App.  Div.  (N.  Y.)  110,  121  N. 
liar,  110  U.  S.  499,  28  L.  ed.  225,  4  Y.  S.  1054.  See,  however,  Riordan 
Sup.  Ct.  160 ;  Wagner  v.  Engel-  v.  Doty,  50  S.  Car.  537,  27  S.  E.  939 ; 
Millar  Co.,  144  Wis.  486,  129  N.  W.  Bibb  v.  Allen,  149  U.  S.  481,  37  L.  ed. 
392.  In  case  the  statute  makes  deal-  819,  13  Sup.  Ct.  950.  The  rules  of 
ing  in  futures  an  indictable  offence,  the  stock  exchange  are  not,  however, 
neither  party  to  a  contract  of  fu-  conclusive,  especially  when  the  rules 
ture  sale  and  delivery  of  goods  can  of  the  exchange  provided  for  "ring- 
be  convicted  under  such  statutes  un-  ing  out"  without  knowledge  of  the 
less  it  appears  that  both  parties  un-  principals.  James  v.  Haven  &  Clem- 
derstood  that  there  was  to  be  no  de-  ent,  185  Fed.  692,  107  C  C.  A.  640, 
livery  of  the  things  sold.  Scales  v.  revg.  172  Fed.  250.  To  same  effect. 
State,  46  Tex.  Cr.  296,  81  S.  W.  947,  Williamson  v.  Majors,  169  Fed.  754, 
66  L.  R.  A.  730,  108  Am.  St.  1014.  95  C  C  A.  186. 
See  also,  Berg  v.  Flickinger,  38  Pa.  '^Barnes  v.  Smith,  169  Mass.  344, 
Super.  Ct.  433.  This  rule  may  be  24  N.  E.  403.  See  also,  Fisher  v. 
changed  by  statute.  See  post,  §  1005  Fisher,  8  Ind.  App.  665,  36  N.  E. 
et  seq.  When  both  parties  intended  296;  Fi.sher  v.  Fisher,  113  Ind.  474,  15 
that  there  should  be  no  delivery,  dam-  N.  E.  832,  131  Ind.  462,  29  N.  E.  31. 


303 


GAMING    AND    WAGERING. 


S    lOOO 


contract  is  legal  on  its  face  it  will  be  presumed  valid  and  the  bur- 
den is  upon  the  party  who  seeks  to  impeach  it  as  a  gambling 
transaction  to  show  its  illegality  for  that  reason.^^ 

§  1000.  When  intention  of  one  party  may  defeat  contract. 
■ — The  statutes  of  some  jurisdictions,  however,  make  the  inten- 
tion of  one  party  to  settle  differences  sufficient  to  invalidate  the 
contract,^*  especially  when  one  party  knows  of  or  has  reasonable 
cause  to  believe  such  to  be  the  intention  of  the  other  party." 

§  1001.  Subsequent  agreement  as  to  delivery. — In  case  the 
original  transaction  is  a  bona  fide  sale  for  future  delivery  the 
mere  fact  that  the  party  subsequently  agreed  to  discharge  the 
contract  by  settling  differences  does  not  make  it  a  wager.^^     On 


"  Marengo  Abstract  Co.  v.  C.  W. 
Hooper  &  Co.  (Ala.),  56  So.  580; 
Johnston  v.  Miller,  67  Ark.  172,  53 
S.  W.  1052  (contract  of  sale  for  the 
future  delivery  of  cotton)  ;  Cleage  v. 
Laidlev,  149  Fed.  346,  79  C.  C.  A. 
284;  Johnson  v.  Milmine,  150  111. 
App.  208;  Pelouse  v.  Slaughter,  241 
111.  215,  89  N.  E.  259;  Richter  v.  Poe, 

109  Md.  20,  71  Atl.  420,  22  L.  R.  A. 
(N.  S.)  174n;  E.  B.  Cadwell  &  Co. 
V.  Lean's  Estate  (Mich.),  134  N.  W. 
1110;  Taylor  v.  Sebastian,  158  Mo. 
App.  147,  138  S.  W.  549;  Treasdale 
V.  McPike,  25  Mo.  App.  341 ;  Dukers 
V.  Townsend.  24  N.  Y.  57;  Roundtree 
V.  Smith,  108  U.  S.  269,  27  L.  ed. 
Ill,  2  Sup.  Ct.  630;  Irwin  v.  Williar, 

110  U.  S.  499,  28  L.  ed.  225,  4  Sup. 
Ct.  160.  "The  character  of  such  an 
operation  is  derived  from  the  inten- 
tion of  the  parties,  and  each  party 
must  concur  in  the  vicious  intent  to 
bring  the  transaction  under  the  de- 
nunciation of  the  law  against  gaming. 
If  either  contracts  in  good  faith  and 
contemplates  a  sale  to  be  followed  by 
the  constituent  of  delivery  and  pay- 
ment he  is  entitled  to  the  benefit  of 
the  contract,  no  matter  what  may 
have  been  the  future  intention  or 
purpose  of  the  other  partv."  Clav  v. 
Allen,  63  Miss.  426.  See  also,  Mar- 
engo Abstract  Co.  v.  Hooper  (Ala.), 
56' So.  580.  See  also,  Eure  v.  Sabis- 
ton,  105  Fed.  721  (construing  North 
Carolina    contract)  ;     Rodgers,     Mc- 


Cabe  &  Co.  v.  Bell,  156  N.  Car.  378, 
72  S    F   817 

"  fayior  v.  Sebastian,  158  Mo.  App. 
147,  138  S.  W.  549;  Connor  v.  Black, 
119  Mo.  126,  24  S.  W.  184;  Atwater 
V.  A.  G.  Edwards  &c.  Brokerage  Co., 
147  Mo.  App.  436,  126  S.  W.  823.  In 
this  case  the  laws  of  Missouri  were 
held  not  to  apply  for  the  reason 
that  the  agreement  was  not  a  Mis- 
souri contract.  Schreiner  v.  Orr,  55 
Mo.  App.  406  (holding  that  a  broker 
cannot  recover  for  services  rendered 
in  bringing  two  parties  together 
when  it  appeared  that  one  of  the 
parties  did  not  intend  the  delivery 
of  the  article  sold).  Compare  the 
foregoing  case  with  that  of  Deierling 
V.  Sloop,  67  Mo.  App.  446.  See.  how- 
ever, (Crawford  v.  Spencer,  92  Mo. 
498.  4  S.  W.  713,  1  Am.  St.  745  (de- 
cided under  a  different  statute)  ; 
Riordon  v.  Dotv,  50  S.  Car.  537.  27 
S.  E.  939;  Harvcv  v.  Dotv,  54  S.  Car. 
548,  27  S.  E.  943;  McGrew  v.  City 
Produce  Exch.,  85  Tenn.  572,  4  S. 
W.  38.  4  Am.  St.  771. 

'"Walker  v.  Johnson,  59  111.  App. 
448;  Fiske  v.  Doucette,  206  Mass.  275, 
92  N.  E.  455 ;  Marks  v.  Metropolitan 
Stock  Exch.,  181  Mass.  251,  63  N.  E. 
410:  Daw  v.  Baners.  174  Mass.  238, 
54  N.  E. '536;  McGrew  v.  Citv  Pro- 
duce Exch.,  85  Tenn.  572.  4  S.  W.  38, 
4  Am.  St.  771.  See  also,  Allen  v. 
Dunham,  92  Tenn.  257,  21  S.  W.  ^'^%. 

'^Miles   V.    Andrews,    153    111.   262, 


1002 


CONTRACTS. 


304 


the  other  hand,  if  the  original  contract  is  merely  to  settle  differ- 
ences the  parties  may  abandon  this  agreement  and  make  a  new 
and  valid  contract  by  which  they  mutually  agree  to  deliver  and 
receive  the  commodity  contracted  for,^^  The  rule  applies  only 
when  the  parties  contemplated  a  settlement  on  the  day  for  deliv- 
ery on  the  market  value  of  the  goods.^* 

§  1002.  Futures — Margin  transactions. — The  word  "mar- 
gin" signifies  money  or  other  property  deposited  with  a  broker  by 
his  customer  to  secure  the  broker  against  loss,  by  reason  of  fluc- 
tuations in  the  market  price  of  the  commodity  purchased  or 
sold.^^  It  is  held,  with  few  exceptions,  that  a  speculative  trans- 
action for  the  purchase  and  sale  of  stock  or  other  commodity  on 
margins  does  not  constitute  gambling.^" 


38  N.  E.  644;  Riebe  v.  Hellman,  69 
111.  App.  19;  Dillon  v.  McCrea,  59  111. 
App.  505;  Dillaway  v.  Alden,  88 
Maine  230,  33  Atl.  981.  See  also, 
Cleage  v.  Laidley,  149  Fed.  346,  79 
C.  C.  A.  284. 

^^  Young  V.  Glendinning,  194  Pa. 
St.  550,  45  Atl.  364;  In  re  Taylor's 
Estate,  192  Pa.  St.  304,  43  Atl.  973, 
73  Am.  St.  812;  In  re  Taylor's  Es- 
tate 192  Pa.  St.  313,  43  Atl.  975  (wa- 
ger contract  made  valid  after  an  as- 
signment for  the  benefit  of  cred- 
itors) ;  Anthony  v.  Unangst,  174  Pa. 
10,  34  Atl.  284.  Contra,  under  the 
South  Carolina  statute,  Riordan  v. 
Dotv.  50  S.   Car.  537,  27  S.   E.  939. 

^"Wright  V.  Vaughn,  137  Ga.  52,  72 
S.  E.  412;  Watson  v.  Hazelhurst,  127 
Ga.  298,  56  S.  E.  459. 

'"See  Sheehv  v.  Shinn,  103  Cal. 
325,  37  Pac.  393.  "'Margin'  is  se- 
curit}',  nothing  more."  Hopkins  v. 
O'Kane,  169  Pa.  St.  478,  36  Week.  N. 
Cas.  (Pa.)  475 

*»  Skiff  'v.  Stoddard,  63  Conn.  198, 
26  Atl.  874,  28  Atl.  104,  21  L.  R.  A. 
111.  The  above  case  treats  the  sub- 
ject exhaustively.  It  holds  that  the 
customer  and  broker  sustained  the 
relation  of  pledgor  and  pledgee,  the 
broker  holding  the  stock  or  other 
commodity  as  security  for  the  re- 
mainder of  the  purchase  price.  Ray- 
mond V.  Parker,  84  Conn.  694,  81  Atl. 
1030;  Hocker  v.  Western  Union  Tel. 
Co.,  45  Fla.  363,  34  So.  901 ;  Perin  v. 
Parker,   126  111.  201,   18  N.   E.  747, 


2  L.  R.  A.  336,  9  Am.  St.  571 ;  Curtis 
v.  Wright,  40  111.  App.  491;  Williams 
Commission  Co.'s  Assignee  v.  Shir- 
ley, 136  Ky.  303,  124  S.  W.  327  (hold- 
ing such  a  transaction  not  void  under 
the  Kentucky  statutes)  ;  Richter  v. 
Poe,  109  Md.  20,  71  Atl.  420,  22  L. 
R.  A.  (N.  S.)  174n;  In  re  Taylor's 
Estate,  192  Pa.  St.  304,  43  Atl.  973, 
73  Am.  St.  812;  Wagner  v.  Hilde- 
brand,  187  Pa.  St.  136.  41  Atl.  34; 
Hopkins  V.  O'Kane,  169  Pa.  St.  478. 
32  Atl.  421 ;  Drouihet  v.  Pinckard 
(Tex.),  42  S.  W.  135.  "The  true 
relations  which  exist  between  the 
broker  and  the  customer  in  such 
cases,  in  the  absence  of  some  special 
agreement,  where  the  stock  is  pur- 
chased on  margin  for  speculative  ac- 
count, are  these:  The  broker  under- 
takes and  agrees:  (1)  At  once  to  buy 
for  the  customer  the  stocks  indicated. 

(2)  To  advance  all  the  money  re- 
quired for  the  purchase  beyond  the 
per  cent,  furnished  by  the  customer. 

(3)  To  carry  or  hold  the  stock  for 
the  benefit  of  the  customer  so  long 
as  the  margin  agreed  upon  is  kept 
good,  or  until  notice  is  given  by 
either  party  that  the  transaction  must 
be  closed.  An  appreciation  in  the 
value  of  the  stock  is  the  gain  of  the 
customer,  and  not  of  the  broker.  (4) 
At  all  times  to  have,  in  his  name  and 
under  his  control,  ready  for  delivery, 
the  shares  purchased,  or  an  equal 
amount  of  other  shares  of  the  same 
stock.      (5)    To   deliver   such   shares 


305 


GAMIXG    AND    WAOERIXG. 


1003 


§  1003.  Test  by  which  to  determine  vaUdity  of. — The  same 
test  is  applied  here  as  in  other  transactions  in  futures.  If  tlie 
parties  mutually  understood  and  intended  that  the  purchaser 
should  pay  for  and  the  seller  should  deliver  the  commodity  at 
the  maturity  of  the  contract  it  is  a  legal  and  valid  transaction; 
and  the  fact  that  the  purchaser  is  required  to  deposit  a  margin 
and  increase  the  same  at  any  time  the  market  requires  it  in  order 
to  insure  payment  of  the  market  price  at  the  maturity  of  the  con- 
tract, and  thus  insure  the  broker  against  loss,  or  that  the  seller 
shall  deposit  a  margin  and  increase  the  same  as  the  market  shall 
require  in  order  to  make  sure  delivery  at  maturity  of  the  com- 
modity sold,  does  not  vitiate  the  contract." 

§  1004.  Presumption  as  to  margin  transactions — Illustra- 
tion.— The  mere  fact  that  grain,  stocks  or  other  commodities 
are  purchased  on  a  margin  does  not  in  itself  raise  an  inference 


to  the  customer  when  required  by 
him,  upon  the  receipt  of  the  ad- 
vances, commissions,  and  interest  due 
to  the  broker;  or  (6)  To  sell  such 
shares,  upon  the  order  of  the  cus- 
tomer upon  payment  of  the  like  sums 
to  him,  and  account  to  the  custo- 
mer for  the  proceeds  of  such  sale. 
Under  this  contract  the  customer  un- 
dertakes:  (1)  To  pay  the  margin 
agreed  upon  on  the  current  market 
value  of  the  stock.  (2)  To  keep  good 
such  margin  according  to  the  fluctua- 
tions of  the  market.  (3)  To  take  the 
shares  so  purchased  on  his  order 
whenever  required  by  the  broker,  and 
to  pay  the  difference  between  the  per- 
centage advanced  by  him  and  the 
amount  due  the  broker.  Tvlarkham  v. 
Jaudon,  41  N.  Y.  235 ;  Richardson  v. 
Shaw,  209  U.  S.  365,  52  L.  ed.  835,  28 
Sup.  Ct.  512."  Richter  v.  Poe,  109 
Md.  20.  71  Atl.  420,  22  L.  R.  A.  (N. 
S.)  174,  also  holding  that  the  law 
presumes  the  validity  of  the  contract. 
Contra,  Art.  iv,  §  26,  California  Con- 
stitution; Parker  v.  Otis,  130  Cal. 
322,  62  Pac.  927,  92  Am.  St.  56,  affd., 
187  U.  S.  606,  47  L.  ed.  323,  23  Sup. 
Ct.  168;  KuUman  v.  Simmens,  104  Cal. 
595.  38  Pac.  362.  This  provision  ap- 
plies when  the  broker  buys  from  a 
third  person  and  keeps  the  title  to 
the  stock,  though  it  is  agreed  that  it 

20 — CoNTR.\CTS,  Vol.  2 


is  collateral  for  his  customer's  debt. 
Sheehy  v.  Shinn,  103  CaL  325,  11  Pac. 
393. 

"But  if  at  the  time  of  the  contract 
it  is  mutually  understood  and  in- 
tended by  all  the  parties,  whether  ex- 
press or  not,  that  the  commodity  said 
to  be  sold  was  not  to  be  paid  for 
nor  to  be  delivered,  but  that  the  con- 
tract was  to  be  settled  and  adjusted 
by  the  payment  of  the  difference  in 
price, — if  the  price  should  decline  the 
purchaser  paying  the  difference,  if  it 
should  rise,  the  seller  paying  the  ad- 
vance, the  contract  price  being  the 
basis  upon  which  to  calculate  the  dif- 
ferences,— in  such  case  it  would  be 
a  gambling  contract  and  void.  White- 
sides  V.  Hunt,  97  Ind.  191,  49  Am. 
Rep.  441.  See  also,  Hooper  v.  Nuck- 
les  (Ala.),  39  So.  711;  Birmingham 
Trust  &c.  Co.  v.  Currey  (Ala.),  57 
So.  962;  Hatch  v.  Douglas,  48  Conn. 
116,  40  \xn.  Rep.  154;  Ling  v.  Mal- 
colm, n  Conn.  517,  59  Atl.  698; 
Fisher  v.  Fisher,  113  Ind.  474,  15  X. 
E.  832;  Sondheim  v.  Gilbert,  117  Ind. 
71,  18  N.  E.  687.  5  L.  R.  A.  432.  10 
Am.  St.  23n;  Davis  v.  Davis,  119  Ind. 
511,  21  N.  E.  1112;  Counselman  v. 
Reichart,  103  Iowa  430.  12  N.  \V. 
490;  Gibnev  v.  Olivette,  196  Mass. 
294,  82  N.  iE.  41,  holding  that  an  in- 
tention   not    to    deliver    renders    the 


I004 


CONTRACTS. 


306 


that  the  transaction  is  a  mere  wager.*^  But  when  taken  in 
connection  with  other  facts  and  circumstances  a  margin  trans- 
action may  show  an  intention  on  the  part  of  the  parties  to  engage 
in  a  gambhng  or  wagering  transaction,  as  where  the  correspond- 
ence shows  that  the  broker  was  wilhng  to  buy  or  sell  an  unlimited 
quantity  of  cotton  at  his  own  risk  for  the  defendant,  without  re- 
gard to  the  latter's  ability  to  meet  the  obligation  thus  incurred, 
so  long  as  the  defendant  put  up  the  margin  ;^^  as  where 
the  broker  knew  that  the  customer  could  not  make  payment, 
and  also  knew  that  he  was  neither  a  shipper  of  the  com- 
modities which  were  the  subject  of  the  pretended  purchase, 
nor  interested  in  a  business  which  required  their  use;**  as 
where  the  broker  makes  no  inquiry  as  to  the  financial 
ability  of  customers  making  large  purchases,  and  merely 
requires  proper  margins;*^  as  an  agreement  which  requires 
the  customer  to  put  margins  as  security  and  provides  for  the  clos- 
ing out  of  such  customer  should  he  fail  to  keep  the  margins  good, 


contract  void  at  common  law;  Bless- 
ing V.  Smith,  74  N.  J.  Ch.  593,  70 
Atl.  933;  Peters  v.  Grim,  149  Pa.  St. 
163,  24  Ad.  192,  34  Am.  St.  599;  In 
re  Taj'lor's  Estate,  192  Pa.  St.  304, 
43  Atl.  973,  12,  Am.  St.  812;  Wall  v. 
Schneider,  59  Wis.  352,  18  N.  W. 
443,  48  Am.  Rep.  520.  This  seems 
also  to  be  the  rule  in  Massachusetts, 
although  one  might  infer  from  the 
discussion  of  some  of  the  cases  cited 
supra  that  the  rule  was  otherwise  in 
that  jurisdiction.      Rice   v.   Winslow, 

180  Mass.  500,  62  N.  E.  1057;  Post  v. 
Leland,  184  Mass.  601,  69  N.  E.  361 ; 
Alarks  v.   Metropolitan   Stock  Exch., 

181  Mass.  251,  63  N.  E.  410.  These 
^Massachusetts  cases  hold  that  the 
broker  is  the  agent  of  the  purchaser 
to  buy  the  stock  or  other  commodity. 
An  agreement  by  appellant  to  pay  in- 
terest on  money  advanced  for  him  by 
the  appellees  to  protect  sales  for  fu- 
ture delivery  against  the  fluctuations 
of  the  market  was  held  not  to  taint 
the  contract  with  the  vice  of  gam- 
bling. Gruman  v.  Smith,  81  N.  Y. 
25.  See  Gregory  v.  Wendell,  39 
Mich.  ZZI,  ZZ  Am.  Rep.  390.  One  who 
agrees  to  pay  interest  on  all  money 
deposited  as  margins  in  his  behalf  is 
not  for  that  reason  a  party  to  a  gam- 


bling contract.  Morissey  v.  Broomal, 
Zl  Nebr.  766,  56  N.  W.  383. 

^Johnston  v.  Miller,  67  Ark.  172, 
53  S.  W.  1052;  Whitehead  v.  Ballin- 
ger,  38  Colo.  66,  88  Pac.  169 ;  Preston 
v.  Cincinnati  &c.  R.  Co.,  36  Fed.  54, 
1  L.  R.  A.  140;  Corbett  v.  Under- 
wood, 83  111.  324,  25  Am.  Rep.  392; 
Marks  v.  Metropolitan  Stock  Exch., 
181  Mass.  251,  (iZ  N.  E.  410;  Kendall 
V.  Fries,  71  N.  J.  L.  401,  58  Atl.  1090; 
Winward  v.  Lincoln,  23  R.  I.  476,  51 
Atl.  106,  64  L.  R.  A.  160n;  Hallet  v. 
Aggergaard,  21  S.  Dak.  554,  114  N. 
W.  696,  14  L.  R.  A.  (N.  S.)  1251. 

^^  Phelps  V.  Holderness,  56  Ark. 
300,  19  S.  W.  921. 

"Waite  V.  Frank,  14  S.  Dak.  626, 
86  N.  W.  645.  However,  a  purchase 
of  stock  on  margin  will  not  be  con- 
sidered a  wagering  contract  merely 
because  the  purchaser  buys  beyond 
the  point  of  prudence  as  measured 
by  his  financial  ability,  Fearon  v. 
Little,  227  Pa.  348,  76  Atl.  72. 

*^Sprague  v.  Warren,  26  Nebr.  326, 
41  N.  W.  1113,  3  L.  R.  A.  679,  holds 
that  these  facts  place  the  burden  on 
the  broker  to  show  that  the  transac- 
tion was  a  bona  fide  sale  for  actual 
delivery. 


307  GAMING   AND    WAGERING.  §    IOO5 

with  no  provision  requiring  an  offer,  ability  or  willingness  to 
perform  on  the  part  of  either;^"  as  where  the  broker  never  calls 
upon  the  customer  for  the  purchase-money,  but  only  for  mar- 
gins;*^ as  where  the  grain  is  purchased  on  a  margin  and  sold  by 
the  customer  before  time  for  delivery  arrived;**  as  where  the 
customer  was  to  be  closed  out  the  moment  the  fluctuation  of  the 
market  exhausted  his  margin;*"  as  where  a  very  small  margin  is 
advanced  on  a  very  large  purchase, ^°  it  may  lead  to  the  conclusion 
that  the  transaction  is  a  mere  wager. 

§  1005.  Legislative  enactment  concerning. — Buying  and 
selling  on  margins  has  been  by  legislative  enactment  declared 
gambling.  The  constitution  of  California  provides  that  all  con- 
tracts for  the  sale  of  shares  in  the  capital  stock  of  any  corporation 
or  association,  on  margins  to  be  delivered  on  a  future  day,  shall 
be  void,  and  any  money  paid  on  such  contracts  may  be  recovered 
by  the  party  paying  it  by  suit  in  any  court  of  competent  juris- 
diction/^ The  validity  of  this  provision  has  been  upheld  by  the 
state  courts.'^  And  under  it  an  agreement  that  defendant  should 
act  as  agent  for  plaintiff  in  buying  stock  for  her  from  third  par- 
ties, and  pay  the  whole  price  therefor,  two-thirds  of  which  was 
advanced  by  plaintiff,  the  stock  to  be  held  by  defendant  until 
the  balance  was  paid,  and  as  collateral  security  for  the  balance 
due  on  the  stock,  the  title  to  remain  in  defendant  while  so  held 
by  him,  has  been  declared  a  sale  on  margin  of  such  stock  by  the 
defendant  to  plaintiff.^^ 

§  1006.  Futures — Options. — The  mere  fact  that  a  contract 
of  purchase  and  sale  is  in  the  end  settled  by  pa3'ment  of  differ- 
ences^*  does  not  necessarily  establish  that  the  agreement  was  a 

"Lvon  V.  Culbertson,  83  111.  33,  25  "=  Parker  v.   Otis.   130   Cal.   322,  62 

Am.  Rep.  349.  Pac.  571,  62  Pac.  927.  92  Am.  St.  56: 

"Jameison  v.  Wallace,  167  111.  388,  Kullman  v.  Simmens,  104  Cal.  595,  38 

47  N.  E.  762,  59  Am.  St.  302.  Pac.  362. 

"Weare  Commission  Co.  v.  People,  "^  Sheehy  v.  Shinn,  103  Cal.  325.  37 

209  111.  528,  70  N.  E.  1076.  Pac.    393.     Compare    with    Pollitz    v. 

"Commercial  Nat.  Bank  v.  Spaids,  Wickersham,    147    Cal.    371,    81    Pac. 

8  111.  App.  493.     See  also.   Sharp  v.  1099. 

Stalker.  63  N.  J.  Eq.  596,  52  Atl.  1120.  "  Sprunt     v.     Hurst-Streator.     180 

'Mn     re     Patterson's     Appeal,     13  Fed.    782    (purchaser    unable    to    get 

Week.  No.  Cas.  (Phila.)  154.  actual    cotton   and    accepted    payment 

"Constitution,  art  4,  §  26.  in   casl.)  ;   Jamieson   v.   Wallace,    167 


I007 


CONTRACTS. 


308 


wager  at  its  inception.  Good  faith  contracts  of  purchase  and 
sale  for  future  dehvery  are,  as  a  general  rule,  upheld,  notwith- 
standing either  the  purchaser  or  seller  reserves  the  right  to  per- 
form the  contract  or  not  at  his  option.^^  Thus  a  vendor  may  be 
given  an  option  to  deliver  the  thing  sold  at  any  time  within  the 
next  twelve  months.^'' 

§  1007.  Rule  further  illustrated. — And  one  who  has  grain 
in  crib  and  sells  it  for  future  delivery  may,  when  that  time  comes, 
instead  of  shipping  his  own  grain,  buy  grain  to  fill  or  offset  the 
sales  made  and  resell  the  grain  on  hand  for  future  delivery." 
A  contract  whereby  for  a  valuable  consideration  one  agrees  to 
purchase  gold  coin  at  a  certain  price  and  within  a  specified  time 
deliverable  at  the  seller's  option  has  been  held  prima  facie  valid.^^ 
Agreements  on  the  part  of  the  vendor  to  repurchase  stock  sold 
if  demand  is  made  within  a  specified  time,'"'*  or  an  offer  to  sell  at 


111.  388,  47  N.  E.  762,  59  Am.  St. 
302;  Scott  V.  Brown,  54  Mo.  App. 
606 ;  Rogers  v.  Marriott,  59  Nebr.  759, 
82  N.  W.  21;  Flagg  v.  Baldwin,  38 
N.  J.  Eq.  219,  48  Am.  Rep.  308; 
Waite  V.  Frank,  14  S.  Dak.  626,  86 
N.  W.  645;  Atwater  v.  Manville, 
106  Wis.  64,  81  N.  W.  985 ;  Lowry  v. 
Dillman,  59  Wis.  197,  18  N.  W.  4; 
Wall  V.  Schneider,  59  Wis.  352,  18  N. 
W.  443,  48  Am.  Rep.  520.  See  also, 
Xash-Wright  Co.  v.  Wright,  156  111. 
App.  243;  Murman  v.  Rose,  132  Mo. 
App.  1Z,  111  S.  W.  527. 

"Hanna  v.  Ingram,  93  Ala.  482,  9 
So.  621;  Union  National  Bank  v. 
Carr,  15  Fed.  438,  29  Int.  Rev.  Rec. 
118,  16  Cent.  L.  J.  320;  Wolcott  v. 
Heath,  78  111.  433;  Logan  v.  Musick, 
81  111.  415;  Godman  v.  Meixsel,  65 
Tnd.  32;  Mason  v.  Pavne,  47  Mo. 
517;  Pieronnet  v.  Lull,  10  Nebr.  457. 
6  N.  W.  759;  Bigelow  v.  Benedict,  70 
N.  Y.  202,  26  Am.  Rep.  573,  affg.  9 
Hun  (N.  Y.)  429;  Story  v.  Salomon, 
71  N.  Y.  420,  6  Daly  (N.  Y.)  531; 
Disborough  v.  Neilson,  3  Johns.  Cas. 
(N.  Y.)  81:  Brown  v.  Hall,  5  Lans. 
(N.  Y.)  177;  Mcllvaine  v.  Egerton, 
2  Robt.  (N.  Y.)  422;  Tyler  v.  Bar- 
rows, 6  Robt.  (N.  Y.)  104;  Lester  v. 
Buel,  49  Ohio  St.  240,  30  N.  E.  821, 
34  Am.  St.  556;  Kirkpatrick  v.  Bon- 
sall,  72  Pa.  St.  155.    So  in  the  case  of 


Harris  v.  Tumbridge,  83  N.  Y.  93,  8 
Abb.  N.  Cas.  (N.  Y.)  291,  38  Am. 
Rep.  398  (Brooklyn  City  Ct.  Gen.  T.), 
holding  form  of  option  known  as  a 
"straddle"  valid  and  of  itself  in  no 
way  obnoxious.  "The  contract  is 
not,  however,  to  be  considered  a 
wager  or  illegal  merely  because  it  is 
optional  on  one  of  the  parties  and 
obligatory  on  the  other."  Taylor  v. 
Sebastian,  158  Mo.  App.  147,  138 
S.  W.  549.  But  it  is  held  in  some 
jurisdictions  that  if  the  vendee  does 
not  obligate  himself  to  take  the  cot- 
ton when  tendered  the  contract  is 
unilateral  and  neither  party  is 
bound.  Luke  v.  Livingston,  9  Ga. 
App.  116,  70  S.  E.  596.  Mallet  & 
Nutt  V.  Watkins,  132  Ga.  700,  64  S. 
E.  999,  131  Am.  St.  226. 

^  Ferryman  v.  Wolffe,  93  Ala.  290, 
9  So.  148.  See  also,  Johnson  v.  Mil- 
mine,  150  111.  App.  208. 

"  Morrissey  v.  Broomal,  Zl  Nebr. 
766,  56  N.  W.  383. 

"^Bigelow  V.  Benedict,  70  N.  Y. 
202,  26  Am.  Rep.  573. 

°^  George  J.  Birkel  Co.  v.  Howze, 
12  Cal.  App.  645,  108  Pac.  145  (ven- 
dee given  the  right  to  reassign  and  re- 
deliver certain  stock  bought  and  re- 
ceive money  paid  therefor  with  in- 
terest) ;  Loeb  V.  Stern,  198  111.  371, 
64    N.    E.    1043,    affg.    99    111.    App. 


309 


GAMING    AND    WAGERING. 


§    lOOS 


a  designated  price  if  acceptance  is  made  within  a  specified  time,"" 
or  to  sell  one  all  the  coal  he  shall  need  during  a  given  season," 
or  to  sell  all  the  oranges  "my  trees  may  produce  in  the  years 
1899  and  1900,"°^  or  of  the  sale  of  a  patent  right  with  an  option 
on  the  part  of  the  patentee  to  cancel  the  contract  if  the  royalties 
do  not  amount  to  a  specified  sum,"^  have  been  upheld. 

§  1008.  Puts  and  calls,  assignments,  resale,  ringing  out. — 
Option  contracts  in  the  form  of  "puts"  (the  privilege  of  deliver- 
ing or  not  delivering  the  thing  sold)  or  "calls"  (the  privilege  of 
calling  or  not  calling  for  the  thing  purchased)  have  been  declared 
illegal  by  statutory  enactment."''  The  mere  fact,  however,  that 
a  purchaser  in  a  future  delivery  contract  intends  to  assign  his 
interest  therein  before  delivery''^  or  actually  resells  before  the 
maturity  of  the  contract,""  does  not  make  the  contract  illegal. 
Nor  does  the  mere  fact  that  intervening  parties  drop  out  and 
leave  a  valid  subsisting  contract  existing  between  one  vendor 


637;  Ubben  v.  Binnian,  182  111.  508, 
55  N.  E.  552,  revg.  78  111.  App.  330; 
Wolf  V.  National  Bank,  178  111.  85, 
52  N.  E.  896,  revg.  11  111.  App.  325. 

°°Schlee  v.  Guckenheimer,  179  III. 
593,  54  N.  E.  302,  revg.  76  111.  App. 
681 ;  Minnesota  Lumber  Co.  v.  White- 
breast  Coal  Co.,  160  111.  85,  43  N.  E. 
774,  31  L.  R.  A.  529,  revg.  56  111.  App. 
248. 

*'  Minnesota  Lumber  Co.  v.  White- 
breast  Coal  Co.,  160  111.  85,  43  N.  E 
774,  31  L.  R.  A.  529;  Standard  Dis- 
tilling &c.  Co.  V.  Springfield  Coal  &c. 
Co.,  146  111.  App.  144  (agreement  to 
supply  from  one  to  three  car  loads 
of  coal  per  day  at  vendee's  option  for 
one  year  at  a  designated  price).  To 
same  effect,  Consolidated  Coal  Co.  v. 
Jones  &  Adams  Co.,  232  111.  326.  83 
N.  E.  851.  affg.  120  111.  App.  139. 

"-Losecco  V.  Gregory,  108  La.  648, 
Z2  So.  985.  See  also,  Ganu  v.  Long 
(Ala.),  56  So.  606. 

•«  Preston  v.  Smith,  156  111.  359,  40 
N.  E.  949. 

•♦Pearce  v.  Foote,  113  111.  228,  55 
Am.  Rep.  414;  Tennev  v.  Foote,  95 
111.  99;  Schneider  v.  turner,  130  111. 
28,  22  N.  E.  497,  6  L.  R.  A.  164n; 
Preston  v.  Smith.  156  111.  359.  40  N. 
E.  949;  Nash-Wright  Co.  v.  Wright. 
156  111.   App.   243    (holding  that   the 


statute  applies  to  contracts  by  which 
the  vendor  is  bound  to  deliver  on  the 
call  of  the  vendee,  it  being  optional 
with  the  vendee  to  buy  or  not  to  buy 
as  he  pleases)  ;  Woods  v.  Bates,  126 
111.  App.  180,  affd.,  80  N.  E.  84.  See 
also,  Luke  v.  Livingston,  9  Ga.  App. 
116,  70  S.  E.  596.  And  when  a  con- 
tract contains  an  optional  feature 
which  is  illegal,  actual  delivery  of  the 
thing  sold  does  not  legalize  the  op- 
tional feature.  Burnev  v.  Blanks 
(Tex.  Civ.  App.),  136  S.  W.  806. 

""Ponder  v.  Cotton  Co.,  100  Fed. 
nZ,  40  C.  C.  A.  416. 

**Ex  parte  Phillips,  2  DeG.  F.  &  J. 
634,  30  L.  J.  Bankr.  1 ;  In  re  Mor- 
gan, 6  Jur.  (N.  S.)  1273,  3  L.  T.  (N. 
S.)  516,  9  W.  R.  131 :  Cleage  v.  Laid- 
lev,  149  Fed.  346.  79  C.  C.  A.  284; 
Wolf  V.  National  Bank.  178  III.  85, 
52  N.  E.  896,  revg.  11  III.  App.  325; 
Ware  v.  Jordan.  25  111.  App.  534; 
Rosenstock  v.  Tormey,  32  Md.  169, 
3  Am.  Rep.  125 ;  Western  Union  Tel. 
Co.  v.  Littlejohn.  72  Miss.  1025,  18 
So.  418;  Eggleston  v.  Rumble.  66 
Hun  (N.  Y.)  627.  20  N.  Y.  S.  819; 
Champlin  v.  Smith,  164  Pa.  St.  481, 
30  Atl.  447;  In  re  Taylor  (Pa.),  43 
Atl.  975 ;  Young  v.  Glendinning,  194 
Pa.  St.  550.  45  Atl.  364. 


I009 


CONTRACTS. 


;io 


and  another  purchaser  invahdate  the  contract/ 
of  this  character  is  usually  termed  "ringing  out. 


A  transaction 


§  1009.  Other  forms  of  wagering  contracts — ^Election 
bets. — Lord  jMansfield  went  farther  perhaps  than  other 
judges  in  upholding  wager  contracts.  But  he  nevertheless  held 
a  bet  on  the  result  of  an  election  void  on  the  ground  that  it  was 
calculated  to  promote  corruption  in  voting.*'^  The  various  courts 
have  consistently  declared  election  bets  void  regardless  of  any 
statute  condemning  wagering  agreements,  either  on  the  ground 
that  they  tended  to  promote  corruption  in  voting^''  or  that  the 
courts  by  permitting  an  action  to  be  brought  on  such  wager  would 
be  drawn  into  a  collateral  inquiry  as  to  the  validity  of  the  election 
of  public  officials."  Elections  at  which  national,  state,  county 
and  city  officials  are  chosen  in  the  jurisdiction  in  which  suit  is 
brought  come  within  the  rule.'^^ 


"Cleage  v.  Laidley,  149  Fed.  346, 
79  C.  C.  A.  284;  Ward  v.  Vosburgh, 
31  Fed.  12;  Lehman  v.  Feld,  Zl  Fed. 
852 ;  Pardridge  v.  Cutier,  68  111.  App. 
569  (reversed  on  another  point) ; 
Riebe  v.  Hellman,  69  111.  App.  19; 
Waterman  v.  Buckland,  1  Mo.  App. 
45;  Kent  v.  Miltenberger,  13  Mo. 
App.  503;  Sprague  v.  Warren,  26 
Nebr.  326,  41  N.  W.  1113,  3  L.  R.  A. 
679n;  Clarke  v.  Foss,  7  Biss.  (U.  S.) 
540,  Fed.  Cas.  No.  2852,  17  Nat. 
Bankr.  Reg.  261. 

'*  For  a  discussion  as  to  what  con- 
stitutes "ringing  out"  see  Cleage  v. 
Laidley,  149  Fed.  346,  79  C.  C.  A.  284. 
See  also,  Springs  v.  James,  137  App. 
Div.  (N.  Y.)   110,  121  N.  Y.  S.  1054. 

*"•  Allen  V.  Hearn,  1  T.  R.  57. 

™  Allen  V.  Hearn,  1  T.  R.  57;  Den- 
niston  v.  Cook,  12  Johns.  (N.  Y.) 
Z16. 

^Lansing  v.  Lansing,  8  Johns.  (N. 
Y.)  454;  Bettis  v.  Reynolds,  12  Ired. 
L.  (N.  C.)  344,  55  Am.  Dec.  417; 
Smyth  V.  M'Masters,  2  Browne  (Pa.) 
182. 

"Many  of  the  following  cases  are 
decided  under  statutes  in  force  in  the 
jurisdiction  where  the  cause  of  ac- 
tion arose.  Foreman  v.  Hardwick,  10 
Ala.  316;  Givens  v.  Rogers,  11  Ala. 
543 ;  Johnston  v.  Russell,  il  Cal.  670 ; 
Hill  V.   Kidd,  43   Cal.   615;   Wheeler 


V.  Spencer,  15  Conn.  28;  Gardner  v. 
Nolen,  3  Har.  (Del.)  420;  McLen- 
nan V.  Whiddon,  120  Ga.  666,  48  S. 
E.  201;  Gordon  v.  Casey,  23  111.  70; 
Stevens  v.  Sharp,  26  111.  404;  Mc- 
Clurken  v.  Detrich,  ZZ  111.  349;  Guy- 
man  V.  Burlingame,  36  111.  201 ; 
Gregory  v.  King,  58  111.  169,  11  Am. 
Rep.  56;  Lockhart  v.  Hullinger,  2  111. 
App.  465 ;  Parsons  v.  State,  2  Ind. 
499;  Davis  v.  Leonard,  69  Ind.  213; 
Hizer  v.  State,  12  Ind.  330;  Worth- 
ington  V.  Black,  13  Ind.  344 ;  Nudd  v. 
Burnett,  14  Ind.  25;  Frybarger  v. 
Simpson,  11  Ind.  59;  David  v.  Ran- 
som, 1  Greene  (Iowa)  383;  Sipe  v. 
Finarty,  6  Iowa  394;  Craig  v.  An- 
drews, 7  Iowa  17;  Bevil  v.  Hix,  12 
B.  Mon.  (Ky.)  140;  McKee  v.  Man- 
ice,  11  Cush.  (Mass.)  357;  Ball  v. 
Gilbert,  12  Mete.  (Mass.)  397;  Fisher 
v.  Hildreth,  117  Mass.  558;  Buckley 
v.  Saxe,  10  Mich.  328;  Cooper  v, 
Brewster,  1  Gil.  (Minn.)  IZ;  Bates 
V.  Clifford,  22  Minn.  52;  Franklin  v. 
Stoddart,  34  Minn.  247,  25  N.  W.  400 ; 
Terrall  v.  Adams,  23  Miss.  570;  Hick- 
erson  v.  Benson,  8  Mo.  8,  40  Am. 
Dec.  115;  Sisk  v.  Evans,  8  Mo.  52; 
Ryan  v.  Judy,  7  Mo.  App.  74;  Specht 
V.  Beindorf,  56  Nebr.  553,  76  N.  W. 
1059,  42  L.  R.  A.  429;  Rust  v.  Gott, 
9  Cow.  (N.  Y.)  169,  18  Am.  Dec. 
497;  Like  v.  Thompson,  9  Barb.   (N. 


3" 


GAMING    AND    WAGERING. 


§    lOIO 


§  1010.  Other  forms  of  wagering — Horse  racing. — In  some 
jurisdictions  belting  on  horse  races  under  certain  conditions  is 
sanctioned  by  law.'^  Statutes  against  gaining  and  wagering  may 
be  so  drawn  as  not  to  include  bets  on  horse  races.  Thus,  statutes 
which  prohibit  bets  on  games  of  chance  and  statutes  of  similar 
import  have  been  held  not  to  include  horse  races.'*  As  a  general 
rule,  however,  betting  on  horse  races  is  considered  as  illegal  gam- 
ing and  within  the  meaning  of  statutes  enacted  for  the  pur- 
pose of  restraining  or  prohibiting  gambling  on  games  of  hazard 
or  skill  although  not  specifically  mentioned  or  enumerated  by  such 
statute.'^  Pool  selling  on  horse  races  is  a  form  of  gambling,  and 
there  can  be  no  recovery  for  the  price  of  pool  tickets  sold  on 


Y.)  315;  Lansing  v.  Lansing,  8 
Johns.  (N.  Y.)  454;  Vischer  v.  Yates, 
11  Johns.  (N.  Y.)  23;  Denniston  v. 
Cook,  12  Johns.  (N.  Y.)  376;  Yates 
V.  Foot,  12  Johns.  (N.  Y.)  1;  Brush 
V.  Keeler,  5  Wend.  (N.  Y.)  250; 
Bunn  V.  Riker.  4  Johns.  (N.  Y.)  426, 
4  Am.  Dec.  292 ;  Lucas  v.  Harper,  24 
Ohio  St.  328 ;  Harper  v.  Grain,  36 
Ohio  St.  338,  38  Am.  Rep.  589; 
Smyth  V.  M'Masters,  2  Browne  (Pa.) 
182;  McAllister  v.  Hoflfman,  16  Serg. 
&  R.  (Pa.)  147,  16  Am.  Dec.  556; 
Siegel  V.  Funk,  3  Pitts.  (Pa.)  28; 
Columbia  Bank  &  Bridge  Co.  v. 
Haldeman,  7  Watts  &  S.  (Pa.)  233, 
42  Am.  Dec.  229;  Directors  of  the 
Poor  V.  Phipps,  1  Chest.  Co.  (Pa.) 
25;  Lloyd  v.  Leisenring,  7  Watts 
(Pa.)  294;  Wagonseller  v.  Snyder,  7 
Watts  (Pa.)  343;  Stoddard  v.  Mar- 
tin, 1  R.  L  1,  19  Am.  Dec.  643 ;  Laval 
V.  Myers,  1  Bailey  L.  (S.  Car.)  486; 
Russell  V.  Pvland,  2  Humph.  (Tenn.) 
131,  36  Am. 'Dec.  307;  Allen  v.  Dodd, 
4  Humph.  (Tenn.)  131.  40  Am.  Dec. 
632;  Danforth  v.  Evans,  16  Vt.  538; 
Tarleton  v.  Baker,  18  Vt.  9,  44  Am. 
Dec.  358;  Machir  v.  Moore,  2  Grat. 
(Va.)  257.  See,  however,  Doolev  v. 
Jackson,  104  Mo.  App.  21.  78  _S.  W. 
330,  holding  that  the  Missouri  stat- 
ute does  not  apply  to  primary  elec- 
tions for  the  selection  of  candidates. 
See  also,  ante,  §  692. 

"Henderson  v.  Stone,  1  Mart.   (N. 
S.)    (La.)    369;  Grayson  v.  Whatley, 

15  La.  Ann.  525 ;  Bingaman  v.  Cocks, 

16  La.  Ann.  249;  Shreveport  v.  Ma- 
loney,  107  La.  193,  31   So.  702;   De- 


bardelaben  v.  State,  99  Tenn.  649,  42 
S.  W.  684.  The  Louisiana  statute, 
however,  prohibits  betting  on  horse 
races  in  pool  rooms.  State  v.  Rabb, 
115  La.  72,i,  39  So.  971. 

'*  State  V.  Rorie,  23  Ark.  726;  State 
V.  Vaughan.  81  Ark.  117,  98  S.  W. 
685,  7  L.  R.  A.  (N.  S.)  899n,  118 
Am.  St.  29.  In  Arkansas  the  statute 
prohibited  "betting  any  money  on  any 
game  of  hazard  or  skill".  Horse  rac- 
ing was  held  not  to  be  a  game  of 
hazard  or  skill  under  the  statute. 
Harless  v.  United  States,  Morris 
(Iowa)  169  (horse  racing  not  a 
game  of  chance)  ;  Commonwealth  v. 
Shelton,  8  Grat.  (Va.)  592  (horse 
racing  not  a  game  of  chance)  ;  Mc- 
Devit  V.  Thomas,  130  Kv.  805,  114  S. 
W.  273  (Kentucky  statute  1903. 
§  1955,  provides  that  "every  contract 
*  *  *  for  which  the  consideration 
of  money,  property  or  other  thing 
lent  or  advanced  for  the  purpose  of 
gaming  *  *  *  shall  be  void."  Bet- 
ting on  a  horse  race  was  held  not  to 
be  prohibited  by  this  provision,  but 
the  agreement  sued  on  was  held  void 
under  another  part  of  the  statute 
which  provided  that  betting,  gaming, 
or  wagering  contracts  were  void). 

"  In  the  following  cases  the  point 
was  decided  either  in  actions  on  con- 
tracts entered  into  in  connection  with 
a  bet  on  a  horse  race,  or  to  recover 
monev  lost  on  the  result  of  a  horse 
race. '  Blaxton  v.  Pye,  2  Wils.  309 ; 
Goodburn  v.  Marley,  2  Strange  1159; 
Corson  v.  Neathenv,  9  Colo.  212,  11 
Pac.  82;  Dyer  v.  Benson,  69  Ga.  609; 


§    lOII 


CONTRACTS. 


312 


credit."  The  Texas  Civil  Appeals  Court,  in  construing  a  New 
York  statute  suspending  for  thirty  days  in  the  year,  within  the 
grounds  of  certain  associations  "for  improving  the  breed  of 
horses,"  the  penal  section  against  betting  and  pool  selling,  held 
that  this  provision  did  not  suspend  the  civil  statute  declaring  void 
all  gambling  contracts,  so  as  to  permit  a  pool  seller  to  recover 
his  losses  from  a  customer/^ 


§  1011.  Gaming  as  defined  by  statute — Generally. — Most 
of  the  cases  which  will  be  cited  in  this  section  were  criminal  pro- 
ceedings, but  it  is  thought  best  to  cite  them  here  in  order  to  show 
the  scope  and  trend  of  statutory  enactment  on  this  subject.  Un- 
der statutes  against  gaming,  betting  on  the  result,  or  paying  for 
a  thing  of  value,  depending  on  the  outcome  of  a  game  of  baga- 


Shaffner  v.  Pinchback,  133  111.  410, 
24  N.  E.  867,  23  Am.  St.  624 ;  Tatman 
V.  Strader,  23  111.  439;  Garrison  v. 
IMcGregor,  51  111.  473;  Richardson  v. 
Kellv,  85  111.  491;  Mosher  v.  Griffin, 
51  111.  184,  99  Am.  Dec.  541  (holding 
that  there  can  be  no  recovery  for  serv- 
ices rendered  in  training  a  horse  for 
purposes  of  gaming)  ;  Wade  v.  Dem- 
ing,  9  Ind.  35  ;  Ellis  v.  Beale,  18  Maine 
337,  36  Am.  Dec.  726;  Shropshire  v. 
Glascock,  4  Mo.  536,  31  Am.  Dec. 
189;  Boynton  v.  Curie,  4  Mo.  599; 
Joseph  V.  Miller,  1  N.  Mex.  621 ;  Mc- 
Questen  v.  Steinmetz,  73  N.  H.  9,  58 
Atl.  876,  111  Am.  St.  592  (action  for 
rent  of  premises).  See  also,  Opinion 
of  Justices,  73  N.  H.  625,  63  Atl.  505. 
This  question  has  arisen  most  fre- 
quently in  prosecutions  under  crimi- 
nal statutes.  See  James  v.  State 
(Okla.  Cr.),  113  Pac.  226,  33  L.  R. 
A.  (N.  S.)  827,  and  note.  See  also, 
note  in  7  L.  R.  A.  (N.  S.)  899.  It  is 
believed,  however,  that  in  a  civil  pro- 
ceeding the  court  might  refuse  to  en- 
force a  contract  directly  connected 
with  a  bet  on  a  horse  race,  for  the 
reason  that  there  existed  a  statute 
which  condemned  gaming,  and  which 
made  it  a  criminal  offense,  while  at 
the  same  time  a  criminal  proceeding 


could  not  be  maintained  under  the 
statute.  Statutes  of  this  character,  in 
so  far  as  they  invalidate  gambling 
contracts,  are  remedial  and  are  to  be 
given  a  liberal  construction,  while  in 
a  criminal  proceeding  it  would  be 
given  a  strict  construction.  See  State 
v.  Hayden,  31  Mo.  35. 

'*  Barker  v.  Mosher,  60  N.  H.  73. 
For  criminal  proceedings  brought 
under  statutes  concerning  book  mak- 
ing and  pool  selling,  see  State  v. 
Stripling,  113  Ala.  120,  21  So.  409, 
36  L.  R.  A.  81 ;  State  v.  Vaughan,  81 
Ark.  117,  98  S.  W.  685,  7  L.  R.  A. 
(N.  S.)  899n,  118  Am.  St.  29;  State 
V.  Thompson,  160  Mo.  333,  60  S.  W. 
1077,  54  L.  R.  A.  950,  83  Am.  St. 
468;  State  v.  Oldham,  200  Mo.  538, 
98  S.  W.  497 ;  State  v.  Nease,  46  Ore. 
433,  80  Pac.  897;  State  v.  Ayers,  49 
Ore.  61,  88  Pac.  653,  124  Am.  St. 
1036. 

"  Tuckett  V.  Herdic,  5  Tex.  Civ. 
App.  690,  24  S.  W.  992.  See  the  case 
of  People  V.  Langan,  196  N.  Y.  260, 
89  N.  E.  921,  25  L.  R.  A.  (N.  S.) 
479n,  which  construes  §  351  of  New 
York  Penal  Code,  Laws  1908.  chap. 
506-507,  against  bookmaking  and 
holds  that  such  statute  does  not  pre- 
vent oral  betting  at  the  race-course. 


313 


GAMING    AND    WAGERING. 


§    lOI  I 


telle,"  billiards  and  pool,"  cards,**'  cock  fight,"'  base  ball  game." 
wrestling  match,"^  craps,®*  fan  tan,""^  shell  game,'*'  a  raffle," 
tenpins,®*  playing  for  "chips"  or  "checks",®**  or  drinks  or  cigars,"" 


"People  V.  Cutler,  28  Hun  (N.  Y.) 
465,  1  N.  Y.  Cr.  465  (In  the  above 
case  nothing  was  actually  bet  on  the 
game.  Losers  were  merely  to  play 
for  the  use  of  the  apparatus)  ;  Neal 
V.  Commonwealth,  22  Grat.  (Va.) 
917. 

"Murphy  v.  Rogers,  151  Mass.  118, 
24  N.  E.  35  (note  given  in  part  for 
price  for  use  of  billiard  table).  An 
agreement  that  the  loser  is  to  pay 
for  the  game  constitutes  a  violation 
of  the  statute  against  gambling.  State 
V.  Sanders,  36  Ark.  353.  Ill  S.  W. 
454,  19  L.  R.  A.  (N.  S.)  913.  See 
also,  cases  cited  in  the  note  on  this 
subject  in  19  L.  R.  A.  (N.  S.)  913. 
The  contrary  is  held  in  some  juris- 
dictions. Harbaugh  v.  People,  40  111. 
294;  Wakefield  v.  Commonwealth,  7 
Kv.  L.  295;  State  v.  Quaid,  43  La. 
Ann.  1076,  10  So.  183,  26  Am.  St.  207 ; 
Blewett  V.  State,  34  Miss.  606;  State 
v.  Hall,  Z2  N.  J.  L.  158;  State  v. 
Belvidere,  44  N.  J.  L.  350;  People 
V.  Sergeant,  8  Cow.  (N.  Y.)  139; 
People  V.  Forbes,  52  Hun  (N.  Y.) 
30,  4  N.  Y.  S.  757;  Steuer  v.  Royal 
Cigar  Co.,  17  Ohio  C.  C.  82,  9  C.  D. 
456. 

"^  Simmons  v.  State,  106  Ga.  355,  32 
S.  E.  339;  In  re  Rowland,  8  Idaho 
595,  70  Pac.  610;  State  v.  Behan,  113 
La.  754,  Zl  So.  714  (faro)  ;  Eubanks 
V.  State,  5  IMo.  450;  Ford  v.  State, 
86  Miss.  123,  38  So.  229  (poker)  ; 
State  V.  Burton,  25  Tex.  420  (faro). 
See,  however,  Chambers  v.  State,  25 
Tex.  307;  Hearn  v.  State,  25  Tex. 
336;  Commonwealth  v.  Terry,  2  Va. 
Cases  n . 

"  Commonwealth  v.  Tilton,  8  Mete. 
(Mass.)  232;  Bagley  v.  State,  1 
Humph.    (Tenn.)    486. 

"Mace  V.  State,  58  Ark.  79,  22  S. 
W.  1108. 

"  Desgain  v.  Wessner,  161  Ind.  205, 
67  N.  E.  991.  Compare  with  Wilkin- 
son V.  Stitt,  175  Mass.  581,  56  N.  E. 
830. 

^  Eslava  v.  State,  44  Ala.  406 ;  Mil- 
ler V.  State.  48  Ala.  122;  Portis  v. 
State,  27  Ark.  360;  Trimble  v.  State. 
27  Ark.  355;  Brown  v.  State.  40  Ga. 
689;   Bethune   v.    State,   48   Ga.   505; 


New  Orleans  v.  Miller,  7  La.  Ann. 
651 ;  Aguirre  v.  State,  31  Tex.  Cr.  519, 
21  S.  \V.  256;  Faucett  v.  State,  46 
Tex.  Cr.  113,  79  S.  W.  548.  Compare, 
however,  with  Cummings  v.  State 
(Tex.  Crim.),  72  S.  W.  395;  Camp- 
bell V.  State  (Tex.  Crim.),  12  S.  W. 
396. 

"In  re  Lee  Tong,  9  Saw.  (U.  S.) 
ZZZ.  18  Fed.  253. 
^  States  V.  Red,  7  Rich.  (S.  Car.)  8. 
"'Mclnnis  v.  State,  51  Ala.  23; 
Johnson  v.  State,  83  Ala.  65,  3  So. 
790;  State  v.  De  Boy,  117  N.  Car. 
702,  23  S.  E.  167;  Stearns  v.  State, 
21  Tex.  692;  Long  v.  State,  22  Tex. 
App.  194,  2  S.  W.  541,  58  Am.  Rep. 
633.  Also,  Koster  v.  Senev,  99  Iowa 
584,  68  N.  W.  824  (holding  that  the 
mere  fact  that  the  drawing  never  took 
place  does  not  affect  the  validity  of 
the  contract).  See,  however,  Norton 
V.  State,  15  Ark.  71 ;  Kirk  v.  State, 
69  Miss.  215,  10  So.  577. 

^  State  V.  Records,  4  Har.  (Del.) 
554  (price  of  game  risked)  ;  Hamil- 
ton V.  State,  75  Ind..  586  (wire  of 
alley).  See,  however.  State  v.  Hall, 
32  N.  J.  L.  158  (terms  of  the  estab- 
lishment that  loser  was  to  pay  for 
use  of  alley).  To  same  effect,  Bren- 
inger  v.  Treasurer  of  Belvidere,  44 
N.  J.  L.  350. 

^Porter  v.  State,  51  Ga.  300;  Rob- 
inson V.  State,  n  Ga.  101 ;  Gibbons 
V.  People,  ZZ  111.  442;  Ashlock  v. 
Commonwealth,  7  B.  Mon.  (Ky.)  44; 
Walton  V.  State,  14  Tex.  381. 

""State  V.  Wade,  43  Ark.  11,  51  Am. 
Rep.  560;  State  v.  ]Maurer,  7  Iowa 
406;  State  v.  Leicht,  17  Iowa  28; 
State  V.  Bishel,  39  Iowa  42;  McDan- 
iel  v.  Commonwealth,  6  Bush  (Ky.) 
2)2(i;  Stahel  v.  Commonwealth,  7  Bush 
(Ky.)  387;  Commonwealth  v.  Tay- 
lor, 14  Gray  (Mass.)  26;  Lord  v. 
State,  16  N.  H.  325,  41  Am.  Dec. 
729;  Brown  v.  State,  49  N.  J.  L.  61, 
7  Atl.  340;  Tuttle  v.  State,  1  Tex. 
App.  364 ;  Stone  v.  State,  3  Tex.  App. 
675;  Bachellor  v.  State,  10  Tex.  258; 
Tuttle  V.  State.  1  Tex.  App.  364; 
TTumphrevs  v.  State,  34  Tex.  Cr.  434, 
30  S.  W.  1066. 


I0I2  CONTRACTS. 


314 


Operating  a  slot-machine/'  have  been  held  gambling.®'^  In  New 
York  a  bet,  by  parties  ignorant  of  the  truth  as  to  whether  or  not  a 
third  person  holds  a  lease  on  certain  real  property,  is  within  the 
statute  against  betting  and  gaming  upon  an  "unknown  or  contin- 
gent" event.''^  It  has  also  been  held  that  a  bet  on  a  decision  of  a 
court  of  last  resort  is  a  wager  on  an  uncertain  event.®* 

§  1012.  Games  on  behalf  of  charity. — The  scheme  prac- 
ticed in  aid  of  fairs  and  charities  of  voting  with  tickets  purchased 
at  fixed  prices  for  candidates,  of  whom  one  in  whose  name  the 
most  tickets  are  voted  is  to  receive  some  article  which  the  whole 
number  of  tickets  pays  for,  is  not  illegal  either  under  the  statute 
or  at  common  law.     Strictly  this  is  not  gaming.®^ 

§  1013.  Bohemian  oats  speculation. — Contracts  whereby 
one  gives  his  note  for  "Bohemian  Oats"  at  a  fictitious  and  extrav- 
agant price  in  consideration  of  the  agreement  of  the  payee  to  sell 
for  him  the  oats  raised  from  those  purchased  at  a  like  extravagant 
price  are,  in  some  jurisdictions,  declared  wager  agreements.®^ 
In  other  jurisdictions  agreements  of  this  character  are  declared 
against  public  policy  because  capable  of  performance  only  by  the 
practicing  of  deception  and  fraud  on  others.®'  In  either  case 
the  courts  will,  as  a  general  rule,  leave  the  parties  where  it  finds 
them.®* 

§  1014.  Rights  of  parties — Validity  of  bills,  notes  or  other 
obligations  given  in  payment  of  gambling  debt. — In  the  ab- 

"  Muller  V.  \Vm.  F.  Stoacker  Cigar        ®'  Shipley  v.  Reasoner,  80  Iowa  548, 

Co.,  89  Nebr.  438,  131  N.  W.  923,  34  45   N.  W.   1077;   Payne  v.  Raubinek, 

L.  R.  A.    (N.  S.)   573,  and  note.  82  Iowa  587,  48  N.  W.  995.    See  also, 

*"  A  bet  on  a   foot  race  constitutes  Merrill   v.    Packer,   80    Iowa   542,   45 

gambling.    Jones   v.    Cavanaugh,   149  N.   W.   1076    (sale  of  "prolific  oats" 

Mass.  124,  29  N.  E.  306.  *   *   *   as    a    speculation).     Compare 

'^Thomson  v.  Hayes,  111  N.  Y.  S.  with    Couch    v.    Hutchinson,    2    Ala. 

495.  App.  444,  57  So.  75  (sale  of  an  agency 

"^ Tripp  V.  O'Brien,  57  111.  App.  407.  contract).    See  also,   ante,   ch.   XXI. 

'''Dion    V.    St.    John    Baptiste    So-  See,  however,  contra,  Matson  v.  Blos- 

ciety,  82  Maine  319,  19  Atl.  825.    See  som,  50  Hun   (N.  Y.)   600,  18  N.  Y. 

also,   Quatsoe  v.   Eggleston,   42  Ore.  St.  726,  2  N.  Y.  S.  551 ;  Kurz  v.  Fish, 

315,  71  Pac.  66.  58   Hun    (N.   Y.)   602,  33  N.   Y.   St. 

*«Schmueckle   v.   Waters,   125   Ind.  674,   11   N.  Y.  S.  209. 
265,  25  N.  E.  281 ;  McNamara  v.  Gar-        °*  See  cases  cited,  ante,  note  97  this 

gett,  68  Mich.  454,  36  N.  W.  218,  13  section. 
Am.  St.  355. 


315 


GAMING    AND    WAGERING.  R    lOI 


sence  of  a  statutory  provision  that  a  bill  or  note  given  for  a  wag- 
ering contract  shall  be  void,  the  defense  that  it  was  for  such  a 
consideration  cannot  be  sustained  against  a  bona  fide  holder  of 
such  a  negotiable  instrument  for  value  before  maturity  and  with- 
out notice;""  and  it  has  been  held  that  where  paper  is  signed  at 
the  maker's  request  by  accommodation  indorsers  to  be  discounted 
at  a  certain  bank,  which  has  no  knowledge  that  the  proceeds  are 
to  be  used  for  gambling  purposes,  such  use  will  constitute  no  de- 
fense to  an  action  on  the  paper. ^ 

§  1015.  As  between  the  immediate  parties  and  those  with 
notice. — As  a  general  rule,  however,  all  bills,  notes,  or  other 
obligations  given  in  payment  of  a  gambling  debt  are,  as  between 
the  immediate  parties  or  in  the  hands  of  subsequent  holders  tak- 
ing after  maturity  or  with  notice,  subject  to  a  defense  showing 
that  the  actual  consideration  was  a  gambling  or  wagering  trans- 
action."    The  same  rule  governs  as  to  the  assignee  of  a  note 

•*  Haight  V.  Joyce,  2  Cal.  64,  56  Am.  the  use  of  table  or  to  the  price  of 
Dec.  311;  Boughner  v.  Meyer,  5  Colo,  the  liquors,  so  that  a  note  given  for 
71,  40  Am.  Rep.  139;  Shirley  v.  How-  the  amount  therefor  would  be  void 
ard,  53  111.  455;  Adams  v.  Wool-  both  as  to  the  original  note  and  the 
dridge,  3  Scam.  (111.)  255;  Biegler  renewal  thereof  where  such  acts  are 
V.  Merchants'  Loan  &  Trust  Co.,  62  contrary  to  the  statute  against  gam- 
111.  App.  560,  affd.,  164  111.  197,  43  N.  bling,  and  so  even  though  the  plain- 
E.  512;  Schmueckle  v.  Waters,  125  tiff  was  licensed  to  sell  such  goods. 
Ind.  265,  25  N.  E.  281;  Wilson  v.  Na-  Murphy  v.  Rogers,  151  Mass.  118,  24 
tional  Fowler  Bank,  47  Ind.  App.  689,  N.  E.  35 ;  Holden  v.  Cosgrove,  12 
95  N.  E.  269;  Atwood  v.  Weeden,  Grav  (Mass.)  216. 
12  R.  I.  293;  Thompson  v.  Samuels  '  Birdsall  v.  Wheeler,  62  App.  Div. 
(Tex.),  14  S.  W.  143.  A  defense  that  (N.  Y.)  625,  71  N.  Y.  S.  67,  affd.,  173 
notes  had  been  given  on  Sunday  and  N.  Y.  590,  65  N.  E.  1114.  See  also, 
on  account  of  a  stock-gambling  trans-  Camas  Prairie  State  Bank  v.  ^New- 
action  is  not  available,  where  the  man,  15  Idaho  719,  99  Pac.  833,  21 
notes  are  regular  upon  their  face,  as  L.  R.  A.  (N.  S.)  703n,  128  Am.  St. 
against  a  purchaser  in  good  faith  for  Sin. 

value,  before  maturity  and  without  ^  Brown  v.  Turner,  7  T.  R.  630,  2 
notice.  IMyers  v.  Kessler,  142  Fed.  Esp.  631  ;  Aubert  v.  IMaze,  2  Bos.  & 
730,  74  C.'C.  A.  62.  If  plaintiff  kept  P.  371,  5  R.  R.  624;  Steers  v.  Lashley, 
a  billiard  saloon  and  played  with  the  6  T.  R.  61 ;  Amory  v.  Merryweather, 
defendant  upon  the  terms  that  the  4  Dowl.  &  Ryl.  86;  Spray  v.  Burk, 
defendant  should  pay  for  the  use  of  123  Ind.  565,  24  N.  E.  588;  People's 
the  table  by  both  parties  in  case  he  Sav.  Bank  v.  Gifford,  108  Iowa  277. 
lost,  but  otherwise  he  should  pay  79  N.  W.  63;  Scollans  v.  Flynn,  120 
nothing,  it  is  gaming.  It  is  also  gam-  Mass.  271 ;  Burrus  v.  Witcover  (N. 
ing  if  the  parties  played  together  up-  Car.),  74  S.  E.  11;  Atwood  v.  Wee- 
on  the  terms  that  the  defendant,  in  den,  12  R.  I.  293.  Nevada  has  adopted 
case  he  lost,  should  pay  the  plaintiff  the  common  law  upon  the  subject  of 
for  liquor  and  cigars  to  be  used  by  wagers  as  altered  by  the  statute  of 
the  plaintiff  but  otherwise  not,  and  9  Anne,  ch.  14.  making  void  a  trans- 
the  same  would  apply  to  the  price  of  fer  of  a  negotiable  instrument  at  the 


§    IOl6  CONTRACTS.  316 

given  for  wagers  intentionally  lost  at  cards  to  enable  the  obligee 
to  sell  it  for  the  joint  benefit  of  the  obligor  and  himself/  and  to 
assignees  generally,  with  notice.* 

§  1016.  Special  statutory  enactments  concerning  recovery 
thereon. — W  here  a  statute  provides  that  all  judgments  by 
confession,  conveyances,  bonds,  bills,  notes  and  securities,  when 
the  consideration  is  money  or  property  won  at  any  game  or  gam- 
bling device,  shall  be  void  and  may  be  set  aside  and  vacated  by 
any  court  of  competent  jurisdiction  upon  suit  brought  for  that 
purpose  by  the  person  so  confessing,  giving,  entering  into  or 
executing  the  same,  or  by  his  personal  representative,  a  purchaser 
or  other  person  interested  therein,  the  main  purpose  of  such  an 
act  is  to  discourage  and  suppress  gaming  by  preventing  retention 
of  the  spoils  by  the  gambler,  or  the  successful  transfer  of  them 
to  his  colleagues.  And  where  a  transfer  or  indorsement  is  made 
of  drafts  given  as  security  for  money  loaned  and  to  be  loaned  for 
the  purpose  of  gambling  with  the  lender,  such  indorsement  is 
within  the  inhibitions  of  the  statute,  as  it  is  to  be  regarded  either 
as  a  security  or  as  a  new  bill,  nor  in  such  case  does  the  rule  as  to 
parties  in  pari  delicto  apply  ;^  and  generally  these  express  statu- 
tory prohibitions  as  to  notes  or  paper  given  for  such  wagering  or 
gambling  considerations,  or  based  upon  such  gaming  transactions, 
preclude  a  recovery,  even  on  the  part  of  a  bona  fide  holder.^ 

time  and  place  of  play  to  the  winner.  §  3426),  considering  Williams  v. 
Burke  &  Co.  v.  Buck,  31  Nev.  74,  99  Wall,  60  Mo.  318  (which  cites  2 
Pac.  1078.  For  numerous  cases  so  Bouv.  L.  Diet.  493)  ;  Slacum  v.  Pom- 
holding  see  cases  cited,  119  Am.  St.  erv,  6  Cranch  (U.  S.)  221,  3  L.  ed. 
174.  See,  however,  Rudolph  v.  Win-  205;  Coffee  v.  Planters'  Bank,  13 
ters,  7  Nebr.  125,  overruled  by  How.  (U.  S.)  183,  14  L.  ed.  105; 
Sprague  v.  Warren,  26  Nebr.  326,  41  Van  Staphorst  v.  Pearce,  4  Mass. 
N.  W.  1113,  3  L.  R.  A.  679n;  Russell  258;  Chapin  v.  Dake,  57  111.  295,  11 
V.  Kidd,  n  Tex.  Civ.  App.  411,  84  S.  Am.  Rep.  15;  and  distinguishing  Hig- 
W  273  ginbotham  v.  McGready,  183  Mo.  96, 

'  Thompson  v.  Moore,  4  T.  B.  Mon.  81   S.  W.  883,   105  Am.  St.  461.    See 

(Ky.)   79.  also,  Savings  Bank  v.  National  Bank 

*See  Steers  v.  Lashley,  6  T.  R.  61;  of  Commerce,  38  Fed.  800.  : 

Union  Collection  Co.  v.  Buckman,  150        "Manning  v.  Manning,  8  Ala.  138; 

Cal.    159,   88   Pac.   708,   119   Am.    St.  Ivey  v.  Nicks,  14  Ala.  564;  Birming- 

164,  and  numerous  cases  cited  in  note  ham  Trust  &c.  Savings  Co.  v.  Curry, 

on  page  175,  9  L.  R.  A.  (N.  S.)  568n,  160  Ala.  370,  49  So.  319,  135  Am.  St. 

119  Am.  St.  164n.  102;  Aver  v.  Younker,  10  Colo.  App. 

■^  Morton   v.    Provident    Nat.   Bank,  27,  50  Pac.  218;  Western  Nat.  Bank 

42  Tex.  Civ.  App.  154,  93  S.  W.  189  &c.  v.   State  Bank  of  Rock  Ford,  18 

(decided  under  Rev.  Stat.  Mo.  1899,  Colo.  App.  128,  70  Pac.  439;  Conklin 


3^7 


GAMING    AND    WAGERIXG. 


§     IOI7 


§  1017.  Note  given  in  an  option  or  "future"  deal. — How- 
ever, before  a  note  given  in  an  option  or  ''future"  deal  shall  be 
subject,  in  the  hands  of  a  bona  fide  holder,  to  the  defense  of  an 
illegal  consideration,  it  is  true  generally  that  the  inhibition  in  the 
statute  must  be  express  or  by  necessary  implication  sufficiently 
specific  to  cover  cases  of  this  character  to  warrant  such  a  defense 
being  sustained,^  although  where  the  statute  expressly  and  in  suf- 
ficiently specific  terms  makes  such  notes  void  it  constitutes  an 
available  and  good  defense  even  against  a  bona  fide  holder.^ 

§  1018.  Presumptions  concerning  and  validity  of  note 
given  for  gambling  debt. — When  it  is  made  to  appear  that 
the  bill  or  note  sued  on  was  given  in  satisfaction  of  a  gambling 
debt  the  law  indulges  in  no  presumption  that  the  holder  acquired 
it  without  notice  before  maturity  and  for  value.     The  burden  is 


V.  Roberts,  36  Conn.  461 ;  Cunning- 
ham V.  National  liank,  71  Ga.  400,  51 
Am.  Rep.  266;  Williams  v.  Judy,  3 
Gil.  (111.)  282,  44  Am.  Dec.  699; 
Pope  V.  Hanke,  52  111.  App.  453,  affd., 
155  111.  617,  40  N.  E.  839,  28  L.  R.  A. 
568;  International  Bank  v.  Vankirk, 
39  111.  App.  23 ;  Tenney  v.  Foote,  4 
111.  App.  594;  Vennum  v.  Carr,  130 
111.  App.  309;  Chapin  v.  Dake,  57  111. 
295,  11  Am.  Rep.  15;  Irwin  v.  Mar- 
quett,  26  Ind.  App.  383,  59  N.  E.  38, 
84  Am.  St.  297;  Koster  v.  Senev,  99 
Iowa  584.  68  N.  W.  824;  Traders' 
Bank  v.  Alsop,  64  Iowa  97,  19  N.  W. 
863;  Pace  v.  Martin,  2  Duv.  (Ky.) 
522;  Early  v.  McCart,  2  Dana  (Ky.) 
414;  Alexander  &  Co.  v.  Hazelrig, 
29  Ky.  1212.  97  S.  W.  353;  Gough 
V.  Pratt,  9  Md.  526;  Gray  v.  Robin- 
son, 95  Miss.  1,  48  So.  226;  Lucas 
V.  Waul,  12  Smedes  &  M.  (Miss.) 
157;  Lagonda  Nat.  Bank  v.  Portner, 
46  Ohio  St.  381.  21  N.  E.  634;  Har- 
per V.  Yoimg,  112  Pa.  St.  419,  3  Atl. 
670;  Unger  v.  Boas,  13  Pa.  St.  601; 
Mordecai  v.  Dawkins,  9  Rich.  Law 
(S.  Car.)  262;  Snoddv  v.  American 
Nat.  Bank.  88  Tenn.  573,  13  S.  W. 
127,  7  L.  R.  A.  705n.  17  Am.  St.  918; 
Allen  V.  Dunham,  92  Tenn.  257.  21 
S.  W.  898;  Stewart  v.  Miller,  3  Will- 
son  (Tex.  Civ.  App.),  §  292; 
Pearce  v.  Rice,  142  U.  S.  28.  35  L. 
ed.  925,  12  Sup.  Ct.  130;  Woodson 
V.   Barrett,   2   Hen.   &   M.    (Va.)    80, 


3  Am.  Dec.  612;  Hurlburt  v.  Straub, 
54  W.  Va.  303.  46  S.  E.  163;  Swin- 
ney  v.  Edwards,  8  Wyo.  54,  55  Pac. 
306,  80  Am.  St.  916.  But  see  Craw- 
ford V.  Spencer,  92  ]\Io.  498,  4  S.  W. 
713,  1  Am.  St.  745.  The  defense  must 
be  pleaded.  Moore  v.  Blanck,  71 
Misc.  (N.  Y.)  257,  129  N.  Y.  S.  1105. 

'■Pope  V.  Hanke,  52  111.  App.  453, 
affd.,  155  111.  617.  40  N.  E.  839.  28 
L.  R.  A.  568;  Sondheim  v.  Gilbert, 
117  Ind.  71,  18  N.  E.  687,  5  L.  R.  A. 
432,  10  Am.  St.  23n ;  Shaw  v.  Clark, 
49  Mich.  384,  13  N.  W.  786.  43  Am. 
St.  474;  Crawford  v.  Spencer,  92 
Mo.  498,  4  S.  W.  713,  1  Am.  St.  745; 
Third  National  Bank  v.  Tinsley.  11 
Mo.  App.  498;  Higginbotham  v.  Mc- 
Gready.  183  Mo.  96.  81  S.  W.  883,  105 
Am.  St.  461 ;  Provost  v.  IMcEncroe, 
102  N.  Y.  650.  5  N.  E.  795 ;  Northern 
National  Bank  v.  Arnold,  187  Pa.  356. 
40  Atl.  794;  Jackson  v.  Foote,  11 
Biss.  (U.  S.)  223,  12  Fed.  37;  Hentz 
V.  Jewell,  4  Woods  (U.  S.)  656,  20 
Fed.  592;  Third  Nat.  Bank  v.  Har- 
rison. 3  McCrary  (U.  S.)  316,  10 
Fed.  243;  Grav  v.  Bovle.  55  Wash. 
578,  104  Pac.  828,  133  Am.  St.  1042. 
But  see  Hawley  v.  Bibb,  69  Ala.  52; 
Cunningham  v.  National  Bank,  71  Ga. 
400,  51"  Am.  Rep.  266. 

"Root  v.  Merriam.  27  Fed.  909; 
Pope  V.  Hanke,  52  111.  App.  453,  affd., 
155  111.  617,  40  N.  E.  839.  28  L.  R. 
A.    568;    Snoddy    v.    American    Nat. 


§    lOIQ  CONTRACTS.  318 

upon  the  holder  to  estabHsh  that  he  Is  a  bona  fide  purchaser.® 
However,  the  note  may  not  be  subject  to  such  a  defense  as  that  of 
a  gambling  consideration  where  the  transaction  is  valid,  in  that 
the  intent  of  one  of  the  parties  w^as  an  actual  sale  of  stocks,  the 
gambling  purpose  being  only  that  of  the  other  party."  Again, 
a  certificate  of  deposit  may  be  based  upon  a  gambling  transaction 
and  be  indorsed  and  assigned  in  a  foreign  state,  and  still  the  in- 
dorser  or  assignor  be  liable  at  the  suit  of  a  bona  fide  holder  for 
value,  although  such  negotiable  paper  be  void  in  such  bona  fide 
holder's  hands  under  express  declaration  of  the  statute  of  the 
state  where  suit  is  brought."  When  a  note  is  given  in  part  for 
money  advanced  for  legitimate  purposes  and  in  part  to  cover 
advances  as  margins  in  speculating  in  cotton  futures  it  may,  as 
between  the  parties,  be  enforced  only  as  to  the  money  advanced 
for  legitimate  purposes.^^ 

§  1019.  Recovery  of  money  lost  at  gaming,  wagering  or 
dealing  in  futures. — When  the  loser  voluntarily  pays  to  the 
winner  the  amount  of  the  wager  the  former  cannot,  in  the  absence 
of  a  special  statute  conferring  such  right,  recover  it  for  the  reason 
that  the  parties  are  in  pari  delicto.^^     Practically  all  the  various 

Bank,  88  Tenn.   573,   13   S.   W.    127,  R.  413 ;  Windham  v.  Children,  7  Ala. 

7  L.  R.  A.  705n,  17  Am.  St.  918.    See  357;   Paulk  v.  Jasper  Land   Co.,  116 

also,   Alexander   &   Co.   v.   Hazelrig,  Ala.  178,  22  So.  495 ;  Johnson  v.  Col- 

29  Kv    1212,  97  S.  W.  353.  lier,  161  Ala.  204,  49  So.  761 ;  Nealy 

"Fuller   V.    Hutchins,    10   Cal.   523,  v.    Powell,    20    Ark.    163;    Grant    v. 

70   Am.   Dec.   746;    Union   Collection  Owens,   55   Ark.   49,   17   S.   W.   338; 

Co.  V.  Buckman,  150  Cal.  159,  88  Pac.  Frank    v.    Pennie,    117    Cal.    254,    49 

708,  9   L.    R.   A.    (N.    S.)    568n,    119  Pac.   208;    Branham   v.    Stallings,   21 

Am.  St.  164n;  Standeford's  Admr.  v.  Colo.   211,  40   Pac.  396,   52   Am.    St. 

Shultz,  5  B.  Mon.   (Ky.)   581,  46  Ky.  213;  Funk  v.  Gallivan,  49  Conn.  124, 

581.  Compare  with  Poorman  v.  Mills,  44   Am.   Rep.  210;    Cook  v.    Barnett, 

39  Cal.  345,  2  Am.  Rep.  451;  Reed  v.  25  Ga.  664;  Gregory  v.  King,  58  111. 

Bond,  96  Mich.   134,  55  N.  W.  619;  169,    11    Am.    Rep.    56;    Holland    v. 

Lee's  Admr.  v.  Ware,  1  Hill  (S.  Car.)  Swain,  94  111.  154;  Davis  v.  Leonard, 

313.  69  Ind.  213;    Schlosser  v.   Smith,  93 

'"Bangs    V.    Hornick,    30    Fed.   97;  Ind.  83;  Thrift  v.  Redman,  13  Iowa 

Springs^&  Co.  v.  Carpenter,  154  Fed.  25;  Graves  v.  Ford,  3  B.  Mon.  (Ky.) 

487,  83  C.  C.  A.  327.    See  also.  Faux  113;  Logan  v.  Anderson,  18  B.  Mon. 

V.  Fitter,  232  Pa.  33,  81  Atl.  91.  (Ky.)     114;    O'Brien    v.    Luques,    81 

"  Sullivan    v.    German    Nat.    Bank,  Maine     46,     16     Atl.     304 ;     Low     v. 

18  Colo.  App.  99,  70  Pac.  162.  Blanchard,   116  Mass.  272;   Northrup 

"Mixfon     V.     Walker    &    Walker  v.   Buffington,    171    Mass.   468,   51    N. 

(Ga.),  71  S.  E.  1007    See  also,  Bauer  E.  7;   Gregory  v.  Wendell,  40  Mich. 

V.  Fabel,  221  Pa.  St.  156,  70  Atl.  558.  432;  Nagle  v.  Randall,  115  Minn.  235, 

''Hudson   v.    Davis,   2   Anstr.   504;  132    N.    W.   266;    Hickerson   v.    Ben- 

Vaughan  v.  Whitcomb,  2  B.  &  P.  N.  son,  8  Mo.  8,  40  Am.  Dec.  115;  Welsh 


319 


GAMING   AND    WAGERING. 


§    IOI9 


States  have,  however,  enacted  laws  which  entitle  the  loser  to  re- 
cover under  some,  if  not  all  instances,  money  or  other  property 
voluntarily  paid  to  the  winner.^* 


V.  Cutler,  44  N.   H.  561;  Mount  v. 
Waite,   7  Johns.    (N.   Y.)    434;    Mc- 
Cullum  V.  Gourlay,  8  Johns.   (N.  Y.) 
147;  Hudspeth  v.  Wilson,  13  N.  Car. 
372,  21  Am.  Dec.  344;  Hodges  v.  Pit- 
man, 4  N.  Car.  276,  2  Car.  Law  394 ; 
Pratt    V.    Mcintosh,    Wright    (Ohio) 
356;'  Speise  v.  McCoy,  6  Watts  &  S. 
(Pa.)    485,   40   Am.   Dec.   579;    Allen 
V.  Dodd,  4  Humph.    (Tenn.)    131,  40 
Am.  Dec.  632;   Woodson  v.   Gordon, 
Peck   (Tenn.)    196,  14  Am.  Dec.  743; 
Danforth  v.  Evans,  16  Vt.  538;  West 
V.  Holmes,  26  Vt.  530.    However,  at 
common  law,  if  one  of  the  parties  to 
a    gambling    transaction    was    made 
drunk  or  stupefied  by  the  other  drug- 
ging him   with   poison  or   whisky  so 
that   he  became   unconscious,   and   if 
while   in   that   condition   he   was    de- 
prived of  his  money  or  property  by 
the  other,  a  recovery  of  the  property 
could  be  had,  more  especially  if  the 
further  allegation  was  made  that  the 
drugs  were  administered  for  that  pur- 
pose.    Summers    v.    Keller,    152    Mo. 
App.  626.  133  S.  W.  1180.    Moreover, 
public     policy     may,    under     circum- 
stances, permit  a  recovery.    Auxer  v. 
Llewellyn,  142  111.  App.  265.   See  also, 
Williamson  v.   Majors,   169  Fed.  754, 
95  C.  C.  A.  186.     See  ante,  ch.  XXI. 
"Jaques    v.    Withy,    1    H.    Bl.    65; 
Jaques  V.  Golightlv,  2  W.   Bl.   1073; 
Bones  v.  Booth,  2  W.  Bl.  1226;  Tap- 
penden   v.   Randall,   2   B.   &   P.   467; 
Lacaussade  v.  White,  7  T.  R.  535,  2 
Esp.  629;  Aubert  v.  Walsh,  3  Taunt. 
277;   Busk  v.   Walsh,  4   Taunt.  290; 
Nelson  v.  W^aters,  18  Ark.  570;  Cook 
V.  Barnett.  25  Ga.  664;  Neal  v.  Todd, 
28  Ga.  334;  Dver  v.  Benson,  69  Ga. 
609;  Tatman  v.  Strader,  23  111.  493; 
Garrison    v.    McGregor,    51    111.    473; 
Richardson  v.  Kelly,  85  111.  491 ;  New 
York  Grain  &c.  Exch.  v.   Mellen,  27 
111.    App.    556;    Clingman    v.    Irvine, 
40  111.   App.  606;   Little  v.   Brannen- 
burgh,  4  Ind.  35 ;   Wade  v.   Deming, 
9  Ind.  35 ;  l^.IcKinney  v.  Pope's  Admr., 
3    B.    Mon.    (Ky.)    93;    Standeford's 
Admr.  v.  Shultz,  5  B.  Mon.  (Ky.)  581, 
46  Ky.  581 ;  Boner  v.  Montgomery,  9 
B.  Mon.  (Ky.)  123;  Grav  v.  Roberts, 
2  A.   K.  Marsh.    (Ky.)   208,   12  Am. 


Dec.  383;  Mayes  v.  Parish,  11  B.  Mon. 
(Ky.)   38;  Lyons  v.  Hodgen,  90  Ky. 
280,   13   S.  W.   1076,   12   Ky.   L.  211; 
Triplett  v.  Scelbach,  91  Ky.  30,  14  S. 
W.    948;    WehmhofT    v.    Rutherford, 
98   Ky.   91,   32    S.    W.   288;    Ellis   v. 
Beale,    18   Maine   2>2,7,   36   Am.    Dec. 
726;  Peyret  v.  Coffee,  48  Maine  319; 
Hook   V.    Boteter,    3    Har.    &    McH. 
(Md.)  348;  Grace  v.  McElroy.  1  Al- 
len   (Mass.)    563;  Low  v.  Blanchard, 
116    Mass.   272;    Miller   v.    Le    Piere, 
136    Mass.    20;    Shinn    v.    Wimberly 
(Miss.),    12    So.    2)2)2i;    Summers    v. 
Keller,  152  Mo.  App.  626,  133  S.  W. 
1180;  Williams  v.  Wall,  60  Mo.  318; 
Swaggard  v.   Hancock,  25   Mo.  App. 
596;    Perry   v.    Gross,   25    Nebr.   826, 
41  N.  W.  799;  Johnson  v.  Ferris,  49 
N.  H.  66;  Watts  v.  Lynch,  64  N.  H. 
96,  5  Atl.  458;  Hutchinson  v.  Targee, 
14  N.  J.  L.  386;  Mann  v.  Gordon,  15 
N.  Mex.  652,  110  Pac.  1043   (holding 
that    loser   might    recover   under   the 
statute  even  though  he  did  not  pay 
the   amount    of    his    losses    until    six 
months    after    the    loss    occurred)  ; 
Grover  v.  Morris,  7Z  N.  Y.  473 ;  Wil- 
kinson V.  Gill,  74  N.  Y.  63.  30  Am. 
Rep.    264;    Haywood   v.    Sheldon,    13 
Johns.  (N.  Y.)  88;  Phillips  v.  Sture, 
1  Code  (N.  Y.)  56;  Veach  v.  Elliott, 
1    Ohio   St.    139;   Hoss  v.   Lavton,  3 
Ohio  St.  352;  Lear  v.   McMillen,  17 
Ohio   St.   464;    Lucas   v.    Harper,   24 
Ohio  St.  328 ;  Lester  v.  Buel,  49  Ohio 
St.  240,  30  N.  E.  821,  34  Am.  St.  556; 
App   v.    Coryell,    3    P.    &    W.    (Pa.) 
494 ;  Newell  v.  WHlgus.  35  Pittsb.  Leg. 
J    (Pa.)   306;  Hockadav  v.  Willis,  1 
Spears'  L.  (S.  Car.)  379.  40  Am.  Dec. 
606;  Williams  v.  Talliaferro,  1  Coldw. 
(Tenn.)  Z7 ;  ^McGrew  v.  Citv  Produce 
Exch.,  85  Tenn.  572,  4   S.  W^  38,  4 
Am.  St.  771 ;  Revier  v.  Hill,  1  Sneed. 
(Tenn.)   405;   Maling  v.  Crummey,  5 
Wash.  222,  31   Pac.  600;    Crowley  v. 
Taylor,  49  Wash.  511,  95  Pac.   1016. 
See,  however,   Sutterly  v.   Fleshman, 
41  Pa.  Super.  Ct.  131.   One  who  pays 
a  gambling  obligation  by  check  can- 
not recover  from  the  bank  the  amount 
of  such  check  even  though  the  bank 
knows    the    purpose    for    which    the 
check  was   drawn.    Gibb  v.   Dominy, 


CONTRACTS. 


320 


§  1020.  Illustration  of  rule  concerning  recovery. — Thus 
one  has,  under  the  laws  of  the  jurisdiction  in  which  the  transac- 
tion occurred,  been  held  entitled  to  recover  money  lost  on  an  elec- 
tion bet,*^  a  bucket  shop  transaction,^''  or  deal  in  futures,^^  or 
stock  gambling,^^  or  jewelry  given  to  the  keeper  of  the  game  in 
order  to  obtain  poker  chips,^°  or  money  deposited  under  a  wager 
agreement  upon  a  rise  and  fall  of  the  price  of  stocks,  whether  the 
agreement  has  been  fully  executed  or  not,-°  or  money  bet  on  a 
foot  race,"^  or  horse  race.^" 


154  111.  App.  74.  The  case  of  Mc- 
Ginley  v.  Cleary,  2  Alaska  269,  holds 
that  in  a  suit  in  equity  a  gambler  can- 
not recover  losses  sustained  at  his 
own  game.  In  this  case  the  plaintiff 
was  the  proprietor  of  a  saloon  in 
which  he  gambled  with  defendant  and 
lost  $1800.00,  in  satisfaction  of  which 
debt  he  conveyed  the  premises  to  the 
winner  and  then  sought  to  recover 
them.  To  the  effect  that  a  con- 
tract void  when  made  is  not  vali- 
dated by  subsequent  repeal  of  the 
law  which  invalidated  it,  see  Willcox 
V.  Edwards  (Cal.),  123  Pac.  276,  and 
numerous  authorities  there  cited. 

'=  Watts  V.  Lvnch,  64  N.  H.  96,  5 
Atl.  458;  Mitchell  v.  Orr,  107  Tenn. 
534,  64  S.  W.  476.  Compare  with 
Davis  V.  Leonard,  69  Ind.  213;  Wood- 
cock V.  McQueen,  11  Ind.  14;  Lassen 
V.  Karrer,  117  Mich.  512,  76  N.  W. 
IZ',  Liebman  v.  Miller,  20  Misc.  (N. 
Y.)  705,  46  N.  Y.  S.  532,  in  which 
cases  the  statute  was  held  not  broad 
enough  to  cover  election  bets.  See, 
however,  Sutterly  v.  Fleshman,  41 
Pa.  Super.  Ct.  131,  holding  that  the 
courts  of  Pennsylvania  will  not  on 
account  of  comity  enforce  a  statu- 
tory right  given  by  another  state  to 
recover  losses  sustained  in  a  gam- 
bling transaction  which  have  already 
been  paid. 

"  Timmons  v.  Timmons,  145  Ky. 
259,  140  S.  W.  164.  See.  however, 
Ives  V.  Boyce,  85  Nebr.  324,  123  N. 
W.  318,  25  L.  R.  A.  (N.  S.)  157n, 
holding  that  the  Nebraska  statute  per- 
mitting recovery  of  money  lost  at 
"games  of  hazard"  does  not  apply  to 
a  "bucket  shop"  transaction. 

"Williamson  v.  Majors,  169  Fed. 
754,  95  C.  C.  A.  186.  See  also,  Ascher 
v.  Edward  Moyse  &  Co.  (Miss.),  57 
So.  299. 


"Mclntyre  v.  Smyth,  108  Va.  IZd, 
62  S.  E.  930. 

'*  Johnson  v.  Clark,  23  Misc.  (N. 
Y.)  346,  51  N.  Y.  S.  238  (either  jew- 
elry or  its  value  recoverable).  To 
same  effect,  Zeller  v.  White,  208  111. 
518,  70  N.  E.  669,  100  Am.  St.  243 
(Suit  does  not  have  to  be  brought 
to  recover  the  money  lost  on  each 
hand  but  may  be  maintained  for 
the  lump  sum  and  it  might  be 
brought  either  against  the  proprie- 
tor of  the  house  or  his  employe.).  See 
Cartwright  v.  McElwain,  132  Ky.  83, 
116  S.  W.  297,  holding  that  a  saloon 
keeper  who  receives  part  of  the 
money  lost  at  gaming  in  his  saloon 
is  liable  for  the  whole  amount  even 
though  he  did  not  knowingly  partici- 
pate in  the  profits ;  Berns  v.  Shaw,  65 
W.  Va.  667,  64  S.  E.  930,  23  L.  R.  A. 
(N.  S.)  522n,  holding  both  the  keeper 
of  the  game  and  his  agent  joint  tort 
feasors  and  liable  jointly  and  sever- 
ally to  the  loser. 

-"  Van  Pelt  v.  Schauble,  68  N.  J.  L. 
638,  54  Atl.  437.  See  also,  Pearce  v. 
Foote,  113  111.  228,  55  Am.  Rep.  414; 
Lyons  v.  Hodgen,  90  Kv.  280,  12  Ky. 
L.  211,  13  S.  W.  1076.  Compare  with 
Ives  V.  Boyce,  85  Nebr.  324,  123  N. 
W.  318,  25  L.  R.  A.  (N.  S.)  157n, 
in  which  it  was  held  that  the  statute 
was  not  sufficiently  broad  to  entitle 
plaintiff  to  recover  money  lost  in  a 
"bucket  shop"  transaction.  To  same 
effect,  Boyce  v.  O'Dell  Commission 
Co.,  109  Fed.  758  (construing  Indiana 
Statute)  ;  Lancaster  v.  McKinley,  2)2i 
Ind.  App.  448,  67  N.  E.  947;  Hirst  v. 
Maag.  13  Pa.  Super.  Ct.  4. 

'^  Jones  V.  Cavanaugh,  149  Mass. 
124,  21  N.  E.  306. 

22  Perry  v.  Gross,  25  Nebr.  826,  41 
N.  W.  799.  Compare  with  Ives  v. 
Boyce,  85  Nebr.  324,  123  N.  W.  318, 
25  L.  R.  A.  (N.  S.)  157n. 


321 


GAMING   AXD   WAGERING. 


§    1021 


§  1021.  Rights  and  liabilities  of  third  persons. — Where  the 
winner  acts  through  an  agent  the  principal  and  agent  may  under 
the  statute  be  jointly  liable  to  the  loser."^  The  right  to  recover 
money  lost  at  gaming  may  rest  in  a  third  person,  as  where  one 
loses  money  which  rightfully  belongs  to  another,  the  true  owner 
may  maintain  an  action  against  the  winner  for  its  recovery. 
Thus,  the  beneficiary  of  trust  funds  which  have  been  lost  by  the 
trustee  at  a  faro  bank  may  maintain  an  action  at  common  law 
against  the  proprietor  of  such  gambling  bank  for  their  recovery, 
the  beneficiary  not  being  in  pari  delicto.'*  A  wife,  in  a  proper 
case,  may  recover  money  entrusted  to  her  husband  which  he  has 
lost  at  gaming.-^  So,  it  has  been  held  that  a  master  may  recover 
property  owned  by  him  which  his  servant,  without  his  consent, 
loses  in  a  gambling  game.""  Under  the  Tennessee  statute,  where 
an  officer  embezzled  funds  of  his  bank,  and  lost  the  same  in  illegal 
speculations,  an  assignment  to  the  bank  by  himself  and  wife  of 
their  right  to  recover  the  same  is  valid. "^ 


^Lilenthal  v.  Carpenter  Baggott  & 
Co.,  148  Ky.  50,  146  S.  W.  2;  Cart- 
wright  V.  McElwain,  132  Ky.  83, 
116  S.  W.  297;  Berns  v.  Shaw,  65  W. 
Va.  667,  64  S.  E.  930,  23  L.  R.  A. 
(N.  S.)  522n.  See,  however,  Nagle 
V.  Randall,  115  Minn.  235,  132  N.  W. 
266,  holding  that  under  the  Alinne- 
sota  statute  the  keeper  of  the  garne 
who  docs  not  participate  therein  is 
liable  to  return  only  the  amount  of 
his  "rake-off". 

'*  Pierson  v.  Fuhrmann,  1  Colo. 
App.  187,  27  Pac.  1015,  per  Reed,  J.: 
"This  was  the  rule  at  common  law, 
and  has  been  asserted  in  the  courts 
of  almost  every  state  in  the  Union. 
In  Jacobs  v.  Pollard,  10  Cush. 
(Mass.)  287,  it  is  said:  'In  all  cases 
where  money  is  held  by  a  person, 
whether  it  came  into  his  hands  right- 
fully or  wrongfully,  that  in  fact  be- 
longs to  another,  the  true  owner  may 
maintain  an  action  against  him  for 
its  recovery.' " 

"■'  Murray  v.  Aull,  47  Colo.  542,  107 
Pac.  1068.  (In  the  above  case  the  wife 
recovered  against  one  who  paid  the 
check  issued  by  the  husband  with  the 
knowledge  that  it  was  given  in  settle- 
ment of  a  gambling  debt.)    See  also. 


Western  Nat.  Bank  of  Pueblo  v.  State 
Bank  of  Rocky  Ford,  18  Colo.  App. 
128,  70  Pac.  439;  Thompson  v.  Hynds, 
15  Utah  389,  49  Pac.  293. 

^Ramirez  v.  Main,  1  Ariz.  43,  89 
Pac.  508.  But  it  has  been  held  that 
the  collateral  heirs  of  a  deceased 
could  not  recover  property  conveyed 
by  the  decedent  in  accordance  with 
the  terms  of  an  aleatory  contract,  "in 
the  making  of  which  there  appears  to 
have  been  no  unfair  dealing  and  no 
great  disproportion  between  the  value 
of  the  property  conveyed  and  the  con- 
sideration received,  the  property  hav- 
ing been  the  naked  ownership  of  real 
estate  valued  at  $3,300,  and  the  con- 
sideration having  been  the  obligation 
of  the  defendant  to  maintain  and 
care  for  the  grantor  during  the  re- 
mainder of  his  life,  and  to  bury  him, 
when  dead."  Thielman  v.  Gahlman, 
119  La.  350,  44  So.  123.  The  right  to 
sue  may  be  given  the  parent,  wife, 
child  or  children,  executor  or  admin- 
istrator of  or  the  assignee  of  the  per- 
son sustaining  the  loss.  Ascher  v.  Ed- 
ward Moyse  &  Co.  (Miss.),  57  So. 
299. 

"Allen  V.  Dunham,  92  Tenn.  257. 
21  S.  W.  898.   As  to  the  right  of  an 


21 — CoNTR.vcTS,  Vol.  2 


1022 


CONTRACTS. 


322 


§  1022.  Prize  contests. — A  purse,  prize  or  premium  is  usu- 
ally considered  as  something  of  value,  offered  by  a  person  for  the 
doing  of  something  by  others.^^  The  mere  fact  that  an  entrance 
fee  is  charged  before  one  is  permitted  to  contest  does  not  make 
the  transaction  gaming  when  the  amount  of  the  prize  does  not 
depend  upon  the  number  of  contestants  or  the  amount  of  fees 
paid  in  by  such  contestant,^"  and  the  winner  may  maintain  an 
action  for  the  purse.^** 

§  1023.  Further  examples  of  valid  and  invalid  prize  con- 
tests.— The  transaction  is  also  valid  where  the  prize  is  made 
up  by  voluntary  subscriptions  on  the  part  of  persons  who  take  no 
part  in  the  contest.^^  A  premium  or  reward  offered  in  good  faith 
and  not  as  a  cover  for  betting,  by  a  third  person  to  the  winner  of 
a  horse  race,  may  be  recovered  by  the  winner  even  though  he  paid 


assignee  to  sue,  see  Van  Pelt  v. 
Schanble,  68  N.  J.  L.  638,  54  Atl. 
437. 

"'See  Hankins  v.  Ottinger,  115  Cal. 
454,  47  Pac.  254.  40  L.  R.  A.  76 ;  Mor- 
rison V.  Bennett,  20  Mont.  560,  52 
Pac.  553,  40  L.  R.  A.  158;  Harris  v. 
White,  81  N.  Y.  532.  See  as  to  right  to 
recover  for  deceit  of  a  newspaper 
publisher  who  conducted  a  subscrip- 
tion contest,  Goodhart  v.  Mission 
Pub.  Co.  (Cal.  App.),  123  Pac.  210. 

^  Gates  V.  Tinning,  5  U.  C.  Q.  B. 
540,  3  U.  C  Q.  B.  295;  Hankins  v. 
Ottinger,  115  Cal.  454,  47  Pac.  254, 
40  L.  R.  A.  76;  Wilson  v.  Conlin,  3 
111.  App.  517;  Alvord  v.  Smith.  63 
Ind.  58;  Mullen  v.  Beech  Grove  Driv- 
ing Park,  64  Ind.  202;  Molk  v.  Da- 
viess County  Agricultural  &c.  Assn., 
12  Ind.  App.  542,  40  N.  E.  927 ;  Delier 
v.  Plymouth  County  Agricultural 
Soc.  57  Iowa  481,  10  N.  W.  872; 
Farrier  v.  State  Agricultural  Soc,  36 
Minn.  478,  32  N.  W.  554;  Harris  v. 
White,  81  N.  Y.  532;  People  v.  Van 
De  Carr,  150  N.  Y.  439,  afifg.  7  App. 
Div.  (N.  Y.)  608,  39  N.  Y.  S.  581; 
People  v.  Fallon,  152  N.  Y.  12,  46 
N.  E.  296,  57  Am.  St.  492,  afifg.  4 
App.  Div.  (N.  Y.)  82,  39  N.  Y.  S. 
1130;  In  re  Dwyer,  14  Misc.  (N.  Y.) 
204,  35  N.  Y.  S.  884;  Misner  v. 
Knapp,  13  Ore.  135,  9  Pac.  65,  57  Am. 
Rep.   6;    Ballard   v.   Brown,   67   Vt. 


586,  32  Atl.  485;  Porter  v.  Day,  71 
Wis.  296,  n  N.  W.  259. 

'"Gates  V.  Tinning,  5  U.  C.  Q.  B. 
540,  3  U.  C  Q.  B.  295;  Alvord  v. 
Smith,  63  Ind.  58;  Molk  v.  Daviess 
County  Agricultural  &c.  Assn.,  12 
Ind.  App.  542,  40  N.  E.  927;  Delier 
v.  Plymouth  County  Agricultural 
Soc,  57  Iowa  481,  10  N.  W.  872;  Mis- 
ner v.  Knapp,  13  Ore.  135,  9  Pac.  65, 
57  Am.  Rep.  6;  Porter  v.  Day,  71 
Wis.  296,  2>1  N.  W.  259;  Moshier  v. 
La  Crosse  County  Agricultural  Soc, 
90  Wis.  Zl,  62  N.  W.  932.  A  contract 
to  train  horses  in  consideration  in 
part  of  a  per  cent,  of  the  purses  won 
by  them  does  not  violate  the  then 
New  York  laws.  Brien  v.  Stone,  82 
App.  Div.  (N.  Y.)  450,  81  N.  Y.  S. 
597.  See  also,  Harris  v.  White,  81  N. 
Y.  532.  Compare  with  Mosher  v. 
Griffin,  51  111.  184,  99  Am.  Dec  541. 
One  who  wins  an  automobile  in  a 
rafifle  may  recover  the  machine  from 
the  one  who  has  actual  possession 
thereof  when  the  owner  recognizes 
the  right  of  the  winner  to  the  ma- 
chine and  gives  him  an  order  for  the 
same.  Dee  v.  Sears-Nattinger  Auto 
Co.,  141  Iowa  610,  118  N.  W.  529, 
133  Am.  St.  182.  See  also,  Martin 
V.  Richardson,  94  Kv.  183,  21  S.  W. 
1039,  14  Ky.  L.  847,  19  L.  R.  A.  692, 
42  Am.  St.  353. 

'^  Wilkinson  v.  Stitt,  175  Mass.  581, 
56  N.  E.  830. 


323  GAMING    AND    WAGERING.  §    IO24 

an  entrance  fee  which  contributed  toward  making  up  the  pre- 
mium.^- But  where  the  amount  of  the  premium  depends  entirely 
upon  the  number  of  contestants  and  the  amount  of  entrance  fees 
paid  in,  it  has  been  held  that  the  transaction  is  a  gambling  con- 
tract.^' A  statute  which  prohibits  pacing  or  trotting  any  horse 
for  a  purse  except  when  authorized  by  a  fair  or  agricultural  so- 
ciety does  not  render  invalid  an  offer  by  the  owner  of  a  stallion  of 
a  specified  sum  of  money  to  the  owner  of  the  first  get  of  such 
stallion  that  should  trot  a  mile  in  a  designated  time.^* 

§  1024.  Collateral  agreements. — Contracts  made  in  fur- 
therance of  gambling  transactions,  though  not  immediately  in- 
volving a  wager,  are  against  public  policy.'^  Consequently,  one 
who  knowingly  and  with  the  purpose  of  furthering  a  wagering 
or  gambling  transaction  lends  money  to  another  to  enable  the 
latter  to  engage  therein  cannot  maintain  an  action  for  its  recov- 
ery.'" 

§  1025.  Collateral  contracts — Lender  must  be  a  confed- 
erate.— It  is  not  enough,  however,  to  defeat  recovery  by  the 

^-  Porter  v.  Day,  71  Wis.  296,  37  N.  cation,  it  was  not  limited  entirely  to 
W.  259.  An  agreement  between  two  the  unlawful  purpose."  St.  Louis  Fair 
contestants  to  pool  their  winnings  in  Assn.  v.  Carmody,  151  Mo.  566,  52 
various  horse  races  is  not  illegal.  S.  W.  365,  74  Am.  St.  571. 
Hankins  v.  Ottinger,  115  Cal.  454.  47  ^  Tyler  v.  Carlisle,  79  Maine  210. 
Pac.  254,  40  L.  R.  A.  76.  See,  how-  9  Atl.  356,  1  Am.  St.  301n ;  Lancaster 
ever,  Comly  v.  Hillegass,  94  Pa.  St.  v.  Ames,  103  Maine  87.  68  Atl.  533, 
132,  39  Am.  Rep.  774,  in  which  the  17  L  R.  A.  (N.  S.)  229n,  125  Am. 
court  refused  to  permit  recovery  on  St.  286;  Gibney  v.  Olivette,  196  Mass. 
a  check  given  to  cover  the  entrance  294,  82  N.  E.  41 ;  Appleton  v.  Max- 
fee  of  a  horse  in  a  race.  well,  10  N.  Mex.  748,  65  Pac.  158,  55 

**  Gibbons  v.   Gouverneur,   1    Denio  L.   R.   A.  93;   Oliphant  v.    Markham. 

(N.    Y.)     170;    Dudley    v.    Flushing  79  Tex.  543.   15   S.   W.  569,  23   Am. 

Jockey   Club,   69   N.    Y.    St.   621.    14  St.  363.    See  also,  Thomas   v.   First 

Misc.  (N.  Y.)  58,  35  N.  Y.  S.  245.  Nat.  Bank,  116  111.  App.  20,  affd..  213 

"Whitehead   v.   Burgess,  61    N.  J.  111.  261,  72  N.  E.  801  (the  indorsee  of 

L.  75.  38  Atl.  802.  a    certificate    of    deposit    denied    the 

^''Kuhl  V.  M.  Gaily  Universal  Press  right  to  recover  on  such  certificate 
Co.,  123  Ala.  452.  26  So.  535,  82  Am.  when  the  indorsement  was  made  to 
St.  135.  "A  scheme  lawful  in  itself  enable  the  indorsee  to  engage  in  pool 
cannot  be  made  a  cover  for  one  that  selling  on  horse  races)  ;  Plank  v. 
is  unlawful.  The  plaintiff's  race  track  Jackson.  128  Tnd.  424,  26  N.  E.  568, 
and  grandstand  were  lawful  to  be  27  N.  E.  1117;  Freedlev  v.  Jacobv. 
kept,  but  when  it  adds  to  those  the  220  Pa.  609.  69  Atl.  1047  (holding  that 
gambling  booth,  and  runs  them  to-  one  who  placed  a  wager  for  another 
gether.  and  then  makes  a  contract  and  advanced  the  money  for  him  can- 
that  is  appurtenant  to  either  and  ap-  not  recover  from  the  other  the  money 
purtenant  to  both,  courts  will  not  en-  so  advanced)  ;  Terry  v.  Peterson,  37 
tertain  it  merely  because,  in  its  appli-  Utah  401,  108  Pac.  1106  (proceeds  of 


1026 


CONTRACTS. 


324 


lender,  that  he  knew  of  the  borrower's  intention  to  use  it  in  a  wag- 
ering or  gaming  transaction.  The  lender  must  in  some  manner  be 
a  confederate  or  participator  in  the  borrower's  act,  must  himself 
be  implicated  in  it.^^  Thus  one  not  a  party  to  a  gambling  transac- 
tion and  who  does  not  profit  thereby  may  recover  on  a  note  given 
him  by  the  loser  for  money  loaned  the  latter  with  which  to  dis- 
charge a  gambling  debt.^^ 

§  1026.  Examples  of  invalid  collateral  contracts. — But  it 
has  been  held  that  a  vendor  of  slot-machines  who  instructs  the 
purchaser  and  assists  him  in  promotion  of  their  illegal  use  cannot 
recover  on  promissory  notes  given  as  payment  for  such  ma- 
chines.^^  One  who  was  employed  as  manager  of  a  gambling  house 
and  was  to  receive  one-half  the  net  profits  in  lieu  of  salary  has 
been  denied  the  right  to  maintain  an  action  for  damages  for  the 
breach  of  such  contract. *''  A  broker  who  is  privy  tO'  an  illegal 
contract  for  the  purchase  or  sale  of  futures  cannot  recover  either 
for  his  services  or  losses.*^  An  executory  contract  for  the  pur- 
chase of  a  half  interest  in  a  store  and  fixtures  among  which  latter 


sale  of  homestead  lost  by  husband  in 
gaming).     See  also,  ante,  §   1014. 

"Corbin  v.  Wachhorst,  IZ  Cal.  411, 
15  Pac.  22;  Singleton  v.  Monticello 
Bank,  113  Ga.  527,  38  S.  E.  947; 
Plank  V.  Jackson,  128  Ind.  424,  26 
N.  E.  568,  27  N.  E.  1117;  Sondheim 
V.  Gilbert,  117  Ind.  71,  18  N.  E.  687, 
5  L.  R.  A.  432,  10  Am.  St.  23n ;  Tyler 
V.  Carlisle,  79  Maine  210,  9  Atl.  356, 
1  Am.  St.  301n;  Waiigh  v.  Beck,  114 
Pa.  St.  422,  6  Atl.  923,  60  Am.  Rep. 
354;  Dowell  v.  Collin  Co.  Nat.  Bank 
(Tex.  Civ.  App.),  126  S.  W.  29; 
Cleveland  v.  Tavlor  (Tex.  Civ. 
App.),  108  S.  W.'l037;  Gaylord  v. 
Soragen,  Z2  Vt.  110,  76  Am.  Dec. 
154;  Kinney  v.  Hynds,  7  Wyo.  22, 
49  Pac.  403,  52  Pac.  1081.  See  also 
cases  cited  in  preceding  note.  See, 
however,  Scott  v.  Baker,  143  111.  App. 
151. 

'^  Oulds  V.  Harrison,  10  Ex.  572,  3 
C.  L.  R.  353,  24  L.  J.  Ex.  66,  3  Wk. 
R.  160 ;  White  v.  Yarbrough,  16  Ala. 
109;  Brooks  v.  Brady,  53  111.  App. 
155;  Wyman  v.  Fiske,  3  Allen 
(Mass.)  238,  80  Am.  Dec.  66;  Bog- 
ges3  V.  Lily,  18  Tex.  200.   It  is  other- 


wise, however,  where  the  one  seeking 
to  recover  was  a  participant  in  the 
game.  White  v.  Wilson's  Admr.,  100 
Ky.  367,  38  S.  W.  495,  Zl  L.  R.  A. 
197. 

^  Kuhl  V.  M.  Gaily  Universal  Press 
Co.,  123  Ala.  452,  26  So.  535,  82  Am. 
St.  135. 

*°Britt  V.  Davis  Bros.,  118  La.  597, 
43  So.  248,  118  Am.  St.  390. 

"Bailey  &  Graham  v.  Phillips,  159 
Fed.  535 ;  Anderson  v.  Holbrook,  128 
Ga.  233,  57  S.  E.  500,  11  L.  R.  A.  (N. 
S.)  575n;  Beers  v.  Wardwell,  198 
Mass.  236,  84  N.  E.  306;  Saunders  v. 
Baker,  122  Mo.  App.  294,  99  S.  W. 
51 ;  Crawford  v.  Spencer,  92  Mo.  498, 
4  S.  W.  713,  1  Am.  St.  745.  Nor  can 
he  recover  money  advanced  by  him 
to  cover  margins.  Henry  Hentz  &  Co. 
V.  Booz,  8  Ga.  App.  577,  70  S.  E.  108. 
See  also,  Burns  v.  Tomlinson,  147  N. 
Car.  645,  61  S.  E.  614.  But  he  is  en- 
titled to  recover  for  advances  made 
on  behalf  of  his  principal  when  not  in 
privy  of  relationship.  Allen  v.  Cald- 
well Ward  &  Co.,  149  Ala.  293,  42 
So.  855;  Bailev  &  Graham  v.  Phil- 
lips, 159  Fed.  535. 


325  GAMING   AND    WAGERING.  §    1 02/ 

were  gaming  devices  known  as  slot-machines  has  been  held  illegal 
and  recovery  of  earnest  money  paid  thereon  permitted. ■*- 

§  1027.  Examples  of  valid  collateral  contracts. — But  it  is 
no  defense  against  one  not  a  party  to  the  gambling  transaction 
who  seeks  to  recover  for  fitting  up  and  furnishing  a  house  that 
he  knew  it  was  to  be  used  for  gaming/^  nor  against  the  vendor  or 
lessor  of  premises  that  he  knew  they  were  to  be  used  for  such 
purpose.** 

§  1028.  Securities  given  for  gambling  debt. — Securities 
given  for  a  gambling  debt  are  unen forcible.*^  Thus  a  pledge  of 
stock  as  collateral  security  for  a  note  given  in  settlement  of  losses 
at  gaming  is  void.*"  The  same  is  true  of  a  bill  of  sale  given, *^  a 
mortgage  executed,*^  or  a  conveyance  of  land  made,**  and  in 
some  jurisdictions  judgments  rendered  on  securities  given  for  a 
gambling  debt  are  void.'^'' 

§  1029.  New  contract — Ratification — Executed  margin 
transaction. — A  new  contract,  such  as  a  renewal  note,  which 
springs  out  of  and  is  based  upon  a  gambling  or  wagering  agree- 

*'  Muller  V.  Wm.  F.  Stoacker  Cigar  "  Hockaday    v.    Willis,    1    Spear's 

Co..  89  Nebr.  438,  131  N.  W.  923,  34  Law  (S.  Car.)  379,  40  Am.  Dec.  606. 

L.  R.  A.  (N.  S.)  573n.  ^niackin  v.  Shannon,   165  Fed.  98 

".Michael  v.  Bacon,  49  Mo.  474,  8  (mortgagor  and   mortgagee   partners 

Am.  Rep.  138.  To  same  effect.  Green-  in  conducting  a  gaming  house)  ;  Kos- 

land  V.  Mitchell,  3  Alaska  271    (car-  ter  v.  Seney,  99  Iowa  584,  68  N.  W. 

pcnters    built    house    to    be   used   by  824  (chattel  mortgage), 

owner  as  a  gaming  house).  '"Trammell  v.  Gordon,  11  Ala.  656; 

"  Brunswick  &c.  Co.  v.  Valleau,  50  Boatright    v.    Porter's   Heirs,   32   Ga. 

Iowa  120,  32  Am.  Rep.  119;  Nagle  v.  130;    International   Bank  v.   Vankirk, 

Randall,    115    Minn.   235,    132   N.   W.  39  111.  App.  23.     See,  however,  as  to 

266     (action     brought     against     the  bona  fide  purchasers,  Fenno  v.  Sayre, 

keeper  of  the  game   and   the  owner  3  Ala.  458;  Chiles  v.  Coleman,  1   A. 

and    lessees    of    the   building).     The  K.    Marsh    (Ky.)    296,    12   Am.   Dec. 

"owner"  or  "lessor"  may  be  rendered  396. 

liable    bv    statute.     Iroquois    Co.    v.  '"' Butler  v.  Nohe,  98  111.  App.  624; 

Meyer,  80  Ohio  St.  676,  89  N.  E.  90.  Gough  v.  Pratt,  9  Md.  526;   Smither 

^"Applegarth  v.  Collev,  10  Mees.  &  v.  Keves,  30  Miss.   179;  Campbell  v. 

W.  723,  12  L.  J.  Ex.  34,  7  Jur.  18;  New    Orleans    Nat.    Bank,    74    Miss. 

International  Bank  v.  Vankirk,  39  111.  526,  21  So.  400,  23  So.  25.     See,  how- 

App.  23;  Gough  v.  Pratt.  9  Md.  526;  ever.  Lane  v.  Chapman,  11  Ad.  &  E. 

Evans  V.  Cook,  11  Nev.  69;  Turner  V.  980;    Wilkerson    v.    Whitnev.    7    Mo. 

Peacock,    13    N.    Car.   303;    Haley   v.  295;  Teague  v.  Perrv.  64  N.  Car.  39; 

Long.  1  Pick.  (Tenn.)  93.  Holland  v.  Pirtle,  10  Humph.  (Tenn.) 

"Menardi  v.   Wacker    (Nev.),   105  167;    Welford    v.    Gilham,   2    Cranch 

Pac.  287.  (U.  S.)  556,  29  Fed.  Cas.  No.  17376. 


§    1027 


CONTRACTS. 


326 


ment  is  nnenforcible.^^  Nor  can  any  agreement  of  ratification 
or  compromise  render  a  gambling  or  wagering  contract  valid 
when  its  illegality  is  made  to  appear."  However,  where  an  il- 
legal margin  or  future  transaction  has  been  closed  and  money 
belonging  to  the  customer  resulting  from  such  transaction  is 
shown  to  be  in  the  hands  of  the  broker  the  latter  may  be  required 
to  pay  the  same  to  the  customer." 


•^Hay  V.  Ayling,  20  L.  J.  Q.  B. 
171,  16  Q.  B.  423,  15  Jur.  605;  Kuhl 
V.  M.  Gaily  Universal  Press  Co.,  123 
Ala.  452,  26  So.  535,  82  Am.  St.  135; 
Stone  V.  Mitchell,  7  Ark.  91 ;  Union 
Collection  Co.  v.  Buckman,  150  Cal. 
159,  88  Pac.  708,  9  L.  R.  A.  (N.  S.) 
568n,  119  Am.  St.  164n ;  International 
Bank  v.  Vankirk,  39  111.  App.  23; 
Campbell  Co.  Bank  v.  Schmitt,  143 
Ky.  421,  136  S.  W.  625;  Hollings- 
worth  V.  Moulton,  53  Hun  (N.  Y.) 
91,  24  N.  Y.  St.  843,  6  N.  Y.  S.  362; 
Haley  v.  Long,  1  Peck.  (Tenn.)  93. 
To  same  effect,  McKin  v.  Shannon, 
165  Fed.  98. 

■"  Union  Collection  Co.  v.  Buck- 
man.  150  Cal.  159,  88  Pac.  708,  9  L. 
R.  A.  (N.  S.)  568n  and  cases  cited, 
119  Am.  St.  164n;  Emery  v.  Royal, 
117  Ind.  299,  20  N.  E.  150;  Creutz  v. 
Heil,  89  Ky.  429,  12  S.  W.  926;  Pit- 


kins  V.  Noves,  48  N.  H.  294,  97  Am. 
Dec.  615.  2  Am.  Rep.  218;  Grandin 
V.  Grandin,  49  N.  J.  L.  508,  9  Atl. 
756,  60  Am.  Rep.  642;  Gould  v.  Arm- 
strong, 2  Hall  (N.  Y.)  266;  Turner 
V.  Peacock,  13  N.  Car.  303;  Haley  v. 
Long,  1  Peck.  (Tenn.)  93;  Reid  v. 
Brewer  (Tex.  Civ.  App.),  36  S.  W. 
99;  Everingham  v.  Meighan,  55  Wis. 
354,  13  N.  W.  269.  An  illegal  gaming 
contract  cannot  be  ratified.  Pelouse 
V.  Slaughter,  241  111.  215,  89  N.  E. 
259.  See  also,  Moore  v.  Blanck,  71 
Misc.  (N.  Y.)  257,  129  N._  Y.  S.  1105 
(check  given  on  discontinuance  of 
an  action  and  check  given  in  settle- 
ment of  a  gambling  transaction). 

"^'In  re  Dorr,  186  Fed.  276,  108  C. 
C.  A.  322.  Compare  with  Bauer  v. 
Fabel,  221  Pa.  156,  70  Atl.  558.  See 
however,  Norris  v.  Logan  (Tex.), 
94  S.  W.  123,  97  S.  W.  820. 


CHAPTER  XXVII. 


LOBBYING  CONTRACTS. 


1035.  General  rule.  §  1046. 

1036.  Lobbying  contracts  void. 

1037.  When  illegal. 

1038.  Character    of    legislation    im-        1047. 

material.  1048. 

1039.  Lobbying     contract     may     be 

general  in  its  nature.  1049. 

1040.  Invalid    if    personal    solicita-        1050. 

tion   is   contemplated. 

1041.  Illustrations    of    unenforcible       1051. 

contracts. 

1042.  Further   illustrations.  1052. 

1043.  Use  of  money  as  a  test. 

1044.  Contract    by    executive    officer       1053. 

qualifying  a  valid  legislative 
enactment.  1054. 

1045.  Lobbying  contract  entered  into 

by  public  officials. 


When  contract  for  services 
before  legislative  body  not 
unlawful. 

Examples   of    valid    contracts. 

Must  appear  openly  in  true 
character. 

Rule   applied. 

Contracts  distinguished  from 
lobbying. 

Effect  of  making  fee  con- 
tingent on  success. 

Contract  entered  into  under 
legislative    authority. 

Rule  where  contract  provides 
for  services  partly  illegal. 

Recovery  of   compensation. 


§  1035.  General  rule. — The  word  "lobbying-"  as  generally 
understood  signifies  soliciting  or  addressing  members  of  a  legis- 
lative body,  in  the  lobby  or  elsewhere,  with  the  purpose  of  influ- 
encing their  votes. ^  By  a  legislative  body  is  meant  any  body  of 
persons  authorized  to  make  laws  or  rules  for  the  community 
represented  by  them,  such  as  a  city  council,^  the  legislature  of  a 
state,^  or  the  congress  of  the  United  States.^ 


'  Burke  v.  Wood,  162  Fed.  533  (the 
above  case  quotes  a  number  of  defini- 
tions) ;  Le  Tourneux  v.  Gilliss,  1  Cal. 
App.  546,  82  Pac.  627;  Colusa  County 
V.  Welch,  122  Cal.  428.  55  Pac.  243; 
Chippewa  Vallev  &  S.  R.  Co.  v.  Chi- 
cago St.  R.  M.  &  O.  R.  Co.,  75  Wis. 
224.  44  N.  W.  17.  6  L.  R.  A.  601. 

'  Hay  ward  v.  Nordberg  Alfg.  Co., 
85  Fed.  4,  29  C.  C.  A.  438  (city  coun- 
cil and  board  of  public  works)  ;  Suss- 
man  v.  Porter,  137  Fed.  161;  Burke 
V.  Wood,  162  Fed.  533;  Critchfield  v. 
Bermidez  Asphalt  Pav.  Co.,  174  111. 
466,  51  N.  E.  552,  42  L.  R.  A.  347. 
See    also,    Davison    v.    Seymour,    1 


Bosw.  (N.  Y.)  88,  in  which  a  con- 
tract for  the  use  of  personal  in- 
fluence in  controlling  the  action  of 
a  board  of  directors  of  a  corpora- 
tion was  said  to  be  on  the  same  foot- 
ing as  contracts  for  influencing  the 
action  of  legislators. 

^  Le  Tourneux  v.  Gilliss,  1  Cal.  App. 
546,  82  Pac.  627;  Marshall  v.  Balti- 
more &  O.  R.  R.  Co.,  16  How.  (U. 
S.)  314.  14  L.  ed.  953:  Chippewa 
Valley  &  S.  R.  Co.  v.  Chicago,  St. 
R.  M.  &  O.  R.  Co..  75  Wis.  224,  44 
N.  W.  17,  6  L.  R.  A.  601. 

*  Owens  V.  Wilkinson,  20  App.  (D. 
C.)  51;  McKee  v.  Cheney,  52  How. 


327 


§    1036  CONTRACTS.  328 

§  1036.  Lobbying  contracts  void. — A  contract  which  has 
for  its  object  the  influencing  of  a  member  or  members  of  a  legis- 
lative body  in  the  discharge  of  their  public  duties  is  void  as 
against  public  policy.^  In  order  to  render  lobbying  contracts 
void  it  is  unnecessary  for  the  agreement  to  call  for  the  perform- 
ance of  acts  which  are  prohibited  by  the  constitution  or  legislative 
enactment.® 

§  1037.  When  illegal. — This  is  true  for  the  reason  that 
legislators  should  act  only  from  a  sense  of  public  duty.  Public 
policy  imperatively  requires  that  courts  should  pronounce  void 
every  contract  the  ultimate  or  probable  tendency  of  which  would 
be  to  sully  the  purity  or  mislead  the  judgment  of  those  to  whom 
the  high  trust  of  legislation  is  confided.^ 

Prac.     (N.    Y.)     144;    Hazelton    v.  989,   30  L.    R.    A.   IZI,   51    Am.    St. 

Sheckel,  202  U.  S.  71,  50  L.  ed.  939,  493;  Everson  v.  Pitney,  40  N.  J.  Eq. 

26   Sup.   Ct.  567;   Trist  v.   Child,  21  539,   5   Atl.   95,    revd.   42    N.   J.    Eq. 

Wall.  (U.  S.)  441,  22  L.  ed.  623.  361,   7   Atl.   860;    Milbank   v.    Jones, 

"Burke  V.  Wood,  162  Fed.  533.  127  N.  Y.  370,  28  N.  E.  31,  24  Am. 

'Le    Tourneux    v.    Gilliss.    1    Cal.  St.  454;   Brown  v.  Brown,  34  Barb. 

App.    546.   82    Pac.   627;    Milbank   v.  (N.   Y.)    533;   Hillyer  v.   Travers,   1 

Jones,   127  N.  Y.  370,  28  N.   E.  31,  Law    Rep.    (N.    Y.)     (O.    S.)    146; 

24   Am.    St.   454;    Mills   v.   Mills,   36  McKee  v.  Cleney,  52  How.  Pr.    (N. 

Barb.    (N.   Y.)    474,   affd.   40   N.    Y.  Y.)    144;    Mills   v.    Mills,    40    N.    Y. 

543,   100  Am.  Dec.  535.  543,  100  Am.  Dec.  535,  afifg.  36  Barb. 

^?ilarshall    v.    Baltimore    &    O.    R.  (N.   Y.)    474;    Chesebrough  v.   Con- 

R.  Co.,  16  How.   (U.  S.)   314,  14  L.  over,   140  N.   Y.  382,  35   N.   E.  633; 

ed.    953.      To    same    effect,    Boyd    v.  Harris  v.  Simonson,  28  Hun  (N.  Y.) 

Barclay,  1  Ala.  34,  34  Am.  Dec.  762;  318,    revd.    83    N.    Y.    156;    Cary   v. 

Hunt  V.  Test,  8  Ala.  719,  42  Am.  Dec.  Western    Union    Tel.    Co.,    47    Hun 

659;    Martin   v.   Wade,  Zl   Cal.    168;  (N.  Y.)  610,  20  Abb.   (N.  Cas.)  ZZZ, 

Weed  V.  Black,  2  MacArth.    (D.  C.)  15  N.  Y.  St.  204;  Gray  v.  Hook,  4  N. 

268,  29  Am.   Rep.  618;    Hayward   v.  Y.  539;  Russell  v.   Burton,  66  Barb. 

Nordberg    Mfg.    Co..   85    Fed.   4,    29  (N.   Y.)     539;    Rose    v.    Truax,    21 

C.  C.  A.  438;  Bermudez  Asphalt  Pav-  Barb.     (N.     Y.)     361;     Sedgwick    v. 

ing    Co.   v.    Critchfield,   62   111.    App.  Stanton,    14    N.    Y.    289;    Harris    v. 

221;  Goodrich  v.  Tenney,  144  111.  422,  Roof,  10  Barb.  (N.  Y.)  489;  Sweeney 

33  N.  E.  44,  19  L.  R.  A.  371,  36  Am.  v.  McLeod,  15  Ore.  330,  15  Pac.  275; 

St.    459;    Cook   v.    Shipman,    24    111.  Hunter  v.  Nolf,  71  Pa.  St.  282;  Fil- 

614;  Judah  v.  Vincennes  University,  son's   Trustees  v.   Himes,   5    Pa.    St. 

23  Ind.  272;  McBratney  v.  Chandler,  452,  47   Am.   Dec.   422;    Hatzfield  v. 

22   Kans.   692,    31     Am.     Rep.    213;  Gulden.  7  Watts    (Pa.)    152,  32  Am. 

Kansas   Pacific   R.   Co.   v.   McCoy,  8  Dec.    750;    Gippinger    v.    Hepbaugh, 

Kans.  538;  Wood  v.  McCann,  6  Dana  5  Watts  &  S.  (Pa.)  315,  40  Am.  Dec. 

(Kv.)    366;   Gill  v.  Williams,   12  La.  519;   Spalding  v.  Ewing,   149  Pa.   St. 

Ann.  219,  68  Am.  Dec.  767;  Burney's  375,  24  Atl.  219,  15  L.  R.  A.  121,  34 

Heirs   v.    Ludeling,   47   La.    Ann.   1Z,  Am.  St.  608;  Usher  v.  McBratney,  3 

16  So.  507;  Fuller  v.  Dame,  18  Pick.  Dill.   (U.  S.)  385;  Trist  v.  Child,  21 

CMass.)   472;   Long  v.  Battle  Creek,  Wall.    (U.    S.)    441,   22   L.    ed.   623; 

39  Mich.  323,  ZZ  Am.  Rep.  384 ;  Houl-  Providence    Tool    Co.    v.    Norris.    2 

ton  v.  Dunn,  60  Minn.  26,  61  N.  W.  Wall.   (U.  S.)    45.    17    L.    ed.    868; 


329  LOBBYING    CONTRACTS.  §    IO38 

§  1038.  Character  of  legislation  immaterial. — In  deterinin- 
ing  the  validity  of  a  lobbying  contract  the  character  of  the  legisla- 
tion in  consideration  of  which  it  is  made  is  immaterial.  A  con- 
tract for  lobbying  services  is  equally  illegal  whether  the  act  to  be 
passed  is  public  or  private  in  its  nature.**  Nor  is  the  contract 
condemned  only  when  its  object  is  to  obtain  legislation.  An 
agreement  which  has  for  its  purpose  the  prevention  of  the  passage 
of  an  act  by  the  legislature  is  equally  invalid." 

§  1039.  Lobbying  contract  may  be  general  in  its  nature. — 
And  where  the  contract  contemplates  and  its  main  purpose  is  the 
securing  or  influencing  of  legislative  action  it  may  be  invalid  even 
though  the  influence  contemplated  is  not  to  be  exerted  for  or 
against  any  particular  bill.  Thus  one  who  advances  money  to 
another  in  order  to  enable  the  latter  to  remain  at  the  capital  dur- 
ing a  session  of  the  legislature  and  while  there  carry  on  the  busi- 
ness of  lobbying  has  been  denied  the  right  to  recover  the  money 
so  advanced.^" 

§  1040.  Invalid  if  personal  solicitation  is  contemplated. — 
The  validity  of  a  contract  for  procuring  legislation  is  usually  de- 
Powers  V.  Skinner,  34  Vt.  274,  80  Atl.  219,  15  L.  R.  A.  727,  34  Am.  St. 
Am.  Dec.  677;  Barron  v.  Tucker,  53  608;  Clippinger  v.  Hepbaugh,  5  Watts 
Vt.  338,  38  Am.  Rep.  684;  Common-  &  S.  (Pa.)  315,  40  Am.  Dec.  519; 
wealth  V.  Callaghan,  2  Va.  Cas.  460;  Trist  v.  Child  21  Wall.  (U.  S.)  441. 
Houlton  V.  Nichol,  93  Wis.  393,  67  22  L.  ed.  623;  Powers  v.  Skinner,  34 
N.  W.  715,  33  L.  R.  A.  166,  37  Am.  Vt.  274,  80  Am.  Dec.  677. 
St.  928;  Chippewa  Valley  &  S.  R.  *  Sweeney  v.  McLeod.  15  Oregon 
Co.  V.  Chicago.  St.  R.  M.  &  O.  R.  330,  15  Pac.  275  (preventing  passage 
Co.,  75  Wis.  224,  44  N.  W.  17,  6  L.  of  an  act  prohibiting  the  catching  of 
R.  A.  601 ;  Bryan  v.  Reynolds,  5  fish  in  a  certain  manner)  ;  Usher  v. 
Wis.  200,  68  Am.  Dec.  55.  'See  also,  ^IcBratney,  3  Dill.  (U.  S.)  385.  See 
IMacGregor  v.  Dover  &c.  R.  Co.,  18  also,  Colusa  Countv  v.  Welch,  122 
Q.  B.  618,  83  E.  C.  L.  618;  East  Cal.  428,  55  Pac.  243. 
Anglian  R.  Co.  v.  Eastern  Counties  "Le  Tourneux  v.  Gilliss,  1  Cal. 
R.  Co.,  16  Jur.  249;  Cameron  v.  App.  546.  82  Pac.  627.  A  man  who 
Heward,  11  Quebec  Super.  Ct.  392.  agrees    to    furnish    testimony    for    a 

*Wood  V.   jMcCann,  6  Dana    (Ky.)  legislative   investigation,   in   exchange 

366    (contract   to   secure   passage   of  for  a  share  of  the  profits  which  such 

an   act   legalizing  promisor's    divorce  investigation  will  produce  to  one  who 

from  a  former  wife)  ;   Frost  v.  Bel-  is    favored   with    inside  and   advance 

mont,   6   Allen    (Mass.)    152    (lobby-  information,  cannot  recover  his  share 

ing  services  to  be  rendered  in  secur-  of  the  profits.     Veazev  v.  Allen.   173 

ing  the  passage  of  an  act  for  the  in-  N.  Y.  359,  66  N.  E.  103.  62  L.  R.  A. 

corporation    of    a    municipality;    con-  362.     See  also.   Hazelton   v.   Sheckel, 

tract   therefor   held    illegal)  ;    Spald-  202  U.  S.  71,  50  L.  ed.  939,  26  Sup. 

ing   V.    Ewing,    149    Pa.    St.    375,   24  Ct.  567- 


§    1 041  CONTRACTS.  33O 

termined  by  the  consideration  as  to  whether  or  not  it  calls  for  or 
contemplates  personal  solicitation  of  or  pressure  brought  to  bear 
upon  a  member  or  members  of  a  legislative  body.  If  personal 
influence  or  personal  solicitation  is  used  or  is  contemplated  by  the 
contract,  instead  of  open  and  fair  argument,  it  is  void." 

§  1041.  Illustrations  of  unenforcible  contracts. — A  con- 
tract to  pay  for  professional  services  in  securing  additional 
compensation  for  the  defendant  as  postmaster,  where  such  ser- 
vices consisted  in  securing  special  legislation  to  compel  the  post- 
office  department  to  pay  a  claim  which  had  been  rejected,  has  been 
held  contrary  to  public  policy  and  unenforcible.^^  An  agreement 
between  a  government  claimant  and  a  claim  agent,  employing  the 
agent  to  assist  in  obtaining  the  passage  of  a  private  act  of  con- 
gress for  payment  of  a  claim,  which  clearly  contemplates  paying 
the  agent  for  personal  solicitations  of  members  of  congress,  and 
other  services  such  as  are  known  as  lobbying,  is  void  because  con- 
trary to  public  policy.^^  Where,  in  a  suit  for  attorney's  fees,  it 
appeared  that  the  services  rendered  consisted  in  personal  solicita-  ' 
tion  of  the  heads  of  departments  of  state,  and  members  of  the 
legislature,   in  order  to  procure  legislation  in  the  interests  of 

"  Hunt  V.  Test,  8  Ala.  713,  42  Am.  the  appointments  to  public  offices,  or 
Dec.  659;  Le  Tourneux  v.  Gilliss,  1  the  ordinary  course  of  legislation, 
Cal.  App.  546,  82  Pac.  627;  Owens  are  void  as  against  public  policy, 
V.  Wilkinson,  20  App.  (D.  C.)  51;  without  reference  to  the  question 
Wood  V.  McCann,  6  Dana  (Ky.)  366;  whether  improper  means  are  con- 
Frost  V.  Belmont,  6  Allen  (Mass.)  templated  or  used  in  their  execution. 
152;  Sedgwick  v.  Stanton,  14  N.  Y.  The  law  looks  to  the  general  tend- 
289;  McKee  v.  Cheney,  52  How.  ency  of  such  agreements;  and  it 
Prac.  (N.  Y.)  144;  Harris  v.  Roof,  closes  the  door  to  temptation,  by  re- 
10  Barb.  (N.  Y.)  489;  Trist  v.  Child,  fusing  them  recognition  in  any  of 
21  Wall.  (U.  S.)  441,  22  L.  ed.  623;  the  courts  of  the  country."  Provi- 
Marshall  v.  Baltimore  &  O.  R.  R.  Co.,  dence  Tool  Co.  v.  Norris,  2  Wall. 
16  How.  (U.  S.)  314,  14  L.  ed.  953;  (U.  S.)  45,  17  L.  ed.  868.  See,  how- 
Globe  Works  V.  United  States,  45  Ct.  ever,  Foltz  v.  Cogswell,  86  Cal.  542, 
CI.  (U.  S.)  497;  Powers  v.  Skinner,  25  Pac.  60;  Miles  v.  Thorne,  38  Cal. 
34  Vt.  274,  80  Am.  Dec.  677 ;  Houlton  335,  99  Am.  Dec.  384. 
V.  Nichol,  93  Wis.  393,  67  N.  W.  715,  "  Spalding  v.  Ewing,  149  Pa.  St. 
33  L.  R.  A.  166,  57  Am.  St.  928.  "It  375,  24  Atl.  219,  15  L.  R.  A.  727,  34 
is  sufficient  to  observe  generally,  that  Am.  St.  608. 

all    agreements    for    pecuniary    con-        "Trist  v.  Child,  21  Wall.    (U.   S.) 

siderations    to    control    the    business  441,  22  L.  ed.  623.    Compare  Penne- 

operations  of  the  government,  or  the  baker  v.   Williams,   136  Ky.   120,   120 

regular  administration  of  justice,  or  8.  W.  321,  123  S.  W.  672. 


331  •      LOBBYIXG    COXTRACTS.  §    IO42 

clients,  no  recovery  can  be  had,  as  contracts  for  such  services  are 
against  public  policy." 

§  1042.  Further  illustrations. — Contracts  "to  give  all  the 
aid  in  his  power,  spend  such  reasonable  time  as  may  be  necessary, 
and  generally  to  use  his  utmost  influence  and  exertions  to  procure 
the  passage  into  a  law"  of  a  specified  bill,^°  to  "use  his  influence, 
eff'orts  and  labor  in  procuring  the  passage  of  a  law  by  the  said 
legislature,"^"  or  to  procure  legislation  upon  a  matter  of  public 
interest  in  regard  to  which  neither  of  the  parties  had  any  claim 
against  the  United  States,"  have  been  declared  void.  It  has  been 
said  that  "If  the  terms  of  the  contract  be  broad  enough  to  cover 
services  of  any  kind,  whether  secret  or  open,  honest  or  dishonest, 
the  law  pronounces  a  ban  upon  the  paper  itself,  Xor  will  honest 
services  substantially  performed  sanctify  an  unlawful  contract."^* 

§  1043.  Use  of  money  as  a  test. — It  has  also  been  stated 
that  all  contracts  for  the  procurement  of  legislation  are  void 
when  they  contemplate  the  use  of  money  to  influence  legislation, 
but  this  broad  statement  is  inaccurate.  The  use  of  money  is  not 
necessarily  wrong.  It  depends  largely  upon  the  manner  of  its 
use.  "If  it  be  used  to  pay  for  the  publication  of  circulars  or 
pamphlets,  or  otherwise,  for  the  collection  or  distribution  of  in- 
formation openly  and  publicly  among  the  members  of  the  legis- 
lature, there  is  nothing  objectionable  or  improper.  But  if  it  be 
used  directly  in  bribing,  or  indirectly  in  working  up  a  personal 
influence  upon  individual  members,  conciliating  them  by  suppers, 
presents,  or  any  of  that  machinery  so  well  known  to  lobbyists, 

"Gary  v.  Western  Union  Tel.  Co.,  N.  W.  898.  30  L.  R.  A.  Ill,  51  .\m. 

47   Hun    (N.   Y.)    610.  20   Abb.    (N.  St.  493.    The  above  case  goes  farther 

Cas.)   ZZ2),  15  N.  Y.   St.  204.  than   anv   other   in    holding   lobbying 

"Mills  V.   Mills,  40  N.  Y.  543.  100  contracts  illegal.     No  personal  solici- 

Am.  Dec.  535.     Compare  Houlton  v.  tation    of    the    members   of    congress 

Nichol.  93  Wis.  393,  67   N.   W.   715,  was   shown.     Plaintiff  attended   con- 

Zl  L.   R.   A.   166,   57  Am.   St.  928.  gress    for    four   years.     During   that 

"Rose  V.  Truax,  21  Barb.   (N.  Y.)  time  he  appeared   before  committees 

361    (personal    solicitation    shown).  and  not  being  an  attorney  hired  one 

"  Hazelton    v.    Sheckels,   202  U.    S.  at  his  own  expense  to  urge  the  pass- 

71,  50  L.  ed.  939,  26  Sup.  Ct.  567.  age  of  the  bill  in  which  he  was  in- 

"Weed  V.   Black.  2   MacArth.    (D.  terested.     Compare   with    Houlton   v. 

C.)  268,  29  Am.  Rep.  618.     See  also,  Nichol,  93  Wis.  393,  67   N.   W.   715, 

Sussman    v.    Porter.    137    Fed.    161 ;  ZZ  L.  R.  A.  166,  57  Am.  St.  928. 
Houlton    V.    Dunn,   60    Minn.   26,   61 


§    I044  CONTRACTS.  332 

which  aims  to  secure  a  member's  vote  without  reference  to  his 
judgment,  then  it  is  not  only  illegal  but  one  of  the  greatest  in- 
fractions of  social  duty  of  which  an  individual  can  under  the 
circumstances  of  the  present  day  be  guilty."^^ 

§  1044.  Contract  by  executive  officer  qualifying  a  valid 
legislative  enactment. — While,  properly  speaking,  they  can- 
not be  designated  as  "lobbying  contracts,"  it  would  be  well  at  this 
point  to  mention  agreements  by  which  a  governor  or  other  execu- 
tive officer  seeks  to  qualify  or  affect  the  operation  of  a  valid  legis- 
lative enactment.  The  governor's  approval  makes  a  bill  which 
has  been  passed  by  the  legislative  body  a  part  of  the  statute  law. 
He  cannot  qualify  or  change  it  by  any  contemporaneous  agree- 
ment or  contract  on  behalf  of  the  state  with  persons  who  are  to 
be  benefited  by  the  law  whereby  they  agree  to  release  to  the  state 
a  part  of  such  benefit."* 

§  1045.    Lobbying  contract  entered  into  by  public  officials. 

— The  members  of  an  official  board  have  no  right  to  employ  an 
attorney  to  lobby  for  or  against  a  bill  which  will  affect  their  ten- 
ure of  office. ^^  There  is  even  more  reason  for  holding  such  a 
contract  illegal  than  there  is  in  cases  of  private  individuals. 

§  1046.  When  contract  for  services  before  legislative  body 
not  unlawful. — The  foregoing  does  not  mean  that  all  persons 
whose  interests  may  in  any  way  be  affected  by  any  public  or 
private  act  of  the  legislature  do  not  have  the  right  to  urge  their 
claims  and  arguments,  either  in  person  or  by  counsel  professing 
to  act  for  them.  It  is  the  right  of  every  citizen  who  is  interested 
in  any  proposed  legislation  to  employ  an  agent  for  compensation 

'^Kansas  Pacific  R.  Co.  v.  McCoy,  passed   by   the   legislature.    Claimant 

8  Kans.  538.  accepted  $22,808.15  under  such  agree- 

''"The  legislature  passed  an  act  ap-  ment  and  this  suit  was  brought  to 
propriating  $45,616.30,  in  settlement  obtain  the  remainder  of  the  $45,616.30 
of  a  claim  against  the  state.  When  appropriated.  The  contract  made  by 
presented  to  the  governor  for  his  sig-  the  governor  was  held  against  pub- 
nature  he  informed  the  claimant  that  lie  policy  and  a  recovery  was  per- 
the  appropriation  was  excessive  and  mitted.  Lukens  v.  Nye,  156  Cal.  498, 
that  he  would  not  sign  the  bill  un-  105   Pac.  593. 

less  he  would  agree  to  accept  $25,000  "'Stark     v.      Publishers:       George 

in  full.     This  he  agreed  to  do.     The  Knapp  &  Co.,  160  Mo.  529,  61  S.  W. 

governor    then    signed    the    bill    as  669. 


2;^^  LOBBYING    CONTRACTS.  §    IO47 

payable  to  the  latter  to  draft  his  bill  and  explain  it  to  any  commit- 
tee, or  the  legislature,  fairly  and  openly,  and  ask  to  liave  it  intro- 
duced, and  contracts  which  do  not  provide  for  more,  and  services 
that  do  not  go  farther,  violate  no  principle  of  law  or  rule  of  pub- 
lic policy.'"" 

§  1047.  Examples  of  valid  contracts. — Contracts  which 
provide  for  compensation  in  consideration  of  a  particular  service 
to  be  rendered,  such  as  the  collection  of  evidence,  the  preparation 
of  papers  or  the  delivery  of  arguinents  orally  or  in  writing  in  sup- 
port of  a  claim,  to  a  committee  or  other  proper  authority  are 
legitimate  everywhere.-^  Services  rendered  in  obtaining  the  pas- 
sage of  laws  by  the  legislature  may  support  a  claim  for  compensa- 
tion when  publicly  rendered  by  advocates  disclosing  their  true' 
relation  to  the  subject."* 

§  1048.  Must  appear  openly  in  true  character. — The  per- 
son performing  such  services  must  appear  openly  in  his  true  char- 
acter. A  hired  advocate  or  agent  assuming  to  act  in  a  different 
character  is  practicing  deceit  on  the  legislature."^ 

§  1049.  Rule  applied. — These  principles  apply  to  proceed- 
ings before  a  municipal  council""  the  same  as  any  other  legislative 

^  Miles  V.  Thorne,  38  Cal.  335,  99  '^Trist  v.  Child,  21  Wall.   (U.  S.) 

Am.  Dec.  384;  Chesebrough  v.  Con-  441,  22  L.  ed.  623;  Marshall  v.  Balti- 

over,   140  N.  Y.  382,  35   N.   E.  633;  more  &  O.  R.  R.  Co.,  16  How.    (U. 

Milbank  v.  Jones,  127  N.  Y.  370,  28  S.)    314,    14    L.    ed.   953.      See    also. 

N.  E.  31,  24  Am.   St.  454;   Marshall  Frost   v.   Belmont,   6   Allen    (Mass.) 

V.  Baltimore  &  O.  R.  R.  Co.,  16  How.  152. 

(U.  S.)   314,  14  L.  ed.  953;  Yates  v.  ="  Critchfield    v.    Bermudez    Asphalt 

Robertson,  80  Va.  475.  Pav.  Co.,  174  111.  466,  51   N.  E.  552, 

'■^Weed  V.  Black.  2  :Mac.  (D.  C.)  42  L.  R.  A.  347.  "It  is  not  the  law 
268,  29  Am.  Rep.  618;  Eisenstein  v.  that  all  contracts  dependent  upon  fu- 
Maiden  Lane  Safe  Deposit  Co.,  113  ture  legislative  action  are  against  pub- 
N.  Y.  S.  967  (lawyer  employed  to  lie  policy,  nor  is  it  true  that  all  con- 
draw  up  resolution  to  be  acted  upon  tracts  to  secure  legislative  action  are 
by  board  of  aldermen)  ;  Russell  v.  unenforcible.  It  is  correct  to  say 
Burton,  66  Barb.  (N.  Y.)  539;  Trist  that  the  law  guards  the  processes  of 
V.  Child,  21  Wall.  (U.  S.)  441,  22  L.  legislation  against  improper  influences 
ed.  623.  See  also,  Foltz  v.  Cogswell,  with  jealous  care,  and  will  not  lend 
86  Cal.  542,  25  Pac.  60;  Baumhoff  v.  its  aid  to  the  enforcement  of  any 
Oklahoma  City  Electric  &c.  Co.,  14  contract  which  e.xpressly  or  implied- 
Okla.  127,  77  Pac.  40.  ly    contemplates    the    employment    of 

"*Wildey    v.    Collier,    7    Md.    273;  corrupt  or  otherwise  improper  meth- 

Sedgwick  v.   Stanton,   14  N.  Y.  289;  ods   to   influence   the   official   conduct 

Brown  v.  Brown,  34  Barb.    (N.   Y.)  of  legislators,  or  others  charged  with 

533;  Bryan  v.  Reynolds,  5  Wis.  200,  public    duty.      But    it     would     be     a 

68  Am.  bee.  55.  strange  perversion  of  this  wholesome 


§    1050  CONTRACTS.  334 

body.  A  contract  which  provided  that  one  "should  do  all  that 
was  necessary  and  proper  to  be  done  to  insure  its  (the  bill's) 
passage,"^  or  to  render  such  services  in  the  way  of  collecting  facts 
and  preparing  and  submitting  to  the  proper  authorities  arguments 
upon  the  merits  of  the  claim,  as  in  his  judgment  might  be  neces- 
sary and  proper,^^  or  which  merely  makes  one  the  depositary  of 
money  to  be  returned  by  him  in  the  event  that  a  resolution  pend- 
ing before  a  board  of  aldermen  and  councilmen  should  fail  to 
pass,"^  or  where  the  only  thing  necessary  to  be  done  under  the 
agreement  was  to  show  that  the  claimant  was  a  loyal  citizen  dur- 
ing the  civil  war^"  have  been  held  valid. 

§  1050.  Contracts  distinguished  from  lobbying. — A  review 
of  the  cases  leads  to  the  conclusion  that  agreements  which  tend 
to  introduce  personal  solicitation  as  an  element  in  procuring 
and  influencing  legislative  action  or  action  by  any  department  of 
the  government  will  be  condemned  as  contrary  to  sound  morals 
and  as  destructive  of  efficiency  in  the  public  service.^^  But  where 
the  contract  does  not  call  for  the  performance  of  some  act  illegal 
per  se,  nor  for  the  doing  of  something  of  itself  of  a  corrupting 
tendency,  nor  by  its  tenns  nor  by  necessary  implication  contem- 

rule  to  say  that  it  forbids  all  efforts  St.  R.  Co.,  82  111.  App.  256.    See  also, 

of    interested    persons    or    classes    to  Greer  v.    Severson,    119  Iowa  84,  93 

secure  the  adoption  of  desired  legis-  N.  W.  72. 

lative  measures.  Legislative  bodies  "Russell  v.  Burton,  66  Barb.  (N. 
do  not  occupy  such  an  exalted  posi-  Y.)  539  (contingent  fee).  Or  to  use 
tion  that  they  may  not  be  approached  and  make  all  "reasonable,  honest  and 
in  a  proper  manner  by  those  desiring  lawful  efforts"  to  secure  paving  con- 
action  within  the  legitimate  scope  of  tracts  from  a  city.  Dunham  v.  Has- 
legislative  power,  and  there  is  no  tings  Pav.  Co.,  57  App.  Div.  (N.  Y.) 
consideration  of  public  policy  which  426,  68  N.  Y.  S.  221. 
forbids  any  individual  from  under-  "*  Stroemer  v.  Van  Orsdel,  74  Nebr. 
taking  by  petition,  by  legitimate  ar-  132,  103  N.  W.  1053,  107  N.  W.  125, 
gument,  and  by  a  fair  showing  of  4  L.  R.  A.  (N.  S.)  212n,  121  Am.  St. 
the  circumstances  to  procure  the  pass-  713n  (contingent  fee).  The  above 
age  of  any  law  or  ordinance  within  case  also  limits  the  case  of  Richard- 
the  power  of  the  body  so  addressed  son  v.  Scott's  Bluff,  59  Nebr.  400, 
to  enact."  Cole  v.  Brown-Hurley  81  N.  W.  309,  48  L.  R.  A.  294,  80 
Hardware  Co.,  139  Iowa  487,  117  N.  Am.   St.  682. 

W.  746,   18  L.  R.  A.    (N.   S.)    1161n.  -"  Milbank  v.  Jones,  127  N.  Y.  370, 

A    contract    to    compensate    property  28  N.  E.  31,  24  Am.  St.  454. 

owners    for    signing    a    petition    ad-  ^''  Pennebacker  v.  Williams,  136  Ky. 

dressed   to   a   city  council   cannot  be  120,  120  S.  W.  321,  123  S.  W.  672. 

enforced.     Brieske  v.  North  Chicago  ''See  infra,  §  1037. 


335 


LOBBYING    CONTRACTS. 


§    IO5I 


plates  a  resort  to  improper  means,  such  as  personal  solicitation  or 
influence,  it  will  be  upheld,^-  so  far  as  this  question  is  concerned. 

§  1051.  Effect  of  making  fee  contingent  on  success. — The 
numerical  weight  of  authority  supports  the  doctrine  that  all  con- 
tracts for  procuring  legislation  are  void  where  the  compensation 
to  be  received  is  contingent  on  the  success  of  the  promisee  in  ob- 
taining either  the  passage  or  defeat  of  a  proposed  act,  even 
though  the  contract  did  not  contemplate  the  rendition  of  im- 
proper services  and  though  no  improper  services  were  in  fact 
rendered.  A  contingent  fee  is  a  strong  and  direct  incentive  to 
the  exertion  of  not  merely  personal  but  sinister  influence  upon 
legislation.^^  This  rule  is  not,  however,  universal,  and  many 
recent  cases  refuse  to  condemn  contracts  concerning  the  procure- 
ment of  legislation  merely  because  the  agreement  provides  for 
the  payment  of  a  reasonable  fee  contingent  upon  success.^'* 


°^The  presumption  is  in  favor  of 
innocence  rather  than  guilt.  Houlton 
V.  Nichol,  93  Wis.  393,  67  N.  W.  715, 
33  L.  R.  A.  166,  57  Am.  St.  928,  re- 
fusing to  follow  Houlton  v.  Dunn, 
60  Minn.  491,  30  L.  R.  A.  737.  "Pub- 
lic interest  is  not  well  served  by  in- 
dulging baseless  suspicions  of  wrong- 
doing." Stroemer  v.  Van  Orsdel,  74 
Nebr.  132,  103  N.  W.  1053,  107  N. 
W.  125,  4  L.  R.  A.  (N.  S.)  212n,  121 
Am.  St.  713n. 

^'Foltz  V.  Cogswell,  86  Cal.  542, 
25  Pac.  60;  Weed  v.  Black,  2  ^lac- 
Arthur  (D.  C.)  268.  29  Am.  Rep.  618; 
Bermudez  Asphalt  Pav.  Co.  v. 
Critchfield,  62  111.  App.  221;  Coquil- 
lard's  Admr.  v.  Bearss,  21  Ind.  479, 
83  Am.  Dec.  362;  Wood  v.  McCann, 
6  Dana  (Kv.)  366;  Gil  v.  Williams, 
12  La.  Ann.  219,  68  Am.  Dec.  767; 
Richardson  v.  Scott's  Bluff,  59  Nebr. 
400.  81  N.  W.  309,  48  L.  R.  A.  294, 
80  Am.  St.  682.  See,  however,  Stroe- 
mer V.  Van  Orsdel,  74  Nebr.  132,  103 
N.  W.  1053,  107  N.  W.  125.  4  L.  R. 
A.  (N.  S.)  212,  121  Am.  St.  713n; 
Rose  V.  Truax,  21  Barb.  (X.  Y.) 
361;  Mills  v.  Mills,  36  Barb.  (N.  Y.) 
474,  affd.  40  N.  Y.  543,  100  Am.  Dec. 
535;  Alilbank  v.  Jones.  127  N.  Y.  370, 
28  N.  E.  31,  24  Am.  St.  454;  Spalding 
v.  Ewing.  149  Pa.  St.  375,  24  Atl.  219, 
34  Am.   St.  608,  rcvg.  9  Pa.   County 


Ct.  471,  15  L.  R.  A.  727;  Clippinger 
v.  Hepbaugh,  5  Watts  &  S.  (Pa.)  315, 
40  Am.  Dec.  519;  Hazelton  v.  Sheck- 
els,  202  U.  S.  71,  50  L.  ed.  939.  26 
Sup.  Ct.  567;  Trist  v.  Child,  21  Wall. 
(U.  S.)  441,  22  L.  ed.  623;  Marshall 
V.  Baltimore  &  O.  R.  R.  Co.,  16  How. 
(U.  S.)  314,  14  L.  ed.  953;  Bryan  v. 
Reynolds,  5  \\'is.  200,  68  Am.  Dec. 
55;  Chippewa  Vallev  &  S.  R.  Co.  v. 
Chicago  St.  R.  M.  &  O.  R.  Co.,  75 
Wis.  224,  44  N.  W.  17,  6  L.  R.  A. 
601.  Compare  Cameron  v.  Heward, 
11  Que.  Super.  Ct.  392;  Houlton  v. 
Nichol,  93  Wis.  393.  67  N.  W.  715, 
33  L.  R.  A.  166,  57  Am.  St.  928.  In 
Chippewa  Valley  &c.  R.  Co.  v.  Chi- 
cago &c.  R.  Co.,  75  Wis.  224.  6  L.  R. 
A.  601,  a  contract  between  two  rail- 
way companies,  by  which  one  agreed 
to  render  "all  reasonable  and  proper 
assistance"  which  it  might  be  able  to 
give  in  procuring  a  legislative  grant 
of  lands  to  the  other  railway  com- 
pany, in  which  the  consideration  to 
be  paid  to  the  former  was  contingent 
upon  securing  the  grant,  was  held  to 
be  illegal.  See  also,  Sussman  v.  Por- 
ter. 137  Fed.  161. 

^*Dcnison  v.  Crawford  Co.,  48  Iowa 
211 ;  Barber  Asphalt  Pav.  Co.  v.  Bots- 
ford,  56  Kans.  532,  44  Pac.  3;  Kansas 
Citv  Paper  House  v.  Folev  Rv.  Print- 
ing" Co.,  85  Kans.  678,  118  Pac.  1056; 


§    1052  CONTRACTS.  336 

§  1052.    Contract  entered  into  under  legislative  authority. 

— A  contract  entered  into  under  authority  of  the  legislature  au- 
thorizing the  employment  of  an  agent  to  prosecute  claims  on  be- 
half of  the  state  which  require  the  procurement  of  legislation, 
for  a  fee  contingent  upon  his  success,  has  been  upheld  on  the 
rather  unusual  ground  that  the  act  of  the  legislature  authorizing 
the  payment  of  a  contingent  fee  was  in  that  particular  case  declar- 
ative of  the  public  policy  of  the  state.^^ 

§  1053.  Rule  where  contract  provides  for  services  partly 
illegal. — In  case  of  an  entire  contract  which  provides  for  the 
performance  of  services  before  a  legislative  body  part  of  which 
services  are  illegal  and  part  legal,  the  whole  contract  is  thereby 
rendered  illegal  and  there  can  be  no  recovery  for  the  value  of  the 
proper  services.'^''  Consequently,  when  the  services  contracted  for 
and  rendered  are  partly  those  of  an  attorney  and  partly  those  of  a 
lobbyist  and  are  blended  as  part  of  a  single  employment,  the 
entire  contract  is  vitiated,  and,  after  performance,  no  recovery 
can  be  had  for  the  work  done  as  an  attorney.^^  Ordinarily,  how- 
ever, a  contract  is  not  rendered  invalid  by  ancillary  or  incidental 
features  which  may  make  it  necessary  to  procure  action  by  a  leg- 
islative body  or  other  public  officials.^^ 

Stroemer   v.    Van    Orsdel,    74    Nebr.  neither  money  nor  personal  attention 

132,  103  N.  W.  1053,  107  N.  W.  125,  to   securing  their  rights."     See   also, 

4  L.  R.  A.  (N.  S.)  212n,  121  Am.  St.  Oscanyan  v.  Arms  Co.,  103  U.  S.  261, 

713n.     In   Taylor  v.    Bemiss,    110   U.  26   L.    ed.    539;    Pennebaker   v.    Wil- 

S.  42,  28  L.  ed.  64,  3  Sup.  Ct.  441,  Ham,  136  Ky.  120,  120  S.  W.  321,  123 

Mr.  Justice  Miller  said:    "It  was  de-  S.  W.  672;  Chesebrough  v.  Conover, 

cided  in  the  case  of  Stanton  v.  Em-  140  N.  Y.  382,  35  N.  E.  633;  Houl- 

brey,  93  U.  S.  548,  23  L.  ed.  983,  that  ton  v.  Nichol,  93  Wis.  393,  67  N.  W. 

contracts  by  attorneys  for  compensa-  715,  33  L.  R.  A.  166,  57  Am.  St.  928. 

tion  in  prosecuting  claims  against  the  ''^  Davis      v.      Commonwealth,      164 

United  States  were  not  void  because  ^lass.  241,  41  N.  E.  292,  30  L.  R.  A. 

the   amount  of   it   was   made   contin-  743. 

gent  upon  success,  or  upon  the  sum  ""  McBratney  v.  Chandler,  22  Kans. 

recovered.     And  the  well-known  diffi-  692,  31  Am.  Rep.  213;  Rose  v.  Truax, 

culties   and   delays   in   obtaining  pay-  21  Barb.  (N.  Y.)  361;  Cary  v.  West- 

ment    of   just    claims   which   are   not  ern  Union  Tel.  Co.,  47  Hun  (N.  Y.) 

within    the    ordinary    course   of   pro-  610,  20  Abb.  N.  Cas.   (N.  Y.)  333,  15 

cedure  of  the  auditing  officers  of  the  N.  Y.  St.  204;  Hazelton  v.  Sheckels, 

government,    justifies   a   liberal    com-  202  U.  S.  71,  50  L.  ed.  939,  26  Sup. 

pensation   in   successful   cases,   where  Ct.  567;  Trist  v.  Child,  21  Wall.   (U. 

none  is.  to  be  received  in  case  of  fail-  S.)   441,  22  L.  ed.  623. 

ure.      Any    other    rule    would    work  "  McBratney  v.  Chandler,  22  Kans. 

much  hardship  in  cases  of  creditors  692,  31  Am.  Rep.  213. 

of  small  means  residing  far  from  the  "^  Cole  v.  Brown-Hurley  Hdw.  Co., 

seat    of    government,    who   can   give  139  Iowa  487,  117  N.  W.  746,  18  L. 


337  LOBBYING    CONTRACTS.  S    IO54 

§  1054.  Recovery  of  compensation. — It  is  of  course  well 
settled  that  compensation  cannot  be  recovered  for  services  ren- 
dered in  the  performance  of  an  illegal  lobbying  contract.^^  So, 
a  co-partner  who  expends  money  for  lobbying  purposes  cannot 
compel  contribution  o\v  the  part  of  the  other  partner  nor  will  the 
partner  making  such  expenditures  be  entitled  to  a  credit  for  the 
amount  so  expended  when  chargeable  with  receipts.*" 

R.  A.  (N.  S.)  1161n  (lease  not  ren-  v.  Oklahoma  City  &c.  Power  Co.,  14 
dered  invalid  by  an  agreement  on  Okla.  127,  77  Pac.  40  (contract  pro- 
part  of  lessor  to  obtain  the  laying  of  viding  for  sale  of  certain  municipal 
a  side  track  along  an  alley  to  the  franchises,  such  sale  to  be  con- 
building  leased)  ;  Burbank  v.  Jef-  summated  within  ten  days  after  an 
ferson  City  &c.  Light  Co.,  35  La.  amendment  mutually  agreed  upon  by 
Ann.  444  (corporation  stipulated  that  the  parties  was  passed  by  the  city 
it    would    secure    passage   of    an    act  council). 

validating  the  mortgage  securing  cer-  ^"  Cary  v.  Western  Union  Tel.  Co., 

tain  bonds  issued  bv  the  company)  ;  47    Hun    (N.    Y.)    610,    20    Abb.    N. 

Greene   v.    Nash,   85    Maine    148,   26  Cas.   (N.  Y.)   333,  15  N.  Y.  St.  204; 

Atl.     1114    (contract    concerning    the  Globe  Works  v.  United  States,  45  Ct. 

construction  of  a  railroad  and  to  se-  CI.   (U.  S.)   497. 

cure    an    extension    of    time    within  *°  McDonald  v.  Buckstaflf,  56  Nebr. 

which  it  might  be  built) ;  Baumhoff  88,  76  N.  W.  476. 


22 — Contracts,  Vol.  2 


CHAPTER  XXVIII. 


EFFECT  OF  ILLEGALITY  OF  CONTRACTS. 


1060.  Illegal  contracts  are  void  and 

cannot  be  enforced. 

1061.  Void     contract    incapable    of 

supporting  a  remedy. 

1062.  Rule    as    affected    by    public 

policy. 

1063.  Exception  to  the  rule. 

1064.  Effect     of     performance     or 

execution   of   contract. 

1065.  Contract  presumed  valid. 

1066.  Parties     left     in     position     in 

which  they  place  themselves. 

1067.  Illustration     of     illegal     con- 

tracts. 

1068.  A   party   in    pari    delicto   may 

object  to  the  legality  of  the 
contract. 

1069.  Effect    of    illegality    of    con- 

tract— In  equity. 

1070.  Effect    of     subsequent    illegal 

contracts  on  prior  contracts. 

1071.  Necessity  of  making  a  prima 

facie    case    without    disclos- 
ing  illegality  of   contract. 

1072.  Rule    criticized    and    restated. 

1073.  Rule  further  considered. 

1074.  Partial    illegality    when    con- 

tract is  devisible. 

1075.  Rule    illustrated    and    applied. 

1076.  Indivisible   illegal   contracts. 

1077.  Illegal  when  consideration  can 

not      be      apportioned — Re- 
nunciation, effect  of. 

1078.  Contracts   growing   out  of  or 

connected   with   illegal  con- 
tracts. 

1079.  Illegal   combination— Right   to 

maintain  an  action  on  inde- 
pendent contract. 

1080.  Rule  illustrated. 

1081.  Illegal      combination  —  Insur- 

ance contract. 

1082.  Effect  of   state   statutes. 

1083.  Promise  by  third  party  to  pay 

claim  arising  out  of  illegal 
contract. 


§  1084.  Third     party     acting    as     de- 
pository. 

1085.  Recovery  of  that  parted  with 

under  executed  agreement. 

1086.  Duty  of   agents   and   partners 

to  turn  over  proceeds  of  il- 
legal transaction. 

1087.  Abandonment   of    illegal   con- 

tracts. 

1088.  Rule  where  aid  of  illegal  con- 

tract is  required  to  establish 
case. 

1089.  Ratification     of     illegal     con- 

tract. 

1090.  General  rule  as  to  ratification. 

1091.  Rule   illustrated. 

1092.  Rule    as    applied    to    Sunday 

contracts. 

1093.  Effect  of  subsequent  payment 

of  license  fee. 

1094.  Enforcing  or  obtaining  relief 

from   illegal  contracts. 

1095.  Exceptions  —  Recovery     pro- 

vided for  by  statute. 

1096.  Statutes    permitting    recovery 

strictly  construed. 

1097.  Other   statutes   considered. 

1098.  Recovery  permitted  when  par- 

ties not  in  pari  delicto. 

1099.  Rule   illustrated. 

1100.  Penalty   on   both   parties— No 

undue  advantage  given. 

1101.  When   parties   not   equally   at 

fault. 

1102.  Rule  illustrated. 

1103.  The    principle    of    "pari    de- 

licto"  as  affected  by  public 
policy. 

1104.  When  one  in  pari  delicto  may 

be  granted  relief. 

1105.  Locus  poenitentiae. 

1106.  Rule   illustrated. 

1107.  Money   or    property   given    to 

one  of  the  parties  to  the  il- 
legal agreement. 


338 


339 


EFFECT    OF    ILLEGALITY    OF    CONTRACTS. 


§     1060 


§  1060.  Illegal  contracts  are  void  and  cannot  be  enforced. 
• — Illegal  contracts  are,  as  a  general  rule,  said  to  be  absolutely 
void.^  This  rule  is  said  to  admit  of  no  exception.-  But  it  needs 
some  explanation. 

§  1061.  Void  contract  incapable  of  supporting  a  remedy. — 
It  would  seem  that  the  word  "void"  as  thus  used  merely  means 
that  a  contract  in  contravention  of  a  statute  or  public  policy 
cannot  be  legally  enforced  at  law  or  is  incapable  of  supporting 
a  remedy.^     For,   as  will   be   seen   subsequently,   an   executed 


'Bensley  v.  Bignold,  5  B.  &  Aid. 
335;  Milt©n  v.  Haden,  32  Ala.  30,  70 
Am.  Dec.  523;  Dudlev  v.  Collier,  87 
Ala.  431,  6  So.  304,  13  Am.  St.  55; 
Voungblood  v.  Birminjjham  Trust  & 
Sav.  Co.,  95  Ala.  521,  ^12  So.  579,  20 
L.  R.  A.  58,  36  Am.  St.  245 ;  Jemison 
V.  Birmingham  &  A.  R.  Co.,  125  Ala. 
378,  28  So.  51 ;  Martin  v.  Hodge,  47 
Ark.  378,  1  S.  W.  694,  58  Am.  Rep. 
763;  O'Bryan  v.  Fitzpatrick,  48  Ark. 
487,  3  S.  W.  527;  Berka  v.  Wood- 
ward, 125  Cal.  119,  57  Pac.  777,  45 
L.  R.  A.  420,  73  Am.  St.  31;  Way- 
man  Inv.  Co.  V.  Wessinger,  13  Cal. 
App.  108,  108  Pac.  1022;  Hittson  v. 
Browne,  3  Colo.  304;  Funk  v.  Gal- 
livan,  49  Conn.  124,  44  Am.  Rep. 
210;  Cook  V.  Pierce,  2  Houst.  (Del.) 
499;  Gilbert  v.  Holmes,  64  111.  548; 
People  V.  Whiteside  Countv,  122  111. 
App.  40;  Missouri  K.  &  t.  R.  Co. 
V.  Bowles,  1  Ind.  Ter.  250,  40  S.  W. 
899;  Western  Union  Tel.  Co.  v.  Yopst, 

118  Ind.  248,  20  N.  E.  222,  3  L.  R.  A. 
224n ;  Naglebaugh  v.  Harder  &  Hofer 
Coal  Min.   Co.,  21   Ind.  App.  551,  51 
X.    E.   427;    Dillon    &c.    v.    Allen,   46 
Iowa  299,  26  Am.  Rep.  145 ;  Richard- 
son V.  Bri.x,  94  Iowa  626,  63  N.  W. 
325;    Pinney  v.   First   Nat.   Bank,   68 
Kans.  223,  75  Pac.  119;  Vanmeter  v. 
Spurrier,  94  Kv.  22,  21   S.  W.  337 
Cotton  V.   Brien,  6  Rob.    (La.)    115 
Harding    v.    Hagar,    60    Elaine    340 
Durgin  v.  Dyer,  68  Maine  143;  Les- 
ter V.  Howard  Bank,  33  ]\Id.  558,  3 
Am.  Rep.  211;  Prescott  v.  Battersby, 

119  Mass.  285;  Bowditch  v.  New  Eng- 
land Mut.  L.  Ins.  Co.,  141  Mass.  292, 
4  N.  E.  798,  55  Am.  Rep.  474;  Sea- 
mans  V.  Temple  Co.,  105  Mich.  400, 
63  N.  W.  408,  28  L.  R.  A.  430,  55 
Am.    St.   457;    Buckley  v.    Humason, 


50  Minn.  195,  52  N.  W.  385,  16  L. 
R.  A.  423,  36  Am.  St.  637;  Deans  v. 
McLendon,  30  Miss.  343;  Brackett  v. 
Hoyt,  29  N.  H.  264;  Coburn  v.  Odell, 
30  N.  H.  540 ;  Hunt  v.  Knickerbacker, 
5  Johns.  (N.  Y.)  327;  Pratt  v.  Short, 
79  N.  Y.  437,  35  Am.  Rep.  531;  Sharp 
V.  Farmer,  4  Dev.  &  B.  (N.  Car.) 
122;  Tod  V.  Wick  Bros.,  36  Ohio  St. 
370 ;  Morris  Run  Coal  Co.  v.  Barclay 
Coal  Co.,  68  Pa.  St.  173,  8  Am.  Rep. 
159;  Holt  V.  Green.  73  Pa.  St.  198,  13 
Am.  Rep.  737;  Harrison  v.  Berkley,  1 
Strob.  (S.  C.)  525,  47  Am.  Dec. 
578;  Stevenson  v.  Ewing,  87  Tenn. 
46.  9  S.  W.  230;  Hunt  v.  Robinson, 
1  Tex.  748 ;  Keith  v.  Fountain,  3  Te.x. 
Civ.  App.  391,  22  S.  W.  191;  Harris 
V.  Runnels,  12  How.  (U.  S.)  79,  13 
L.  ed.  901 ;  Miller  v.  Ammon,  145  U. 
S.  421,  36  L.  ed.  759.  12  Sup.  Ct.  884; 
Re  Pittock,  2  Sawy.  (U.  S.)  416, 
Fed.  Cas.  No.  11189;  Aiken  v.  Blais- 
dell,  41  Vt.  655 ;  Niemever  v.  Wright, 
75  Va.  239.  40  Am.  Rep.  720;  Mel- 
choir  V.  McCartv,  31  Wis.  252,  11 
Am.  Rep.  605 ;  Bartlett  v.  Collins,  109 
Wis.  477,  85  N.  W.  703.  83  Am.  St. 
928.  Cases  without  number  might  be 
cited  on  this  proposition  but  it  it  con- 
sidered unnecessary. 

"  Cox  V.  Donnelly,  34  Ark.  762. 

'Fennell  v.  Ridler,  5  B.  C.  406,  11 
E.  C.  L.  517;  Hartford  Fire  Ins.  Co. 
V.  Chicago  &c.  R.  Co.,  62  Fed.  904; 
Johns  v.  Bailev,  45  Iowa  241 ;  Giesa- 
peake  &  O.  R.  Co.  v.  Mavsville  Brick 
Co.,  132  Ky.  643,  116  S.  W.  1183  (con- 
tract by  railroad  company  preferen- 
tial rate)  ;  Myers  v.  Meinrath,  101 
Mass.  366,  3  Am.  Rep.  368;  Smith  v. 
Bean,  15  N.  H.  577;  jenness  v.  Simp- 
son (Vt.),  78  Atl.  886.  "It  has  been 
held    that   the    words   'void'   and   *in- 


§    I062 


CONTRACTS. 


340 


illegal  contract  may  confer  actual  and  irrevocable  rights  on  the 
parties;  and  the  word  "illegal"  in  this  connection  is  sometimes 
used  in  different  senses.  It  must  also  be  borne  in  mind  that  two 
different  rules  are  applied  to  contracts  entered  into  Avith  one 
engaged  in  a  business  which  the  law  requires  to  be  licensed. 
Whether  or  not  a  contract  entered  into  with  one  in  the  course  of 
such  business  who  has  no  license  will  be  upheld  depends  largely 
on  the  nature  of  the  business  and  the  wording  of  the  statute.  In 
case  the  license  is  required  for  the  protection  of  the  public  the 
contract  is  void ;  in  case  it  is  merely  a  revenue  measure  the  con- 
tract is  valid.* 


§  1062.  Rule  as  affected  by  public  policy. — The  rule  which 
declares  illegal  contracts  void  is  a  necessary  and  salutary  one,  but 
it  is  not  a  mere  arbitrary  rule  applicable  to  all  contracts  in  some 
sense  illegal.  It  will  be  disregarded  when  it  becomes  necessary 
to  save  from  injury  those  for  whose  protection  the  violated  stat- 
utes were  enacted  or  whenever  public  interest  demands  that  such 
statute  be  enforced.^ 

§  1063.  Exception  to  the  rule. — As  a  general  rule  the  prin- 
ciple that  contracts  entered  into  in  contravention  of  a  statute  are 
void  has  no  application  in  the  case  of  marriage  contracts.  Thus, 
a  marriage  has  been  upheld  notwithstanding  it  was  celebrated 


valid,'  when  used  in  regard  to  con- 
tracts not  immoral  or  against  public 
policy,  usually  mean  voidable  at  the 
option  of  one  of  the  parties  or  some 
one  legally  interested  therein,  and 
that  such  construction  leads  to  fewer 
errors  than  that  which  ascribes  to 
those  words  the  meaning  of  absolute 
nullity  for  any  and  all  purposes." 
Doney  v.  Laughlin  (Ind.  App.),  94 
N.  E.  1027. 

*  See  ante,  §  dlZ.  See  Johnson 
V.  Berry  (S.  Dak.),  104  N.  W. 
1114,  1  L.  R.  A.  (N.  S.)  1159 
(which  refuses  to  permit  the  owner 
of  a  steam-thresher  to  recover  his 
threshing  bill  when  he  had  failed  to 
comply  with  the  statute  requiring 
steam-threshers  to  give  bond  condi- 
tioned on  his  paying  all  damages  for 
fire,  &c.)  ;  Duluth  Music  Co.  v.  Clan- 
cey,  139  Wis.  189,  120  N.  W.  854,  131 


Am.  St.  1051  (action  to  replevin  a 
piano  sold  on  conditional  sale  by  a 
foreign  corporation  not  authorized 
to  do  business  in  the  state  of  Wis- 
consin). 

°  See  generally,  Cox  v.  Donnelly,  34 
Ark.  762;  City  School  Corporation 
of  Evansville  v.  Hickman,  47  Ind. 
App.  500,  94  N.  E.  828;  Deming  v. 
State,  23  Ind.  416;  Scotten  v.  State, 
51  Ind.  52;  Tootle  v.  Taylor,  64 
Iowa  629,  21  N.  W.  115;  State  v. 
Corning  State  Sav.  Bank,  136  Iowa 
79,  113  N.  W.  500;  Bemis  v.  Becker, 
1  Kans.  226;  Mason  v.  McLeod,  57 
Kans.  105,  45  Pac.  76,  41  L.  R.  A. 
548,  57  Am.  St.  2,21;  Lester  v.  How- 
ard Bank,  ZZ  Md.  558,  3  Am.  Rep. 
211;  Bowditch  v.  New  England  Mut. 
&c.  Ins.  Co..  141  Mass'.  292,4  N.E. 
798,  55  Am.  Rep.  474;  Union  Trust 


341 


EFFECT    OF    ILLEGALITY    OF    CONTRACTS. 


§    1064 


without  the  consent  of  the  parents  or  guardian  of  the  bride  and 
the  latter  incurred  a  penalty  because  of  her  youthful  age." 

§  1064.  Effect  of  performance  or  execution  of  contract. — 
As  a  general  rule  the  law  will  leave  all  equally  guilty  of  an  illegal 
or  immoral  transaction  where  it  finds  them,  and  will  neither  lend 
its  aid  to  enforce  the  contract  while  executory  nor  to  rescind  it 
and  recover  the  consideration  parted  with  when  executed.''  "It 
is  a  well-settled  principle  of  law  that  the  courts  will  not  aid  a 
party  to  enforce  an  agreement  made  in  furtherance  of  objects  for- 
bidden by  the  statute,  or  by  common  law,  or  general  policy  of  the 
law,  or  to  recover  damages  for  its  breach,  or  when  the  agreement 
has  been  executed  in  whole  or  in  part  by  payment  of  money  to 
recover  it  back."^ 

§  1065.  Contract  presumed  valid. — The  general  rule,  how- 
ever, is  "The  law  does  not  presume  that  parties  to  a  contract  in- 
tend by  it  to  accomplish  an  illegal  object,  but  it  rather  presumes 
that  they  intended  to  accomplish  a  legal  purpose."^    The  legality 


Co.  V.  Preston  Nat.  Bank,  136  Mich. 
460.  99  N.  W.  399,  112  Am.  St.  270; 
Union  Nat.  Bank  v.  Matthews,  98  U. 
S.  621,  25  L.  ed.  188.  See,  however, 
Penn  v.  Bornman,  102  111.  523. 

'  Hervey  v.  Moslev,  7  Gray 
(Mass.)  479,  66  Am.  Dec.  515. 

'  Cottonwood  V.  H.  jNI.  Austin  & 
Co.,  158  Ala.  117,  48  So.  345;  Hill  v. 
Freeman,  IZ  Ala.  200,  49  Am.  Rep. 
48,  and  note;  O'Byrne  v.  Henley, 
161  Ala.  620,  50  So.  83,  23  L.  R.  A. 
(N.  S.)  496n  (executory  contract)  ; 
Holman  v.  Thomas,  171  Fed.  219; 
Glass  V.  Childs  (Ga.  App.),  71  S.  E. 
920;  Gray  v.  Roberts,  2  A.  K.  Marsh 
208,  12  Am.  Dec.  383 ;  Inhabitants  of 
Warrenton  v.  Eaton,  11  Mass.  368; 
Jourdan  v.  Burstow,  76  N.  J.  Eq.  55, 
74  Atl.  124,  139  Am.  St.  741 
(action  to  recover  property  parted 
with  under  contract  to  compound  a 
felonv)  ;  Klein  v.  Mechanics'  &  Trad- 
ers' Bank,  145  App.  Div.  (N.  Y.)  615, 
130  N.  Y.  S.  436  (holding  ignorance 
of  the  law  no  excuse)  ;  Smathers  v. 
Bankers'  Life  Ins.  Co.,  151  N.  Car. 
98,  65  S.  E.  746  (executory  con- 
tract) ;  Cantrell  v.  Ring  (Tenn.),  145 
S.  W.   166;   Sauerhering  v.  Rueping, 


137  Wis.  407,  119  N.  W.  184  (con- 
tract to  enable  plaintiff  to  control 
corporation   to    his    own    interest). 

*  Howard  v.  Farrar,  28  Okla.  490, 
114  Pac.  695.  "A  void  contract  can- 
not be  enforced,  no  matter  what 
hardship  it  may  work,  or  how  strong 
the  equities  may  appear."  Pipe 
Creek  School  Tp.  v.  Hawkins  (Ind. 
App.),  97  N.  E.  936.  "The  courts 
will  not  in  general  aid  either  party 
to  enforce  an  illegal  agreement,  but 
will  leave  the  parties  where  they 
place  themselves  with  reference  to 
such  illegal  agreement,  except  where 
the  law  or  public  policy  requires  ac- 
tion by  the  courts,  or  where  the  par- 
ties are  not  in  pari  delicto,  and  per- 
haps in  other  cases  not  pertinent 
here."  Stewart  v.  Stearns  &c.  Lum- 
ber Co.,  56  Fla.  570,  48  So.  19,  24  L. 
R.  A.   (N.  S.)   649n. 

"Page  V.  Metropolitan  Life  Ins. 
Co.,  98  Ark.  340,  135  S.  W.  911.  To 
same  effect,  Burne  v.  Lee,  156  Cal. 
221,  104  Pac.  438:  Barteldes  Seed 
Co.  V.  Border  Queen  Mill  &  Eleva- 
tor Co..  23  Okla.  675,  101  Pac. 
1130;  Harbison-Walker  Refractor- 
ies    Co.     v.     Stanton,     111     Pa.     55, 


io66 


CONTRACTS. 


342 


of  a  contract  is  to  be  judged  of  by  its  character,  and  not  by 
what  the  plaintiff  might  do  or  should  attempt  to  do,  with  the 
fruits  of  it/"  But  when  the  illegality  of  the  contract  is  plainly 
apparent  it  has  been  said  that  the  court  will  or  should,  sua  sponta, 
deny  relief/^ 


§  1066.  Parties  left  in  position  in  which  they  place  them- 
selves.— However,  no  other  element  entering  in,  the  parties 
are  left  to  abide  the  consequences  of  their  own  act.  When  the 
illegality  of  the  contract  is  made  to  appear  the  law  will  not  extend 
its  aid  to  either  of  the  parties.^-  The  law  does  not  sit  as  an  ar- 
biter of  differences  arising  out  of  an  illegal  transaction."    Money 


75  Atl.  988.  See  also,  Brown 
V.  Bishop,  105  Maine  272,  74 
Atl.  724;  Mires  v.  St.  Louis  &  S.  F. 
R.  Co.,  134  Mo.  App.  379.  114  S.  W. 
1052;  Artistic  Porcelain  Co.  v. 
Boch,  76  N.  J.  Eq.  533,  74  Atl.  680; 
Horn  V.  Gibson  (Okla.),  103  Pac. 
563.  On  demurrer  the  court  can 
look  only  to  the  pleadings  and  when 
the  petition  does  not  disclose  the 
vice  of  the  contract,  no  other  ele- 
ment entering  in  the  demurrer  should 
be  overruled.  The  defense  of  ille- 
gality may  be  made  by  answer. 
Coons  V.  Green,  55  Tex.  Civ.  App. 
612,  120  S.   W.   1108. 

^"  Luhrig  Coal  Co.  v.  Jones  &c.  Co., 
141  Fed.  617.  12  C.  C.  A.  311.  The 
mere  fact  that  one  of  the  parties 
entered  into  the  contract  for  an  ille- 
gal purpose  does  not  render  it  illegal 
to  the  other  party  when  the  latter 
did  nothing  to  further  the  illegal 
purpose.  Hollenberg  Music  Co.  v. 
Berry,  85  Ark.  9.  106  S.  W.  1172. 
Where  a  contract,  not  lawful  in  it- 
self, has  been  executed,  and  the  par- 
ties have  enjoyed  the  benefits  of  the 
contract  the  mere  fact  that  one  of 
the  parties  has  violated  a  penal  stat- 
ute in  the  approach  to  the  contract 
will  not  prevent  a  court  from  enforc- 
ing payments.  Haynes  v.  Abramson, 
97  N.  Y.  S.  371 ;  Beilin  v.  Wein,  101 
N.  Y.  S.  38,  51  Misc.  (N.  Y.)  595. 

"  Dunn  V.  Stegeman,  10  Cal.  App. 
38,  101  Pac.  25 ;  Union  Collection  Co. 
V.  Buckman,  150  Cal.  159,  88  Pac.  708, 
9  L.  R.  A.  (N.  S.)  568n,  119  Am.  St. 
164n;  Howe's  Exr.  v.  Griffin's  Admr. 


(Ky.),  31  Ky.  L.  784,  103  S.  W. 
714;  Drake  v.  Lauer,  93  App.  Div. 
(N.  Y.)  86,  86  N.  Y.  S.  986,  affd.,  182 
N.  Y.  533,  75  N.  E.  1129;  Rogers  v. 
Gladiator  Gold  Min.  &  Mill  Co.,  21 
S.  Dak.  412,  113  N.  W.  86;  Ann.  Cas. 
1912A.  1033,  note.  See,  however, 
O'Brien  v.  Shea,  208  Mass.  528,  95  N. 
E.  99,  Ann.  Cas.  1912A.  1030. 

^"  Butler  v.  Agnew,  9  Cal.  App. 
327,  99  Pac.  395;  Russell  v.  Courier 
Printing   &    Publishing    Co.    (Colo.), 

95  Pac.  936;  Thomas  v.  First  Nat. 
Bank,  213  111.  261,  72  N.  E.  801; 
Rudolf  V.  Costa,  119  La.  781,  44  So. 
477;  Benson  v.  Bawden,  149  Mich. 
584,  113  N.  W.  20,  13  L.  R.  A.  (N. 
S.)  721;  Perry  v.  Berger,  85  Nebr. 
753,  124  N.  W.  133;  Heintz  v.  Saw- 
yer, 27  Ohio  Cir.  Ct.  10.  When 
recovery  is  permitted  it  is  not  al- 
lowed as  under  the  unlawful  con- 
tract but  upon  a  quantum  meruit  dis- 
affirming the  contract  and  holding 
defendant  liable  for  the  value  of 
benefit  actually  received.  White  Star 
Line  v.  Star  Line  of  Steamers,  141 
^lich.  604,  105  N.  W.  135,  113  Am. 
St.  551. 

^Bowman  v.  Phillips,  41  Kans. 
364,  21  Pac.  230,  3  L.  R.  A.  631,  13 
Am.  St.  292.  See  Leonard  v.  Poole, 
114  X.  Y.  371,  11  Am.  St.  667;  Wig- 
gins V.  Bisso,  92  Tex.  219,  47  S.  W. 
637,  71  Am.  St.  837;  Camp  v.  Bruce, 

96  Va.  521,  31  S.  E.  901,  43  L.  R.  A. 
146,  70  Am.  St.  873.  "If  a  cause  of 
action  is  such  as  no  court  would 
entertain,  a  court  is  bound  to 
raise    the    question    in    the    interest 


343  EFFECT    OF   ILLEGALITY    OF    CONTRACTS.  §    IO66 

paid  or  personal  property  transferred  in  accordance  with  the 
terms  of  an  illegal  contract  cannot  as  a  general  rule  be  recov- 
ered/* notwithstanding  the  other  party  refuses  to  perform  his 


of  due  administration  of  justice  and  Cutler,  44  X.  H.  561 ;  Roby  v.  West, 
not  for  the  benefit  or  in  the  interest  4  X.  H.  285,  17  Am.  Dec.  423;  Weeks 
of  either  party.  Whether  a  claim  of  v.  Mill,  38  X.  H.  199;  White  v.  Hun- 
illegality  is  made  by  the  pleadings  or  ter,  23  X.  H.  128;  Johnson  v.  Ferris, 
not,  parties  cannot  compel  a  court  49  X.  H.  66;  Hope  v.  Linden  Park 
to  adjudicate  upon  alleged  rights  Blood  Horse  Assn.,  58  X.  J.  L.  627, 
growing  out  of  a  contract  void  as  34  Atl.  1070,  55  Am.  St.  614; 
against  public  policy  or  in  violation  Brindlev  v.  Lawton,  53  X^.  J. 
of  public  law."  Pietsch  v.  Pietsch,  Eq.  259,  31  Atl.  394;  Ellicott 
245  111.  454,  92  N.  E.  325,  29  L.  R.  A.  v.  Chamberlin.  38  X.  J.  Eq.  604. 
218n.  48  Am.  Rep.  Zll  \  People  v.  Stephens. 
"Collins  V.  Blantern.  2  Wils.  341;  71  X.  Y.  527;  Peck  v.  Burr,  10  X. 
Walker  v.  Gregory.  36  Ala.  180;  Ed-  Y.  294;  Phoenix  Bridge  Co.  v.  Key- 
wards  v.  Randle,  63  Ark.  318,  38  S.  stone  Bridge  Co.,  142  X.  Y.  425,  11 
W.  343.  36  L.  R.  A.  174,  58  Am.  St.  X.  E.  562;  Knowlton  v.  Congress  &c. 
108;  Hartin  v.  Wade,  Zl  Cal.  168;  Spring  Co.,  57  X.  Y.  518;  De  Witt 
Schubart  v.  Chicago  Gas  Light  &c.  Wire-Cloth  Co.  v.  Xew  Jersey  Wire- 
Co.,  41  111.  App.  181;  Griflfen  v.  Piper,  Cloth  Co.,  16  Daly  (X.  Y.)  529,  14 
55  111.  App.  213;  State  v.  Sims.  76  Ind.  N.  Y.  S.  277;  Havnes  v.  Rudd,  83 
328;  Xudd  v.  Burnett.  14  Ind.  25;  X.  Y.  251;  Webb  v.  Fulchire,  3  Ired. 
Davis  v.  Leonard,  69  Ind.  213;  485,  40  Am.  Dec.  419;  Hoss  v.  Lav- 
Hutchins  V.  Weldin,  114  Ind.  80;  ton,  3  Ohio  St.  352:  Kahn  v.  Wal- 
Budd  V.  Rutherford,  4  Ind.  App.  386,  ton.  46  Ohio  St.  195 ;  Richter  v. 
30  X.  E.  1111;  Kinnev  v.  AIcDermot,  Phoenix  Building  &  Loan  Co.,  27 
55  Iowa  674.  39  Am.  Rep.  191 ;  Pike  Ohio  C  C.  793  faction  to  recover 
v.  King,  16  Iowa  49;  Ilallan  v.  Huff-  property  parted  with  under  an  agree- 
man,  5  Kans.  App.  303 ;  Davezac  v.  ment  to  compound  a  felonv)  ;  Atchi- 
Seiler,  12  Kv.  L.  599 ;  Kimbrough  v.  son  &c.  R.  Co.  v.  Holmes,  18  Okla.  92, 
Lane,  11  Bush  (Kv.)  566;  Grav  v.  90  Pac.  22;  Jackson  v.  Baker  Ore.,  85 
Roberts,  2  A.  K.  Marsh.  (Ky.)  208,  Pac.  512  (action  to  recover  $1000.00 
12  Am.  Dec.  383 ;  Copley  v.  Berry,  paid  to  a  homesteader  in  considera- 
12  Rob.  (La.)  79;  Waite  v.  Merrill,  4  tion  of  a  promise  by  the  latter  to 
Maine  102,  16  Am.  Dec.  238 ;  Got-  convey  his  homestead  to  a  third  party 
wait  v.  Xeal,  25  Md.  434;  Maryland  upon  obtaining  title);  Lutz  v.  Weid- 
Trust  Co.  V.  Xational  Alechanics'  ner,  1  Woodw.  Dec.  (Pa.)  428;  Stew- 
Bank,  102  Md.  608,  63  Atl.  70;  Harvev  art  v.  Parnell,  29  W.  X.  Cas.  (Pa.) 
V.  Merrill.  150  Mass.  1,  15  Am.  St.  537;  Touro  v.  Cassin.  1  Xott.  &  McC. 
159;  Richardson  v.  Buhl,  11  Mich.  632,  (S.  Car.)  173,  9  Am.  Dec.  680;  Seelig- 
43  X.  W.  1102.  6  L.  R.  A.  457;  Reed  son  v.  Lewis.  65  Tex.  215,  57  Am. 
v.  Bond,  96  Mich.  134,  55  X.  W.  619;  Rep.  593,  overruling  Boggess  v.  Lillv. 
Walhier  v.  Weber,  142  Mich.  322,  105  18  Tex.  200 ;  Davis  v.  Sittig,  65  Tex. 
N.  W.  772  (action  to  recover  pay-  497.  Compare  Rayner  Cattle  Co.  v. 
ments  made  in  order  to  secure  police  Bedford,  91  Tex.  642.  44  S.  W.  410. 
protection  and  for  the  use  of  an-  45  S.  W.  554;  Huff  v.  McMichael 
other's  liquor  license)  ;  Benson  v.  (Tex.  Civ.  App.),  127  S.  W.  574 
Bawden.  149  Mich.  584.  113  X.  W.  (action  to  recover  shares  of  stock 
20.  13  L.  R.  A.  (X.  S.)  721  (post-  transferred  to  the  defendant  in  fur- 
office  fixtures)  ;  Xelson  v.  Townsend,  therance  of  a  scheme  to  defraud 
132  I\Io.  App.  390.  Ill  S.  W.  894  third  parties);  Harriman  v.  Xorth- 
(action  to  recover  money  advanced  ern  Securities  Co..  197  U.  S.  244,  49 
under  a  contract  to  assign  wages,  L.  ed.  739.  25  Sup.  Ct.  493 ;  White  v. 
the  contract  to  assign  wages  being  Barber.  123  U.  S.  392.  8  Sup.  Ct.  221 ; 
unlawful);  Davis  v.  Hinman.  73  Foote  &  Stone  v.  Emerson.  10  Vt.  338, 
Xebr.  850,  103  X.  W.  668;  Welsh  v.  ZZ  Am.  Dec.  205;  McEwen  v.  Shan- 


1067 


CONTRACTS. 


344 


part  of  the  agreement."  Where  the  contract  is  illegal,  because 
contrary  to  positive  law  or  against  public  policy,  an  action  cannot 
be  maintained  either  to  enforce  it  directly,  or  to  recover  the  value 
of  services  rendered  under  it,  or  money  paid  on  it.^° 

§  1067.  Illustration  of  illegal  contracts. — It  has  been  held 
that  a  landlord  could  not  maintain  an  action  for  rent  due  under 
a  lease  of  a  building  which  the  lessor  had  unlawfully  failed  to 
equip  with  fire  escapes/^  The  court  has  denied  the  right  to 
recover  money  paid  for  a  larger  sum  of  counterfeit  money,  not- 
withstanding such  counterfeit  money  was  not  delivered.^ ^  And 
where  property  was  conveyed  in  compliance  with  the  terms  of  an 
agreement  that  compounded  a  felony  it  was  held  that  no  action 
could  be  maintained  either  to  compel  a  performance  or  to  recover 
the  property/®  In  case  a  deed  for  land  has  been  delivered  under 
such  a  contract,  title  passes  and  the  grantor  can  neither  recover 


non,  64  Vt.  583,  25  Atl.  661 ;  Dixon  v. 
Olmstead,  9  Vt.  310,  31  Am.  Dec.  629; 
Barnard  v.  Crane,  1  Tyler  (Vt.)  457; 
Johnson  v.  Jennings,  10  Grat.  (Va.)  1, 
60  Am.  Dec.  323 ;  McClintock  v.  Lois- 
seau,  31  W.  Va.  865,  8  S.  E.  612,  2 
L.  R.  A.  816.  Appellant  was  a 
saloon-keeper  whose  business  had 
been  closed  by  municipal  authorities 
for  his  violation  of  the  excise  law  of 
the  city.  He  was  allowed  to  re- 
open upon  his  deposit  with  the 
treasurer  of  the  city  of  the  sum 
sued  for,  upon  condition  that  it  was 
to  be  returned  to  him  if  the  ex- 
cise laws  of  the  city  were  not  vio- 
lated during  the  year  1906.  It  was 
held  that  the  contract  was  void  as 
against  public  policy,  the  money  was 
received  by  the  treasurer  as  an  in- 
dividual, the  parties  were  in  pari 
delicto,  and  the  law  would  not  in- 
tervene for  the  relief  of  either. 
jMarsicano  v.  Birmingham  (Ala.),  51 
So.  608.  See  also,  Hilton  v.  Hil- 
ton, 103  Maine  92,  68  Atl.  595  (release 
by  child  of  all  claims  against  fath- 
er's estate  on  latter's  death).  A 
contract  by  which  a  collection  of 
porcelains  is  sold  contrary  to  the 
request  of  the  testator  that  it  be 
kept  intact  has  been  held  not  con- 
trary to  public  policy  and  was  en- 
forced.    Warren  v.  Bouvier,  68  Misc. 


(N.  Y.)   159,  124  N.  Y.  S.  641. 

"■^  Edwards  v.  Randle,  63  Ark.  318, 
38  S.  W.  343,  36  L.  R.  A.  174,  58  Am. 
St.  108;  Kinney  v.  McDermot,  55 
Iowa  674,  8  N.  W.  656,  39  Am.  Rep. 
191 ;  Kilbourn  City  v.  Southern  Wis. 
Power  Co.,  149  Wis.  168,  135  N.  W. 
499  (involving  construction  of  pub- 
lic utilities  law  contract  for  free 
light  to  village).  However,  when  an 
illegal  contract  has  not  been  exe- 
cuted, and  is  still  executory,  money 
paid  thereunder  may  be  recovered. 
Such  a  suit  and  recovery  do  not  con- 
stitute an  enforcement  of  the  ille- 
gal contract.  Instead,  it  constitutes 
a  disaffirmance.  McCall  v.  Whaley, 
52  Tex.  Civ.  App.  646,  115  S.  W. 
658.    See  post,  §  1105. 

^■^  Roller  v.  Murray,  112  Va.  780,  72 
S.  E.  665. 

^^Lenthold  v.  Stickney  (Mmn.), 
133  N.  W.  856. 

"Chapman  v.  Haley,  117  Ky.  1004. 
25  Ky.  L.  2182,  80  S.  W.  190. 

'*Jourdan  v.  Burstow,  76  N.  J.  Eq. 
55,  74  Atl.  124,  139  Am.  St.  741; 
Johnson  v.  Douglas,  32  Wash.  293, 
73  Pac.  374.  See  also,  American  Nat. 
Bank  v.  Madison,  144  Ky.  152,  137  S. 
W.  1076  (action  to  recover  money 
paid  on  a  note  given  to  compound  a 
felony).     See  ante,  ch.  XXI. 


345 


EFFECT    OF    ILLEGALITY    OF    CONTRACTS. 


§     1068 


the  land  nor  defend  against  an  action  in  ejectment.^"  Nor  can 
property  conveyed  and  delivered  in  consideration  of  future  illicit 
intercourse  be  recovered.'^ 

§  1068.  A  party  in  pari  delicto  may  object  to  the  legality  of 
the  contract. — The  general  rule  is  that  if  the  parties  are  in 
pari  delicto  the  courts  will  render  assistance  to  neither.  More- 
over, the  objection  against  the  legality  of  a  contract  may  be  made 
by  a  party  in  pari  delicto.  The  defense  is  allowed,  not  for  the 
sake  of  the  party  objecting,  but  because  upon  principles  of  public 
policy  the  courts  will  not  aid  the  party  in  search  of  relief." 

§  1069.  Effect  of  illegality  of  contract — In  equity. — The 
legal  maxim  that  equity  follows  the  law  holds  good  as  a  general 
rule  in  equitable  proceedings  on  illegal  contracts.  Where  the 
parties  are  in  pari  delicto  equity  will  leave  them  in  the  position 
in  which  they  have  placed  themselves."    The  maxim,  that  he  who 


^'Treadwell  v.  Torbert,  119  Ala. 
279,  24  So.  54,  72  Am.  St.  918;  Wil- 
liams V.  Englebrecht,  Zl  Ohio  St. 
383;  Raguet  v.  Roll,  7  Ohio  (part 
2)  70.  See,  however.  Southern  Ex- 
press Co.  V.  Duffey,  48  Ga.  358,  which 
holds  that  where  possession  has  not 
been  delivered  the  grantor  may  be 
defended  against  an  action  in  eject- 
ment. 

^Hill  V.  Freeman,  1Z  Ala.  200,  49 
.•\m.  St.  48.  To  same  effect,  Otis  v. 
Freeman,  199  Mass.  160,  85  N.  E. 
168,  127  Am.  St.  476;  Brindley  v. 
Lawton,  S3  N.  J.  Eq.  259,  31  Atl. 
394. 

*^McKinney  v.  Big  Horn  Basin 
Development  Co.,  167  Fed.  770,  93  C. 
C.  A.  258;  Pittsburgh  Const.  Co.  v. 
West  Side  Belt  R.  Co.,  151  Fed.  125; 
Tompkins  v.  Compton,  93  Ga.  525, 
21  S.  E.  79;  Goodrich  v.  Penney,  144 
111.  422;  Todd  v.  Ferc;uson,  161  Mo. 
App.  624,  144  S.  W.  158;  Dieckmann 
V.  Robyn  (Mo.  App.).  141  S.  W.  717; 
Costello  V.  Portsman's  Brewing  Co., 
69  N.  H.  405.  43  Atl.  640;  Burck  v. 
Abbott,  22  Tex.  Civ.  App.  216,  54 
S.  W.  314.  See  also,  Edgar  v.  Fow- 
ler, 3  East  222;  Gubbins  v.  Bank  of 
Commerce.  7Q  111.  App.  154;  Neustadt 
v.  Hall,  58  111.  172;  Herring  v.  Cum- 
berland  Lumber   Co.    (N.    Car.),    74 


S.  E.  1011.  A  void  or  illegal  con- 
tract does  not  work  an  estoppel. 
Lukens  v.  Nye,  156  Cal.  498,  105  Pac. 
593;  Wilson  v.  Fahnestock  (Ind. 
App.),  86  N.  E.  1037;  Bodenhofer  v. 
Hogan,  142  Iowa  321,  120  X.  W.  659, 
134  Am.  St.  418;  International  Text 
Book  Co.  V.  Ohl  (Mich.),  Ill  N.  W. 
768.  As  a  general  rule,  w-here  per- 
sons engage  in  an  unlawful  business, 
such  as  betting  on  a  horse  race,  so 
as  to  be  in  pari  delicto,  the  law  will 
not  assist  either  one  but  leave  them 
where  they  have  placed  themselves. 
Shaffner  v.  Pinchback,  133  111.  410, 
24  N.  E.  867,  23  Am.  St.  624.  To 
same  eflfect,  Morrison  v.  Bennett,  20 
Mont.  560,  52  Pac.  553,  40  L.  R.  A. 
158. 

"Benyon  v.  Xettlefold.  3  Macn. 
&  G.  94;  Thomson  v.  Thomson.  7 
Ves.  Jr.  470.  In  re  Cork  &c.  R.  Co., 
39  L.  J.  Ch.  277;  Ayerst  v.  Jenkins, 
L.  R.  16  Eq.  275 :  Saltmarsh  v.  Beene, 
4  Port.  (Ala.)  283,  30  Am.  Dec.  525; 
Roberts  v.  Taylor.  7  Porter  (.Ala.) 
251 ;  Shattuck  v.  Watson.  53  Ark.  147, 
13  S.  W.  516,  7  L.  R.  A.  551n:  Hedges 
v.  Dixon  County,  Zl  Fed.  304;  Gar- 
rison V.  Burns,  98  Ga.  762;  Miller  v. 
Marckle,  21  111.  152;  Compton  v.  Bun- 
ker Hill  Bank,  96  111.  301,  36  Am.  Rep. 


§    lO/O  CONTRACTS.  346 

comes  in  a  court  of  equity  must  come  with  clean  hands,  applies.-'* 

§  1070.  Effect  of  subsequent  illegal  contracts  on  prior  con- 
tracts.— It  has  already  been  seen  that  a  lawful  promise  made 
for  a  lawful  consideration  which  grows  out  of  or  is  immediately 
connected  with  an  illegal  contract  and  which  cannot  be  severed 
from  the  latter  may  be  rendered  invalid  by  reason  of  its  close  con- 
nection with  the  illegal  agreement.^^  However,  where  the  legal 
can  be  separated  from  the  illegal  covenants  the  former  may  be 
enforcible,  notwithstanding  one  of  the  parties  may  have  intended 
to  thereby  promote  an  unlawful  object  indirectly  and  collater- 
ally.-^ 

§  1071.  Necessity  of  making  a  prima  facie  case  without 
disclosing  illegality  of  contract. — The  courts  are  not  in  entire 
accord  as  to  the  test  to  be  applied  by  which  to  determine  whether 
the  lawful  agreement  is  so  far  removed  from  the  unlawful  object 
as  to  be  itself  legal.     Some  cases  lay  down  the  rule  that  the 


147;  Mattox  v.  Hightshue,  39  Tnd. 
95 ;  Cronise  v.  Clark,  4  Md.  Ch.  403 ; 
Atwood  V.  Fisk.  101  Mass.  363,  100 
Am.  Dec.  124 ;  Ownes  v.  Ownes,  23 
N.  J.  Eq.  60;  Bunn  v.  Winthrop,  1 
Johns.  Ch.  (X.  Y.)  329;  Wright  v. 
Miller,  8  N.  Y.  9,  59  Am.  Dec.  438; 
McRae  v.  Atlantic  &  N.  C.  R.  Co.,  58 
N.  Car.  395 ;  Thomas  v.  Cronise,  16 
Ohio  54;  Stipe  v.  Stipe,  2  Head 
(Tenn.)  169;  Porter  v.  Jones,  6 
Coldw.  (Tenn.)  313;  Simmons  v. 
Kincaid,  5  Sneed  (Tenn.)  450; 
Cordova  v.  Lee  (Tex.),  14  S.  W. 
208 ;  Harriman  v.  Northern  Securi- 
ties Co..  197  U.  S.  244,  49  L.  ed. 
739,  25  Sup.  Ct.  493 ;  Thomas  v.  Rich- 
mond, 12  Wall.  (U.  S.)  349,  20  L. 
ed.  453;  Congress  &  Empire  Spring 
Co.  V.  Knowlton.  103  U.  S.  49,  26  L.  ed. 
347;  St.  Louis  &c.  R.  Co.  v.  Torre 
Haute  &c.  R.  Co.,  145  U.  S.  396,  36 
L.  ed.  749,  12  Sup.  Ct.  12;  Brown  v. 
Wylie,  2  W.  Va.  502,  98  Am.  Dec. 
781.  Thus  it  has  been  held  that  a 
court  of  equity  will  not  enjoin  the 
payment  of  a  check  given  in  payment 
of  money  lost  in  illegal  speculations 
on  the  market.  Kahn  v.  Waldon,  46 
Ohio  St.  195.  Compare  Basket  v. 
Moss,  115  N.  Car.  448,  20  S.  E.  7ZZ, 


48  L.  R.  A.  842n,  in  which  an  in- 
junction was  granted  against  the  sale 
of  real  estate  under  a  mortgage  given 
as  payment  for  procuring  the  ap- 
pointment or  resignation  of  a  pub- 
lic officer.  The  court  said,  referring 
to  Pomeroy's  Equity  Jurisprudence, 
§§  939,  942:  " 'In  pari  delicto'  is 
often  misunderstood,  and  its  applica- 
tion is,  properly  and  correctly.i  that 
in  such  cases  'potior  est  conditio 
possidentis'  that  is,  that  the  court 
will  permit  nothing  to  be  done  which 
will  enable  a  party  to  collect  from 
the  other  the  fruits  of  his  wrong. 
When  he  sues  to  recover,  the  law 
will  not  give  him  judgment.  When 
he  has  shrewdly  attempted  to 
evade  this  by  taking  a  mortgage  with 
a  power  of  sale,  the  court  will,  by 
injunction,  prevent  his  collecting  on 
a  mortgage  denounced  as  void  by 
reasons  of  public  policy." 

^  Shattuck  V.  Watson,  53  Ark.  147. 
13  S.  W.  516,  7  L.  R.  A.  551n;  Por- 
ter V.  Jones,  6  Coldw.  (Tenn.)  313. 
As  to  when,  see  post,  §  1094. 

='See  ante,  §  1078.  See  also,  ante, 
§  226. 

^'Rogers  v.  Waller,  4  Hay\v. 
(Tenn.)  205,  9  Am.  Dec.  758. 


347  EFFECT    OF    ILLEGALITY    OF    CONTRACTS.  §    10/2 

collateral  agreement  cannot  be  enforced  unless  a  prima  facie 
case  can  be  made  without  disclosing  or  relying  upon  the  prior 
or  subsequent  illegal  contract.*^  If  by  this  rule  it  is  meant  that 
recovery  may  be  had  when  it  is  unnecessary  to  rely  on  the  illegal 
transaction  to  establish  the  plaintiff's  right  to  recovery,  it  is  cor- 
rect in  principle.  Thus  the  illegality  of  a  lease  of  property  will 
not  prevent  the  lessor  from  regaining  possession  after  such  lease 
has  expired.-^ 

§  1072.  Rule  criticized  and  restated. — The  rule  as  stated 
in  the  foregoing  cases  is  misleading,  however,  for  the  reason  that 
one  might  infer  that  the  plaintiff's  right  to  recover  depended 
upon  his  ability  to  suppress  the  illegal  contract  rather  than  on  his 
ability  to  show  that  it  is  in  no  way  connected  therewith.  A  bet- 
ter statement  of  the  rule  is  to  the  effect  that  the  test  of  a  viola- 
tion of  rules  of  public  policy  is  whether  the  plaintiff  requires  the 
aid  of  the  illegal  transaction  to  establish  his  right."" 

§  1073.  Rule  further  considered. — In  accordance  with 
these  rules  it  has  been  held  that  an  unlawful  contract  entered  into 
for  the  purpose  of  modifying  or  discharging  a  prior  legal  contract 
will  not  defeat  the  right  to  enforce  the  prior  contract.^''     Thus 

"Farmer  v.   Russell,   1   Bos.  &   P.  which  had  for  its  object  the  suppres- 

296;  Simpson  v.  Bloss,  7  Taunt.  246;  sion    of    bidding    on    public    sale    of 

Phalen    v.    Clark.    19    Conn.   421,    50  lands). 

Am.    Dec.    253;    Clarke    &c.    Co.    v.  ""  Sittle   v.    Wright,    122    Fed.    434, 

Brown,   11   Ga.   606,   4   Am.    St.   98;  58  C.  C.  A.  416. 

Ingram  v.  Mitchell,  30  Ga.  547;  Bar-  =*  Springfield  &c.   Ins.  Co.  v.   Hull, 

wick  V.  :\Iovse.  74  Miss.  415,  21   So.  51   Ohio   St.   270,  Zl  X.   E.    1116.  25 

238,60Am.  St.  512;    Snider  v.  Wood-  L.  R.  A.  Zl ,  46  Am.  St.  571;  Robson 

enware    Co.,  74  Miss.  353,  20  So.  836 ;  v.    Hamilton,    41    Ore.    239,    69    Pac. 

Gallagher  v.   Cornelius,  23  Mont.  27,  651;    Nester  v.    Continental    Brewing 

57   Pac.   447:   Green   v.   Corrigan,  87  Co.,  161  Pa.   St.  473,  29  Atl.   102,  24 

jMo.  359:   Woodman  v.   Hubbard,  25  L.   R.   A.  247,  41   Am.   St.   894.     To 

N.  H.  67,  57  .^.m.  Dec.  310;   Wood-  same    effect,    Wayman    Inv.    Co.    v. 

worth  V.  Bennett.  43  N.  Y.  273,  3  Am.  Wessinger  &  Wagner,    13   Cal.   App. 

Rep.  706:   Oliphant  v.   Markliam,   79  108.  108  Pac.  1022;  Butler  v.  Agnew. 

Tex.  543,   15  S.  W.  569,  23  Am.   St.  9  Cal.  App.  Zll ,  99  Pac.  395;  Cobb  v. 

363;  Buck  v.  Albee.  26  Vt.  184,  62  Am.  Crittenden,  161  Fed.  510.  88  C.  C.  A. 

Dec.  564;  Hardv  v.   Stonebreaker,  31  452:    Harwell    v.    Blake    (Tex.    Civ. 

Wis.  640.    ".\  party  to  an  illegal  con-  App.),  90   S.   W.    1125    (action   by   a 

tract  cannot  set  up  a  case  in  which  he  debtor  against  trustee  for  benefit  of 

must    necessarily    disclose    an    illegal  creditors   for  money  received  by   the 

purpose  as    the    groundwork    of    his  trustee   and   not   accounted    for), 

claim."     Southern  Mut.  Aid  Assn.  v.  '"Foreman    v.    Hardwick,    10    .A.la. 

Bount.    112   Va.    214,    70    S.    E.    487  316;    Ware    v.    Currv,   67    Ala.    274: 

(suit    growing    out    of    a    contract  Tucker  v.  West,  29  Ark.  386;  Haw- 


§  1074 


CONTRACTS. 


348 


the  attempted  discharge  of  a  vaHd  obhgation  for  an  illegal  con- 
sideration has  been  held  not  to  discharge  such  valid  obligation.^^ 


§  1074.    Partial  illegality  when  contract  is  divisible. — A 

contract  made  up  of  several  distinct  transactions  or  parts,  some  of 
which  are  legal  and  other  illegal,  will  be  enforced  as  to  its  legal 
provisions  where  the  legal  portions  can  be  separated  from  those 
which  are  illegal,^"  as  where  goods  are  sold  at  a  separate  price 
for  each  article,  the  fact  that  the  sale  of  some  of  the  articles  is 
illegal  does  not  as  a  general  rule  defeat  the  validity  of  the  entire 
transaction.^^ 

§  1075.  Rule  illustrated  and  applied. — Thus  where  fertil- 
izer was  sold  and  notes  given  for  several  shipments  thereof,  each 
consisting  of  several  sacks,  recovery  on  the  notes  given  for  the 
shipments  properly  tagged  was  not  defeated  by  the  fact  that  one 
sack  in  one  of  the  shipments  did  not  have  a  tag  attached  thereto 
as  required  by  law.     This  defeated  recovery  only  on  that  con- 


kins  V.  Campbell,  6  Ark.  513;  Britt 
V.  Aylett,  11  Ark.  475,  52  Am.  Dec. 
282;  Chicago  &c.  R.  Co.  v.  Lewis, 
109  111.  120;  Ogden  v.  Barker,  18 
Johns.  (N.  Y.)  87;  Cook  v.  Barnes. 
36  N.  Y.  520;  Wilcoxon  v.  Logan,  91 
N.  Car.  449;  Scott  v.  Atchison,  38 
Tex.  384;  Nichols  v.  Mudgett,  2>2  Vt. 
546.  See  also,  Baird  v.  Boehner,  77 
Iowa  622,  42  N.  W.  454;  Harvey  y. 
Tama  County,  53  Iowa  228;  Manion's 
Admrs.  v.  Titsworth,  18  B.  Mon. 
(Ky.)  582;  Cate  v.  Blair,  6  Coldw. 
(Tenn.)   639. 

^'Best  V.  Higginbotham,  7  B.  Mon. 
(Ky.)  124.  See  also.  Slaughter  v. 
Hamm,  2  Ohio  271.  Compare  Eu- 
banks  v.  Dobbs,  4  Ark.  173 ;  Smith  v. 
Davidson,  6  J.  J.  Marsh.  (Ky.)  539; 
Sickman  v.  Lapsley,  13  Serg.  &  R. 
(Pa.)  224,  15  Am.  Dec.  596;  Bailey 
V.  Buck,  11  Vt.  252. 

'"  Glucose  Sugar  Refining  Co.  v. 
Marshalltown,  153  Fed.  620;  Choc- 
taw P.  C.  R.  Co.  V.  Bond,  160  Fed. 
403,  87  C.  C.  A.  355;  Livingston  v. 
Chicago  &c.  R.  Co.  (Iowa),  120  N. 
W.  1040  (contract  concerning  main- 
tenance of  farm  crossing)  ;  Fryer  v. 
Marker,  142  Iowa  708,  121  N.  W. 
526,  23  L.  R.  A.  (N.  S.)  477n;  Smith 


V.  Corbin,  135  Ky.  727,  123  S.  W. 
277;  Shevalier  v.  Doyle  (Nebr.),  130 
N.  W.  417;  Faist  v.  Dahl,  86  Nebr. 
669,  126  N.  W.  84;  Piper  v.  Boston 
&c.  R.  Co.,  75  N.  H.  435,  75  Atl. 
1041 ;  Osgood  v.  Central  Vermont  R. 
Co.,  77  Vt.  334,  60  Atl.  137,  70  L.  R. 
A.  930;  Sprigg's  Admr.  v.  Rutland 
R.  Co.,  77  Vt.  347,  60  Atl.  143 
(Contract  exempting  railroad  com- 
pany from  liability  for  damage  to 
cattle  over  and  above  an  agreed  val- 
uation and  exempting  it  from  liabil- 
ity to  the  care-taker  held  divisible. 
The  first  provision  was  valid,  the  lat- 
ter invalid.)  When  several  transac- 
tions, some  legal  and  some  illegal, 
constitute  the  consideration  for  a 
mortgage,  they  may  be  upheld  for  the 
legal  consideration  when  severable 
from  the  illegal.  Conradt  v.  Lepper, 
13  Wyo.  473,  81  Pac.  307,  rehearing 
denied,  82  Pac.  2.     See  ante,  §  249. 

''Bovd  V.  Eaton,  44  Maine  51,  69 
Am.  St.  83;  Barrett  v.  Delano 
(Maine).  14  Atl.  288;  Walker  v. 
Lovell,  28  N.  H.  138,  61  Am.  Dec. 
605;  Chase's  Exrs.  v.  Burkholder,  18 
Pa.  48;  Shaw  v.  Carpenter,  54  Vt. 
155,  41  Am.  Rep.  837. 


349 


EFFECT    OF    ILLEGALITY    OF    CONTRACTS. 


§     lO/C 


signment  which  contained  the  sack  not  properly  tagged.^*  And 
the  legal  portion  of  the  contract,  part  of  which  is  void  because 
in  restraint  of  trade,  will  be  enforced  where  the  lawful  promise 
can  be  separated  from  that  part  of  the  contract  void  because  in 
restraint  of  trade. ^'^  The  rule  stated  in  the  preceding  sections  to 
the  effect  ''that  the  test  whether  a  demand  connected  with  an 
illegal  act  can  be  enforced  is,  whether  the  plaintiff  requires  any 
aid  from  the  illegal  transaction  to  establish  his  case,"  applies 
here.'« 


§  1076.    Indivisible  illegal  contracts. — A  contract  v^^hich  is 
entire  and  indivisible  and  which  contains  a  stipulation  that  is 


"  Alabama  Nat.  Bank  v.  C.  C.  Par- 
ker &  Co.,  146  Ala.  513,  40  So.  987. 
See,  however,  the  case  of  Bick  v. 
Seal,  45  j\Io.  App.  475,  which  lays 
down  the  rule  that  "  'If  the  consid- 
eration of  any  contract,  either  in 
whole  or  in  part,  be  illegal,  this  de- 
feats the  entire  contract,  and  it  is 
wholly  immaterial,  whether  the  con- 
tract discloses  such  illegality,  or  it 
be  established  by  evidence  aliunde.' " 
See  also,  Hanauer  v.  Doane,  12 
Wall.  (U.  S.)  342,  20  L.  ed.  439.  In 
the  above  case  suit  was  brought  upon 
two  notes  given  as  part  considera- 
tion for  the  purchase  of  goods  sold 
by  the  plaintiff  to  be  used  to  aid 
those  states  in  rebellion  against  the 
United  States.  The  court  said :  "A 
portion  of  their  consideration  was 
stores  and  supplies  furnished  to  the 
army  contractor  of  the  Confederate 
Government,  and  another  portion 
was  due-bills,  issued  for  the  same 
consideration,  and  received  by  Hun- 
ter and  Oakes  with  full  notice  of 
their  character.  If  either  of  these 
portions  of  the  consideration  on 
which  the  notes  were  given  was  ille- 
gal, the  notes  are  void  in  toto.  Such 
is  the  elementary  rule,  for  which  it 
is  unnecessary  to  cite  authorities." 
See  also,  Minnesota  Sandstone  Co. 
V.  Clark  35  Wash.  466,  11  Pac.  803. 

"Central  New  York  Teleg.  Co.  v. 
Averill.  199  N.  Y.  128,  92  N.  E.  206. 
32  L.  R.  A.  (N.  S.)  494n,  139  Am. 
St.  878.  A  contract  between  one  who 
has  a  franchise  to  furnish  natural 
gas  to  the  inhabitants  of  a  city,  and 


a  gas  company  owning  natural  gas 
wells  and  a  sj'stem  for  distribution 
in  such  city,  on  one  side,  and  a  light 
company  which  has  the  right  to  fur- 
nish gas  and  buy  and  sell  the  same, 
on  the  other,  w-hich  bound  the  gas 
company  to  furnish  gas  during  the 
life  of  the  franchise  to  the  lighting 
company  for  sale  to  the  inhabitants, 
etc.,  the  gas  company  to  control  the 
prices  of  natural  gas  to  the  consum- 
ers for  all  purposes  except  illumina- 
tion, the  lighting  company  to  fi.x  the 
rate  for  illuminating  gas,  was  held 
divisible  and  the  clause  as  to  the 
right  to  fix  the  price  of  gas,  if  in- 
valid as  in  restraint  of  trade,  could 
be  disregarded  and  the  legal  part  of 
the  contract  given  effect.  Ft.  Smith 
Light  &  Traction  Co.  v.  Kelley,  94 
Ark.  461,  127  S.  W.  975.  See  also, 
Nicholson  v.  Ellis,  110  Md.  322,  IZ 
Atl.  17,  24  L.  R.  A.  (N.  S.)  942n 
132  Am.  St.  445. 

""Oliphant  v.  Markham,  79  Tex. 
543,  15  S.  W.  569,  23  Am.  St.  363.  See 
also.  Herring  v.  Cumberland  Lum- 
ber Co.  (N.  Car.),  74  S.  E.  1011.  See, 
ante,  §  249.  But  where  the  induce- 
ment to  the  agreement  and  the  sole 
object  in  view  was  the  accomplish- 
ment of  an  illegal  purpose  which 
cannot  be  separated  from  the  other 
parts  of  the  contract  the  contract 
cannot  be  divided  and  leave  any  sub- 
ject-matter capable  of  enforcement. 
Santa  Clara  Vallev  &c.  Co.  v.  Haves, 
IG  Cal.  387,  18  Pac.  391,  9  Am. 'St. 


§    10/7                                               CONTRACTS.  35O 

illegal  and  cannot  be  severed  from  the  legal  portion  of  the  agree- 
ment, is  corrupted  by  the  stipulation  and  rendered  unenforcible  as 
an  entirety. ^^  Thus  when  a  condition  precedent  represents  the 
consideration  for  a  promise  and  the  condition  is  illegal,  the  prom- 
ise supported  by  it  also  fails. ^^ 

§  1077.    Illegal  when  consideration  cannot  be  apportioned 
— Renunciation,  effect  of. — Even  though  it  might  be  possible 

"^  Beal  &  Dovle  Dry  Goods  Co.  v.  Globe  Pub.  Co.,  41  Minn.  188,  16  Am. 
Barton,  80  Ark.  326,  97  S.W.  58  (par-  St.  695;  Ford  v.  Gregson,  7  Mont, 
tial  illegality  consisted  of  compound-  89,  14  Pac.  659;  Hughes  v.  MuUins, 
ing  a  felony)  ;  Prost  v.  More,  40  36  Mont.  267,  92  Pac.  758  (contract 
Cal.  347 ;  Santa  Clara  Valley  Mill  concerning  procurement  of  evidence)  ; 
&c.  Co.  V.  Hayes,  76  Cal.  387,  18  Bliss  v.  Brainard,  41  N.  H.  256 ;  Roby 
Pac.  391,  9  Am.  St.  211;  Norris  v.  v.  West,  4  N.  H.  285,  17  Am.  Dec. 
Harris,  15  Cal.  226;  More  v.  Bonnet,  423;  Williams  v.  Hastings,  59  N.  H. 
40  Cal.  251,  6  Am.  Rep.  621;  Brown  273  (part  of  services  rendered  on 
V.  Kennedy,  12  Colo.  235,  20  Pac.  696;  Sunday)  ;  Ridgely  v.  Keene,  134  App. 
Pierce  v.  Shav,  145  111.  App.  612;  Div.  (N.  Y.)  647,  119  N.  Y.  S.  451; 
Schmueckle  v.  Waters,  125  Ind.  265,  Rose  v.  Truax,  21  Barb.  (N.  Y.) 
25  N.  E.  281;  Kain  v.  Bare,  4  Ind.  361;  Brown  v.  Treat,  1  Hill  (N.  Y.) 
App.  440;  Lingle  v.  Snvder,  160  Fed.  225;  Suydam  v.  Smith,  7  Hill  (N. 
627,  87  C.  C.  A.  529  (contract  em-  Y.)  182;  Miller  v.  Scherder,  2  N.  Y. 
braced  public  land  part  of  which  was  262;  Lambert  v.  Snow,  17  How.  Pr. 
lawfully  and  part  unlawfully  in  pos-  (N.  Y.)  517;  McGovern  v.  Payn,  32 
session  of  the  plaintiff);  Boatmen's  Barb.  (N.  Y.)  83;  Brown  v.  Brown, 
Bank  v.  Frilzlen,  175  Fed.  183;  34  Barb.  (N.  Y.)  533:  Decker  v. 
Mount  V.  Montgomery  County,  168  Morton,  1  Redf.  (N.  Y.)  477;  Foley 
Ind.  661,  80  N.  E.  629,  14  L.  R.  A.  v.  Speir,  100  N.  Y.  552.  3  N.  E.  477, 
(X.  S.)  483  (holding  that  one  who  affg.  11  Daly  (N.  Y.)  254;  Crawford 
purchases  another's  interest  in  a  re-  v.  Wick,  18  Ohio  St.  190,  98  Am. 
ward  to  be  paid  by  the  county  for  Dec.  103.  Compare  Lange  v.  Werk, 
information  leading  to  the  convic-  2  Ohio  St.  519;  Filson's  Trustees  v. 
tion  of  certain  persons  guilty  of  sell-  Himes,  5  Pa.  St.  452,  47  Am.  Dec. 
ing  their  votes  cannot  recover  the  422;  Kottwitz  v.  Alexander,  34  Tex. 
reward)  ;  Osgood  v.  Bauder,  75  Iowa  689;  Arrington  v.  Sneed,  18  Tex. 
550,  39  N.  W.  887,  1  L.  R.  A.  655;  135;  McNeese  v.  Carver.  40  Tex.  Civ. 
Dillon  &c.  v.  Allen,  46  Iowa  299,  26  App.  129,  89  S.  W.  430  (part  of 
Am.  Rep.  145 ;  Baird  v.  Boehner,  77  consideration  for  check  was  the 
Iowa  622,  42  N.  W.  454 ;  Gipps  Brew-  promise  of  the  payee  to  procure  dis- 
ing  Co.  V.  De  France,  91  Iowa  108,  51  missal  of  criminal  proceedings 
Am.  St.  329;  Casady  v.  Wood-  against  maker's  son);  Kennedy  v. 
bury,  13  Iowa  113;  McLane's  Admr.  Lonabaugh  (Wyo.),  117  Pac.  1079. 
V.  Dixon,  30  Ky.  L.  683,  99  S.  W.  When  the  entire  consideration  is  ille- 
601  (part  of  consideration  living  in  gal  though  not  immoral,  the  con- 
adultery)  ;  Goodwin  v.  Clark,  65  tract  is  void.  Nicholson  v.  Ellis,  110 
Maine  280  (no  recovery  allowed  for  Md.  322,  73  Atl.  17,  24  L.  R.  A.  (N. 
services  part  of  which  were  ren-  S.)  942n,  132  Am.  St.  445.  To  same 
dered  in  the  unlawful  sale  of  intox-  effect.  Globe  Works  v.  United  States, 
icating  liquors)  ;  Bishop  v.  Palmer,  45  Ct.  CI.  (U.  S.)  497.  See  also, 
146  Mass.  469,   16  N.  E.  299,  4  Am.  ante,  §  249. 

St.    339;    Holt   v.    O'Brien,    15    Gray  '» Bessire  &  Co.  v.   Corn   Products 

(Mass.)     311;     McNamarav.     Gar-  Mfg.  Co.,  47  Ind.  App.  298,  94  N.  E. 

gett,  68  Mich.  454,  36  N.  W.  218,  13  353. 
Am.    St.    355,    Handy   v.    St.    Paul 


351  EFFECT    OF    ILLEGALITY    OF    CONTRACTS.  §     IO77 

to  sever  the  illegal  from  the  legal  portion  of  the  contract  yet  if 
there  are  no  means  by  which  to  ascertain  whether  the  promise 
was  induced  by  the  legal  or  illegal  portion  or  where  the  considera- 
ation  is  unapportioned  and  iinapportionable  the  entire  contract 
will  be  held  illegal,  if  one  of  the  elements  thereof  is  immoral  or 
against  public  policy.^'*     Nor  can  the  legal  portion  of  an  entire 

■"•Walrond  v.  Walrond,  4  Jur.  (N.  7  J.  J.  Marsh.  (Ky.)  583;  Brown's 
S.)  1099;  Bridge  v.  Cage,  Cro.  Jac.  Admr.  v.  Langford's  Admr.,  3  Bibb 
103;  VVillyams  v.  Bullmore,  33  Law  (Ky.)  497;  Kimbrough  v.  Lane.  11 
J.  Ch.  461;  Card  v.  Hope.  2  B.  &  Bush  (Ky.)  556;  Ozanne  v.  Haber, 
C.  661,  9  E.  C.  L.  289;  Parkin  v.  30  La.  Ann.  1384;  Coolidge  v.  Blake, 
Dick,  11  East  502;  Hopkins  v.  Pres-  15  Mass.  429;  Perkins  v.  Cummings, 
cott,  4  C.  B.  577.  56  E.  C.  L.  577.  To  2  Gray  (Mass.)  258;  Bishop  v.  Pal- 
same  effect.  Trist  v.  Child,  21  Wall,  mer,  146  Mass.  469,  16  X.  E.  299, 
(U.  S.)  441,  22  L.  ed.  623;  Birming-  4  Am.  St.  339;  Robinson  v.  Green, 
ham  Trust  &  Sav.  Co.  v.  Currey  3  Mete.  (Mass.)  159;  Bliss  v.  Negus, 
(Ala.),  57  So.  962;  Pettit's  Admr.  v.  8  Mass.  46;  McXamara  v.  Gargett, 
Pettit's  Disbr..  32  Ala.  288;  Wynne  v.  68  Mich.  454.  36  X.  W.  218.  13  Am. 
Whisenant,  37  Ala.  46;  Dawkins  v.  St.  355;  Wisner  v.  Bardwell,  38 
Gill,  10  Ala.  206:  Valentine  v.  Stew-  Mich.  278;  Snyder  v.  Willey,  33 
art,  15  Cal.  387;  Hovt  v.  Macon,  2  Mich.  483;  Friend  v.  Porter,  50  Mo 
Colo.  502;  Pueblo  &  A.  V.  R.  Co.  v.  App.  89;  Bick  v.  Seal,  45  Mo.  App 
Taylor.  6  Colo.  1,  45  Am.  Rep.  512,  475;  Peltz  v.  Long,  40  Mo.  532 
Cited  in  Brown  v.  Kennedy,  12  Colo.  Sumner  v.  Summers,  54  Mo.  340 
235,  20  Pac.  696;  Chandler  v.  John-  McCormick  Harvesting  Mach.  Co.  v 
son,  39  Ga.  85 ;  Allen  v.  Pearce,  84  Miller,  54  Nebr.  644,  74  X.  W.  1061 
Ga.  606,  10  S.  E.  1015;  Halthaus  v.  Hinds  v.  Chamberlin,  6  N.  H.  225 
Kuntz,  17  111.  App.  434;  Wolf  v.  Bixbv  v.  Moor.  51  N.  H.  402;  Clark 
Fletemeyer,  83  111.  418;  Tenney  v.  v.  Ricker.  14  X.  H.  44;  Steinfeld  v. 
Foote,  95  111.  99;  Henderson  v.  Pal-  Levy  (Brooklyn  City  Ct.  Spec.  T.).  16 
mer,  71  111.  579,  22  Am.  Rep.  117;  Abb.  Pr.  (N.  S.)  (X.  Y.)  26;  Rose 
People  V.  Smith,  130  III.  App.  407;  v.  Truax,  21  Barb.  (X.  Y.)  361; 
James  v.  Jellison,  94  Ind.  292,  48  Am.  Haynes  v.  Rudd,  102  N.  Y.  372,  55 
Rep.  151;  Ricketts  v.  Harvev,  106  Ind.  Am.  Rep.  815;  Saratoga  County 
564,  6  N.  E.  325;  Everhart  v.  Puc-  Bank  v.  King.  44  X.  Y.  87;  Widoe 
kett,  73  Ind.  409;  Elkhart  County  v.  Webb,  20  Ohio  St.  431.  5  Am.  Rep. 
Lodge  V.  Crarv,  98  Ind.  238,  49  Am.  664 ;  Ohio  v.  Board  of  Education,  35 
Rep.  746;  Saxon  v.  Wood,  4  Ind.  Ohio  St.  519;  Raguet  v.  Roll,  7  Ohio 
App.  242,  30  X.  E.  797;  Madison  Ins.  (pt.  2)  70;  McQuade  v.  Rosecrans, 
Co.  V.  Forsythe,  2  Ind.  483;  Koster  36  Ohio  St.  442;  Filson's  Trustees  v. 
v.  Senev,  99  Iowa  584:  Tavlor  v.  Himes,  5  Pa.  St.  452.  47  Am.  Dec. 
Pickett, '52  Iowa  467.  3  X.  W.  514;  422.  In  re  Bredin's  Appeal.  92  Pa. 
Baird  v.  Boehner,  77  Iowa  622,  42  St.  241,  2  Ky.  L.  20,  37  Am.  Rep. 
N.  W.  454;  McBratnev  v.  Chandler,  677;  Lancaster  Countv  v.  Fulton.  128 
22  Kans.  692,  31  Am.  Rep.  213:  Ger-  Pa.  St.  48;  Moss  v.  Tones.  1  Week, 
lach  V.  Skinner,  34  Kans.  86,  8  Pac.  No.  Cas.  (Pa.)  96:  Sullivan  v.  Hor- 
257.  55  Am.  Rep.  240:  Flersheim  v.  gan.  \7  R.  I.  109.  20  Atl.  232.  9  L.  R. 
Carv,  39  Kans.  178.  17  Pac.  825;  A.  110;  Massev  v.  Wallace.  32  S.  Car. 
Fort  Worth  First  Nat.  Bank  v.  149.  10  S.  E.  937;  Potts  v.  Grav.  3 
Payne.  19  Ky.  L.  839.  42  S.  W.  736;  Coldw.  (Tenn.)  468,  91  Am.  Dec. 
Donallcn  v.  Lennox,  6  Dana  (Kv.)  294;  Wegner  Bros.  v.  Biering.  65 
81:  Collins  v.  Merrcll,  2  Mete.  (Kv.)  Tex.  506;  Seeligson  v.  Lewis.  65  Tex. 
163:  Swan  v.  Chandler.  8  R.  ]\Ion.  215.  57  Am.  Rep.  .503 :  Reed  v.  Brewer. 
(Ky.)  98:  Gardner  v.  Maxey.  9  B.  90  Tex.  144.  37  S.  W.  418:  Edwards 
Men.   (Ky.)   90;  Burgen  v.  Straughan,  County  v.  Jennings,  89  Tex.  618,  35 


§     10/8  COXTRACTS.  352 

contract  ordinarily  be  rendered  valid  and  binding  by  a  renuncia- 
tion of  the  illegal  part/" 

§  1078.  Contracts  growing  out  of  or  connected  with  ille- 
gal contracts. — This  subject  has  already  been  treated  to  some 
extent  in  the  chapter  on  Legality  of  Object,  under  the  section, 
Contracts  Growing  Out  of  or  Connected  with  Illegal  Contracts, 
and  little  will  be  added  here.  The  general  rule  is  that  an  obli- 
gation will  be  enforced,  though  indirectly  connected  with  an 
illegal  transaction,  if  it  is  supported  by  an  independent  consider- 
ation, so  that  the  plaintiff  does  not  require  the  aid  of  the  illegal 
transaction  to  establish  his  case.*^  Thus,  it  is  well  settled  that 
contracts  which  relate  to  and  are  in  furtherance  of  illegal  com- 
binations are  void,  but  this  rule  does  not  generally  apply  to  con- 
tracts made  by  members  of  such  combinations  which  do  not  relate 
to  the  monopoly  itself,  and  which  are  merely  collateral  to  the 
agreement  by  which  the  illegal  combination  was  formed.*^ 

§  1079.  Illegal  combination — Right  to  maintain  an  action 
on  independent  contract. — There  is  a  conflict  of  authority  as 
to  whether  the  illegal  combination  has  a  right  to  maintain  an  ac- 
tion upon  an  independent  or  collateral  contract,  and  the  conclu- 
sion reached  by  the  various  courts  depends  largely  upon  the  con- 
struction placed  upon  local  statutes  forbidding  combinations  in 
restraint  of  trade.     At  common  law  such  combination  or  trust 

S    W.   1053,  affg.    (Tex.),  33  S.  W.  terial.     Kimbrough  v.  Lane,  11  Bush 

585;  Kottwitz  v.  Alexander,  34  Tex.  (Ky.)  556. 

689;   Rayner  Cattle   Co.   v.   Bedford,  "Arnot   v.   Pittston   &c.   Coal   Co., 

91  Tex.  642,  44  S.  W.  410,  45  S.  W.  68  N.  Y.  558,  23  Am.  Rep.  190   (no 

554;    Powers  v.    Skinner,  34  Vt.  274,  recovery  permitted    for  the  price   of 

80  Am.  Dec.  677 ;  Badger  v.  Williams,  coal   delivered   under  an   illegal  con- 

1  D.  Chip.   (Vt.)   137;  Cobb  v.  Cow-  tract);     Inter    Ocean    Pub.     Co.    v. 

dery,   40   Vt.   25,   94   Am.    Dec.   370;  Associated      Press,      Circuit      Court 

Woodruff  V.  Hinman,  11  Vt.  592,  34  1898,  3   Chicago   L.  J.    (N.   S.)   96 

Am.    Dec.    712;  Hinesburgh  v.Sumner,  "Citizen's    Nat.    Bank   v.    Mitchell, 

9  Vt.  23,  31  Am.  Dec.  599;  Bowen  v.  24  Okla.  488,  103  Pac.  720 ;  Armstrong 

Buck,  28   Vt.   308;    Swartzer  v.    Gil-  v.    American    Exch.    Nat.    Bank,    133 

lett,  1  Chand.   (Wis.)  207.     See  also,  U.  S.  433,  33  L.  ed.  747,  10  Sup.  Ct. 

Evans  v.   American   Strawboard   Co.,  450. 

114  111.  App.  450.    Compare  Pierce  v.  *^  Freed  v.  American  Fire  Ins.  Co., 

Pierce,    17   Ind.   App.    107,   46   N.   E.  90  Miss.  72,  43  So.  947,  11  L.  R.  A. 

480;  Wilcox  v.  Daniels,  15  R.  I.  261,3  (N.  S.)   368n,  122  Am.  St.  307.  See, 

Atl.   204.     The  smallness  of  the  en-  ante,  §  249. 
tire    illegal    consideration    is    imma- 


353  EFFECT    OF    ILLEGALITY    OF    CONTRACTS.  §    I080 

was  permitted  to  mnintnin  actions  which  were  collateral  to  and 
independent  of  the  illegal  contract  by  which  the  trust  was  formed, 
and  which  are  not  in  furtherance  thereof." 

§  1080.  Rule  illustrated. — In  accordance  with  this  princi- 
ple it  has  been  held  that  the  agents  of  a  corporation  could  not 
defeat  an  action  by  the  company  to  compel  them  to  pay  over 
money  belonging  to  it  arising  from  goods  sold  and  collections 
made  on  the  ground  that  the  corporation  was  a  trust  or  monop- 
oly, notwithstanding  the  existence  of  a  statute  which  made  illegal 
contracts  in  restraint  of  trade  or  commerce."  Likewise,  the 
vendor  of  goods  has  been  permitted  to  recover  the  sale  price,  not- 
withstanding they  were  sold  under  an  agreement  for  an  exclusive 
agency,  since  the  agreement  to  pay  for  goods  purchased  and  deliv- 
ered was  severable   from  the  exclusive  agency  provision. *° 

§  1081.  Illegal  combination — Insurance  contract. — And 
where  the  plaintiff  insured  property,  which  was  destroyed  by  the 
wrongful  act  of  a  third  person,  it  was  held  that  the  fact  that  the 
insurer  was  a  member  of  an  unlawful  combination  did  not  pre- 
vent it  from  enforcing  a  provision  subrogating  the  insurer  to  the 
rights  of  the  insured  against  the  one  responsible  for  the 
destruction  of  the  property,  as  the  subrogation  agreement  did  not 
relate  to  the  business  of  the  combine.'*® 

§  1082.  Effect  of  state  statutes. — The  various  state  stat- 
utes do  not,  as  a  general  rule,  defeat  the  right  of  a  trust  or  com- 
bination to  recover  for  goods  sold  by  it,*'  unless  the  statute  spe- 
cifically provides  that  there  can  be  no  recovery.     The  statutes 

"Connolly    v.    Union    Sewer    Pipe  *' Packard    v.    Bvrd,   73    S.    Car.    1, 

Co.,  184  U.  S.  540,  46  L.  ed.  679,  22  51    S.    E.   678,   6   L.   R.   A.    (N.   S.) 

Sup.  Ct.  431.    Compare  with  the  fore-  547n. 

going  case,   Continental   Wall   Paper  ^  Freed  v.  American  Fire  Ins.  Co., 

Co.    V.    Lewis    Voight    &c.    Co.,    212  90  Miss.  72,  43  So.  947,  11  L.  R.  A. 

U.  S.  227,  53  L.  ed.  486,  29  Sup.  Ct.  (X.  S.)  368n,  122  Am.  St.  307. 

280.    Also,  Hadley  Dean  Plate  Glass  *' Wiley    v.    National    Wall    Paper 

Co.  V.  Highland  Glass  Co.,  74  C.  C.  Co.,  70  111.  .'\pp.  543 ;  Over  v.  Bvram 

A.  462,   143  Fed.  242;   National   Dis-  Foundry    Co.,    37    Ind.    App.   452.    77 

tilling   Co.   V.   Cream   Citv    Importing  N.  E.  302,  117  .A.m.  St.  327;  Interna- 

Co.,  86  Wis.  352.  56   X."  W.  864,  39  tional      Harvester      Co.      v.      Smith 

Am.  St.  902.  (Mich.),  127  N.  W.  695,  30  L.  R.  A. 

"International     Harvester    Co.     v.  (N.  S.)  580. 
Smith    (Mich.),   127   X.   W.  695,  30 
L.  R.  A.  (N.  S.)  580. 

23 — Contracts,  Vol.  2 


§    1083  CONTRACTS.  354 

of  some  states  so  provide.*^  It  is,  of  course,  well  settled  both  at 
common  law  and  by  statute  that  there  can  be  no  recovery  where  it 
is  necessary  to  rely  on  and  prove  the  illegal  contract  by  which  the 
trust  or  combination  was  formed.*® 

§  1083.  Promise  by  third  party  to  pay  claim  arising  out  of 
illegal  contract. — Closely  allied  to  the  subject  under  discus- 
sion is  the  question  of  whether  or  not  a  third  party  is  liable  on 
his  promise,  express  or  implied,  to  pay  a  claim  arising  out  of  an 
illegal  contract  performed  between  two  other  persons,  the  pro- 
ceeds of  which  are  in  the  hands  of  such  third  person  as  a  result  of 
his  promise.  In  case  the  latter's  promise  is  based  on  a  valuable 
and  legal  consideration,^"  or  such  third  person  is  a  mere  depos- 
itary of  money  which  represents  the  proceeds  of  an  illegal  con- 
tract to  pay  the  same  to  one  of  the  parties  to  such  contract,  the 
third  party's  promise  is  not  affected  by  the  illegality  of  the  orig- 
inal contract,  but  may  be  enforced  in  behalf  of  the  party  for 
whose  benefit  the  promise  is  made,  since  his  promise  is  a  new  and 
independent  transaction  and  not  tainted  by  the  illegality  of  the 
original  agreement. ^^ 

*'  Ferd  Heim  Brewing  Co.  v.  Bel-  legally  cutting  timber  from  govern- 

inder,  97  Mo.  App.  64,  71  S.  W.  691;  ment  lands). 

Wagner  v.  Alinnie  Harvester  Co.,  25  "Tenant  v.  Elliott,  1  Bos.  &  P.  3; 
Okla.  558,  106  Pac.  969.  Before  such  Farmer  v.  Russell,  1  Bos.  &  P.  296; 
a  statute  will  apply,  however,  the  Thomson  v.  Thomson,  7  Ves.  Jr.  470; 
sale  must  have  been  made  within  the  Sharp  v.  Taylor,  2  Phil.  Ch.  801 ; 
state,  since  the  act  has  no  application  Barker  v.  Parker,  23  Ark.  390;  Fair- 
to  sales  made  in  another  state.  Frank  banks  v.  Blackington,  9  Pick.  (Mass.) 
A.  Menne  Factory  v.  Harback,  85  93 ;  Woodson  v.  Hopkins,  85  Miss. 
Ark.  278,  107  S.  W.  991.  171,  Zl  So.  1000,  38  So.  298,  70  L.  R. 

"Continental    Wall    Paper    Co.    v.  A.  645,   107   Am.    St.  275;   Hatch   v. 

Lewis  Voight  &c.  Co.,   148  Fed.  939,  Hansom,   46   Mo.   App.   323;    Roselle 

78   C.   C.   A.  567,  212  U.   S.  227,   53  v.  Beckemeir,  134  Mo.  380,  35  S.  W. 

L.  ed.  486,  29  Sup.  Ct.  280.    The  above  1132;  Owens  v.  Davenport,  39  Mont, 

case  is  an  important  one  on  the  ques-  555,   104  Pac.  682,  28  L.  R.   A.    CN. 

tion  of  what  constitutes  a  collateral  S.)  996n ;  Woodworth  v.  Bennett,  43 

contract,     considered     in     connection  N.  Y.  273,  3  Am.  Rep.  706;  Merritt 

with    what    constitutes     a     collateral  v.   Millard,  4  Keyes    (N.   Y.)    208.  3 

contract  within  the  provisions  of  en-  Abb.  Dec.  (N.  Y.)  291 ;  Owen  v.  Da- 

actment    against    trusts    and    monop-  vis,  1  Bail.  ("S.  Car.)  315;  Jageman  v. 

dies.  Necco    CTex.    Civ.    App.).    59   S.   W. 

""Owens    V.    Davenport.    .39    Mont.  822:   McMullen   v.   Hoffman.   174  U. 

555,   104   Pac.   682,   28  L.   R.   A.    CN.  S.   639,   43   L.   ed.   1117.    19   Sup.   Ct. 

S.)    996n    (assignment    of   claims   by  8,39:    Lemon    v.    Grosskopf,    22    Wis. 

an  employer  of  labor  made  to  one  in  447,    99    Am.    Dec.    58;    Kiewert    v. 

consideration    of    the    assignee    fur-  Rindskopf.  46  Wis.  481,  1  N.  W.  163, 

nishing  funds  with  which  to  pay  la-  32  Am.  Rep.  731.     "The  law  will  not 

borers,  and  labor  performance  in  il-  raise    an    indebtedness    in    assumpsit 


355  EFFECT    OF    ILLEGALITY    OF    CONTRACTS.  §    I084 

§  1084.  Third  party  acting  as  depositary. — However,  when 
such  third  person  is  acting  merely  as  a  depositary  of  the  proceeds 
of  the  illegal  contract,  it  would  seem  that  either  of  the  parties  to 
the  contract  may  withdraw  or  revoke  his  instructions  as  to  the 
payment  of  the  proceeds  to  the  other  party  to  the  illegal  agree- 
ment at  any  time  before  the  payment  is  actually  made/"  The 
mere  fact  that  the  manufacture  and  sale  of  whiskey  is  against  the 
policy  of  the  state  does  not  render  invalid  a  contract  of  insurance 
by  which  whiskey  stored  within  the  state  is  insured  against  loss 
by  fire." 

§  1085.  Recovery  of  that  parted  with  under  executed 
agreement. — The  right  of  a  plaintiff  to  recover  that  parted 
with  under  an  executed  agreement  is  not  defeated  by  the 
fact  that  the  parties  have  been  engaged  in  an  illegal  transaction 
which  was  collateral  to  that  on  which  the  suit  is  brought.  When 
the  plaintiff  can  establish  his  cause  of  action  without  the  necessity 
of  relying  on  an  illegal  agreement  in  any  way  connected  with  it 
he  cannot  be  defeated  by  the  plea  of  illegality  because  the  connec- 
tion is  then  too  remote  for  the  one  to  be  affected  by  the  vice  of 
the  other,  as  where  one  loans  money  with  knowledge  that  it  is  to 
be  used  in  gaming,  he  may  recover  the  money  so  loaned  when  it 
was  not  loaned  for  that  express  purpose  but  merely  to  accommo- 
date the  borrower  as  a  man.^*     Nor  is  one's  just  claim  against  a 

against  him  in  favor  of  the  party  for  *^  "It  is  no  defense  to  a  contract 
whose  benefit  the  fund  was  placed  in  that  has  been  performed  by  the  prom- 
his  hands."  Bendet  v.  Ellis.  120  isee  that  the  promisor  knew  that  the 
Tenn.  277,  111  S.  W.  795,  18  L.  R.  agreement  or  its  performance  might 
A.  (N.  S.)  114,  127  Am.  St.  1060  aid  the  promisee  to  violate  the  law 
(proceeds  of  an  insurance  policy).  or  to  defy  the  public  policy  of  the 
•"Edgar  v.  Fowler.  3  East  222.  In  state  when  the  promisor  neither  com- 
the  above  case  the  court  said:  "The  bined  nor  conspired  with  the  prom- 
monev  does  not  appear  to  have  been  isee  to  accomplish  that  result,  nor 
actually  paid  into  the  defendant's  shared  in  the  benefits  of  such  a  viola- 
hands.  In  case  of  illegal  transactions  tion."  Mechanics'  Ins.  Co.  v.  Hoover 
it  may  always  be  stopped  while  it  is  Distilling  Co.,  182  Fed.  590,  105  C. 
in  transitu  to  the  person  who  is  en-  C.   A.    128. 

titled  to  receive  it.  If  indeed  this  "Tyler  v.  Carlisle.  79  Maine  210, 
had  been  made  a  legal  transaction,  the  9  Atl.  356.  1  Am.  St.  301.  The  mere 
money  might  perhaps  have  been  con-  fact  that  pianos  are  to  be  sold  by 
sidered  as  paid.  But  we  will  not  as-  means  of  a  contest  does  not  affect 
sist  an  illegal  transaction  in  any  re-  the  validity  of  their  sale  to  a  buyer 
spect.  We  leave  the  matter  as  we  who  intends  to  resell  under  such  con- 
find  it:  and  then  the  maxim  applies,  tract.  D.  H.  Baldwin  &  Co.  v.  Moser 
melior  est  conditio  possidentis."  See  (Iowa),  123  N.  W.  989.  Nor  does 
further,  ante,  ch.  XXVI.  the   fact  that   money  is  loaned   to  a 


io86 


CONTRACTS. 


356 


corporation  defeated  by  the  fact  that  he  has  participated  in  an 
improper  issuance  of  stock.'^^  And  one's  right  to  recover  his 
share  of  an  estate  which  he  has  been  induced  to  part  with  through 
fraud  will  not  be  defeated  by  the  fact  that  he  acquiesced  in  a 
proposition  made  by  the  purchaser  to  conceal  certain  assets  of 
the  estate  in  order  to  keep  them  from  creditors.^® 

§  1086.  Duty  of  agents  and  partners  to  turn  over  proceeds 
of  illegal  transaction. — On  the  principle  that  their  duty  to 
turn  over  the  proceeds  of  an  illegal  transaction  is  collateral  to  the 
illegal  transaction  itself,  agents^ ^  and  partners^^  have  been  re- 


firm  engaged  in  the  liquor  business 
defeat  recovery  thereof,  when  it  is 
not  shown  that  the  money  was  loaned 
to  enable  the  firm  to  violate  the  laws 
but  rather  to  pay  its  honest  debts. 
Grey  v.  Callan  (Iowa),  110  N.  W. 
909.  The  fact  that  a  contract  to 
build  a  house  is  collateral  to  an  il- 
legal scheme  does  not  defeat  the 
right  of  one  of  the  parties  thereto 
to  enforce  a  lien  on  the  house.  Adams 
V.  Curran,  33  Ky.  L.  498,  110  S.  W. 
280.  A  contract  between  a  shipper 
and  a  third  person  by  which  the 
former  is  to  receive  a  rebate  does 
not,  even  if  in  violation  of  the  in- 
terstate commerce  act,  render  the 
railroad's  contract  of  shipment  in- 
A-alid.  Southern  Kans.  R.  Co.  v.  Cox, 
43  Tex.  Civ.  App.  79,  95  S.  W.  1124. 

"  Easton  Nat.  Bank  v.  American 
Brick  &c.  Co.,  69  N.  J.  Eq.  326,  60 
Atl.  54,  affd.  70  N.  J.  Eq.  722,  64  Atl. 
1095,  revd.  70  N.  J.  Eq.  732,  64  Atl. 
917,  8  L.  R.  A.   (N.  S.)  271n. 

"'Wright  v.  Wright,  51  N.  J.  Eq. 
475,  26  Atl.  166.  For  a  statement  of 
the  general  rule  applicable,  see  John- 
ston  v.   Smith's   Admr.,   70  Ala.    108. 

"  State  v.  Baltimore  &c.  R.  Co.,  34 
Md.  344;  Ilaacke  v.  Knights  of  Lib- 
erty Social  Club,  76  Md.  429,  25  Atl. 
422;  Willson  v.  Owen,  30  Mich.  474; 
Gilliam  v.  Brown,  43  Miss.  641 ; 
Cheuvront  v.  Horner,  62  W.  Va.  476, 
59  S.  E.  964;  Contra,  Clarke  &c.  Co. 
V.  Brown,  77  Ga.  606,  4  Am.  St.  98; 
Alexander  v.  Barker,  64  Kans.  396, 
67  Pac.  829.  See  also,  Daniels  v. 
Barney,  22  Ind.  207.  This  latter  case 
holds  that  the  principal  may  recover 
unless  the  agent  engaged  in  the  un- 


lawful transaction  at  the  orders  of 
the  principal.  Compare  also  with 
Houts  V.  Scharbaner  (Tex.  Civ. 
App.),  103  S.  W.  679,  where  vendor's 
agent  falsely  represented  to  the 
vendees  that  he  was  a  joint  purchaser 
with  them.  It  was  held  the  vendor 
could  not  recover  money  paid  his 
agent  in  furtherance  of  and  in  ac- 
cordance with  their  scheme  to  mis- 
lead and  defraud  the  vendees. 
But  a  vendee  or  purchaser  who  ap- 
points an  agent  to  consummate  the 
deal  may  recover  from  his  agent  com- 
missions paid  to  the  latter  by  the 
vendor,  notwithstanding  the  vendee 
intends  to  dispose  of  the  property  in 
an  illegal  manner.  Commercial  Club 
of  Joplin  V.  Davis,  136  Mo.  App.  583, 
118  S.  W.  668.  In  case  the  party 
from  whom  the  proceeds  are  sought 
to  be  recovered  was  not  merely  an 
agent  or  depositary  but  a  cocon- 
spirator, no  recovery  can  be  had. 
Feltner  v.  Feltner  (Ky.),  116  S.  W. 
1196. 

'"  Fryer  v.  Harker,  142  Iowa  708, 
121  N.  W.  526,  23  L.  R.  A.  (N.  S.) 
477n;  Richardson  v.  Welch,  47  Mich. 
309,  11  N.  W.  172;  Gilliam  v.  Brown, 
43  Miss.  641 ;  Andrews  v.  New  Or- 
leans Brewing  Assn.,  74  Miss.  362,  20 
So.  837,  60  Am.  St.  509.  "Although 
a  contract  may  be  illegal,  it  does  not 
follow  that  it  is  illegal  or  immoral 
for  the  parties  to  it,  after  its  com- 
pletion, to  fairly  settle  and  adjust  the 
profits  and  losses  which  have  resulted 
from  it.  The  vice  of  the  contract 
does  not  enter  into  such  settlement." 
Mitchell  v.  Fish,  97  Ark.  444,  134  S. 
W.  940,   quoting   from   De  Leon  v. 


357 


EFFECT    OF    ILLEGALITY    OF    CONTRACTS. 


§    1087 


quired  to  turn  over  and  account  for  the  proceeds  of  an  unlawful 
transaction,  especially  when  a  division  of  the  profits  has  been 
agreed  on.^"  The  illegality  of  one  contract  does  not  extend  to 
another  unless  the  two  are  united  either  in  consideration  or 
promise.*" 

§  1087.  Abandonment  of  illegal  contracts. — It  is  also  com- 
petent for  the  parties  to  an  illegal  contract  to  mutually  rescind 
the  same  and  to  enter  into  a  new  and  valid  agreement  based  upon 
a  new  and  valid  consideration."^  The  old  contract  must,  how- 
ever, be  abandoned  in  fact.  The  parties  must  not  seek  by  the 
new  contract  to  enforce  rights  growing  out  of  or  connected  with 
the  illegal  agreement.  Otherwise  the  subsequent  contract  will 
be  illegal  also.  The  parties  can  do  nothing  less  than  make  a  new 
contract."-  A  new  promise,  such  as  a  compromise  agreement, 
based  on  a  contract  tainted  with  illegality,  is  also  illegal."'^     So 


Trevino,  49  Tex.  88,  30  Am.  Rep.  101. 
See  also,  Simon  v.  Garlitz  (Tex.  Civ. 
App.),  133  S.  W.  461.  See,  however, 
Butler  V.  Agnew,  9  Cal.  App.  221,  99 
Pac.  395;  Craft  v.  AlcConoughy,  79 
111.  346,  22  Am.  Rep.  171;  Snell  v. 
Dvvight,  120  Mass.  9;  Morrison  v. 
Bennett,  20  Mont.  560,  52  Pac.  553, 
40  L.  R.  A.  158;  Coffee  v.  Burke,  132 
App.  Div.  (N.  Y.)  128,  116  N.  Y.  S. 
514;  Citizens'  Nat.  Bank  v.  Mitchell, 
24  Okla.  488,  103  Pac.  720;  Vande- 
grift  V.  Vandegrift,  226  Pa.  254,  75 
Atl.  365  (in  which  it  was  held  that 
since  recovery  could  not  be  had  with- 
out relying  on  the  illegal  partnership 
it  would  be  denied.  This  was  an  ac- 
tion for  an  accounting  brought  by  a 
surviving  partner  against  the  execu- 
trix of  the  deceased  partner). 

'"  Mitchell  V.  Fish,  97  Ark.  444,  134 
S.  W.  940.  See  also,  McRae  v.  War- 
nack,  98  Ark.  52,  135  S.  W.  807  (as 
to  the  right  of  an  assignee  of  a  life 
insurance  policy  to  recover  the 
amount  of  premiums  paid  by  him  and 
the  amount  which  the  intestate  ac- 
tually owed  him). 

/"Kansas  City  &c.  Brick  Co.  v.  Na- 
tional Surety  Co.,  167  Fed.  496  (ac- 
tion to  recover  for  brick  furnished  a 
contractor  with  which  to  make  a  pub- 
lic improvement,  the  contract  for  the 


improvement  being  illegal  because  let 
in  violation  of  the  statute  governing 
such    matters). 

"Barnes  v.  Hedley,  2  Taunt.  184; 
Faikney  v.  Reynous,  4  Burr.  2069; 
Mitchell  V.  Lyman,  V  111.  525;  Stout 
V.  Ennis,  28  Kans.  706;  Chadbourn  v. 
Watts,  10  Mass.  121,  6  Am.  Dec.  100; 
Clark  V.  Phelps,  6  Mete.  (Mass.)  296. 
"A  new  contract,  founded  on  a  new 
consideration,  although  in  relation  to 
property  respecting  which  there  had 
been  unlawful  transactions  between 
the  parties,  is  not  itself  unlawful." 
Armstrong  v.  Toler,  11  Wheat.  (U. 
S.)  258,  6  L.  ed.  468.  See  also,  Curry 
V.  La  Fon,  133  Mo.  App.  163,  113 
S.  W.  246. 

"-Webster  v.  Sturges,  7  111.  App. 
560 ;  Handy  v.  St.  Paul  Globe  Co.,  41 
Minn.  188,  16  Am.  St.  695;  Boyd  v. 
Boyd,  130  App.  Div.  (N.  Y.)  161,  114 
N.  Y.  S.  361;  Coffey  v.  Burke,  132 
App.  Div.  (N.  Y.)  128,  116  N.  Y.  S. 
514. 

"Union  Collection  Co.  v.  Buck- 
man,  ISO  Cal.  159,  88  Pac.  708,  9  L. 
R.  A.  (N.  S.)  568n.  119  Am.  St. 
164n ;  Tompkins  v.  Compton,  93  Ga. 
520,  21  S.  E.  79 ;  Bick  v.  Seal.  45  Mo. 
App.  475 ;  Kidder  v.  Blake,  45  N.  H. 
530;  Melchoir  v.  McCartv,  31  Wis. 
252,  11  Am.  Rep.  605. 


§    I088  CONTRACTS.  358 

long  as  the  void  or  illegal  contract  is  the  basis  of  the  action 
courts  will  leave  the  parties  where  it  finds  them."* 

§  1088.  Rule  where  aid  of  illegal  contract  is  required  to 
establish  case. — This  topic  has  already  been  touched  upon 
several  times  in  this  connection.  It  was  fully  treated  in  the  chap- 
ter on  Legality  of  Object"^  and  nothing  further  will  be  added  at 
this  point. 

§  1089.  Ratification  of  illegal  contract. — It  is  a  general 
rule  of  law  that  a  contract  made  in  violation  of  a  statute  is  void 
and  that  when  a  plaintiff  cannot  establish  his  cause  of  action 
without  relying  upon  an  illegal  contract  he  cannot  recover.'"^ 
Consequently  a  contract  which  is  in  reality  illegal  cannot,  prop- 
erly speaking,  be  ratified.*^' 

§  1090.  General  rule  as  to  ratification. — The  general  rule 
has  been  stated  as  follows:  "Where  the  transaction  is  contrary 
to  good  faith,  and  the  fraud  affects  individual  interests  only, 
ratification  is  allowed ;  but,  when  the  fraud  is  of  such  a  character 
as  to  amount  to  crime  or  other  wrong  involving  the  public  inter- 
ests, ratification  is  not  allowed. ""^^ 

**  Cascade   Public   Service  Corp.   v.  Paul  Globe  Publishing  Co.,  41  Minn. 

Railsi)ack,    59    Wash.    376,    109    Pac.  188,  42  N.  W.  872,  4  L.  R.   A.  466, 

1062   (contract  by  entryman  for  sale  16  Am.  St.  695;  American  Fire  Ins. 

of  land  before  issuance  of  patent).  Co.   v.    Bank,    12>    Miss.    469,    18    So. 

*=  See  ante,  §  678.  931 ;  Bick  v.  Seal,  45  Mo.  App.  475 ; 

"  See  generally  matter  in  preceding  McCormick  Harvesting  Mach.  Co.  v. 

section   and   also   Penn  v.    Bornman,  Miller,  54  Nebr.  644,  74  N.  W.  1061 ; 

102  111.  523;  Miller  v.  Ammon,  145  U.  Boutelle  v.   Melendy,    19  N.   H.    196, 

S.  421,  36  L.  ed.  759,  12  Sup.  Ct.  884;  49    Am.    Dec.    152;    Sirkin    v.    14th 

Harris  v.  Runnels,  12  How.   (U.  S.)  Street  Store,  124  App.  Div.   (N.  Y.) 

79.    13    L.    ed.    901     (stating    excep-  384,  108  N.  Y.  S.  830   (action  to  re- 

tions)  ;    Bank    of    United    States    v.  cover  purchase  price  of  goods  when 

Owens,  2  Pet.   (U.  S.)   527,  7  L.  ed.  the    vendor   had   given    the   vendee's 

508  (stating  exceptions).  purchasing   agent    a    commission    for 

*"  Moog  v.  Hannon's  Admr.,  93  Ala.  placing  the  order  with  him)  ;  Shisler 

503,  9  So.  596;  Union  Collection  Co.  v.  Vandike,  92   Pa.   St.  447,  Zl  Am. 

v.  Buckman,  150  Cal.  159,  88  Pac.  708,  Rep.    702;    Rue   v.    Missouri    Pac.    R. 

9  L.  R.  A.  (N.  S.)   568n;  Pelouze  v.  Co.,   74   Tex.   474,   8   S.   W.    533,    15 

Slaughter,  241  111.  215.  89  N.  E.  259;  Am.  St.  852;  Central  Transportation 

Lindt  V.  Uihlein,  109  Iowa  591,  79  N.  Co.  v.  Pullman's  Palace-Car  Co.,  139 

W.  IZ,  opinion  modified  in  80  N.  W.  U.   S.  24,  35  L.  ed.   55.   11    Sup.   Ct. 

658;Ackerman  v.  Larner,  116  La.  101,  478;   Buck  v.   Albee,  26  Vt.    184,   62 

40  So.  581    (does  not  acquire  validity  Am.  Dec.  564;  Melchoir  v.  McCarty, 

either  by  lapse  of  time  or  by  ratifi-  31  Wis.  252,  11  Am.  Rep.  605. 
cation)  ;  Comstock  v.  Draper.  1  Mich.        °*Jennes  v.  Simpson,  84  Vt.  127,  78 

481,   53  Am.   Dec.  78;   Handy  v.   St.  Atl.  886. 


359  EFFECT    OF    ILLEGALITY    OF    CONTRACTS.  §    lOQI 

§  1091.  Rule  illustrated. — Thus,  a  sale  of  liquor  1)y  whole- 
sale dealers  who  had  not  taken  out  a  revenue  license,  l)eing  void 
under  the  statutes  then  in  force,  will  not  support  an  action  to  re- 
cover the  price ;  nor  can  validity  be  imparted  to  the  contract  by  a 
subsequent  ratification,  express  or  implied,  as  by  a  part  payment 
of  the  price.''"  Likewise  an  agreement  to  arbitrate  losses  which 
arise  out  of  a  wagering  sale  of  futures  has  itself  been  declared 
unlawful.^"  Nor  can  a  contract  to  compound  a  felony  be  ratified 
or  confirmed.'^ 

§  1092.  Rule  as  applied  to  Sunday  contracts. — There  is 
some  conflict  of  authority,  however,  when  this  principle  is  sought 
to  be  applied  to  Sunday  contracts.  Some  courts  hold  that  such 
contracts  cannot  be  ratified,"-  others  that  they  may  be  subse- 
quently ratified. ^^  It  is  believed,  however,  that  many  of  the  cases 
that  advance  this  latter  view  are  guilty  merely  of  a  loose  use  of 
the  word  "ratification,"  or  else  call  acts  which  in  effect  amount 
to  the  formation  of  a  new  contract  on  a  subsequent  secular  day 
a  ratification.'* 

§  1093.  Effect  of  subsequent  payment  of  license  fee. — In 
some  jurisdictions  a  contract  which  is  invalid  because  the  parties 
thereto  have  failed  to  pay  a  license  tax  imposed  by  law  may  be 
rendered  valid  and  binding  by  a  subsequent  payment  of  such 
license  fee.'^ 

•*  Moog  V.  Hannon's  Admr.,  93  Ala.  Baghurst,  47  N.  J.  Eq.  201,  20  Atl. 

503,  9  So.  596.  252,  25  Atl.  474. 

'"Benton  v.  Singleton,  114  Ga.  548,        '^  Evansville  v.  Morris,  87  Ind.  269, 

40  S.   E.  811,  58  L.   R.   A.   181,  and  44  Am.   Rep.  762>\   Perkins  v.  Jones, 

note  26  Ind.  499;  Williamson  v.  Branden- 

"  Stanard  v.  Sampson,  23  Okla.  13,  berg,  6  Ind.  App.  97,  32  N.  E.  1022 : 

99  Pac   796  Russell  v.  Murdock.  79  Iowa  101.  4-^ 

"Butler  V.  Lee,  11  Ala.  885,  46  Am.  N.  W.  237,  18  Am.  St.  348;  Harrison 

Dec.  230;  Day  v.  McAllister,  15  Gray  v.     Colton.    31     Iowa     16;     Cook    v. 

(Mass.)   433;   Acme  Electrical  Illus-  Porker,  193  Pa.  St.  461.  44  Atl.  560, 

trating  &c.   Co.  v.  Van  Derbeck.   127  74  Am.  St.  699.     "Acts  of  ratification 

Mich.  341,  86  N.  W.  786,  89  Am.  St.  will  make  them  new  contracts,  which 

476-  Winfield  v.  Dodge,  45  Mich  355,  the  parties  are  bound  to  perform." 
7    N.    W.    906,    40    Am.    Rep.    476;        "See  ante,  ch.  XXV. 
Gwinn  v.  Simes,  61  Mo.  335;  Riddle        "  McMahon    v.    Savings    Assn..    /5 

V.   Keller    61   N.  J    Eq.  513,  48   Atl.  Miss.  965,  23  So.  431 ;  American  Fire 

818;  Gennert  v.  Wuestner,  53   N.  J.  Ins.  Co.  v.  Bank,  7Z  Miss.  469,  18  So. 

Eq.  302,  31  Atl.  609;  Cannon  v.  Rvan,  931. 
49  N.  J.  L.  314,  8  Atl.  293;  Nibert  v. 


§    I094  CONTRACTS.  360 

§  1094.  Enforcing  or  obtaining  relief  from  illegal  contracts. 
— It  is  well  recognized  that  generally  speaking  the  law  will  not 
lend  its  support  to  a  claim  founded  upon  its  own  violation.  All 
contracts  or  agreements  which  have  for  their  object  anything 
which  is  repugnant  to  the  general  policy  of  the  common  law,  or 
contrary  to  the  provisions  of  any  statute,  are  void  and  not  to  be 
enforced.'* 

Nor  does  comity  require  the  enforcement  of  a  contract  entered 
into  in  another  state  when  it  is  contrary  to  the  public  policy  of 
the  forum.  A  state  is  not  required  to  recognize  or  enforce  con- 
tracts which  are  injurious  to  the  welfare  of  its  people  or  which 
are  in  violation  of  positive  legislation  declarative  of  the  public 
policy  of  the  forum." 

It  is  also  true  as  a  general  rule  that  if  the  parties  are  in  pari 
delicto  and  are  equally  at  fault  and  one  of  them  has  performed 
the  illegal  agreement  in  whole  or  in  part,  he  cannot  recover  from 
the  other  party  that  which  he  has  parted  with  under  the  contract. 
The  law  will  leave  the  parties  where  it  finds  them.'^  The  rule 
is  the  same  in  equity.'^' 

§  1095.    Exceptions — Recovery  provided  for  by  statute. — 

However,  there  are  certain  exceptions  to  the  rule  which  denies 
the  right  to  recover  compensation  for  services  rendered  or  the 
possession  of  property  parted  with  in  the  performance  of  an 
illegal  contract.  The  generally  recognized  exceptions  are :  first, 
those  instances  in  which  recovery  is  provided  for  by  statute; 
second,  when  the  parties  are  not  equally  at  fault  or  are  not  in 
pari  delicto,  and  third,  contracts  where  one  party  recedes  from 
the  illegal  agreement  before  its  purpose  is  accomplished,  in  which 
case  he  is  allowed  to  recover  that  which  he  has  parted  with. 
This  last  exception  is  termed  the  doctrine  of  locus  poenitentiae. 

''  See  ante,  §  645.  Great  Northern   R.   Co.,   18  N.  Dak. 

"Pope  V.   Hanke,   155   111.  617,  40  324,  121  N.  W.  78;  Corstens  Packing 

N.  E.  839,  28  L.  R.  A.  568;  Thomas  Co.   v.    Southern   Pac.   Co.    (Wash.), 

V.   First   Nat.   Bank,  213   111.  261,  12  108    Pac.    613.      See    also.    Western 

N.  E.  801;   Corbin  v.  Houlehan,   100  Union  Tel.  Co.  v.   Hill,   163  Ala.   18, 

Maine  246,  61  Atl.  131,  70  L.  R.  A.  50  So.  248. 

568;  Atwater  v.   A.  G.  Edwards  &c.  ''*  See  ante,  §  1064. 

Co.  (Mo.  App.),  126  S.  W.  823;  Wil-  "Colby  v.  Title  Ins.  &  Trust  Co., 

liamson   v.    Postal    Tel.    Co.,    151    N.  160  Cal.  632,  117  Pac.  913. 
Car.  223,  65    S.   E.  974;    Hanson   v. 


361  EFFECT    OF    ILLEGALITY    OF    CONTRACTS.  §    IO96 

An  instance  in  which  recovery  is  allowed  by  statute  is  found  in 
the  case  of  wager  contracts.  Many  statutes  have  been  passed 
throughout  the  English  speaking  world  allowing  one  who  has 
paid  his  losses  under  a  wager  to  recover  the  same.®'* 

§  1096.  Statutes  permitting  recovery  strictly  construed. — 
Statutes  of  this  character  are  usually  strictly  construed.  Thus 
it  has  been  held  that  a  statute  which  permits  one  to  recover  losses 
sustained  through  betting  on  a  game  does  not  apply  to  other 
wagers.*^  Some  statutes  of  this  character  do  not  permit  a  com- 
mon or  professional  gambler  to  recover  his  losses.**-  Certain  of 
these  statutes  are  also  held  to  impose  a  penalty,*'^  while  others  do 
not  impose  a  penalty.^'* 

§  1097.  Other  statutes  considered. — Certain  other  states 
permit  the  recovery  of  property  conveyed  in  payment  of  intoxi- 
cating liquor.*^  Other  statutes  prevent  one  wdio  has  received  a 
valuable  consideration  under  a  contract  void  because  entered  into 
upon  Sunday  from  defending  an  action  brought  on  such  a  con- 
tract upon  that  ground  unless  he  restores  the  consideration  re- 

*"  Universal     Stock     Exchange     v.  Bates,  4  Blackf.  (Ind.)  6Z;  Northrup 

Strachan    (1896),  A.   C.   166;   Parker  v.   Buffington,   171    Mass.   468,  51   N. 

V.  Otis,  130  Cal.  322,  62  Pac.  571,  92  E.    7    (rule    changed   by   the    act   of 

Am.   St.  56,   affd.   187  U.   S.  606,  47  1890)  ;   Bingham  v.   Scott,   177  Mass. 

L.   ed.   323,   23    Sup.    Ct.    168;    Kruse  208,  58  N.  E.  687;  Lassen  v.  Karrer, 

V.  Kennett,  181  111.  199,  54  N.  E.  965,  117  Mich.  512,  76  N.  W.  72>;  Shaw  v. 

revg.  69  111.  App.  566;  Elder  v.  Tal-  Clark.  49  Mich.  384,  13  N.  W.  786,  43 

cott,  43   111.   App.  439;   Wehmhoff  v.  Am.  Rep.  474;  Connor  v.  Black,  132 

Rutherford   98  Kv.  91,  32  S.  W.  288;  Mo.  150,  Z2,  S.  W.  783;  Dows  v.  Glas- 

Triplett   v.    Seelbach,  91    Ky.   30,    14  pel,  4  N.  Dak.  251,  60  N.  W.  60. 

S.  W.  948;  Lester  v.  Buel,  49  Ohio  '- Stapp  v.  Mason,  114  Ky.  900.  72 

St.   240,   30    N.    E.   821,   34   Am.    St.  S.    W.     11.      (The    conclusion    here 

556;    Lucas   v.    Harper,   24   Ohio    St.  reached  depended  on  the  wording  of 

328;  Rice  v.  Winslow,  182  Mass.  273,  the  Kentucky  statute.) 

65    N.    E.    366;    Munns    v.    Donovan  "Fitzgerald  v.  Schloss,  62  N.  J.  L. 

Commission  Co.,  117  Iowa  516,  91  N.  472.  41   Atl.  677;   Cooper  v.  Rowley, 

W.    789;    McGrew    v.    City    Produce  29  Ohio  St.  547. 

Exch.,  85  Tenn.  572,  4  S.  W.  38,  4  "Parker  v.   Otis.   130   Cal.  322.  62 

Am.   St.   771.     By  some  statutes  the  Pac.  571,  92  Am.  St.  56,  affd.  187  U. 

loser  may  recover  twice  the  amount  S.    606,    47    L.    ed.    323.    23    Sup.    Ct. 

of    his    loss.      Meyers   v.    Dillon,    39  168    (constitutional)  ;   Wall   v.    Stock 

Ore.   581,   65    Pac.   867,   affd.   on    re-  Exchange,   168   Mass.   282,  46   N.   E. 

hearing,  66  Pac.  814.  1062.     See  also,  further  on  this  sub- 

"  Bovce  v.  O'Dell  Commission  Co.,  ject  in  the  chapter  on  Gambling  and 

109   Fed.    758;    Sondheim   v.    Gilbert,  Wagering  Contracts. 

117  Ind.  71,  18  N.  E.  687.  5  L.  R.  A.  «'Lindt   v.    Uihlein.    109  Iowa   591, 

432.    10   Am.    St.   23n;   Woodcock   v.  79  N.  W.  72,,  80  N.  W.  658. 
McQueen,    11   Ind.   14;   McHatton  v. 


§   ioqS  contracts.  362 

ceived.'*'  Statutes  of  this  latter  character  have  been  held  to  apply 
to  actions  brought  by  an  indorsee  against  the  indorser  of  a  prom- 
issory note,"  to  recover  the  hire  of  a  team,®^  for  the  roofing  of  a 
building/^  or  for  the  rescission  of  the  sale  of  a  horse."*'  Such  a 
statute  has  been  held,  however,  not  to  permit  the  recovery  of 
damages  for  negligent  injuries  to  a  team  hired  for  use  on  Sun- 
day."^ 

§  1098.  Recovery  permitted  when  parties  not  in  pari  de- 
licto.— The  second  exception  to  the  rule  that  there  can  be  no 
recovery  of  the  consideration  parted  with  under  an  executed 
illegal  contract  is  found  in  those  cases  where  the  parties  are  not 
in  pari  delicto.  The  parties  to  an  agreement  may  be  in  delicto ; 
this  does  not  of  necessity,  however,  place  them  in  pari  delicto. 
One  party  may  be  less  guilty  than  the  other ;  one  may  have  acted 
under  duress  or  undue  influence ;  or  the  parties  may  not  be  on  an 
equal  footing  because  of  a  disparity  in  their  ages  or  in  mental  at- 
tainment. As  a  general  rule  where  any  of  the  foregoing  circum- 
stances exist  the  party  less  guilty  will  be  permitted  to  recover 
from  the  dominant  party  that  which  he  has  obtained  from  the  for- 
mer by  reason  of  the  unlawful  agreement.^^  "Even  a  wrongdoer 

^Wetherell   v.    Hollister,   IZ   Conn.  Ky.  160,  8  Ky.  L.  820,  3  S.  W.  5,  7 

622.  48  Atl.  826;  Bridges  v.  Bridges,  Am.  St.  583;  Belding  v.  Smythe,  138 

93  Maine  557,  45  Atl.  827;  Wheeldon  Mass.  530;  Bryant  v.  Peck  &  Whipple 

V.  Lyford,  84  Maine  114,  24  Atl.  793;  Co.,    154    Mass.    460,   28    N.    E.    678: 

Bar  Harbor  &c.  Bank  v.  Kingsley,  84  Barnes     v.     Brown,     32     Mich.     146 

Maine  111,  24  Atl.  794.  Meech   v.    Lee,   82    Mich.   274,  46   N 

''Bar   Harbor   &c.   Bank  v.   Kings-  E.  383;  Boston  v.  Balch,  69  Mo.  115 

lev,  84  Alaine  111,  24  Atl.  754.  Bell   v.    Campbell,    123   Mo.    1,   25   S 

'*'  Wheeldon    v.    Lyford,    84    Maine  W.  359,  45  Am.  St.  505 ;  Ford  v.  Har- 

114    24  Atl    793.  rington,  16  N.  Y.  285;  Richardson  v. 

-''Wetherell   v.   Hollister,   1Z   Conn.  Crandall,  48  N.  Y.  348;   Boyd  v.  De 

622,  48  Atl.  826.  La  Montagnie,  11  N.  Y.  498,  29  Am. 

'"Bridges  v.  Bridges,  93  Maine  557,  Rep.   197;  Duval  v.  Wellman,  124  N. 

45  Atl.  827.  Y.  156,  26  N.  E.  343 ;  Foley  v.  Greene, 

°' Wheeldon    v.    Lyford,    84    Maine  14  R.  L  618,  51  Am.  Rep.  419;  James 

114.  24  Atl.  793.  v.   Steere,   16  R.   L  367,   16  Atl.   143, 

°-Woodham  v.  Allen,   130  Cal.  194,  2   L.    R.    A.    164;    Gorringe   v.   Read, 

62  Pac.  398;  Baehr  v.  Wolf,  59  111.  23  Utah  120,  63  Pac.  902,  90  Am.  St. 

470;  Herrick  v.  Lynch,  150  111.  283,  37  692;  Harrington  v.  Grant,  54  Vt.  236; 

N.    E.  221;    Evans   v.    Funk,    151    111.  Rozell  v.  Vansyckle,  11  Wash.  79,  39 

650,  38  N.  E.  230;  Davidson  v.  Car-  Pac.  270.     It  has  been  held  that  one's 

ter,  55  Iowa  117,  7  N.  W.  466;  Wil-  cause  of  action  does  not  grow  out  of 

liams  V.   Collins,  67  Iowa  413,  25  N.  a  violation  of  law  and  thus  defeat  his 

W.  682;  Mason  v.  McLeod,  57  Kans.  right  of  recovery  where  he  purchased 

105,  45  Pac.  76,  41  L.  R.  A.  548,  57  of    a    wholesale    dealer    adulterated 

Am.   St.  327 ;   Harper  v.   Harper,  85  vinegar  under  an  implied  warranty  of 


363  EFFECT    OF    ILLEGALITY    OF    CONTRACTS.  §     lOQQ 

is  not  the  prey  of  any  spoliator  who  may  outwit  him.  It  is  true 
that  the  law  will  enforce  no  part  of  a  contract  the  performance 
of  any  stipulation  of  which  is  forbidden,  but  the  parties  do  not 
become  outlaws  when  they  make  such  a  contract,  and  their  rights 
in  equity  as  well  as  at  law  are  the  same  as  those  of  others,  in  so 
far  as  they  do  not  require  enforcement  of  any  part  of  the  con- 
tract."^^ 

§  1099.  Rule  illustrated. — Thus  in  case  the  contract  vio- 
lates a  rule  of  law  which  has  for  its  object  the  protection  of  one 
class  of  men  from  the  oppression  and  imposition  of  another 
class  of  men  the  really  guilty  party  is  never  allowed  any  relief 
under  the  statute  or  permitted  to  set  up  the  statute  as  a  defense 
to  relief  sought  by  the  other  party.  That  which  was  intended 
as  a  shield  for  one  of  the  parties  will  not  be  converted  into  a 
sword  with  which  to  work  his  destruction."*  As  where  the  legis- 
lature imposed  a  penalty  on  the  vendor  of  lottery  tickets,  it  was 
held  that  such  statute  was  intended  for  the  protection  of  pur- 
chasers of  lottery  tickets  and  for  this  reason  the  purchaser  by 
participating  in  the  illegal  transaction  was  not  in  pari  delicto  and 

its  purity  and  retailed  it  as  pure  and  (Ky.)  208,  12  Am.  Dec.  283.   "A  stat- 

was  fined  under  the  pure   food  law.  ute  may  declare  a  contract  to  be  void, 

PViedgood  v.  Kline,  67  Misc  (N.  V.)  and    still   but   one   of   the   parties   be 

428,  123  N.  Y.  S.  247.     The  guaranty  guilty   of    its    violation.      Enactments 

of  a  debt  due  a  bank  as  a  secret  pref-  of  this  character  are  often  made  for 

crence    in    a    proposed    composition  the   purpose  of   protecting   one   class 

agreement   was   obtained    for   such   a  of  men  from  the  oppression  and  im- 

bank  by  the  insolvent  firm.     In  a  suit  positions   of    another    class    of    men ; 

by  the  bank  to  enforce  the  guaranty,  and   in   such   cases,   the   really  guilty 

the    guarantor    in    her    answer    de-  party  is  never  allowed  any  relief  un- 

manded   the   return   of   the   guaranty  der   the   statute,   or   permitted   to   set 

and   the   stock   deposited  as   security,  up  the  statute  as  a  defense  to  relief 

Held,  that  the  relief  was  an  unlawful  sought  by  the  other  party.     Such   is 

preference,  and  the  bank  had  no  right  the  case  with  all  laws,  which  declare 

either  to  the  guaranty  or  the  collat-  usurious    contracts    to    be    null    and 

eral,      the      guarantor      having      no  void.    The  lender  is  never  allowed  to 

knowledge     that     the     consideration  take    advantage    of    the    statute,    be- 

was     illegal     when     executed.     Glens  cause  he  is  the  guilty  party;  the  bor- 

Falls      Nat.      Bank     v.     Van      Nos-  rower  may  do  so,  because  he  is  not  a 

trand,    103    App.    Div.    (N.    Y.)    598,  particeps  criminis.    He  is  regarded  as 

92  N.  Y.  S.  1125,  affd.  41   ^lisc.   (N.  the  victim  of  the  usurer,  and  not  in 

Y.)  526,  85  N.  Y.  S.  50.  pari  delicto.    This  principle  applies  to 

*^Primeau    v.    Granfield,    180    Fed.  everv  contract  declared  to  be  void  by 

847,  852.  the  statute,  in  the  making  of  which 

"  Mobile  &  O.  R.  Co.  v.  Dismukes,  but  one  of  the  parties  is  in  pari  de- 

94  Ala.  131.  10  So.  289,  17  L.  R.  A.  licto."    Ferguson    v.    Sutphen,    8    111. 

113;    Scotten    v.    State,    51    Ind.    52;  547. 
Gray    v.    Roberts,    2    A.    K.    Marsh. 


§    IIOO  CONTRACTS.  364 

might  recover  the  price  of  the  ticket."^  Likewise  a  statute  which 
provides  that  a  vendor  of  a  patent  must  make  and  file  an  affidavit 
of  the  genuineness  of  the  letters  is  for  the  benefit  of  the  vendee, 
and  in  case  the  vendor  fails  to  make  and  file  such  affidavit  the 
vendee  is  not  in  pari  delicto  and  may  maintain  an  action  to  set 
aside  the  purchase  and  recover  the  consideration.^*'  And  the 
same  is  true  where  a  druggist  sells  his  entire  stock  to  another  in 
violation  of  law,"  or  where  a  client  pays  his  attorney  a  fee  in  ex- 
cess of  that  prescribed  by  law.°^  It  has  also  been  held  that  a 
bank  which  loans  money  to  one  of  its  directors  in  violation  of 
law  is  entitled  to  resort  to  security  for  such  loan  as  against  the 
creditors  or  the  director,®^  and  one  who  pays  money  to  a  bank 
on  a  contract  in  violation  of  law  may  recover  the  money  so  paid.^ 

§  1100.  Penalty  on  both  parties — No  undue  advantage 
given. — However,  if  the  law  imposes  the  penalty  on  both  par- 
ties to  the  transaction,  or  if  there  is  moral  turpitude  on  both  sides 
the  courts  will  ordinarily  take  no  pains  to  ascertain  the  relative 
guilt  of  the  parties.-  Moreover  the  law  will  not  give  the  one  for 
whose  protection  the  law  is  passed  an  undue  advantage.  Thus 
where  the  purpose  of  the  statute  was  to  protect  persons  giving 
credit  to  a  fictitious  firm  on  the  face  of  the  fictitious  designation, 
a  debtor  of  such  firm  could  not  defeat  his  liability  on  the  ground 

*'  Gray  v.  Roberts,  2  A.  K.  Marsh.  2ai ;    Stevens    v.    Cincinnati    Times- 

(Kv)  208,  12  Am.  Dec.  383;  Becker  Star  Co.,  72  Ohio  St.  112,  IZ  N.  E. 

V.  Wilcox,  81  Nebr.  476,   116  N.  W.  1058,  106  Am.  St   586 

160,   16  L.   R.   A.    (N.   S.)    571.    See  ^  Mason  v.  McLeod,  57  Kans.  105, 

also,   Jaques  v.    Golightly,   2   W.   Bl.  45  Pac.  76,  41  L.  R.  A.  548,  57  Am. 

1073;   Browning  v.   Morris,  2  Cowp.  St.  327. 

790.  The  rule  is  otherwise,  however,  "'  Stansfield  v.  Kunz,  62  Kans.  /y/, 
where  the  party  who  seeks  to  recover  64  Pac.  614.  _  ^,  ,,  .  ,,0  ac\ 
was  one  of  the  principals  in  the  ^^  Smart  v.  White,  1Z  Maine  332,  40 
lottery  scheme.  Branham  v.  Stall-  Am.  Rep.  356.  ,  r.  ,  „  tvtj 
ings,  21  Colo.  211,  40  Pac.  396,  52  •**  Lester  v.  Howard  Bank,  ZZ  Md. 
Am.  St.  213.  And  the  vendee  cannot  558,  3  Am.  Rep.  211  00  -o-  1 
recover  when  it  appears  that  the  stat-  '  White  v.  Franklin  Bank,  ll  Pick, 
ute  imposed  a  penalty  upon  both  the  (Mass.)  181.  „ 
vendor  and  the  vendee  and  was  not  'See  ante,  §  1096  et  seq.  bee 
intended  as  a  protection  for  the  ven-  also  Pullman  Palace -Car  Co.  v. 
dee.  See  cases  cited  ante  this  note.  Central  Transportation  Co.,  65  i<ed. 
See  also,  State  Mutual  Life  Ins.  Co.  158;  White  v.  Franklm  Bank,  22 
v.  Newton,  89  111.  App.  353;  Harring-  Pick.  (Mass.)  181;  Kitchen  v.  Green- 
ton  v.  Halliday,  4  Ohio  N.  P.  (N.  S.)  abaum,  61  Mo.  110. 


365  EFFECT    OF    ILLEGALITY    OF    CONTRACTS.  §     I  101 

that  the  firm  had  not  filed  a  certificate  in  the  office  of  the  clerk 
of  the  county  where  the  business  was  transacted.^ 

§  1101.  When  parties  not  equally  at  fault. — The  parties  to 
an  illegal  contract  are  not  equally  at  fault  and  for  that  reason  not 
in  pari  delicto  when  it  appears  that  although  the  parties  concur 
in  the  illegal  act,  some  fraud,  duress,  oppression,  imposition  or 
undue  influence  is  practiced  by  one  party  upon  the  other  so  that 
the  guilt  of  the  latter  is  subordinate  to  that  of  the  former.*  In 
such  case  the  wrong  rests  chiefly  on  the  person  by  whom  it  was 
contrived  and  his  confederate  is  regarded  as  a  mere  instrument 
for  accomplishing  an  end  not  his  own.  If  the  former  were  al- 
lowed immunity  under  such  circumstances  he  would  be  permitted 
to  take  advantage  of  his  own  wrong  and  reap  the  benefit  from 
his  fraud.^  "A  court  of  equity  will  interfere,  and  go  to  the  re- 
lief of  a  less  guilty  party,  whose  transgression  has  been  brought 
about  by  the  imposition,  undue  influence,  etc.,  of  the  party  on 
whom  the  burden  of  the  original  blameworthiness  principally 
rests. '"^ 

§  1102.  Rule  illustrated. — Thus  the  maxim  "in  pari  de- 
licto" does  not  apply  to  a  case  where  a  married  w'oman  sues  to 
set  aside  a  deed  of  her  separate  property  made  under  express  or 
implied  threats  of  the  prosecution  of  her  husband  and  to  save  him 
from  prosecution.''  One  who  is  through  duress  or  undue  in- 
fluence induced  to  enter  into  an  unlawful  transaction  is  not  in 
pari  delicto.*     When  one  induced  another  to  take  part  in  Dr. 

'    *Rutkowskv  V.  Bozza,  11  N.  J.  L.  1  N.  W.  466.     To  same  effect,  Brady 

724,  11  Atl.  502.  V.  Central  Western  R.  Co.,  88  Nebr. 

*  Burrows  v.  Rhodes  (1899),  1  Q.  B.  840,  130  N.  W.  575. 

816;  Mobile  &c.  Ry.  Co.  v.  Dismukes,  "Bell  v.  Campbell,  123  Mo.  1,  25  S. 

94  Ala.  131,  10  So.  289,  17  L.  R.  A.  W.  359.  45  Am.  St.  505. 

113;    McColgan   v.   Muirhead,  2   Cal.  'Burton  v.  IMcMillan,  52  Fla.  469, 

App.6.82Pac.   1113;   Harper  v.  Har-  42  So.  849,  8  L.  R.  A.    (X.  S.)  991, 

per,  85  Ky.  160,  8  Ky.  L.  820,  3  S.  W.  reviewing     many     authorities.      See 

5,   7   Am.    St.   583 ;    Morgan   City  v.  also,  ante,  ch.  VII. 

Dalton,  112  La.  9.  36  So.  208;  Roman  *  Colby  v.  Title  Ins.  &  Trust   Co.. 

V.   Mali,  42  Md.  513;   Pearl  v.  Wal-  160  Cal.  632,  117  Pac.  913   (property 

ter.  80  Mich.  317,  45  N.  W.  181;  Hess  transferred   to   compound   daughter's 

V.  Culver,  11  Mich.  598.  43  N.  W.  994,  fclonv)  ;  Davidson  v.  Carter.  55  Iowa 

6  L.  R.  A.  498,  18  Am.  St.  421 ;  Kitch-  117.  7  N.  \V.  466;  Peck  v.  Peck.  101 

en  V.   Greenabaum,  61   Mo.   110;   Da-  Mich.    304.    59    N.    W.    604;    Bell    v. 

vidson  V.  Hobson.  59  Mo.  App.  130.  Campbell.   123   Mo.    1.  25   S.   \\'.   359, 

.    ''Davidson  v.  Carter,  55  Iowa  117,  45  Am.  St.  505;  Duval  v.  Wellman, 


§    II03  CONTRACTS.  366 

Jameson's  raid  by  representing  that  the  British  government  had 
authorized  the  invasion  of  South  Africa  he  was  held  hable  to  the 
person  so  induced  for  damages  sustained  by  him  by  reason  of  his 
taking  part  in  such  raid."  One  who  is  induced  by  his  surety  on 
a  bail  bond  to  deed  certain  land  to  the  latter  and  then  abscond, 
the  bailor  representing  that  unless  the  former  did  so  he  would  be 
placed  in  jail  and  perhaps  sent  to  the  penitentiary,  has  been  held 
entitled  to  maintain  an  action  to  recover  the  property  so  conveyed 
when  the  surety  was  not  required  to  pay  over  the  bail  money  and 
the  charges  were  afterward  dismissed.^"  It  has  also  been  said 
that  parties  who  pay  money  for  the  purpose  of  procuring  a  hus- 
band or  wife  will  be  regarded  as  under  a  species  of  imposition 
or  undue  influence  and  are  entitled  to  recover  the  same.^^ 

§  1103.  The  principle  of  "pari  delicto"  as  affected  by  pub- 
lic policy. — The  relationship  which  the  parties  sustain  one  to 
another  is  also  important  in  determining  whether  they  stand  in 
pari  delicto.  Where  a  relation  of  trust  and  confidence  subsists 
between  the  parties  relief  will  not  be  denied  to  the  party  least  in 
fault  against  the  one  who  has  led  him  into  the  act  by  a  violation 
of  confidence.^^  Thus  a  husband  who  conveys  property  to  a  sup- 
posed friend  in  order  to  avoid  a  payment  of  alimony  which  he 
feared  his  wife  might  recover  in  an  action  for  divorce  was  not  in 
pari  delicto  when  it  appeared  that  the  supposed  friend  knew  that 
the  wife  did  not  intend  to  insist  on  her  demand  for  alimony  but, 
notwithstanding  this  knowledge,  reported  to  the  husband  that 
the  wife  would  insist  on  such  demand."  It  has  also  been  held 
that  an  attorney  cannot  interpose  the  defense  of  pari  delicto  in 
a  suit  brought  against  him  by  a  client.'*     This  same  principle  has 

124  N.  Y.  156,  26  N.  E.  343 ;  Place  v.  him  into  this  illegal  act,  and  then  im- 

Hayward,  117  N.  Y.  487,  23  N.  E.  25.  posed  upon  him,  such  relief  will  not 

'Burrows  v.  Rhodes    (1899),   1  Q.  be   refused."    Harper   v.    Harper,   85 

B    816  Ky.  160,  3  S.  W.  5,  7  Am.  St.  583. 

"Baehr  v.  Wolf,  59  111.  470.  ^^^  Poston  v.   Balch,  69  Mo.   115. 

^Wenninger  v.    Mitchell,    139   Mo.  "Ford    v.    Harrington,    16    N.    Y. 

App.  420,   122  S.  W.   1130;  Duval  v.  285;  Freelove  v.  Cole,  41   Barb.    (N. 

Wellman,    124   N.   Y.   156,   26   N.   E.  Y.)  318,  affd.  41  N.  Y.  619.    See  also, 

343.     See,  ante,  §  754.  Belding    v.    Smythe,    138    Alass.    530. 

''Barnes   v.   Brown,   32   Mich.    146.  See,    however,    Schermerhorn    v.    De 

"Even  if  the  party  had  sufficient  ca-  Chambrun,  64  Fed.   195,   12  C.  C.  A. 

pacity    to    contract,    yet    if,    through  81 ;  Roman  v.  Mali,  42  Md.  513. 
trusting  confidence,  the  other  has  led 


367  EFFECT    OF    ILLEGALITY    OF    CONTRACTS.  §     II O4 

been  applied  to  guardians,  trustees,  executors  and  administrat- 
ors." Likewise  when  one  who  employs  another  to  make  a  con- 
tract with  a  third  person  and  pays  him  a  commission  for  such 
services,  the  commission  may  be  recovered  when  it  is  subse- 
quently learned  that  the  one  employed  to  make  such  contract 
was  already  in  the  employment  of  the  third  person  with  whom 
the  agreement  was  to  be  made.^"  It  has  been  held,  however, 
that  one  who  has  knowledge  of  all  the  material  facts  and  who 
is  not  induced  to  enter  into  the  contract  through  mistake  may 
be  in  pari  delicto  even  though  he  does  not  know  the  contract 
is  illegal  because  of  a  mistake  of  law.^^ 

§  1104.    When  one  in  pari  delicto  may  be  granted  relief. — 

Again,  one  who  is  in  pari  delicto  may  be  granted  relief  on  the 
ground  of  public  policy.  Public  policy  lies  at  the  basis  of  the  law 
in  regard  to  illegal  contracts  and  the  rule  is  adopted,  not  for  the 
benefit  of  the  parties,  but  of  the  public.  Cases  may  arise  of  a 
character  in  which  the  public  interest  will  be  better  promoted 
by  granting  than  by  denying  relief  and  in  such  cases  the  general 
rule  must  yield  to  the  policy.'^  Thus  one  who  enters  into  a  con- 
spiracy to  defraud  but  is  himself  defrauded  may  recover  the 
amount  parted  with  if  public  policy  demands  that  he  be  permitted 
to  do  so.'^  It  has  also  been  held  that  the  question  of  the  falsity 
of  answers  in  an  application  for  life  insurance  cannot  be  raised  in 

"  O'Conner  V.  Ward,  60  Miss.  1025.  of    swindlers    induced    him    to    join 

"  Campbell  v.  Baxter,  41  Nebr.  729,  them  in  a  supposed  scheme  to  swm- 

60  N    W.  90.  die  a  third  person,  the  plaintiff,  how- 

"Alissouri  K.  &  T.  R.  Co.  v.  ever,  being  in  fact  the  victim);  De- 
Bowles   1  Ind.  Ter.  250.  40  S.  W.  899.  pue  v.   Swift.   1904 ;  Clothes  Washer 

« Lester  v.  Howard  Bank,  32  Md.  Co.  (Mo.  App.),  129  S.  W.  230.  (In 
558  3  Am  Rep.  211;  Rideout  v.  the  above  case  recovery  was  permit- 
Mars  (Miss.),  54  So.  801;  Herring  ted  on  the  ground  that  it  was  pub- 
v.  Cumberland  Lumber  Co.  (N.  lie  policy  to  discourage  the  defend- 
Car)  74  S  E  1011-  Johnson  v.  ant's  fraudulent  business  of  selling 
Cooper  2  Yerg.  (Tenn.)  524,  24  Am.  patent  rights  for  a  worthless  article.) 
Dec.  502.  See'also,  Citv  School  Corp.  Compare  the  foregoing  case  with 
of  Evansville  v.  Hickman  (Ind.  that  of  Schmitt  v.  Gibson,  12  Cal. 
.•\pp.).94N.  E.828:  Jenness  v.  Simp-  App.  407,  107  Pac.  571.  in  which  the 
son    84  Vt.   127.  78  A\\.  886.  facts  are  much  the  same  except  that 

"Anxer  v.  Llewellvn.  142  111.  .\pp.  the  betting  was  on  a  fake  prize  fight. 

265    (bet  on  a  "fake  fight")  ;  Hobbs  The  action  brought  was  not  one  for 

V.   Boatright,   195  Mo.  693.  93   S.  W.  conspiracy  to  defraud  but  in  assump- 

934,  5  L.  R.  A.   (X.  S.)  906,  113  Am.  sit.     The   court   denied   the   right   to 

St.  709.   (In  the  above  case  the  plain-  recover.     It  said:    "To  our  mind  the 

tiff  bet  on  a  fake  foot-race.     A  gang  public    welfare    is   best    promoted    by 


§  1 105 


CONTRACTS. 


368 


a  suit  over  the  right  to  the  proceeds  which  have  been  paid  by  the 
insurer.-" 

§  1105.  Locus  poenitentiae. — A  third  exception  to  the  rule 
that  no  rehef  will  be  granted  from  illegal  contracts  is  found  in  the 
rule  that  either  party  has  a  locus  poenitentiae"^  before  a  material 
part  of  the  illegal  purpose  has  been  accomplished.^^  The  mean- 
ing of  this  has  already  been  explained. 

§  1106.  Rule  illustrated. — Thus  one  who  deposits  money 
•with  a  stakeholder  on  a  bet  may  repudiate  the  wager^^  and  de- 
mand a  return  of  the  money  deposited  with  the  stakeholder 
before  it  is  paid  over  to  the  winner,  and  in  case  the  stakeholder 
pays  the  stakes  over  to  the  winner  subsequent  to  such  demand  he 
is  liable  for  the  amount  so  turned  over.^*     And  this  is  true  not- 


adhering  to  the  rule  established  in 
this  state  half  a  century  ago,  at 
which  time  the  doors  of  the  courts 
were  declared  closed  against  one 
seeking  redress  under  circumstances 
identical  with  those  presented  in  the 
case  at  bar." 

=°Bendet  v.  Ellis,  120  Tenn.  277,  111 
S.  W.  795,  18  L.  R.  A.  (N.  S.)  114. 

"  Wassermann  v.  Sloss,  117  Cal. 
425,  42  Pac.  566,  38  L.  R.  A.  176,  59 
Am.  St.  209;  Clarke  v.  Brown,  11  Ga. 
606,  4  Am.  St.  98  (deposit  of  money 
to  have  been  expended  in  futures)  ; 
Benton  v.  Singleton,  114  Ga.  548,  40 
S.  E.  811,  58  L.  R.  A.  181  (deposit 
for  deal  in  "futures")  ;  Lafferty  v. 
Jelley,  22  Ind.  471  ;  Sternburg  v.  Cal- 
lanan,  14  Iowa  251  (money  given  to 
agent  to  be  loaned  at  usurious  rates)  ; 
Stansficld  v.  Kunz,  62  Kans.  797,  64 
Pac.  614;  Ware  v.  Spinney,  76  Kans. 
289,  91  Pac.  787,  13  L.  R.  A.  (N.  S.) 
267n ;  Tyler  v.  Carlisle,  79  Maine  210, 
9  Atl.  356,  1  Am.  St.  301n;  Adams 
Exp.  Co.  V.  Reno,  48  Mo.  264;  Sou- 
hegan  Nat.  Bank  v.  Wallace,  61  N. 
H.  24  (money  furnished  to  agent  to 
secretly  obtain  the  return  of  stolen 
securities)  ;  Bernard  v.  Taylor,  27> 
Ore.  416,  31  Pac.  968,  18  L.  R.  A. 
859,  Zl  Am.  St.  693;  Peters  v.  Grim, 
149  Pa.  St.  163,  24  Atl.  192,  34  Am.  St. 
599  (action  to  recover  deposit  with 
b:okers  which  was  to  have  been  ex- 
pended in  futures)  ;  Repplier  v.  Ja- 


cobs, 149  Pa.  St.  167,  24  Atl.  194; 
Spring  Co.  v.  Knowlton,  103  U.  S. 
49.^  26  L.  ed.  347. 

^  See  Kearlev  v.  Thompson,  24  Q. 
B.  Div.  742;  'Ullman  v.  St.  Louis 
Chair  Assn.,  167  Mo.  273,  66  S.  W. 
949,  56  L.  R.  A.  606;  Knowland  v. 
Congress  &  E.  Spring  Co.,  57  N. 
Y.  518;  Hooker  v.  De  Palos,  28  Ohio 
St.  251 ;  Leadbetter  v.  Hawley,  59 
Ore.  422,  117  Pac.  289;  Miller  v.  Lar- 
son, 19  Wis.  463;  Douville  v.  Mer- 
rick, 25  Wis.  688.  (Money  deposited 
by  husband  with  an  attorney  who  was 
with  wife's  consent  to  bring  an  ac- 
tion for  divorce  on  the  wife's  behalf. 
Suit  to  recover  money  before  divorce 
proceedings    commenced.) 

-^Hale  v.  Sherwood,  40  Conn.  332, 
16  Am.  Rep.  Zl ;  Okerson  v.  Critten- 
den, 62  Iowa  297,  17  N.  W.  528;  Pat- 
terson v.  Clark,   126  Mass.  531. 

="  Lewis  V.  Bruton,  74  Ala.  317,  49 
Am.  Rep.  816;  Corson  v.  Neatheny, 
9  Colo.  212,  11  Pac.  82;  Wheeler  v 
Spencer,  15  Conn.  28;  McLennan  v 
Whiddon,  120  Ga.  666,  48  S.  E.  201 
Petillon  V.  Hippie,  90  111.  420,  32  Am 
Rep.  31 ;  Doxey  v.  Miller,  2  111.  App 
30 ;  Taylor  v.  Moore,  20  Ind.  App 
654,  SO  N.  E.  770;  Burroughs  v 
Hunt,  13  Ind.  178;  Turner  v.  Thomp- 
son, 107  Ky.  647,  55  S.  W.  210 ;  Stacy 
v.  Foss,  19  Maine  335,  36  Am.  Dec. 
755 ;  Gilmore  v.  Woodcock,  69  Maine 
118;  Love  v.  Harvey,  114  Mass.  80; 


369 


EFFECT    OF    ILLEGALITY    OF    CONTRACTS. 


§    I  107 


withstanding  the  one  who  placed  his  money  in  the  hands  of  the 
stakeholder  believed  that  he  had  a  "sure  thing"  and  intended  to 
defraud  others. ^°  The  same  principle  applies  where  money  is 
paid  to  a  third  person  for  the  purpose  of  bribing  officials,-*'  or  to 
compound  a  felony,-'  or  to  obtain  a  pardon  for  another.** 

§  1107.    Money  or  property  given  to  one  of  the  parties  to 
the  illegal  agreement. — The  money  so  deposited  may  be  re- 


IMorgan   v.   Beaumont,   121    j\Iass.  7; 
Whitwell    V.    Carter,    4    Mich.    329; 
Pabst  Brew.  Co.  v.  Liston,  80  INIinn. 
473,  83  N.  W.  448,  81  Am.  St.  275; 
White  V.  Gilleland,  93  ^lo.  App.  310 
(withdrawal    may    be    made    at    any- 
time before  payment).    Compare  the 
foregoing  case  with   Cutshall  v.   ^^Ic- 
Gowan,  98  Mo.   App.  702,  73  S.   W- 
933 ;  Deaver  v.  Bennett,  29  Nebr.  812, 
46  N.  W.  161.  26  Am.  St.  415;  Ward 
V.  Holliday,  87  \ebr.  607,  127  N.  W. 
882    (bet   on   horse   race)  ;    Thomson 
V.  Haves,  111  N.  Y.  S.  495,  59  Misc. 
(N.   Y.)    425    (bet   as  to   whether  a 
designated  party  held  a  lease  on  cer- 
tain property)  ;  Kohler  v.  Rosenthal, 
135  App.  Div.  (N.  Y.)  438,  120  N.  Y. 
S.  325;  Dunn  v.  Drummond,  4  Okla. 
461,  51  Pac.  656;  McAllister  v.  Hoff- 
man,   16   Serg.   &   R.    (Pa.)    147,    16 
Am.  Dec.  556;  Dauler  v.  Hartlev,  178 
Pa.  23,  35  Atl.  857;  Lillard  v.  Mitch- 
ell   (Tenn.),  37  S.  W.  702;  Lewy  v. 
Crawford,  5  Tex.  Civ.  App.  293,  23 
S.    W.    1041.     (Election   bet.     Stake- 
holder   notified     not     to    turn     over 
money  after  the  result  of  the  elec- 
tion  had   become   known   but   before 
actual  payment  had  been  made.)    But 
the   stakeholder   is    not    liable    where 
he  pays  the  money  over  to  the  win- 
ner without  notice  from  the  loser  not 
to  do  so.    Himmelman  v.  Pecaut.  133 
Iowa  503,  110  X.  W.  919.    See  Maher 
V.  Vanhorn,  15  Colo.  App.  14,  60  Pac. 
949,  on  the  question  as  to  what  con- 
stitutes  a   demand.      In    this    case    it 
was  held  that  the  demand  made  was 
insufficient.    Vandolah   v.    McKee.  99 
Mo.  App.  342.  73  S.  W.  233  (demand 
held  sufficient).     See  also,  Colson  v. 
Meyers,  80  Ga.  499,  5  S.  E.  504  (no- 
tice to  a  stakeholder  not  to  pay  over 
money  for  the  reason  that  the  elec- 

24 — Contracts,  Vol.  2 


tion  would  probably  be  contested  not 
a  demand).  See  also,  Cutshall  v. 
McGowan,  98  Mo.  App.  702,  73  S. 
W.  933,  where  in  an  action  to  recover 
money  deposited  with  defendant  as  a 
wager  on  a  horse  race,  plaintiff's  own 
evidence  showed  that  he  did  not  sig- 
nify his  dissent  to  the  bet  until  the 
race  was  so  far  run  that  he  realized 
that  his  horse  was  beaten,  such  dis- 
sent was  inopportune  and  his  right 
to  recover  lost.  Morgan  v.  Groff.  4 
Barb.  (N.  Y.)  524  (bet  made  with 
unauthorized  person).  See  further 
in  ch.  26. 

=»  Falkenberg  v.  Allen,  18  Okla.  210, 
90  Pac.  415,  10  L.  R.  A.  (N.  S.)  494. 
In  the  above  case  plaintiff  Allen  put 
up  his  money  on  a  fake  foot-race  in 
the  belief  that  it  was  fixed  his  way. 
Before  the  race  was  actually  run  he 
found  out  that  the  race  was  merely  a 
scheme  to  beat  him  out  of  his  money. 
He  immediately  demanded  of  the 
stakeholder  his  money.  The  stake- 
holder refused  to  turn  it  over,  the 
race  was  run,  and  plaintiff  lost  his 
money.  It  was  held  that  he  might  re- 
cover from  the  stakeholder.  To  same 
effect,  Fisher  v.  Hildreth,  117  Mass. 
558;  Bernard  v.  Taylor,  23  Ore.  416, 
31  Pac.  968,  18  L.  R.  A.  859,  37  Am. 
St.  693. 

^Wassermann  v.  Sloss,  117  Cal. 
425,  49  Pac.  566,  38  L.  R.  A.  176,  59 
Am.  St.  209.  See  also.  Bone  v.  Ek- 
less.  5  Hurlst.  &  N.  925. 

"  Taylor  v.  Lendey,  9  East,  49.  See 
also,  Davenger  v.  Everett,  7  Legal 
Gaz.  (Phila.)  202;  Kiewert  v.  Rinds- 
kopf,  46  Wis.  481,  1  N.  W.  163,  32 
Am.  Rep.  731  (minimum  penalty  to 
be  procured  in  case  of  conviction). 

^  Adams  Exp.  Co.  v.  Reno,  48  Mo. 
264. 


§    I  107  CONTRACTS.  37O 

covered  if  its  return  is  demanded  before  it  is  expended  for  the 
illegal  purpose.  There  is  some  question  as  to  whether  the  prop- 
erty parted  with  may  be  recovered  when  turned  over  to  one  of  the 
parties  to  the  illegal  agreement  and  not  to  a  third  party.  Cer- 
tain jurisdictions  permit  a  recovery  where  the  contract  is  not 
malum  in  se  and  is  largely  unexecuted  and  is  legal  on  its  face.^** 
Wliere  this  doctrine  obtains  it  is  difficult  to  lay  down  any  general 
rules  which  will  be  applicable  to  all  cases.  The  rule  has  been 
given  the  following  broad  general  statement :  "In  minor  offenses, 
the  locus  poenitentiae  continues  until  the  money  has  been  actually 
converted  to  the  illegal  use.  The  law  encourages  a  repudiation 
of  the  illegal  contract,  even  by  a  guilty  participator,  as  long  as  it 
remains  an  executory  contract,  or  the  illegal  purpose  has  not 
been  put  in  operation."^"  Other  courts  deny  the  right  of  one 
party  to  recover  property  paid  over  to  the  other  party  to  an  illegal 
agreement  where  the  statute  makes  no  provision  for  a  recovery 
and  both  parties  are  in  pari  delicto,^^  especially  so  where  the  con- 
tract has  been  partly  performed.' 


32 


^Simpson     v.     Lord     Howden,     3  defended    that    it    was    an    unlawful 

:\Iylne  &  C.  97;  Congress  &c.  Spring  monopoly  and  that  his  right  to  ern- 

Co,   V.    Knowlton,    103    U.    S.    49,   26  ployment  was  so  dependent  upon  his 

L.  ed.  347 ;  McCutcheon  V.  Merz  Cap-  participation    in    such    unlawful    mo- 

sule  Co.,  71  Fed.  787,  19  C.  C.  A.  108,  nopoly     that     a     suit     for     damages 

31  L.  R.  A.  415;  White  v.  Franklin  arising  out  of  a  disturbance  of  this 

Bank,  22  Pick.    (Mass.)    181    (money  right    could    not    be    sustained.     The 

deposited  in  a  bank,  contrary  to  law,  court  said:    "The  plaintiff's  right  of 

recoverable).  action,  as  we  regard  it,  does  not  rest 

^  Tyler  v.  Carlisle,   79  Maine  210,  upon    any    assertion    of    the    alleged 

9  Atl.  356,  1  Am.  St.  301.  monopoly,  but  upon  a  repudiation  of 

■■'^  Knowlton     v.     Congress     &     E.  the    very    course    of    procedure    that 

Spring  Co.,  57  N.  Y.  518.  was  invoked  in  his  case  to  establish 

^-  Ullman  v.  Fair  Association,  167  the  monopoly.  It  is  settled  that. 
Mo.  273,  66  S.  W.  949,  56  L.  R.  A.  where  a  party  has  entered  into  an 
606.  See  also,  the  case  of  Brennan  agreement  that  is  void  because  con- 
V.  United  Hatters  &c..  Local  No.  17,  trary  to  public  policy,  his  right  to 
(N.  J.),  65  Atl.  165,  9  L.  R.  A.  recover  upon  a  ground  of  action  that 
(N.  S.)  254.  This  was  a  suit  brought  exists  independent  of  the  agree- 
by  a  member  of  a  labor  union  for  the  ment  is  not  overthrown  by  the  op- 
alleged  wrongful  act  of  such  union  in  oration  of  the  maxim,  *In  pari  de- 
securing  plaintiff's  discharge  from  licto.' 
his   employment,     .The   labor   union 


> » 


CHAPTER  XXIX. 


CONFLICT  OF   LAWS. 


1110.  General    rule — Lex    loci    con-     § 

tractus. 

1111.  Lex    loci    contractus    governs 

as  to  the  nature,  obligation 
and  interpretation  of  the 
contract. 

1112.  The    general    rule    given    fur- 

ther consideration. 

1113.  Law   of   the   place   a  part   of 

the  contract. 

1114.  Reasons  underlying  the  rule. 

1115.  Where  is  the  place  of  the  con- 

tract. 

1116.  Place  of  acceptance. 

1117.  Place  of  delivery. 

1118.  Place  of  performance. 

1119.  When  law  of  the  place  of  per- 

formance governs. 

1120.  The  rule  illustrated. 

1121.  Part   performance  in   one  ju- 

risdiction and  part  in  an- 
other. 

1122.  Agreement    by    parties    as    to 

law  which  shall  control. 

1123.  Agreements     as    to     the    law 

which  shall  control  consid- 
ered  further. 

1124.  Formal  validity. 

1125.  Formal    validity  —  Statute    of 

frauds. 

1126.  Essential  validity — Legality. 

1127.  Capacity  of  parties. 

1128.  Capacity    to    contract — Corpo- 

rations— Agents. 

1129.  Distinction     between    capacity 

to  contract  and  capacity  to 
perform  the  contract. 

1130.  Capacity  to  contract — Married 

women. 

1131.  Capacity     to     contract — Tran- 

sients in  a  foreign  country. 

1132.  Capacity  to  contract — Law  of 

domicile. 

1133.  Rule  in  Louisiana. 

1134.  When  law  of  domicile  imposes 

a  total  incapacity. 

1135.  Capacity  to  contract — Law  of 

forum. 

2>7^ 


1136.  Capacity  to  contract — Infants. 

1137.  Discharge  of   contracts — Stat- 

utes of  limitation. 

1138.  Lex    fori — When    action    may 

be  maintained  thereunder. 

1139.  Statutes  as  to  maintenance  of 

actions  in  lex  fori. 

1140.  Other  statutory  enactments. 

1141.  Rule    when    the    law    of    the 

place   extinguishes   the  con- 
tract. 

1142.  Particular        contracts  —  Con- 

tracts  relating  to  realty. 

1143.  Rule  applied. 

1144.  Lex  situs  controls  as  to  cove- 

nants   which    run    with    the 
land  and  the  like. 

1145.  Distinction  between  covenants 

which  run  with  the  land  and 
personal  covenants. 

1146.  Transfer  of  personalty. 

1147.  Legislative   power    extends   to 

all  personal  property  within 
boundaries  of  the  state. 

1148.  When    the    law    of    domicile 

yields    to    the    law    of    the 
situs. 

1149.  Sale  or  attachment  of  goods — 

When  le.x  sitae  controls. 

1150.  The  trend  of  authority. 

1151.  The    law    of    the    domicile   as 

compared    with   the   law   of 
the  place. 

1152.  Transfer  of  personalty — Sales. 

1153.  Sale  governed  by  the  law  of 

the  place  where  it  becomes 
complete  and  binding. 

1154.  The  law  of  the  situs  as  aflfect- 

ing  the  rights  of  creditors. 

1155.  Removal     of     goods     without 

vendor's  knowledge  or  con- 
sent. 

1156.  Contract  of  sale  providing  for 

delivery  and  use  in  another 
jurisdiction. 

1157.  Validity  of  chattel  mortgages 

and  bills  of  sale. 


§    IIIO 


CONTRACTS. 


372 


§  1158.  Removal  of  mortgaged  goods     §  1180. 
to  another  jurisdiction. 

1159.  Mortgagors  consenting  to  the        1181. 

removal — Comity. 

1160.  Necessit.v    to    retiie    mortgage       1182. 

on  property  moved  into  an-        1183. 
other  jurisdiction. 

1161.  Sales  of  intoxicating  liquors.  1184. 

1162.  Sales    of    intoxicating   liquors 

—Rule  apphed.  1185. 

1163.  Voluntary  assignments  for  the 

benefit  of  creditors.  1186. 

1164.  Assignment  valid  where  made 

generally   valid    everywhere. 

1165.  Foreign  voluntary  assignment        1187. 

— Resident  creditors. 

1166.  When  law  of  place  of  assign-       1188. 

ment  prevails  over  the  law 

of  the  domicile.  1189. 

1167.  Involuntarj^  assignment  under 

bankrupt      and      insolvency        1190. 
laws. 

1168.  Involuntary   assignment — 

When  recognized  in  foreign        1191. 
jurisdictions. 

1169.  When   assignment   is  involun-        1192. 

tary.  1193. 

1170.  Sale  or  mortgage — As  affected 

by  fraud.  1194. 

1171.  Bills  and  notes.  1195. 

1172.  Presumption  as  to  place  of  de-       1196. 

livery.  1197. 

1173.  Bill  or  note  payable  generally.       1198. 

1174.  Naming  of  place  for  payment 

does  not  necessarily  fix  gov-       1199. 
erning  law. 

1175.  Laws  of  more  than  one  state       1200. 

may  apply  to  same  bill. 

1176.  Negotiability.  1201. 

1177.  Rule    in    federal    and    a    few        1202. 

state  courts. 

1178.  Law     governing     liability     of        1203. 

parties  to  bills  and  notes. 

1179.  Necessity  of  demand  and  pro- 

test  as    a    condition    prece- 
dent. 


Necessity  for  notice  of  dis- 
honor. 

Time  of  payment — Days  of 
grace. 

Interest. 

Different  rates — Parties  may 
stipulate  either. 

In  selecting  rate  must  act  in 
good  faith. 

Insurance  contracts  —  Gener- 
ally. _ 

Authority  of  agent  limited  to 
taking  applications — Excep- 
tions. 

Policy  mailed  to  agent  of  in- 
surer. 

Delivery  and  payment  of  first 
premium. 

Parties  designating  the  state 
whose  laws  are  to  govern. 

Validity — Policy  usually  gov- 
erned by  the  law  of  the 
place. 

Construction  and  rights  of  the 
parties. 

Contracts  of  carriers. 

Connecting  lines  of  carriers — 
The  English  rule. 

The  American  rule. 

"Contract  tickets." 

^laritime  contracts. 

Contracts  of  affreightment. 

Contracts  of  telegraph  com- 
pany. 

Remedies — Lex  fori  —  Gener- 
ally. 

Lex  fori  governs  as  to  rem- 
edy. 

Rule  applied. 

When  forum  will  refuse  to 
enforce  the  contract. 

Foreign  laws  not  judicially 
noticed. 


§  1110.  General  rule — Lex  loci  contractus. — Personal  con- 
tracts will  be  construed  and  their  validity  determined  by  the  law 
of  the  place  where  they  were  made,  unless  the  contracting  parties 
clearly  appear  to  have  had  some  other  law  in  view.^     Parties  are 


^  Bertonneau  v.  Southern  Pac.  Co., 
17  Cal.  App.  539,  120  Pac.  53;  Illus- 
trated Postal  Card  &  Novelty  Co.  v. 
Holt  fConn.),  81  Atl.  1061;  Croissant 
v.  Empire  State  Realty  Co.,  29  App 
D.  C.  538;  Provident  Sav.  Life  As- 


sur.  Soc.  V.  Hadley,  102  Fed.  856,  43 
C.  C.  A.  25 ;  Thomson  v.  Kvle,  39  Fla. 
582.  23  So.  12,  63  Am.  St.  193;  Illi- 
nois Cent.  R.  Co.  v.  Beebe,  174  111. 
13,  50  N.  E.  1019,  43  L.  R.  A.  210,  66 
Am.  St.  253;  McCoy  v.  Griswold,  114 


?>7^ 


CONFLICT    OF    LAWS. 


nil 


presumed  to  contract  in  reference  to  the  laws  of  the  country  in 
which  the  contract  is  made,  and  it  is  a  maxim  that  locus  con- 
tractus regit  actum,  unless  the  intention  of  the  parties  to  the  con- 
trary is  clearly  shown. ^ 

§  1111.  Lex  loci  contractus  governs  as  to  the  nature,  obli- 
gation and  interpretation  of  the  contract. — Lord  Justice 
Turner  in  a  leading  case  on  this  subject  said :  "The  general  rule 
is,  that  the  law  of  the  country  where  a  contract  is  made  governs 
as  to  the  nature,  the  obligation,  and  the  interpretation  of  it.  The 
parties  to  the  contract  are  either  the  subjects  of  the  Power  there 
ruling,  or  as  temporary  residents  owe  it  a  temporary  allegiance : 
in  either  case  equally  they  must  be  understood  to  submit  to  the 
law  there  prevailing,  and  to  agree  to  its  action  upon  their  con- 


Ill.  App.  556;  Reid,  jNIurdoch  &  Co. 
V.  Northern  Lumber  Co.,  146  111.  App. 
371 ;  Weil  v.  Sturgus.  23  Kv.  L.  644, 
63  S.  W.  602;  Farmer  v.  Etheridge, 
24  Kv.  L.  649,  69  S.  W.  761 ;  Emer- 
son Co.  V.  Proctor,  97  Maine  360,  54 
Atl.  849;  Tremain  v.  Dyott,  161  Mo. 
App.  217,  142  S.  W.  760;  Jamieson 
V.  Potts,  55  Ore.  292,  105  Pac.  93; 
Meuer  v.  Chicago,  M.  &  St.  P.  R.  Co., 
11  S.  Dak.  94,  75  N.  W.  823,  74  Am. 
St.  774;  International  Harvester  Co. 
V.  McAdams,  142  Wis.  114,  124  N. 
W.  1042.  See  also.  First  Nat.  Bank 
V.  Arthur.  10  Colo.  App.  283,  50  Pac 
738;  Lynch  v.  Postlethwaite,  7  Mar- 
tin (La.)  69;  Pittsburgh  &  E.  R.  R. 
Co.  V.  Bishop.  7  Ohio  C.  D.  72,; 
Forepaugh  v.  Delaware  L.  &  W.  R. 
Co.,  128  Pa.  St.  217,  18  Atl.  503,  5 
L.  R.  A.  508,  15  Am.  St.  672  (en- 
forcing a  New  York  law)  ;  Scud- 
der  V.  Union  Nat.  Bank,  91  U.  S.  406, 
23  L.  ed.  245;  Pritchard  v.  Norton, 
106  U.  S.  124,  1  Sup.  Ct.  102,  27  L. 
ed.  104;  Cox  v.  United  States,  6  Pet. 
(U.  S.)  172.  8  L.  ed.  359;  Lamar  v. 
Micou,  114  U.  S.  218;  Watts  v.  Ca- 
mors,  115  U.  S.  353,  6  Sup.  Ct.  91; 
"Contracts  made  in  Nebraska,  with 
residents  of  this  state,  by  a  foreign 
building  and  loan  association,  if  made 
by  agent  of  such  association  within 
this  state,  are  Nebraska  contracts, 
and  their  construction,  validity  and 
enforcement  are  governed  by  the 
laws  of  the  state!"     National  Mutual 


Bldg.  Co.  V.  Retzman  (Nebr.),  96 
N.  W.  204.  And  where  a  contract 
was  made  in  Indian  Territory  and 
was  to  be  performed  entirely  after 
the  creation  of  the  state  of  Oklahoma 
it  was  held  that  the  rights  of  the  par- 
ties thereto  would  in  no  wise  be  af- 
fected or  disturbed  by  the  change, 
oven  had  a  change  in  law  followed. 
Turner  v.  Trail,  24  Okla.  135,  103 
Pac.  575 ;  To  same  effect.  Purcell  v. 
Barnett  (Okla),  121  Pac.  231 ;  Barnes 
v.  American  Soda  Fountain  Co. 
(Okla.),  121  Pac.  250.  See  also, 
Sweetser  v.  Jordan  (Mass.),  97  N.  E. 
768.  Mercantile  Trust  &c.  Co.  v. 
Columbus,  161  Fed.  135  (holding  that 
a  contract  is  not  only  to  be  con- 
strued by  the  law  of  the  place  but  by 
the  law  as  interpreted  by  the  courts 
at  the  time  the  contract  was  entered 
into  and  that  its  validity  is  not  to  be 
affected  by  subsequent  contrary  de- 
cisions). 

=  Llovd  V.  Guibert  (1865),  L.  R.  1 
Q.  B.  115;  Gibbs  v.  Fremont.  9  Ex. 
25;  Hope  v.  Hope,  8  Deg.  M.  &  G. 
731 ;  Alves  v.  Hodgson,  7  T.  R.  241 ; 
Trimbey  v.  Vignier,  1  Bing.  N.  Cas. 
151;  Lewis  v.  Headley.  36  111.  433; 
Emerson  Co.  v.  Proctor,  97  Maine 
360.  54  Atl.  849;  Milliken  v.  Pratt, 
125  Mass.  374,  28  Am.  Rep.  241  (val- 
idity of  contracts  as  regards  capaci- 
tv  of  parties)  :  Pearsall  v.  Dwight, 
2  Mass.  84,  3  Am.  Dec.  35;  Dver  v. 
Hunt,  5  N.  H.  401;  Douglas  v.  Old- 


^    1 1 12  CONTRACTS.  374 

tract."*  A  contract  made  in  London  between  two  English  mer- 
cantile houses,  by  which  one  agreed  to  sell  to  the  other  twenty 
thousand  tons  of  Algerian  esparto,  to  be  shipped  by  a  French 
company  at  an  Algerian  port  on  board  vessels  furnished  by  the 
purchasers  at  London,  and  to  be  paid  for  by  them  on  arrival,  was 
held  to  be  an  English  contract  governed  by  English  law ;  notwith- 
standing the  shipment  of  the  goods  in  Algiers  had  been  prevented 
by  vis  major  which,  by  the  law  of  France,  in  force  there,  excused 
the  seller  from  performing  the  contract.* 

§  1112.    The  general  rule  given  further  consideration. — It 

is  true  generally  that  matters  bearing  upon  the  execution,  inter- 
pretation and  validity  of  a  contract  are  detemiined  by  the  law  of 
the  place  where  it  is  made ;  matters  connected  with  its  perform- 
ance are  regulated  by  the  law  prevailing  at  the  place  of  perform- 
ance ;  and  matters  respecting  the  remedy  depend  upon  the  law  of 
the  place  where  the  suit  is  brought.^  But  such  contract  may 
not  be  enforced  by  the  laws  of  a  foreign  state  where  it  is  contrary 
to  positive  statutory  enactment  or  the  public  policy  of  the  state 
where  its  enforcement  is  desired.® 

ham,  6  N.  H.   150;  French  v.  Hall,  Jacobs  v.  Credit  Lyonnais,   12  L. 

9  N.  H.  137,  32  Am.  Dec.  341 ;  Ses-  R.  Q.  B.  D.  589. 

sions  V   Little,  9  N.  H.  271;  DaCosta  ^In  re  Swift,  105  Fed.  493;  Poison 

V   Davis  24  N.  J.  L.  319;  Roubieck  v.  v.   Stewart,  167  Mass.  211,  45  N.  E. 

Haddad,'  67  N.  J.  L.  522,  51  Atl.  938;  737,  36  L.  R.  A.  771,  57  Am.  St.  452; 

Shelby    Steel    Tube    Co.    v.    Burgess  DaCosta  v.  Davis,  24  N    J    L.  319 ; 

Gun   Co     8  App.   Div.    (N.  Y.)    444,  Latham  v.  De  Loiselle,  158  N.  Y.  687, 

40   N     Y     S    871-    Bank   of    United  53  N.  E.  1127;  Union  Nat.  Bank  v. 

States   v.'Donnally,   8   Pet.    (U.    S.)  Chapman,   169  N.   Y.   538    62  N.   E. 

361   8  L.  ed.  974;  Wilcox  v.  Hunt,  13  672,  revg.  52  App.  Div.   (NY.)  57; 

Pet   (U.  S.)  378,  10  L.  ed.  209;  Liver-  Pickering  v.  Fisk,  6  Vt.  102;   bcud- 

oool   Steam   Co.  v.   Phenix  Ins.  Co.,  der  v.  Union  National  Bank,  91  U.  b. 

129  U    S   397  406,  23  L.  ed.  245. 

''It  was   accordingly  held  that  the  ^'Parker  y    Moore,  115  Fed.  799,  53 

law  of  England,  and  not  the  French  C.  C   A.   369;   Hamilton  v.   Chicago 

law  in  force  at  Mauritius,  governed  &c.  R.  Co^  (Iowa),  124  N.  W    363; 

the  validity  and  construction  of  a  con-  Carey  v.  Schmeltz,  221  Mo.  13^  uy 

tract  made  between  an  English  com-  S.  W.  946;   Carstens  Packing  Co    v 

pany  and  an  English  subject  to  carry  Southern  Pac.  Co.,  58  Wash.  239,  108 

him  hence  by  way  of  Alexandria  and  Pac.  613,  holding  contract  by  carrier 

Suez  to  Mauritius,  and  containing  a  against    liability    for   own   negligence 

stipulation   that  the   company   should  against  policy  of  Washington.        Ihe 

not  be  liable  for  loss  of  passenger's  general  doctrine  that  a  contract,  valid 

baggage  which  the   court   in   Mauri-  when  it  is  made    is  valid  also  in  the 

tius    had    held    to    be    valid    by    the  courts  of  any  other  country  or  state, 

French  law.     Peninsular  &c.  Naviga-  when    it    is    sought   to   be^  enf^oJ^f  ?' 

tion    Co.   v.    Shand,   3   Moore   P.   C.  even  though,  had  it  been  in  the  lat- 

(N    S  )   272.  t^r  country  or  state,  it  would  be  ille- 


375 


CONFLICT    OF    LAWS, 


III3 


§  1113.  Law  of  the  place  a  part  of  the  contract. — As  a  rule 
the  law  of  the  place  where  the  contract  is  made  is,  without  any 
express  assent  or  agreement  of  the  parties,  incorporated  into 
and  forms  a  part  of  the  contract;^  and  the  rule  that  con- 
tracts are  to  be  construed  according  to  the  law  of  the  place  of 
their  execution,  and  that  the  law,  including  city  ordinances,  in 
force  upon  any  subject  that  is  made  the  subject-matter  of  any 
contract  enters  into  the  same,  has  been  held  to  apply  just  as  if 
the  law  were  actually  and  expressly  made  a  part  of  the  agreement 
between  the  contracting  parties.** 

§  1114.  Reasons  underlying  the  rule. — The  rule  that  the 
validity  of  a  contract  depends  upon  the  lex  loci  contractus  may 
seem  at  first  glance  arbitrary  and  unsupported  by  any  reason. 
It  is,  however,  supported  by  sound  reason  which  is  as  follows: 


gal  and  hence  unenforcible,  is  sub- 
ject to  several  exceptions :  (1)  When 
the  contract  in  question  is  contrary 
to  good  morals;.  (2)  when  the  state 
of  the  forum,  or  its  citizens,  would 
be  injured  by  the  enforcement  by  its 
courts  of  contracts  of  the  kind  in 
question;  (3)  when  the  contract  vio- 
lates the  positive  legislation  of  the 
state  of  the  forum — that  is,  is  con- 
trary to  its  constitution  or  statutes; 
and  (4)  when  the  contract  violates 
the  public  policy  of  the  state  of 
the  forum."  These  exceptions  are 
grounded  on  the  principle  that  the 
rule  of  comity  is  not  a  right  of  any 
state  or  country,  but  is  permitted  and 
accepted  by  all  civilized  communities 
from  mutual  interest  and  conve- 
nience, and  from  a  sense  of  the  incon- 
venience which  would  otherwise  re- 
sult, and  from  moral  necessity  to  do 
justice  in  order  that  justice  may  be 
done  in  return.  Cannaday  v.  Atlan- 
tic Coast  Liner  Co.  (N.  Car.),  55  S. 
E.  836.  To  same  effect,  Burrus  v. 
Witcover  (N.  Car.),  74  S.  E.  11 
(gaming  contract).  Comity  will  not 
be  recognized  to  overthrow  an  ex- 
press statute  of  the  state  where  the 
agreement  is  sought  to  be  enforced. 
Boyer  v.  M.  D.  Knowlton  Co.  (Ohio), 
97  N.  E.  137.  A  contract  is  not 
necessarily  contrary  to  the  public  pol- 


icy of  the  state  merely  because  it 
could  not  validly  have  been  made 
there,  nor  is  it  one  to  which  comity 
will  not  be  extended  merely  because 
the  making  of  such  contracts  in  the 
place  of  the  forum  is  prohibited.  A 
contract  valid  where  made  will  be  up- 
held in  the  courts  of  a  foreign  ju- 
risdiction, unless  its  enforcement 
would  exhibit  to  the  citizens  of  the 
state  an  example  pernicious  and 
detestable.  International  Harvester 
Co.  V.  McAdams,  142  Wis.  114,  124 
N.  W.  1042,  26  L.  R.  A.  (N.  S.) 
774n.   See  also,  post.  §§  1152,  1171. 

'  Lamkin  v.  Lovell  (Ala.),  58  So. 
258;  ]\Iissouri  State  Life  Ins.  Co.  v. 
Lovelace,  1  Ga.  App.  446,  58  S.  E. 
93;  Baxter  National  Bank  v.  Talbot 
(1891),  154  Mass.  213,  28  X.  E.  163. 
13  L.  R.  A.  52.  See  also,  Liverpool 
&  G.  W.  S.  Co.  v.  Phenix  Ins.  Co., 
129  U.  S.  397,  32  L.  ed.  788,  9  Sup.  Ct. 
469. 

'  Brady  v.  Northwestern  Ins.  Co., 
11  Mich.  425;  Larkin  v.  Glens  Falls 
Ins.  Co.,  80  Minn.  527,  83  N.  W.  409, 
81  Am.  St.  286;  Gerncr  v.  Church.  43 
Nebr.  6^)0,  62  N,  W.  51 ;  Jones  v.  Ne- 
braska City,  1  Nebr.  176;  Stewart  v, 
Otoe  County,  2  Nebr.  177;  Sessions 
v.  Irwin.  8  Nebr.  5 ;  Dorrington  v. 
Myers,  11  Nebr.  388,  9  N.  W.^555. 


§    1 1 15  CONTRACTS.  376 

Capacity  to  contract  is  essential  to  the  formation  of  a  valid  agree- 
ment. Since  this  is  true  it  follows  that  capacity  to  contract  should 
be  governed  by  a  fixed  rule  and  should  not  depend  on  anything 
so  elusive  as  the  intention  of  the  parties.  The  rule,  out  of  the 
necessity  created  by  modern  conditions,  has  determined  that  as 
a  general  proposition  capacity  of  the  parties  to  contract  is  to  be 
determined  by  the  law  of  the  place  where  the  contract  is  made. 
It  follows  that  the  validity  of  the  contract  should  be  determined 
by  the  law  of  the  place  where  the  contract  is  made.  If  this 
reason  were  kept  in  view  much  of  the  prevalent  confusion  would 
be  avoided. 

§  1115.  Where  is  the  place  of  the  contract — Place  of  cele- 
bration.— The  foregoing  rules  are  well  settled.  The  real  dif- 
ficulty lies  in  determining  what  is  the  place  of  the  contract.  This 
much  may  be  taken  as  settled,  however,  that  a  contract  is  for  the 
most  purposes  deemed  to  have  been  made  at  the  place  or  within 
the  state  where  the  final  act  necessary  to  make  it  a  binding  obli- 
gation was  done.^  This  does  not  settle  the  matter,  however,  for 
it  remains  to  be  determined  what  one  act  is  considered  as  neces- 
sary to  complete  the  contract,  and  where  such  act  was  done.  In 
some  cases  the  unconditional  acceptance  by  one  of  another's 
offer  is  the  last  act  essential  to  the  completion  of  the  agreement 
and  the  place  of  the  contract  is  the  place  where  acceptance  is 
made.^"  In  other  instances,  however,  the  contract  does  not  be- 
come binding  until  there  has  been  an  actual  delivery  to  the  obligee 
in  which  instance  the  place  of  delivery  becomes  the  place  of  the 
contract." 

§  1116.    Place  of  acceptance. — In  case  the  contract  is  one 

of  such  character  that  delivery  of  the  agreement  itself  or  of  the 

'Gibbs  &c.  Co.  V.  De  France,  91  Co.  v.  Tuttle,  40  N.  J.  L.  476;  Mac- 
Iowa  108,  28  L.  R.  A.  386,  51  Am.  tier's  Admrs.  v.  Frith,  6  Wend.  (N. 
St.  329;  Dord  v.  Bonnaffee,  6  La.  Y.)  103,  21  Am.  Dec.  262;  Wilson  v. 
Ann.  563,  54  Am.  Dec.  573;  Whit-  Lewiston  Mill  Co.,  150  N.  Y.  314,  44 
son  V.  Stodder,  8  Mart.  (La.)  95,  13  N.  E.  959,  55  Am.  St.  680;  Shelby 
Am.  Dec.  281 ;  Emerson  Co.  v.  Proc-  Steel  Tube  Co.  v.  Burgess  Gun  Co., 
tor,  97  Maine  360,  54  Atl.  849;  Crom-  8  App.  Div.  (N.  Y.)  444,  40  N.  Y.  S. 
well  V.   Roval  Canadian   Ins.   Co.,  49  871. 

Md.  366,  33  Am.  Rep.  258;   Milliken  "See  post,  §  1116  et  seq. 

V.  Pratt,  125  Mass.  374,  28  Am.  Rep.  "See  post,   §§    1117,    1171,    1185   et 

241;    Northampton,   Mutual  &c.   Ins.  seq. 


ZTJ  CONFLICT   OF   LAWS.  §    III7 

article  bargained  for  is  not  the  final  and  conclusive  act  essential 
to  the  formation  of  a  binding  obligation,  the  definite  and  unquali- 
fied acceptance  by  one  of  the  other's  offer  is  the  last  act  necessary 
to  conclude  the  agreement/-  and  the  lex  loci  contractus  is  the 
place  of  acceptance. ^^  Thus  where  a  resident  of  one  state  drops 
in  the  mail  an  unqualified  and  definite  acceptance  properly  ad- 
dressed to  the  one  making  the  offer  who  resides  in  another  state 
the  contract  is  complete  and  the  lex  loci  contractus  is  the  place 
where  the  acceptance  is  mailed."  The  place  from  where  a  tele- 
gram is  sent  accepting  a  given  proposition  is  the  place  of  the  con- 
tract in  the  absence  of  any  other  element  to  take  the  case  out  of 
the  general  rule.^^  But  a  proposition  made  to  an  agent  who  has 
no  authority  to  finally  close  the  deal  does  not  become  a  binding 
obligation  until  accepted  by  the  principal,  and  the  place  of  the 
contract  is  that  where  the  principal  accepts. ^^ 

§  1117.  Place  of  delivery. — There  are  many  contracts, 
however,  that  are  not  complete  and  binding  obligations  until  the 
actual  delivery  of  the  contract  itself  or  the  thing  bargained  for. 
Where  this  is  true  the  place  of  delivery  is  the  place  of  the  con- 
tract, irrespective  of  the  place  wdiere  it  was  dated  or  signed." 

"See  ante,  ch.  3.  N.  E.  1004.     But  if  the  acceptance  is 

"  ]\Iorgan  v.  Eaton,  58  Fla.  562,  52  qualified    in    any   material    manner   it 

So.   305 ;   Emmerson   Co.  v.    Proctor,  does  not  become  a  binding  obligation 

97    Maine    360,    54    Atl.    849;    Stein-  until   the   proposition    as   modified   is 

Gray  Drug  Co.  v.  H.  Michelsen  Co.,  accepted  by  the  other  party  and  the 

116  N.   Y.   S.  789.  other   place  where  he  accepts   is  the 

"Kent  V.  Dawson  Bank,  13  Blachf.  place  of  the  contract.     Xew  York  &c. 

(U.  S.)  237,  Fed.  Cas.  No.  7714.    In  Co.  v.   Williams.    102   App.   Div.    (X. 

the  above  case  an  Illinois  bank  mailed  Y.)  1,  92  N.  Y.  S.  808.   See  ante,  ch.  3. 

a  draft  to  a  North  Carolina  bank  for  "  Garrettson     v.     North      Atchison 

collection.    Upon    the    receipt    of    the  Bank,  47  Fed.  867:  affd.  51  Fed.  168, 

draft   the   North   Carolina   bank  sent  2  C,  C.  A.   145;    Perry  v.  Mt.  Hope 

through  the  mail  a  reply  in  which  re-  Ins.   Co.,   15   R.   I.  380.  5  Atl.  632,  2 

ceipt  of  the  draft  was  acknowledged  Am.    St.    902;    Tillinghast    v.    Boston 

and   assuming   to   undertake   its    col-  &c.  Lumber  Co.,  39  S.  Car.  484,  18  S. 

lection.     The  agreement  was  regard-  E.  120,  22  L.  R.  A.  49. 

ed    as    a    North    Carolina    contract.  "Dord    v.    Bonnaffee,    6   La,    Ann. 

Equitable  L.  Assur.   Soc.  v.  Perkins,  563,  54  Am.  Dec.  573;  Barrett  v.  Kel- 

41  Ind.  App.  183,  80  N.  E.  682;  Dord  lev,  66  Vt.  515,  29  Atl.  809,  44  Am. 

V.  Bannaffee  &  Co.,  6  La.  Ann.  563,  St.  862.    See  post,  §  1186. 

54   Am.    Dec.    573;    Emerson    Co.   v.  "  Kellev  v.   Telle.  66  Ark.  464,  51 

Proctor,  97  Maine  360,  54  Atl.  849;  S.    W.    633;    Connecticut    Mut.    Life 

St.  Nicholas   Bank  v.   State  National  Ins.  Co.  v.  Westervelt,  SI  Conn.  586; 

Bank,  128  N.  Y.  26,  27  N.  E.  849,  13  Buchanan  v.  Drover's  Nat.   Bank,  55 

L.  R.  A.  241.   See  also.  Swing  v.  :Ma-  1-ed.  223.  5  C.  C.  A.  83,  6  U.  S.  App. 

rion  Pulp  Co.  47  Ind.  App.   199,  93  566;    Wells,   Fargo   &   Co.   v.   Van- 


iiiS 


CONTRACTS. 


378 


A  note  signed  by  a  member  of  a  partnership  in  the  partnership 
name,  but  which  is  not  delivered  until  after  the  dissolution  of  the 
firm,  cannot  be  received  as  a  partnership  obligation/*  The  fact 
that  a  note  is  dated  at  a  designated  place  may  be  prima  facie  evi- 
dence that  it  was  executed  at  that  place.  It  is  proper,  however, 
to  show  by  parol  evidence  that  it  was  actually  executed  else- 
where.^® And  if  the  bill  or  note  is  signed  in  one  state  or  country 
but  is  first  delivered  and  becomes  a  binding  obligation  in  another, 
the  latter  is  the  place  of  the  contract."** 

§  1118.  Place  of  performance. — The  place  at  which  the 
contract  is  to  be  performed  is  of  great  importance  in  determining 
the  law  of  the  contract.  It  might  perhaps  be  a  more  accurate 
statement  of  the  general  rule,  in  the  light  of  the  decided  cases,  to 
say  that  a  contract  is  presumed  to  be  controlled  by  the  law  of  the 
place  where  it  is  made,-^  especially  when  it  is  in  fact  performed 


sickle,  64  Fed.  944;  Kuhn  v.  Morri- 
son, 75  Fed.  81.  revd.  78  Fed.  16,  23  C. 
C.  A.  619;  Gay  v.  Rainey,  89  111.  221, 
31  Am.  Rep.  76;  Briggs  v.  Latham,  36 
Kans.  255,  13  Pac.  393,  59  Am.  Rep. 
546;  Roads  v.  Webb,  91  Maine  406, 
40  Atl.  128,  64  Am.  St.  246 ;  MiUiken 
V.  Pratt,  125  Mass.  374,  28  Am.  Rep. 
241 ;  John  A.  Tolman  Co.  v.  Reed,  115 
Mich.  71,  12  N.  W.  1104;  Thomson- 
Houston  Electric  Co.  v.  Palmer,  52 
Minn.  174,  53  N.  W.  1137,  38  Am. 
St.  536;  Johnston  v.  Gawtry,  83  Mo. 
339;  Phoenix  Mut.  Life  Ins.  Co.  v. 
Simons,  52  Mo.  App.  357 ;  Campbell 
V.  Nichols,  IZ  X.  J.  L.  81 ;  Ball  &  Hill 
V.  Consolidated  Franklinite  Co.,  Z2 
N.  J.  L.  102;  Freese  v.  Brownell,  35 
N.  J.  L.  285,  10  Am.  Rep.  239 ;  Rich- 
ardson V.  Draper,  23  Hun  (N.  Y.) 
188,  affd.,  87  N.  Y.  ZZl  \  Smith  v. 
Frame,  3  Ohio  C.  C.  587;  In  re  Con- 
rad, 8  Phila.  (Pa.)  147,  Fed.  Cas.  No. 
3126;  Winward  v.  Lincoln,  23  R.  I. 
476,  51  Atl.  106,  64  L.  R.  A.  160; 
Overton  v.  Bolton,  9  Heisk.  (Tenn.) 
762.  24  Am.  Rep.  367;  First  Nat.  Bank 
V.  Shaw,  109  Tenn.  237,  70  S.  W.  807, 
59  L.  R.  A.  498,  97  Am.  St.  840;  Til- 
den  V.  Blair,  88  U.  S.  241.  22  L.  ed. 
632.  See  also.  Southern  Exp.  Co.  v. 
Gibbs,  155  Ala.  303.  46  So.  465.  18  L. 
R.  A.  (N.  S.)  847n,  130  Am.  St.  24. 


^'Woodford  V.  Dorwin,  3  Vt.  82, 
21  Am.  Dec.  573. 

"Wells,  Fargo  &  Co.  v.  Vansickle, 
64  Fed.  944;  Overton  v.  Bolton,  9 
Heisk.  (Tenn.)  762,  24  Am.  Rep.  367; 
First  National  Bank  v.  Mann,  94 
Tenn.  17,  27  S.  W.  1015,  27  L.  R.  A. 
565.  Compare  with,  Thompson  v. 
Ketcham,  8  Johns.  (N.  Y.)  190,  5 
Am.  Dec.  ZZ2. 

"-"  Gay  V.  Rainey,  89  111.  221,  31  Am. 
Rep.  76n ;  Hart  v.  Wills,  52  Iowa  56, 
2  N.  W.  619,  35  Am.  Rep.  255; 
Briggs  V.  Latham,  36  Kans.  255,  13 
Pac.  393,  59  Am.  Rep.  546;  Bell  v. 
Packard,  69  Maine  105,  31  Am.  Rep. 
251;  Fant  v.  Miller,  17  Grat.  (Va.) 
47.  See  further  on  the  subject  post, 
§§  1171,  1185,  1198  et  seq. 

■^  Hale  V.  New  Jersey  Steam  Nav- 
igation Co.,  15  Conn.  539,  39  Am. 
Dec.  398.  See  also,  Southern  Exp. 
Co.  V.  Gibbs,  155  Ala.  303,  46  So.  465, 
18  L.  R.  A.  (N.  S.)  874n,  130  Am. 
St.  24;  International  Harvester  Co. 
of  America  v.  McAdam,  142  Wis.  114, 
124  N.  W.  1042,  26  L.  R.  A.  (N. 
S.)  774n.  Nothing  is  expressly 
stated  in  the  instrument  itself  as  to 
what  should  be  the  governing  law. 
It  must  therefore  be  determined 
under  the  established  principles  of 
private  international  law.     By  the&e 


379  CONFLICT    OF    LAWS.  §1119 

there.-"  But  where  the  real  intention  of  the  parties  is  that  the 
contract  shall  be  performed  in  the  place  where  it  is  made  it  will 
be  governed  by  the  laws  of  such  place,  notwithstanding  another 
jurisdiction  is  designated  as  the  place  of  performance  in  an  at- 
tempted evasion  of  a  rule  of  law  of  the  former  jurisdiction.  The 
real  intention  of  the  parties  as  to  the  place  of  performance  gov- 
erns.'^ If  no  place  of  performance  is  expressly  stated  or  implied 
from  the  terms  of  the  contract,  the  law  of  the  place  where  it  is 
made  will  govern.-^  Moreover,  contracts  made  in  one  jurisdic- 
tion and  intended  to  be  performed  there,  but  which  cannot  be 
made  the  basis  of  an  action  there,  are  generally  unenforcible  else- 
where." 

§  1119.  When  law  of  the  place  of  performance  governs. — 
However,  when  it  appears  upon  the  face  of  the  contract  that  there 
is  to  be  a  good  faith  performance  thereof  in  some  jurisdiction 
other  than  that  of  the  lex  loci  contractus,  or  that  it  is  made  with 
reference  to  the  laws  of  some  other  place,  then  it  is  to  be  con- 
strued according  to  the  law  of  the  place  with  reference  to  which 
it  is  made,-"     When  the  terms  or  nature  of  the  contract  show 

the  proper  law  of  every  contract  un-  Barb.  (N.  Y.)   118;  Barett  v.  Dodge, 

der  such  circumstances,  so  far  as  the  16  R.  I.  740,  19  Atl.  530,  27  Am.  St. 

contractual  obligations  of  the  parties  m  (note). 

to  each  other  are  concerned,   is  that        "°  See     Alexander     v.     Barker,     64 

by    which    they    may   justly    be   pre-  Kans.    396,   67    Pac.    829.      See   also, 

sumed  to  have  meant  to  bind  them-  Lovell  v.  Boston  &  R.  Co.,  75  N.  H. 

selves.      New    Haven    Trust    Co.    v.  568,  78  Atl.  621,  34  L.  R.  A.   (N.  S.) 

Camp,  81  Conn.  539,  71  Atl.  788,  790.  67.    See  post,  §  1199  et  seq. 

~  Owen  V.  Giles,  157  Fed.  825 ;  Arn-        '"  Eastor  v.   George  Wostenholm  & 

ett  V.    Pinson,   ZZ   Ky.   L.   36,   108   S.  Son,   137  Fed.  524,  70  C.  C.  A.   108; 

W.  852;    Equitable   Life   Assur.    Soc.  Southern  Ex.  Co.  v.  Gibbs,  155  Ala. 

V.  Clements.  140  U.  S.  226,  35  L.  ed.  303,  46  So.  465,  18  L.  R.  A.   (N.  S.) 

497,  11  Sup.  Ct.  822.    Thus  a  contract  874n.  130  Am.  St.  24;  White  v.  Holly, 

made    and     to    be     exclusively    per-  80  Conn.  438,  68  .\tl.  997;   Douglass 

formed  in   Indiana  is  not  subject  to  v.   Paine,   141    Mich.  485,    104   N.   W. 

the    provisions    of    an    Ohio    statute.  781 ;  Curtis  v.  Delaware,  L.  &  W.  R. 

George  A.  Shaw  &  Co.  v.  Cleveland,  Co.,  74  N.  Y.  116,  30  Am.  Rep.  271; 

C,  C.  &  St.  L.  R.  Co.,  173  Fed.  746,  Montana    Coal   &   Coke   Co.   v.    Cin- 

97  C.  C.  A.  520.  cinnati  Coal  &c.  Co..  69  Ohio  St.  351, 

"^  National  Mutual  Building  &  Loan  69  N.  E.  613.     See.  however.  Warder 

Assn.  v.  Burch.   124  Mich.  57,  82  N.  v.  Arell.  2  Wash.  282,  1  Am.  Dec.  488. 

W.   837,   83   Am.    St.   311.     See   also.  "It  is  settled  law  that  the  validity  of 

Thomas  v.  Wentworth  Hotel  Co.,  158  a  contract  as  to  matters  affecting  its 

Cal.  275,    110  Pac.  942,   139  .^m.    St.  performance  is  to  be  determined  by 

120.  the  laws  of  the  place  of  performance, 

■*  New  York  S:c.   Co.  v.   Davis,  96  and    not    the    place    of    execution." 

Md.  81.  53  Atl.  669  (note  and  mort-  Zenatello    v.    Hammerstein,    231    Pa. 

gage)  ;    Pomeroy   v.    Ainesworth,   22  56,  79  Atl.  922. 


§    II20  CONTRACTS.  380 

that  it  was  to  be  executed  in  another  country  or  state,  then  the 
place  of  making  the  contract  becomes  so  far  immaterial,  and  the 
law  of  the  place  where  the  contract  is  to  be  performed  governs  in 
determining  the  rights  of  the  parties.'^ 

§  1120.    The  rule  illustrated. — Thus  a  written  contract  for 

the  sale  of  lumber  to  be  cut  by  the  seller  in  Mississippi,  and  to  be 
inspected,  paid  for,  delivered  and  received  there,  is  gov- 
erned by  the  laws  of  that  state,  both  as  to  its  obligation  and  exe- 
cution, although  made  and  subscribed  in  Tennessee.^^  A  con- 
tract subscription  to  capital  stock,  made  in  Maryland,  but  to  be 
performed  in  the  state  where  the  corporation  is  chartered  and 
domiciled,  has  been  held  governed  by  the  laws  of  such  other 
state."* 


=^  Lewis  V.  Headley,  36  111.  433,  87 
Am.  Dec.  227;  Burchard  v.  Dunbar, 
82  111.  450;  Malpica  v.  McKown,  1 
La.  248,  20  Am.  Dec.  279;  Douglass 
V.  Paine,  141  Mich.  485,  104  N.  W. 
781;  F.  B.  Houck  Co.  v.  Sharpe.  83 
]\Io.  App.  385;  Campbell  v.  Nichols, 
33  N.  J.  L.  81 ;  Fanning  v.  Consequa, 
17  Johns.  (N.  Y.)  511,  8  Am.  Dec. 
442;  Waverly  Nat.  Bank  v.  Hall 
(1892),  150  Pa.  St.  466,  24  Atl.  665 
(contract  for  the  loan  of  money- 
made  in  Pennsylvania,  the  business 
to  be  conducted  in  New  York)  ; 
Tobin  V.  McNab,  53  S.  Car.  73,  30 
S.  E.  827 ;  Harrison  v.  Edwards,  12 
Vt.  648,  36  Am.  Dec.  364.  In  Way- 
man  V.  Southard.  10  Wheat.  (U.  S.) 
1,  6  L.  ed.  253,  Chief  Justice  Marshall 
referred  to  the  principle  as  one  of 
universal  law  that  "in  every  forum 
a  contract  is  governed  by  the  law 
with  a  view  to  which  it  was  made." 
And  in  Robinson  v.  Bland,  2  Burr. 
1077,  Lord  Mansfield  said :  "The  law 
of  the  place  can  never  be  the  rule, 
where  the  transaction  is  entered  into 
with  an  express  view  to  the  law  of 
another  country,  as  the  rule  by  which 
it  is  to  be  governed."  In  Andrews 
V.  Pond,  13  Pet.  (U.  S.)  65,  10  L.  ed. 
61,  Chief  Justice  Taney  said:  "The 
general  principle  in  relation  to  con- 
tracts made  in  one  place  to  be 
executed  in  another,  is  well  settled. 
They  are  to  be  governed  by  the  law 
of  the  place  of  performance."    "Where 


a  contract  is  made  with  a  purpose  by 
the  parties  that  it  shall  be  performed 
in  a  particular  place,  its  validity  and 
interpretation  are  to  be  determined 
by  the  law  of  the  place  where  it  is 
to  be  executed.  It  is  made  with  a 
view  to  that  law."  Old  Dominion 
Copper  &c.  Co.  v.  Bigelow,  203  Mass. 
159,  89  N.  E.  193.  See  also,  South- 
ern Exp.  Co.  V.  Gibbs,  155  Ala.  303, 
46  So.  465,  18  L.  R.  A.  (N.  S.)  874n, 
130  Am.  St.  24. 

'*  Hart  v.  Livermore  &c.  Mach.  Co., 
72  Miss.  809,  17  So.  769,  Cooper,  C. 
J. :  "Ordinarily,  the  validity  of  a  con- 
tract is  determinable  by  the  iex  loci 
contractus,'  but  where,  by  the  con- 
tract, a  different  place  of  perform- 
ance is  fixed,  the  presumption  is  that 
the  parties,  as  they  lawfully  may  do, 
contract  with  reference  to  the  law  of 
such  place.  Dalton  v.  Murphy,  30 
Miss.  59;  Bank  of  Louisiana  v.  Will- 
iams, 46  Miss.  618,  12  Am.  Rep. 
319;  Shacklett  v.  Polk,  51  Miss.  378; 
Osgood  V.  Bauder,  75  Iowa  550,  39 
N.  W.  887,  1  L.  R.  A.  655,  and  note." 

=»Fear  v.  Bartlett,  81  Md.  435,  32 
Atl.  322,  33  L.  R.  A.  721n,  Robinson, 
C.  J. :  "In  dealing  with  the  defend- 
ant's subscription,  we  have  treated  it 
as  a  Virginia  contract.  The  company 
was  chartered  by  that  state,  with  its 
office  and  place  of  business  in  that 
state,  and  although  the  subscription 
was  made  in  this  state,  the  contract 
was  to  be  performed  in  Virginia,  and, 


38i 


CONFLICT    OF    LAWS. 


§    II2I 


§1121.  Part  performance  in  one  jurisdiction  and  part  in 
another. — When  a  part  of  a  contract  is  to  be  performed  in 
one  jurisdiction  and  a  part  in  another,  it  is  held  that  each  part  is 
to  be  governed  l)y  the  law  of  the  place  where  it  is  performed/'' 
This  rule  is  not  universal,  however,  and  it  has  been  held  that 
where  the  contract  is  made  and  to  be  performed  in  part  in  one 
jurisdiction,  the  laws  of  that  jurisdiction  control,  unless  it  clearly 
appears  that  the  intention  of  the  parties  was  otherwise.^^  More- 
over, if  the  contract  is  entire  or  indivisible,  though  it  is  to  be 
partly  performed  in  the  state  where  made  and  partly  in  another, 
then  the  lex  loci  contractus  or  the  law  of  the  state  where  it  is 


this  being  so,  the  rights  and  liabilities 
of  the  parties  under  it  are  to  be  de- 
termined by  the  law  of  that  state ;  and 
what  we  have  said  as  to  the  right  of 
the   defendant   to   repudiate   his   sub- 
scription  on  the  ground  that   it   was 
procured    through    the    fraud   of    the 
company    is    strictly    in    accord    with 
the  decision  of  the  court  of  appeals 
of    that    state    in    Weisiger    v.    Rich- 
mond &c.   Mach.  Co.,  90  Va.  795,  20 
S.  E.  361."   But  the  validity  of  a  con- 
tract between  citizens  of  the  United 
States,    valid    by    the    laws    of    the 
United  States  and  of  the  state  where 
made,  has  been  held  to  be  affected  by 
the  customs  or  laws  of  the   Indians 
in  whose  territory  it  is  to  be  carried 
out.    Anheuser-Busch   Brewing   Assn. 
V.  Bond.  66  Fed.  653.  13  C.  C.  A.  665. 
'"Southern  Exp.   Co.  v.  Gibbs,   155 
Ala.  303,  46  So.  465,  18  L.  R.  A.  (N. 
S.)   847n,  130  Am.  St.  24;   Porter  v. 
Price.   80   Fed.   655,  26  C.   C   A.  70 
(holding  that  in  a  case  of  this  char- 
acter the  parties   may   treat   it  as   a 
contract     of     either     jurisdiction     in 
which  it  is  partly  performed)  ;  Pom- 
eroy  v.  Ainesworth,  22  Barb.  (N.  Y.) 
118;    Liverpool   &   G.   W.    S.    Co.   v. 
Phenix   Tns.    Co.,    129  U.   S.   397,   32 
L.  ed.  788,  9  Sup.  Ct.  469.    "It  may 
be  that  the  contract  is  partly  to  be 
performed  in  one  place  and  partly  in 
another.    In  such  a  case  the  only  cer- 
tain guide  is  to  be  found  in  applying 
sound  ideas  of  business,  convenience, 
and  sense  to  the  language  of  the  con- 
tract itself,  with  a  view  to  discover- 


ing from  it  the  true  intention  of  the 
parties.  *  *  *  Stereotyped  rules  laid 
down  by  judicial  writers  cannot, 
therefore,  be  accepted  as  infallible 
canons  of  interpretation  in  these 
days,  when  commercial  transactions 
have  altered  in  character  and  in- 
creased in  complexity:  and  there  can 
be  no  hard-and-fast  rule  by  which  to 
construe  the  multiform  commercial 
agreements  with  which  in  modern 
times  we  have  to  deal,"  per  Bowen,  L. 
J.,  in  Jacobs  v.  Credit  Lvonnais 
(1884),  L.  R.  12  Q.  B.  Div.  589.  See 
also,  Kavanaugh  v.  Supreme  Council 
of  Roval  League,  158  Mo.  App.  234, 
138  S.'  W.  359 ;  Adams'  Exp.  Co.  v. 
Green,  111  Va.  527,  72  S.  E.  102. 

^^  Bertonneau  v.  Southern  Pac.  Co., 
17  Cal.  App.  539,  120  Pac.  53  (af- 
freightment contract)  ;  Southern 
Exp.  Co.  V.  Hanaw,  134  Ga.  445.  67 
S.  E.  944,  137  Am.  St.  227.  (Contract 
for  transportation  of  goods.  Case 
holds  that,  a  contract  of  carriage,  as 
to  shipments  into  Georgia,  which  is 
not  contrary  to  the  policy  of  this 
state,  can  be  enforced  here,  if  valid 
under  the  laws  of  the  state  where  it 
was  made  and  the  carriage  was  begun, 
although  it  might  not  have  been  a 
complete  or  binding  contract  if  exe- 
cuted in  Georgia.  The  contract  was 
in  this  case  held  against  public  pol- 
icv.)  Illinois  Cent.  R.  Co.  v.  Beebe, 
174  111.  13.  50  N.  E.  1019,  43  L.  R.  A. 
210.  66  Am.  St.  253;  Bartlett  v.  Col- 
lins. 109  Wis.  477,  85  N.  W.  703,  83 
Am.  St.  9S8. 


§    1 122  CONTRACTS.  382 

r.iacle  governs  as  to  the  validity  of  such  contract  and  if  invalid 
there  it  is  invalid  everywhere.^" 

§  1122.  Agreement  by  parties  as  to  law  v^^hich  shall  con- 
trol.— The  parties  may,  within  certain  limits,  agree  upon  the 
jurisdiction  whose  law  is  to  control  the  contract,  and  when  this 
right  is  properly  exercised  no  room  remains  for  inference  or  pre- 
sumption as  to  what  law  was  intended  to  govern.^^  Where  the 
parties  to  a  contract  live  under  different  systems  of  law  the  ques- 
tion as  to  which  of  those  systems  must  be  applied  to  the  construc- 
tion of  the  contract  or  any  part  of  it  depends  upon  the  mutual 
intention  of  the  parties,  either  as  expressed  in  the  contract  or  as 
derivable  from  the  fair  implications  of  its  terms.^*  Thus,  parties 
residing  in  different  states  may  agree  that  the  contract  shall  be 
governed  by  the  law  of  either.^^ 

§  1123.  Agreements  as  to  the  law  which  shall  control  con- 
sidered further. — In  accordance  with  this  principle  it  has 
been  held  that  although  an  arbitration  clause  in  which  the  arbitra- 
tors are  unnamed  is  invalid  according  to  the  law  of  Scotland,  yet, 
if  the  intention  of  the  parties  to  a  contract  made  in  England  in 

''  Illinois  Cent.  R.  Co.  v.  Beebe,  174  Sup.  Ct.  785 ;  Liverpool  &  G.  W.  S. 

111.  13.  50  N.  E.  1019,  43  L.  R.  A.  210,  Co.   v.    Phenix    Ins.    Co.,    129   U.    S. 

66  Am.  St.  253.  397,  32  L.  ed.  788,  9  Sup.   Ct.  469; 

^'Spurrier  v.  La  Cloche  (1902),  Griesemer  v.  Mutual  Life  Ins.  Co., 
App.  Cas.  446;  Royal  Exchange  10  Wash.  202,  38  Pac.  1031.  "It  is 
Assur.  Corp.  v.  Sjoforsakrings  Aktie-  no  injustice  to  the  company  to  decide 
bolaget  Vega  (1902),  2  K.  B.  384;  its  rights  according  to  the  principles 
Hamlj-n  v.  Talisker  Distillery  (1894),  of  the  law  of  the  country  which  it 
A.  C.  202;  Mutual  Life  Ins.  Co.  v.  has  agreed  to  be  bound  by,  so  long 
Hill,  118  Fed.  708,  55  C.  C.  A.  536  as,  in  a  case  like  this,  the  foreign 
affg.  113  Fed.  44;  Mittenthal  v.  Mas-  law  is  not  in  any  way  contrary  to  the 
cagni,  183  Mass.  19,  66  N.  E.  425,  60  policy  of  our  own."  London  Assur. 
L.  R.  A.  812,  97  Am.  St.  404;  Russell  v.  Companhia  De  Aloagens  Do  Bar- 
V.  Pierce,  121  Mich.  208.  80  N.  W.  riero,  167  U.  S.  149,  4  L.  ed.  113,  17 
118;  Smith  v.  Parsons,  55  Minn.  520,  Sup.  Ct.  785.  "Under  the  general 
57  N.  W.  311;  Kavanaugh  v.  Su-  rule  defining  lex  loci  contractus,  it  is 
preme  Council  of  Royal  League,  158  within  the  power  of  the  parties,  by 
Mo.  App.  234,  138  S.  W.  359;  Hale  the  terms  of  their  contract,  to  estab- 
V.  Cairns,  8  N.  Dak.  145,  11  N.  W.  lish  the  place  according  to  the  laws 
1010,  44  L.  R.  A.  261,  1Z  Am.  St.  746;  of  which  the  construction  of  the  con- 
Jones  V.  Fidelity  Loan  &  Trust  Co.,  tract  shall  be  determined."  Green  v. 
7  S.  Dak.  122,  63  N.  W.  553;  Dugan  Security  Mut.  Life  Ins.  Co.,  159  Mo. 
V.  Lewis,  79  Tex.  246,  14  S.  W.  1024,  App.  277,  140  S.  W.  325. 
12  L.  R,  A.  93,  23  Am.  St.  332 ;  Lon-  '■"  Caesar  v.  Capel.  83  Fed.  403. 
don  Assur.  v.  Companhia  De  Moag-  ''United  States  Savings  &c.  Co.  v. 
ens,  167  U.  S.  149,  42  L.  ed.   113,  17  Shain,  8  N.  Dak.  136,  11  N.  W.  1006. 


383  CONFLICT    OF    LAWS.  §    II24 

which  such  a  clause  is  contained  is  that  tlie  clause  should  be  inter- 
preted according  to  the  law  of  England,  there  is  no  reason  why 
a  court  of  Scotland  should  not  give  effect  to  it,  as  this  rule  does 
not  appear  to  rest  upon  any  essential  considerations  of  public 
policy.^"  Express  reference  to  the  law  of  the  jurisdiction  where 
the  contract  is  made,^^  or  where  it  is  made  and  to  be  partly  per- 
formed'* may  make  the  law  of  such  jurisdiction  control.  More- 
over, the  parties  are  presumed  to  know  the  law  of  the  jurisdiction 
which  they  thus  adopt. ^'* 

§  1124.  Formal  validity. — The  validity  of  a  contract  so  far 
as  regards  its  formation  or  formal  validity  is  determined  by  the 
lex  loci  contractus  when  such  contract  is  personal  or  relates  to 
personal  property.^"  Thus  the  formalities  with  which  a  policy  of 
insurance  must  be  made  have  been  held  governed  by  the  law  of 
the  place  where  it  is  executed.^^ 

§  1125.  Formal  validity — Statute  of  frauds. — In  those  ju- 
risdictions in  which  the  statute  of  frauds  is  considered  not  merely 
as  a  rule  of  evidence  but  is  held  to  involve  the  essential  validity 
of  the  contract  and  to  be  declaratory  of  the  form  in  which  the 
contract  must  be  made  the  law  of  the  place  where  the  contract  is 
made  controls  as  to  the  statute  of  frauds.*-   It  is  otherwise,  how- 

"•  Hamlyn     v.     Talisker     Distillery  its  validity,  as  to  the  form  and  sol- 

(1894),  A.  C  202.  emnities  to  be  observed  in  its  crea- 

"Dugan  V.  Lewis,  79  Tex.  246,   14  tion."  Roubicek  v.  Haddad,  67  N.  J. 

S.  W.  1024,  12  L.  R.  A.  93,  23  Am.  L.  522.  51  Atl.  938;  Pritchard  v.  Nor- 

St.  332.  ton,  106  U.   S.   124,  27  L.  ed.   104,  1 

'*  Alittenthal     v.      Mascagnie,      183  Sup.  Ct.  102. 

Mass.  19,  66  N.  E.  425,  60  L.  R.  A.  "Johnson  v.  Mutual  Life  Ins.   Co. 

812,  97  Am.   St.  404.     In   the  above  of  New  York,  180  Mass.  407,  62  N. 

case    the    contract    was    to    be    per-  E.  733,  63  L.   R.  A.  833.     See  also, 

formed  in  several  countries;  it  pro-  Mutual   Life   Ins.   Co.  v.   Cohen,   179 

vided  that  suit  should  be  brought  in  U.  S.  262.  45  L.  ed.  181,  21  Sup.  Ct. 

Italv.  106. 

'"Mutual  Life  Ins.  Co.  v.  Phinnev,  "'Miller  v.  Wilson,  146  111.  523.  34 

178  U.  S.  327,  44  L.  ed.  1088,  20  Sup.  N.   E.   1111.  37  Am.   St.    186;    Kling 

Ct.  906.  V.    Fries,   33    Mich.   275;    Dacosta   v. 

'"Vrancx   v.    Ross.   98    Mass.   591;  Davis,   24   N.   J.   L.   319;    Wilson   v. 

Lovell   V.    Boston   &   M.   R.    Co.,   75  Lewiston    Mill    Co.,    150   N.    Y.    314, 

N.  H.  568.  78  Atl.  621,  34  L.  R.  A.  44  N.  E.  959.  55  Am.  St.  680;  Perry 

(N.    S.)    67n;    Williamson   v.    Postal  v.  Iron  Co..  15  R.  I.  380,  5  Atl.  632, 

Telegraph-Cable  Co.,  151  N.  Car.  223,  2  Am.  St.  902;  Scudder  v.  Union  Nat. 

65  S.  E.  974 ;  Gait  v.  Dibrell,  10  Yerg.  Bank.  91   U.    S.   406.   23   L.   ed.   245. 

(Tenn.)     146.      "The    lex    loci    con-  See  also,  Wolf  v.  Burke.  18  Colo.  264, 

tractus   must   control    in   determining  32    Pac.    427,     19    L.     R.    A.    792n; 


CONTRACTS. 


384 


ever,  in  those  jurisdictions  where  the  statute  is  treated  not  as 
operating  to  destroy  the  vaHdity  of  the  contract  altogether  but  as 
concerning  merely  the  procedure  or  right  or  the  evidence  whereby 
the  contract  is  to  be  proved.  Where  this  latter  view  obtains  the 
law  of  the  forum  controls  as  to  the  statute  of  frauds.*^ 

§  1126.  Essential  validity — Legality. — The  general  rule  is 
that  the  validity  of  the  contract,  that  is,  the  question  of  whether  it 
is  a  legal  or  illegal  one,  is  judged  by  the  law  of  the  state  or 
country  in  which  it  was  made,  and  that  a  contract  good  where 
made  is  usually  good  everywhere."**  There  are  important  excep- 
tions to  this  rule,  however,  which  will  be  treated  in  the  subsequent 
section  in  this  chapter  on  Remedies.**^  So,  on  the  other  hand, 
it  is  held  that  a  contract  which  is  invalid  where  made  because 
made  on  Sunday,  or  the  like,  will  not  be  enforced  in  another 
jurisdiction,"*^  even  if  the  contract  may  be  performed  in  whole  or 
in  part  at  another  place  under  the  law  of  which  it  would  be 
valid.*^  And  in  accordance  with  the  general  rule  first  stated,  a  con- 
tract which  is  valid  by  the  law  of  a  place  where  made  will  be  en- 


Cochran  v.  Ward,  5  Ind.  App.  89,  29 
N.  E.  795,  31  N.  E.  581,  51  Am.  St. 
229. 

*'Leroux  v.  Brown,  12  C  B.  801, 
74  E.  C.  L.  801;  Kleeman  &  Co.  v. 
Collins,  9  Bush  (Ky.)  460;  Emery  v. 
Burbank,  163  Mass.  326,  39  N.  E. 
1026,  28  L.  R.  A.  57,  47  Am.  St.  456 ; 
Heaton  v.  Eldridge,  56  Ohio  St.  87, 
46  N.  E.  638,  36  L.  R.  A.  817.  60 
Am.  St.  in.  See  also,  1  Elliott  Ev., 
§  651 ;  Buhl  v.  Stephens.  84  Fed.  922. 

■"Evans  v.  Kittrell.  ZZ  Ala.  449; 
Matthews  v.  Paine,  47  Ark.  54,  14 
S.  W.  463;  Illustrated  Postal  Card 
&c.  Co.  V.  Holt  (Conn.),  81  Atl.  1061 ; 
Altland  v.  Atchison,  T.  &  S.  F.  R. 
Co.,  151  111.  App.  291;  McCoy  v.  Gris- 
wold,  114  111.  App.  556;  Reid,  Mur- 
doch &  Co.  V.  Northern  Lumber  Co., 
146  111.  App.  371;  Stacv  v.  Baker,  1 
Scam.  (111.)  417:  Western  Life  In- 
demnity Co.  V.  Rupp,  147  Ky.  489,  144 
S.  W.  743;  Bond  v.  Cummings,  70 
Maine  125;  Corbin  v.  Houlehan,  100 
Maine  246,  61  Atl.  131,  70  L.  R.  A. 
568;  Tremain  v.  Dvolt,  161  Mo.  App. 
217,  142  S.  W.  760;  Hill  v.  Spear, 
50  N.  H.  253,  9  Am.  Rep.  205 ;  Will- 


iamson V.  Postal  Telegraph-Cable 
Co.,  151  N.  Car.  223,  65  S.  E.  974; 
Klinck  V.  Price,  4  W.  Va.  4,  6  Am. 
Rep.  268;  Davis  v.  Chicago,  M.  &  St. 
P.  Ry.  Co.,  93  Wis.  470,  67  N.  W.  16, 
ZZ  L.  R.  A.  654,  57  Am.  St.  935.  The 
distinction  between  the  validity  of  the 
contract  and  the  validity  of  the  act  to 
be  done  must  be  borne  in  mind  in 
case  the  contract  is  made  in  a  juris- 
diction other  than  that  in  which  the 
contract  is  to  be  performed.  See  Lo- 
vell  V.  Boston  &  M.  R.  R.  Co.,  75  N. 
H.  568,  78  Atl.  621,  34  L.  R.  A.  (N. 
S.)  67n.  See  also,  Wagner  v.  Minnie 
Harvester  Co.,  25  Okla.  558,  106  Pac. 
969. 

"a  See  §  1199  et  seq. 

^'King  V.  Fleming,  12  111.  21,  22 
Am.  Rep.  131 ;  Strouse  v.  Lanctot 
(Miss.),  27  So.  606;  Lovell  v.  Bos- 
ton &  AT.  R.  R.  Co.,  75  N.  H.  568,  78 
Atl.  621,  34  L.  R.  A.  (N.  S.)  67n ; 
Northrup  v.  Foot,  14  Wend.  (N.  Y.) 
248. 

"*  Arbuckle  v.  Reaume,  96  Mich.  243, 
55  N.  W.  808;  Lovell  v.  Boston  &  M. 
R.  R.  Co.,  75  N.  H.  568,  78  Atl.  621, 
34  L.  R.  A.  (N.  S.)  67n. 


385  CONFLICT    OF    LAWS.  §    1 127 

forced  in  another  state  or  country  by  the  law  of  which  the  con- 
tract would  be  invalid  if  originally  made  in  the  latter  jurisdiction 
when  the  rule  of  law  forbidding  the  contract  does  not  rest  upon 
any  essential  considerations  of  public  policy.*^ 

§  1127.  Capacity  of  parties. — It  is  obvious  that  no  contract 
can  be  formed  unless  the  parties  thereto  have  capacity  to  make 
the  agreement.  Capacity  to  contract  is  a  prerequisite  to  the 
formation  of  a  binding  obligation/*  Since  the  legality  of  a 
contract  generally  depends  upon  the  place  where  it  is  made,  it 
would  seem  to  follow  as  a  necessity  that  the  capacity  of  the 
parties  to  contract  should  be  governed  by  the  law  of  the  place 
where  the  contract  is  made.  Not  only  does  this  seem  to  follow 
as  a  necessity  but  it  rests  on  solid  principle.  Since  there  can  be  no 
binding  contract  in  the  absence  of  capacity  to  contract,  the  law 
by  which  to  determine  capacity  should  be  governed  by  a  fixed 
rule,  and  should  not  depend  upon  anything  so  uncertain  or 
elusive  as  the  intention  of  the  parties.  Consequently,  it  is  held 
as  a  general  rule  that  capacity  of  the  parties  to  contract  is  deter- 
mined by  the  law  of  the  place  where  the  contract  is  made.'*'* 

§  1128.  Capacity  to  contract — Corporations — Agents. — It 
must  be  borne  in  mind,  however,  that  in  the  case  of  an  artificial 

"  Swann  v.  Swann,  21  Fed.  299;  ered  in  Kansas  upon  Sunday;  but 
Murphy  v.  Collins,  121  Mass.  6;  this  was  upon  the  ground  that,  in  the 
O'Rourke  v.  O'Rourke,  43  Mich.  58,  absence  of  evidence  to  the  contrary. 
4  N.  W.  531 ;  McKee  v.  Jones,  67  it  would  be  presumed  that  the  law  of 
Miss.  405,  7  So.  348;  Brown  v.  Kansas  was  similar  to  that  of  Geor- 
Browning,  15  R.  I.  422,  7  Atl.  403,  2  gia,  and  rendered  contracts  made  on 
Am.  St.  908;  Adams  v.  Gay,  19  Vt.  Sunday  void.  See  further  as  to  con- 
358.  In  none  of  these  cases  was  there  liict  of  laws  relative  to  Sunday  Con- 
any  conflict  between  the  lex  loci  con-  tracts,  ante,  ch.  25. 
tractus  and  lex  loci  solutionis  on  this  ■^'' See  ante,  Parties,  ch.  10;  Infants, 
point.  In  Murphy  v.  Collins,  121  cli.  11;  Insane  Persons,  ch.  12;  Mar- 
Mass.  6,  the  court  said  that,  the  note  ried  Women,  ch.  13;  Drunken  Per- 
having  been   made   and    delivered   in  sons,  ch.  14. 

New  York,  "and  not  appearing  to  be  "  Illinois    Cent.    R.    Co.    v.    Beebe, 

payable    elsewhere."    its    validity    de-  174  111.  13,  50  N.  E.  1019,  43  L.  R.  A. 

pended  upon  the  law  of  New  York.  210.  66  Am.  St.  253 ;  Carev  v.  ]\Iackev, 

See  also,  Thaver  v.  Elliott.  16  N.  H.  82  Maine  516,  20  Atl.  84.  9  L.  R.  A. 

102.    See,  however,  Thaver  v.  Elliott,  113,    17    Am.    St.    500;    Campbell    v. 

16  N.   H.    102:    Brown  v.   Gates,    120  Crampton.    18   Blatchf.    (U.    S.)    150. 

Wis.   349,  97   N.   W.   221.  98   N.   W.  2  Fed.  417.  8  Abb.  N.  Cas.   (N.  Y.) 

205.  1  Am.  &  Eng.  Ann,  Cas.  85.    In  363;   Union    Nat.    Bank  v.   Chapman. 

Hill  V.  Wilker,  41  Ga.  449.  5  Am.  Rep.  169  N.  Y.  538.  62  N.  E.  672,  57  L.  R. 

540.   the   court   refused   to   enforce  a  A.  513,  88  Am.  St.  614;  International 

contract  which  was  made  and  deliv-  Harvester  Co.  v.  McAdam,  142  Wis. 

25 — Contracts,  Vol.  2 


§    I  129  CONTRACTS.  386 

person  capacity  to  contract  is  largely  determined  by  the  law  of 
its  creation  as  set  out  in  its  charter,  although  its  right  to  contract 
may  be  encumbered  or  restricted  by  the  laws  of  a  foreign  juris- 
diction when  it  undertakes  to  contract  therein. ^°  The  place  where 
one  assumes  the  relation  of  executor  or  administrator  or  agent  is 
also  an  important  factor  in  determining  his  rights  and  powers.^^ 

§  1129.  Distinction  between  capacity  to  contract  and  ca- 
pacity to  perform  the  contract. — A  distinction  must  also  be 
drawn  between  capacity  to  make  a  contract  and  capacity  to  per- 
form it  after  it  is  made.  The  public  policy  of  a  foreign  jurisdic- 
tion may  prevent  the  enforcement  of  a  contract  which  the  parties 
had  capacity  to  make  by  the  law  of  the  place  where  it  was  made.^^ 

§  1130.  Capacity  to  contract — Married  women. — Most  of 
the  cases  concerning  capacity  to  contract  relate  to  agreements 
entered  into  by  married  women.  A  majority  of  these  cases  hold 
that  a  married  woman's  capacity  is  in  this  respect  governed  by  the 
law  of  the  place  where  the  contract  is  made.^^  Consequently  the 
validity  of  a  contract  to  marry  entered  into  by  a  nephew  and 
aunt  of  the  half-blood,^*  or  of  a  married  woman  to  become  a 

114,  124  N.  W.  1042,  26  L.  R.  A.  (N.  11  Fed.   742;   Robinson  v.   Pease,  28 

S.)   774n.    CoiTipare  Mayer  v.  Roche,  Ind.  App.  610,  63  N.  E.  479;  Nichols 

11  N.  J.  L.  681,  75  Atl.  235,  26  L.  R.  &c.    Co.   v.    Marshall,    108   Iowa   518, 

A.  (N.  S.)  763n.  79  N.  W.  282  (in  the  above  case  the 

'^In   so   far  as  the  charter  or  ar-  domicil    and    forum    corresponded); 

tides  of  a  corporation  declare  an  in-  Young's  Trustee  v.  Bullen,  19  Ky.  L. 

tent  to  do  business  in  another  state,  1561,  43  S.  W.  687;  Bell  v.  Packard, 

the    law    of    that    state    becomes,    so  69  Maine  105,  31  Am.  Rep.  251 ;  Hill 

far  as  concerns  business  there  done,  v.  Chase,  143  Mass.  129,  9  N.  E.  30; 

a   part   of   the   contract.     Thomas   v.  Milliken  v.   Pratt,   125   Mass.  374,  28 

Wentworth   Hotel   Co.,   158   Cal.  275,  Am.    Rep.    241;    Smith    v.    Frame,    3 

110  Pac.  942,   139  Am.  St.   120.     See  Ohio   C.   C.  587;   Pearl  v.   Hansbor- 

ante,  ch.  18.  ough,  9  Humph.   (Tenn.)   426. 

"And   in   case   of   contracts  by  an        "Campbell  v.  Crampton,  18Blatchf. 

agent  see  Pope  v.  Nickerson,  3  Story  (U.  S.)  150,  2  Fed.  417.    In  the  above 

(U.   S.)    465,    Fed.    Cas.    No.    11274;  case  it  is  said:     "Upon  principle  no 

Chatenay  v.  Brazilian  Submarine  Tel.  reason  can  be  alleged  why  a  contract 

Co.,  1891,  1  Q.  B.  79,  dl  L.  T.  739,  39  void  for  want  of  capacity  of  the  party 

Week.  Rep.  65.  at  the  place  where  it  is  made  should 

"See  post,  §  1199.  be  held  good  because  it  provides  that 

"Connecticut  Mut.  Life  Ins.  Co.  v.  it  shall  be  performed  elsewhere,  and 

Westervelt,   52   Conn.   586.     Compare  nothing   can   be   found   in   any   adju- 

First  Nat.  Bank  v.  Mitchell,  92  Fed.  dication  or  text-book  to  support  such 

565,  34  C  C.  A.  542,  reversed  on  an-  a    conclusion.      It    is    a    solecism    to 

other  point,  180  U.  S.  471,  45  L.  ed.  speak  of   that  transaction  as  a  con- 

627,  21  Sup.  Ct.  418;  Bowles  v.  Field,  tract  which  cannot  be  a  contract  be- 


387 


CONFLICT    OF    LAWS. 


§    II3I 


party  to  an  accommodation  note  for  her  husband,"  or  to  enter 
into  a  contract  of  suretyship/"  or  the  vahdity  of  a  promissory 
note  given  by  her'^  is  determined  by  the  law  of  the  place  where 
made  rather  than  the  law  of  the  place  uf  performance.'''' 

§1131.  Capacity  to  contract — Transients  in  a  foreign 
country. — An  exception  to  the  general  rule  that  the  capacity 
or  legal  competency  of  the  parties  to  contract  is  governed  by  the 
law  of  the  place  has,  however,  been  suggested  where  the  contract 
is  entered  into  by  two  citizens  of  the  same  community  who  may 
be  transiently  in  a  foreign  country  and  subsequently  it  is  sought 
to  enforce  the  contract  in  their  domestic  courts/" 

§1132.  Capacity  to  contract — Law  of  domicil. — As  be- 
tween the  law  of  the  place  where  the  contract  is  made  and  the  law 
of  the  domicil,  the  former  is,  as  a  general  rule,  held  to  determine 
the  capacity  of  the  parties  to  contract.""     In  a  Michigan  case  a 


cause  of  the  inability  of  the  persons 
to  make  it  such.  When  the  authori- 
ties which  declare  that  the  obhga- 
tion,  interpretation,  nature  and  vahd- 
ity of  a  contract  made  in  one  place, 
which  is  to  be  performed  in  another, 
are  to  be  determined  by  the  law  of 
the  place  of  performance,  are  exam- 
ined, it  will  be  found  that  the  term 
'validity'  refers  to  the  conditions  of 
the  contract,  and  the  extent  and  na- 
ture of  its  obligation,  as  to  which  the 
agreement  will  be  upheld  or  defeated, 
according  to  the  sanction  or  the  pro- 
hibitions of  the  law  of  the  place 
where  the  parties  have  located  the 
transaction." 

"  Voight  V.  Brown,  42  Hun  (N.  Y.) 
394;  International  Harvester  Co.  v. 
iVlcAdam,  142  Wis.  114,  124  N.  W. 
1042,  26  L.  R.  A.  (N.  S.)  774n.  See 
also,  Thompson  v.  Taylor,  66  N.  J. 
L.  253,  49  Atl.  544,  54  L.  R.  A.  585, 
88  Am.  St.  485  (accommodation  in- 
dorsement). 

""  Union  Nat.  Bank  v.  Chapman,  169 
N.  Y.  538,  62  N.  E.  672,  57  L.  R.  A. 
513.  88  Am.  St.  614. 

"Hager  v.  National  German- 
American  Bank.  105  Ga.  116,  31  S. 
E  141;  F.  B.  Hauck  Clothing  Co.  v. 
Sharp,  83  Mo.  App.  385;  Taylor  v. 
Sharpe,  108  X.  Car.  377,  13  S.  E.  138/ 


Wood  v.  Wheeler,  106  N.  Car.  512, 
11  S.  E.  590,  second  appeal  111  N. 
Car.  231,  16  S.  E.  418.  See  also, 
First  Nat.  Bank  v.  Shaw,  109  Tenn. 
IZl,  70  S.  W.  807,  59  L.  R.  A.  498, 
97  Am.  St.  840, 

"^  See,  however,  the  case  of  Maver 
v.  Roche,  n  N.  J.  L.  681,  75  Atl.  235. 
26  L.  R.  A.  (N.  S.)  763n,  in  which 
case  a  married  woman  signed  a  note 
either  as  an  accommodation  guar- 
antor, or  surety  for  the  other  maker. 
She  signed  such  note  in  the  state  of 
New  Jersey.  The  court  laid  down 
the  rule  that  the  proper  law  of  the 
contract  is  the  law  by  which  the 
parties  thereto  intended  or  may  fair- 
ly be  presumed  to  have  intended  the 
contract  to  be  governed  and  that  in 
the  case  before  the  court  the  parties 
apparently  intended  that  the  contract 
should  be  governed  by  the  laws  of 
New  York.  Compare  also,  with  the 
case  of  Garrigue  v.  Keller.  164  Ind. 
676.  74  N.  E.  523,  69  L.  R.  A.  870, 
108  Am.  St.  324. 

■*  Pickering  v.  Fisk,  6  Vt.   102. 

»"  Bowles  V.  Field,  78  Fed.  742; 
First  Nat.  Bank  v.  Mitchell.  92  Fed. 
565,  34  C.  C.  A.  542,  revd.  180  U.  S. 
471,  45  L.  ed.  627,  21  Sup.  Ct.  418; 
Robinson  v.  Pease,  28  Ind.  App.  610, 
di  N.  E.  479;  Milliken  v.  Pratt,  125 


II33 


CONTRACTS. 


388 


note  made  by  a  married  woman  who  resided  in  Indiana,  for  the 
purchase  of  goods  in  Michigan  and  vaHd  under  the  law  of  the 
latter  state  was  enforced  there  under  the  presumption  that  it  was 
valid  in  Indiana,  at  least  until  the  contrary  was  shown.^^ 

§  1133.  Rule  in  Louisiana. — There  is  at  least  one  jurisdic- 
tion in  this  country,  however,  which  holds  that  as  between  the  lex 
loci  contractus  and  the  lex  domicilii  the  latter  governs  with  re- 
spect to  the  capacity  of  a  married  woman  to  make  personal  con- 
tracts. This  is  true  in  Louisiana  whose  jurisprudence  is  based 
on  the  civil  rather  than  on  the  common  law.''^ 

§  1134.    When  law  of  domicile  imposes  a  total  incapacity. 

— The  Supreme  Court  of  Appeals  of  Virginia  has  stated  the  rule 
as  follows :  "A  contract  of  a  married  woman,  valid  where  made 
and  to  be  performed,  is  valid  everywhere,  unless  she  be  domiciled 
in  a  state  where  the  law  of  the  domicil  imposes  a  total  incapacity 
to  contract  on  the  part  of  its  married  women."*'^ 


jMass.  374,  28  Am.  Rep.  241 ;  Phoenix 
]\Iut.  Life  Ins.  Co.  v.  Simmons,  52 
Mo.  App.  357;  Brigham  v.  Gilmartin, 
58  N.  H.  346.  In  the  following  cases 
the  lex  loci  contractus  and  the  lex 
domicilii  corresponded  but  the  de- 
cision was  based  on  the  law  of  the 
place.  Nixon  v.  Halley,  78  111.  611; 
Bond  V.  Cummings,  70  Maine  125 ; 
Partee  v.  Silliman,  44  Miss.  272;  F. 
B.  Hauck  Clothing  Co.  v.  Sharpe,  83 
Mo.  App.  385;  Hill  v.  Pine  River 
Bank,  45  N.  H.  300 ;  Miller  v.  Camp- 
bell, 140  N.  Y.  457,  35  N.  E.  651; 
Evans  v.  Cleary,  125  Pa.  St.  204,  17 
Atl.  440,  11  Am.  St.  886;  Dulin  v. 
McCaw,  39  W.  Va.  721,  20  S.  E. 
681. 

•^Wheeler  v.  Constantine,  39  Mich. 
62,  33  Am.  Rep.  355. 

"Garnier  v.  Poydras,  13  La.  177; 
Roberts  v.  Wilkinson,  5  La.  Ann. 
369;  Baer  v.  Terry,  105  La.  479,  29 
So.  886.  "Personal  incapacities  com- 
municated by  the  laws  of  any  par- 
ticular place,  accompany  the  person 
wherever  he  goes.  Thus  he  who  is 
excused  the  consequences  of  con- 
tracts, for  want  of  age,  in  his  coun- 
try, cannot  make  binding  contracts 
in  another."  Le  Breton  v.  Nouchet, 
3  Mart.    (La.)   60,  5  Am.  Dec.  736. 


See  also.  Pitch  v.  Hyatt.  3  McArth. 
(10  D.  C.)  536;  First  Nat.  Bank  v. 
Shaw,  109  Tenn.  237,  70  S.  W.  807, 
59  L.  R.  A.  498,  97  Am.  St.  840.  See 
ante,  ch.   13. 

"^  This  decision  would  seem  really 
to  rest,  however,  more  on  public  pol- 
icy than  on  an  application  of  the  lex 
domicilii  in  preference  to  the  lex  loci 
contractus.  For  the  court  continuing 
said :  "Where  the  common  law  pre- 
vails in  full  force  by  which  a  mar- 
ried woman  is  deemed  incapable  of 
binding  herself  by  any  contract  what- 
ever, it  has  been  held  in  some  cases, 
and  suggested  in  others,  that  this 
utter  want  of  capacity  must  be  con- 
sidered as  so  fixed  by  the  settled  pol- 
icy of  the  state  that  its  courts  should 
not  yield  to  the  law  of  another  state 
in  which  she  might  undertake  to  con- 
tract." Young  V.  Hart,  101  Va.  480, 
44  S.  E.  703.  The  English  courts 
originally  held  that  capacity  to  marry 
was  governed  by  the  law  of  the  place 
where  the  marriage  was  solemnized. 
Scrimshire  v.  Scrimshire,  2  Hagg. 
Con.  395 ;  Dalrymple  v.  Dalrvmple. 
2  Hagg.  Con.  54;  Mallac  v.  Mallac,  2 
Sw.  &  Tr.  67.  During  the  last  sev- 
enty-five years  the  courts  of  England 
have  manifested  a  strong  tendency  to 


389  CONFLICT    OF    LAWS.  §    1^35 

§  1135.  Capacity  to  contract — Law  of  forum. — As  be- 
tween the  law  of  the  place  and  the  law  of  the  forum,  there  seems 
to  be  no  question  but  that  the  former  controls  as  to  capacity  to  con- 
tract. Notwithstanding,  the  court  of  one  of  our  states  has  said : 
"A  contract  valid  by  the  laws  of  one  State  cannot  be  enforced  in 
another,  unless  such  a  contract  made  between  its  own  citizens 
could  be  enforced  there,  or,  in  other  words,  it  depends  on  the  lex 
fori."°*  In  a  subsequent  case,  however,  the  court  limited  the 
language  above  quoted  and  held  it  applicable  only  to  the  remedies 
sought,  and  that  the  lex  fori  did  not  go  to  the  validity  of  the  con- 
tract.*''^ However,  when  the  law  of  the  domicil  and  the  forum 
correspond  and  are  different  from  that  of  the  place  of  contract 
the  courts  are  very  apt  to  hold  that  a  contract,  though  valid  ac- 
cording to  the  lex  loci  contractus,  is  contrary  to  the  public  policy 
of  the  forimi  and  therefore  will  not  be  enforced,  upon  the  ground 
that  no  state  or  nation  will  enforce  a  foreign  law  which  is  con- 
trary to  its  fixed  settled  policy. "^^^ 

§  1136.  Capacity  to  contract — Infants. — The  contract  of 
an  infant  differs  from  that  of  a  feme  under  the  disability  of 

determine  capacit}^  to  marry  by  the  Am.  &  Eng.  Ann.  Cas.  1050;  Camp- 
law  of  the  domicil,  and  in  the  pres-  bell  v.  Crampton,  18  Blatchf.  (U.  S.) 
ent  status  of  their  law  it  may  be  150,  2  Fed.  417,  8  Abb.  N.  Cas.  (N. 
summarized  as  follows:  Where  both  Y.)  363),  except  where  the  marriage 
parties  are  domiciled  in  the  same  is  polygamous,  incestuous,  or  is  posi- 
country  and  are  incapable  under  its  tively  prohibited  by  the  law  of  the 
laws  to  contract  marriage,  the  law  domicil.  Kinnev  v.  Commonwealth, 
of  the  domicil  will  control,  but  when  30  Grat.  (Va.)  858,  32  Am.  Rep.  690. 
the  marriage  is  celebrated  in  Eng-  The  statutes  of  some  states  provide 
land  and  one  of  the  parties  is  there  that  a  marriage  consummated  outside 
domiciled  and  the  parties  are  by  the  the  state  with  the  intent  to  evade  its 
law  of  England  capable  of  marrying,  laws  is  void.  Rev.  Laws  Mass.  1902, 
their  marriage  will  be  upheld,  even  p.  1346,  §  10.  Acts  of  1905  (Ind.), 
though  the  other  party,  under  the  p.  216,  §  5.  As  to  the  law  governing 
law  of  the  domicil,  does  not  have  the  capacity  to  marry,  see  ch.  13.  See 
capacity  to  marry.  See  Sottomayor  also,  ante,  ch.  10.  See  further  on  this 
V.  De  Barros,  3  P.  Div.  1,  5  P.  Div.  subject,  §  1199  et  seq.  infra. 
94;  Brook  v.  Brook,  9  H.  L.  C.  193.  "•  Hayden  v.  Stone.  13  R.  I.  106. 
In  the  United  States,  capacity  to  con-  "^  Brown  v.  Browning.  15  R.  I.  422, 
tract  marriage  is,  as  a  general  rule,  7  Atl.  403.  2  Am.  St.  908. 
determined  by  the  law  of  the  place  ""a  Thompson  v.  Tavlor.  65  N.  J.  L. 
(Dannelli  v.  Dannelli's  Admr.,  4  107,  46  Atl.  567.  Compare  the  fore- 
Bush  (Kv.)  51;  Jackson  v.  Jackson,  going  case  with  that  of  Thompson 
82  ^Id.  17,  33  Atl.  317.  34  L.  R.  A.  v.  Tavlor,  66  N.  J.  L.  253.  49  Atl. 
773;  Aledwav  v.  Needham,  16  Mass.  544.  54  L.  R.  A.  585.  88  Am.  St.  485; 
157.  8  Am.  Dec.  131 ;  Thorp  v.  Thorp,  Maver  v.  Roche.  77  N.  J.  L.  681  75 
90  N.  Y.  602:  Tn  re  Chace,  26  R.  I.  Atl  235,  26  L.  R.  A.  (N.  S  )  763n; 
351,  58  Atl.  978,  69  L.  R.  A.  493,  3  Armstrong  v.  Best,   112  N.  Car.  59, 


s  1137 


COXTRACTS. 


390 


coverture  in  that  in  the  latter  case  the  contract  at  common  law  is 
void,  while  in  the  case  of  the  infant  the  agreement  is  merely  void- 
able. The  contract  of  an  infant  is  a  valid  obligation  until  dis- 
affirmed.'^'* But  since  it  is  true  generally  that  both  capacity  to 
contract  and  the  validity  of  the  contract  itself  are  determined  by 
the  law  of  the  place  it  follows  naturally  that  the  capacity  of  in- 
fants to  contract  is  determined  by  the  law  of  the  place,**^  or  in  a 
proper  case  by  the  law  of  the  place  of  performance.''^ 

§  1137.  Discharge  of  contracts — Statutes  of  limitation. — 
Statutes  of  limitation  as  a  general  rule  act  upon  the  remedy 
merely  and  not  upon  the  debt.  A  statute  of  limitation  merely 
bars  the  remedy  and  does  not  extinguish  the  obligation.*'^  Con- 
sequently the  statutes  of  limitation  which  exist  in  the  jurisdiction 
in  which  suit  is  brought  govern  regardless  of  the  local  law  applic- 
able to  the  contract  itself.'"  All  suits  must  be  brought  within 
the  time  prescribed  by  the  lex  fori  although  the  laws  of  the 


17  S.  E.  14,  25  L.  R.  A.  188,  34  Am. 
St.  473;  Hanover  Nat.  Bank  v. 
Howell,  118  X.  Car.  271,  23  S.  E. 
1005;  Spearman  v.  Ward,  114  Pa. 
634,  8  Atl.  430.  See  also,  Milliken 
V.  Pratt,  125  Mass.  374,  28  Am.  Rep. 
241 ;  Robinson  v.  Queen,  87  Tenn. 
445,  11  S.  W.  38,  3  L.  R.  A.  214.  10 
Am.  St.  690;  Case  v.  Dodge,  18  R.  I. 
661,  29  Atl.  785;  Holmes  v.  Reynolds, 
55  Vt.  39. 

'"See  ante,  ch.  11. 

"'Male  V.  Roberts,  3  Esp.  163; 
Phoenix  Mutual  Life  Ins.  Co.  v.  Sim- 
mons, 52  Mo.  App.  357. 

**  See  Thompson  v.  Ketcham,  4 
Johns.  (N.  Y.)  285,  in  which  a  note 
executed  in  Jamaica  but  payable  in 
New  York  was  held  governed  by  the 
law  of  New  York  with  reference  to 
the  defense  of  infancy.  Compare, 
however,  with  a  subsequent  appeal  of 
the  same  case  in  8  Johns.  (N.  Y.) 
190,  5  Am.  Dec.  332,  in  which  the 
laws  of  New  York  were  held  inap- 
plicable for  the  reason,  however,  that 
parol  evidence  was  inadmissible  to 
show  that  the  note  was  payable  in 
New  York.  It  is  not  believed,  how- 
ever, that  the  decision  second  appeal 
detracts  from  the  first  appeal  as  au- 
thority. See  also,  Andrews  v.  His 
Creditors,  11  La.  464;  In  re  Huey's 


Appeal,  1  Grant.  Cas.  (Pa.)  51.  The 
foregoing  principles  do  not  of  course 
apply  to  contracts  concerning  real 
estate,  especially  those  covenants 
which  run  with  the  land.  See  Beau- 
champ  v.  Bertig,  90  Ark.  351,  119  S. 
W.  75,  23  L.  R.  A.  (N.  S.)  659.  See 
also,  post,  §  1142  et  seq. 

"'  See  post,  ch.  55. 

"Williams  v.  Jones,  13  East.  439; 
Don  V.  Lippman,  5  Clark  &  F.  1; 
Ruckmabove  v.  Lulloobhoy  Motti- 
chund,  8  Moore  P.  C.  C.  4,  5  Moore 
Ind.  App.  234 ;  De  la  Vega  v.  Vianna, 
1  Barn.  &  Ad.  284;  British  Linen  Co. 
V.  Drummond,  10  Barn.  &  C.  903, 
9  L.  J.  (O.  S.)  K.  B.  213;  Fergusson 
V.  Fyfife,  8  Clark  &  F.  121;  Wood- 
bridge  V.  Wright,  3  Conn.  523 ;  At- 
water  v.  Townsend,  4  Conn.  47,  10 
Am.  Dec.  97;  Medbury  v.  Hopkins, 
3  Conn.  472;  Bruce  v.  Luck,  4  G. 
Greene  TTowa)  143;  McArthur  v. 
Goddin,  12  Bush  (Ky.)  274;  Brown 
V.  Stone,  4  La.  Ann.  235;  Thibodeau 
V.  Levassuer,  36  Maine  362;  ^landru 
V.  Ashbv,  108  Md.  643.  71  Atl.  312; 
Pearsall  v.  Dwight,  2  Mass.  84,  3 
Am.  Dec.  35 ;  Tappan  v.  Poor,  15 
^lass.  419;  Fletcher  v.  Spaulding,  9 
Gil.  CMinn.)  54;  Bigelow  v.  Ames, 
18  Gil.  CMinn.)  471  :  Paine  v.  Drew, 
44    N.    H.    306;    Nash   v.    Tupper,    1 


391 


COXFLICT    OF    LAWS. 


§     II3S 


country  where  the  contract  was  entered  into  may  allow  a  much 
longer  time  in  which  to  bring  an  action.^' 

§  1138.  Lex  fori — When  action  may  be  maintained  there- 
under.— The  converse  of  this  is  also  true  and  suit  may  be 
maintained  at  the  lex  fori  when  the  debt  is  not  there  outlawed 
even  though  the  statute  of  limitation  has  run  against  it  in  the 
jurisdiction  to  which  the  debt  is  subject.'^"  And  this  has  been 
held  to  be  so  even  though  the  parties  have  resided  in  the  jurisdic- 
tion where  the  obligation  was  incurred  until  the  statute  of  limita- 
tions has  run  against  it  in  that  jurisdiction.""     The  citizens  of 


Caines  (N.  Y.)  402,  2  Am.  Dec.  197; 
Smith  V.  Spinolla,  2  Johns.  (N.  Y.) 
198;  Ruggles  v.  Keeler,  3  Johns.  (N. 
Y.)  263.  3  Am.  Dec.  482;  Peck  v. 
Hozier,  14  Johns.  (N.  Y.)  346;  Whitte- 
more  v.  Adams,  2  Cow.  (X.  Y.)  626; 
Decouche  v.  Savetier,  3  Johns.  Ch. 
(N.  Y.)  190.  8  Am.  Dec.  478;  Cans 
V.  Frank,  36  Barb.  (N.  Y.)  320; 
Lincoln  v.  Battelle,  6  Wend.  (N.  Y.) 
475;  Power  v.  Hathaway,  43  Barb. 
(N.  Y.)  214;  Carpentier  v.  Minturn, 
6  Lans.  (N.  Y.)  56;  Miller  v.  Bren- 
ham.  7  Hun  (N.  Y.)  330,  affd.  68  N. 
Y.  83;  Huber  v.  Steiner,  2  Bing.  N. 
Cas.  202,  2  Scott  304,  1  Hodges  206; 
Van  Reimsdvk  v.  Kane,  1  Gall.  (U. 
S.)  371.  Fed.  Cas.  No.  16871;  Le  Roy 
V.  Crowninshield,  2  Mason  (U.  S.) 
151,  Fed.  Cas.  No.  8269;  Hinklev  v. 
Marean,  3  Mason  (U.  S.)  88,  Fed. 
Cas.  No.  6523;  Titus  v.  Hobart,  5 
IMason  (U.  S.)  378,  Fed.  Cas.  No. 
14063 ;  Bank  of  United  States  v.  Don- 
nally,  8  Pet.  (U.  S.)  361,  8  L.  ed. 
974;  M'Elmovle  v.  Cohen,  13  Pet. 
(U.  S.)  312,  10  L.  ed.  177;  Townsend 
V.  Jemison,  9  How.  (U.  S.)  407,  13 
L.  ed.  194;  Carver  v.  Adams,  38  Vt. 
500.  See  also,  note  to  48  L.  R.  A. 
625. 

"Rock  Island  Plow  Co.  v.  Master- 
son,  96  Ark.  446,  132  S.  W.  216; 
Hawse  v.  Burgmire,  4  Colo.  313; 
Mineral  Point  R.  Co.  v.  Barron,  83 
111.  365;  Paine  v.  Drew.  44  N.  H. 
306;  Bonnifield  v.  Price,  1  Wvo.  223. 

^=  Harris  v.  Quine,  L.  R.  4  Q.  B. 
653,  10  Best  &  S.  644,  38  L.  J.  Q.  B. 
(N.  S.)  331,  20  L.  T.  (N.  S.)  947,  17 
Week.  Rep.  967;  Finch  v.  Finch,  45 


L.  J.  Ch.  (N.  S.)  816.  35  L.  T.  (N. 
S.)  235;  Jones  v.  Jones,  18  Ala.  248; 
Ware  v.  Curry,  67  Ala.  274;  Drake 
V.  Found  Treasure  Min.  Co.,  53  Fed. 
474;  Sloan  v.  Waugh,  18  Iowa  224; 
Swickard  v.  Bailev,  3  Kans.  507; 
Pearsall  v.  Dwight,  2  Mass.  84,  3 
Am.  Dec.  35 ;  Wav  v.  Sperry,  6  Cush. 
(Mass.)  238,  52  Am.  Dec.  779;  Paine 
V.  Drew,  44  N.  H.  306;  Clarke  v. 
Lake  Shore  &  M.  S.  R.  Co.,  94  N.  Y. 
217;  New  York  Life  Ins.  Co.  v.  Ait- 
kin, 125  N.  Y.  660,  26  N.  E.  732; 
Iluber  V.  Steiner,  2  Bing.  N.  Cas. 
202,  2  Scott  304,  1  Hodges  206 ;  Saw- 
yer V.  Macaulay,  18  S.  Car.  543;  Pike 
V.  Greene,  1  Yerg.  (Tenn.)  465; 
Townsend  v.  Jemison,  9  How.  (U. 
S.)  407,  13  L.  ed.  194;  Willard  v. 
Wood.  164  U^  S.  502,  41  L.  ed.  531. 
17  Sup.  Ct.  176;  Le  Rov  v.  Crowin- 
shield,  2  Mason  (N.  S.)  151,  Fed. 
Cas.  No.  8269;  Graves  v.  Weeks, 
19  Vt.  178.  In  the  absence  of  any 
provision  in  the  statutes  of  limitation 
to  the  contrary  they  begin  to  run  at 
the  time  of  the  accrual  of  the  action 
regardless  of  the  debtor  or  creditor's 
presence  or  absence  or  residence  in 
the  state.  Rock  Island  Plow  Co.  v. 
Masterson,  96  Ark.  446,  132  S.  W. 
216.  Compare  with  Runkle  v.  Pullin 
(Ind.  App.).  97  N.  E.  956;  Jamieson 
V.  Potts,  55  Ore.  292.  105  Pac.  93. 

"Perkins  v.  Guy.  55  Miss.  153,  30 
Am.  Rep.  510.  See  also,  Bulger  v. 
Roche.  11  Pick.  (Mass.)  36.  22  Am. 
Dec.  359;  Power  v.  Hathawav,  43 
Barb.  (N.  Y.)  214;  Townsend  v. 
Jamieson,  9  How.  (U.  S.)  407,  13  L. 
ed.  194. 


§    II 39  CONTRACTS. 


392 


one  state  cannot  be  barred  by  the  statutes  of  limitation  of  another 
state  unless  they  bring  themselves  within  its  jurisdiction/* 

§  1139.    Statutes  as  to  maintenance  of  actions  in  lex  fori. — 

The  generally  recognized  rule  is  that  if  statutes  of  limitation  be- 
long to  the  remedy,  and  do  not  affect  the  validity  and  ol)ligation 
of  contracts,  then  the  statute  of  the  forum  and  not  of  the  place 
of  the  contract  would  prevail.  The  statutes  of  the  forum  may 
provide,  however,  that  an  action  barred  by  the  laws  of  any  other 
state  or  territory  will  be  barred  in  the  forum."  The  statutory 
provisions  on  this  subject  vaiy.  In  some  cases  the  statutes  pro- 
vide that  no  action  can  be  maintained  where  the  statute  of  limi- 
tation of  another  state  has  created  a  bar  to  such  action  "while  the 
party  to  be  charged  was  a  resident  of  such  state"^®  or,  "while  he 
resided  therein""  or  while  all  the  parties  resided  therein. '^^  A 
provision  of  this  character  may  be  made  to  apply  only  to  causes  of 
action  arising  outside  the  state.'^ 

§  1140.  Other  statutory  enactments. — By  still  other  stat- 
utes no  action  can  be  maintained  at  the  forum  after  the  expira- 
tion of  time  limited  by  the  laws  of  the  state  or  country  where 
the  obligation  of  the  contract  arose,  thus  excluding  the  bar  of  the 
statute  of  a  third  state-"  unless  the  bar  of  the  statute  of  such  third 
jurisdiction  would  be  available  as  a  defense  in  the  state  or  country 
in  which  the  cause  of  action  arose. ^^ 

'*  Field   V.    Dickinson,   3   Ark.    409,  "^  Holmes  v.  Hengen,  41  Misc.   (N. 

36  Am.  Dec.  458.           _  Y.)   521,  85  N.  Y.  S.  35.     For  other 

"  See    Taylor   v.    Union    Pacific    R.  cases   construing  statutes  of   various 

Co.,  123  Fed.  155;  Hower  v.  Aultman  jurisdictions,    see    Strong    v.    Lewis, 

&c.  Co.,  27  Nebr.  251,  42  N.  W.  1039.  204  111.  35,  68  N.  E.  556;  O'Donnell 

'"  Kempe  v.  Bader,  86  Tenn.  189,  6  v.  Lewis,  104  111.  App.  198 ;  Van  Dorn 

S.  W.  126.  V.    Bodlcv,    38    Ind.    402;    Harris    v. 

"  AlcCann    v.    Randall,    147    Mass.  Harris,  38  Ind.  423 ;  Mechanics  Bldg. 

81.  17  N.  E.  75,  9  Am.  St.  666.  Assn.  v.  Whitacre,  92  Ind.  547;  Good- 

"Frve  V.  Parker,  84  Maine  251,  24  now  v.   Stryker,  62  Iowa  221,   14  N. 

Atl.   844;    MacNichols   v.   Spence,  83  W.  345,   17  N.   W.  506,  affd.   123  U. 

Maine  87,  21  Atl.  748.  S.  527,  31  L.  ed.  194,  8  Sup.  Ct.  203; 

"Runkle  V.  Pullin   (Ind.  App.),  97  Bradley  v.  Cole,  67  Iowa  650,  25  N. 

N.    E.    956.      See    also,     Sinclair    v.  W.   849;    Lewis    v.    Hyams,   26    Nev. 

Gunzenhauser   (Ind.),  98  N.  E.  37.  68,  63  Pac.  126,  64  Pac.  817,  99  Am. 

^Sinclair  v.   Gunzenhauser    (Ind.),  St.  677;    Penfield   v.   Chesapeake   &c. 

98  N.   E.   37;   Chevrier  v.   Robert,  6  R.  Co.,  134  U.  S.  351,  33  L.  ed.  940, 

Mont.  319,  12  Pac.  702.  10  Sup.  Ct.  566. 


393  CONFLICT    OF    LAWS.  §    II4I 

§  1141.  Rule  when  the  law  of  the  place  extinguishes  the 
contract. — The  foregoing  principles  do  not  apply,  however, 
when  the  statute  of  the  place  where  the  contract  was  made  oper- 
ates to  extinguish  the  contract  or  debt  itself,  in  which  case  when 
the  contract  is  sued  ujxjn  in  another  state  the  statutes  of  the  lex 
loci  contractus  and  not  the  lex  fori  control.^"  And  in  those  juris- 
dictions where  the  statute  of  frauds  is  considered  as  a  matter 
merely  affecting  the  remedy,  if  by  the  law  of  the  forum  no  action 
can  be  maintained  on  a  particular  oral  contract,  if  made  in  that 
country,  the  like  rule  will  obtain  as  to  a  contract  made  abroad, 
although  it  was  valid  by  the  law  of  the  place  where  made.*^ 

§  1142.  Particular  contracts — Contracts  relating  to  realty. 
— It  appears  to  be  well  settled  by  the  laws  of  every  state  or  coun- 
tr}'-,  that  the  transfer  of  land  or  other  immovable  property,  or  the 
creation  of  any  interest  in  or  lien  or  encumbrance  thereon  which 
runs  with  the  land,  must  be  made  according  to  the  lex  situs  or 
the  local  law  of  the  place  where  the  property  is  situated.®*  As 
to  such  contracts  the  lex  situs  governs  as  to  the  form  of  the  con- 

"  Perkins  v.  Guy,  55  Miss.  153,  30  426;  Joy  v.  Midland  State  Bank,  26 

Am.  Rep.  510;  McMerty  v.  Morrison.  S.  Dak.  244,   128  N.  W.   147,  133  N. 

62  Mo.  140;  Cans  v.  Frank,  36  Barb.  W.  276;  White  v.  Howard,  46  N.  Y. 

(N.   Y.)    320;    Lincoln   v.   Battelle,  6  144  (Where  a  resident  of  Connecticut 

Wend.    (N.    Y.)    475.      In    Baker    v.  died  leaving  real  estate  in  New  York, 

.Stonebaker,  36  Mo.  338,  it  was  held  it   was  held  that  the  validity  of  the 

that  after  the  twelve  years  had  expired  devise   and   all   questions    relating   to 

in    Maryland   after   the   rendition    of  the  title  must  be  determined  by  the 

the  judgment   no   recovery   could   be  laws  and  courts  of   New  York  irre- 

liad  upon  it  in  Missouri  because  the  spective     of     the     domicil     of     the 

Maryland  statute  did  not  merely  af-  testator).    It  has  been  held  that  where 

feet    the    remedy,    but    it    absolutely  a    wife    died    between    the    date    of 

extinguished  the  debt.  entry  by  her  husband  on  public  lands 

®^Leroux  v.  Brown,   12  C  B.  801.  belonging  to  the  United   States  and 

**  Beauchamp    v.    Bertig,    90    Ark.  the  date  that  the  patent  was  issued, 

351,    119    S.    W.    75,    23    L.    R.    A.  the  laws  of  the  United  States  applied 

(N.    S.)    659;    Dalton   v.    Taliaferro,  and  not  the  laws  of  the  state  relating 

101   111.   App.   592;   Rush  v.   Landers,  to  communitv  property.     Wadkins  v. 

107  La.  549,  32  So.  95,  57  L.   R.  A.  Producers'    Oil    Co.     (La.),    57    So. 

353;  Richardson  v.  DeGiverville,  107  937. 
Mo.  422,  17  S.  W.  974,  28  Am.  St. 


^  II43 


CONTRACTS. 


394 


tract/^  its  validity,''®  and  its  interpretation." 

§  1143.    Rule  applied. — This  is  true  of  assignments  for  the 
benefit  of  creditors  con\eying  real  property,**  mortgages,®"  and 


"New  Haven  Trust  Co.  v.  Camp, 
81  Conn.  539,  71  Atl.  788;  Bowdle  v. 
Jencks.  18  S.  Dak.  80,  99  N.  W.  98. 

"'McDaniel  v.  Grace,  15  Ark.  465; 
Keane  v.  Chamberlain,  14  App.  (D. 
C.)  84;  Post  V.  Springfield  First  Nat. 
Bank,  138  111.  559,  28  N.  E.  978; 
Northwestern  IMut.  L.  Ins.  Co.  v. 
Overholt,  4  Dill.  (U.  S.)  287,  Fed. 
Cas.  No.  10338 ;  Arndt  v.  Griggs,  134 
U.  S.  316,  33  L.  ed.  918,  10  Sup.  Ct. 
557.  See  also,  Bissell  v.  Terry,  69 
111.  184;  Dovle  v.  McGuire,  38  Iowa 
410;  Loving  v.  Pairo,  10  Iowa  283, 
77  Am.  Dec.  108;  Moore  v.  Church, 
70  Iowa  208,  30  N.  W.  855,  59  Am. 
Rep.  439;  Acker  v.  Priest,  92  Iowa 
610,  61  N.  W.  235;  Watson  v.  Holden, 
58  Kans.  657,  50  Pac.  883.  See  Will- 
iams V.  Jones,  14  Bush  (Ky.)  418; 
In  re  Larendon's  Succession,  39  La. 
Ann.  952,  3  So.  219.  See  Harper  v. 
Hampton,  1  Har.  &  J.  (Md.)  622; 
Osborn  v.  Adams,  18  Pick.  (Mass.) 
245.  See  also,  Ross  v.  Ross,  129 
]Mass.  243,  37  Am.  Rep.  321;  Bentley 
v.  Whittemore,  18  N.  J.  Eq.  366.  See 
Belanger  v.  Mann,  11  Que.  L.  71; 
Laviolette  v.  INIartin,  11  Low.  Can. 
254 ;  Commercial  Bank  v.  Jackson,  7 
S.  Dak.  135,  63  N.  W.  548.  But  in 
Hubbard  v.  Sayre,  105  Ala.  440.  17 
So.  17,  it  was  "held  that  the  validity 
of  a  deed  given  by  one  domiciled  in 
Alabama,  conveying  lands  situated 
therein,  in  payment  of  commissions 
earned  and  advances  made  by  a 
broker  in  New  York  in  the  purchase 
and  sale  of  cotton  futures,  was  to 
be  determined  by  the  law  of  New 
York. 

*' Robinson  v.  Bland,  2  Burr.  1077; 
Norton  v.  Florence  Land  &c.  Co.,  7 
Ch.  Div.  332;  Western  Springs  v. 
Collins,  98  Fed.  933,  40  C.  C.  A.  33 ; 
Wines  V.  Woods,  109  Ind.  291,  10  N. 
E.  399;  Schee  v.  La  Grange,  78  Iowa 
101,  42  N.  W.  616;  Acker  v.  Priest, 
92  Iowa  610,  61  N.  W.  235;  Harlan 
V.  Mavington  (Iowa),  133  N.  W.  367; 
In  re  Cassid/s  Succession,  40  La. 
Ann.  827;  Bronson  v.  St.  Croix  Lum- 
ber Co.,  44  Minn.  348,  46  N.  W.  570; 
Cummings    v.    Powell,    16    Mo.    App. 


559;  Richardson  v.  De  Givervillc,  107 
Mo.  422,  17  S.  W.  974,  28  Am.  St. 
426;  Genet  v.  Delaware  &  H.  Canal 
Co.,  13  Misc.  (N.  Y.)  409,  69  N.  Y. 
St.  357,  35  N.  Y.  S.  147;  Lewis'  Exrs. 
V.  Barry,  72  Pa.  St.  18;  McGoon  v. 
Scales,  9  Wall.  (U.  S.)  23,  19  L. 
ed.  545;  Leases:  Stanton  v.  Harvey, 
44  La.  Ann.  511,  10  So.  778;  Graves 
V.  Cameron,  9  Daly  (N.  Y.)  152. 
See  also,  Alexander  v.  Barker,  64 
Kans.  396,  67  Pac.  829.  "But  what 
the  parties  to  the  instrument,  at  the 
time  of  its  execution,  understood  to 
be  its  effect  (whenever  that  may  be- 
come important)  is  to  be  determined 
by  the  law  whatever  it  was,  which 
they  then  had  in  mind  as  governing 
its  construction  and  operation."  New 
Haven  Trust  Co.  v.  Camp,  81  Conn. 
539,  71  Atl.  788. 

''Danner  &  Co.  v.  Brewer  &  Co., 
69  Ala.  191;  Keane  v.  Chamberlain, 
14  App.  D.  C.  84 ;  Watson  v.  Holden, 
58  Kans.  657,  50  Pac.  883. 

®*  Purdom  v.  Pavey,  26  Can.  Sup. 
Ct.  412;  :\lanton  v.  J.  F.  Seiberling 
&  Co.,  107  Iowa  534,  78  N.  W.  194; 
Goddard  v.  Sawyer,  9  Allen  (Mass.) 
78;  Fessenden  v.  Taft,  65  N.  H.  39, 
17  Atl.  713.  Compare  Boehme  v. 
Rail,  51  N.  J.  Eq.  541,  26  Atl.  832; 
Manhattan  &  S.  Savings  &  Loan 
Assn.  of  N.  Y.  v.  Massarelli  (N.  J.), 
42  Atl.  284;  Hosford  v.  Nichols,  1 
Paige  (N.  Y.)  220;  Baum  v.  Birchall, 
150  Pa.  St.  164,  24  Atl.  620,  30  Am. 
St.  797;  Oregon  &  W.  Trust  &c.  Co. 
V.  Rathburn,  5  Sawy.  (U.  S.)  32, 
Fed.  Cas.  10555.  See  also,  Sinclair 
V.  Gunzenhauser  (Ind.),  98  N.  E.  37. 
It  has  been  held  that  a  foreclosure  in 
one  state  of  a  mortgage  upon  land  in 
another  has  no  validity.  Farmers' 
Loan  &  Trust  Co.  v.  Postal  Telegraph 
Co.,  55  Conn.  334,  11  Atl.  184,  3  Am. 
St.  i3  (where  there  has  been  a  fore- 
closure in  New  York  of  a  mortgage 
upon  lands  in  Connecticut).  See  also, 
Lindlev  v.  O'Reilley,  50  N.  J.  L. 
636,  15  Atl.  379.  1  L.  R.  A.  79,  7  Am. 
St.  802.  The  effect  of  a  conveyance, 
in  effect  a  mortgage,  made  in  New 
York  of  lands  in  West  Virginia  is  to 


395 


CONFLICT    OF    LAWS. 


>?    I  144 


covenants  of  warranty."'"  It  has  been  decided  that  the  1  iw  of  the 
place  where  the  land  is  situated  must  also  be  resorted  to  for  the 
purpose  of  determining  what  is  or  is  not  to  be  considered  as 
real  or  heritable  property  so  as  to  have  locality  within  the  intent 
and  meaning  of  this  principle. °^ 


§  1144.  Lex  situs  controls  as  to  covenants  which  run  with 
the  land  and  the  like. — The  lex  situs  is  also  to  be  consulted 
in  determining  whether  a  covenant  contained  in  a  deed  runs  with 
the  land.^"  It  is  also  true  as  a  general  rule  that  in  the  case  of  ex- 
ecutory contracts  which  relate  to  questions  of  construction,  title, 
covenants ;;real,  mode  and  formality  of  execution,  and  all  things 
else  which  the  law  of  the  situs  impresses  upon  the  nature  of  the 
property,  the^character  of  the  tenure  and  the  mode  of  transmis- 
sion are  to  be  determined  by  the  law  of  the  place  where  the  land 
is  located. °^  Thus  the  form  of  validity  of  a  power  of  attorney 
executed  in  England  to  convey  realty  situated  in  Nebraska  has 


be  determined  by  the  laws  of  the  lat- 
ter state ;  but  a  contract  also  made 
in  New  York  between  the  citizens  of 
that  state  for -the  loan  of  money  to 
secure  .the  *  payment  of  which  such 
conveyance  was  executed  is  to  be 
governed  as  to  its  nature,  construc- 
tion and  validity,  by  the  laws  of  New 
York.  Klinck  v.  Price, -4  W.  Va.  4, 
6  Am.  Rep.  268.  Where  money  was 
borrowed  and  the  note  made  payable 
in  New  York  but  dated  in  Nebraska 
where  a  mortgage  to  secure  it  was 
executed  on  land,  the  contract  being 
usurious  by  the  New  York  law,  was 
held  void.  .Sands  v.  Smith,  1  Nebr. 
108,  93  Am.  Dec.  331. 

*»  Logan  V.  Moulder,  1  Ark.  313,  33 
Am.  Dec.  338;  Beauchamp  v.  Bertig, 
90  Ark.  351.  119  S.  W.  75,  23  L.  R.  A. 
(N.  S.)  659. 

"  Chapman  v.  Robertson.  6  Paige 
(N.  Y.)  627.  31  Am.  Dec.  264.  "In  all 
the  books  it  is  conceded  that  real 
property  must  be  transferred  accord- 
ing to  the  law  of  its  locality,  because 
it  is  subject  to  the  exclusive  jurisdic- 
tion of  the  government  of  its  lo- 
cality, and  because  every  legal  rem- 
edy in  regard  to  it  must  be  sought 
there."     Per    Peckham,    J.    in    Guil- 


lander  v.  Howell,  35  N.  Y.  657  said : 
"Real  property  cannot  attend  the  per- 
son of  the  owner  as  he  goes  from  one 
jurisdiction  to  another.  It  is  fixed, 
immovable,  and  necessarily  under  the 
law  of  the  place  where  it  lies."  Baum 
v.  Birchall.  150  Pa.  St.  164,  24  Atl. 
620,  30  Am.  St.  797. 

"-Fisher  v.  Parry.  68  Ind.  465; 
Riley  v.  Burroughs,  41  Nebr.  296.  59 
N.  W.  929.  Compare  Worlev  v.  Hine- 
man.  6  Ind.  App.  240.  33  N.  E.  260. 

*^  Clark  v.  Harmer,  9  App.  Cas.  (D. 
C.)  1  (option  for  purchase  of  land)  ; 
Bissell  V.  Terry.  69  111.  184  (validity 
of  power  of  attorney)  ;  Bissell  v. 
Terry,  69  111.  184  (statute  of  frauds)  ; 
Garden  City  Sand  Co.  v.  Miller.  157 
111.  225,  41  N.  E.  753;  Breckinridge 
v.  Moore,  3  B.  ]\Ion.  (Ky.)  629 
(champertous  contract)  ;  ^lorris  v. 
Linton.  61  Nebr.  537,  85  N.  W.  565 
(validity  of  power  of  attorney  to 
convev  land)  :  Latrobe  v.  Winans. 
89  Md.  636.  43  Atl.  829;  Giddings  v. 
Eastman.  Clarke  Ch.  (N.  Y.)  19 
(champertous  contract")  ;  Abell  v. 
Douglass.  4  Denio  (N.  Y.)  305  (stat- 
ute of  frauds)  :  Siegel  v.  Robinson. 
56  Pa.  St.  19,  93  Am.  775  (statute  of 
frauds). 


1 145 


CONTRACTS. 


396 


been  held  controlled  by  the  law  of  the  place  where  the  realty  is 
situated,  i.  e.,  Nebraska,  and  not  by  the  laws  of  England.^* 

§1145.  Distinction  between  covenants  which  run  with 
the  land  and  personal  covenants. — In  some  jurisdictions, 
however,  a  distinction  has  been  drawn  between  covenants  which 
run  with  the  land  and  those  which  are  merely  personal  in  their 
nature,  the  cases  holding  that  obligations  of  the  latter  character 
such  as  covenants  of  seisin,  of  the  right  to  convey,  and  against 
encumbrances,  and  executory  contracts  for  deeds,  or  other  instru- 
ments containing  covenants  that  do  not  run  with  the  land,  are 
governed  by  the  law  concerning  movables.^^  And  the  law  of  the 
place  where  the  land  is  situated  does  not  control  personal  cove- 
nants, not  purporting  to  be  conveyances,  between  persons  outside 
the  jurisdiction  although  concerning  land  located  within  it.**** 
Thus  it  has  been  held  that  the  measure  of  damages  for  the  breach 
of  a  contract  to  convey  real  estate  is  to  be  governed  by  the  law  of 
the  place  where  the  contract  is  entered  into  and  not  by  the  law  of 
the  place  where  the  land  is  situated,'*^  although  other  jurisdic- 
tions hold  that  the  question  of  damages  for  the  breach  of  a  cove- 


"*  Morris  v.  Linton,  61  Nebr.  537, 
85  N.  W.  565. 

*=  Beauchamp  v.  Bertig,  90  Ark.  351, 
119  S.  W.  75,  23  L.  R.  A.  (N.  S.) 
659.  In  the  above  case  it  is  said: 
"All  these  contracts  in  the  absence  of 
statutory  law  or  an  express  intention 
to  the  contrary,  are  usually  governed 
by  the  law  of  the  place  where  such 
contracts  are  made."  For  a  discus- 
sion of  these  covenants  which  run 
with  the  land  and  those  which  do 
not,  see  Sjoblom  v.  Mark,  103  Minn. 
193,  114  N.  W.  746,  15  L.  R.  A.  (N.  S.) 
1129.  Clement  v.  Willett,  105  Minn. 
267,  117  N.  W.  491,  17  L.  R.  A.  (N. 
S.)  1094,  127  Am.  St.  562  (holding 
that  a  contract  to  assume  and  pay  a 
mortgage  is  not  such  a  covenant). 

**  Poison  V.  Stewart,  167  Mass.  211, 
45  N.  E.  m.  36  L.  R.  A.  771,  57  Am. 
St.  452.  "Where  a  conveyance  is 
executed  in  this  state,  between  citi- 
zens of  this  state,  for  lands  in  an- 
other state,  in  so  far  as  it  treats  of 
covenants  which  never  attach  to  the 
soil,  but  are  essentially  personal,  the 
laws  of  this  state  control."    Cochran 


V.  Ward,  5  Ind.  App.  89,  29  N.  E. 
795,  31  N.  E.  581,  51  Am.  St.  229. 
The  validity  and  effect  of  a  note 
given  in  Alabama  secured  by  a  mort- 
gage on  land  situated  in  Mississippi 
has  been  held  governed  by  the  laws 
of  Alabama.  Lamkin  v.  Lovell  (Ala.), 
58  So.  258. 

*'Atwood  V.  Walker,  179  Mass.  514, 
61  N.  E.  58.  In  the  above  case  the  con- 
tract to  convey  was  entered  into  in 
New  York.  Action  for  breach  thereof 
was  brought  in  Massachusetts.  It 
was  held  that  the  measure  of  dam- 
ages was  governed  by  the  New  York 
law.  See  also,  Dalton  v.  Taliaferro, 
101  111.  App.  592;  Fisher  v,  Parry, 
68  Ind.  465.  Compare  this  latter  case, 
however,  with  Worley  v.  Hineman, 
6  Ind.  App.  240,  ZZ  N.  E.  260 ;  Smith 
v.  Ingram,  132  N.  Car.  959,  44  S.  E. 
643.  95  Am.  St.  680;  Klinck  v.  Price, 
4  W.  Va.  4,  6  Am.  Rep.  268.  It 
seems  that  in  England  the  interpreta- 
tion and  effect  of  contracts  relating 
to  land  but  which  do  not  amount  to 
a-  conveyance  are  to  be  governed  by 
the    laws    with    reference    to    which 


397 


CONFLICT    OF    LAWS. 


§    1 146 


nant  which  runs  with  the  land  is  to  be  determined  by  the  laws 
of  the  state  where  the  land  is  situated.'*^ 

§  1146.  Transfer  of  personalty. — In  contradistinction  to 
contracts  for  the  conveyance  of  an  intcest  in  real  estate  it  has 
been  frequently  said  that  personal  property  or  merchandise  has 
no  locus  sitae,  but  follows  the  person  of  the  owner,  and  a  gen- 
erally recognized  rule  is  that  his  alienation  of  it  is  governed  by 
the  law  of  the  domicil  or  the  place  where  the  sale  is  made,  and 
that  such  contracts  should  have  in  any  other  state  the  same  inter- 
pretation, binding  force  and  validity  as  would  be  given  them  at 
the  domicil  or  place  where  the  sale  is  made."''  It  is  believed,  how- 
ever, that  this  statement  in  its  broadest  sense  is  inaccurate.  There 
can  be  no  question  that  tangible  personal  property  has  locality, 
and  that  this  locality  is  often  of  great  importance  in  determining 
the  rights  of  various  parties  therein.  A  distinction  has  been  made 
between  debts  and  movables,  the  latter  being  capable  of  having  a 
situs  while  the  former,  it  is  said,  follow  the  domicil  of  the  owner. ^ 


they  are  made  (Cood  v.  Cood,  33 
Beav.  314.  Campbell  v.  Dent,  2  'Sloo. 
P.  C.  292.  Compare  Waterhouse  v. 
Stansfield.  9  Hare  234,  10  Hare  254) 
although  it  is  presumed  that  the  par- 
ties contracted  with  reference  to  the 
law  of  the  place  where  the  land  is 
located.  Lloyd  v.  Guibert,  L.  R.  1 
Q.  B.  lis. 

'^Kling  V.  Sejour,  4  La.  Ann.  128; 
In  re  Cassidy's  Succession,  40  La. 
Ann.  827;  Tillotson  v.  Prichard,  60 
Vt.  94.  14  Atl.  302,  6  Am.  St.  95.  See 
also,  Mathenv  v.  Stewart,  108  Mo. 
73,  17  S.  W.  i014;  Hazelett  v.  Wood- 
ruff, 150  ^lo.  534,  51  S.  W.  1048.  See, 
however,  Looney  v.  Reeves,  5  Kans. 
App.  279,  48  Pac.  606.  As  to  convey- 
ances by  receivers  see  Joy  v.  Mid- 
land State  Bank,  26  S.  Dak.  244,  128 
N.  W.  147,  133  N.  W.  276. 

■"^Da  Costa  v.  Davis,  24  N.  J.  L. 
319.  It  is  a  clear  proposition  not 
only  of  the  law  of  England,  but  of 
every  country  in  the  world  where 
law  has  the  semblance  of  science, 
that  personal  property  has  no  lo- 
cality. The  meaning  of  that  is.  not 
that  personal  property  has  no  visible 
locality,  but  that  it  is  subject  to  that 
law  which  governs  the  person  of  the 


owner.  Both  with  respect  to  the  dis- 
position of  it  and  with  respect  to 
the  transmission  of  it,  either  by  suc- 
cession or  liy  the  act  of  the  party, 
it  follows  the  law  of  the  person. 
Sill  V.  Worswick,  1  H.  Black  665; 
Thomson  v.  Advocate  General,  12  C. 
&  F.  1.  "Our  American  decisions  of 
inter-confederated  law  *  *  *  fully 
sustain  this  principle."  Hoffman  v. 
Carow,  22  Wend.  (N.  Y.)  285;  Born 
V.  Shaw,  29  Pa.  St.  288,  72  Am.  Dec. 
633  (question  of  a  sale  of  personal 
property  wdiich  took  place  in  \'ir- 
ginia).  See  Vanbuskirk  v.  Hartford 
Fire  Ins.  Co.,  14  Conn.  583.  "The 
law  of  the  domicil  of  the  owner  of 
personal  property,  as  a  general  rule, 
determines  the  validity  of  every  trans- 
fer made  of  it  bv  him."  Edgerlv  v. 
Bush,  81  N.  Y.  199.  "The  principle 
is  also  well  settled  that  a  voluntary 
conveyance  of  personal  property,  good 
by  the  law  of  the  place  where  it  was 
made,  passes  title  wheresoever  the 
propertv  mav  be  situated."  Nichols 
v.  Mase,  94  N.  Y.  160. 

'  People  V.  Commissioner  of  Taxes. 
23  N.  Y.  224.  See  also.  Egbert  v. 
Baker,  58  Conn.  319.  20  Atl.  466; 
Caskie  v.   Webster,  2  Wall.   Jr.    (U. 


§     1 147  CONTRACTS.  398 

§  1147.  Legislative  power  extends  to  all  personal  property 
within  boundaries  of  state. — ^Moreover,  the  situs  of  personal 
property  is  of  importance  for  the  reason  that  the  legislative  power 
of  every  state  extends  to  all  personal  property  within  its  bound- 
aries and  that  the  laws  of  a  foreign  jurisdiction  are  applicable 
thereto  only  on  the  principles  of  comity,  and  comity  between  the 
states  will  be  disregarded  when  the  laws  and  policy  of  tlie  state 
where  the  property  is  situated  have  prescribed  a  different  rule  of 
transfer  from  that  of  the  state  where  the  owner  lives.  Personal 
property  located  in  a  given  state  will  be  affected  by  the  laws  of 
a  foreign  jurisdiction  only  so  far  as  comity  permits."  Every 
state  has  the  right  to  regulate  the  transfer  of  property  within  its 
limits,  and  whoever  sends  property  into  it  impliedly  submits  to 
the  regulations  concerning  its  transfer  in  force  there.^ 

§  1148.  When  the  law  of  domicile  yields  to  the  law  of  the 
situs. — The  fiction  of  law  that  the  domicil  of  the  owner 
draws  to  it  his  personal  estate  wherever  it  may  happen  to  be  lo- 
cated, yields  whenever  it  is  necessary  for  the  purposes  of  justice 
that  the  actual  situs  of  the  thing  should  be  examined.  It  yields 
to  laws  for  attaching  the  estate  of  nonresidents,  because  such  laws 
necessarily  assume  that  property  has  a  situs,  distinct  from  the 
owner's  domicil.* 

S.)     131.      See,    however,    Southern  52;    Hervev  v.   Rhode   Island   Loco- 

Pac.    R.    Co.    V.    A.    J.    Lyon    &    Co.  motive  Works,  93  U.  S.  664,  23  L.  ed. 

(Miss.),  54  So.  728,  34  L.  R.  A.   (N.  1003;  Walworth  v.  Harris.  129  U.  S. 

S.)  234.  355,  32  L.  ed.  712,  9  Sup.  Ct.  340. 

'Smead  v.  Chandler,  71  Ark.  505,  'See  Edgerly  v.  Bush,  81  N.  Y. 
76  S.  W.  1066.  65  L.  R.  A.  353n;  199;  Hervey  v.  Rhode  Island  Loco- 
Parker  V.  Brown,  85  Fed.  595,  29  C  motive  Works,  93  U.  S.  664,  23  L. 
C.  A.  357,  56  U.  S.  App.  341  ;  Crowell  ed.  1003,  holding  that  the  liability  of 
v.  Skipper,  6  Fla.  580;  Varnum  v.  property  to  be  sold  under  legal  proc- 
Camp,  13  N.  J.  L.  326,  25  Am.  Dec.  ess,  issuing  from  the  courts  of  the 
476;  State  Bank  v.  First  Nat.  Bank,  state  where  it  is  situated,  must  be 
34  N.  J.  Eq.  450;  Graham  v.  First  determined  by  the  law  of  that  state 
Nat.  Bank,  84  N.  Y.  393,  38  Am.  Rep.  rather  than  the  law  of  the  jurisdic- 
528;  Hallgarten  v.  Oldham,  135  Mass.  tion  where  the  owner  lives.  See 
1,  46  Am.  Rep.  433 ;  McCollum  v.  also,  Studebaker  Bros.  v.  Man,  14 
Smith,  Meigs  (Tenn.)  342,  33  Am.  Wvo.  68,  82  Pac.  2. 
Dec.  147.  See  Pullman's  Palace  Car  *  Clark  v.  Tarbell.  58  N.  H.  88; 
Co.  V.  Pennsylvania,  141  U.  S.  18,  35  Warner  v.  Jaffray,  96  N.  Y.  248.  See 
L.  ed.  613,  11  Sup.  Ct.  876;  Green  v.  also.  Southern  Pac.  R.  Co.  v.  A.  J. 
Van  Buskirk,  7  Wall.  (U.  S.)  139,  Lyon  &  Co.  (Miss.),  54  So.  728,  34 
19  L.  ed.  109,  38  How.  Pr.  (N.  Y.)  L.  R.  A.   (N.  S.)  234. 


399  COXFLICT    OF    LAWS.  g    II49 

§  1149.  Sale  or  attachment  of  goods — When  lex  sitae  con- 
trols.— When  a  sale,  mortgage  or  pledge  of  goods  within  the 
jurisdiction  of  a  certain  state  is  made  elsewhere,  it  is  not  only 
competent,  but  reasonable,  for  the  state  which  has  the  goods 
within  its  power  to  require  them  to  be  dealt  with  in  the  same  way 
as  would  be  necessary  in  a  domestic  transaction,  in  order  to  pass 
a  title  which  it  will  recognize  as  against  domestic  creditors  of  the 
vendor  or  pledgor.^  Where  a  party  residing  in  the  state  of  Xew 
York  executed  and  delivered  a  chattel  mortgage  on  property  in 
Illinois,  and  a  creditor,  before  the  mortgage  was  recorded  and  the 
property  delivered,  both  record  and  delivery  being  necessary 
under  the  laws  of  Illinois,  sued  out  a  writ  of  attachment  in 
Illinois  and  obtained  judgment,  and  the  property  was  levied  upon 
and  sold,  it  was  held  that  the  attachment  on  the  property  in  Illi- 
nois took  precedent  of  the  unrecorded  mortgage  executed  in  Xew 
York,  where  record  was  not  necessary,  although  the  owner  of  the 
chattels,  the  attaching  creditor  and  the  mortgage  creditor  were 
all  residents  of   New  York.^ 

§  1150.  The  trend  of  authority. — In  recognition  of  these 
principles  it  has  been  said  that  "in  modern  times,  since  the  great 
increase  in  the  amount  and  variety  of  personal  property,  not 
immediately  connected  with  the  person  of  the  owner,  that  rule 
(the  principle  that  the  lex  domicilii  governs)  has  yielded  more 
and  more  to  the  lex  situs  (the  law  of  the  place  where  the  prop- 
erty is  kept  and  used)."'     And  again,  "Indeed,  it  may  be  said 

'Hallgarten  v.  Oldham,   135   Mass.  signment  and  the  same  was  subject 

1,  46  Am.  Rep.  433.  to  the  attachment  proceedings.     "As 

'"Green    v.    Van    Buskirk,    7    Wall,  to   property   actually   situate   in    Xew 

(U.  S.)    139,  19  L.  ed.  109,  38  How.  Jersey,    that   state    has    the   conceded 

Pr.    (N.   Y.^    52.     Personal  property  right    to    legislate;    she    may    declare 

situated  in  New  Jersey  was  held  sub-  what  alone  shall  transfer  the  title  as 

ject  to  the  local  laws  of  that   state,  against  her  citizens,  creditors  of  the 

though  the  owner  thereof  resided  in  assignor.      The    property    is    within 

the  state  of  New  York.  A  general  as-  her  exclusivejurisdiction."  Guillander 

signment    with    preferences    for    the  v.  Howell.  35   N.  Y.  657. 

benefit  of  creditors,  which  was  void  '  Pullman's     Palace     Car     Co.     v. 

under  the  laws  of   New  Jersey,  was  Pennsylvania,  141  U.  S.  18,  35  L.  ed. 

made  in  New  York,  of  property  sit-  613.    11    Sup.    Ct.    876.    3    Interstate 

uated   in   New  Jersey.     Subsequently  Com.    595.      (The    question    involyed 

such  property  was  taken  in  New  Jer-  in  the  above  case  was  as  to  the  situs 

sey  under  a   foreign  attachment  and  of  personal  property  for  purposes  of 

sold;  held,  that  no  title  to  property  taxation.) 
in    New    Jersey   passed   by    such    as- 


^    II5I  CONTRACTS.  4OO 

that  the  tendency  of  modern  authorities,  under  the  influence  of 
European  Continental  jurisprudence,  is  toward  the  recognition 
of  the  rule  of  the  situs  to  such  an  extent  that  what  was  an  excep- 
tion is  tending  to  become  the  rule."^ 

§  1151.  The  law  of  the  domicil  as  compared  with  the  law 
of  the  place. — Not  only  is  the  foregoing  true  but  it  is  believed 
that  the  statement  that  personal  property  or  merchandise  follows 
the  person  of  the  owner,  and  that  his  alienation  of  it  is  governed 
by  the  law  of  his  domicil  misstates  the  law  or  is  at  least  too  broad. 
In  so  far  as  the  personal  rights  and  obligations  of  the  parties  are 
concerned,  a  contract  relating  to  personal  property  is  much  the 
same  as  a  purely  personal  contract.  For  this  reason  it  would  seem 
that  the  general  principle  governing  personal  contracts  would  apply 
to  contracts  concerning  personalty,  and  this  is  true.  The  personal 
rights  and  obligations  of  the  parties  under  contracts  relating  to 
personal  property  and  also  the  title  to  or  interest  in  the  property 
so  far  as  these  questions  rest  upon  the  validity  of  such  contract 
depend  generally  upon  the  law  of  the  place  where  the  contract 
is  made.^ 

§  1152.  Transfer  of  personalty — Sales. — The  situs  of  the 
property  is  of  great  importance  in  determining  the  law  governing 
sales  of  personal  property.  In  many  instances  there  is  no  bind- 
ing contract  until  the  delivery  of  the  thing  sold,  in  which  case  the 

*  Farmers'   &c.    Nat.    Bank   v.   Lof-  "The    principle    is    also    well    settled 

tus,  133  Pa.  St.  97,  19  Atl.  347,  7  L.  that  a  voluntary  conveyance  of  per- 

R.  A.  313.  sonal  property,  good  by  the   law   of 

'  See  Aultman  &c.    Taylor  Machin-  the  place  where  it  was  made,  passes 

ery  Co.  v.  Kennedy,  114  Iowa  444,  87  title    wheresoever   the    property    may 

N.   W.  435,    89  Am.    St.  373 ;  Ramsey  be  situated."     This   is   nothing  short 

V.   Glenn,  33  Kans.  271,  6  Pac.  265;  of    a    declaration    that    the    lex    loci 

Townsend  v.  Allen,  36  N.  Y.  St.  523,  contractus   governs.     But   in  another 

13  N.  Y.  S.  73,  afifd.   126  N.  Y.  646,  part   of   the   same  opinion   the  court 

27  N.  E.  853 ;  Morrow  v.  Alexander,  quotes     with    approval     a     statement 

24   N.    Car.   388.      See    further,   post,  from  the  case  of  Edgerly  v.  Bush,  81 

§      1152     et      seq.       Much      of      the  N.  Y.  199,  to  the  effect  that  "the  law 

confusion      which      exists      on     this  of  the  domicil  of  the  owner  of  per- 

branch    of   the    subject    results    from  sonal  property  as  a  general  rule,  de- 

indiscriminating  use  of  language  on  termines  the  validity  of  every  transfer 

the  part  of  the  courts.    A  good  illus-  made  of  it  by  him."    In  other  words, 

tration  of  this  is   found  in  the  case  the  law  of  the  domicil  controls.  The 

of    Nichols   V.    Mase,   94   N.    Y.    160.  decision     seems     to     have     actually 

In  one  part  of  the  opinion  it  is  said:  turned  on  the  situs  of  the  property. 


40I 


COXTLICT    OF    LAWS. 


s  1153 


place  of  delivery  becomes  the  place  of  the  sale.'*'  Thus  when 
a  vendee  orders  goods  from  a  vendor  residing  in  another  state 
and  it  is  agreed  that  the  sale  is  not  complete  until  the  goods  are 
delivered  to  the  purchaser,  the  law  of  the  state  to  which  they  are 
consigned  and  where  the  purchaser  receives  them  will  govern.'^ 

§  1153.  Sale  governed  by  the  law  of  the  place  where  it  be- 
comes complete  and  binding. — On  the  other  hand,  in  the  ab- 
sence of  anything  to  show  a  contrary  intent,  a  sale  is  ordinarily 
considered  as  complete  when  a  vendee  in  one  state  orders  goods 
from  a  vendor  in  another  state,  and  such  order  is  accepted  by  the 
vendor  and  the  goods  delivered  to  the  carrier.'-  Consequently, 
a  contract  of  sale  is  governed  by  the  laws  of  the  place  where  the 
transaction  becomes  a  complete  and  binding  obligation,'^  notwith- 


"See  Dow  v.  Gould  &c.  Min.  Co., 
31  Cal.  629;  Mead  v.  Dayton,  28 
Conn.  33 ;  Lewis  v.  McCabe,  49  Conn. 
155,  44  Am.  Rep.  217;  Weil  v.  Golden, 
141  Mass.  364.  6  N.  E.  229. 

'^^  Julius  Winkelmeyer  Brewing 
Assn.  V.  Xipp,  6  Kans.  App.  730, 
SO  Pac.  956;  McLanc  v.  His 
Creditors,  47  La.  Ann.  134,  16  So. 
764;  Suit  v.  Woodhall,  113  Mass. 
391;  Weil  v.  Golden,  141  Mass.  364,  6 
N.  E.  229;  Wilson  v.  Lewiston  Mill 
Co.,  150  N.  Y.  314,  44  N.  E.  959,  55 
Am.  St.  680.  See  also,  Phoenix 
Packing  Co.  v.  Humphrey-Ball  Co., 
58  Wash.  396,  108  Pac.  952. 

^"G.  A.  Gray  Co.  v.  Taylor  Bros. 
Iron  Works  Co.,  14  C.  C.  A.  56,  66 
Fed.  686;  Brinker  v.  Schcunemann, 
43  111.  App.  659;  Diether  v.  Ferguson 
Lumber  Co..  9  Ind.  App.  173,  35  N. 
E.  843,  36  X.  E.  765 ;  Engs  v.  Priest, 
65  Iowa  232.  21  X.  W.  580;  Mc- 
Carty  v.  Gordon,  16  Kans.  35 ;  Finch 
V.  Mansfield.  97  Alass.  89;  Kline  v. 
Baker,  99  Mass.  253 ;  Brockway  v. 
Maloney.  102  Mass.  308:  Dolan  v. 
Green,  110  Mass.  322;  Milliken  v. 
Pratt,  125  Mass.  374,  28  Am.  Rep. 
241 ;  Portsmouth  Brewing  Co.  v. 
Smith,  155  Mass.  100,  28  X.  E.  1130; 
Orcutt  V.  Xelson,  1  Gray  (Mass.) 
536;  Merchant  v.  Chapman,  4  Allen 
(Mass.)  362;  Kling  v.  Fries,  33 
Mich.  275.  Sec  also.  Webber  v. 
Howe,  36  Mich.  150,  24  Am.  Rep. 
590;    Sullivan    v.    Sullivan,   70    Mich. 

26 — CoxTR.\CT5,  Vol.  2 


583;  In  re  Kahn,  55  Minn.  509,  57 
N.  W.  154;  Kerwin  v.  Doran.  29  Mo. 
App.  307 :  Lauten  v.  Rowan,  59  X. 
H.  215;  Fuller  v.  Leet,  59  X.  H.  163; 
Lynch  v.  Stott,  67  X.  H.  589,  30 
Atl.  420 ;  Backman  v.  Jenks,  55  Barb. 
(X.  Y.)  468;  Jaffray  v.  Wolf,  4 
Okla.  303,  47  Pac.  496;  Braunn  v. 
Keally,  146  Pa.  St.  519,  23  Atl.  389, 
28  Am.  St.  811;  Baum  v.  Birchall, 
150  Pa.  St.  164,  24  Atl.  620,  30  Am. 
St.  797 ;  Perlman  v.  Sartorius,  162 
Pa.  St.  320,  29  Atl.  852,  42  Am.  St. 
834;  Lowrev  v.  Ulmer,  1  Pa.  Super. 
Ct.  425;  Whiting  Mfg.  Co.  v.  Fourth 
St.  Xat.  Bank,  16  Pa.  Super.  Ct. 
419 ;  Mack  v.  Lee,  13  R.  I.  293.  Com- 
pare Rome  Furniture  &c.  Co.  v. 
Walling  (Tenn.  Ch.),  58  S.  W.  1094. 
See,  however,  Phoenix  Packing  Co. 
v.  Humphrev-Ball  Co.,  58  Wash. 
396,   108  Pac'  952. 

"Cammell  v.  Sewcll,  5  H.  &  X. 
728,  27  L.  J.  Ex.  447;  Rhode  Island 
Locomotive  Works  v.  South  Eastern 
R.  Co.,  31  L.  C.  Jur.  86;  Koster  v. 
Merritt,  32  Conn.  246 ;  G.  A.  Gray  Co. 
v.  Taylor  Bros.  Iron  Works  Co.,  14 
C.  C.  A.  56,  66  Fed.  686;  Brinker  v. 
Scheunemann.  43  111.  App.  659;  Die- 
ther v.  Ferguson  Lumber  Co.,  9 
Ind.  App.  173,  35  X.  E.  843,  36  X. 
E.  765;  Fred  Miller  Brewing  Co.  v. 
De  France.  90  Iowa  395.  57  X.  W. 
959;  Finch  v.  Mansfield.  97  Mass. 
89;  Kline  v.  Baker.  99  ^lass.  253; 
Brockway  v.  Maloney,  102  Mass.  308; 


§   II54 


CONTRACTS. 


402 


Standing  the  seller  may  be  domiciled^*  and  the  goods  located'"^ 
elsewhere,  subject,  of  course,  to  the  rule  that  only  so  far  as  the 
comity  of  the  state  where  the  property  is  situated  allows  can  such 
property  be  affected  by  the  law  of  any  other  state."' 

§  1154.  The  law  of  the  situs  as  affecting  the  rights  of  cred- 
itors.— A  sale  which  is  valid  by  the  lex  rei  sitae,  and  wdiich 
is  also  the  place  of  the  contract,  will  be  upheld  as  against  creditors 
of  the  original  owner  by  the  law  of  the  state  to  which  such  prop- 
erty is  subsequently  removed.''  Thus,  a  sale  or  transfer  of  prop- 
erty valid  by  the  law  of  the  place  where  it  is  made  and  where  the 
property  is  situated  will  not  be  held  invalid  as  against  an  attaching 
creditor  of  the  vendor  after  the  property  has  been  subsequently 
removed  to  another  jurisdiction,  where  if  governed  by  the  laws 
of  the  latter  jurisdiction  the  sale  or  transfer  would  be  invalid.'' 

Bank,  15  Pa.  Super.  Ct.  419 ;  Mack  v. 
Lee,  13  R.  I.  293.  See  also,  Bever- 
wyck  Brewing  Co.  v.  Oliver,  69  Vt. 
323,  Z7  Atl.  1110;  State  v.  O'Neil,  58 
Vt.  140,  2  Atl.  586,  56  Am.  Rep.  557. 

"Mead  v.  Dayton,  28  Conn.  ZZ; 
Julius  Winkelmeyer  Brew.  Assn.  v. 
Nipp,  6  Kans.  App.  730,  50  Pac.  956; 
Suit  V.  Woodhall,  113  Mass.  391; 
Weil  V.  Golden,  141  Mass.  364.  See 
also,  Wilson  v.  Lewiston  Mill  Co., 
106  N.  Y.  314,  55  Am.  St.  680. 

'^McLane  v.  Creditors,  47  La.  134, 
16  So.  764;  Erman  v.  Lehman,  47 
La.  Ann.  1651,  18  So.  650;  Dougherty 
V.  Curie,  2  Humph.  (Tenn.)  453. 

^""See.  ante,  §§  1148,  1149  et  seq.  See 
also,  Olivier  v.  Townes,  2  Mart.  (La.) 
(N.  S.)  93. 

"Koster  v.  Merritt,  32  Conn.  246; 
Wyse  V.  Dandridge,  35  Miss.  672,  72 
Am.  Dec.  149 ;  French  v.  Hall,  9  N.  H. 
137,  32  Am.  Dec.  341 ;  Born  v.  Shaw, 
29  Pa.  St.  288,  72  Am.  Dec.  6Z2,; 
Reid  V.  Gray,  Z7  Pa.  St.  508.  78 
Am.  Dec.  444;  United  States  Bank  v. 
Lee,  13  Pet.  (U.  S.)  107;  Kurner  v. 
O'Neil,  39  W.  Va.  515,  20  S.  E.  589. 
Compare,  also,  Adams  v.  Fellers,  88 
S.  Car.  212.  70  S.  E.  722,  35  L.  R.  A. 
(N.  S.)  385  and  note. 

"Fally  V.  Steinficld,  10  Ky.  L. 
982;  Willis  v.  Memphis  Grocery  Co. 
(Miss.),  19  So.  101;  Kurner  v. 
O'Neil,  39  W.  Va.  515,  20  S.  E.  589. 
See,    however,   Walp   v.    Lamkin,   76 


Dolan  V.  Green,  110  Mass.  322;  Ames 
V  McCamber,  124  Mass.  85;  Milli- 
ken  V.  Pratt,  125  Mass.  374,  28  Am. 
Rep.  241 ;  Portsmouth  Brewing  Co. 
V.  Smith,  155  Mass.  100,  28  N.  E. 
1130;  Tarbox  v.  Childs,  165  Mass. 
408.  43  N.  E.  124;  Orcutt  v.  Nelson, 
1  Gray  (Mass.)  536;  Merchant  v. 
Chapman,  4  Allen  (Mass.)  362; 
Kling  V.  Fries,  2>3  Mich.  275;  Sulli- 
van V.  Sullivan,  70  Mich.  583,  38  N.  W. 
472.  See  also,  Webber  v.  Howe,  36 
^lich.  150,  24  Am.  Rep.  590;  In  re 
Kahn,  55  Minn.  509,  57  N.  W.  154; 
Lvnch  v.  Stott,  67  N.  H.  589,  30  Atl. 
420 ;  French  v.  Hall,  9  N.  H.  137,  32 
Am.  Dec.  341 ;  Sessions  v.  Little,  9 
N.  H.  271;  Lauten  v.  Rowan,  59  N. 
H.  215;  Fuller  v.  Leet,  59  N.  H. 
163;  Backman  v.  Jenks,  55  Barb.  (N. 
Y.)  468;  D'lvernois  v.  Leavitt,  23 
Barb.  (N.  Y.)  63;  Jaffray  v.  Wolf, 
4  Okla.  303,  47  Pac.  496;  Born  v. 
Shaw,  29  Pa.  St.  288,  72  Am.  Dec. 
633;  Baltimore  &c.  R.  Co.  v.  Hoge, 
34  Pa.  St.  214;  Henry  v.  Philadel- 
phia Warehouse  Co.,  81  Pa.  St.  76; 
Braunn  v.  Keally,  146  Pa.  St.  519, 
23  Atl.  389,  28  Am.  St.  811;  Baum  v. 
Rirchall,  150  Pa.  St.  164,  24  Atl. 
620,  30  Am.  St.  797;  Perlman  v.  Sar- 
torius.  162  Pa.  St.  320,  29  Atl.  852, 
42  Am.  St.  834;  Arnold  v.  Shade, 
15  Leg.  Int.  (Pa.)  75;  Lowrey  v. 
Ulmer,  1  Pa.  Super.  Ct.  425;  Whit- 
ing   Mfg.    Co.    V.    Fourth    St.    Nat. 


403  CONFLICT    OF    LAWS.  8    II55 

So  a  sale  of  property,  snch  as  a  ship  at  sea'^  or  goods  in  transitu,-*' 
valid  by  the  law  of  the  place  where  made  and  where  the  par- 
ties reside,  will  be  upheld  as  against  attaching  creditors  of  the 
vendor  in  a  jurisdiction  in  which  the  thing  sold  subsequently 
comes,  and  in  which  jurisdiction  tlie  sale  would  be  invalid.  Con- 
ditional sales  are,  as  a  general  rule,  governed  by  the  law  of  the 
place  where  the  contract  is  made,  and  where  its  subject-matter  is 
situated,  instead  of  being  subject  to  the  laws  of  the  state  to  whicli 
the  chattel  is  subsequently  removed."^ 

§  1155.  Removal  of  goods  without  vendor's  knowledge  or 
consent. — This  is  especially  true  where  the  conditional  sale 
is  valid  by  the  law  of  the  place  where  the  contract  is  made  and 
the  property  situated,  and  the  property  is  subsequently  removed 
to  another  jurisdiction  without  ihe  conditional  vendor's  knowl- 
edge or  consent."  Thus,  one  who  rents  a  moving  picture  ma- 
chine to  another  for  use  in  the  state  where  the  property  is  located 
and  the  parties  reside,  by  the  laws  of  which  the  contract  is  not  re- 
quired to  be  recorded,  does  not,  when  he  lays  claim  to  the  prop- 
erty as  soon  as  he  learns  that  an  interest  therein  has  been  sold 
to  a  bona  fide  purchaser,  lose  his  title  in  favor  of  such  bona  fide 
purchaser  in  another  state,  to  which  the  lessee  removed  the  prop- 
erty without  the  knowledge  or  consent  of  the  lessor,  although  the 

Conn.  515.  57  Atl.  277,  in  which  the  Jersey.       Cleveland    Machine   Works 

sale  was  declared  invalid.    The  goods  v.  Lang,  61  N.  H.  348,  31  Atl.  20,  68 

sold  were  shipped   from   Connecticut  Am.    St.    675;    Brown    Carriage    Co. 

to  New  York,  and  the  sale  there  com-  v.   Dowd,  155  N.  Car.  307,  71    S.  E. 

pleted    for    the    express    purpose    of  721 ;    Barrett   v.    Kelley,    66   Vt.    515, 

evading  the  laws  of  Connecticut,  and  29  Atl.  809,  44  Am.  St.  862.  See  also^ 

after    the    sale    the    goods    were   im-  Mershorn  v.  Moors,  76  Wis.  502,  45 

mediately    returned    to   the    state   of  N.  W.  95,  in  which  the  place  of  the 

Connecticut.  contract  was  held  to  govern,  notwith- 

"Thuret  v.  Jenkins,  7  Mart.   (La.)  standing  the  property  was  not  there 

318,  12  Am.  Dec.  508.  situated,    but    was    in    transitu    from 

■"Fell  V.  Darden,  17  La.  Ann.  236.  another  jurisdiction  to   the   state   of 

^Lane    v.    J.     E.    Roach's    Banda  the  forum. 

Mexicana  Co.,  78  N.  J.  Eq.  439,  79  "Sawyer    &    U.    Co.    v.    Boyce,    1 

Atl.  365.     In  the  above  case  the  ar-  Sask.  L.  R.  230;  Weinstein  v.  Freyer, 

tides  sold  were  temporarily  in  New  93  Ala.  257,  9  So.  285.  12  L.   R.   A. 

Jersey  with  the  vendee's  knowledge.  700n;    Cooper  v.  Philadelphia  Worsted 

The   court   held   that   under   the   cir-  Co.,  68  N.   J.   Eq.  622,  60  Atl.   352; 

cumstances     the    vendor's     lien     was  Fiske  v.    Peebles.    13   N.   Y.    St.   743 : 

paramount   to   that    of    a    subsequent  Studebaker    Bros.    Co.    v.    Mau,    14 

mortgagor,   even   though    the   vendor  Wyo.  68,  82  Pac.  2.  13  Wyo.  358,  80 

had   not   recorded    his   lien    in    New  Pac.  151,  110  Am.  St.  1001. 


§    I  156  CONTRACTS.  4O4 

laws  of  such  state  require  such  contracts  to  be  recorded  to  give 
them  vaHdity  against  bona  fide  purchasers."" 

§  1156.  Contract  of  sale  providing  for  delivery  and  use  in 
another  jurisdiction. — Some  jurisdictions  hold,  however,  that 
where  property  is  sold  on  conditional  sale,  and  the  contract  pro- 
vides for  the  delivery  and  use  of  the  property  in  a  jurisdiction 
other  than  that  in  which  the  contract  is  entered  into,  the  validity 
of  the  transaction  is  to  be  governed  by  the  law  of  the  state  or 
country  where  the  property  is  to  be  delivered  and  used,  either  on 
the  ground  that  the  parties  contracted  with  a  view  to  the  laws  of 
the  jurisdiction  in  which  the  transaction  was  to  be  carried  out  and 
completed,"*  or  on  the  ground  that  a  contrary  holding  would  con- 
travene the  policy  of  the  forum.-^ 

§  1157.    Validity  of  chattel  mortgages  and  bills  of  sale. — 

The  validity  of  a  chattel  mortgage"*'  or  bill  of  sale"  is  governed 
by  the  lex  loci  contractus,  not  only  with  respect  to  the  substantive 
rights  of  the  immediate  parties,-^  but  also,  generally,  as  to  the 
rights  of  third  persons,  in  so  far  as  their  rights  depend  on  the 
validity  and  effect  of  the  instrument  or  contract  itself.-^     How- 

^  Adams  v.  Fellers,  88  S.  Car.  212,  ber    Co.    v.    Lewis,    121    Ala.   94,    25 

70  S.  E.  722,  35  L.  R.  A.    (N.   S.)  So.  729. 

385.  =•' Hooper   v.    Gumm,   L.   R.   2   Ch. 

^Beggs   V.    Bartels,    IZ    Conn.    132,  282;  Ramsey  v.  Glenn,  33  Kans.  271, 

46  Atl.   874,   84   Am.    St.   152.    In   re  6   Pac.   265;    Keenes   v.    Simpson,   62 

Legg,  96  Fed.  326;  Bradlev  v.  King-  Minn.  Zll,  20  N.  W.  364.     See  also, 

man    Implement    Co.,    79    Nebr.    144,  McCabe  v.    Blymyre,  9   Phila.    (Pa.). 

112   N.   W.   346.     See  also,   Jones   v.  615.      Compare    with    Title    Guaranty 

Molster,  11   Ohio  C.  C.  432,   5   Ohio  &c.  Co.  v.   Witmire,   195   Fed.  43,  in 

C.  D.  251   (vendor  subsequent  to  sale  which  it  is  held  that  a  chattel  mort- 

consented  to  the  removal  of  the  prop-  gage     made     in     Illinois     concerning 

erty  to  the  state  of  the  former).  To  property  to  be  located  in,  and  which 

same  effect,    National   Cash    Register  was  in  fact  transferred  to  Minnesota, 

Co.    V.    Paulson,    16     Okla.    204,     83  where  the  contract  was  to  be  carried 

Pac.  793.  out,  must  be  interpreted  with  refer- 

"Weinstein  v.   Freyer,  93  Ala.  257,  ence  to  the  laws  of  Minnesota. 

9    So.    285,    12    L.  R.  A.  700n ;  Public  "J  Denny  v.   Faulkner,  22  Kans.  89. 

Parks    Amusement    Co.    v.    Embree-  "'  Ramsey  v.    Glenn,   ZZ   Kans.  271, 

McLean    Carriage    Co.,    64   Ark.    29.  6    Pac.   265.      See   also,    cases   above 

40   S.   W.  582;    Harper  v.   People,   2  cited. 

Colo.   App.    177,  29   Pac.    1040;   Tor-  =^  Fisher  v.  Friedman,  47  Iowa  443; 

ranee     v.     Buffalo     Third     National  Brown  v.  Koenig,  99  Mo.  App.  653, 

Bank,  70  Hun   (N.  Y.)  44,  23  N.  Y.  74   S.    W.   407;    Beckham   v.    Carter, 

S.  1073 ;  Hervey  v.  Rhode  Island  Lo-  19  Mo.  App.  596 ;    Roach  v.  St.  Louis 

comotive  Works,  93  U.  S.  664,  23  L.  Type  Foundry,  21     Mo.     App.     118; 

ed.  1003.    See,  however,  Ensley  Lum-  Hughes  v.  Abston,   105  Tenn.  70,  58 


405  CONFLICT    OF    LAWS.  §     I  1 58 

ever,  a  sale  or  chattel  mortgage  executed  in  conformity  with  and 
valid  by  the  law  where  the  property  is  situated  has  been  upheld, 
when  it  appeared  that  the  parties  contracted  with  reference  to  the 
law  of  the  place  where  the  property  is  located,  even  though  the 
sale  or  mortgage  would  be  invalid  by  the  law  of  the  place  where 
executed.  ^'^ 

§  1158.  Removal  of  mortgaged  goods  to  another  jurisdic- 
tion.— Generally  speaking,  the  lien  of  the  mortgage  will  not 
be  defeated  by  the  subsequent  removal  of  the  property  to  another 
state  by  the  mortgagor,  especially  when  removal  is  made  into 
such  jurisdiction,  without  the  knowledge  or  consent  of  the  mort- 
gagee, and  its  sale  to  a  good  faith  purchaser,  or  its  seizure  under 
legal  process  in  the  latter  jurisdiction.^'  Thus,  in  the  absence  of 
,any  such  statutoiy  provision  it  is  held  by  the  weight  of  authority 
that  a  chattel  mortgage  executed  in  conformity  of  the  law  of  the 
place  where  the  contract  is  made  and  where  the  property  is  sit- 
uated will,  without  being  refiled  or  re-recorded,  protect  the  mort- 
gagee against  good  faith  purchasers  or  creditors  of  the  mortgagor 
after  the  removal  of  the  property  to  another  state,  especially 
when  the  property  was  removed  without  the  mortgagor's  knowl- 
edge or  consent.^^ 

S.   W.  296.     See   also,   AuUman   &c.  Armitage  v.  Spalin,  4  Pa.  Dist.  270; 

Mach.  Co.  V.  Kennedy.  114  Iowa  444,  State  Bank  v.  Carr,  15  Pa.  Super  Ct. 

87   N.   W.   435,   89   Am.    St.   373,   in  346. 

which  the  place   where  the   property        '- Gosline  v.  Dunbar,  32  N.  B.  325; 

was  situated  differed  from  the  place  Hall  v.  Pillow,  31  Ark.  32;  Shappard 

where   the    mortgage    was    executed,  v.  Hvnes,  104  Fed.  449,  45  C.  C.  A. 

^  Chilling^vorth     v.     Eastern     Tin-  271,    52   L.    R.    A.    675;    Blystone   v. 

ware  Co.,  66  Conn.  306,  33  Atl.  1009.  Burgett,  10  Ind.  28,  68  Am.  Dec.  658; 

In  the  above  case  the  mortgage  was  .\mes  Iron  Works  v.  Warren.  76  Ind. 

executed    in    New    York    on    proper-  512,  40  Am.  Rep.  258;  Ord  Nat.  Bank 

ty    in    Connecticut.      Compare,    how-  v.    r^Iassey,    48    Kans.    762,    30    Pac. 

ever,   with  Gardner  v.   Lewis,  7   Gil.  124,  17  L.  R.  A.  127;  Lang\vorthy  v. 

(Md.)   377.  Little,  12  Cush.    (Mass.)    109;   Keen- 

'     ''Ballard  v.  Winter,  39  Conn.  179;  an  v.   Stimson,  32   Minn.   377,  20   N. 

Michigan   C   R.   Co.   v.   Chicago  &c.  W.   364;    Hundlev   v.   Mount,   8   Sm. 

R.   Co.,    1    111.    App.    399;    Martin    v.  &  M.  (Miss.)  387;  Prewett  v.  Dobbs. 

Hill,  12  Barb.  (N.  Y.)  631;  Edgerlv  v.  13  Sm.  &  M.   (Miss.)  431;  Barker  v. 

Bush.  81  N.  Y.  199;  Jones  v.  Tavlor,  Stacy,  25    Miss.    471;    Davis   v.    Wil- 

30  Vt.  42  (overruling  Skiff  v.  Solace.  Hams,  73  Miss.  708.  19  So.  352;     La- 

23   Vt.   279)  ;    Norris   v.    Sowles,    57  favette   Countv   Bank   v.   Metcalf.  29 

Vt.    360;    Cobb    v.    Buswell.    37    Vt.  Mo.   App.   384:    Smith   v.   Hutchings, 

337    (notwithstanding  that  the  mort-  v^O  Mo.  380;  Feurt  v.  Rowell.  62  Mo. 

gagee  knew  of  and  consented  to  such  524:   Offutt   v.   Flagg.   10  N.   H.   46; 

removal).     But   see   contra,    McCabe  Ferguson   v.   Clifford.  37   N.    H.   86; 

V.    Blymyre,   9    Phila.      (Pa.)     615;  Cushman  v.  Luther.  53   N.   H.  562; 


s  1159 


CONTRACTS. 


406 


§  1159.    Mortgagor  consenting  to  the  removal — Comity. — 

But  where  the  mortgagor  consents  to  the  removal  it  is  held  by 
some  cases  that  the  chattel  mortgage  will  not  be  enforced  in  the 
state  to  which  the  property  was  removed  as  against  a  bona  fide 
attaching  creditor  or  purchaser.^^  Here  as  elsewhere  it  must  be 
remembered,  however,  that  all  questions  pertaining  to  the  nature 
and  extent  of  the  remedy  are  governed  by  the  lex  fori,  and  the 


Parr  v.  Bradv.  11  N.  J.  L.  201 ; 
Nichols  V.  Mase,  94  N.  Y.  160; 
Hornt  Hall  v.  Burwell,  109  N.  Car. 
10,  13  S.  E.  721,  13  L.  R.  A.  740, 
26  Am.  St.  556;  Wilson  v.  Rustad,  7 
N.  Dak.  330,  75  N.  W.  260,  66  Am. 
St.  649;  Greenville  Nat.  Bank  v. 
Evans-Snyder-Buel  Co.,  9  Okla.  353, 
60  Pac.  249;  Craig  v.  Williams.  90 
Va.  500,  18  S.  E.  899,  44  Am.  St._934. 
See  also,  Handley  v.  Harris,  48  Kans. 
606,  29  Pac.  1145,  17  L.  R.  A.  703,  30 
Am.  St.  322;  Blvthe  v.  Crump  Bros., 
28  Tex.  Civ.  App.  327,  66  S.  W.  885 
(in  which  the  property  was  removed 
without  the  mortgagee's  consent  and 
sold  before  he  had  time  to  give  no- 
tice of  his  lien  by  registration). 
The  foregoing  cases  do  not  qualify 
the  rule  in  any  way.  In  the  follow- 
ing cases  the  rule  is  qualified,  the 
court  upholding  the  mortgage  if  the 
mortgagee  did  not  know  of  or  con- 
sent to  the  removal.  Jones  v.  Two- 
hey,  8  West.  Law_  (Can.)  295 
(chattels  removed  without  consent 
of  mortgagee)  ;  Bonin  v.  Robertson, 
2  Terr.  L.  21  (chattels  removed 
without  consent  of  mortgagee)  ; 
F.  E.  Creelman  Lumber  Co.  v. 
Lesh,  IZ  Ark.  16,  83  S.  W.  320,  3 
Am.  &  Eng.  Ann.  Cas.  108  (quaere 
as  to  rule  if  mortgagee  did  consent 
to  removal)  ;  Armitage-Herschel  Co. 
V.  Potter,  93  111.  App.  602;  National 
Bank  of  Commerce  v.  Morris,  114 
Mo.  255,  21  S.  W.  511,  19  L.  R.  A. 
463.  35  Am.  St.  754;  Anderson  v. 
Doak,  32  N.  Car.  295;  Kanaga  v. 
Taylor,  7  Ohio  St.  134,  70  Am.  Dec. 
62;  Kerfoot  v.  State  Bank,  14  Okla. 
104,  n  Pac.  46;  Newsum  v.  Hoffman 
(Tenn.),  137  S.  W.  490,  limiting 
Snyder  v.  Yates,  112  Tenn.  309,  79 
S.  W.  796.  64  L.  R.  A.  353.  105  Am. 
St.  941 ;  Scaling  v.  First  Nat.  Bank, 
39  Texas  Civ.  App.  154,  87  S.  W. 
715    (chattels    removed   without   con- 


sent of  mortgagee)  ;  Studebaker 
Bros.  Co.  v.  Mau,  14  Wyo.  68,  82 
Pac.  2 ;  Yund  v.  First  Nat.  Bank,  14 
Wyo.  81,  82  Pac.  6  (chattels  removed 
without  consent  of  mortgagee).  This 
is  true  in  case  of  removal  of  mort- 
gaged chattels  from  the  United 
States  to  the  Northwest  Territo- 
ries of  Canada  (Bonin  v.  Robert- 
son, 2  Terr.  L.  21),  at  least  where 
the  statutes  of  the  territories  make 
no  provision  whereby  chattel  mort- 
gages made  outside  the  territories 
can  be  filed.  It  is  also  true 
in  case  of  the  removal  of  mort- 
gaged chattels  from  one  province  to 
another.  Jones  v.  Twohey,  8  West. 
Law  (Can.)  295.  See,  however, 
cases  which  deny  the  rule  laid  down 
in  the  text,  Miles  v.  Oden,  8  Mart. 
(La.)  (N.  S.)  211,  19  Am.  Dec. 
177;  Frelson  v.  Tiner,  6  La.  Ann.  18; 
Verdier  v.  Leperte,  4  La.  41 ;  Zol- 
likoffer  v.  Briggs,  19  La.  521;  Till- 
man V.  Drake,  4  La.  Ann.  16;  Delop 
V.  Windsor,  26  La.  Ann.  185;  Mont- 
gomery v.  Wight,  8  Mich.  143; 
Bovdson  V.  Goodrich,  49  Mich.  65, 
12 'N.  W^  913;  Corbett  v.  Littlefield, 
84  Mich.  30,  47  N.  W.  581,  11  L.  R. 
A.  95,  22  Am.  St.  681 ;  Vining  v.  Mil- 
lar, 109  Mich.  205,  67  N.  W.  126,  32 
L.  R.  A.  442;  Buffalo  Coal  Co.  v. 
Rochester  &  State  Line  R.  Co.,  8 
Week.  N.  Cas.  (Pa.)  126;  Best  v. 
Farmers'  &c.  Bank  (Texas  Civ. 
App.),  141  S.  W.  334 ;  Crosby  v.  Hus- 
ton, 1  Tex.  203.  See  also,  Rosen- 
baum  V.  Dawes,  11  111.  App.  295, 
affd.  in  179  111.  112,  53  N.  _E.  585; 
Hernandez  v,  Aaron,  12)  Miss.  434, 
16  So.  910. 

^'  Pennington  Co.  Bank  v.  Bauman, 
87  Nebr.  25,  126  N.  W.  654 ;  Newsum 
v.  Hoffman  (Tenn.),  137  S.  W.  490; 
Jones  v.  North  Pac.  Fish  Co.,  42 
Wash.  332,  84  Pac.  1122,  6  L.  R.  A. 
(N.   S.)    940  and  note. 


407  CONFLICT    OF    LAWS.  §    I160 

extent  to  which  it  will  enforce  the  law  of  the  lex  loci  contractus 
depends  on  comity.''* 

§  1160.  Necessity  to  refile  mortgage  on  property  moved 
into  another  jurisdiction. — Moreover,  each  state  has  the 
power  to  regulate  the  transfer  of  personal  property  located  within 
its  boundaries  and  a  chattel  mortgage  made  and  recorded  in  some 
other  jurisdiction  in  conforrB.i'.y  with  the  law  of  the  latter  will  not 
protect  the  mortgagee  as  to  creditors  or  subsequent  purchasers 
without  notice  in  the  jurisdiction  where  the  property  was  situated 
at  the  time  of  the  mortgage  unless  such  mortgage  is  refiled  or  re- 
recorded in  conformity  with  the  lex  situs.^"  Nor  is  this  rule 
changed  by  the  fact  that  both  the  mortgagor  and  mortgagee  re- 
side in  the  jurisdiction  where  the  mortgage  is  executed.^"  By 
the  statutes  of  some  states  chattel  mortgages  executed  upon  prop- 
erty subsequently  brought  within  the  state  must  be  refiled  or 
re-recorded  in  the  latter  state.^' 

§  1161.  Sales  of  intoxicating  liquors. — This  discussion  will 
have  nothing  to  do  with  illegal  contracts  between  vendor  and 
vendee  of  intoxicating  liquors  whereby  they  conspire  to  evade  or 
break  the  laws  of  a  gWen  jurisdiction,  controlling  traf^c  in  such 
liquors.  That  phase  of  the  subject  has  been  treated  in  the  chap- 
ter on  Legality  of  Object.^ "^ 

As  in  the  case  of  other  contracts,  agreements  for  the  purchase 
and  sale  of  intoxicating  liquors  are  governed  by  the  law  of  the 

'*Aultman    &c.    Tavlor    IJachinerv  v.  Conner,  8  Jones  &  Spcn.   O*^.  Y.) 

Co.  V.  Kennedy,  114  Iowa  444.  87  X.  339:  Green  v.  Van  Buskirk,  7  Wall. 

W.   435,   89  .\m.    St.   373;   Denny   v.  (U.  S.)   139,  19  L.  ed.  109,  38  How. 

Faulkner,   22    Kans.    89;    Studeteker  Pr.  (N.  Y.)  52.    In  re  Soldiers'  Busi- 

Bros.    Co.    V.    Mau,   14  Wvo.   68,  32  nes^'    Messenger    &   Dispatch    Co.,   3 

Pac.  2.                                    '  Ben.  (U.  S.)  204,  Fed.  Cas.  No.  13163. 

^^Hardawav    v.    Semmes,    38    Ala.  To  same   effect,  Smead  v.  Chandler, 

657;    In  re   Brannock.   131   Fed.  G19;  71  Ark.  505,  76  S.  W.  1066,  65  L.  R. 

.•\mes  Iron  Works  v.  Warren,  76  Ind.  A.  353n. 

512,  40  Am.  Rep.  258;   McFadden  v.  ''Pleasanton    v.    Johnson.    91    IMd. 

Blocker.  2   Ind.   Ten  260,   48  S.   W.  673,  47  Atl.   102S. 

1043.   58   L.    R.   A.   878;   Aultman  &  "See  Johnson  v.   Hughes,  89  Ala. 

Taylor    Machinery    Co.   v.    Kennedy,  588.  8  So.   147;   Peterson  v.  Kaigler, 

114  Iowa  444.  87 'X.  W.  435.  89  Ain.  78  Ga.  464.  3  S.  E.  655;  Hubbard  v. 

St.  373;  Arkansas  City  Bank  v.  Cas-  Andrews,     76    Ga.     177.       See    also, 

sidv,  71  Mo.  App.  186;  Clark  v.  Tar-  Smead  y.   Chandler,  71  Ark.  505,  76 

bell   58   X.   H.   88;   Keller  v.    Paine,  S.  W.  1066.  65  L.  R.  A.  353n. 

107  N.  Y.  83,  13  X.  E.  635;  Whitman  ^^  Ch.  21. 


§    Il62  CONTRACTS.  408 

place  where  the  title  passes  and  the  sale  becomes  a  complete  and 
binding  contract.^^  Consequently,  if  the  sale  is  made  and  the 
title  passes  in  a  jurisdiction  in  which  the  transaction  is  legal  the 
mere  fact  that  the  vendor  delivered  the  liquors  to  a  common  car- 
rier to  be  transported  to  a  state  where  the  sale  would  be  invalid 
does  not  make  the  laws  of  this  latter  state  control.'^'' 

§  1162.  Sales  of  intoxicating  liquors — Rule  applied. — Thus 
a  continuing  offer  by  a  given  vendor  to  sell  to  a  vendee  upon  the 
latter's  order  is  not  a  completed  contract  until  the  goods  are  or- 
dered by  the  vendee  and  the  contract  of  sale  is  governed  by  the 
laws  of  the  place  where  the  order  is  accepted.*^  So  if  an  order  is 
solicited  by  an  agent  who  does  not  have  authority  to  finally  close 
the  transaction  in  territory  where  the  sale  would  be  illegal  the  sale 
becomes  binding  upon  acceptance  by  the  agent's  principal  and  is 
governed  by  the  law  of  the  state  where  he  makes  such  accept- 
ance." However,  if  the  sale  is  not  complete  and  the  title  does 
not  pass  until  actual  delivery  to  the  vendee  the  law  of  the  place 
•where  the  vendee  receives  the  goods  controls.'*^ 

^  J.  &.  J.  Eager  Co.  v.  Burke,  74  Garner,  111  Iowa  424,  82  N.  W.  1007. 

Conn.  534,  51   Atl.  544;  Fred  Miller  which   holds   that   the    fact   that   the 

Brewing   Co.   v.   De  France,  90   Iowa  vendee  may  not  have  known  that  the 

395,     57     N.     W.     959;     Portsmouth  sale  was  not  complete  until  accepted 

Brewing  Co.  v.  Smith,  155  Mass.  100,  by  the  principal  when  no  inquiry  was 

28   N.    E.    1130;    Schoenhofen   Brew-  made  by  the     defendant     concerning 

ing   Co.  V.   Whipple    (Nebr.),   89    N.  the  agent's   power  and  the  salesman 

W.   751;    Bacon  v.   Hunt,  12  Vt.  98,  did    nothing     calculated     to     mislead 

47  Atl.  394.  him  into  the    belief     that     the    sales 

^"  Brown  v.  Wieland,  116  Iowa  711,  were  completed  when  the  order  was 

89  X.  W.  17,  61  L.  R.  A.  417:  Engs  given    to    him    does    not    change    the 

V.  Priest,  65  Iowa  232,  21  N.  W.  580 ;  rule.     Bacon  v.   Hunt,  72  Vt.  98,  47 

Sullivan  v.  Sullivan,  70  Mich.  583,  38  Atl.  394,  in  which  case  the  court  said 

N.  W.  472;    Bollinger  v.   Wilson,   Id  it   was    clearly    a    question    of     fact 

Minn.  262,  79  N.  W.  109,  11  Am.  St.  whether   the    contract    was    made    in 

646.  the  state  of  Massachusetts  or  partly 

^"Fred    Miller    Brew.    Co.    v.    De-  in   Vermont.      The   jury    found   that 

France,  90  Iowa  395.  57  N.  W.  959.  it   was   made   in   Massachusetts,   and 

"J.  &.   J.   Eager   Co.   v.   Burke,   74  their   judgment  was    held   conclusive 

Conn.  534,  51  Atl.  544;  Brown  v.Wie-  as   to   the   place   of   the   sale.     Com- 

land,    116    Iowa  711, 89  N.  W.  17, 6Hi.  pare    with    Phoenix    Packing    Co.    v. 

R.   A.    417;     Sachs    v.    Garner,    111  Humphrev-Ball  Co.,  58     Wash.     396, 

Iowa  424,  82  N.  W.  1007;   Fegler  v.  108   Pac. '952. 

Shipman,  2>Z  Iowa  194,  11   Am.   Rep.        ""Weil   v.    Golden,    141    Mass.   364, 

118;   Bacon   v.    Plunt,   12   Vt.  98,   47  6  N.  E.  229 
Atl.  394.     To  same  effect,   Sacks  v. 


409 


CONFLICT   OF   LAWS. 


§    11^3 


§  1163.    Voluntary  assignments  for  the  benefit  of  creditors. 

— It  is  generally  conceded  that  an  owner  of  property  has  the  right 
to  transfer  the  same  for  a  good  and  valuable  consideration;  and 
the  general  disposition  of  all  friendly  governments  is  to  give 
effect  to  such  contracts  when  not  opposed  by  some  great  consider- 
ations of  public  policy,  or  which  are  manifestly  injurious  to  their 
own  citizens."  This  is  especially  true  of  the  several  states  of  the 
American  Union,  which  though  foreign  in  some  respects  are 
closely  united  in  many  others.^* 

§  1164.  Assignment  valid  where  made  generally  valid 
everywhere. — It  follow^s  that  as  a  general  rule  voluntary  as- 
signments of  property  for  the  benefit  of  creditors,  valid  by  the  laws 
of  the  state  where  made,  are  held  to  operate  as  a  conveyance  of 
personal  property  not  already  subject  to  a  prior  lien  in  every  state 
where  it  may  be  found,  when  not  opposed  to  the  law  or  public 
policy  of  the  jurisdiction  in  which  the  property  is  found."     Thus 


*^  See  post,  §  1164  et  seq. 

"  Means  v.  Hapgood,  19  Pick. 
(Mass.)  105.  See  also,  Jewell  v. 
Knight,  123  U.  S.  426,  31  L.  ed.  190, 
8  Sup.  Ct.  193. 

*^  Campbell  v.  Colorado  Coal  &c. 
Co.,  9  Colo.  60,  10  Pac.  248;  First 
Xat.  Bank  v.  Walker,  61  Conn.  154, 
23  Atl.  696;  J.  M.  Atherton  Co.  v. 
Ives,  20  Fed.  894 ;  Van  Wyck  v.  Read, 
43  Fed.  716;  Miller  v.  Kcrnaghen,  56 
Ga.  155;  Princeton  ]\Ifg.  Co.  v. 
White.  68  Ga.  96;  Rubel  v.  Louis- 
ville Bkg.  Co.,  10  Ky.  L.  1021;  Cof- 
lin  V.  Kelling,  83  Ky.  649,  7  Ky.  L. 
724,  overruling  in  effect  Johnson  v. 
Parker,  4  Rush.  (Ky.)  149;  Covey 
V.  Cutler,  55  Minn.  18,  56  X.  W.  255 ; 
Askew  V.  La  Cvgne  Exch.  Bank,  83 
Mo.  366,  53  Am.  Rep.  590;  Frazier 
V.  Fredericks,  24  X.  J.  L.  162;  Speed 
V.  Mav,  17  Pa.  01,  55  Am.  Dec.  540; 
In  re  Smith's  Appeal,  104  Pa.  381; 
Carter-Battle  Grocer  Co.  v.  Jackson, 
18  Tex.  Civ.  App.  353,  45  S.  W.  615; 
Weider  v.  Maddox,  66  Tex.  372,  1 
S.  W.  168.  59  Am.  Rep.  617:  Black  v. 
Zacharie,  3  How.  (IT.  S.)  483,  11  L. 
ed.  690.  See  also.  Walters  v.  Whit- 
lock,  9  Fla.  86.  76  Am.  Dec.  607; 
Moore  v.  Land  Title  &  T.  Co.,  82 
Md.   288,   33    Atl.   641;    Zuppann    v. 


Bauer.  17  Mo.  App.  678;  Roberts  v. 
Xorcross,  69  N.  H.  533,  45  Atl.  560; 
Vandcrpoel  v.  Gorman,  140  X.  Y. 
563,  35  X.  E.  932,  24  L.  R.  A.  548, 
37  Am.  St.  601 ;  Thompson  v.  Fry, 
51  Hun  (xX.  Y.)  296.  4  X.  Y.  S.  166; 
Kelstadt  v.  Reillv,  55  How.  Pr.  (X. 
Y.)  373;  Wing  v.  Bradner.  162  Pa. 
72,  29  Atl.  291 ;  Cook  v.  Van  Horn,  81 
Wis.  291,  50  X.  W.  893.  See  especially 
the  case  of  Stowe  v.  Belfast  Sav. 
Bank.  92  Fed.  90,  34  C.  C.  A.  229, 
affd.,  93  Fed.  100.  which  was  an  action 
at  law  involving  the  validity  of  an  at- 
tachment and  sale  thereunder  of 
certain  lands  located  in  Maine 
claimed  by  plaintiff  as  trustee  under 
a  general  assignment  for  the  benefit 
of  creditors  made  in  Massachusetts. 
During  the  course  of  the  discussion 
the  court  said,  quoting  from  the  case 
of  Cole  V.  Cunningham.  133  U.  S. 
107.  10  Sup.  Ct.  269:  "In  most 
(states)  the  distinction  between  in^ 
voluntary  transfers  of  property,  such 
as  work  by  operation  of  law,  as  for- 
eign bankrupt  and  insolvency  laws, 
and  a  voluntary  conveyance,  is 
recognized.  The  reason  for  the  dis- 
tinction is  that  a  voluntary  transfer, 
if  valid  where  made,  ought  general- 
ly to  be  valid  everywhere,  being  the 


§  ii65 


CONTRACTS. 


410 


in  Pennsylvania  an  assignment  made  in  New  York  where  the 
assignor  and  assignee  were  domiciled  which  contained  prefer- 
ences in  favor  of  certain  creditors,  which  preferences  were  valid 
by  the  law  of  New  York,  but  illegal  in  Pennsylvania,  was  held  to 
pass  the  title  to  personalty  in  Pennsylvania  for  all  purposes." 
So  an  assignment  with  preferences,  made  in  Utah,  of  personal 
property  in  Idaho,  which  forbids  preferences,  was  held  by  the 
United  States  Supreme  Court  valid  in  Idaho  against  an  attach- 
ing creditor,  a  corporation  existing  under  the  laws  of  Minne- 
sota.*'^ Such  assignments  have  been  held,  however,  ineffectual 
to  pass  title  to  personal  property  situated  in  another  state,  when  in 
contravention  of  the  laws  of  that  state  and  inconsistent  with  its 
policy.'*® 

§  1165.    Foreign  voluntary  assignment — Resident   credit- 
ors.— The  courts  of  some  jurisdictions  go  so  far  as  to  refuse 


exercise  of  the  personal  right  of  the 
owner  to  dispose  of  his  own,  while 
an  assignment  by  operation  of  law 
has  no  legal  operation  outside  the 
state  in  which  the  law  was  passed." 
In  bankruptcy  the  local  laws  of  the 
state  determine  the  interpretation  and 
validity  of  the  contract  with  the 
bankrupt.  In  re  Hartdagen,  189  Fed. 
546,  and  cases  cited. 

*«In  re  Smith's  Appeal  (1887),  117 
Pa.  30,  11  Atl.  394.  See  also,  Egbert 
V.  Baker,  58  Conn.  319,  20  Atl.  466; 
Schuler  v.  Israel,  27  Fed.  851  (a 
voluntary  assignment  in  Texas  held 
valid  in  Missouri,  save  as  it  con- 
flicts with  the  rights  of  resident 
creditors)  ;  Halsted  v.  Straus,  32  Fed. 
279;  Baltimore  &  Ohio  R.  v.  Glenn, 
28  Md.  287,  92  Am.  Dec.  688  (an  as- 
signment executed  by  a  Virginia  cor- 
poration in  the  State  of  Virginia  of 
propertv  in  Maryland  sustained)  ; 
Burlock  v.  Taylor,  16  Pick.  (Mass.) 
335  (an  assignment  by  an  insolvent 
debtor  in  New  York  held  valid  in 
T^Iassachusetts  against  a  subsequent 
attachment  by  a  citizen  of  New  York 
of  property  in  Massachusetts,  al- 
though such  assignment  was  invalid 
under  the  laws  of  that  state)  ;  Train 
V.  Kendall  (1884),  137  Mass.  366  (an 
assignment  made  in  another  state  up- 
held as  against  an  attaching  creditor 


of  the  assignor  domiciled  in  Massa- 
chusetts) ;  Frank  v.  Bobbitt,  155 
Mass.  112,  29  N.  E.  909  (a  voluntary 
assignment  made  in  North  Carolina 
valid  as  against  a  subsequent  at- 
taching creditor  in  still  another  state 
and  not  a  party  to  the  assignment)  ; 
Fay  v.  Jenks,  78  Mich.  304.  44  N. 
W.  378;  Butler  v.  Wendell,  57  Mich. 
62,  23  N.  W.  460.  58  Am.  Rep.  329; 
In  re  Paige,  31  Minn.  136,  16  N.  W. 
700;  Thurston  v.  Rosenfield,  42  Mo. 
474,  97  Am.  Dec.  351 ;  Eddy  v.  Win- 
chester, 60  N.  H.  63  ("the  rights  of 
our  own  citizens  not  being  in- 
volved") ;  Ockerman  v.  Cross,  54  N. 
Y.  29;  Vanderpoel  v.  Gorman, 
140  N.  Y.  563,  35  N.  E.  933,  24  L. 
R.  A.  548,  n  Am.  St.  601  (validity 
of  assignment  made  by  a  New  Jer- 
sey corporation  doing  business  in 
New  York)  ;  Hanford  v.  Paine,  32 
Vt.  442,  78  Am.  Dec.  586;  Cook  v. 
Van  Horn,  81  Wis.  291,  50  N.  W. 
893. 

"Barnett  v.  Kinney,  147  U.  S. 
476,  13  Sup.  Ct.  403. 

"  Varnum  v.  Camp,  13  N.  J.  L.  326, 
25  Am.  Dec.  476n ;  Warner  v.  Jaffray, 
30  Hun  (N.  Y.)  326,  96  N.  Y.  248. 
"The  true  rule  of  law  and  public  pol- 
icy is  this :  that  a  voluntary  assign- 
ment made  abroad,  inconsistent,  in 
substantial  respects,  with  our  statute, 


411 


CONFLICT    OF    LAWS. 


§    II66 


any  effect  to  a  voluntary  assignment  made  in  a  foreign  jurisdic- 
tion and  valid  by  the  law  of  the  place  where  made  which  will  prej- 
udice the  rights  of  attaching  resident  creditors/'-*  But  even  in 
jurisdictions  which  so  hold,  a  voluntary  assignment  is  upheld  as 
to  all  except  resident  creditors,  and  in  the  absence  of  claims  of 
such  creditors  the  assignee  may  reduce  the  property  located  in 
such  foreign  jurisdiction  to  possession^"  and  maintain  the  validity 
of  the  assignment  as  against  nonresident  creditors.^^ 


§  1166.  When  law  of  place  of  assignment  prevails  over  the 
law  of  the  domicil. — As  between  the  law  of  the  domicil  of 
the  assignor  and  the  law  of  the  place  where  the  assignment  is 
made,  the  law  of  the  latter  usually  prevails,  especially  when  the 
business  of  the  assignor  is  there  conducted."  This  is  not  true, 
however,  where  the  assignment  is  made  with  special  reference  to 


should  not  be  put  in  execution  here 
to  the  detriment  of  our  citizens,  but 
that,  for  all  other  purposes,  if  valid 
by  the  lex  loci,  it  should  be  carried 
fully  into  effect."  Bentley  v.  Whitte- 
more,  19  N.  J.  Eq.  462.  See  also, 
Henderson  v.  Schass,  35  111.  App. 
155. 

"  Sheldon  v.  Wheeler,  32  Fed.  TIZ 
(following  Illinois  rule)  ;  Heyer  v. 
Alexander,  108  111.  385;  Woodward 
V.  Brooks,  128  111.  222,  20  N.  E.  685. 
3  L.  R.  A.  702n,  15  Am.  St.  104; 
Smith  V.  Lamson  Bros.,  184  111.  71. 
56  N.  E.  387 ;  Fox  v.  Adams.  5  Greenl. 
(Maine)  245;  Happv  v.  Prickett,  24 
Wash.  290,  64  Pac.  528. 

'"Woodward  v.  Brooks,  128  111. 
222,  20  X.  E.  685,  3  L.  R.  A.  702n,  15 
Am.  St.  104. 

"  Woodward  v.  Brooks,  128  111.  222, 
20  N.  E.  685,  3  L.  R.  A.  702n,  15  Am. 
St.  104;  Consolidated  Tank  Line  Co. 
V.  Collier.  148  111.  259,  35  N.  E.  756. 
39  Am.  St.  181;  Walton  v.  Detroit 
Copper  &c.  Rolling  Mills,  Zl  111.  App. 
264 ;  Chaffee  v.  Fourth  Nat.  Bank,  71 
IMaine  514,  36  Am.  Rep.  345.  See 
also.  Lane  v.  J.  E.  Roach's  Banda 
Mexicana  Co.,  78  N.  J.  Eq.  439,  79 
Atl.  365,  in  which  Learning,  J.,  after 
reviewing  the  authorities  said :  "But 
I  have  found  no  adjudicated  cases  in 


which  a  local  statute  or  policy  of  the 
forum  of  the  remedy  has  been  upheld 
to  overthrow  the  comities  of  states, 
except  where  the  local  statute  is  in- 
voked by  and  in  behalf  of  a  citizen 
of  the  state  where  the  local  statute 
exists.  On  the  contrary,  wherever 
I  have  found  the  subject  directly 
considered,  the  uniform  view  appears 
to  have  been  adopted  that  the  law  of 
the  contract  will  be  recognized,  un- 
less the  enforcement  of  the  pro- 
visions of  the  local  statute  are  found 
necessary  for  the  protection  of  a 
citizen  of  the  forum  of  the  remedy." 
As  to  the  rights  of  state  courts  to 
thus  discriminate  between  domestic 
and  non-resident  creditors,  see  Bel- 
fast Sav.  Bank  v.  Stowe,  92  Fed.  100. 
34  C.  C.  A.  229,  63  U.  S.  App.  14. 
holding  that  they  do  not  have  the 
right  to  make  any  discrimination. 

"Egbert  v.  Baker,  58  Conn.  319, 
20  Atl.  466;  In  re  Paige  &  S.  Lumber 
Co.,  31  .Minn.  136,  16  N.  W.  700;  In 
re  Browning  Bros.,  (^  N.  J.  Eq.  302. 
57  Atl.  869;  Smedley  v.  Smith.  15 
Daly  (N.  Y.)  421,  8  N.  Y.  S.  100. 
affd.  in  126  N.  Y.  637,  27  N.  E.  411; 
Grady  v.  Bowe,  11  Daly  (N.  Y.)  259. 
See  also,  Schroder  v.  Tompkins,  58 
Fed.  672. 


ii67 


CONTRACTS, 


412 


the  law  of  clomicir*^  or  when  executed  in  another  jurisdiction  in 
order  to  evade  the  law  of  the  domicil.^* 

§  1167.  Involuntary  assignments  under  bankrupt  and  in- 
solvency laws. — There  is  a  distinction  between  involuntary 
transfers  of  property,  such  as  are  worked  by  operation  of  law  un- 
der foreign  bankrupt  assignments  and  insolvency  laws,  and  a  vol- 
untary conveyance.  The  reason  for  the  distinction  is  that  a  vol- 
untary transfer,  valid  where  made,  ought  generally  to  be  valid 
everywhere,  since  it  is  but  the  exercise  of  the  personal  right  of 
the  owner  to  dispose  of  his  property,  while  an  assignment  by 
operation  of  law  is  not  the  free  and  voluntary  act  of  the  owner 
but  is  made  by  compulsion  and  for  this  reason  has  no  legal  opera- 
tion outside  the  state  in  which  the  law  was  passed.^^  The  pre- 
vailing doctrine  in  this  country  is  that  a  conveyance  under  foreign 
bankrupt  and  insolvent  laws  cannot  affect  property  outside  of  the 
state  or  country  in  which  the  law  is  enacted,  and  will  not  prevail 
against  the  rights  of  attaching  creditors  where  the  property  is  sit- 
uated.^* 


^Richardson  v.  Rogers,  45  Mich. 
591,  8  N.  W.  526;  McKibben  v.  El- 
lingson,  58  Minn.  205,  59  N.  W.  1003, 
49  Am.  St.  499. 

"Kansas  City  Packing  Co.  v. 
Hoover,  1  App.  D.  C.  268. 

''Paine  v.  Lester,  44  Conn.  196,  26 
Am.  Rep.  442;  Stowe  v.  Belfast  Sav. 
Bank,  92  Fed.  90;  Barth  v.  Backus, 
140  N.  Y.  230,  35  N.  E.  425.  23  L.  R. 
A.  47,  Zl  Am.  St.  545;  Cole  v.  Cun- 
ningham, 133  U.  S.  107,  ZZ  L.  ed. 
538,  10  Sup.  Ct.  269;  Hanford  v. 
Paine,  32  Vt.  422,  78  Am.  Dec.  586. 

'•^  Paine  v.  Lester,  44  Conn.  196,  26 
Am.  Rep.  442  (a  case  where  the  at- 
tached creditor  was  not  a  citizen)  ; 
City  Ins.  Co.  v.  Commercial  Bank, 
68  111.  348 ;  Felch  v.  Bugbee,  48  Maine 
9,  n  Am.  Dec.  203;  Osborn  v. 
Adams,  18  Pick.  (Mass.)  245;  Zip- 
cey  V.  Thompson,  1  Gray  (Mass.) 
243;  Kelly  v.  Crapo,  45  N.  Y.  86,  6 
Am.  Rep.  35  (This  case,  however, 
was  revd..  16  Wall.  (U.  S.)  610,  21 
L.  ed.  430)  ;  Hoyt  v.  Thompson,  5 
N.  Y.  320;  Willitts  v.  Waite,  25  N. 
Y.  577;  Hibernia  Nat.  Bank  v.  La- 
combe,  84  N.   Y.  367,  38  Am.   Rep. 


518;  Barth  v.  Backus,  140  N.  Y.  230, 
35  N.  E.  425,  23  L.  R.  A.  47,  Zl  Am. 
St.  545 ;  Towne  v.  Smith.  1  Wood.  & 
M.  (U.  S.)  115,  Fed.  Cas.  No.  14115; 
In  re  The  Watchman,  1  Ware  (U. 
S.)  233,  Fed.  Cas.  No.  17251;  Booth 
V.  Clark,  17  How.  (U.  S.)  322,  15 
L.  ed.  164.  "While  the  authorities 
are  not  altogether  harmonious,  the 
prevailing  American  doctrine  is  that 
conveyance  under  a  state  insolvent 
law  operates  only  upon  property 
within  the  territory  of  that  state,  and 
that  with  respect  to  property  in  other 
states  it  is  given  only  such  efifect  as 
the  laws  of  such  state  permit ;  and 
that,  in  general,  it  must  give  way  to 
claims  of  creditors  pursuing  their 
remedies  there.  It  passes  no  title  to 
real  estate  situated  in  another  state. 
Nor,  as  to  personal  property,  will  the 
title  acquired  by  it  prevail  against  the 
rights  of  attaching  creditors  under 
the  laws  of  the  state  where  the  prop- 
erty is  actually  situated."  Security 
Trust  Co.  V.  Dodd,  173  U.  S.  624,  43 
L.  ed.  835.  19  Sup.  Ct.  545.  Chief 
Justice  ^Tarshall  in  Harrison  v. 
Sterry,  5  Cranch   (U.  S.)   289,  3  L. 


413 


CONFLICT    OF    LAWS. 


§    II68 


§  1168.  Involuntary  assignment — When  recognized  in  for- 
eign jurisdictions. — Uut  while  the  statutes  of  foreign  states 
can  have  no  recognition  in  other  states  except  by  comity,  the  stat- 
utory title  of  foreign  assignees  in  bankruptcy  is  recognized  and 
enforced  in  other  states  when  it  can  be  done  without  injustice 
to  the  citizens  thereof  and  without  prejudice  to  creditors  pursu- 
ing their  remedies  under  the  local  statute  and  provided  such  titles 
are  not  in  conflict  with  the  laws  or  public  policy  of  the  state." 

§  1169.  When  assignment  is  involuntary. — In  determining 
whether  an  assignment  is  voluntarily  or  involuntarily  made  it  is 
important  to  remember  that  one  who  voluntarily  takes  advantage 
of  a  bankruptcy  act,  that  is  to  say,  a  statute  which  provides  that 
the  assignor  may  be  discharged  from  his  debts  as  a  part  of  the 
proceedings  under  such  assignment  upon  compliance  with  the  pro- 
visions of  the  act,  is  deemed  to  have  done  so  in  invitum  and  the 


ed.  104,  said,  in  effect,  that  foreign 
bankrupt  laws  do  not  operate  to 
transfer  the  property  of  bankrupts 
within  the  United  States.  "When 
upon  the  insolvency  of  a  debtor,  the 
law  of  the  state  in  which  he  resides 
assumes  to  take  his  property  out  of 
his  control,  and  to  assign  it,  by  ju- 
dicial proceedings,  without  his  assent, 
to  trustees  for  distribution  among  his 
creditors,  such  an  assignment  will 
not  be  allowed  by  the  courts  of  an- 
other state  to  prevail  against  any 
remedy  which  the  laws  of  the  latter 
afford  to  its  own  citizens  against 
property  within  its  jurisdiction."  Tay- 
lor V.  Columbian  Ins.  Co.,  14  Allen 
(Mass.)  353.  In  Holmes  v.  Remsen, 
20  Johns.  (N.  Y.)  229,  11  Am.  Dec. 
269,  it  was  held  that  a  statutory  as- 
signment of  a  debtor's  property  un- 
der the  laws  of  a  foreign  country 
is  not  equivalent  to  a  voluntary  as- 
signment by  the  debtor  and  that  such 
an  assignment  will  not  hold  good  to 
the  prejudice  of  the  rights  of  do- 
mestic creditors  pursuing  their  rem- 
edy by  attachment  under  our  laws. 

"In  re  .\ccounting  of  Waite.  99  N. 
Y.  433.  In  Cole  v.  Cunningham,  133 
U.  S.  107.  33  L.  ed.  538.  10  Sup.  Ct. 
269,  Chief  Justice  Fuller  said :  "Great 


contrariety  of  state  decisions  exists 
upon  this  general  topic,  and  it  may 
be  fairly  stated  that,  as  between  citi- 
zens of  the  state  of  the  forum,  and 
the  assignee  appointed  under  the  laws 
of  another  state,  the  claim  of  the 
former  will  be  held  superior  to  that 
of  the  latter  by  the  courts  of  the 
former ;  while,  as  between  the  as- 
signee and  citizens  of  his  own  state 
and  the  state  of  the  debtor,  the  laws 
of  such  state  will  ordinarily  be  ap- 
plied in  the  state  of  the  litigation, 
unless  forbidden  by,  or  inconsistent 
with,  the  laws  or  policj-  of  the  lat- 
ter." Upton  V.  Hubbard,  28  Conn. 
274,  73  Am.  Dec.  670,  a  contest  be- 
tween a  Massachusetts  assignee  and  a 
creditor  who  was  also  from  that 
state.  The  court  held  that  although 
a  foreign  assignee  may  be  allowed  to 
sue  in  our  courts  as  a  matter  of 
courtesy,  yet  the  courtesy  will  be  de- 
nied in  all  cases  where  there  are 
claims  upon  the  property  adverse  to 
the  assignment,  whether  the  claim- 
ants be  citizens  of  that  or  of  some 
other  state.  See  article  in  7  Harvard 
Law  Rev.  281.  entitled  "An  Assign- 
ment in  Insolvency,  and  its  Effect 
upon  Property  and  Persons  out  of 
the  State." 


§    I  I/O  CONTRACTS.  4I4 

assignment  is  governed  by  the  principles  applicable  to  involuntary 
assignments."" 

§1170.  Sale  or  mortgage — As  affected  by  fraud. — The 
effect  given  a  sale  or  mortgage  of  personal  property  as  influenced 
by  the  question  of  fraud  against  the  creditors  of  the  seller  gener- 
ally depends  upon  the  law  of  the  situs  of  the  property  and  not  up- 
on the  law  of  the  place  where  the  contract  is  made.  Consequently 
a  sale  or  mortgage  of  personal  property,  notwithstanding  such 
sale  may  be  valid  by  the  law  of  the  place  where  the  contract  is 
made,  will  not  be  upheld  in  another  jurisdiction  where  the  prop- 
erty is  situated  at  the  time  of  the  sale  or  mortgage  as  against 
attaching  creditors  if  by  the  laws  of  the  latter  jurisdiction  it 
would  be  invalid  against  such  creditors  because  it  tended  to  hin- 
der, delay  or  defraud  them.^^ 

§  1171.  Bills  and  notes. — A  promissory  note  is  not  com- 
plete until  it  has  been  delivered  and  as  between  the  immediate 
parties  the  place  of  the  contract  evidenced  by  such  note  does  not 
depend  upon  where  the  note  is  dated  or  signed  but  upon  the  place 
where  it  is  delivered.^*'     Thus  a  note  signed  by  one  maker  in 

"^Townsend  v.  Coxe,  151  111.  62,  Zl  57  Fed.  133  (transfer  in  Illinois  held 
N.  E.  689  (The  property  actually  in-  invahd  in  California  if  made  with  in- 
volved in  that  case  was  real  prop-  tent  to  delay,  or  defraud  creditor)  ; 
erty)  ;  Franzen  v.  Hutchinson,  94  Levy  v.  Kentucky  DistilHng  Co.,  9 
Iowa  95,  62  N.  W.  698;  Barth  v.  Ky.  L.  (abstract')  103  (fraudulent 
Backus,  140  N.  Y.  230,  35  N.  E.  425,  transfer    of    warehouse    receipts    for 

23  L.  R.  A.  47,  37  Am.  St.  545 ;  Se-  liquor  stored  in  Kentuckv)  ;  Schmidt 
curity  Trust  Co.  v.  Dodd,  173  U.  S.  v.  Perkins,  74  N.  J.  L.  '785,  67  Atl. 
624,  43  L.  ed.  835,  19  Sup.  Ct.  545;  77,  11  L.  R.  A.  (N.  S.)  1007, 
Segnitz  v.  Garden  City  I3kg.  &  T.  122  Am.  St.  417  (sale  in  Iowa  of 
Co.,  107  Wis.  171,  83  N.  W.  327,  50  property  located  in  New  Jersey); 
L.  R.  A.  327,  81  Am.  St.  830 ;  Mc-  Bearing  v.  McKinnon  Dash  &  Hard- 
Clure  V.  Campbell,  71  Wis.  350,  5  ware  Co.,  165  N.  Y.  78,  58  N.  E.  733, 
.Am.  St.  220,  37  N.  W.  343,  5  Am.  St.  80  Am.  St.  708  (chattel  mortgage  ex- 
220.  See  also.  Whitman  v.  Mast  &c.  ecuted  in  Michigan  unen  forcible  in 
Co.,  11  Wash.  318,  39  Pac.  649.  48  New  York  when  under  the  laws  of 
Am.  St.  874.  This  has  also  been  held  the  latter  state  it  would  be  invalid 
true  of  a  deed  of  assignment  exe-  because  of  its  tendency  to  hinder  and 
cuted  by  a  partnership  in  compliance  delay  creditors)  ;  Fowler  v.  Bell,  90 
with  a  decree  of  court.  Catlin  v.  Tex.  150,  37  S.  W.  1058,  39  L.  R.  A. 
Wilcox  Silver  Plate  Co.,  123  Ind.  477,  254,  59  Am.  St.  788  (chattel  mortgage 

24  N.  E.  250,  8  L.  R.  A.  62.  18  Am.  executed  in  Iowa  held  invalid  in 
St.  338.  See  also.  Ward  v.  Connecti-  Texas  on  the  ground  of  public  pol- 
cut  Pipe  Mfg.  Co.,  71  Conn.  345,  41  icy).  See  also,  Smead  v.  Chandler, 
Atl.  1057,  42  L.  R.  A.  706,  71  Am.  St.  71  Ark.  505,  76  S.  W.  1066,  65  L.  R. 
207;  Toof  v.  Miller,  73  Miss.  756,  19  A.  353n ;  In  re  Kahn,  55  Minn.  509, 
So.  577.  57  N.  W.  154. 

"'Smith  v.  New  York  Life  Ins.  Co., 


415 


CONFLICT    OF    LAWS. 


§1172 


one  state  and  by  a  second  maker  in  another  state  and  by  him  de- 
livered is  governed  by  the  laws  of  the  latter  state."^  In  deter- 
mining the  place  where  an  accommodation  note  is  made,  the  place 
where  it  was  delivered  and  negotiated  controls,  and  not  the  place 
where  it  was  written,  signed  or  dated.""  So  when  the  payee  of  a 
note  indorses  the  same  in  one  state  and  sale  and  deliver}^  thereof 
is  made  in  another  jurisdiction  the  contract  of  indorsement  is 
governed  by  tlie  law  of  the  place  where  the  sale  and  delivery  was 
made  instead  of  where  the  indorsement  was  written. ''^ 


§  1172.    Presumption  as  to  place  of  delivery. — However, 
the  note  is  presumed  to  have  been  delivered  at  the  place  where  it 


•"Wells-Fargo  &  Co.  v.  Vansickle, 
64  Fed.  944,  holding  that  parol  evi- 
dence is  admissible  to  show  that  not- 
withstanding the  printed  words  "San 
Francisco,  California"'  upon  the  face 
of  the  note,  the  note  was  actually 
made,  executed,  and  delivered  in  Car- 
son City,  Xev.  Kelley  v.  Telle,  66 
Ark.  464,  51  S.  W.  633;  Loud  v. 
Collins.  12  Cal.  App.  786,  108  Pac. 
880  (deliverv  bv  mail);  Walker  v. 
Lovitt,  250  111. '543,  95  N.  E.  631; 
Hart  V.  Wills,  52  Iowa  56,  2  N.  W. 
615,  35  Am.  Rep.  255 ;  Briggs  v.  La- 
tham, 36  Kans.  255,  13  Pac.  293,  59 
Am.  Rep.  546;  Holt  v.  Knowlton,  86 
Maine  456,  29  Atl.  1113;  Salley  v. 
Terrill,  95  Maine  553,  50  Atl.  896, 
55  L.  R.  A.  730,  85  Am.  St.  433 ;  Law- 
rence V.  Bassett,  5  Allen  (Mass.) 
140;  Phcenix  Mut.  L.  Ins.  Co.  v. 
Simons,  52  Mo.  App.  357 ;  Johnston 
V.  Gawtry,  83  Mo.  339;  School  Dis- 
trict V.  Stocking,  138  Mo.  672,  40  S. 
W.  656,  Zl  L.  R.  A.  406.  60  Am.  St. 
576 ;  Bascom  v.  Zediker,  48  Nebr.  380, 
67  N.  W.  148;  Hyde  v.  Goodnow,  3 
N.  Y.  266;  Lee  v.  Selleck,  Z2>  N.  Y. 
615.  Compare  Staples  v.  Nott,  128 
N.  Y.  403,  28  N.  E.  515,  26  Am.  St. 
480;  Commercial  Nat.  Bank  v.  Simp- 
son, 90  N.  Car.  467;  Davis  v.  Cole- 
man, 29  N.  Car.  424.  Compare  Mor- 
ris V.  Hockaday,  94  N.  Car.  286,  55 
Am.  Rep.  607n ;  Nichols  Sheppard 
Co.  V.  First  Nat.  Bank,  6  N.  Dak.  404, 
71  N.  W.  135;  Barrett  v.  Dodge,  16 
R.   I.  740,   19  Atl.   530,  27  Am.   St. 


Ill;  Winward  v.  Lincoln,  23  R.  L 
476,  51  Atl.  106,  64  L.  R.  A.  160n ; 
Johnson  City  First  Nat.  Bank  v. 
Mann,  94  Tenn.  17,  27  S.  W.  1015; 
Hubble  V.  Morristown  Land  Co.,  95 
Tenn.  585,  32  S.  W.  965;  Lomax  v. 
First  Nat.  Bank  (Tex.),  39  S.  W. 
655.  Compare  Falls  v.  United  States 
Savings  &c.  Co.,  97  Ala.  417,  13  So. 
25,  24  L.  R.  A.  174,  38  Am.  St.  194; 
Jackson  v.  American  Mortg.  Co.,  88 
Ga.  756,  15  S.  E.  812.  Compare  with 
Jennings  v.  Moore,  189  Mass.  197,  75 
N.  E.  214. 

"'Hart  V.  Wills,  52  Iowa  56.  2  N. 
W.^  615,  35  Am.  St.  255. 

"•  Gallaudet  v.  Svkes,  1  McArthur 
(D.  C)  489;  Young  v.  Harris,  14  B. 
Mon.  (Ky.)  556,  61  Am.  Dec.  170; 
Voigt  V.  Brown,  42  Hun  (N.  Y.) 
394;  Carnegie  Steel  Co.  v.  Chatta- 
nooga Construction  Co,  (Tenn.),  2>% 
S.  W.  102;  Connor  v.  Donnell,  55 
Tex.  167;  Tilden  v.  Blair,  21  Wall. 
(U.  S.)  241,  22  L.  ed.  632.  See  also. 
Chemical  Nat.  Bank  v.  Kellogg,  183 
N.  Y.  92,  75  N.  E.  1103,  2  L.  R.  A. 
(N.  S.)  299  and  note.  111  Am.  St. 
717.  See  also.  Smith  v.  Dixon,  134 
N.  Y.  S.  1097  (maker  sent  note  to 
another  state  to  be  negotiated). 

•^  Phipps  V.  Harding,  70  Fed.  468.  17 
C  C.  A.  203.  30  L.  R.  A.  513 ;  Briggs 
V.  Latham,  36  Kans.  255.  13  Pac.  293, 
59  Am.  Rep.  546 ;  Dunscomb  v.  Bunk- 
er. 2  Mete.  (Mass.)  8:  New  York 
Life  Ins.  Co.  v.  McKellar,  68  N.  H, 
326,  44  Atl.  516. 


11/3 


CONTRACTS. 


416 


was  dated  and  signed"*  and  in  the  absence  of  any  notice  to  the  con- 
trary it  would  seem  that  the  purchaser  has  the  right  to  rely  on  the 
presumption  that  the  note  was  made  and  delivered  in  the  place 
where  it  is  dated. *^^ 

§  1173.  Bill  or  note  payable  generally. — A  promissory 
note  payable  generally,  that  is,  where  no  specified  place  of  pay- 
ment is  mentioned,  is  treated  as  a  note  of  the  place  where  it  is 
executed,  and  the  rights,  duties  and  obligations  growing  out  of  it 
are  to  be  determined  by  the  laws  of  that  place.'^*'  When  a  note 
was  given  in  Canada,  payable  on  demand,  in  consideration  of  an 
antecedent  debt  contracted  in  New  York,  of  which  state  both 
parties  to  the  note  were  inhabitants,  but  were  at  the  time  the  note 
was  executed  and  delivered  temporarily  in  Canada,  it  was  held 
that  the  laws  of  Canada  must  govern  as  to  the  note.''^  If  a  bill 
or  note  is  payable  in  a  particular  place  it  is  generally  to  be  treated 
as  if  made  there,  without  reference  to  the  place  where  it  is  writ- 
ten, or  signed  or  dated.*^* 


"Hall  V.  Harris,  16  Ind.  180; 
Strawberrv  Point  Bank  v.  Lee,  117 
Mich.   122,'  75   N.  W.  444. 

"=  Chemical  Nat.  Bank  v.  Kellogg, 
183  N.  Y.  92,  75  N.  E.  1103,  2  L.  R. 
A.  (N.  S.)  299n,  111  Am.  St.  717; 
Watson  V.  Boston  Woven  Cordage 
Co.,  75  Hun  (N.  Y.)  115,  26  N.  Y. 
S.  1101. 

^*  Trimbey  v.  Vignier,  1  Bing.  N.  C. 
151  (note  made  in  Paris,  no  place 
of  payment  being  named)  ;  Walker 
V.  Lovitt,  250  111.  543.  95  N.  E.  631 ; 
Peck  V.  Hibbard,  26  Vt.  698,  62  Am. 
Dec.  605. 

"Smith  V.  Mead,  3  Conn.  253,  8 
Am.  Dec.  183.  The  note  was  made 
payable  in  New  York,  but  by  legal 
consequence  in  Canada,  and  was  im- 
mediately after  its  execution  suable 
in  the  courts  of  that  country.  The 
preceding  contract  was  extinguished, 
and  the  insolvency  laws  of  New 
York  held  not  to  apply. 

^Rouquette  v.  Overmann,  L.  R.  10 
Q.  B.  525;  Shoe  &c.  Nat.  Bank  v. 
Wood,  142  Mass.  563,  8  N.  E.  753; 
Houston  V.  Keith  fMiss.),  56  So.  336 
Cnote  made  in  IMississippi  but  by  its 
terms  pavable  in  Texas)  ;  Brown  v. 
Wcrthington   (Mo.  App.)    142  S.  W. 


1082  (note  executed  in  Missouri  made 
payable  in  Michigan)  ;  Cutler  v. 
Wright,  22  N.  Y.  472  (A  note  made 
in  New  York,  but  dated  in  Florida, 
and  payable  there,  is  governed  by 
the  laws  of  that  place)  ;  Everett  v. 
Vendryes,  19  N.  Y.  436  (holding  that 
the  law  of  the  place  where  the  bill 
was  payable  controlled  as  to  the  lia- 
bility of  the  drawer  to  the  indorsee). 
See  also,  the  case  of  Cherry  v. 
Sprague,  187  Mass.  113,  U  N.  E. 
456,  67  L.  R.  A.  2>Z,  105  Am.  St.  381, 
in  which  it  is  held  that  as  the  instru- 
ment was  a  promissory  note  and  as 
it  was  payable  in  South  Dakota  and 
was  sent  to  the  payee  by  mail  and  re- 
ceived by  him  in  that  state,  it  was  a 
South  Dakota  and  not  a  Massachu- 
setts contract.  Steward  v.  Common- 
wealth Nat.  Bank,  29  Okla.  754,  119 
Pac.  216  (note  dated  and  made  pay- 
able in  Texas).  A  note  executed 
and  delivered  in  Michigan  on  Sunday 
in  payment  of  goods  sold  and  deliv- 
ered, although  payable  in  Ohio,  was 
held  governed  by  the  laws  of  Michi- 
gan and  void.  "Parties  cannot  be 
allowed  to  defy  our  laws,  and  recover 
upon  a  contract  void  from  its  incep- 
tion under  our  statute,  by  making  the 


417  CONFLICT    OF    LAWS.  §    I  I  74 

§  1174.  Naming  of  place  for  payment  does  not  necessarily 
fix  governing  law. — The  naming  of  a  bank  in  another  state 
as  the  place  for  payment  of  a  note  does  not,  however,  always 
characterize  the  contract  as  to  be  governed  by  the  laws  of  that 
place.  The  arrangement  may  be  simply  for  the  convenience  of  the 
maker,  and  have  no  peculiar  effect.'^'*  Where  a  draft  was  drawn 
and  dated  in  Illinois,  and  accepted  and  made  payable  in  New  York 
by  the  drawees,  residents  of  New  York,  and  returned  by  the  ac- 
ceptors to  the  drawer  in  Illinois  for  the  purpose  of  being  nego- 
tiated there  by  him,  the  understanding  being  that  the  draft  was  to 
be  discounted  by  a  bank  in  Illinois,  it  was  held  that  it  was  an  Illi- 
nois contract,  and  the  rights  and  liabilities  of  the  parties  were  to 
be  determined  by  the  law  of  that  state.'" 

§  1175.  Laws  of  more  than  one  state  may  apply  to  same 
bill. — The  laws  of  more  than  one  jurisdiction  may  apply  to 
the  same  bill  of  exchange  in  which  event  it  has  been  held  that  it 
is  to  be  construed  according  to  the  law  of  each  place  at  which  the 
contract  contemplated  that  something  was  to  be  done  by  either 

place  of  payment  out  of  the  state."  signed  it  and  the  defendant  indorsed 
Arbuckle  V.  "Reaume,  96  Mich.  243, 55  it.  The  note  was  then  mailed  to 
N.  W.  808.  Artifice  is  sometimes  re-  plaintiff  in  Washington.  The  in- 
sorted  to  in  the  making  of  contracts,  dorser  set  up  usury  as  a  defense.  It 
with  a  view  of  evading  the  laws  was  held  untenable,  and  that  the  con- 
against  usury.  To  this  end  a  false  tract  was  made  in  the  District  of 
or  fictitious  place  of  performance  is  Columbia,  and  to  be  governed  by  the 
sometimes  inserted  in  the  writing,  laws  there,  and  that  the  engagement 
Whenever  such  attempt  is  made  to  of  the  indorser  did  not  affect^  the 
appear,  the  courts  refuse  to  lend  their  local  character  of  the  contract.  "The 
sanction  to  it.  Falls  v.  United  States  rule  deducible  from  all  these  cases 
Savings  &c.  Co.,  97  Ala.  417,  13  So.  is  that  the  whole  transaction  will  be 
25,  24  L.  R.  A.  174,  38  Am.  St.  194.  looked  into,  to  ascertam  where  the 
°» Staples  v.  Nott,  128  N.  Y.  403,  28  real  contract,  the  meeting  of  the 
N.  E.  515,  26  Am.  St.  480,  where  in  minds,  simply  evidenced  by  the  in- 
an  action  upon  a  promissory  note,  strument,  took  place.  When  that  is 
dated  in  Washington,  D.  C,  made  ascertained,  neither  the  date  of  the 
payable  at  a  bank  in  New  York,  instrument,  where  signed,  nor  where 
which  bore  interest  at  a  legal  rate  payable,  is  controlling."  Hooley  v. 
where  dated  but  illegal  in  New  York,  Talcott,  129  App.  Div.  (N.  Y.)  233, 
it  appeared  that  the  note  was  given  113  N.  Y.  S.  820. 
to  take  up  another  note  dated  in  '"Tilden  v.  Blair,  21  Wall.  (U.  S.) 
Washington  and  payable  there,  which  241,  22  L.  ed.  632.  "The  place  of  pay- 
bore  the  same  rate  of  interest.  The  ment  was  doubtless  designated  for 
arrangement  for  renewal  was  made  the  convenience  of  the  acceptors,  or 
in  Washington,  where  the  note  in  to  facilitate  the  negotiation  of  the 
suit  was  drawn  and  handed  to  the  draft.  But  it  is  a  controlling  fact 
maker  to  execute,  who  took  it  to  that  before  the  acceptance  had  any 
his   home   in   New   York,   where   he  operation— before  the  instrument  be- 

27 — Contracts,  Vol.  2 


§  1 176 


CONTRACTS. 


418 


of  the  parties.'^  Each  successive  indorser  is  Hable  according  to  the 
law  of  the  place  where  he  indorses  and  deHvers  the  note,  every  in- 
dorsement being  treated  as  a  nev^  substantive  contract.'" 

§  1176.  Negotiability. — The  negotiability  of  a  bill  or  note 
is,  as  a  general  rule,  determined  by  the  law  of  the  place  of  per- 
formance, although  when  the  place  of  the  contract  and  the  place 
of  performance  coincide,  it  is  usually  said  that  the  negotiability 
of  a  bill  or  note  is  to  be  determined  by  the  law  of  the  place  where 
it  is  made."     But  when  the  bill  or  note  is  made  payable  in  a 


came  a  bill,  the  defendants  sent  it  to 
Illinois  for  the  purpose  of  having 
it  negotiated  in  that  state — negotiated, 
it  must  be  presumed,  at  such  a  rate 
of  discount  as  by  the  law  of  that 
state  was  allowable."  A  bill  drawn 
in  Indiana  and  accepted  in  Michigan 
to  be  discounted  in  Indiana,  and  to 
be  paid  in  Michigan,  held  to  be  an 
Indiana  contract.  Farmers'  Nat 
Bank  V.  Sutton  Mfg.  Co.,  52  Fed.  191 

^Horne  v.  Rouquette,  L.  R.  3  Q 
B.  Div.  514;  Hibernia  &c.  Bank  v 
Lacombe,  84  N.  Y.  367.  38  Am.  Rep 
518.  See  also,  Arnett  v.  Pinson 
33  Ky.  L.  36,  108  S.  W.  852. 

"Potter  V.  Brown,  5  East  124 
Downer  v.  Chesebrough,  36  Conn.  39, 
4  Am.  Rep.  29  (promissory  note  in- 
dorsed in  blank)  ;  Powers  v.  Lynch, 
3  Mass.  77  (where  Judge  Sedgwick 
held  that  the  indorser  contemplates 
performance  as  to  himself,  according 
to  the  law  of  the  place  where  he 
makes  the  indorsement)  ;  Prentiss  v. 
Savage,  13  Mass.  20;  Carnegie  v. 
Morrison,  2  Mete.  (Mass.)  381;  Bax- 
ter Nat.  Bank  v.  Talbot,  154  Mass. 
213,  28  N.  E.  163,  13  L.  R.  A.  52n 
(promissory  note  indorsed  in  another 
state)  ;  Freese  v.  Brownell,  35  N.  J. 
L.  285,  10  Am.  Rep.  239;  Chemical 
Nat.  Bank  v.  Kellogg,  183  N.  Y.  92, 
75  N.  E.  1103,  2  L.  R.  A.  (N.  S.) 
299,  111  Am.  St.  717;  Artisans'  Bank 
v.  Park  Bank,  41  Barb.  (N.  Y.)  599; 
Hicks  v.  Brown,  12  Johns.  (N.  Y.) 
142.  "Every  indorsement,  accommo- 
dation or  otherwise,  is  essentially  an 
original  contract,  equivalent  to  a  new 
note  or  bill,  in  favor  of  the  holder 
and  the  acceptor  or  obligor."  Trabue 
V.  Short,  18  La.  Ann.  257.  See  also, 
Byers  v.   Tritch,   12   Colo.   App.   377, 


55  Pac.  622;  Mackintosh  v.  Gibbs,  81 
N.  J.  L.  577,  80  Atl.  554;  Lee  v. 
Selleck,  33  N.  Y.  615.  In  an  action 
upon  a  bill  of  exchange  payable  in 
New  York  but  drawn  in  New  Gren- 
ada, it  was  held  that  the  drawer  was 
liable  under  the  law  of  the  place  of 
performance,  and  the  indorser  under 
the  place  of  contract,  that  is,  where 
the  indorsement  was  made.  Everett 
V.  Vendryes,  19  N.  Y.  436. 

"De  La  Chaumette  v.  Bank  of 
England,  2  B.  &  Ad.  385,  9  L.  J.  K. 
B.  (O.  S.)  239;  Robertson  v.  Burde- 
kin,  6  Sc.  Sess.  Cas.  (2d  series)  17; 
Vermont  Bank  v.  Porter,  5  Day 
(Conn.)  320,  5  Am.  Dec.  157;  Bowne 
V.  Olcott,  2  Root  (Conn.)  353;  Lock- 
wood  V.  Lindsey,  6  App.  Cas.  (D.  C.) 
396;  Stacy  v.  Baker,  2  111.  417;  Evans 
V.  Anderson,  78  111.  558.  Compare 
Roosa  V.  Crist,  17  111.  450,  65  Am. 
Dec.  679;  Hakes  v.  National  Bank, 
61  111.  App.  501,  afifd.,  164  111.  273,  45 
N.  E.  444;  Yeatman  v.  Cullen,  5 
Blackf.  (Ind.)  240;  Krieg  v.  Palmer 
Nat.  Bank  (Ind.  App.),  95  N.  E.  613 
(certificate  of  deposit)  ;  Tyler  v. 
Trabue,  8  B.  Mon.  (Ky.)  306;  Cope 
V.  Daniel,  9  Dana  (Ky.)  415;  Stevens 
V.  Gregg,  89  Ky.  461,  12  S.  W.  775; 
Carlyle  v.  Chambers,  4  Bush  (Ky.) 
272,  96  Am.  Dec.  304 ;  Murray  v.  Gib- 
son, 2  La.  Ann.  311;  Newton  v.  Gray, 
10  La.  Ann.  67;  Ory  v.  Winter,  4 
Mart.  (La.)  (N.  S.)  277;  Chartres 
V.  Cairnes,  4  Mart.  (La.)  (N.  S.)  1, 
5  Cow.  578n ;  Warren  v.  Copelin,  4 
Mete.  (Mass.)  594;  Strawberry  Point 
Bank  V.  Lee,  117  Mich.  122,  75  N.  W. 
444;  Owen  v.  Moody,  29  Miss.  79; 
Stix  V.  Mathews,  63  Mo.  371,  75  Mo. 
96 ;  Clark  v.  Porter,  90  Mo.  App.  143 
(instrument   made   in    Indian   Terri- 


419 


CONFLICT    OF    LAWS, 


§    II77 


different  jurisdiction  from  that  in  which  it  is  executed  it  is  held 
by  the  weight  of  authority  that  its  negotiability  is  determined  by 
the  lex  solutionis.''* 

§  1177.  Rule  in  federal  and  a  few  state  courts. — The  fed- 
eral courts  and  a  few  of  the  state  courts,  however,  refuse  to  be 
bound  by  the  decisions  of  other  jurisdictions  upon  questions  con- 
cerning the  common-law  or  general  commercial  principles  unless 
predicated  on  a  statutory  enactment  defining  the  elements  of  a 
negotiable  instrument,  which  local  statute,  by  its  definition,  em- 
braces terms  similar  to  those  found  in  the  note  in  question  as 
affecting  its  negotiability.  Consequently,  in  the  jurisdictions  so 
holding,  the  courts  of  the  state  where  the  case  is  tried  will  be 
governed  by  their  own  precedents  even  though  the  courts  of  the 
state  where  the  bill  or  note  was  payable  have  interpreted  the  com- 
mon law  otherwise."  This  doctrine,  however,  is  contrary  to 
the  decision  in  some  of  the  state  courts.  The  rule  adopted 
in  a  number  of  the  state  courts  is  that  when  it  becomes  nec- 
essary to  determine  the  common  law  of  another  state,  the  de- 


tory  and  paj^able  in  Arkansas,  the 
law  in  Indian  Territory  and  Arkan- 
sas being  the  same)  ;  Bliss  v.  Hough- 
ton, 13  N.  H.  126;  Reddick  v.  Jones, 
28  N.  Car.  107,  44  Am.  Dec.  68.  See 
Curtiss  V.  Hutchinson,  4  Ohio  Dec. 
19.  Compare  Logue  v.  Smith,  Wright 
(Ohio)  10;  Ludlow  v.  Bingham,  4 
Dall.  (Pa.)  47,  1  L.  ed.  736;  Barrett 
V.  Dodge,  16  R.  I.  740,  19  Atl.  530, 
27  Am.  St.  Ill;  Harrison  v.  Edwards, 
12  Vt.  648,  36  Am.  Dec.  364;  Wilson 
V.  Lazier,  11  Grat.  (Va.)  477.  See, 
however.  Macintosh  v.  Gibbs,  81  N. 
J.  L.  577.  80  Atl.  554,  same  case,  74 
Atl.  708  (which  assumes  that  the  ne- 
gotiability of  a  note  made  and  pay- 
able in  California  is  to  be  determined 
by  the  laws  of  New  Jersey,  the  place 
where  it  was  indorsed.  The  lex  fori 
determines  whether  a  bona  fide 
holder  of  such  bill  or  note  may  main- 
tain an  action  on  it  in  his  own  name. 
Warren  v.  Copelin,  4  Mete.  (Mass.) 
594.  The  lex  fori  also  controls  the 
form  of  pleas  of  want  of  considera- 
tion. Williams  v.  HajTies,  27  Iowa 
251.  1  Am.  Rep.  268. 

"Compare   Sturdivant  v.    Memphis 
Nat.  Bank,  60  Fed.  730,  9  C.  C.  A. 


256;  Lowry  v.  Andreas,  20  111.  App. 
521 ;  Sykes  v.  Citizens'  Nat.  Bank,  78 
Kans.  688,  98  Pac.  206,  19  L.  R.  A. 
(N.  S.)  665  and  note;  Shoe  &c.  Nat. 
Bank  v.  Wood,  142  Mass.  563,  8  N.  E. 
753;  Emanuel  v.  White.  34  Miss.  56,69 
Am.  Dec.  385;  J\Iiller  v.  Mayfield.  Zl 
Miss.  688;  Harrison  v.  Pike,  48  Miss. 
46;  Howenstein  v.  Barnes.  5  Dill.  (U. 
S.)  482,  Fed.  Cas.  No.  6786;  Brabston 
V.  Gibson,  9  How.  (U.  S.)  263,  13  L. 
ed.  131.  See  also.  Houston  v.  Keith 
(Miss.),  56  So.  336;  Stark  v.  Olsen, 
44  Nebr.  646,  63  N.  W.  2,1 ;  Freeman's 
Bank  v.  Ruckman,  16  Grat.  (Va.) 
126.  See.  however.  Woods  v.  Ridley, 
11  Humph.  (Tenn.)   194. 

"  State  Nat.  Bank  v.  Cudahv  Pack- 
ing Co.,  126  Fed.  543;  Second  Nat. 
Bank  v.  Basuier,  65  Fed.  58,  12  C.  C. 
A.  517.  27  U.  S.  App.  541;  Farmers' 
Nat.  Bank  v.  Sutton  Mfg.  Co.,  52 
Fed.  191,  3  C.  C.  A.  1,  6  U.  S.  App. 
312,  17  L.  R.  A.  595.  In  the  above 
case  it  is  said :  "Upon  such  questions 
(questions  as  to  the  general  com- 
mercial law)  courts  _  of  the  United 
States,  in  exercising  jurisdiction  con- 
current with  that  of  the  state  courts, 
have  always  asserted  an  independence 


§  11/8 


CONTRACTS. 


420 


cisions  of  the  courts  of  final  resort  of  that  state  will  be  fol- 
lowed, ordinarily  at  least,  regardless  of  precedents  to  the  contrary 
in  the  state  where  the  trial  is  held,  and  that  this  rule  applies  to 
the  law  merchant  as  well  as  to  other  branches  of  the  common 
law.*-^ 

§  1178.  Law  governing  liability  of  parties  to  bills  and 
notes. — The  following  are  the  general  rules  usually  appli- 
cable as  to  the  different  parties  to  bills  and  notes :  The  liability 
of  a  drawer  of  a  bill  of  exchange  is  governed  by  the  laws  of  the 


of  judgment  as  to  the  state  law,  even 
if  they  differ  with  the  state  Supreme 
Court.  But  where  the  question  is  a 
new  one  with  the  federal  courts  it  is 
their  rule,  as  it  is  their  duty,  to  give 
weight  to  the  decisions  of  the  courts 
of  the  state  whose  law  they  are  ad- 
ministering." Guernsey  v.  Imperial 
Bank  of  Canada,  188  Fed.  300,  110 
C.  C.  A.  278;  Roads  v.  Webb,  91 
Maine  406,  40  Atl.  128,  64  Am.  St. 
246.  To  same  effect,  First  Nat.  Bank 
v.  Lock-Stitch  Fence  Co.,  24  Fed. 
221;  Phipps  v.  Harding,  70  Fed.  468, 
17  C.  C.  A.  203,  30  L.  R.  A.  513; 
Van  Vleet  v.  Sledge,  45  Fed.  743; 
Bank  of  Edgefield  v.  Farmers'  Co- 
operative Mfg.  Co.,  52  Fed.  98,  2  C. 
C.  A.  637,  2  U.  S.  App.  282,  18  L.  R. 
A.  201;  Pattillo  v.  Alexander,  105 
Ga.  482,  30  S.  E.  644;  Franklin  v. 
Twogood,  25  Iowa  520,  96  Am.  Dec. 
1Z;  Faulkner  v.  Hart,  82  N.  Y.  413, 
27  Am.  Rep.  574;  St.  Nicholas  Bank 
V.  State  Nat.  Bank,  128  N.  Y.  26, 
27  N.  E.  849,  13  L.  R.  A.  241 ;  Third 
Nat.  Bank  v.  National  Bank  of  Com- 
merce (Tex.  Civ.  App.),  139  S.  W. 
665;  Brooklyn  City  &  N.  R.  Co.  v. 
National  Bank,  102  U.  S.  14,  26  L. 
ed.  61 ;  Gates  v.  First  Nat.  Bank,  100 
U.  S.  239,  25  L.  ed.  580;  Swift  v. 
Tyson,  16  Pet.  (U.  S.)  1,  10  L.  ed. 
865.  See  also,  note  in  6  L,  R.  A. 
(N.  S.)  212. 

''Roe  V.  Gerome,  18  Conn.  138; 
Sykes  v.  Citizens'  Nat.  Bank,  78 
Kans.  688.  98  Pac.  206,  19  L.  R.  A. 
(N.  S.)  665n.  (The  question  involved 
was  as  to  the  negotiability  of  a  prorn- 
issory  note.)  "We  must  presume,  in 
the  absence  of  proof  to  the  contrary, 
that  the  common  law  prevails  in 
Pennsylvania.  However,  a  decision  of 


the  highest  court  of  that  state  upon 
some  branch  of  the  common  law  may 
not  be  in  harmony  with  the  decisions 
in  this  state.  But  if  the  highest  judicial 
tribunal  of  that  state  has  declared 
that  a  note  like  that  in  suit  may  be 
taken  by  a  good-faith  purchaser  for 
value  freed  from  all  defenses,  that  is 
the  law  of  that  state.  And  this 
would  be  true  whether  the  decisions 
of  that  state  were  under  a  statute  or 
not.  A  foreign  court  could  question 
the  decisions  of  the  courts  of  this 
state  upon  any  branch  of  the  com- 
mon law  only  upon  the  ground  that 
it  did  not  agree  with  the  promises  or 
the  reasoning  of  the  court.  If  the 
foreign  court  may  question  such  a 
decision,  it  might  question  a  decision 
of  the  courts  of  this  state  in  inter- 
preting one  of  its  own  statutes,  but 
it  is  conceded  that  this  the  foreign 
court  cannot  do.  The  foreign  court 
is  the  only  tribunal  competent  to  de- 
cide upon  the  common  or  the  statute 
law  of  its  own  state,  and  we  fail 
to  see  any  reason  for  permitting  such 
decisions  to  be  questioned  in  the  one 
case,  and  not  permitting  them  to  be 
questioned  in  the  other."  Midland 
Steel  Co.  v.  Citizens'  Nat.  Bank.  34 
Ind.  App.  107.  72  N.  E.  290;  Lim- 
rick  Nat.  Bank  v.  Howard,  71  N.  H. 
13,  51  Atl.  641,  93  Am.  St.  489, 
pointing  out  a  distinction  between 
decisions  of  the  United  States  courts 
and  of  state  courts.  The  New 
Hampshire  court  said:  "While  it  is 
doubtless  competent  for  the  Supreme 
Court  of  the  United  States,  in  a  case 
before  it,  to  determine  the  law  gov- 
erning the  interpretation  of  Vermont 
contracts  without  regard  to  the  de- 
cision   applicable    in    that    state,    it 


421                                            CONFLICT  OF    LAWS.                                    §    1 1 78 

state  where  the  bill  is  drawn/^  that  of  the  maker  of  a  note  by 
the  law  of  the  place  where  it  is  made  and  to  be  performed,'*  that 

of  an  irregular  indorser,  in  most  jurisdictions,  by  the  place  where 
the  instrument  is  delivered,'"  that  of  the  acceptor  by  the  law  of 
the  place  where  the  bill  is  payable  or  where  the  contract  of  accept- 
ance is  to  be  performed,'*"'  that  of  an  indorser  by  the  law  of  the 

would  be   little  less  than   usurpation  Hall,   15   111.  263;   Hunt  v.    Standart, 

for  this  court  to  decide  in  this  case  15  Ind.  33,  77  Am.  Dec.  79 ;   Goddin 

what,  in  its  opinion,  ought  to  be  the  v.    Shipley,    7    B.    Mon.     (Ky.)    575; 

commercial    law    of    Vermont."    See  Stickney    v.    Jordan,    58    Maine    106, 

also,  note  in  6  L.  R.  A.   (N.  S.)  212.  4    Am.    Rep.    251;    Creston    National 

"  Allen  V.    Kemble,  6  Moo.    P.   C.  Bank  v.   Salmon,  117   Mo.  App.  506, 

314,    13   Jur.  287;    Potter   v.   Brown,  93  S.  W.  288;  Little  v.  Riley,  43  N. 

5  East  124;  Story  v.  McKay,  15  Ont.  H.  109;  New  York  L.  Ins.  Co.  v.  Mc- 
169;  Crawford  V.  Branch  Bank,  6  Ala.  Kellar,  68  N.  H.  326,  44  Atl.  516; 
12,  41  Am.  Dec.  33;  Sullivan  v.  Ger-  Lee  v.  Selleck,  33  xN.  Y.  615;  Brah- 
man Nat.  Bank,  18  Colo.  App.  99,  70  ston  v.  Gibson,  9  How.  (U.  S.)  263, 
Pac.  162;  Thorp  v.  Craig,  10  Iowa  13  L.  ed.  131;  Calhoun  County  v. 
461 ;  Wood  v.  Gibbs,  35  Miss.  559,  dis-  Galbraith,  99  U.  S.  214,  25  L.  ed.  410. 
tinguishing  Fellows  V.  Harris,  12  Sm.  Compare    Ballard    v.    Webster   (Sup. 

6  M.  (Miss.)  462.  Compare  Coff-  Ct.  Spec.  T.),  9  Abb.  Pr.  (N.  Y.) 
man  v.  Bank  of  Kentucky,  41  Miss.  404;  Baird  v.  Vines,  18  S.  Dak.  52, 
212,  90  Am.  Dec.  371;  Price  v.  Page,  99  N.  W.  89;  First  National  Bank  v. 
24  Mo.  65;  Bouldin  v.  Page,  24  Mo.  Doeden,  21  S.  Dak.  400,  113  N.  W. 
594;    Page    v.    Page,    24    Mo.    595;  81. 

Freese  v.  Brownell,  35  N.  J.  L.  285,  ™Byers  v.  Tritch,  12  Colo.  App. 
10  Am.  Rep.  239 ;  Lennig  v.  Ralston,  377,  55  Pac.  622 ;  Smith  v.  Myers,  107 
23  Pa.  St.  137;  Ilazelhurst  v.  Kean,  m.  126,  69  N.  E.  858;  Nashua  Sav. 
4  Yeates  (Pa.)  19.  In  the  case  of  Bank  v.  Sayles,  184  Mass.  520,  69 
Amsinck  v.  Rogers,  189  N.  Y.  252,  N.  E.  309,  100  Am.  St.  573 ;  Lawrence 
82  N.  E.  134,  12  L.  R.  A.  (N.  S.)  v.  Bassett,  5  Allen  (Mass.)  140; 
875,  121  Am.  St.  858,  the  reason  for  Cherry  v.  Sprague,  187  Mass.  113,  72 
the  rule  is  stated  as  follows :  "The  N.  E.  456.  67  L.  R.  A.  33n,  105  Am. 
drawer  of  such  a  bill  does  not  con-  St.  381 ;  Hackley  Nat.  Bank  v.  Barn,-, 
tract  to  pay  the  money  in  the  foreign  139  Wis.  96,  120  N.  W.  275. 
place  on  which  it  is  drawn,  but  only  See,  however,  Montana  Coal  &  Coke 
guarantees  its  acceptance  and  pay-  Co.  v.  Cincinnati  Coal  &  Coke  Co., 
ment  in  that  place  by  the  drawee,  and  69  Ohio  St.  351,  69  N.  E.  613,  which 
agrees,  in  default  of  such  payment,  makes  his  liability  depend  upon  the 
upon  due  notice,  to  reimburse  the  place  where  the  note  is  payable.  Co- 
holder  in  principal  and  damages  at  lumbia  Finance  &  Trust  Co.  v.  Pur- 
the  place  where  he  entered  the  con-  cell,  142  Fed.  984,  applying  Pennsyl- 
tract.  His  contract  is  regarded  as  vania  law  holds  that  the  place  where 
made  at  the  place  where  the  bill  is  the  regular  indorser  signed  deter- 
drawn,  and  as  to  its  form  and  nature  mines  the  nature  of  his  contract, 
and  the  obligation  and  effect  thereof  '"Roe  v.  Jerome,  18  Conn.  138: 
is  governed  by  the  law  of  that  place  in  Webster  v.  Howe  Mach.  Co.,  54 
regard  to  the  payee  and  any  subse-  Conn.  394,  8  Atl.  482 ;  Mason  v.  Dou- 
quent  holder."  say,  35  111.  424,  85  Am.  Dec.  368; 
"  Phipps  V.  Harding,  17  C.  C.  A.  Hunt  v.  Standart,  15  Ind.  33,  77  Am. 
203,  70  Fed.  468,  30  L.  R.  A.  513;  Dec.  79;  Midland  Steel  Co.  v.  Citi- 
Patent  Title  Co.  v.  Stratton,  89  Fed.  zens'  National  Bank,  34  Ind.  App. 
174;  Prvor  v.  Wright.  14  Ark.  189;  107,  72  N.  E.  290;  Sykes  v.  Citizens' 
Bailey  v.  Dcvinc,  123  Ga.  653,  51  S.  National  Bank,  78  Kans.  688,  98  Pac. 
E.  603,  107  Am.  St.  153;  Crouch  v. 


s-   1 1/9 


CONTRACTS. 


422 


place  of  the  indorsement  in  the  absence  of  any  agreement  to  the 
contrary-®^ 

§  1179.    Necessity  of  demand  and  protest  as  a  condition 
precedent. — Likewise  the  necessity  of  demand  and  protest  as 


206,  19  L.  R.  A.  (N.  S.)  665n;  Mus- 
son   V.   Lake,   4   How.    (U.   S.)    262, 

11  L.  ed.  967;  Kelly  v.  Smith,  1  Met. 
(Ky.)  313;  Fiske  v.  Foster,  10  Mete. 
(Mass.)  597.  See  also,  Barney  v. 
Xewcomb,  9  Cush.  (Mass.)  46; 
Frazier  v.  Warfield,  9  Smedes  &  M. 
(Miss.)  220;  Lienkauf  Pkg.  Co.  v. 
Hanev  (Miss.),  46  So.  626;  Freese 
V.  Brownell,  35  N.  J.  L.  285,  10  Am. 
Rep.  239;  Weller  v.  Goslin  (Sup. 
Ct.  Tr.  T.),  32  Misc.  (N.  Y.)  36,  65 
N.  Y.  S.  232;  Frierson  v.  Galbraith, 

12  Lea  (Term.)  129;  Duerson's 
Admr.  v.  Alson,  27  Grat.  (Va.)  229; 
See  also,  Johnson  County  Sav.  Bank 
V.  Kramer,  42  Ind.  App.  548,  86  N. 
E.  84 ;  Price  v.  Gatliff's  Exrs.,  33  Ky. 
L.  324,  110  S.  W.  332;  Vennum  v. 
Mertens,  119  Mo.  App.  461,  95  S.  W. 
292. 

«'' Allen  V.  Kemble,  6  Moo.  P.  C. 
314,  13  Jur.  287;  Dunn  v.  Adams, 
Parmeter  &  Co.,  1  Ala.  527,  35  Am. 
Dec.  42 ;  Givens  v.  Western  Bank,  2 
Ala.  397 ;  Lowry's  Admr.  v.  Western 
Bank,  7  Ala.  120;  Miller  v.  Mcln- 
tyre,  9  Ala.  638 ;  McDougald's  Admr. 
V.  Rutherford,  30  Ala.  253;  Cullum 
V.  Casey  &  Co.,  9  Port.  (Ala.)  131, 
33  Am.  Dec.  304;  Greathead  v.  Wal- 
ton, 40  Conn.  226;  Levy  v.  Cohen,  4 
Ga.  1;  Cox  v.  Adams,  2  Ga.  158; 
Humphreys  v.  Collier,  Beecher's 
Breese  (111.)  297;  Schuttler  v.  Piatt, 
12  III.  417;  Maxwell  v.  Van 
Sant,  46  111.  58;  Dunnigan  v.  Stevens, 
122  111.  396,  13  N.  E.  651,  3  Am.  St. 
496;  Studebaker  Bros.  Mfg.  Co.  v. 
Hinsey,  88  111.  App.  234;  Belford  v. 
Bangs,  15  111.  App.  76;  Crouch  v. 
Hall,  15  111.  263;  Holbrook  v.  Vib- 
bard,  2  Scam.  (111.)  465;  Bond  v. 
Bragg,  17  111.  69;  Krieg  v.  Palmer 
Nat.  Bank  (Ind.  App.),  95  N.  E. 
^13;  Yeatman  v.  Cullen,  5  Blackf. 
OTnd.)  240;  Hunt  v.  Standart,  15 
Ind.  ?3,  77  Am.  Dec.  79;  Brown  v. 
Bunn,  16  Ind.  406;  Mendenhall  v. 
Gately,  18  Ind.  149;  Rose  v.  Park 
Bank,  20  Ind.  94,  83  Am.  Dec.  306; 
Patterson    v.    Carrell,    60    Ind.    128; 


Bernard  v.  Barry,  1  Greene  (Iowa) 
388;  National  Bank  v.  Green,  33 
Iowa  140;  Huse  v.  Hamblin,  29  Iowa 
501,  4  Am.  Rep.  244;  Chatham  Bank 
v.  Allison,  15  Iowa  357;  Briggs  v. 
Latham,  36  Kans.  255,  13  Pac.  393,  59 
Am.  Rep.  546;  Carlisle  v.  Chambers, 
4  Bush  (Ky.)  268,  96  Am.  Dec.  304; 
Young  V.  Harris,  14  B.  Mon.  (Ky.) 
556,  61  Am.  Dec.  170;  Hyatt  v.  State 
Bank,  8  Bush  (Ky.)  193;  Finer  v. 
Clary,  17  B.  Mon.  (Ky.)  645;  Short 
V.  Trabue,  4  Mete.  (Ky.)  299;  Weil 
V.  Sturgus,  23  Ky.  L.  644,  63  S.  W. 
602;  Kuenzi  v.  Elvers,  14  La.  Ann. 
391,  74  Am.  Dec.  434;  Powers  v. 
Lynch,  3  Mass.  77;  Glidden  v.  Cham- 
berlin,  167  Mass.  486,  46  N.  E.  103, 
57  Am.  St.  479;  Williams  v.  Wade, 
1  Mete.  (Mass.)  82;  Dow  v.  Ro- 
well,  12  N.  H.  49;  Chemical  Nat. 
Bank  v.  Kellogg,  87  App.  Div.  (N. 
Y.)  633,  84  N.  Y.  S.  1121,  affd.  183  N. 
Y.  92,  75  N.  E.  1103,  2  L.  R.  A.  (N. 
S.)  299,  111  Am.  St.  717;  Aymar  v. 
Sheldon,  12  Wend.  (N.  Y.)  439,  27 
Am.  Dec.  137;  Cook  v.  Litchfield,  9 
N.  Y.  279,  Seld.  Notes  (N.  Y.)  195; 
Lee  V.  Selleck,  33  N.  Y.  615 ;  Artisans' 
Bank  V.  Park  Bank,  41  Barb.  (N.  Y.) 
599;  Cowperthwaite  v.  Sheffield,  1 
Sandf.  (N.  Y.)  416,  affd.  3  N.  Y.243; 
Hatcher  v.  McMorine,  15  N.  Car. 
122;  Case  v.  Heffner,  10  Ohio  180; 
Conahan  v.  Smith,  2  Disney  (Ohio) 
9,  13  Ohio  Dec.  6;  Illinois  Bank  v. 
Brady,  3  McLean  (U.  S.)  268;  Dun- 
das  V.  Bowler,  3  McLean  (U.  S.) 
397,  Fed.  Cas.  No.  4141 ;  In  re  Pulsi- 
fer,  9  Biss.  (U.  S.)  487,  14  Fed.  247; 
Slacum  v.  Pomery,  6  Cranch  (U.  S.) 
221;  Nichols  v.  Porter,  2  W.  Va.  13, 
94  Am.  Dec.  501.  See,  however, 
Mullen  v.  Morris,  2  Pa.  St.  85,  which 
holds  that  the  indorser  is  liable  for 
interest  on  a  bill  according  to  the 
law  of  the  place  on  which  it  is  drawn. 
To  the  same  effect,  see  Peck  v.  Mayo, 
14  Vt.  33,  39  Am.  Dec.  205.  It  has 
also  been  held,  that  when  an  in- 
dorser goes  temporarily  into  another 
jurisdiction  merely  as  a  matter  of  con- 


4^3 


CONFLICT    OF    LAWS. 


II80 


a  condition  precedent  to  holding  the  drawer  and  indorser  of  a 
foreign  bill  liable  is  governed  by  the  law  of  the  place  where  the 
bill  is  drawn  or  indorsed.®^  It  would  also  seem  to  follow  that  the 
time,  manner  and  the  sufficiency  of  demand  and  protest  should  be 
governed  by  the  law  of  the  place  where  the  bill  is  drawn  or  in- 
dorsed, and  it  has  been  so  held,"^  but  it  is  generally  held  that  such 
matters  are  governed  by  the  law  of  the  place  where  the  bill  is 
payable.®* 

§  1180.  Necessity  for  notice  of  dishonor. — The  necessity 
for  notice  of  dishonor  is  determined  by  the  law  of  the  place  where 
the  bill  is  drawn  or  indorsed,  regardless  of  where  it  is  payable.*' 
On  the  other  hand,  it  is  held  as  a  general  rule  that  the  law  gov- 


venience  in  conducting  the  negotia- 
tion the  state  of  his  residence  will 
be  deemed  the  place  of  his  contract. 
Vanzant  v.  Arnold,  31  Ga.  210.  See 
also,  Briggs  v.  Latham,  36  Kans.  255, 
13  Pac.  393,  59  Am.  Rep.  546;  Curtis 
V.  Leavitt,  15  N.  Y.  9. 

"Crawford  v.  Branch  Bank,  6  Ala. 
12.  41  Am.  Dec.  33 ;  Greathead  v. 
Walton,  40  Conn.  226 ;  Bond  v.  Bragg, 
17  111.  69;  Belford  v.  Bangs,  15  111. 
App.  76;  Gay  v.  Rainey,  89  111.  221, 
31  Am.  Rep.  76;  Hunt  v.  Standart,  15 
Ind.  33,  77  Am.  Dec.  79;  Thorp  v. 
Craig,  10  Iowa  461 ;  Huse  v.  Ham- 
blin,  29  Iowa  501,  4  Am.  Rep.  244; 
Young  V.  Harris,  14  B.  Mon.  (Ky.) 
556,  61  Am.  Dec.  170;  Finer  v. 
Clary,  17  B.  Mon.  (Ky.)  645;  Powers 
V.  Lvnch,  3  Mass.  77;  Glidden  v. 
Chamberlin,  167  Mass.  486,  46  N, 
E.  103,  57  Am.  St.  479;  Price  v. 
Page,  24  Mo.  65;  Aymar  v.  Sheldon, 
12  Wend.  (N.  Y.)  439,  27  Am.  Dec. 
137;  Allen  v.  Merchants'  Bank,  22 
Wend.  (N.  Y.)  215,  34  Am.  Dec. 
289;  Carroll  v.  Upton,  2  Sand.  (N. 
Y.)  171,  affd.  3  N.  Y.  272;  Arti- 
sans' Bank  v.  Park  Bank,  41  Barb. 
(N.  Y.)  599;  Amsinck  v.  Rogers.  103 
App.  Div.  (N.  Y.)  428.  93  N.  Y.  S. 
87.  189  N.  Y.  252,  82  X.  E.  134,  12 
L.  R.  A.  (X.  S.)  875,  121  Am.  St. 
858;  Warner  v.  Citizens'  Bank,  6  S. 
Dak.  152,  60  N.  W.  746;  Green  v. 
Bond,  5  Sneed  (Tenn.)  328;  Ray- 
mond V.  Holmes.  11  Tex.  54;  Mus- 
son  V.  Lake,  4  How.  (U.  S.)  262,  11 


L.  ed.  967;  Nichols  v.  Porter,  2  W. 
Va.  13,  94  Am.  Dec.  501. 

"Amsinck  v.  Rogers,  103  App.  Div. 
(N.  Y.)  428,  93  N.  Y.  S.  87,  189  N. 
Y.  252,  82  N.  E.  134,  12  L.  R.  A.  (N. 
S.)  875,  121  Am.  St.  858,  in  which 
the  courts  suggest  that  in  a  case  like 
this  there  would  be  no  great  difficul- 
ty in  forwarding  with  the  bill  in- 
structions for  its  proper  protest. 
See  also,  Warner  v.  Citizens'  Bank, 
6  S.  Dak.  152,  60  N.  W.  746 ;  Green  v. 
Bond,  5  Sneed  (Tenn.)  328. 

**  Donegan  v.  Wood,  49  Ala.  242,  20 
Am.  Rep.  275 ;  Guernsey  v.  Imperial 
Bank  of  Canada,  188  Fed.  300,  110 
C.  C.  A  278;  Wooley  v.  Lvon,  117 
111.  244.  6  N.  E.  885,  57  Am.  Rep. 
867;  Allen  v.  Harrah,  30  Iowa  363; 
McClane  v.  Fitch,  4  B.  Mon.  (Ky.) 
599;  Finer  v.  Clary,  17  B.  Mon. 
(Ky.)  645;  Commercial  Bank  v. 
Barksdale,  36  Mo.  563 :  Sylvester  v. 
Crohran,  138  N.  Y.  494,  "34  N.  E. 
273 ;  Carter  v.  Union  Bank,  7  Humph. 
(Tenn.)  548,  46  Am.  Dec.  89;  Pierce 
V.  Indseth,  106  U.  S.  546,  27  L.  ed. 
254.  1  Sup.  Ct.  418. 

"Belford  V.  Bangs,  15  111.  App.  76; 
Bonds  V.  Bragg,  17  111.  69;  Gay  v. 
Rainey,  89  111.  221.  31  Am.  Rep.  76; 
Thorp  V.  Craig,  10  Iowa  461 ;  Young 
V.  Harris,  14  B.  Mon.  (Ky.)  556,  61 
Am.  Dec.  170 ;  Allen  v.  Merchants' 
Bank.  22  Wend.  (X.  Y.)  215.  34  Am. 
Dec.  289;  Artisans'  Bank  v.  Park 
Bank.  41  Barb.  (X.  Y.)  599:  Doug- 
las V.  Bank  of  Commerce,  97  Tenn. 
133,  36  S.  W.  874. 


Il8l  CONTRACTS. 


424 


erning  the  time,  manner  and  the  sufficiency  of  notice  of  dishonor 
is  controlled  by  the  law  of  the  place  where  the  bill  is  payable.^^ 

§  1181.  Time  of  payment — Days  of  grace. — The  time  at 
which  a  bill  or  note  matures  concerns  the  performance  of  the  obli- 
gation and  is  governed  by  the  place  where  it  is  made  payable  and 
not  by  the  law  of  the  place  where  it  is  drawn  or  indorsed."  Thus 
where  a  draft  drawn  and  indorsed  in  New  York  on  a  bank  in 
Connecticut  was  by  its  terms  payable  on  a  specified  day  and  it  was 
presented  and  protested  for  nonpayment  on  that  day,  it  was  held 
in  the  suit  in  New  York  that  the  law  of  Connecticut  governed, 
according  to  which  it  was  payable  without  grace  when  due.®^ 

§  1182.  Interest. — It  is  well  settled,  as  a  general  rule,  that 
the  lex  loci  contractus  must  govern  the  rate  of  interest  where  the 
contract  does  not  provide  for  its  payment  in  another  jurisdiction, 
or  when  the  contract  has  nothing  on  its  face^  and  there  is  nothing 
attending  the  making  of  it,  indicating  that  it  is  to  be  performed  in 
another  jurisdiction, ^°  This  is  true  notwithstanding  prelimi- 
nary negotiations  may  have  been  conducted  in  another  state.®''  But 
if  a  security  made  in  one  country  or  state  is  payable  in  another, 
the  rate  of  interest,  if  nothing  is  said  on  the  subject,  is  to  be  regu- 
lated by  the  law  of  the  place  of  payment.®^     Where  a  promissory 

^  See,   Rothschild   v.    Currie,    1    Q.  S.  87,  189  N.  Y.  252,  82  N.  E.  134,  12 

B.  43;  Hirschfeld  v.   Smith,  L.  R.  1  L.  R.  A.  (N.  S.)  875,  121  Am.  St.  858; 

C.  P.  340;  Guernsey  V.  Imperial  Bank  Pawcatuck  Nat.  Bank  v.  Barber,  22 
of  Canada,  188  Fed.  300,  110  C.  C.  R.  I.  73,  46  Atl.  1095;  Bank  of 
A.  278;  Wooley  v.  Lyon,  117  111.  Washington  v.  Triplett,  1  Pet.  (U. 
244.  6  N.  E.  885,  57  Am.  Rep.  867;  S.)  25,  7  L.  ed.  37;  Bryant  v.  Edson,  8 
Brown  v.  Jones,  125  Ind.  375,  25  N.  Vt.  325,  30  Am.  Dec.  472 ;  Blodgett  v. 
E.  452,  21  Am.  St.  227.  See,  however,  Durgin,  32  Vt.  361 ;  Walsh  v.  Dart,  12 
Aymar  v.  Sheldon,  12  Wend.  (N.  Wis.  709;  Second  Nat.  Bank  v. 
Y.)  439,  27  Am.  Dec.  137;  Amsick  v.  Smith,  118  Wis.  18,  94  N.  W.  664. 
Rogers.  103  App.  Div.  (N.  Y.)  428,  ""  Bowen  v.  Newell,  13  N.  Y.  290, 
93  N.  Y.  S.  87,  189  N.  Y.  252,  82  N.  64  Am.  Dec.  550,  Seld.  Notes  (N.  Y.) 
E.  134,  12  L.  R.  A.  (N.  S.)  875,  121  87.  See  also,  Guernsey  v.  Imperial 
Am.  St.  858.  Bank  of  Canada,  188  Fed.  300,  110  C. 

*'  Kilgore  V.  Bulkley,  14  Conn.  362 ;  C.  A.  278. 

Thorp  V.  Craig,   10  Iowa  461 ;  Vidal  *"  Austin  v.  Imus,  23  Vt.  286. 

V.    Thompson,    11    Mart.     (La.)    23;  *°Knoup  v.    Carver,   74   N.   J.  Eq. 

Cribbs   V.   Adams,   13   Gray    (Mass.)  449,  70  Atl.  660. 

597 ;   Burnham  v.  Webster,   19  Maine  "'  See  Campbell  v.  Nichols,  33  N._  J. 

232;  Bank  of  Orange  County  v.  Col-  L.     81      (where     the     chief     justice 

by,  12  N.  H.  520;   Bowen  v.  Newell,  [Beasley]     declared    the    rule    to    be 

13  N.  Y.  290,  64  Am.  Dec.  550,  Seld.  now    entirely   indisputable,    when   the 

Notes  (N.  Y.)  87;  Amsinck  v.  Rogers,  contract  was  made  in  one  state,  and 

103  App.  Div.  (N.  Y.)  428,  93  N.  Y.  the  place  of  payment,  in  good  faith, 


425 


CONFLICT    OF    LAWS. 


§    1 183 


note  was  drawn  in  Montreal,  payable  to  parties  residing  in 
England,  "with  interest  until  paid  in  England,"  it  was  held  that 
the  plaintilY,  on  a  judgment  obtained  in  New  York,  was  entitled 
to  the  English  rate  of  interest,  and  not  to  the  rate  in  Lower  Can- 
ada."^ 

§  1183.  Different  rates — Parties  may  stipulate  either. — 
When,  at  the  place  of  contract,  the  rate  of  interest  differs  from 
that  of  the  place  of  payment,  the  parties  may  stipulate  for  either 
rate,  and  the  contract  will  govern,  the  parties  having  the  right  of 
election  as  to  the  law  of  which  place  their  contract  is  to  be  gov- 
erned."^ Any  rate  of  interest  authorized  by  the  lex  loci  con- 
tractus or  lex  loci  solutionis  will  usually  be  recognized  and  en- 
forced in  the  courts  of  other  governments  even  though  the  laws 
of  the  latter  would  make  such  rate  usurious.^*     Where  the  bor- 


made  in  another)  ;  Cutler  v.  Wright, 
22  N.  Y.  472;  Fanning  v.  Consequa, 
17  Johns.  (N.  Y.)  511,  8  Am.  Dec. 
442 ;  Peck  v.  Mayo,  14  Vt.  33,  39  Am. 
Dec.  205  (where  the  notes  sued  on 
were  made  at  Montreal,  Canada, 
where  the  makers  resided,  payable  in 
Albany,  New  York).  In  Depau  v. 
Humphreys,  8  Mart.  (La.)  (N.  S.) 
1,  it  was  decided  that  where  a  con- 
tract is  made  in  one  country,  to  be 
performed  in  another,  where  the  rate 
of  interest  is  higher  than  at  the  place 
of  contract,  it  may  stipulate  the  high- 
er rate  of  interest.  Chancellor  Kent, 
2  Kent's  Com.  461,  declared  that  this 
elementary  principle  was  the  re- 
ceived doctrine  at  Westminster  Hall, 
citing  Thompson  v.  Powles,  2 
Simons  194.  See,  however,  Akers  v. 
Demond,  103  Mass.  318. 

"Scofield  V.  Day,  20  Johns.  (N. 
Y.)  102.  Compare  with  Chapman  v. 
Robertson,  6  Paige  (N.  Y.)  627,  31 
Am.  Dec.  264,  where  the  debtor  bor- 
rowed money  in  England  upon  a 
bond  and  mortgage  executed  in  New 
York,  on  lands  in  New  York,  at  the 
New  York  rate  of  interest ;  it  was 
held  that  the  usury  law  of  England 
was  no  defense,  li  the  contract  was 
made  in  New  York,  upon  a  mortgage 
there,  it  was  not  a  violation  of  the 
English  usury  law,  though  the  money 
was  made  payable  to  a  creditor  in 
England.    A  contract  is  not  void  for 


usury  which  is  made  in  Wisconsin 
with  a  New  York  Bank,  for  the  pay- 
ment in  Wisconsin  to  said  bank  of 
a  sum  of  money,  with  interest  at 
ten  per  cent.,  though  the  New  York 
law  avoids  all  contracts  which  pro- 
vide for  payment  of  more  than  seven 
per  cent,  interest,  if  the  Wisconsin 
law  makes  no  such  provision,  the  law 
of  the  place  of  performance  govern- 
ing in  determining  the  validity  of 
the  contract.  Kennedy  v.  Knight,  21 
Wis.  340,  94  Am.  Dec.  543. 

"'Arnold  v.  Potter,  22  Iowa  194; 
Goode  V.  Colorado  Inv.  Loan  Co., 
16  N.  Mex.  461,  117  Pac.  856;  Bul- 
lard  V.  Thompson,  35  Tex.  313;  Du- 
gan  V.  Lewis,  79  Texas  246,  14  S. 
W.  1024,  12  L.  R.  A.  93,  23  Am.  St. 
332 ;  Cromwell  v.  Count}'  of  Sac,  96 
U.  S.  51,  24  L.  ed.  681;  Andrews  v. 
Pond,  13  Pet.  (U.  S.)  65,  10  L.  ed. 
61;  Miller  v.  Tiffanv,  1  Wall.  (U. 
S.)  298,  17  L.  ed.  540.  "I  apprehend 
that  a  contract  made,  bona  fide,  in 
one  country  and  to  be  performed  in 
another,  and  stipulating  the  higher 
rate  of  interest  of  the  latter,  is  not 
usurious  with  reference  to  the  laws 
of  the  former  country.  A  contract,  to 
be  usurious,  by  our  law,  must  not 
only  be  made  here,  but  to  be  per- 
formed here."  Peck  v.  Mayo,  14  Vt. 
33,  39  Am.  Dec.  205. 

"*  Walker  v.  Lovitt,  250  111.  543.  95 
N.  E.  631    (note  made  and  delivered 


§    I  1 84  CONTRACTS.  426 

rower  resided  in  Ohio,  the  laws  of  which  state,  at  the  time, 
allowed  parties  to  contract  for  any  rate  of  interest  not  exceeding 
ten  per  cent.,  and  the  lender  resided  in  Pennsylvania,  where  six 
per  cent,  was  the  legal  rate,  it  was  held  that  the  parties,  on  a  loan 
of  money  made  in  Ohio,  had  a  right  to  stipulate  in  the  note  for 
interest  at  ten  per  cent,  per  annum,  and  make  the  note  payable  in 
Pennsylvania  without  thereby  rendering  the  contract  usurious."' 

§  1 184.    In  selecting  rate  must  act  in  good  faith. — This  rule 

is  subject,  however,  to  the  qualification  that  the  parties  act  in 
good  faith,  and  that  the  form  of  the  transaction  is  not  adopted 
to  disguise  its  real  character  and  in  order  to  evade  the  penalty  of 
a  usurious  contract  at  the  other  place.*''*  Moreover,  when  the  rate 
of  interest  is  unconscionable  and  is  against  public  policy  and  good 
morals,  the  forum  will  refuse  to  permit  the  enforcement  of  the 
obligation,  although  the  lex  loci  contractus  places  no  statutory 
limit  on  the  rate  of  interest  that  may  be  charged."^  Where  a 
resident  of  New  York  made  a  note  there,  dated,  payable  and  in- 
tended to  be  discounted  there,  specifying  no  rate  of  interest,  and 
the  note  was  first  negotiated  in  another  state,  at  a  rate  of  interest 
lawful  there,  but  unlawful  in  New  York,  it  was  held  invalid  for 
usury.®® 

§  1185.    Insurance   contracts — Generally. — So   far   as   the 

conflict  of  laws  is  concerned,  insurance  contracts  are  governed  by 
the  same  general  principles  that  apply  to  contracts  in  general.®^  If 
the  parties  to  an  insurance  contract  are  in  different  jurisdictions, 
the  place  where  the  last  act  is  done  which  is  necessary  to  complete 

in   Missouri  and  which  was  payable  Car.  882,  21   S.    E.  924,  47   Am.   St. 

generally)  ;    McAllister  v.    Smith,    17  841. 

111.  328,  65  Am.  Dec.  651.  In  Georgia  a  "  Engert     v.      Chadwick      (Utah), 

note  payable  in  Massachusetts  which  120  Pac.  223. 

is  usurious  under  the  laws  of  Georgia  **  Dickinson  v.  Edwards,  11  N.   Y. 

will   not   be   enforced    in    Georgia   to  573,7  Abb.  N.  C.  (N.  Y.)  65,  58  How. 

the    extent    of    usury.      Kilcrease    v.  Pr.    (N.    Y.)    24,   ZZ   Am.   Rep.   671; 

Johnson,  85  Ga.  600,  11   S.  E.  870.  Jewell   v.    Wright,   30   N.   Y.   259,   9 

»=^Kilgore  V.  Dempsey,  25  Ohio  St.  Abb.   Pr.    (N.   S.)    (N.  Y.)   399n,   18 

413,    18   Am.   Rep.   306.  Abb.   Pr,    (N.   Y.)    80,  27  How.   Pr. 

»«Hollis     V.     Covenant     &c.     Loan  (N.  Y.)  481,  86  Am.  Dec.  372. 

Assn.,  104  Ga.  318,  31  S.  E.  215;  Mil-  »» Missouri    State   Life   Ins.    Co.   v. 

ler  V.  Tiffany,   1  Wall.    (U.   S.)   298,  Lovelace,   1    Ga.   App.   446,   58   S.   E. 

17    L.    ed.    540.      See    also,    Akers    v.  93;    Kavanaugh    v.    Supreme    Court 

Demond,  103  Mass.  318;  Meroney  v.  of  Royal  League,  158  Mo.  App.  234, 

Atlanta  Building  &c.   Assn.,    116   N.  138  S.  W.  359. 


427 


CONFLICT    OF    LAWS. 


II86 


or  give  validity  to  the  contract  is  the  place  where  the  contract 
is  entered  into/ 

§  1 186.  Authority  of  agent  limited  to  taking  applications — 
Exceptions. — Consequently  when  the  authority  of  the  agent 
who  solicits  the  insurance  is  limited  to  taking  and  forwarding  ap- 
plications to  the  home  office,  there  to  be  accepted  or  rejected,  the 
contract  will  be  deemed  to  have  been  made  in  the  jurisdiction 
where  the  home  office  is  situated,  when  the  policy  issued  substan- 
tially conforms  to  the  application  and  is  sent  directly  to  the 
insured  or  his  agent  and  there  is  nothing  to  show  that  the  policy 
was  not  to  become  a  binding  obligation  until  actually  delivered 
to  the  insured.^  However,  when  the  policy  of  insurance  mailed 
by  the  insurer  to  the  insured  varies  materially  from  the  applica- 
tion,^ or  where  the  contract  is  not  considered  as  executed  until  re- 


*  Carrollton  Furniture  Mfg.  Co.  v. 
American  Credit  Indemnity  Co.,  115 
Fed.  n,  52  C.  C  A.  671,  aflfd..  124 
Fed.  25,  59  C.  C.  A.  545;  Ford  v. 
Buckeve  State  Ins.  Co.,  6  Bush 
(Ky.)"l33,  99  Am.  Dec.  663;  Millard 
V.  Brayton,  177  Mass.  553,  59  N.  E. 
436,  52  L.  R.  A.  117,  83  Am.  St.  294; 
Haas  V.  Mutual  Life  Ins.  Co.,  90 
Nebr.  808,  134  N.  W.  937;  McElroy 
V.  Metropolitan  Life  Ins.  Co.,  84 
Nebr.  866,  122  N.  W.  27,  23  L.  R.  A. 
(N.  S.)  968n;  Manhattan  Life  Ins. 
Co.  V.  Warwick,  20  Grat.  (Va.)  614, 
3  Am.  Rep.  218;  Galloway  v.  Stand- 
ard Fire  Ins.  Co.,  45  W.  Va.  237,  31 
S.  E.  969.  The  assignment  of  a  pol- 
icy and  the  parties  to  whom  it  may 
be  assigned  may  be  regulated  by  the 
laws  of  the  state  where  the  assign- 
ment was  made.  Western  Life  In- 
demnity Co.  V.  Rupp,  147  Ky.  489, 
144  S.  W.  743. 

'  State  Mut.  F.  Ins.  Assn.  v.  Brink- 
lev  Stave  &C.C0..6I  Ark.  1,31  S.W. 
157,  29  L.  R.  A.  712,  54  Am.  St.  191; 
Tuttle  V.  Iowa  Traveling  Men's 
Assn..  132  Iowa  652,  104  N.  W.  1131, 
7  L.  R.  A.  (N.  S.)  223n;  Com.  Mut. 
F.  Ins.  Co,  V.  Knabe  &c.  Mfg.  Co., 
171  Mass.  265.  50  X.  E.  516;  Davis  v. 
Aetna  Mut.  Fire  Ins.  Co.,  67  N.  H. 
218.  34  Atl.  464:  Orient  Ins.  Co.  v. 
Rudolph.  69  N.  J.  Eq.  570,  61  Atl. 
26:  Northampton  Mut.  Live  Stock 
Ins.   Co.  v.  Tuttle,  40  N.  J.   L.  476; 


Hyde  v.  Goodnow,  3  N.  Y.  266; 
Huntley  v.  Merrill,  32  Barb.  (N.  Y.) 
626;  Galloway  v.  Standard  Fire  Ins. 
Co.,  45  W.  Va.  237,  31  S.  E.  969. 
See  also.  Commonwealth  Mut.  Fire 
Ins.  Co.  v.  Fairbank  Canning  Co., 
173  Mass.  161,  53  N.  E.  111.  See, 
however,  the  case  of  Rose  v.  Kimber- 
ly  &c.  Co.,  89  Wis.  545,  62  N.  W. 
526.  Zl  L.  R.  A.  556,  46  Am.  St.  855, 
which  admits  the  general  rule  but 
holds  that  a  receiver  of  the  company 
cannot  maintain  an  action  against 
the  insured  to  recover  an  assessment 
when  the  company  was  prohibited 
from  transacting  business  within  the 
state.. 

'  Born  V.  Home  Ins.  Co.,  120  Iowa 
299,  94  N.  W.  849;  Supreme  Lodge 
K.  of  P.  V.  Mever.  198  U.  S.  508,  49 
L.  ed.  1146,  25  Sup.  Ct.  754.  In  the 
above  case  by  the  terms  of  the  cer- 
tificate the  agreement  of  defendant 
was  subject  not  only  to  the  condi- 
tions subscribed  to  by  the  member  in 
his  application,  but  to  the  further 
conditions  in  agreement  hereinafter 
named.  It  was  held  that  the  con- 
tract did  not  become  complete  until 
the  member  had  accepted  the  certifi- 
cate with  these  conditions,  and  since 
this  acceptance  took  place  in  New 
York  the  contract  was  a  New  York 
contract.  See  also.  Provident  Sav. 
Life  Assur.  Soc.  v.  Hadlev.  102  Fed. 
856,  AZ  C.  C.  A.  25.    Compare  Hart- 


§  ii87 


CONTRACTS. 


428 


ceived  and  inspected  by  the  insured/  the  contract  is  not  complete 
until  the  receipt  and  acceptance  by  the  insured  of  the  poHcy.^ 

§  1187.  Policy  mailed  to  agent  of  insurer. — The  foregoing 
general  rule  and  its  exceptions  also  apply  when  the  contract  of 
insurance  is  mailed  to  the  agent  of  the  insurer  and  by  him  to  be 
delivered  to  the  insured  in  another  state.  When  the  contract  is 
complete  in  every  respect  at  the  time  it  is  mailed  to  the  agent  the 
state  or  country  from  which  the  contract  was  mailed  will  be  re- 
garded as  the  place  of  the  contract.**  But  where  the  agent  to 
whom  the  policy  is  mailed  is  required  to  countersign  the  same' 
and  the  policy  does  not  take  effect  until  so  countersigned,  the  con- 
tract has  been  regarded  as  made  in  the  state  in  which  the  agent 
countersigned  the  same.® 


ford  Steam  Boiler  Inspection  Ins. 
Co.  V.  Lasher  Stocking  Co.,  66  Vt. 
439,  29  Atl.  629  (letter  accompany- 
ing policy  suggesting  but  not  requir- 
ing change  held  not  to  change  the 
place  of  contract). 

*  Swing  V.  Wellington,  44  Ind.  App. 
445,  89  N.  E.  514.  See  also,  Inger- 
soll  V.  Mutual  Life  Ins.  Co.,  156  111. 
App.  568. 

'  Swing  V.  Dayton,  124  App.  Div. 
(N.  Y.)  SB,  108  N.  Y.  S.  155.  The 
above  case  holds  that  a  contract  of 
insurance  mailed  in  Ohio  to  the  in- 
sured in  Pennsylvania  was  to  be  gov- 
erned by  the  laws  of  the  latter  state. 
The  contract  expressly  provided  that 
it  should  become  a  mutual  agree- 
ment upon  its  acceptance  by  the  in- 
sured. See  also,  Haas  v.  Mutual  Life 
Ins.   Co.,   90   Nebr.   808,    134   N.   W. 

'French  v.  People,  6  Colo.  App. 
311,  40  Pac.  463;  Gibson  v.  Connecti- 
cut Fire  Ins.  Co.,  11  Fed.  561 ;  Com- 
monwealth Mut.  Fire  Ins.  Co.  v.  Will- 
iam Knabe  &  Co.  Mfg.  Co.,  171  Mass. 
265,  50  N.  E.  516;  Davis  v.  Aetna 
Mut.  Fire  Ins.  Co.,  67  N.  H.  218,  34 
Atl.  464;  Western  v.  Genesee  Mut, 
Ins.  Co.,  12  N.  Y.  258;  Fidelity  Mut. 
L.  Assn.  V.  Harris,  94  Tex.  25,  57  S. 
W.  635,  86  Am.  St.  813;  Baker  v. 
Spaulding  Bros.,  71  Vt.  169,  42  Atl. 
982;  Galloway  v.  Standard  Fire  Ins. 
Co.,  46  W.  Va.  237,  31  S.  E.  969. 

'Dollan      V.       Supreme      Council 


(Mich.).  113  N.  W.  10,  13  L.  R.  A. 
(N.  S.)  424,  overruled  on  another 
point  on  rehearing,  152  Mich.  266, 
116  N.  W.  383,  16  L.  R.  A.  (N.  S.) 
555;  Orient  Ins.  Co.  v.  Rudolph,  69 
N.  J.  Eq.  570,  61  Atl.  26;  Hardiman 
V.  Fire  Assn.  of  Philadelphia,  212 
Pa.  383,  61  Atl.  990. 

*  Continental  Life  Ins.  Co.  v.  Webb, 
54  Ala.  688;  Curtiss  v.  ^tna  Life 
Ins.  Co.,  90  Cal.  245,  27  Pac.  211, 
25  Am.  St.  114;  Pomeroy  v.  Man- 
hattan L.  Ins.  Co.,  40  111.  398 ;  Crom- 
well V.  Royal  Canadian  Ins.  Co.,  49 
Md.  366,  ZZ  Am.  Rep.  258  (The  ulti- 
mate question  in  this  case  related 
to  the  attachment  of  the  proceeds.)  ; 
Daniels  v.  Hudson  River  Fire  Ins. 
Co.,  12  Cush.  (Alass.)  416,  59  Am. 
Dec.  192;  Heebner  v.  Eagle  Ins.  Co., 
10  Gray  (Mass.)  131,  69  Am.  Dec. 
308 ;  Antes  v.  State  Ins.  Co.,  61  Nebr. 
55,  84  N.  W.  412;  Todd  v.  State  Ins. 
Co.,  3  Week.  No.  Cas.  (Pa.)  330; 
Curnow  V.  Phoenix  Ins.  Co.,  Zl  S. 
Car.  406,  16  S.  E.  132,  34  Am.  St. 
766  (The  ultimate  question  was  as 
to  the  place  where  the  cause  of  ac- 
tion arose.)  ;  Fidelity  Mut.  Life  Assn. 
v.  Harris,  94  Tex.  25,  57  S.  W.  635, 
86  Am.  St.  813;  Manhattan  Life  Ins. 
Co.  V.  Warwick,  20  Grat.  (Va.)  614, 
3  Am.  Rep.  218.  (The  ultimate  ques- 
tion was  as  to  the  place  where  pre- 
miums were  payable.)  See  also. 
Northwestern  Mut.  L.  Ins.  Co.  v. 
Elliott,  7   Sawy.   (U.   S.)    17,   5  Fed. 


•429 


CONFLICT    OF    LAWS. 


§    II88 


§  1188.  Delivery  and  payment  of  first  premium. — The 
policy  may  also  provide  that  it  is  not  to  take  effect  until  its  de- 
livery, in  which  case  the  place  of  delivery  is  the  place  of  the 
contract.*  This  is  also  true  where  the  policy  provides  that  it 
shall  not  take  effect  until  the  payment  of  the  first  premium  or  the 
payment  of  the  first  premium  and  delivery.  When  a  contract  of 
insurance  does  not  become  a  binding  obligation  until  the  payment 
of  the  first  premium  the  place  of  the  payment  is  the  place  of  the 
contract. ^° 

§  1189.  Parties  designating  the  state  whose  laws  are  to 
govern. — It  must  be  remembered,  however,  that  the  parties 
to  an  insurance  contract  may  stipulate  therein  that  it  is  made  with 
reference  to  the  laws  of  a  designated  state,  in  which  event  the 
question  of  what  law  governs  is  no  longer  open  to  inquiry,  it 


225 ;  Miller  v.  Maryland  Casualty  Co., 
1 193  Fed.  343  (accident  policy  de- 
livered and  countersigned  in  Penn- 
sylvania). 

*  Meagher  v.  yEtna  Ins.  Co.,  20  U. 
;C.  Q.  B.  607;  Carrollton  Furniture 
']\Ifg.  Co.  V.  American  Credit  In- 
demnity Co.,  115  Fed.  n,  52  C.  C. 
A.  671 ;  In  re  Pennsylvania  Ins.  Co., 
22  Fed.  109;  Knights' Templar  &c.  L. 
Indemnity  Co.  v.  Berry,  50  Fed.  511, 
1  C.  C.  A.  561 ;  Thwing  v.  Great 
Western  Ins.  Co.,  Ill  Mass.  93;  Re- 
liance Mut.  Ins.  Co.  v.  Sawver,  160 
Mass.  413,  36  N.  E.  59;  Millard  v. 
Bravton.  177  Mass.  533.  59  N.  E. 
436,  52  L.  R.  A.  117,  83  Am.  St.  294; 
Perry  v.  Dwelling-House  Ins.  Co., 
67  N.  H.  291,  ZZ  Atl.  731,  68  Am. 
St.  668;  Equitable  Life  Assur.  Soc. 
V.  Clements,  140  U.  S.  226,  35  L.  ed. 
497,  11  Sup.  Ct.  822;  Wood  v.  Cas- 
cade F.  &c.  Ins.  Co.,  8  Wash.  427, 
40  Am.  St.  917;  In  re  Breitung's  Es- 
tate, 78  Wis.  IZ,  46  N.  W.  891.  See 
also.  Prudential  Life  Ins.  Co.  v. 
Fusco's  Admr.,  145  Ky.  378,  140  S. 
W.  566  (delivered  and  to  be  per- 
formed in  Kentucky)  ;  Wilde  v. 
Wilde,  209  Mass.  205,  95  N.  E.  295. 
See,  however.  Perry  v.  Dwelling- 
House  Ins.  Co.,  67  N.  H.  291,  Z2> 
Atl.  731.  68  Am.  St.  668;  Equitable 
Life  Assur.  Soc.  v.  Clements,  140  U. 
S.  226,  35  L.  ed.  497.  11  Sup.  Ct.  %22. 

"Mut.  Ben.  Life  Ins.  Co.  v.  Rob- 


inson, 54  Fed.  580,  affd.  in  58  Fed. 
723,  7  C.  C.  A.  444,  19  U.  S.  App.  266, 
22  L.  R.  A.  325 ;  Albro  v.  Manhattan 
Life  Ins.  Co.,  119  Fed.  629,  affd.,  127 
Fed.  281,  62  C.  C.  A.  213;  Knights' 
Templar  &  IM.  Life  Indemnity  Co. 
V.  Berrv,  50  Fed.  511,  1  C  C.  A. 
561,  4  U.  S.  App.  353,  affg.  46  Fed. 
439;  Northwestern  Mut.  Life  Ins. 
Co.  V.  Elliott,  5  Fed.  225.  7  Sawy. 
(U.  S.)  17;  Rose  v.  ]\Iutual  Life  Ins. 
Co.,  240  111.  45,  88  N.  E.  204  (hold- 
ing actual  delivery  unnecessary 
where  policy  provides  that  it  shall 
not  become  binding  until  the  first 
premium  has  been  paid  and  the  policy 
issued)  ;  Ford  v.  Buckeve  State  Ins. 
Co.,  6  Bush  (Ky.)  133, '99  Am.  Dec. 
663;  Grevenig  v.  Washington  Life 
Ins.  Co.,  112  La.  879,  36  So.  790,  104 
Am.  St.  474  (policy  merely  provided 
that  it  should  not  be  binding  until 
the  first  premium  had  been  paid)  ; 
Millard  v.  Bravton,  177  Mass.  533, 
59  N.  E.  436,  52  L.  R.  A.  117.  83 
Am.  St.  294;  Cravens  v.  New  York 
Life  Ins.  Co.,  148  Mo.  583,  50  S.  W. 
519,  53  L.  R.  A.  305,  71  Am.  St.  628, 
affd.  in  178  U.  S.  389.  44  L.  ed.  1116, 
20  Sup.  Ct.  962;  Horton  v.  New 
York  Life  Ins.  Co.,  151  Mo.  604.  52 
S.  W.  356;  Lfmberger  v.  Modern 
Brotherhood  of  Am.  (Mo.  App.),  144 
S.  W.  898;  McElrov  v.  Metropolitan 
Life  Ins.  Co.,  84  Nebr.  866,  122  N. 
W.  n,  23  L.  R.  A.    (N.  S.)   968n; 


§  ii89 


CONTRACTS. 


430 


having  been  settled  by  the  parties  themselves/^  The  liberty  of 
the  parties  in  this  respect  is,  however,  limited  by  the  well  settled 
rule  that  the  forum  will  not  give  effect  to  such  provision  if  in  any 
particular  case  the  contract  so  providing  is  contrary  to  the 
public  policy  of  the  forum.  The  laws  of  the  state  may  establish 
a  rule  of  public  policy  which  overrides  the  freedom  of  contract 
of  the  parties  and  make  waivers  of  statutory  provisions  inef- 
fectual.^- 


Pool  V.  New  England  Mutual  Life 
Ins.  Co.,  123  App.  Div.  (N.  Y.)  885, 
108  N.  Y.  S.  431 ;  Watt  v.  Gideon,  8 
Pa.  Dist.  395,  22  Pa.  Co.  Ct.  499; 
Metropolitan  Life  Ins.  Co.  v.  Brad- 
ley, 98  Tex.  230,  82  S.  W.  1031,  68 
L.  R.  A.  509;  Northwestern  Mutual 
Life  Ins.  Co.  v.  McCue  (U.  S.),  32 
Sup.  Ct.  220;  Equitable  Life  Assur. 
Soc.  V.  Clements,  140  U.  S.  226,  35 
L.  ed.  497,  11  Sup.  Ct.  822;  Mutual 
Life  Ins.  Co.  v.  Cohen,  179  U.  S. 
262,  45  L.  ed.  181,  21  Sup.  Ct.  106; 
Mutual  Life  Ins.  Co.  v.  Hill,  193  U. 
S.  551,  48  L.  ed.  778,  24  Sup.  Ct.  538. 

"Mutual  Life  Ins.  Co.  v.  Hill,  118 
Fed.  708,  55  C  C.  A.  536;  Mutual 
Life  Ins.  Co.  v.  Cohen,  179  U.  S. 
262,  45  L.  ed.  181,  21  Sup.  Ct.  106. 
Compare  the  two  foregoing  cases 
with  Polk  V.  Mutual  Reserve  Fund 
Life  Assn.,  137  Fed.  273;  Russell  v. 
Grigsby,  94  C  C  A.  61,  168  Fed.  577; 
Eagle  V.  New  York  Life  Ins.  Co. 
(Ind.  App.),  91  N.  E.  814;  Green  v. 
Security  &c.  Ins.  Co.,  158  Mo.  App. 
277,  140  S.  W.  325 ;  Williams  v.  Mu- 
tual Reserve  Fund  Life  Assn.,  145 
N.  Car.  128,  58  S.  E.  802,  13  Am.  & 
Eng.  Ann.  Cas.  51 ;  Griesemer  v. 
Mut.  Life  Ins.  Co.,  10  Wash.  202,  38 
Pac.  1031,  followed  in  Griesemer  v. 
Mut.  Life  Ins.  Co.,  10  Wash.  211,  38 
Pac.  1034.  See  also,  New  York  Life 
Ins.  Co.  V.  Smith,  139  Ala.  303,  35 
So.  1004;  Jones  v.  New  York  Life 
Ins.  Co.  (Okla.),  122  Pac.  702  (ap- 
plication provided  that  contract  was 
to  be  construed  according  to  law  of 
New  York).  See,  however,  Pietri  v. 
Seguenot,  96  Mo.  App.  258,  69  S.  W. 
1055  •  Umberger  v.  Modern  Brother- 
hood of  America  (Mo.  App.),  144 
S.  W.  898. 

"Albro  V.  Manhattan  Life  Ins.  Co., 
119  Fed.  629,  affd.,  127  Fed.  281,  62 


C.  C.  A.  213;  Mutual  Benefit  Life 
Ins.  Co.  v.  Robison,  54  Fed.  580, 
affd.,  58  Fed.  12Z,  7  C.  C.  A.  444; 
19  U.  S.  App.  266,  22  L.  R.  A.  325; 
New  York  Life  Ins.  Co.  v.  Russell, 
n  Fed.  94,  23  C.  C.  A.  43,  40  U.  S. 
App.  530;  Cravens  v.  New  York  Life 
Ins.  Co.,  148  Mo.  583,  50  S.  W.  519, 
53  L.  R.  A.  305,  71  Am.  St.  628,  affd., 
178  U.  S.  389,  44  L.  ed.  1116,  20  Sup. 
Ct.  962;  Horton  v.  New  York  Life 
Ins.  Co.,  151  Mo.  604,  52  S.  W.  356. 
See  also.  Swing  v.  Munson,  191  Pa. 
582,  43  Atl.  342,  58  L.  R.  A.  223,  71 
Am.  St.  112;  McDermott  v.  Pru- 
dential Ins.  Co.,  7  Luz.  Leg.  Reg. 
(Pa.)  246;  Owen  v.  Bankers'  Life 
Ins.  Co.,  84  S.  Car.  253,  (^6  S. 
E.  290,  137  Am.  St.  845,  holds 
that  a  provision  in  a  policy  of 
insurance  that  it  be  governed  by 
the  laws  of  a  foreign  jurisdiction 
will  not  be  given  effect  in  the  face 
of  one  statute  which  provides  that 
contracts  made  by  a  foreign  corpora- 
tion within  the  state  of  South  Car- 
olina shall  be  deemed  and  held  to 
be  contracts  made  within  the  state 
and  of  another  which  stipulates  that 
all  and  every  such  foreign  corpora- 
tion shall  be  subject  to  the  laws 
of  South  Carolina  in  like  manner  as 
corporations  chartered  under  domes- 
tic laws.  See  also,  cases  cited  in  pre- 
ceding notes,  and  Fidelity  Mut.  L. 
Ins.  Co.  V.  Miazza,  93  Miss.  18,  46 
So.  817,  136  Am.  St.  534.  In  this 
connection  it  should  be  borne  in 
mind  that  in  applying  the  principles 
of  the  common  law  the  federal  court 
while  bound  by  the  interpretation 
which  a  state  court  puts  on  its  own 
statute  is  not  bound  by  the  de- 
cisions of  local  courts  on  questions 
of  general,  common  or  commercial 
law.     In   the  latter  case  the   federal 


431 


CONFLICT    OF    LAWS. 


1 190 


§  1190.  Validity — Policy  usually  governed  by  the  law  of 
the  place. — As  in  the  case  of  contracts  generally,  the  validity 
of  a  contract  of  insurance  is  usually  to  be  determined  by  the  law 
of  the  place  where  the  contract  is  made/^  and  this  has  been  held 
true  even  though  the  property  insured  was  situated  in  another 
jurisdiction/*  And  where  a  life  insurance  policy  was  made  and 
to  be  performed  in  one  state,  was  issued  by  the  company  in  a 
second  jurisdiction  and  the  insured  died  and  suit  was  brought  on 
the  policy  in  a  third  state  it  was  held  that  the  law  of  the  state 
where  the  contract  of  insurance  was  made  and  to  be  performed 
controlled. ^^ 

§  1191.    Construction  and  rights  of  the  parties. — As  to  the 

construction,  interpretation,  and  effect,  it  has  been  said  that  this 
is  controlled  largely  by  the  intention  of  the  parties  and  that  they 
have  the  power  to  establish  the  place  of  the  contract  so  far  as  its 
construction  and  the  rights  of  the  parties  thereto  are  concerned.^' 


courts  are  at  liberty  to  exercise  their 
own  judgment.  See  Washburn  &c. 
Mfg.  Co.  V.  ReHance  Marine  Ins. 
Co.,  179  U.  S.  1,  45  L.  ed.  49,  21  Sup. 
Ct.  1. 

"Pattison  V.  ^lills.  2  BHgh  (N.  S.) 
520;  Knights'  Templar  &c.  Life  In- 
demnity Co.  V.  Berrv,  1  C.  C.  A.  561, 
50  Fed.  511;  Hicks  v.  National  Life 
Ins.  Co.,  60  Fed.  690,  9  C.  C.  A.  215 ; 
National  Union  v.  Marlow,  74  Fed. 
775,  21  C.  C.  A.  89;  Equitable  Life 
Assur.    Soc.   V.    Nixon,   81    Fed.   796, 

26  C.  C.  A.  620;  Equitable  Life 
Assur.   Soc.   V.   Trimble,  83   Fed.  85, 

27  C.  C.  A.  404.  See  also.  State  Mut. 
F.  Ins.  Assn.  v.  Brinklev  Stave  &c. 
Co.,  61  Ark.  1,  31  S.  W.  157.  29  L. 
R.  A.  712,  54  Am.  St.  191;  Fletcher 
V.  New  York  Life  Ins.  Co.,  4  Mc- 
Crary  (U.  S.)  440,  13  Fed.  526;  Wall 
V.  Equitable  Life  Assur.  Soc,  32 
Fed.  273.  See  Goodwin  v.  Provident 
Sav.  L.  Assur.  Assn.,  97  Iowa  226. 
66  N.  W.  157.  32  L.  R.  A.  473,  59 
Am.  St.  411;  Ford  v.  Buckeye  State 
Ins.  Co..  6  Bush  (Ky.)  133.  99  Am. 
Dec.  663;  Robinson  v.  Hurst.  78  Md. 
59,  26  Atl.  956.  20  L.  R.  A.  761,  44 
Am.  St.  266;  Reliance  iMut.  Ins.  Co. 
V.  Sawyer.  160  Mass.  413,  36  N.  E. 
59;   Voorheis  v.  People's  Mut.  Ben. 


Soc,  91  Mich.  469.  51  N.  W.  934; 
Price  V.  Connecticut  Mut.  L.  Ins. 
Co.,  48  Mo.  App.  281 ;  Hvde  v.  Good- 
now,  3  N.  Y.  266;  Ward  v.  Tucker, 
7  Wash.  399,  35  Pac  126;  Wood  v. 
Cascade  F.  &c  Ins.  Co.,  8  Wash.  427, 
40  Am.  St.  917;  Seamans  v.  Knapp, 
Stout  &c.  Co.,  89  Wis.  171,  61  N.  W. 
757,  27  L.  R.  A.  357,  46  Am.  St.  825. 
However,  it  has  been  held  that  where 
an  insurance  contract  is  to  be  per- 
formed in  a  country  different  from 
that  in  which  the  contract  is  made 
the  law  of  the  place  of  performance 
governs.  London  Assurance  v.  Com- 
panhia  De  Moagens,  167  U.  S.,  149, 
17  Sup.  Ct.  785.  42  L.  ed.  113.  The 
lex  fori  applies  when  the  contract 
violates  the  public  policy  of  the  state 
of  the  forum  as  expressed  in  its  stat- 
utes. Seamans  v.  Zimmerman,  91 
Iowa  363.  59  N.  W.  290. 

"  Columbia  Fire  Ins.  Co.  v.  Kin- 
yon,  Z7  N.  J.  L.  2>2,\  Hyde  v.  Good- 
now,  3  N.  Y.  266 ;  Seamans  v.  Knapp, 
Stout  Co..  89  Wis.  171.  61  N.  W.  757, 
27  y  R.  A.  357.  46  Am.  St.  825. 

"Clarev  v.  Union  Cent.  Life  Ins. 
Co..  143  Kv.  540.  136  S.  W.  1014,  IZ 
L.  R.  A.   (N.  S.)   881. 

"Greer  v.  Poole,  L.  R.  5  Q.  B.  D. 
272;   Penn  Mut.  L.  Ins.  Co.  v.  Me- 


S  1 192 


CONTRACTS. 


432 


In  the  absence  of  any  such  agreement  on  the  part  of  the  particvS 
the  contract  is  usually  to  be  construed  according  to  the  law  of 
the  place  of  performance.^^  The  law  of  the  place  where  the  con- 
tract is  made  controls  as  to  its  construction,  interpretation,  and 
effect  in  the  absence  of  any  agreement  between  the  parties  by 
which  another  jurisdiction  is  designated  as  the  law  governing 
the  construction  and  when  no  place  of  performance  is  indicated.^* 

§  1192.  Contracts  of  carriers. — The  rule  that  contracts  are 
to  be  construed  according  to  the  laws  of  the  state  where  made, 
unless  it  is  presumed  from  their  tenor  that  they  were  entered  into 
with  a  view  to  the  laws  of  some  other  state,  applies  to  the  con- 
tract of  a  carrier  to  transport  goods  to  a  party  residing  in  a  dif- 
ferent state.  The  rights  of  the  parties  will  be  determined  by  the 
law  of  the  place  where  the  contract  is  made,  unless  contrary  to 
public  policy  of  the  forum.^^    Where  a  railroad  company  received 


chanics'  Sav.  Bank,  72  Fed.  413,  19  C. 
C.  A.  286,  38  L.  R.  A.  33n ;  Gibson  v. 
Connecticut  Fire  Ins.  Co.,  11  Fed.  561 ; 
Canton  Ins.  Office  v.  Woodside,  90 
Fed.  301,  ZZ  C.  C.  A.  63;  Mutual  L. 
Ins.  Co.  V.  Dingley,  100  Fed.  408,  49 
L.  R.  A.  132,  40  C.  C.  A.  459;  Gracie 
V.  Browne,  2  Caines  (N.  Y.)  30; 
London  Assur.  v.  Companhia  De 
Moagens,  167  U.  S.  149,  42  L.  ed. 
113,  17  Sup.  Ct.  785;  Griesemer  v. 
Mutual  L.  Ins.  Co.,  10  Wash.  211,  38 
Pac.  1034. 

"  Progresso  S.  S.  Co.  v.  St.  Paul 
&c.  Ins.  Co.,  146  Cal.  279,  79  Pac. 
967;  Mutual  Life  Ins.  Co.  v.  Hill,  97 
Fed.  263,  49  L.  R.  A.  127,  38  C.  C 
A.  159;  Mutual  Life  Ins.  Co.  v.  Ding- 
ley,  100  Fed.  408,  49  L.  R.  A.  132, 
40  C.  C  A.  459;  Grangers'  Life  Ins. 
Co.  V.  Brown,  57  Miss.  308,  34  Am. 
Rep.  446;  Milhous  v.  Johnson  (Sup. 
Ct.  Gen.  T.),  51  Hun  (N.  Y.)  639, 
21  N.  Y.  St.  382,  4  N.  Y.  S.  .199; 
Seiders  v.  Merchants'  Life  Assn.,  93 
Texas  194,  54  S.  W.  753;  London 
Assurance  Co.  v.  Companhia  De 
Moagens  do  Barreio,  167  U.  S.  149, 
42  L.  ed.  113,  17  Sup.  Ct.  785.  See 
also,  Union  Cent.  Life  Ins.  Co.  v. 
Caldwell,  68  Ark.  505,  58  S.  W.  355; 
Marden  v.  Hotel  Owners'  Ins.  Co., 
85  Iowa  584,  52  N.  W.  509,  39  Am. 
St.    316;    Seyk   v.    Millers'    Nat.    Ins. 


Co.,  74  Wis.  Q,  41  N.  W.  443,  3  L. 
R.   A.   523n. 

"Franklin  Life  Ins.  Co.  v.  Mor- 
rell,  84  Ark.  511,  106  S.  W.  680; 
Northwestern  Steamship  Co.  v.  Mar- 
itime Ins.  Co.,  161  Fed.  166;  Canton 
Ins.  Office  V.  Woodside,  90  Fed.  301, 
ZZ  C.  C.  A.  dZ ;  Supreme  Council  &c. 
V.  Getz,  112  Fed.  119,  50  C.  C.  A. 
153;  Cobb  v.  Lime  Rock  Fire  &  Ma- 
rine Ins.  Co.,  58  Maine  326;  Horton 
V.  Home  Ins.  Co.,  122  N.  Car.  498, 
29  S.  E.  944,  65  Am.  St.  717 ;  Hardi- 
man  v.  Fire  Assn.  of  Philadelphia,  212 
Pa.  383,  61  Atl  990.  See  also,  Dan- 
iels V.  Hudson  River  Fire  Ins.  Co., 
12  Cush.  (Mass.)  416,  59  Am.  Dec. 
192;  King-Brick  Mfg.  Co.  v.  Phoe- 
nix Ins.  Co.,  164  Mass.  291,  41  N.  E. 
277. 

^^  Bertonneau  v.  Southern  Pac.  Co. 
(Cal.  App.),  120  Pac.  53;  Hale  v. 
New  Jersey  Steam  Navigation  Co., 
15  Conn.  539,  39  Am.  Dec. 
398,  Southern  Express  Co.  v. 
Hanaw,  134  Ga.  445,  67  S.  E. 
944,  137  Am.  St.  227;  Brockway  v. 
American  Exp.  Co.,  168  Mass.  257, 
47  N.  E.  87;  McKinstry  v.  Chicago 
&c.  R.  Co.  (Mo.  App.),  134  S.  W. 
1061 ;  Herf  &c.  Chemical  Co.  v.  Lack- 
awana  Line,  100  Mo.  App.  164,  IZ  S. 
W.  346;  Hurst  v.  St.  Louis  &  S.  F. 
R.  Co.,   117  Mo.  App.  25,  94  S.  W. 


433  CONFLICT    OF    LAWS.  §    I  I93 

in  Indiana  goods  consigned  to  Leavenworth,  in  Kansas,  and  car- 
ried them  to  Chicago,  in  Illinois,  and  there  delivered  them  to 
another  railroad  company,  in  whose  custody  they  were  destroyed 
by  fire,  the  Supreme  Court  of  Illinois  held  that  the  case  must  be 
governed  by  the  law  of  Indiana,  by  which  the  first  company  was 
not  liable  for  the  loss  of  goods  after  they  passed  into  the  custCKly 
of  the  next  carrier  in  the  line  of  transit.^"  In  an  action  brought 
in  New  York  to  recover  for  the  loss  of  a  trunk  and  its  contents, 
where  the  baggage  was  delivered  to  the  carrier  in  Pennsylvania  to 
be  transported  to  New  York,  the  question  was  whether  the  stat- 
ute of  Pennsylvania,  defining  the  liability  of  railroad  corpora- 
tions upon  contracts  entered  into  by  them  for  the  transmission  of 
baggage,  formed  a  part  of  the  contract,  and  it  was  held  that  the 
rights  of  the  parties  were  to  be  determined  by  the  laws  of  New 
York  where  the  delivery  was  to  be  made.^^ 

§  1193.  Connecting  lines  of  carriers — The  English  rule. — 
A  common  carrier  has  power  to  make  a  contract  to  carry  to  a 
place  beyond  the  terminus  of  his  own  route  and  thereby  render 
himself  liable  as  such  for  the  whole  distance."    When  a  carrier 

794;  Atchison  T,  &  S.  F.  R.  Co.  v.  tie  from  a  place  in  Iowa  to  Chicago). 
Rodgers,  16  N.  Mex.  120,  113  Pac  The  contract  was  held  to  be  governed 
805 ;  Cannaday  v.  Atlantic  Coast  Line  by  the  law  of  Iowa  as  to  its  validity 
R.  Co.,  143  N.  Car.  439,  55  S.  E.  836,  and  interpretation,  and  the  restriction 
8  L.  R.  A.  (N.  S.)  939,  118  Am.  St.  as  to  liabihty  was  valid.  Hazel  v. 
821 ;  Adams  Express  Co.  v.  Green,  Chicago  &c.  R.  Co.,  82  Iowa  477, 
112  Va.  527,  12  S.  E.  102.  See  also,  48  N.  W.  926,  validity  of  a  contract 
Gilliland  v.  Southern  R.  Co.,  85  S.  made  in  another  state,  but  void  un- 
Car.  26,  67  S.  E.  20,  137  Am.  St.  der  the  laws  of  Iowa. 
861;  Shelton  v.  Canadian  Northern  ^Curtis  v.  Delaware,  L.  &  W.  R. 
R.  Co.,  189  Fed.  153.  Co.,  74  N.  Y.  116,  30  Am.  Rep.  271. 
**  Pennsylvania  Co.  v.  Fairchild,  69  To  same  efifect,  Southern  Express 
111.  260;  Talbott  v.  Merchants'  Des-  Co.  v.  Gibbs,  155  Ala.  303,  46  So.  465, 
patch  Transportation  Co.,  41  Iowa  18  L.  R.  A.  (N.  S.)  489,  130  Am.  St. 
247,  20  Am.  Rep.  589.  Goods  were  24.  See  also,  Adams  Express  Co.  v. 
shipped  from  Connecticut  to  Iowa  and  Green,  112  Va.  527,  72  S.  E.  102. 
lost  in  Illinois,  for  which  the  carrier  "Swift  v.  Pacific  Mail  Steamship 
was  sued  in  Iowa,  where  the  statute  Co.,  106  N.  Y.  206,  12  N.  E.  583; 
prohibits  a  common  carrier  from  re-  Weed  v.  Saratoga  &c.  R.  Co.,  19 
stricting  his  liability  by  contract.  It  Wend.  (N.  Y.)  534;  Pennsylvania 
was  held  that  as  the  exceptions  lim-  R.  Co.  v.  Berry,  (:&  Pa.  St.  272; 
iting  liability  were  valid  in  the  state  Moses  v.  Union  Pac.  R.  Co.  (Tex.), 
where  the  contract  was  made,  and  41  S.  W.  154;  Ogdensburg  &c.  R. 
valid  in  Illinois,  where  the  loss  oc-  Co.  v.  Pratt.  22  Wall.  (U.  S.)  123, 
curred,  the  contract  was  valid,  and  22  L.  ed.  827.  49  How.  Pr.  84;  Farm- 
there  could  be  no  recovery  for  the  ers'  &c.  Bank  v.  Champlain  Transp. 
loss.  McDaniel  v.  Chicago  &c.  R.  Co..  23  Vt.  186.  56  Am.  Dec.  C^'^;  4 
Co.,  24  Iowa  412    (shipment  of  cat-  Elliott  R.  R.   (2d  ed.),  §   1434.     The 

28 — Contracts,  Vol.  2 


s  1 195 


CONTRACTS. 


434 


contracts  to  carry  goods  to  a  point  beyond  the  terminus  of  his 
own.  line,  and  there  deHver  them,  he  may  be  hable  not  only  for 
his  own  negligence,  but  also  for  that  of  the  connecting  carriers 
throughout  the  route.  The  connecting  carriers  are,  in  such  cases, 
often  regarded  as  his  agents,  for  whose  acts  he  is  held  respon- 
sible.*^ In  England  it  has  been  uniformly  held  that  the  receipt  of 
goods  marked  for  a  place  beyond  the  line  of  the  carrier  who  re- 
ceives them  implies  a  contract  on  his  part  to  carry  them  to  their 
final  destination,  although  no  connection  in  business  is  shown  with 


Supreme  Court  of  Connecticut  has 
held  the  contrary  doctrine.  Nauga- 
tuck  R.  Co.  V.  Waterbury  Button  Co., 
24  Conn.  468;  Elmore  v.  Naugatuck 
R.  Co.,  23  Conn.  457,  63  Am.  Dec. 
143.  Waite,  C.  J.,  in  delivering  a 
dissenting  opinion,  said:  "The  mail, 
question  involved,  is,  whether  a  rail- 
road corporation  has  power  to  make 
a  valid  contract  for  the  transporta- 
tion of  goods,  to  any  place  beyond 
the  termination  of  their  road.  *  *  * 
If  the  present  railroad  corporations 
do  not  possess  the  power  to  make 
such  a  contract,  as  incidental  to  their 
general  powers,  in  my  opinion,  the 
business  wants  of  the  community, 
and  especially  of  mercantile  men, 
must  soon  demand  legislative  inter- 
ference and  a  grant  of  the  requisite 
authority.  Indeed,  I  do  not  see  how 
the  great  business  operations  of  the 
country  can  safely  be  carried  on 
without  it."  In  Root  v.  Great  West- 
ern R.  Co.,  45  N.  Y.  524,  in  speaking 
of  the  contract  to  transport  over 
other  lines,  the  court  said:  "Such 
an  undertaking  may  be  established 
by  express  contract,  or  by  showing 
that  the  company  held  itself  out  as 
a  carrier  for  the  entire  distance,  or 
received  freight  for  the  entire  dis- 
tance, or  other  circumstances  indi- 
cating an  understanding  that  it  was 
to  carry  through."  The  way  bill 
showing  the  destination  of  the  goods 
furnishes  evidence,  whether  looked 
upon  as  a  contract  or  as  a  declara- 
tion, or  an  admission  simply.  Og- 
densburg  &c.  R.  Co.  v.  Pratt,  22 
Wall.  (U.  S.)  123,  22  L.  ed.  827,  49 
How.  Pr.  84.  "As  a  general  rule, 
the  bill  of  lading  given  by  a  carrier 


to  and  accepted  by  the  shipper  of 
goods  contains  the  contract  for  car- 
riage, and  in  the  absence  of  fraud, 
imposition  or  mistake,  the  parties  are 
concluded  by  its  terms  as  there  ex- 
pressed." Per  Bradley,  J.,  Jennings 
V.  Grand  Trunk  Railway  of  Canada, 

127  N.  Y.  438. 

^Illinois  Cent.  R.  Co.  v.  Foulks, 
191  111.  57,  60  N.  E.  890,  affg.  92  111. 
App.  391;  Elgin  &c.  R.  Co.  v.  Bates 
Mach.  Co.,  98  111.  App.  311,  affd.,  200 
111.  636,  66  N.  E.  326,  93  Am.  St. 
218;  Beard  v.  St.  Louis  &c.  R.  Co., 
79  Iowa  527,  44  N.  W.  803 ;  Atchison 
v.  Roach,  35  Kans.  740,  12  Pac.  93, 
57  Am.  Rep.  199;  Bryan  v.  Memphis 
&c.  R.  Co.,  11  Bush  (Ky.)  597;  Louis- 
ville &c.  R.  Co.  v.  Cooper,  21  Ky.  L. 
1644,  56  S.  W.  144;  Popham  v.  Bar- 
nard, 77  Mo.  App.  619;  Missouri  Pac. 
R.  Co.  V.  Crowell  Lumber  &c.  Co., 
51  Nebr.  293,  70  N.  W.  964;  Missouri 
Pacific  R.  Co.  V.  Twiss,  35  Nebr.  267, 
53  N.  W.  76,  37  Am.  St.  437;  Chi- 
cago &c.  R.  Co.  V.  Western  Hay  &c. 
Co.,  2  Nebr.  (unoff.)  784,  90  N.  W. 
205 ;  Nashua  Lock  Co.  v.  Worcester 
&c.  R.  Co.,  48  N.  H.  339,  2  Am.  Rep. 
242;  Baltimore  &c.  R.  Co.  v.  Camp- 
bell, 36  Ohio  St.  647,  38  Am.  Rep. 
617  (suit  to  recover  the  value  of 
baggage  lost)  ;  Post  v.  Southern  R. 
Co.,  103  Tenn.  184,  52  S.  W.  301,  55 
L.  R.  A.  481;  Gulf  &c.  R.  Co.  v. 
Short  (Tex.  Civ.  App.),  51  S.  W. 
261 ;  Galveston  &c.  R.  Co.  v.  Allison, 
59  Texas  193;  Newell  v.  Smith,  49 
Vt.  255.  See  also,  Pennsylvania  R. 
Co.  v.  Anoka  Nat.  Bank,  108  Fed. 
482,  47  C.  C.  A.  454;  Gwyn  Harper 
Mfg.   Co.  V.   Carolina   Cent.   R.   Co., 

128  N.  Car.  280,  38  S.  E.  894. 


435 


CONFLICT    OF    LAWS, 


§    1 194 


Other  carriers  beyond,  and  although  the  price  for  the  through 
transportation  is  not  paid  in  advance.^* 

§  1194.    The  American  rule. — Some  of  the  states  in  this 
country  have  adopted  the  Enghsh  rule,"  but  the  general  doctrine 


°*  See  Muschamp  v.  Lancaster  &c.  R. 
Co.,  8  M.  &  W.  421  (leading  case), 
where  a  parcel  was  delivered  at  Lan- 
caster, to  the  Lancaster  and  Preston 
Junction  Railway  Co.,  directed  to  a 
person  in  Derbyshire.  The  person 
who  brought  it  to  the  station  offered 
to  pay  the  freight  charges,  but  the 
clerk  said  that  they  had  better  be 
paid  at  the  other  end  on  receipt  of 
the  parcel.  The  Lancaster  and  Pres- 
ton Junction  Railway  Co.  was  known 
to  be  the  proprietor  of  the  line  only 
as  far  as  Preston.  The  parcel  was 
lost  after  it  was  forwarded  from 
Preston.  Held,  that  the  Lancaster 
and  Preston  company  was  liable.  In 
the  court  below  the  learned  judge 
stated  to  the  jury,  in  summing  up, 
"that  where  a  common  carrier  takes 
into  his  care  a  parcel  directed  to  a 
particular  place,  and  does  not  by 
positive  agreement  limit  his  responsi- 
bility to  a  part  only  of  the  distance, 
that  is  prima  facie  evidence  of  an 
undertaking  on  his  part  to  carry  the 
parcel  to  the  place  to  which  it  is  di- 
rected :  and  that  the  same  rule  ap- 
plied, although  that  place  were  be- 
yond the  limits  within  which  he  in 
general  professed  to  carry  on  his 
trade  as  a  carrier."  On  a  rule  nisi 
for  a  new  trial  on  the  ground  of 
misdirection  it  was  held  in  the  court 
of  exchequer  that  there  was  no  mis- 
direction. Lord  Abinger,  C.  B.,  said: 
"The  carriage-money  being  in  this 
case  one  undivided  sum,  rather  sup- 
ports the  inference,  that  although 
these  carriers  carry  only  a  certain 
distance  with  their  own  vehicles,  they 
make  subordinate  contracts  with  the 
other  carriers,  and  are  partners  inter 
se  as  to  the  carriage-money ;  a  fact 
of  which  the  owner  of  the  goods 
could  know  nothing,  as  he  only  pays 
the  one  entire  sum  at  the  end  of  the 
journey,  which  they  afterward  di- 
vide as  thev  please.''  Collins  v. 
Bristol  &c.  R.  Co.,  11  Exch.  790; 
Bristol  &c.  R.  Co.  v.  Collins,  7  H. 
L.  Cas.  194;  Mytton  v.  Midland  R. 


Co.,  4  H.  &  N.  615.  The  same  rule 
applied  to  a  through  contract  for  the 
carriage  of  a  passenger  and  his  bag- 
gage. Watson  V.  Ambergate  ike.  R. 
Co.,  3  Eng.  L.  &  Eq.  497;  Scothorn 
V.  South  Staffordshire  R.  Co.,  8  Exch- 
341 ;  Coxon  v.  Great  Western  R.  Co., 
5  H.  &  N.  274;  Crouch  v.  London 
&c.  R.  Co.,  25  Eng.  L.  &  Eq.  287; 
Houston  R.  Co.  v.  Ald'adden  (Tex. 
Civ.  App.),  40  S.  W.  216;  Missouri 
K.  &c.  R.  Co.  V.  Mazzie,  29  Tex.  Civ. 
App.  295,  68  S.  W.  56. 

"Bird  V.  Southern  R.  Co.,  99Tenn. 
719,  42  S.  W.  451.  63  .-\m.  St.  856. 
The  Supreme  Court  of  Illinois  would 
seem  to  hold  that  a  railroad  com- 
pany which  receives  goods  to  carry, 
marked  for  a  particular  destination, 
although  beyond  its  own  line,  is 
prima  facie  bound  to  carry  them  to 
that  place  and  deliver  them  there, 
and  that  an  agreement  to  that  effect 
is  implied  by  the  reception  of  the 
goods  thus  marked.  Illinois  Cent. 
R.  Co.  v.  Frankenberg,  54  111.  88.  5 
Am.  Rep.  92;  Illinois  Cent.  R.  Co. 
V.  Johnson,  34  111.  389;  Erie  R.  Co. 
V.  Wilcox,  84  111.  239,  25  Am.  Rep. 
451.  The  courts  of  Alabama,  Flor- 
ida, Georgia,  New  Hampshire,  South 
Carolina  and  Tennessee  also  hold 
that  in  the  absence  of  a  special  con- 
tract, limiting  his  liability  to  his  own 
line,  the  initial  carrier  remains  liable 
for  the  safe  carriage  to  and  delivery 
of  the  goods  at  their  final  destina- 
tion. Mobile  &c.  R.  Co.  v.  Cope- 
land,  63  Ala.  219,  35  Am.  Rep.  13; 
Bennett  v.  Filyaw,  1  Fla.  403;  Haw- 
ley  V.  Screven,  62  Ga.  347,  35  Am. 
Rep.  126  (trunk  lost)  ;  Nashua  Lock 
Co.  V.  Worcester  &c.  R.  Co.,  48  N.  H. 
339,  2  Am.  Rep.  242;  Bradford  v. 
South  Carolina  R.  Co.,  7  Rich.  L. 
(S.  Car.)  201,  62  Am.  Dec.  411; 
Louisville  &c.  R.  Co.  v.  Weaver,  9 
Lea  (Tenn.)  38.  42  Am.  Rep.  654 
(loss  of  baggage).  "The  mere  ac- 
ceptance of  goods  by  a  common  car- 
rier marked  to  a  designation  [des- 
tination]  beyond  the  terminus  of  its 


1 194 


CONTRACTS. 


436 


as  to  transportation  by  connecting  lines  approved  by  the  United 
States  Supreme  Court,  and  by  a  majority  of  the  state  courts, 
amounts  to  this :  that  each  road,  confining  itself  to  its  common- 
law  liability,  is  only  bound,  in  the  absence  of  a  special  contract,  to 
safely  carry  over  its  own  route  and  safely  deliver  to  the  next  suc- 
ceeding carrier,  but  that  any  one  of  the  companies  may  agree  that 
over  the  whole  route  its  liability  shall  extend.  In  the  absence  of  a 
special  agreement  to  that  effect,  such  liability  will  not  attach.^^ 
The  owner  of  goods  lost  or  damaged  while  in  the  custody  of  the 
carrier  may,  in  this  country,  seek  his  remedy  against  the  inter- 


line, as  a  matter  of  law  imports  no 
absolute  undertaking  upon  the  part 
of  the  carrier  beyond  the  end  of  its 
road,  but  is  a  matter  of  evidence  to 
be  submitted  to  the  jury,  from  which, 
in  connection  with  other  evidence 
produced,  they  are  to  determine,  as 
a  question  of  fact,  the  real  engage- 
ment entered  into."  Per  Day,  J.,  in 
Mulligan  v.  Illinois  Cent.  R.  Co.,  36 
Iowa  181. 

"^  Elmore  v.  Naugatuck  R.  Co.,  23 
Conn.  457,  63  Am.  Dec.  143;  Felton 
V.  Central  &c.  R.  Co.,  114  Ga.  609, 
40  S.  E.  746;  Pennsylvania  Co.  v. 
Dickson,  31  Ind.  App.  451,  67  N. 
E.  538;  Pittsburgh  &c.  R.  Co.  v. 
Morton,  61  Ind.  539,  28  Am.  Rep. 
682;  Hill  v.  Burlington  &c.  R.  Co., 
60  Iowa  196,  14  N.  W.  249;  Berg  v. 
Atchison   &c.   R.   Co.,  30   Kans.   561, 

2  Pac.  639;  Hoffman  v.  Union  Pac. 
R.  Co.,  8  Kans.  App.  379,  56  Pac. 
331;  Louisville  &c.  R.  Co.  v.  Tarter, 
19  Kv.  L.  229,  39  S.  W.  698;  Louis- 
ville &c.  R.  Co.  v.  Cooper,  19  Ky.  L. 
1152,  42  S.  W.  1134;  Richmond  &c. 
R.  Co.  v.  Thomas,  19  Ky.  L.  1488,  43 
S.  W.  466;  Burroughs  v.  Norwich 
&c.  R.  Co.,  100  Mass.  26,  1  Am.  Rep. 
78;  Nutting  v.  Connecticut  &c.  R. 
Co.,  1  Gray  (Mass.)  502;  St.  Clair 
v.  Kansas  Citv  &c.  R.  Co.,  11  Miss. 
789,  28  So.  957;  Illinois  Cent.  R. 
Co.  v.  Kerr,  68  Miss.  14,  8  So.  330; 
Grover  &c.  Baker  Co.  v.  Missouri 
Pacific  R.  Co.,  70  Mo.  672,  35  Am. 
Rep.  444;  Van  Santvoord  v.  St.  John, 
6  Hill  (N.  Y.)  157;  Root  v.  Great 
Western  R.  Co.,  45  N.  Y.  524;  Knott 
v.  Raleigh  &c.  R.  Co.,  98  N.  Car.  IZ, 

3  S.  E.  735,  2  Am.  St.  321;  Stevens 
V.  Lake  Shore  &c.  R.  Co.,  11  Ohio  C 


D.  168;  Clyde  v.  Hubbard,  88  Pa.  St. 
358;  Harris  v.  Grand  Trunk  R.  Co., 
15  R.  I.  371,  5  Atl.  305 ;  St.  Louis  &c. 
R.  Co.  V.  Cohen  (Tex.  Civ.  App.),  55 
S.  W.  1123;  Hunter  v.  Southern  Pac. 
R.  Co.,  76  Tex.  195,  13  S.  W.  190  (ex- 
press exemption)  ;  Myrick  v.  Mich- 
igan Cent.  R.  Co.,  107  U.  S.  102,  27 
L.  ed.  325,  1  Sup.  Ct.  425;  Michigan 
Cent.  R.  Co.  v.  Mineral  Springs  Mfg. 
Co.,  16  Wall.  (U.  S.)  318,  21  L.  ed. 
297;  Ogdensburg  &c.  R.  Co.  v.  Pratt, 
22  Wall.  (U.  S.)  123,  22  L.  ed.  827,  49 
How.  Pr.  84  (the  contract  there  was 
to  carry  through  the  whole  route)  ; 
McConnell  v.  Norfolk  &c.  R.  Co.,  86 
Va.  248,  9  S.  E.  1006  (express  ex- 
emption). "If  it  be  true  that  an 
'initial  carrier,'  by  which  expression 
we  understand  the  carrier  first  re- 
ceiving the  goods,  is  bound  for  the 
default  of  connecting  carriers,  it  is 
because  of  a  contract  binding  him  to 
that  effect.  Such  a  contract  may  be 
expressed  or  implied  from  the  facts 
connected  with  the  transaction.  If 
the  'initial  carrier'  enters  into  no 
contract  to  that  effect,  he  is  not  so 
bound.  If  he  does  so  bind  himself, 
he  is  liable  for  the  default  of  the 
connecting  carrier."  Per  Beck,  J., 
in  Beard  v.  St.  Louis  &c.  R.  Co.,  79 
Iowa  527.  In  Missouri  the  act  of 
issuing  a  receipt  or  bill  of  lading  for 
property  to  be  carried  beyond  its  line 
is  evidence  of  such  a  contract.  Dim- 
mitt  V.  Kansas  City  &c.  R.  Co.,  103 
Mo.  433,  15  S.  W.  761  (statutory 
regulation).  "There  is  really  no 
great  difference  between  the  English 
and  American  doctrine  on  this  sub- 
ject. The  one  holds  that,  to  exempt 
a    carrier    from    liability    beyond    its 


437  CONFLICT   OF   LAWS.  §    II95 

mediate  carrier  in  fault,  as  well  as  against  the  carrier  with  whom 
the  contract  for  through  carriage  was  in  the  first  place  made." 

§  1195.  "Contract  tickets." — Where  a  passenger  on  a 
steamer  from  Liverpool  to  Boston  purchased  a  ticket  entitled 
"Passenger  Contract  Ticket,"  on  which  was  a  stipulation  that 
the  owners  of  the  ship  did  not  hold  themselves  responsible  for 
loss  or  damage  to  baggage,  it  was  held  in  Massachusetts  that  the 
contract  was  a  British  contract,  and,  being  valid  where  made, 
would  be  enforced  in  Massachusetts,  although,  if  made  in  the 
latter  place,  it  would  be  void  as  against  public  policy.^'  So 
where  a  party  purchaL,ed  a  ticket  which  entitled  her  to  passage 
from  a  point  in  California  to  a  point  in  Kansas  it  was  held  that 
the  laws  of  California  governed."" 

§  1196.  Maritime  contracts. — A  ship  in  the  open  sea  is  re- 
garded by  the  law  of  nations  as  a  part  of  the  territory  whose 
flag  such  ship  carries.  Courts  have  held  in  many  cases  that  the 
validity  of  maritime  contracts  is  to  be  determined  by  the  law  of 

terminus  there  must  be  a  special  con-  487;  Davis  v.  New  York,  O.  &  W.  R. 

tract  to  that   end.     The  other,   that  Co.,    70    Minn.    27,    72    N.    W.    823; 

to  make  the  first  carrier  responsible  Beede  v.  Wisconsin  Cent.  R.  Co.,  90 

there  must  be  a   special  contract  to  Minn.    36,   95    N.    W.   454,    101    Am. 

that  end.     Both  admit  that  the  car-  St.  390;  Alabama  &c.  R.  Co.  v.  Lam- 

rier  is  not  bound  to  go  beyond  the  kin,  78  Miss.  502,  30  So.  47;  Halliday 

terminus,    but   that    he    may    do    so;  v.  St.  Louis  &c.  R.  Co.,  74  Mo.  159, 

and  if  he  undertakes  to  do  so  he  is  41  Am.  Rep.  309;  Omaha  &  R.  V.  R. 

liound     by     his     undertaking."      Per  Co.  v.  Crow,  53  Nebr.  747,  74  N.  W. 

Simpson,  C.  J.,  in  Piedmont  Mfg.  Co.  1066,    69    Am.     St.    741 ;     Barter    v. 

V.  Columbia  &c.  R.  Co.,  19  S.  Car.  353.  Wheeler,  49  N.  H.  9,  6  Am.  Rep.  434 ; 

See  cases  cited  in  extended  note  to  Taffe  v.  Oregon  R.  Co.,  41   Ore.  64, 

Wells  V.  Thomas,  72  Am.  Dec.  232,  67  Pac.  1015,  58  L.  R.  A.  187;  Hous- 

and  Miller  v.  South  Carolina  R.  Co.,  ton  &  T.  C.  R.   Co.  v.   Ney   (Tex.), 

2Z  S.  Car.  539,  9  L.  R.  A.  833.     See  58  S.  W.  43.     See  also,  Texas  &  N. 

generally,   also,   4  Elliott  R.   R.   (2d  O.   R.   Co.   v.   Brown    (Tex.   97),  2>7 

ed.),  §§  1435-1441.  S.  W.  785. 

"^  Southern  Express  Co.  v.  Hess,  Si  ^Potter  v.  The  Majestic,  60  Fed. 
Ala.  19;  Packard  v.  Taylor,  35  Ark.  624,  9  C  C.  A.  161,  23  L.  R.  A.  746. 
402,  Z7  Am.  Rep.  Z7 ;  Little  Rock  &c.  =*Justis  v.  Atchison  &c.  R.  Co.,  12 
R.  Co.  V.  Odom,  63  Ark.  326,  38  S.  Cal.  App.  639,  108  Pac.  328.  It  has 
W.  339;  Anchor  Line  v.  Dater,  68  been  held  that  in  actions  in  tort  the 
111.  369;  Hartley  v.  St.  Louis  &c.  Co.,  law  of  the  place  where  the  injury 
lis  Iowa  612,  89  N.  W.  88;  United  occurs  defines  the  rights  of  the  par- 
States  &c.  Co.  V.  Furniture  Co.,  19  ties.  Smith  v.  Atchison,  194  Fed.  79. 
Ky.  L.  833,  42  S.  W.  342;  Hoffman  See  also.  Hasbrouck  v.  New  York 
V.  Cumberland  &c.  Co.,  85  Md.  391,  &c.  R.  Co.,  202  N.  Y.  363,  95  N.  E. 
37  Atl.  214;  Hope  v.  Delaware  &  H.  808,  35  L.  R.  A.  (N.  S.)  537. 
Canal  Co.,  Ill   Mich.  209,  69  N.  W. 


§    I  197  CONTRACTS.  438 

the  flag,  that  is,  of  the  nation  to  which  the  ship  belongs.'"  Thus 
a  French  ship,  owned  by  a  Frenchman,  was  chartered  by  the 
master,  in  pursuance  of  his  general  authority  as  such,  in  a  Dan- 
ish West  India  island,  to  a  British  subject,  who  knew  her  to  be 
French,  for  a  voyage  from  St.  Marc,  in  Hayti,  to  Havre,  London 
or  Liverpool,  at  the  charterer's  option,  and  he  shipped  a  cargo 
from  St.  Alarc  to  Liverpool.  On  the  voyage  the  ship  sustained 
damage  from  a  storm,  which  compelled  her  to  put  into  a  Portu- 
guese port.  There  the  master  lawfully  borrowed  money  on  bot- 
tomr}^  and  repaired  the  ship,  and  she  carried  her  cargo  safe  to 
Liverpool.  The  bondholder  proceeded  in  an  English  court  of 
admiralty  against  the  ship,  freight  and  cargo,  which,  being  in- 
sufficient to  satisfy  the  bond,  he  brought  an  action  at  law  to  re- 
cover the  deficiency  against  the  owners  of  the  ship,  and  they 
abandoned  the  ship  and  freight  in  such  a  manner  as  by  the  French 
law  absolved  them  from  liability.  It  was  held  that  the  French 
law  governed  the  case,  and  therefore  the  plaintiff  could  not  re- 
cover.'* 

§  1197.  Contracts  of  affreightment. — As  a  general  rule  the 
validity  and  obligations  of  a  contract  of  affreightment  are  gov- 
erned by  the  law  of  the  place  where  made  and  do  not  vary  from 
time  to  time  as  the  goods  pass  from  state  to  state.^^  A  contract 
of  affreightment,  made  in  an  American  port  by  an  American  ship- 

*°Crapo  V.  Kelly,  16  Wall.   (U.  S.)  which  her  flag  was  sufficient  notice. 

610,    21    L.    ed.    430.      See,    however,  That  decision  was  in  accordance  with 

Pouppirt  V.  Elder  Dempster  Shipping  an  earlier  one  of  Mr.  Justice  Story, 

Co.,  122  Fed.  983.  revd.  125  Fed.  732,  in    Pope  v.    Nickerson,   3    Story    (U. 

6  C.  C.  A.  500,  holding  that  the  ad-  S.)    465,   as  well   as   with   later  ones 

miralty  courts   of  the   United    States  in  the  privy  council,  on  appeal  from 

have    jurisdiction    of    an    action    for  the  high  court  of  admiralty,  m  which 

personal     injuries     sustained    by    an  the  validity  of  a  bottomry  bond  has 

American  passenger  on  the  high  seas  been  determined  by  the  law  prevail- 

irrespective  of  the  law  of  the  ships  ing  at  the  home  port  of  the  ship,  and 

flag.  not  by  the  law  of  the  port  where  the 

^  Lloyd  v.   Guibert,  L.   R.   1   Q.  B.  bond  was  given.     The  Karnak,  L.  R. 

115,  6  B.  &  S.  100.     The  question  of  2  P.  C.  505;  The  Gaetano  &  Maria, 

the  intent  of  the  parties  was  compli-  L.  R.  7  P.  Div.   137.     See  also.  The 

cated    with    that    of    the    lawful    au-  Barque    Woodland,    7    Benedict    (U. 

thority  of   the   master;    and   the   de-  S.)     110,     118;    The    Woodland,    14 

cision  in  the  Queen's  Bench  was  upon  Blatchf.    (U.  S.)    499,  and   104  U.   S. 

the    ground    that    the    extent    of    his  180. 

authority  to  bind  the  ship,  the  freight  *^  Bertonneau  v.  Southern  Pac.  Co. 

of  the  owners  was  limited  by  the  law  (Cal.  App.),  120  Pac.  53.     See,  how- 

of   the   home    port   of    the    ship,    of  ever,  ante,  §  1118. 


439 


CONFLICT    OF    LAWS. 


§    II97 


per  with  an  English  steamship  company  doing  business  there,  for 
the  shipment  of  goods  tliere  and  their  carriage  to  and  dehvery  in 
England,  where  the  freight  is  payahle  in  EngHsh  currency,  was 
held  by  the  United  States  Supreme  Court  an  American  contract, 
and  governed  by  American  law,  so  far  as  regards  tlie  effect  of  a 
stipulation  exempting  the  company  from  responsibility  for  the 
negligence  of  its  servants  in  the  course  of  the  voyage.'"  Where  a 
contract  was  made  in  Massachussets  between  an  American  citi- 
zen and  a  British  company  of  ship  owners,  by  which  the  company 
undertook  to  carry  certain  cattle  from  Boston  to  England  in  a 
British  ship,  and  the  contract  contained  express  stipulations  ex- 
empting the  ship  owners  from  liability  for  loss  or  damage  arising 
from  negligence  of  the  master  or  crew,  which  clause  of  the  con- 
tract was  valid  by  the  English  law  but  void  by  the  law  of  Mass- 
achusetts as  against  public  policy,  and  the  cattle  were  lost  by  the 


'*  Liverpool  &c.  Steam  Co.  v.  Phe- 
nix  Ins.  Co.,  129  U.  S.  397,  32  L.  ed. 
788,  9  Sup.  Ct.  469,  affg.  Ins.  Co.  of 
North  America  v.  Liverpool  &c.  Steam 
Co.,  22  Blatchf.  (U.  S.)  372,  22 
Fed.  715 ;  adding  to  Insurance  Co. 
of  North  America  v.  Liverpool 
&c.  Steam  Co.,  17  Fed.  Zll. 
Gray,  J.,  in  delivering  the  opin- 
ion of  the  court  referring  to  Penin- 
sular and  Oriental  Navigation  Co. 
v.  Shand,  3  Moore  P.  C.  (N.  S.) 
272,  said :  "In  that  case  effect  was 
given  to  the  law  of  England,  when 
the  contract  was  made  and  both  par- 
ties were  English,  and  must  be  held 
to  have  known  the  laws  of  their  own 
country.  In  this  case  the  contract 
was  made  in  this  country,  between 
parties,  one  residing  and  the  other 
doing  business  here,  and  the  law  of 
England  is  a  foreign  law,  which  the 
American  shipper  is  not  presumed  to 
know."  He  summed  up  his  conclu- 
sion thus:  "Each  of  the  bills  of 
lading  is  an  American  and  not  an 
English  contract,  and  so  far  as  con- 
cerns the  obligation  to  carry  the 
goods  in  safety,  is  to  be  governed 
by  the  American  law,  and  not  by  the 
law,  municipal  or  maritime,  of  any 
other  country.  By  our  law  as  de- 
clared by  this  court,  the  stipulation 
by  which  the  appellant  undertook  to 
exempt   itself   from   liability   for   the 


negligence  of  its  servant  is  contrary 
to  public  policy  and  therefore  void, 
and  the  loss  of  the  ship  was  a  breach 
of  the  contract,  for  which  the  shipper 
might  maintain  a  suit  against  the 
carrier."  In  Chartered  Mercantile 
Bank  of  India  v.  Netherlands  Steam 
Navigation  Co.,  9  L.  R.  Q.  B.  Div.  118. 
10  Q.  B.  Div.  521,  the  goods  were 
shipped  at  Singapore,  an  English  port, 
to  be  carried  to  a  port  in  Java,  in  a 
vessel  carrying  the  Dutch  flag,  and 
the  contract  was  held  to  be  governed 
by  the  law  of  England.  A  rule  of  law 
founded  on  public  policy  cannot  be 
set  aside  in  our  own  courts  by  any 
stipulation  to  adopt  the  law  of  an- 
other country.  The  stipulation  in  a 
bill  of  lading  that  the  liability  of  the 
carrier  shall  be  governed  by  the  law 
of  England,  is  a  device  to  secure  an 
unlawful  exemption.  In  re  The  En- 
ergia,  56  Fed.  124,  affd..  66  Fed. 
604,  13  C.  C.  A.  653  When 
the  British  owner  of  a  British 
ship  is  proceeded  against  in  an 
American  court  by  both  British 
and  American  cargo  owners  in  re- 
spect to  a  loss  of  cargo  occurring  in 
British  waters,  the  extent  of  his 
liability  is  determined  by  the  law  of 
the  United  States  and  not  of  Great 
Britain.  In  re  State  Steamship  Co., 
60  Fed.  1018. 


§    1 198  CONTRACTS.  44O 

negligence  of  the  master  and  crew,  it  was  held  in  a  suit  for  dam- 
ages in  the  English  courts  that  the  English  law  prevailed,  and  that 
the  stipulations  were  valid,  on  the  ground  that  the  contracts  were 
governed  by  the  law  of  the  flag,  and  on  the  particular  ground  that 
from  the  special  provisions  of  the  contracts  themselves  it  ap- 
peared that  the  parties  were  contracting  with  a  view  to  the  law 
of  England.^* 

However,  the  courts  of  the  forum  may  refuse  to  enforce  the 
provisions  in  a  carrier's  contract,  valid  where  made,  exempting  it 
from  liability  for  damages  sustained  whether  caused  by  the  negli- 
gence of  the  carrier  or  carriers,  or  any  of  its  or  their  employes, 
when  such  provisions  are  contrary  to  the  settled  policy  of  the 
forum, ^^ 

§  1198.  Contracts  of  telegraph  company. — As  regards  tel- 
egraph companies,  the  generally  accepted  or  prevailing  rule  is  that 
if  a  telegraphic  message  is  delivered  to  the  company  in  one 
state  to  be  transmitted  by  it  to  a  place  in  another  state,  the 
validity  and  interpretation  of  the  contract  as  well  as  the  rule 
measuring  damages  arising  upon  a  breach  and  the  company's 
liability  therefor  are  to  be  determined  by  the  laws  of  the  former 
state  where  the  contract  originated.^®  Thus  it  has  been  held  that 
where  a  message  is  delivered  to  a  telegraph  company  in  North 

**  In  re     Missouri     Steamship     Co.  N.  Car.  603,  45  S.  E.  938 ;  Hancock  v. 

(1888),  L.  R.  42  Ch.  Div.  321.  Western   Union  Telegraph  Co,  137  N. 

''  Lake  Shore  &c.  M.  S.  R.  Co.  v.  Car.    497,    49    S.    E.  952,  69  L.  R.  A. 

Teeters,  166  Ind.  335,  77  N.  E.  599,  5  403 ;  Johnson  v.  Western    Union  Tele- 

L.    R.    A.    (N.    S.)    425.      See    also,  graph  Co.,  144  N.  Car.  410,  57  S.  E. 

Adams    Express    Co.    v.    Walker,   26  122,    10  L.   R.   A.    (N.   S.)    256,   119 

Ky.  L.  1025,  83  S.  W.  106,  67  L.  R.  Am.    St.   961;    Western    Union    Tel. 

A.  412;   Davis  v.  Chesapeake  &c.  R.  Co.   v.   Pratt,   18   Okla.   274,  89   Pac. 

Co..    122   Ky.   528,   29   Ky.    L.   53,  92  237;    Western    Union    Telegraph    Co. 

S.  W.  339,  5  L.  R.  A.    (N.  S.)   458,  v.  Waller,  96  Tex.  589,  74  S.  W.  751, 

121    Am.    St.   481.     Such    a   contract  97    Am.     St.    936;     Western    Union 

may    be    upheld    when    the    accident  Tel.    Co.    v.    Parsley,    57    Tex.    Civ. 

occurs    outside    the    forum.      Cleve-  App.    8,    121    S.    W.    226;    Western 

land  &c.  R.  Co.  v.  Druien,  26  Ky.  L.  Union  Tel.  Co.  v.  Ashley   (Tex.  Civ. 

103,  80  S.  W.  778,  66  L.  R.  A.  275.  App.),    137    S.   W.    1165.     See   also, 

The    measure   of    damages    is    deter-  Markley    v.      Western     Union     Tel. 

mined  by  the  law  of  the  place  where  Co.    (Iowa),   132   N.   W.   37;    Brown 

the  loss  occurs.     Hasbrouck  v.   New  v.    Western    Union    Tel.    Co.,    85    S. 

York  &c.   R.  Co.,  202   N.  Y.  363,  95  Car.  459,  67  S.  E.  146,   137  Am.  St. 

N.  E.  808,  35  L.  R.  A.  (N.  S.)  537.  914.     But   see.    Western   Union    Tel. 

••Reed  v.  Western  Union  Tel.  Co.,  Co.  v.  Chilton  (Ark.),  140  S.  W.  26; 

135    Mo.    661,   37    S.    W.   904,   34   L.  Western  Union  Telegraph  Co.  v.  Eu- 

R.  A.  492.  58  Am.  St.  609;  Bryan  v.  banks.   100  Ky.   591,  38   S.   W.   1068, 

Western   Union   Telegraph    Co.,    133  36  L.  R.  A.  711,  66  Am.  St.  361.    And 


441  CONFLICT    OF    LAWS.  §    1 199 

Carolina  to  be  transmitted  by  it  to  a  party  in  South  Carolina  the 
one  in  South  Carolina  to  whom  the  message  is  directed  may 
maintain  an  action  in  North  Carolina  for  breach  of  contract  and 
recover  damages  for  mental  anguish  suffered  by  reason  of  such 
breach,  even  if  such  damages  could  not  have  been  recovered  in 
South  Carolina. ^^ 

On  the  other  hand,  the  same  court  has  held  that  if  a  message 
is  given  to  the  company  in  Virginia  to  be  transmitted  to  a  point 
in  North  Carolina  suit  cannot  be  maintained  in  North  Carolina 
for  a  breach  of  contract  for  failure  to  deliver  the  message  and 
damages  be  recovered  for  mental  anguish  suffered  by  reason  of 
such  breach,  when  damages  for  mental  anguish  are  not  recover- 
able in  Virginia.^® 

§  1199.    Remedies — Lex     fori — Generally. — One     of     the 

leading  cases  on  the  subject  of  the  conflict  of  laws  and  the  case 
which  is  perhaps  cited  by  the  courts  of  this  country  more  than 
any  other  decision  lays  down  the  following  rules :  "Matters  bear- 
ing upon  the  execution,  the  interpretation,  and  the  validity  of  a 
contract  are  determined  by  the  law  of  the  place  where  the  con- 
tract is  made.  Matters  connected  with  its  performance  are  regu- 
lated by  the  law  prevailing  in  the  place  of  performance.  Matters 
respecting  the  remedy,  such  as  the  bringing  of  suit,  admissibility 

see  generally,  Gray  v.  Western  Union  latter  case  the  message  was  sent  from 

Telegraph    Co.,    108  Tenn.   39,   64   S.  a    point    in    Arkansas    to   a   point    in 

W.  1063,  91  Am.  St.  706,  and  note.  Texas.      It    was    held    that    damages 

"  Bryan  v.  Western  Union  Tele-  for  mental  anguish  could  not  be  re- 
graph  Co.,  133  X.  Car.  603,  45  S.  E.  covered  in  Texas  when  not  recover- 
938.  Compare  also,  Brown  v.  West-  able  under  the  laws  of  Arkansas.  See, 
em  Union  Tel.  Co.,  85  S.  Car.  495,  however,  Western  Union  Tel.  Co. 
67  S.  E.  146,  137  Am.  St.  914.  To  v.  Chilton  (Ark.).  140  S.  W.  26, 
same  effect.  Western  Union  Tele-  holding  where  a  message  was  sent  in 
graph  Co.  v.  Waller,  96  Tex.  589,  IMissouri  to  the  plaintiff  in  Arkansas 
74  S.  W.  751,  97  .\m.  St.  936.  In  the  he  might  recover  damages  under  the 
last  case  a  message  was  given  to  the  Arkansas  statute  for  failure  to  de- 
company  in  Texas  to  be  transmitted  liver.  And  see  also.  Gray  v.  Tele- 
to  a  point  in  Indian  Territory.  graph    Co.,    108   Tenn.  39,   64   S.    W. 

""  Johnson  v.  Western  Union  Tele-  1063,  91  Am.  St.  706n.    On  the  ques- 

graph  Co.,  144  N.  Car.  410,  57  S.  E.  tion  as  to  when  the  sendee  stands  in 

122,  10  L.  R.  A.  (N.  S.)  256,  119  Am.  such  privity  of  relation  as  to  entitle 

St.  961 ;  Hall  v.  Western  Union  Tele-  him  to    sue,    see,    Anniston    Cordage 

graph  Co.,  139  N.  Car.  369,  52  S.  E.  Co.  v.   Western   Union   Tel.   Co.,    161 

50.     To  same  effect.   Western  Union  Ala.  216,  49  So.  770.  30  L.  R.  A.  (N. 

Telegraph  Co.  v.   Buchanan,  35  Tex.  S.)    1116  and  note,  135  Am.   St.  124. 

Civ.  App.  437,  80  S.  W.  561.     In  the  See  also,  ante,  ch.  32. 


§    I200  CONTRACTS.  442 

of  evidence,  statutes  of  limitation,  depend  upon  the  law  of  the 
place  where  the  suit  is  brought.  "^^  The  first  and  second  rules 
may  be  open  to  some  criticism,  but  the  third  is  universally  ad- 
mitted to  be  true.*" 

§  1200.  Lex  fori  governs  as  to  remedy. — There  is  no  ques- 
tion but  that  matters  respecting  the  remedy  such  as  the 
character  of  action  to  be  instituted,  the  admissibihty  of  evi- 
dence, and  the  mode  of  redress,  depend  upon  the  law  of  the 
place  where  the  suit  is  brought,  for  matters  of  procedure  must  be 
uniform  in  the  courts  of  the  same  country.  No  forum  in  which 
a  remedy  is  given  to  foreigners,  or  upon  foreign  contracts,  is 
expected  to  adopt  the  forms  of  trial  of  the  foreign  country."  The 
laws  of  the  country  where  the  contract  was  made  can  only  have 
reference  to  the  nature  of  the  contract,  not  the  mode  of  enforcing 
it.  Whoever  comes  into  a  country  voluntarily  subjects  himself  to 
all  the  laws  of  that  country,  and  therein  to  all  remedies  directed 
by  those  laws,  on  his  particular  engagement.'*-  It  remains  true 
that  as  a  general  rule  the  validity  and  legality  of  a  contract  made 
in  a  foreign  country  or  sister  state  is  to  be  determined  by  the  lex 
loci  contractus  but  the  remedy  or  mode  of  enforcing  it  is  to  con- 
form to  the  laws  of  the  country  or  state  where  the  action  is  insti- 
tuted." 

^Scudder  v.   Nat.   Bank,  91  U.   S.  Williams,  46  Miss.  618,  12  Am.  Rep. 

406,  23  L.  ed.  245.  319;  Bank  of  United  States  v.  Don- 

*ht   might   be   well   to   qualify   the  nally,  8  Pet.  (U.  S.)  361,  8L.ed.974; 

language  of  the  text  by  saying  that  Crofoot    v.    Thatcher,    19    Utah    212, 

in  some  jurisdictions  the  statutes  of  57  Pac.  171,  75  Am.   St.  725. 
limitations  have  been  held  not  mere-        ''Walters    v.    Whitlock,   9   Fla.   86, 

ly  to  bar  the  remedy  but  to  discharge  76  Am.  Dec.  607;   Rosa  v.   Cnst,    17 

the    debt.      Consequently    where    the  111.  450,  65  Am.  Dec.  679;   Hefferlm 

debt  is  actually     discharged     by     the  v.  Sinsinderfer,  2  Kans.  401,  85  Am. 

statute  of  limitations  in  force  at  the  Dec.     593;     Everett     v.     Hcrrm,     46 

place  of  the    contract    the    court    in  Maine  357,  74  Am.  Dec.  455;  Trash- 

which  suit  is  brought  will  not  apply  er  v.    Everhart,   3    Gill   &   J.    (Md.) 

the  rule  of  the  forum  as  expressed  in  234;    Ivey   v.    Lalland,   42    Miss.   444, 

its  statute  of  limitations.  97   Am.    Dec.    475,   2    Am.    Rep.    606. 

*^  Scudder  v.  Union  National  Bank,  The  lex  fori  governs  in  determming 
91  U.  S.  406,  23  L.  ed.  245;  Pritch-  the  mode  of  trial,  including  the  form 
ard  V.  Norton,  106  U.  S.  124,  27  of  pleading,  the  quality  and  degree 
L.  ed.  104,  1  Sup.  Ct.  102;  Harrison  v.  of  evidence,  and  the  mode  of  re- 
Edwards  12  Vt.  648,  36  Am.  Dec.  dress.  McAllister  v.  Smith,  17  111. 
364  328,   65   Am.    Dec.   651;    Union    Nat. 

^'Melan  v.  De  Fitz  James,   1   Bos.  Bank    v.    Chapman,    169    N.    Y.    538, 

&   P.    138;    De   la   Vega   v.    Vianna,  62  N.  E.  672,  57  L.   R.  A.   513n,  88 

1  B.  &  Ad.  284;  Bank  of  Louisiana  v.  Am.  St.  614,  affg.  52  App.  Div.   (N. 


443 


CONFLICT    OF    LAWS. 


§    1201 


§  1201.  Rule  applied. — Thus  where  a  contract  is  made  in 
one  country,  to  be  performed  in  a  second,  and  is  enforced  in  a 
third,  the  law  of  the  last  alone  will  govern  the  case  as  to  the 
remedy/*  So  it  has  been  held  that  a  statute  of  Massachusetts, 
providing  that  in  a  suit  on  a  usurious  contract  recovery  must 
be  limited  to  the  original  demand,  less  three  times  the  amount  of 
the  usurious  reserve,  applies  to  the  remedy  only,  and  has  no  force 
in  Vennont/'^  And  it  has  likewise  been  held  tliat  where  one  rents 
property  in  Alabama  the  lessor  may  proceed  in  Georgia  by  a 
distress  warrant  for  rent  due,  a  distress  warrant  being  in  Georgia 
a  mere  remedial  procedure.*^ 

§  1202.  When  forum  will  refuse  to  enforce  the  contract. — 
A  contract  void  by  the  law  of  the  place  where  made,  even  though 
it  is  to  be  performed  in  another  state,  by  the  laws  of  which  it 
would  be  valid,  is  void  everywhere,  as  the  courts  of  no  state  will 
enforce  the  void  contracts  of  another  state.*^    The  forum  may 


Y.)  57,  64  N.  Y.  S.  1053;  Kanaga  v. 
Taylor,  7  Ohio  St.  134,  70  Am.  Dec. 
62  (enforcement  of  chattel  mort- 
gage in  foreign  jurisdiction,  the 
property  before  breach  of  condition 
having  been  removed  to  Ohio,  and 
beyond  the  jurisdiction  of  the  state 
in  which  the  mortgage  was  given)  ; 
Jamieson  v.  Polts,  55  Ore.  292.  105 
Pac.  93;  Murphv  v.  Allen,  71  Vt.  377, 
45  Atl.  752;  Harrison  v.  Edwards,  12 
Vt.  648,  36  Am.  Dec.  364.  "A 
fourth  rule  is  this :  The  law  of  one 
state  having  ex  proprio  vigore,  no 
validity  in  another  state,  the  enforce- 
ment of  a  foreign  contract  which 
would  not  be  valid  by  the  law  of  the 
forum  where  its  enforcement  is  ju- 
dicially attempted,  depends  upon 
comity  which  is  extended  for  that 
purpose,  unless  the  agreement  is 
contrary  to  the  public  policy  of  the 
state  of  the  forum,  in  that  it  is  con- 
trary to  good  morals,  or  the  state  or 
its  citizens  would  be  injured  by  the 
enforcement,  or  it  perniciously  vio- 
lates positive  written  or  unwritten 
prohibitory  law;  the  extent  to  which 
comity  will  be  extended  being  very 
much  a  matter  of  judicial  policy  to 
be  determined  within  reasonable  lim- 
itations by  each  state  for  itself."  In- 


ternational Harvester  Co.  v.  Mc- 
Adam,  142  Wis.  114,  124  N.  W.  1042. 
State  laws  do  not  have  extraterrito- 
rial force  but  they  may  prevent  the 
enforcement  of  a  contract  which 
would  be  invalid  by  the  law  of  the 
forum  had  it  been  made  there.  Asch- 
er  v.  Edward  Moyse  Co.  (Miss.),  57 
So.  299. 

"Campbell  v.  Stein,  6  Dow.  116; 
Davis  V.  Morton,  Gait  &  Co.,  5 
Bush  (Ky.)  160,  96  Am.  Dec.  345. 

*»  Suffolk  Bank  v.  Kidder,  12  Vt. 
464,  36  Am.  Dec.  354. 

**■  Davis  v.  De  Vaughn,  7  Ga.  App. 
324,  66  S.  E.  956. 

"  Western  Union  Tel.  Co.  v.  Eu- 
banks,  100  Ky.  591,  38  S.  W.  1068,  36 
L.  R.  A.  711.  66  Am.  St.  361;  Lovell 
V.  Boston  &  M.  R.  Co.,  75  X.  H.  568, 
78  Atl.  621,  34  L.  R.  A.  (X.  S.)  67n; 
Hyde  v.  Goodnow,  3  N.  Y.  266;  An- 
drews V.  Herriot,  4  Cow.  (N.  Y.) 
508.  See  also,  Akers  v.  Demond,  103 
Mass.  318;  John  A.  Tollman  Co.  v. 
Reed,  115  Mich.  71.  72  X.  W.  1104; 
Corn  Exch.  Xat.  Bank  v.  Jansen.  70 
Xebr.  579,  97  X.  W.  814.  See,  how- 
ever, Allegheny  Co.  v.  Allen,  68  X. 
J.  L.  68.  52  Atl.  298,  69  N.  J.  L.  270, 
55  Atl.  724. 


§    1203  CONTRACTS.  444 

also  refuse  to  enforce  the  contract  because  the  lex  fori  furnishes 
no  remedy  at  all  or  a  remedy  which  is  too  broad  or  too  restricted 
to  protect  the  rights  of  the  parties  as  fixed  by  the  lex  loci  con- 
tractus.*^ In  case  the  remedy  is  too  broad,  this  difficulty  may  in 
some  instances  be  overcome  by  foregoing  a  part  of  the  remedy 
afforded  and  accepting  only  that  part  which  is  coextensive  with 
the  remedy  of  the  lex  loci  contractus.*^  The  forum  may  furnish 
a  remedy  for  the  enforcement  of  a  contract  of  a  married  woman, 
notwithstanding  the  contract  has  been  made  outside  the  forum 
and  is  of  a  nature  such  as  is  prohibited  by  the  lex  fori,  if  made 
at  the  forum.^" 

§  1203.  Foreign  laws  not  judicially  noticed. — Foreign  laws 
cannot  be  taken  notice  of  judicially,  but  must  be  proved  as  facts, 
and  with  respect  to  this  subject  the  several  states  of  the  union  are 
to  be  considered  in  relation  to  each  other  as  foreign  nations." 
This  general  doctrine  is  well  settled. 

*^Bank  of   Louisiana  v.   Williams,  Bank,  45  Nebr.  850,  64  N.  W.  227; 

46  Miss.  618,  12  Am.  Rep.  319;  Ruhe  Wood  v.  Wheeler,   111   N.  Car.  231, 

V.  Buck,  124  Mo.  178,  27  S.  W.  412,  25  16  S.  E.  418. 

L.  R.  A.  178,  46  Am.  St.  439  (law  "Treat  v.  C.  D.  Chapman,  1  Ala. 
of  the  forum  furnished  no  remedy);  App.  491,  56  So.  267;  Brackett  v. 
Hinkson  v.  Williams,  41  N.  J.  L.  35  Norton,  4  Conn.  517,  10  Am.  Dec. 
(remedy  too  broad)  ;  Armstrong  v.  179  (where  the  services  of  an  at- 
Best  112  N.  Car.  59,  17  S.  E.  14,  25  torney  were  rendered  in  the  state  of 
L.  R.  A.  188;  Dulin  v.  McCaw,  39  W.  New  York  and  it  was  held  that  the 
Va.  721,  20  S.  E.  681  (remedy  too  laws  of  New  York  were  the  stand- 
restricted).  See  also,  Hochstadter  v.  ard  by  which  the  case  must  be  deter- 
Hays,  11  Colo.  118,  17  Pac.  289;  mined);  Brown  Carriage  Co.  v. 
Burchard  v.  Dunbar,  82  111.  450,  25  Dowd,  155  N.  Car.  307,  71  S.  E.  721; 
Am.  Rep.  334;  Bradley  v.  Johnson,  Hoshaw  v.  Lines  (Okla.),  118  Pac. 
46  N.  J.  L.  271;  Spearman  v.  Ward,  583.  See  also,  Shelton  v.  Canadian 
114  Pa.  St.  634,  8  Atl.  430.  Northern  R.  Co.,  189  Fed.  153,  hold- 

^Hockstadter    v.    Hays,    11    Colo,  ing  that  the  law  of  Canada  must  be 

118,  17  Pac.  289;  Bradley  v.  Johnson,  proved  as  a  fact.     See,  however,  F. 

46  N   J   L.  271.  E.    Creelman   Lumber   Co.    v.    J.   A. 

"Benton  v.  German-American  Nat.  Lesh,  n  Ark.  16,  83  S.  W.  320. 


CHAPTER  XXX. 


STATUTE  OF   FRAUDS- 


i  1210.  Form  of  contract — Classes  of     §  1232. 
simple  contracts   in  writing. 

1211.  Statute  of  frauds — Origin  and        1233. 

purpose. 

1212.  Statute    of    frauds    substanti-        1234. 

ally  adopted  in  this  country. 

1213.  Construction  of  the  act. 

1214.  Operation  and   effect  of   stat-        1235. 

utes        generally — Executed 
contracts.  1236. 

1215.  Its  effect  on  verbal  contracts. 

1216.  Operation  and  effect  of   stat-        1237. 

utes    generally — Quasi  and 
implied  contracts. 

1217.  Statutes  generally  held  to  af-        1238. 

feet  remedies. 

1218.  Defense    of    statute    personal.        1239. 

1219.  When  statute  must  be  invoked        1240. 

by  third  person.  1241. 

1220.  Waiver  of  statute.  1242. 

1221.  Conflict      of      law— Law      of        1243. 

forum. 

1222.  Conflict  of  law — Cases  apply-        1244. 

ing  lex  loci  contractus.  1245. 

1223.  Conflict  of  law — Cases  apply-        1246. 

ing  law  of  place  of  perform- 
ance. 

1224.  How  statute  must  be  invoked.        1247. 

1225.  Fourth  section  of  the  origin- 

al act — Affect  form  of  sim-        1248. 
pie  contracts. 

1226.  Fourth    section — Promises    by        1249. 

executors    and    administra- 
tors. 

1227.  Fourth     section — Promise     to        1250. 

answer  for  debt  of  another        1251. 
— Scope  of  clause. 

1228.  Fourth     section — Promise     to 

answer  for  the  debts  of  an-        1252. 
other — General    matters. 

1229.  Necessity     for     a     subsisting,        1253. 

binding  obligation.  1254. 

1230.  To   whom    the    promise    must 

be  made.  1255. 

1231.  Original  and  collateral  prom-        1256. 

ises. 

445 


General  rules  further  con- 
sidered. 

Original  promises — Payment 
out  of  property  of  debtor. 

Original  promises — New  con- 
sideration moving  to  prom- 
isor. 

Original  promises — Promise 
to  pay  own  debt. 

Question  determined  by  per- 
son to  whom  credit  is  given. 

Person  to  whom  credit  is 
given — Services  rend  e  r  e  d, 
and  the  like. 

Language  indicative  of  col- 
lateral promise. 

Miscellaneous    promises. 

Question  one  of  intention. 

When  a  question  for  the  jury. 

Relinquishment  of  lien. 

Independent  promise  releas- 
ing another. 

Del  credere  commission. 

As  to  contracts  of  indemnity. 

Oral  promise  to  indemnity 
guarantor  not  within  the 
statute. 

Illustrations  of  collateral 
promises. 

Agreements  in  consideration 
of   marriage. 

Promise  to  do  some  act  other 
than  marry  in  consideration 
of  marriage. 

Antenuptial   contracts. 

Antenuptial  parol  agreements 
reduced  to  writing  after 
marriage. 

Antenuptial  agreement — Exe- 
cution. 

Contracts  relating  to  lands. 

Necessity  for  and  sufficiency 
of  writing. 

Scope  of  the  clause. 

Cases  not  within  the  statute — 
Constructive    trusts. 


CONTRACTS. 

1257.  Cases  not  within  the  statute—     §  1282. 

Party    fences    and    location 
of  boundary  line. 

1258.  Cases   not    within   the   statute 

— Licenses      to      enter      on        1283. 
lands. 

1259.  Fixtures. 

1260.  Fructus   industriales,  1284. 

1261.  Other  collateral  contracts  not 

within    the    fourth    clause —        1285. 
Illustrations. 

1262.  Cases     not     within     fourth 

clause — Partnership   to   deal        1286. 
in  lands. 

1263.  Cases    disting  u  i  s  h  e  d — How 

contract   may   be  taken   out        1287. 
of   statute. 

1264.  Appointment  of  agent  to  buy 

land. 

1265.  Cases    not    within    the    fourth        1288. 

clause — Judicial  sales. 

1266.  Contracts   within   statute — Pa- 

rol contract  to  arbitrate.  1289. 

1267.  Cases     within     clause     four — 

Easements.  1290. 

1268.  Contracts    within    the    fourth 

clause — Contracts     for     the 
sale  of  growing  trees. 

1269.  Sale  of  standing  timber  to  be        1291. 

immediately    removed. 

1270.  Cases  within  the  fourth  clause        1292. 

— Leases.  1293. 

1271.  How      contract      concerning 

land   may  be  taken   out   of        1294. 
the    statute. 

1272.  Insufficient    performance — 

Possession.  1295. 

1273.  Taking       possession — English        1296. 

Doctrine.  1297. 

1274.  Insufficient    performance        1298. 

— Payment      of      purchase-        1299. 
price — Exchange   of    lands. 

1275.  Additional  illustrations  of  the        1300. 

rule. 

1276.  Performance  of  services.  1301. 

1277.  Agreements    not    to    be    per- 

formed    within     a     year — 

Scope  of  the  clause.  1302. 

1278.  Contracts     within     the     fifth        1303. 

clause — Contracts    to   last   a 

year  from  a  date  in  futuro        1304. 

— Leases. 

1279.  Contracts  to  last  a  year  from        1305. 

a  date  in   futuro — Services. 

1280.  Method  of  computing  time.  1306. 

1281.  Contracts     which     cannot    be 

performed  within  a  year.  1307. 


446 

Cases  not  within  the  fifth 
clause — Contracts  which 
may  be  performed  within 
a  year. 

Performance  within  a  year 
possible — R  u  1  e  illustrated 
and  considered  further. 

Performance  depending  upon 
a   contingency. 

Contracts  not  within  the  fifth 
clause — Contracts  to  con- 
tinue  during   life. 

Contracts  to  be  performed  on 
death  of  one  of  the  parties 
or  third   person. 

Statute  of  frauds  apphes  to 
contracts  which  cannot 
possibly  or  reasonably  be 
performed  within  a  year. 

Agreement  not  to  be  per- 
formed within  a  year — Op- 
tion to  terminate. 

Performance  on  one  side 
within  the  year. 

Performance  by  one  party 
within  a  year — Sufficiency 
of  question  of  construc- 
tion. 

Seventeenth  section  of  the 
statute. 

Scope  of  the  statute. 

Transactions  construed  as 
contracts    for    sale. 

Work  and  labor  contracts  dis- 
tinguished from  contracts 
of  sale. 

Massachusetts  rule. 

The  rule  in  New  York. 

The  English  rule. 

Sale   of   timber   products. 

Realty  improvement  c  o  n  - 
tracts. 

Work  in  raising  crops  and 
the  like. 

Sufficiency  of  the  memoran- 
dum acquired  by  the  fourth 
and   seventeenth   sections. 

Form    of    memorandum. 

Correspondence  as  evidence 
of   the  contract. 

Bought  and  sold  notes — "Slip 
contracts." 

The  contents  of  the  memo- 
randum. 

Names  of  parties  must  b  e 
shown. 

Description  of  subject-matter 
— Personal  property. 


I 


447 


STATUTE    OF    FRAUDS. 


§    I2IO 


J  1308.  Contents     of     memorandum —     §  1325. 
Admission   of   evidence   ali- 
unde. 

1309.  Contents     of     memorandum —        1326. 

Descriptions   of   real   estate. 

1310.  Further    illustrations    of    the        1327. 

rule. 

1311.  Contract    to    convey    one    of 

several  tracts.  1328. 

1312.  Contents     of     memorandum — 

Descriptions    of    real    estate 
held  insufficient. 

1313.  Whether     the     memorandum       1329. 

must    show    the    considera- 
tion. 1330. 

1314.  Weight  of  authority.  1331. 

1315.  Statement    of    consideration — 

Executory    contracts — Price        1332. 
and  terms.  1333. 

1316.  Memorandum — Time    of    pay- 

ment. 1334. 

1317.  Form  of  the  signature.  1335. 

1318.  Place  of  signature. 

1319.  Who  must  sign.  1336. 

1320.  Who     is     the     party     to     be 

charged.  1337. 

1321.  Vendor     as    party    to    be 

charged. 

1322.  Trustee    as    party    to    be        1338. 

charged.  1339. 

1323.  Special     statutes    relating    t  o 

the  signature  of  the  parties.        1340. 

1324.  Time      when     memorandum        1341. 

must  be  made.  1342. 

1343. 


Must  memorandum  be  pre- 
pared before  action  is 
brought  ? 

Necessity  for  delivery  of 
memorandum. 

Taking  contract  out  of  oper- 
ation of  seventeenth  sec- 
tion— Part    performance. 

Taking  contract  out  of  oper- 
ation of  seventeenth  sec- 
tion— Receipt  and  accep- 
tance— Necessity    for. 

Kind  of  acceptance — Must  be 
unconditional. 

Mere    words    insufficient. 

Acts  construing  an  accep- 
ancc. 

Further    illustrations. 

Acceptance  of  part  of  the 
goods. 

Goods  sold  by  sample. 

Constructive  delivery  and  ac- 
ceptance. 

Acceptance  by  agent,  bailee 
or  joint  purchaser. 

Delivery  at  a  place  or  to  a 
person  designated  by  the 
buyer. 

Delivery   to   a  carrier. 

Delivery  which  takes  contract 
out  of  the  statute. 

Question  for  the  jury. 

Earnest  or  part  payment. 

Auctioneer's   sale. 

Judicial  sales. 


§  1210.  Form  of  contract — Classes  of  simple  contracts  in 
writing. — As  already  shown  in  the  earlier  part  of  this  work, 
in  the  case  of  sealed  contracts,  the  seal  takes  the  place  of  the 
consideration  required  in  simple  contracts.^  The  deed  is  the  true 
type  of  formal  contract,  and  may  be  said  to  derive  its  validity 
from  the  form,  or,  in  other  words,  from  the  seal  and  form  of  exe- 
cution." Simple  or  parol  contracts,  however,  do  not  depend  on 
form  in  any  such  sense  to  make  them  true  contracts ;  but  a  certain 
form,  as  a  right,  may  be  required  as  evidence  of  the  contract, 


'  See,  ante.  §  196. 

'  The  statute  of  frauds  does  not  ap- 
ply to  contracts  of  this  character,  i. 
e.,  agreements  under  seal,  or  deeds; 
it  operates  only  on  express  simple 
contracts  resulting  from  the  consent 
of  the  parties  to  a  promise  given  for 
a   valuable   consideration.     See,    also, 


Cooch  V.  Goodman,  2  Q.  B.  580.  42  E. 
C.  L.  817;  Aveline  v.  Whisson.  4  M. 
&  G.  801.  43  E.  C.  L.  414.  In  Cherrj' 
V.  Fleming,  4  Exch.  631.  Rolfe.  B., 
said  :  "I  am  strongly  inclined  to  think 
that  the  statute  does  not  extend  to 
deeds,  because  its  requirements  would 
be    satisfied    by    the    parties    putting 


a    I2I0 


CONTRACTS. 


448 


SO  as  to  make  it  enforcible  at  law  where  proper  objection  is  made 
or  the  question  properly  raised.^  In  other  words  the  form  re- 
quired does  not  in  such  cases  go  to  the  very  existence  of  the  con- 
tract, and  while  its  absence  prevents  an  action  being  maintained 
upon  it  the  omission  may  be  made  good,  and  the  contract  is  not 
void  nor  incapable  of  being  put  in  proper  form  before  an  action 
is  instituted.*  Simple  or  parol  contracts,  as  elsewhere  explained, 
include  contracts  in  writing  as  well  as  those  by  word  of  mouth 
or  implied  in  fact  from  conduct  or  the  like ;  and  simple  contracts 
in  writing  may  now  be  further  classified  or  divided,  for  con- 
venience, first,  into  those  which  are  in  writing  but  are  not  re- 
quired to  be  in  writing  nor  to  be  proved  by  writing;  second, 
those  which  do  not  need  to  be  in  writing  but  must  be 
proved  by  writing;  and  third,  contracts  which  must  be  in 
writing. 

Negotiable  instruments,  it  would   seem,  must  be  in  writing 
even  in  the  absence  of  any  statute  to  that  effect  and  there  are 


their  mark  to  the  writing.  The  ob- 
ject of  the  statute  was  to  prevent 
matters  of  importance  from  resting 
on  the  frail  testimony  of  memory 
alone.  Before  the  Norman  time, 
signature  rendered  the  instrument 
authentic.  Sealing  was  introduced 
because  the  people  in  general  could 
not  write.  Then  there  arose  a  dis- 
tinction between  what  was  sealed  and 
what  was  not  sealed,  and  that  went 
on  until  society  became  more  ad- 
vanced, when  the  statute  ultimately 
said  that  certain  instruments  must 
be  authenticated  by  signature.  That 
means,  that  such  instruments  are  not 
to  rest  on  parol  testimony  only,  and 
it  was  not  intended  to  touch  those 
which  were  already  authenticated  by 
a  ceremony  of  a  higher  nature  than 
a  signature  or  a  mark." 

^  The  statute  does  not  dispense  with 
the  common-law  requirement  of  con- 
sent, promise  and  consideration;  in- 
stead, its  object  was  to  secure  proof 
of  these  elements.  "The  statute  neyer 
meant  to  enforce  any  promise  which 
was  before  invalid,  merely  because 
put  in  writing."  Wain  v.  Warlters,  5 
East  10.  See  also,  the  case  of  Rann 
V.  Hughes,  7  T.  R.  350n,  in  which  it 
is   said :    "All   contracts   are,   by   the 


laws  of  England,  distinguished  into 
agreements  by  specialty,  and  agree- 
ments by  parol ;  nor  is  there  any  such 
third  class  as  some  of  the  counsel 
have  endeavoured  to  maintain,  as 
contracts  in  writing.  If  they  be  mere- 
ly written  and  not  specialties,  they 
are  parol,  and  a  consideration  must 
be  proved.  But  it  is  said  that  the 
Statute  of  Frauds  has  taken  away 
the  necessity  of  any  consideration  in 
this  case."  After  a  review  of  the  stat- 
ute the  court  said :  "That  this  does 
not  prove  that  the  agreement  was 
still  not  liable  to  be  tried  and  judged 
of  as  all  other  agreements  merely  in 
writing  are  by  the  common  law,  and 
does  not  prove  the  converse  of  the 
proposition,  that  when  in  writing  the 
party  must  be  at  all  events  liable." 

*  See,  Leroux  v.  Brown,  12  C.  B. 
801,  74  E.  C.  L.  801 ;  Britain  v.  Ros- 
siter,  11  Q.  B.  D.  123;  Maddison  v. 
Alderson,  8  App.  Cas.  467,  488;  Bird 
V.  Munroe,  66  Maine  ZZ7,  22  Am. 
Rep.  571 ;  Townsend  v.  Hargraves, 
118  Mass.  325.  Some  cases,  however, 
apparently  consider  the  statute  of 
frauds  as  affecting  the  validity  of  the 
contract  itself.  The  failure  to  com- 
ply therewith  makes  the  contract 
void. 


449  STATUTE  OF  FRAUDS.  §  121 1 

Statutes  in  many  states  requiring  the  acceptance  of  a  bill  of 
exchange  or  the  like  to  be  in  writing.  So  the  acknowledg- 
ment of  debt  barred  by  the  statute  of  limitations  and  authority 
to  bind  another  as  surety  are  usually  required  by  statute  to 
be  in  writing.  And  this  is  true  in  regard  to  assignments  of 
copyrights  and  patents  under  act  of  congress.  There  are  also 
jurisdictions  whose  statutes  require  additional  contracts  to  be  in 
writing,  or  at  least  to  be  so  proved.  But  the  majority  of  such 
statutes,  however,  relate  to  contracts  under  seal  for  conveyances 
of  land,  or  the  like.  The  principal  statute  requiring  contracts 
to  be  proved  by  writing  is  the  statute  of  frauds,  and  the  numerous 
cases  of  contracts  falling  within  that  statute  constitute  the  main 
body,  if  not  practically  the  whole  body,  of  the  class  of  contracts 
that  need  not  be  in  writing  but  must  be  proved  by  writing.  Deeds, 
negotiable  instruments  and  other  particular  written  contracts  will 
be  specifically  considered  in  another  volume.  Here  we  have  to  do 
chiefly  with  simple  contracts  as  affected  by  the  statute  of  frauds. 

§  1211.  Statute  of  frauds — Origin  and  purpose. — The  stat- 
ute of  frauds,  so  called,  requiring  in  many  cases  written  evidence 
of  a  contract,  was  passed  in  the  twenty-ninth  year  of  the  reign 
of  Charles  II,  being  A.  D,  1677.  It  is  very  generally  in  force  in 
this  country,  but  the  statutes  of  the  different  states,  while  agree- 
ing substantially  with  the  English  statute,  do  not  copy  its  pro- 
visions exactly.'^  The  object  of  the  statute  was  that  contracts  of 
an  important  character,  as  well  as  those  which  were  not  to  be  exe- 
cuted within  a  prescribed  period,  should  be  supported  by  more 
satisfactory  evidence  than  could  be  afforded  by  verbal  testimony 
only.  The  risks  of  mistakes,  arising  from  the  defective  and  im- 
perfect recollection  of  witnesses,  and  the  temptation  to  commit 
fraud  by  perjury,  were  the  evils  against  which  the  statute  was 
directed. ** 

'The  authorship  of  this  celebrated  v.  Warlters  (1804),  5  East  10.  "The 
enactment  is  mainly  ascribed  to  Sir  statute,"  says  Lord  Kenyon  in  Chap- 
Matthew  Hale,  but  it  was  without  lin  v.  Rogers,  1  East  192,  "is  one 
doubt  the  product  of  several  minds,  of  the  wisest  laws  in  our  statute 
Lord  Nottingham  and  others  bear-  book."  For  the  statutes  of  the  vari- 
ing  a  part  in  framing  it.  Reed  on  ous  states,  see  Smith  on  the  Law  of 
Statute  of  Frauds,  §  1 ;  Wyndham  v.  Fraud. 
Chetwynd   (1757),  1  Burr  414;  Wain        "Saunders    v.    Wakefield,    4    B.    & 

29 — Contracts,  Vol.  2 


§    12 1 2  CONTRACTS.  45O 

§  1212.    Statute   of   frauds   substantially   adopted   in   this 
country. — The  original  statute  commonly  termed  the  "stat- 
ute of  frauds/'  in  so  far  as  it  related  to  the  subject  of  contracts, 
in  substance  provided,  ( i )  No  action  could  be  brought  to  charge 
any  executor  or  administrator  upon  any  special  promise  to  answer 
in  damages  out  of  his  personal  estate;  (2)  to  charge  any  defend- 
ant upon  any  special  promise  to  answer  for  the  debt,  default  or 
miscarriage  of  another  person;  (3)  to  charge  any  person  upon 
any  agreement  made  upon  consideration  of  marriage;  (4)  upon 
any  contract  for  sale  of  lands,  tenements  or  hereditaments,  or  any 
interest  in  or  concerning  them ;  (5)  upon  any  agreement  not  to  be 
performed  within  one  year  from  the  making  thereof  unless  the 
agreement  upon  which  the  action  was  brought,  or  some  memo- 
randum or  note  thereof,  should  be  in  writing  and  signed  by  the 
party  to  be  charged  therewith  or  his  agent  duly  authorized  in 
writing;  (6)  all  declarations  or  creations  of  trusts  or  confidences 
in  any  lands,  tenements  or  hereditaments  were  to  be  manifested 
and  proved  by  some  writing,  or  by  the  last  will  in  writing  of  the 
party  who  in  law  was  able  to  declare  such  trust,  or  else  they 
should  be  utterly  void  and  of  no  effect,  except  where  they  arose 
by  operation  of  law ;  (7)  all  grants  and  assignments  of  any  trusts 
and  confidences  were  likewise  to  be  in  writing,  or  by  will  or  de- 
vise or  to  be  void;  (8)  no  contract  for  the  sale  of  any  goods, 
wares  and  merchandise  for  the  price  of  ten  pounds  sterling,  or 
upward,  should  be  good  except  where  the  buyer  should  accept 
part  of  the  goods  so  sold  and  actually  receive  the  same,  or  give 
something  in  earnest  to  bind  the  bargain  or  in  part  payment 
therefor,  or  that  some  note  or  memorandum  in  writing  of  the 
bargain  be  made  and  signed  by  the  party  to  be  charged  or  his 
agent  lawfully  authorized.'    The  provisions  bearing  especially  on 
contracts  are  contained  in  the  fourth  and  seventeenth  sections. 
They  will  be  given  somewhat  thorough  consideration  in  the  sub- 
sequent sections  of  this  chapter.    The  original  English  statute  of 
frauds  has  been  in  substance  re-enacted  in  nearly  all  the  states 

Aid.  595 ;   Norman  v.  Molett,  8  Ala.        '  Smith  on  the  Law  of  Fraud,  §  312, 
546;  Marcy  v.  Marcy,  9  Allen  (Mass.)     pp.  328,  329. 
8;     Townsend     v.     Hargraves,     118 
Mass.  325. 


451  STATUTE  OF  FRAUDS.  §  12 1 3 

and  territories  of  this  country.  Generally,  however,  our  state 
statutes  restrict  the  term  for  which  oral  leases  may  be  made  to 
one  year. 

§  1213.  Construction  of  the  statute, — The  courts  differ  as 
to  the  construction  to  be  placed  on  the  statute  of  frauds.  This,  it 
is  believed,  is  largely  due  to  the  temperament  of  the  various 
judges  who  have  passed  upon  it  and  the  attitude  which  they 
took  toward  the  statutes,  and  the  supposed  exigencies  of  justice. 
As  is  well  known,  some  judges  always  insist  on  a  literal  interpre- 
tation and  application  of  the  statute,  regardless  of  its  manifest 
intent  and  purpose;  others  would  place  a  strict  construction  on 
the  statute  so  as  to  make  it  apply  only  in  those  cases  which  come 
within  the  intent  of  the  statute.  Regardless  of  many  cases  which 
assert  a  contrary  doctrine  a  review  of  the  authorities  will  show 
that  the  courts  have  in  the  main  given  the  statute  a  strict  con- 
struction ;  moreover,  it  is  believed  that  this  is  a  growing  tendency. 
Thus  it  was  originally  held  that  an  agreement  made  in  considera- 
tion of  marriage  was  directly  within  the  words  and  not  out  of  the 
intent  of  the  statute.^  But  subsequently  it  was  held  that  mutual 
promises  to  marry  were  not  within  the  statute.®  This  latter  con- 
struction is  the  one  which  has  prevailed. ^°  The  tendency  on  the 
part  of  the  court  to  limit  the  application  of  the  statute  is  also 
strikingly  illustrated  in  the  interpretation  placed  upon  that  pro- 
vision which  provides  that  no  action  can  be  brought  upon  any 
agreement  not  to  be  performed  within  one  year  from  the  making 
thereof  unless  the  agreement  upon  which  the  action  was  brought, 
or  some  memorandum  or  note  thereof,  shall  be  in  writing  and 
signed  by  the  party  to  be  charged  therewith,  or  his  agent  duly 
authorized  in  writing.  This  has  been  held  to  apply  only  to  con- 
tracts which  by  their  terms  are  not  to  be  performed  in  a  year, 
and  inapplicable  to  those  agreements  which  by  any  possibility  can 

'Philpot  V.  Wallet,  3  Lev.  65.  ute,  'Any  agreement  made  upon  con- 
•  Harrison  v.  Cage,  1  L.  D.  Raym.  sideration  of  marriage.'  meant  or  in- 
386.  eluded  promises  to  marry.  It  would 
"Clark  V.  Pendleton,  20  Conn.  495;  be  imputing  to  the  legislature  too 
Blackburn  v.  Mann,  85  Til.  222;  Short  great  an  absurdity  to  suppose  that 
V.  Stotts,  58  Ind.  29;  Morgan  v.  Yar-  they  had  enacted  that  all  our  court- 
borough,  5  La.  Ann.  316;  Ogden  v.  ships,  to  be  valid,  must  be  in  writ- 
Ogden,  1  Bland  (Md.)  284;  Wilbur  ing."  Withers  v.  Richardson,  5  T.  B. 
V.  Johnson,  58  Mo.  600.  "It  has  never  Mon.  (Ky.)  94,  17  .^m.  Dec.  44. 
been  held  that  the  words  of  that  stat- 


§    1 2 14  CONTRACTS.'  452 

be  fulfilled  or  completed  in  one  year."  Other  cases  lay  down 
the  rule  that  if  the  contract  may  be  performed  by  one  of  the  par- 
ties within  a  year  it  is  not  within  the  statute,  although  the  other 
party  is  not  to  perform  within  a  year.  That  is  to  say,  the  courts 
have  inserted  the  words  "on  either  side"  in  the  clause  not  to  be 
performed  within  a  year.^^  Lord  Mansfield  seems  to  have  given 
expression  to  the  generally  accepted  rule  applied  in  the  con- 
struction of  the  statute  of  frauds.  He  said:  "The  object  of  the 
legislature  in  that  statute  was  a  wise  one;  and  what  the  legisla- 
ture meant,  is  the  rule  both  at  law  and  equity.  *  *  *  The  key 
to  the  construction  of  the  act  is  the  intent  of  the  legislature ;  and, 
therefore  many  cases,  though  seemingly  within  the  letter,  have 
been  let  out  of  it;  more  instances  have  indeed  occurred  in  courts 
of  equity  than  of  law,  but  the  rule  is  in  both  the  same.  For 
instance,  where  a  man  admits  the  contract  to  have  been  made,  it  is 
out  of  the  statute ;  for  here  there  can  be  no  perjury.  Again 
*    *    *    if  the  contract  is  executed,  it  is  never  set  aside."^^ 

§  1214.  Operation  and  effect  of  statutes  generally — Exe- 
cuted contracts. — This  last  proposition  is  well  settled.  A 
verbal  contract  originally  within  the  statute  is  removed  from  the 
operation  of  the  statute  when  fully  performed.^*  So  when  some 
of  the  provisions  of  a  contract  are  .within  the  statute  and  others 

"See,     Anonymous,    1     Salk.    280;  133;    James    v.    Morey,    44    III.   352; 

Fenton    v.    Emblers,    3    Burr.    1278;  Pearce  v.  Pearce,   184  111.  289,  56  N. 

Moore   v.    Fox,    10    Johns.    (N.    Y.)  E.    311;     Anderson     School     Tp.    v. 

244,    6   Am.    Dec.    338;    Blanding   v.  Lodge,  130  Ind.  108,  29  N.  E.  411,  30 

Sargent,  33  N.  H.  239,  66  Am.  Dec.  Am.  St.  206;  Nicholson  v.  Schmucker, 

720;    Walker   v.    Johnson,   96   U.    S.  81    Md.   459,    32   Atl.    182;    Stone   v. 

424,    24    L.    ed.    834;    McPherson    v.  Dennison,  13  Pick.  (Mass.)  1,  23  Am. 

Cox,   96   U.    S.   404,   24   L.   ed.   746;  Dec.   654;    Norton    v.    Simonds.    124 

McGinnis  v.  Cook,  57  Vt.  36,  52  Am.  Mass.  19;  Gerber  v.  Upton,  123  Mich. 

Rep.    115.    See   further,   post,    §    1277  605,  82  N.  W.  363;  McCue  v.  Smith, 

et  seq.  9  Gil.  (Minn.)  237,  86  Am.  Dec.  100; 

"  Donellan  v.  Read,  3  B.  &  Ad.  899,  Griffith  v.   Thompson,  50   Nebr.   424, 

23  E.   C.  L.  391;   Cherry  v.  Heming,  69    N.    W.   946;    Dodge   v.    Crandall. 

4    Exch.    631.      See    also,     Piper    v.  30  N.  Y.  294;  Newman  v.  Nellis,  97 

Fosher,   121   Ind.   407,  23  N.  E.  269;  N.  Y.  285;  Brown  v.  Farmer's  Loan 

Smalley   v.    Greene,   52   Iowa  241,   3  &  T.  Co.,  117  N.  Y.  266,  22  N.  E.  952; 

N.  W.  78.     Contra,  Whipple  v.   Par-  Huntley  v.    Huntley,    114  U.    S.   394, 

ker,  29  Mich.  369.    See,  post,  §  1290.  5    S.    Ct.   884,    29   L.    ed.    130 ;    Bibb 

"Simmon    v.    Motives,    1    W.    Bl.  v.  Allen,  149  U.  S.  481,  497,  37  L.  ed. 

599,  3  Burr.  1921.  819,  13  Sup.  Ct.  950;   Pireaux  v.  Si- 

"  Bates  V.  Babcock,  95  Cal.  479,  30  mon,  79  Wis.  392,  48  N.  W.  674. 
Pac.  605,  16  L.  R.  A.  745,  29  Am.  St. 


453  STATUTE  OF  FRAUDS.  §  12 1 5 

are  not  the  statute  does  not  apply  whenever  those  within  it  have 
been  performed.  Thus,  when  an  oral  contract  for  the  sale  of  land 
has  been  executed  and  accepted  an  action  may  be  maintained  for 
the  agreed  purchase-price.^^ 

§  1215.  Its  effect  on  verbal  contracts. — The  statute  does 
not  prohibit  the  making  of  an  oral  agreement,  but  bars  the  legal 
remedies  by  which  it  might  otherwise  have  been  enforced.  A 
new  rule  of  evidence  is  introduced  and  a  new  defense  created  by 
requiring  that  the  agreement  shall  be  proved  by  a  writing.^^  A 
contract  within  the  statute  is  not  illegal  when  not  written,  but 
only  not  capable  of  bein^  enforced,  an  immunity  which  it  is  said 
the  defendant  on  the  trial  may  waive. ^^  If  the  parties  choose  to 
perform  it,  the  contract  remains  in  full  force  notwithstanding  the 
statute,  so  far  as  relates  to  the  legal  effect  and  consequences  of 
what  has  been  done  under  it.^^  The  difference  in  the  phraseology 
between  the  fourth  and  seventeenth  sections  in  this,  that  the  for- 
mer says  "no  action  shall  be  brought"  upon  the  contract,  and  the 
latter  says  the  contract  shall  not  be  "allowed  to  be  good,"  has  been 

"Worden   v.    Sharp,   56    111.    104;  W.  484;  Crane  v.  Powell,  139  N.  Y. 

Stephenson  v.   Arnold,   89   Ind.  426;  379,  34  N.  E.  911;  Magee  v.  Blank- 

Brackett  v.  Evans.   1   Cush.    (Mass.)  enship,  95  N.  Car.  563;  Garrett-Will- 

79;     Preble     v.     Baldwin,     6     Cush.  iams  Co.  v.   Hamill,  131   N.  Car.  57, 

(Mass.)    549;   Waldron  v.  Laird,  65  42  S.  E.  448;  Child  v.  Pearl,  43  Vt. 

Mich.   237,   32   N.   W.   29;    Galley  v.  224. 

Galley,  14  Nebr.  174,  15  N.  W.  318;  "Adams    v.    Patrick,    30   Vt.    516; 

Bowen  v.  Bell,  20  Johns.  (N.  Y.)  ]\Iontgomery  v.  Edwards,  46  Vt.  151, 
338,  11  Am.  Dec.  286;  Remington  v.  .  14  Am.  Rep.  618. 

Palmer,  62  N.  Y.  31;  Randall  v.  Tur-  "Crane  v.   Gough,   4  Md.   316.    It 

ner,  17  Ohio  St.  262;  Negley  v.  Jef-  was  settled  by  Leroux  v.  Brown,  12 

fers.  28  Ohio  St.  90;  Ascutney  Bank  C.  B.  801,  that  the  statute  does  not 

V.  Ormsbv,  28  Vt.  721 ;  King  v.  Smith,  affect  the  validity  of  the  contract,  but 

33  Vt.  22';  Niland  v.  Murphy,  73  Wis.  only  makes  a  particular  kind  of  proof 

326,  41  N.  W.  335.  necessary  to  enable  a  party  to  bring 

"Whitney    v.     Cochran,     1     Scam,  an  action  upon  it.    "I  think  it  is  now 

(111.)  209;  Chicago  Dock  Co.  v.  Kin-  finally  settled  that  the  true  construc- 

zie,  49   111.  289;   Lowman  v.   Sheets,  tion  of  the  Statute  of  Frauds,  both 

124  Ind.  416,  24  N.  E.  351,  7  L.  R.  the  4th  and   17th  sections,  is  not  to 

A.   784;    Merchant   v.   O'Rourke,    111  render    the    contracts     within     them 

Iowa  351,   82   N.   W.  759;   Cahill  v.  void,  still  less  illegal,  but  is  to  ren- 

Bigelow,     18     Pick.      (Mass.)      369;  der    the    kind    of    evidence    required 

Haynes  v.  Nice,  100  Mass.  327,  1  Am.  indispensable    when    it    is    sought   to 

Rep.   109;   La  Du-King  Mfg.   Co.  v.  enforce     the     contract."     per     Lord 

La  Du,  36  Minn.  473,  31  N.  W.  938;  Blackburn  in   Maddison   v.  Alderson 

Kriger  v.  Leppel,  42  Minn.  6,  43  N.  (1883),  8  App.  Cas.  467,  488. 


I2l6 


CONTRACTS. 


454 


commented  upon  in  various  cases,  but  the  difference  does  not 
change  the  force  and  effect  of  the  two  sections/^ 

§  1216.  Operation  and  effect  of  statute  generally — Quasi 
and  implied  contracts. — Closely  analogous  to  executed  agree- 
ments are  those  contracts  which  are  termed  quasi  or  implied  con- 
tracts, and  as  the  statute  of  frauds  does  not  apply  to  the  former 
neither  does  it  apply  to  the  latter.  As  here  used  the  term  "quasi 
contract"  applies  to  all  contractual  duties  which  are  not  enforcible 
by  special  assumpsit  or  by  the  action  of  debt.  It  includes  those 
cases  in  which  one  party  has  conferred  a  benefit  which  was  not 
intended  as  a  gratuity  upon  the  other  to  the  conferring  of  which 
benefit  the  latter  has  assented.  Thus  where  the  defendant  has 
had  the  benefit  of  the  plaintiff's  labor  and  money  expended  at  his 
request  and  though  he  may  not  be  legally  liable  to  carry  out  his 
original  promise  the  law  upon  his  refusal  so  to  do  implies  a  prom- 
ise to  compensate  the  plaintiff.^*^     Quasi  contracts  or  those  im- 


"Bird  V.  Munroe,  66  Maine  ZZ7, 
22  Am.  Rep.  571 ;  Townsend  v.  Har- 
graves,  118  Mass.  325.  In  some  states 
the  statutes  expressly  provide  that 
certain  contracts  "shall  be  void,"  un- 
less expressed  in  writing.  A  void 
contract  confers  no  right  and  cre- 
ates no  obligation  between  the  par- 
ties.    Dung  V.  Parker,  52  N.  Y.  494. 

=»Gray  v.  Hill,  Rvan  &  M.  420; 
Williams  v.  Bemis,  108  Mass.  91,  11 
Am.  Rep.  318.  Gay  v.  Mooney,  67  N. 
J.  L.  27.  In  the  above  case  evidence 
was  admitted  to  show  that  as  be- 
tween plaintiff  and  decedent  the  lat- 
ter had  agreed  to  devise  a  certain 
dwelling  house  to  the  plaintiff's  chil- 
dren in  return  for  what  he  should 
receive  as  a  member  of  the  family. 
While  no  action  could  be  maintained 
on  this  contract  evidence  thereof  was 
held  admissible  as  tending  to  show 
the  relation  which  existed  between 
the  parties  and  the  right  of  the 
plaintiff  to  recover  the  quantum 
meruit  for  the  value  of  services  ren- 
dered. Banker  v.  Henderson,  58  N. 
J.  L.  26,  32  Atl.  700.  In  the  above 
case  the  general  rule  was  recognized 
but  in  the  particular  case  recovery 
denied  on  the  ground  that  the  de- 
fendant    had     received     no     benefit. 


Hawley  v.  Moody,  24  Vt.  603.  To 
the  same  effect,  Lockwood  v.  Barnes, 
3  Hill  (N.  Y.)  128,  38  Am.  Dec.  620; 
Albea  v.  Griffin,  2  Dev.  &  B.  Eq.  (N. 
Car.)  9  (plaintiff  permitted  to  re- 
cover value  of  improvements)  ;  Ben- 
der's Admr.  v.  Bender,  Zl  Pa.  419 
(improvement  made  on  real  estate; 
reliance  on  a  contract  within  the 
statute  of  frauds)  ;  Rhea  v.  Allison,  3 
Head.  (Tenn.)  176  (improvements 
made  on  real  estate  under  a  parol 
contract  of  sale).  "The  principle 
seems  to  be  perfectly  well  settled,  and 
is  sustained  by  very  numerous  au- 
thorities, that  where  a  party  to  an 
agreement  void  by  the  statute  of 
frauds  fails  to  execute  it,  the  price 
advanced,  or  the  value  of  the  article 
delivered  in  part  performance  of  the 
contract,  whether  in  money,  labor, 
or  chattels,  may  be  recovered  back." 
Smith  V.  Administrators  of  John  F. 
Smith,  4  Dutch.  (N.  J.)  208,  78  Am. 
Dec.  49.  "If  the  plaintiffs,  in  con- 
sideration of  an  agreement  which 
was  within  the  statute  of  frauds, 
and  which  the  defendant  declined  to 
carry  out,  expended  money  in  build- 
ing upon  his  land,  they  might  main- 
tain an  action  to  recover  the  cost  of 
such   building."     Parker   v.    Tainter, 


455  STATUTE  OF  FRAUDS.  §  121/ 

plied  or  created  by  law  are  not  within  the  statute  for  the  obvious 
reason  that  the  law  under  certain  circumstances  imposes  a  liabil- 
ity irrespective  of  the  acts  of  the  parties.  They  are  a  distinct 
class  and  are  deemed  neither  written  nor  unwritten. ^^  The  party 
liable  may  be  required  to  respond  as  if  a  contract  existed  even 
against  his  express  dissent;  as  when  a  husband  is  required  to  pay 
for  necessities  furnished  his  wife  whom  he  has  deserted  even 
though  he  has  given  notice  that  he  will  not  be  liable  therefor.'' 

§  1217.  Statutes  generally  held  to  affect  remedies. — Some 
provisions  of  some  of  the  statutes  may  make  oral  contracts  within 
their  scope  entirely  void  or  at  least  voidable.  And  there  are 
certain  provisions  of  the  original  statute  that  have  been  said  in  a 
few  cases  to  have  the  effect  of  making  such  oral  contracts  void. 
But  the  general  rule  is  that  the  statute  affects  merely  the  remedy 
and  does  not  render  the  agreement  absolutely  void  but  simply 
prevents  its  enforcement  and  refuses  damages  for  its  breach.'^ 
Indeed  it  has  been  said  that  the  statute  does  not  in  any  way  affect 
the  substance  or  ingredients  of  contracts  but  merely  prescribes  as 
a  rule  of  evidence  that  in  all  cases  where  they  are  sought  to  be 

123  Mass.  185.    See,  however,  O'Rear  infants  or  insane  persons  being  held 

V.  Botts,  3  B.     Mon.   (Ky.)   360.    But  liable  for  necessities  furnished  them, 

the    plaintiff  cannot  recover  where  it  See,  ante,  §§  260,  261. 

appears  that  he  himself  is  the  party  "  See  ante,  ch.  13. 

at  fault  or  when  he  seeks  to  enforce  *^  Bracegirdle  v.  Heald,  1  B.  &  Aid. 

a     contract     within     the     statute     of  722;    Souch   v.    Strawbridge,  2   C.    B. 

frauds.     Collier  v.   Coates,    17   Barb.  808;  Britain  v.  Rossiter,  11  Q.  B.  Div. 

(N.    Y.)    471:    Thomas   v.    Brown,    1  123;  Sweet  v.  Lee,  4  Scott  N.  R.  11; 

Q.  B.  Div.  714;  Abbott  v.  Draper,  4  Leroux  v.   Brown,    12  C.    B.   801,    14 

Denio    (N.   Y.)    51;   Long  v.   Finger,  Eng.  L.  &  Eq.  247;  Phillips  v.  Ocmul- 

74  N.  Car.  502;  Philbrook  V.  Belknap,  gee    Mills,    55    Ga.    633;    Collins    v. 

6  Vt.  383.     Compare,  however,  with  Thayer,  74  111.  138;  Chicago  Attach- 

Nelson  v.    Shelbv   Mfg.   Co.,  96  Ala.  ment    Co.    v.    Davis    Sewing-Machine 

515.  11  So.  695,  38  Am.  St.  116;  King  Co.,  142  111.  171,  31  N.  E.  438,  15  L. 

v.    Welcome,    5    Gray.    (Mass.)    41;  R.  A.  754n :   Lowman  v.   Sheets,   124 

Masson  v.    Swan,   6   Heisk.    (Tenn.)  Ind.  416.  24   N.   E.  351,  7   L.   R.   A. 

450.  784;    Townsend    v.    Hargraves,    118 

^  See,    2    Bl.    Com.    443 :    Smith    v.  Mass.  325 ;  Amsinck  v.  American  Ins. 

Bradley.  1  Root   (Conn.)   150;  Good-  Co.,  129  Mass.  185;  McCue  v.  Smith, 

win  V.  Gilbert.  9  Mass.  510;  Thomp-  9    Gil.     (Minn.)    237,    86    Am.    Dec. 

son  V.  Blanchard,  3  Comst.    (N.  Y.)  100;   Pinkham  v.    Mattox.  53   N.   H. 

335;   Doolittle  v.   Dininny,  31   N.  Y.  600;    Magee   v.    Blankenship,    95    N. 

350.     The    law    may    in    certain    in-  Car.  563.    "The  great  purpose  of  the 

stances     impose     the     liability     even  enactments,  commonly  known  as  the 

though  the  party  on  whom  the  obli-  statute  of  frauds,  is  to  guard  against 

gation   is   imposed   did   not  have   ca-  the    commission    of    perjury    in    the 

pacity  to  contract  as  in  the  case  of  proof  of   certain  contracts.     This   is 


§    I2l8 


CONTRACTS. 


456 


enforced  oral  proof  of  them  shall  not  be  received.^*  This  may, 
however,  be  too  strong  a  statement  of  the  rule  for  in  some  cases 
the  statute  of  frauds  is  considered  as  affecting  the  validity  of  a 
contract  in  which  case  the  lex  loci  contractus  is  declared  to  gov- 
ern."^ A  distinction  is  drawn  between  contracts  concerning  real 
estate  and  personal  agreements.^''  In  still  other  jurisdictions  the 
law  of  the  place  of  performance  is  looked  to  in  order  to  deter- 
mine the  validity  of  a  contract  which  would  be  unenforcible 
because  contrary  to  the  statute  of  frauds  as  it  exists  in  the 
forum.^^ 


§  1218.  Defense  of  statute  personal. — The  defense  of  the 
statute  of  frauds  is  a  personal  one,  and,  as  a  general  rule,  can  only 
be  made  by  parties  or  privies. ^^     This  rule  applies  to  insurance 


effected  by  providing  that  mere  parol 
proof  of  such  contracts  shall  be  in- 
sufficient to  establish  them  in  a  court 
of  justice."  Marsh  v.  Hyde,  3  Gray 
(69  Mass.)  331. 

^*  Browne  on  Statute  of  Frauds, 
§  115. 

"^  Ringgold  V.  Newkirk,  3  Ark.  96; 
Miller  v.  Wilson,  146  111.  523,  34  N. 
E.  1111,  yi  Am.  St.  186  (contract 
made  in  another  state  for  the  sale  of 
land  situated  therein)  ;  Cochran  v. 
Ward,  5  Ind.  App.  89,  29  N.  E.  795, 
31  N.  E.  581,  51  Am.  St.  229  (lease 
of  real  estate.  The  court  held  that 
in  such  case  the  statute  of  frauds  of 
Illinois  entered  into  and  became  a 
part  of  the  contract.)  See,  Low  v. 
Andrews,  1  Story  (U.  S.)  38,  Fed. 
Cas.  No.  8559. 

=*  Stout  V.  Ennis,  28  Kans.  706; 
Fox  V.  Matthews,  Z2)  Miss.  433;  Da- 
Costa  V.  Davis,  24  N.  J.  L.  319;  Hunt 
V.  Jones,  12  R.  I.  65,  34  Am.  Rep. 
635;  Anderson  v.  May,  10  Heisk. 
(Tenn.)  84  (contract  for  lease  of 
land  situated  in  Arkansas). 

"Allshouse  V.  Ramsay,  6  Whart. 
(Pa.)  331,  Zl  Am.  Dec.  417.  See 
also,  the  following  cases  in  which  the 
forum  and  the  place  of  performance 
coincided.  The  decision  being  based, 
however,  on  the  ground  that  the  con- 
tract was  to  be  performed  in  the 
jurisdiction  where  suit  was  brought. 
See,  Emery  v.  Burbank,  163  Mass. 
326,  39  N.  E.  1026,  28  L.  R.  A.  57,  47 


Am.  St.  456;  Young  v.  Pearson,  1 
Cal.  448;  Turnow  v.  Hochstadter,  7 
Hun  (N.  Y.)  80.  See  also,  Mason  v. 
Dousey,  35  111.  424,  85  Am.  Dec.  368; 
Denny  v.  Williams,  5  Allen  (Mass.) 
1 ;  Aldrich  v.  Carpenter,  160  Mass. 
166,  35  N.  E.  456. 

^  Mewburn's  Heirs  v.  Bass.  82  Ala. 
622,  2  So.  520;  Daum  v.  Conley,  27 
Colo.  56,  59  Pac.  753;  Purdom  Na- 
val Stores  Co.  v.  Western  Union  Tel. 
Co.,  153  Fed.  327;  McCoy  v.  Will- 
iams. 1  Gilm.  (6  111.)  584;  Chicago 
Dock  Co.  V.  Kinzie,  49  111.  289; 
Hughes  V.  Lumbsen,  8  111.  App.  185; 
Hallberg  v.  Brosseau,  64  111.  App. 
520;  Pasquay  v.  Pasquav,  235  111. 
48,  85  N.  E.  316;  Mitchell  v.  King, 
n  111.  462;  Cool  v.  Peters  Box  & 
Lumber  Co.,  87  Ind.  531 ;  Savage  v. 
Lee,  101  Ind.  514;  Bodkin  v.  Merit, 
102  Ind.  293,  1  N.  E.  625;.  Burrow  v. 
Terre  Haute  &  L.  R.  Co.,  107  Ind. 
432,  8  N.  E.  167;  Jackson  v.  Stan- 
field,  137  Ind.  592,  36  N.  E.  345,  Z1 
N.  E.  14,  23  L.  R.  A.  588;  Morrison 
V.  ColHer,  79  Ind.  417;  Dixon  v. 
Duke,  85  Ind.  434;  Crawford  v. 
Woods,  6  Bush  (Ky.)  200;  Bohan- 
non  V.  Pace,  6  Dana  (Ky.)  194; 
Ames  V.  Jackson,  115  Mass.  508; 
Grisham  v.  Lutric,  76  Miss.  444,  24 
So.  169;  St.  Louis  K.  &  N.  W.  R. 
Co.  V.  Clark,  121  Mo.  169,  25  S.  W. 
192,  906,  26  L.  R.  A.  751n;  Rickards 
V.  Cunningham,  10  Nebr.  417,  6  N. 
W.  475;  Eisley  v.   Malchow,  9  Nebr. 


457  STATUTE  OF  FRAUDS.  §  I219 

companies."  An  execution  creditor  cannot  question  a  good  faith 
sale  of  property  by  his  debtor  merely  because  such  contract  of 
sale  is  not  evidenced  as  the  statute  of  frauds  requires. ^°  It  is  true 
generally  that  a  creditor  cannot  take  advantage  of  the  statute  of 
frauds  and  thus  avoid  a  sale  of  lands  made  by  the  debtor,  when 
the  latter  has  elected  to  waive  the  statute.^^  When  the  debtor 
fails  to  plead  the  statute  his  creditor  cannot  plead  it.^"  Neither 
can  the  creditor  invoke  the  statute  to  defeat  an  estoppel  against 
the  debtor,^^  nor  to  defeat  a  liability  of  the  creditors  which  he 
himself  has  recognized.^*  Where  lands  are  purchased  for  the 
benefit  of  the  plaintiff,  and  after  a  resale  thereof  the  proceeds  are 
paid  to  the  defendant,  he  cannot,  in  an  action  for  money  had  and 
received,  successfully  defend  on  the  ground  that  the  contract 
between  the  plaintiff  and  third  person  was  in  parol  and  for  that 
reason  voidable  under  the  statute. ^^ 

§  1219.  When  statute  may  be  invoked  by  third  person. — 
However,  it  has  been  held  that  when  a  vendor  of  chattels  by  a 
contract  of  sale  which  is  voidable  by  the  statute  of  frauds  makes 
a  sale  or  pledge  and  delivery  of  them  to  a  third  person,  he  thereby 
repudiates  and  avoids  the  former  contract,  and  the  subsequent 
purchaser  may  invoke  the  statute  for  his  own  protection.^^     The 

174,  2  N.  W.  2n2;  Tibbets  v.  Flan-  lings,  12  Ind.  505;  Morrison  v.  Col- 

ders,  18  N.  H.  284;  Benton  v.  Pratt,  lier,  79  Ind.  417;  Dixon  v.  Duke,  85 

2  Wend.    (N.   Y.)   385,  20  Am.   Dec.  Ind.  434;  Old  National  Bank  v.  Find- 

623;    Bell    v.    Beazley.    18    Tex.    Civ.  ley,   131   Ind.  225,  31   N.  E.  62;  Can- 

App.  639,  45   S.  W.  401;   Huntley  v.  non   v.    Castleman,    164   Ind.    343,    IZ 

Huntley,  114  U.  S.  394,  29  L.  ed.  130,  N.   E.  689;   Walker  v.   Walker's  As- 

5  Sup.  Ct.  884.   The  statute  of  frauds  signee,  19  Ky.  L.  626.  41  S.  W.  315; 

as  a  defense  is  personal  to  the  party  Minns  v.  Morse,  15  Ohio  568,  45  Am. 

to  a  contract  and  is  not  available  to  Dec.    590;    LefFerson    v.    Dallas,    20 

a  stranger  to  the  contract  in  a  col-  Ohio    St.   68;    Roberts   v.    Francis,  2 

lateral   proceeding.     Grisham   v.   Lu-  Heisk.    (49  Tenn.)    127. 

trie,  Id  Miss.  444.  24  So.  169.  '^^  Cresswell    v.    McCaig,    11    Nebr. 

="  Mutual   Mill  Ins.   Co.  v.   Gordon,  222.  9  N.  W.  52.    See  also,  Cahill  v. 

20  111.  App.  559,  aflfd.  121  111.  366,  12  Bigelow,   18  Pick.    (Mass.)   369. 

N.   E.  747;    Northwestern   Mut.   Life  ^^  Cross  v.  Weare  Commission  Co., 

Ins.  Co.  V.  Heimann,  93  Ind.  24;  Am-  45  111.  App.  255.  affd..  153  111.  499,  38 

sinch  V.  American  Ins.  Co.,  129  Mass.  N.  E.  1038,  46  Am.  St.  902. 

185.  "Kemp  v.   National  Bank  &c.,   109 

'"Dixon  V.  Duke,  85  Ind.  434.    See  Fed.  48.  48  C.  C.  A.  213. 

also,   Wright   v.   Jones,    105   Ind.    17,  ^Garrett's    Admrs.   v.    Garrett,   21 

4  N.  E.  281.  Ala.  687. 

"Gordon   v.   Tweedv,   71    Ala.   202  ^  First    Nat.    Bank   v.    Blair    State 

(parol  agreement  by  husband  to  con-  Bank,  80  Nebr.  400.   114  N.  W.  409, 

vey  lands  to  wife)  ;  Brown  v.  Raw-  127  Am.  St.  752  and  note.    See  also, 


§    I220  CONTRACTS.  458 

foregoing  rule  is  frequently  applied  to  intermediate  vendees^^  and 
lessees  of  property.^*  The  vendee  or  lessee  of  one  who  is  alleged 
to  have  made  a  contract  voidable  within  the  statute  is  such  a  suc- 
cessor in  interest  and  holds  such  privity  of  estate  with  his  vendor 
or  lessor  that  he  may  claim  the  protection  of  the  statute.^*  Heirs 
stand  in  privity  of  relationship  and  may  invoke  the  statute  of 
frauds  against  a  claimant  under  a  parol  contract  with  their  an- 
cestor.*" 

§  1220.  Waiver  of  statute. — Moreover,  the  statute  of 
frauds  is  a  shield  which  a  party  may  use  or  not  for  his  protection, 
just  as  he  sees  fit.  A  party,  though  otherwise  entitled  to  the  pro- 
tection of  the  statute,  may  waive  it/^  Thus  it  has  been  held  that 
if  the  complaint  alleges  a  verbal  agreement  within  the  statute, 
and  the  defendant,  by  his  answer,  admits  it  without  pleading  the 
statute  as  a  defense,  he  is  deemed  to  have  waived  its  benefit." 
So  it  has  been  held  that  where  in  an  action  for  rent  due  on  a  con- 
tract of  leasing  or  renting  the  defendant  neither  denies  the  con- 
tract nor  pleads  the  statute  of  frauds,  he  is  in  no  position  to  ques- 
tion its  nonconformity  to  the  statute.*^ 

§  1221.  Conflict  of  law — Law  of  forum. — Since  the  statute 
of  frauds  is  usually  held  to  affect  merely  the  remedy  it  is  true 

Shelton   v.   Thompson,  96  Mo.   App.  relation  existing  between  the  grantor 

327,  70  S.  W.  256.  and  his   deceased   grantee)  ;    Phillips 

"Hunter    v.    Bales,    24    Ind.    299;  v.  Kimmons,  94  Tenn.  562,  29  S.  W. 

Hansen  v.  Berthelson,    19  Nebr.  433,  965    (holding  that  the  administratrix 

27  N.  W.  423.    See  also,  McSpadden  of   the  vendee   could    not   rescind   a 

V.    Starrs    &c.    Iron    Co.    (Tenn),    42  parol  contract   for  the  sale  of   land, 

S.    W.   497;    Masterson   v.    Little,   75  where  the  vendor  is  willing  to  look 

Tex.  682,   13  S.  W.    154;   Sanborn  v.  to    the    land    alone    for    payment    of 

Murphy,  86  Tex.  437,  25  S.  W.  610.  the  balance  due  and  the  heirs  do  not 

^Best  V.   Davis,   44   111.   App.   624.  desire  a  rescission). 

See,   however,   Boyce  v.   Graham,  91  "■  Cahill     v.      Bigelow,      18      Pick. 

Ind.  420.  (Mass.)  369;  St.  Louis  &c.  R.  Co.  v. 

=*  Meyer  Bros.  v.  Mitchell,  75  Ala.  Clark,  121  Mo.  161,  25  S.  W.  192,  26 

475 ;    Shakespeare    v.    Alba,    76    Ala.  L.  R.  A.  751,  note  in  78  Am.  St.  648. 

351;     Bulkley     v.     Storer,     2     Day  « Crane  v.   Powell,   139  N.  Y.  379, 

(Conn.)    531;   Grundies  v.  Kelso,  41  34  N.   E.  911;   Cozine  v.  Graham,  2 

111.  App.  200.  Paige   Ch.    (N.   Y.)    177;   Vanpell  v. 

** Vaughn    v.    Vaughn,    100    Tenn.  Woodward,    2    Sandf.    Ch.    (N.    Y.) 

282,  45   S.  W.  677.     See  also,  Haw-  143;     Harris     v.     Knickerbacker,     5 

kins  v.  Dunmore,  24   Misc.    (N.   Y.)  Wend.  (N.  Y.)  638;  Duffy  v.  O'Don- 

623,  54  N.  Y.  S.  165  (holding  that  in  avon,    46    N.    Y.    223 ;     Marston    v. 

this  case  an   executor  could  not  set  Sweet,  66  N.  Y.  206,  23  Am.  Rep.  43. 

up  the  statute  to  compel  a  reconvey-  **  Bless  v.  Jenkins,  129  Mo.  647,  31 

ance  on   account  of   the   confidential  S.  W.  938.   But  see  post,  §  1^4. 


459 


STATUTE  OF  FRAUDS. 


§  1222 


generally  that  the  law  of  the  forum  governs,  at  least  unless  tlie 
contract  relates  to  realty,  and  if  a  statute  of  a  state  in  which  an 
action  is  brought  prohibits  the  enforcement  of  the  contract  on 
which  the  action  is  based,  that  statute  will  be  applied,  and  if  prop- 
erly invoked,  will  defeat  the  action,  notwithstanding  the  fact  that 
the  contract  may  have  been  good  in  the  state  where  it  was  made." 
There  are,  however,  authorities  to  the  contrary."  But  cases 
which  so  hold,  as  a  general  rule,  relate  to  contracts  concerning 
realty. 

§  1222.  Conflict  of  law — Cases  applying  lex  loci  con- 
tractus.— In  those  jurisdictions  which  do  not  regard  the  stat- 
ute of  frauds  as  affecting  the  remedy  merely  but  where  it  is  con- 
sidered as  affecting  the  contract  itself,  a  choice  must  be  made 
between  the  law  of  the  place  where  the  contract  is  made  and  that 


**Leroux  v.  Brown,  12  C.  B.  801, 
14  Eng.  L.  &  Eq.  247,  74  E.  C.  L. 
801;  Buhl  V.  Stephens,  84  Fed.  922; 
Kleeman  v.  CoHins,  9  Bush  (Ky.) 
460;  Emery  v.  Burbank,  163  Mass. 
326,  39  N.  E.  1026,  28  L.  R.  A.  57, 
47  Am.  St.  456;  Heaton  v.  Eldridge, 
56  Ohio  St.  87,  46  N.  E.  638,  36  L. 
R.  A.  817,  60  Am.  St.  111.  "It  may 
be  considered  as  settled  that  whatever 
relates  to  the  remedy,  and  constitutes 
a  part  of  the  procedure,  is  determined 
by  the  law  of  the  forum;  but  what- 
ever goes  to  the  substance  of  the  ob- 
ligation, and  affects  the  rights  of  the 
parties  growing  out  of  the  contract 
itself,  or  inhering  in  it,  is  governed 
by  the  lex  loci  contractus.  The  pro- 
vision of  our  statute  is  copied  from 
the  fifth  clause  of  the  fourth  section 
of  the  English  statute  of  frauds  (29 
Car.  II.  c.  3),  and  in  the  case  of 
Leroux  v.  Brown,  12  C.  B.  801,  where 
the  precise  question  now  involved 
arose,  it  was  held,  upon  great  con- 
sideration, that  this  clause  of  the  stat- 
ute affected  the  remedy  only.  A  re- 
covery was  denied  in  an  action  upon 
an  oral  contract  not  to  be  performed 
within  a  year,  which  was  made  in 
France,  where  it  was  capable  of  proof 
by  parol  evidence.  The  doctrine  es- 
tablished by  this  case  has  been  uni- 
formly adhered  to  by  the  English 
courts,    and    has    been    followed    or 


cited  with  approbation  by  many 
American  courts,  and  it  has  met  with 
the  general  approval  of  text  writers. 
The  case  of  Leroux  v.  Brown,  supra, 
has  been  criticized  somewhat  on  the 
distinction  there  drawn  between  the 
fourth  and  seventeenth  sections  of 
the  statute,  to  the  point  that  the 
former  section  related  to  the  remedy 
and  the  latter  to  the  obligation  or 
validity  of  the  contract.  This  dis- 
tinction has  not  met  with  general  ap- 
proval, and  it  has  been  held  in  some 
of  the  later  cases  that  both  sections 
relate  to  the  remedy.  Leroux  v. 
Brown  is  cited  with  approval  by  the 
Supreme  Court  in  Pritchard  v.  Nor- 
ton, 106  U.  S.  124,  134,  1  Sup.  Ct.  102." 
Buhl  V.  Stephens,  84  Fed.  922. 

"Gibson  V.  Holland,  L.  R.  1  C.  P. 
1;  Miller  v.  Wilson,  146  111.  523,  34 
N.  E.  1111,  n  Am.  St.  186;  Cochran 
V.  Ward,  5  Ind.  App.  89,  29  N.  E. 
795,  31  N.  E.  581,  51  Am.  St.  229; 
Kling  V.  Fries,  ZZ  Mich.  275;  Hough- 
taling  V.  Ball,  19  Mo.  84,  20  Mo.  563, 
59  Am.  Dec.  331 ;  Anderson  v.  May, 
10  Heisk.  (Tenn.)  84;  Low  v.  An- 
drews &c.  Co.,  1  Storv  (U.  S.)  435, 
Fed.  Cas.  No.  8559.  See  also,  Wolf 
V.  Burke,  18  Colo.  264.  32  Pac.  427, 
19  L.  R.  A.  792,  and  note.  Wilson  v. 
Lewiston  Mill  Co.,  150  N.  Y.  314.  44 
N.  E.  959,  55  Am.  St.  680;  Scudder 
V.  Bank,  91  U.  S.  406,  23  L.  ed.  245. 


§    1223  CONTRACTS.  460 

of  the  place  where  it  Is  to  be  performed.  In  those  jurisdictions 
in  which  the  statute  is  considered  as  affecting  the  vaHdity  of  the 
contract  itself  the  lex  loci  contractus  is  generally  declared  to  gov- 
ern." In  conformity  with  this  principle  it  has  been  held  that  a 
contract  valid  by  the  law  of  the  place  where  it  is  made  is  en  forci- 
ble, though  contrary  to  the  statute  of  frauds  in  force  at  the  place 
of  performance.*^  The  converse  of  this  is  also  held  true,  and  a 
contract  which  violated  the  statute  of  frauds  of  the  place  where  it 
was  made  has  been  held  unenforcible  though  valid  according  to 
the  law  of  the  place  of  performance.^^ 

§  1223.  Conflict  of  law— Cases  applying  law  of  place  of 
performance. — There  are  a  number  of  cases,  however,  which 
hold  that  the  law  of  the  place  of  performance  instead  of  the  law 
of  the  place  where  the  contract  is  made,  so  far  as  the  statute  of 
frauds  is  concerned,  governs  instead  of  the  lex  loci  contractus.*' 
And  it  has  been  held  with  reference  to  the  statute  of  frauds  that 
the  intention  of  the  parties  to  a  contract,  so  far  as  it  is  disclosed, 
must  control,  and  when  it  is  ascertained,  it  should  not  be  overcome 
by  considerations  respecting  the  place  where  the  contract  was  ex- 
ecuted or  accepted.^*' 

§  1224.  How  statute  must  be  invoked. — There  is  consider- 
able conflict  among  the  authorities  as  to  the  manner  in  which  the 
statute  should  be  pleaded  or  taken  advantage  of.     The  better  rule 

*«Kling    V.    Fries,    33    Mich.    275;  Co.,  33  Mich.  340;  Da  Costa  v.  Davis, 

Foster  v.  Lumbermen's  Min.   Co.,  68  24  N.  J.  L.  319 ;  Goldstein  v.  Scott,  76 

Mich.   188,  36  N.  W.  171;  Da  Costa  App.  Div.    (N.  Y.)   78,  78  N.  Y.   S. 

V.  Davis,  24  N.  J.  L.  319;  Forward  v.  736. 

Harris,  30  Barb.    (N.   Y.)    338;   All-        ''Young    v.    Pearson,    1    Cal.    448 

shouse   V.    Ramsey,   6   Whart.    (Pa.)  (verbal  partnership  agreement  made 

331,    37    Am.    Dec.    417;    Scudder    v.  in  Louisiana  to  be  performed  in  Cal- 

Union   Nat.   Bank,  91   U.   S.  406,  23  ifornia)  ;  Davenport  v.  Karnes,  70  111. 

L.  ed.  245;  Pritchard  v.  Norton,   106  465   (parol  antenuptial  contract  made 

U.   S.   124,  27  L.  ed.   104,  1   Sup.  Ct.  in   Pennsylvania  to  be  performed   in 

102.  Illinois)  ;    Mason   v.   Dousey,   35    111. 

*' Allen    V.    Schuchardt,    Fed.    Cas.  424,  85  Am.  Dec.  368  (foreign  bill  of 

No.  236,  1  Am.  L.  Reg.   (N.  S.)   13;  exchange    drawn    in    one    state    and 

Hunt  v.  Jones,  12  R.  I.  265,  34  Am.  made   payable   in   another)  ;   Turnow 

Rep.  635;  Perrv  v.  Mount  Hope  Iron  v.   Hochstadter,   7   Hun    (N.   Y.)    80 

Co.,  15  R.  I.  380,  5  Atl.  632,  2  Am.  St.  (contract    made    in    Germany   to    be 

902.     See  also,   Houchtaling  v.   Ball,  performed  in  New  York). 
19  Mo.  84,  20  Mo.  563,  59  Am.  Dec.        ^Wilson  v.  Lewiston  Mill  Co.,  150 

331.  N.  Y.  314,  44  N.  E.  959,  55  Am.  St. 

**Roethke  v.  Phillip  Best  Brewing  680. 


461  STATUTE  OF  FRAUDS.  §  1 225 

seems  to  be  that  it  may  be  invoked  under  a  general  deniaP*  as  well 
as  by  specially  pleading  it,  but  if  the  fact  of  the  agreement  is  ad- 
mitted, while  this  does  not  dispense  with  the  writing  required  by 
the  statute  if  the  statute  is  at  the  same  time  properly  relied  upon, 
yet  the  weight  of  authority  is  to  the  effect  that  in  such  case  the 
statute  must  be  pleaded."  A  number  of  authorities  hold  that 
while  the  statute  may  be  relied  on  under  the  general  denial,  yet 
there  is  a  waiver  if  oral  evidence  of  the  alleged  contract  is  permit- 
ted to  be  given  without  objection,  and  that  the  proper*  way  in 
which  to  raise  the  question  where  there  is  only  general  denial,  is 
to  object  to  evidence  offered  in  violation  of  a  statute  when  it  is 
offered."  The  authorities  on  this  point  are  not  entirely  har- 
monious and  there  is  good  reason  for  holding  that  oral  evidence, 
whether  objected  to  when  offered  or  not,  is  insufficient  to  support 
a  recovery  on  a  contract  required  by  the  statute  of  frauds  to  be  in 
writing,  at  least  where  the  contract  is  declared  on  as  a  written 
contract.'^* 

§  1225.  Fourth  section  of  the  original  act — Affect  form  of 
simple  contracts. — The  fourth  section  of  the  original  act  pro- 
vided  *'    *    H:    *    ]\jo  action  shall  be  brought  whereby  to  charge 

"  See    Buhl    v.    Stephens,    84    Fed.  scope  than  most  other  pleas,  and  un- 

922;  Billingslea  v.  Ward,  33  Md.  48;  der  it  defendant  may  invoke  the  stat- 

Riif    V.    Riibe,   68    Nebr.    543,    94    N.  ute  of  frauds."   Howell  v.  Harvev,  65 

W.   517;    Levien  v.    Dietz,    106  App.  W.  Va.  310,  64  S.  E.  249,  22  L.  R. 

Div.    (N.   Y.)    208,  94   N.   Y.   S.  419  A.   (N.  S.)    1077n. 

(holding  the   defense  of  the   statute  "  Battell    v.    Matot,    58   Vt.    271,    5 

of  frauds  admissible  under  a  general  Atl.  479,  and  note  in  78  Am.  St.  657. 

denial  where  the  complainant  alleges  "  Miller    v.    Harper,   63    Mo.    App. 

that  the  contract  sued  on  is  in  writ-  293;    Clement    v.    Gill,    59    Mo.    App. 

ing)  ;  Birchell  v.  Neaster,  36  Ohio  St.  482;   Crough  v.  Nurge,  44  App.  Div. 

331;    Rowton   v.    Rowton,    1    Hen.    &  (N.  Y.)   19,  60  N.  Y.  S.  395,  affd.  in 

Mun.    (Va.)   92;  Jackson's  Assignees  168  N.  Y.  657,  61  N.  E.  1128;  Cosand 

V.    Cutright.    5     Munf.     (Va.)     308;  v.  Bunker,  2  S.  Dak.  294,  50  N.  W. 

Eaves  v.   Vial,  98  Va.   134,  34  S.   E.  84;   Montgomery  v.  Edwards,  46  Vt. 

978;  Robertson  v.  Smith,  94  Va.  250,  151,  14  Am.  Rep.  618;  Williams-Hay- 

26  S.  E.  579,  64  Am.  St.  723;  Will-  ward    Shoe    Co.   v.    Brooks,   9  Wyo. 

iams-Havward    Shoe    Co.    v.    Brooks,  424,  64  Pac.  342.    See  also,  Nunez  v. 

9  Wyo.  424,  64  Pac.  342  (citing  many  Morgan,  77  Cal.  427,  19  Pac.  753,  and 

authorities).     See    also,    note    in    78  note  in  78  Am.  St.  654,  655. 

Am.  St.  648.     "The  scope  of  the  plea  "  See    Wynn    v.    Garland,    19    Ark. 

of  the  general  issue  is,  as  a  general  23,  68  Am.  Dec.  190;  Dixon  v.  Duke, 

rule,  a  denial  of  every  material  aver-  85    Ind.    434;    Benedict    v.    Bird.    103 

ment    of     fact    in    the    declaration."  Iowa  612,  72  N.  W.  768;  Thomas  v. 

Sprague  v.   Hosie,   155   Mich.  30,   118  Churchill,    48    Nebr.    266,    67    N.    W. 

N.  W.  497,   130  Am.   St.  558.     "The  182;  Brauer  v.  Oceanic  &c.  Co.,  178 

plea  non  assumpsit  is  broader  in  its  N.  Y.  339,  70  N.  E.  863. 


§     1226  CONTRACTS.  462 

any  executor  or  administrator  upon  any  special  promise  to  answer 
damages  out  of  his  own  estate  (2)  or  whereby  to  charge  the  de- 
fendant upon  any  special  promise  to  answer  for  the  debt,  default 
or  miscarriages  of  another  person,  (3)  or  to  charge  any  person 
upon  any  agreement  made  upon  consideration  of  marriage,  (4)  or 
upon  any  contract  or  sale  of  lands,  tenements,  or  hereditaments, 
or  any  interest  in  or  concerning  them,  (5)  or  upon  any  agreement 
that  is  not  to  be  performed  within  the  space  of  one  year  from  the 
making  thereof  (6)  unless  the  agreement  upon  which  such  action 
shall  be  brought  or  some  memorandum  or  note  thereof  shall  be 
in  writing  and  signed  by  the  party  to  be  charged  therewith,  or 
some  other  person  thereunto  by  him  lawfully  authorized."^^  A 
brief  discussion  will  be  given  of  the  various  contracts  mentioned 
in  the  foregoing  section  in  the  order  in  which  they  are  named 
therein. 

§  1226.  Fourth  section — Promises  by  executors  and  ad- 
ministrators.— The  clause  of  the  statute  providing  that  "No 
action  shall  be  brought  whereby  to  charge  any  executor  or  admin- 
istrator upon  any  special  promise  to  answer  damages  out  of  his 
own  estate,"  made  verbally,  is  closely  allied  to  and  is  governed 
by  the  same  principles,  as  the  other  provision  of  the  statute  re- 
lating to  oral  promises  by  one  to  pay  the  debt  of  another.^®  It 
was  enacted  to  prevent  executors  or  administrators  from  being 
fraudulently  held  for  the  debts  or  liabilities  of  the  estate  upon 
which  they  were  called  to  administer.  The  special  promise  re- 
ferred to  is  any  actual  promise  made  in  distinction  from  promises 
implied  by  law,  which  are  held  not  within  the  statute."  The 
statute  is  also  usually  held  not  to  apply  where  the  promise  of  the 
executor  or  administrator  had  for  its  object  the  purpose  to  sub- 
serve some  interest  of  his  own.^^  In  such  a  case  the  contract  is 
founded  upon  a  new  and  distinct  consideration  moving  between 
the  parties.^*     Neither  does  it  include  promises  on  which  the 

"^  Stat.  29  Car.  II,  Cap.  3,  §  4.  Bellows  v.  Sowles,  57  Vt.  164,  52  Am. 

"'Harrington   v.    Rich,   6   Vt.   666;  Rep.  118. 

Bellows  V.  Sowles,  57  Vt.  164,  52  Am.  ''  Blake  v.  Robinson,  129  Iowa  196, 

Rep    118  105   N.   W.   401;    Emerson   v.    Slater, 

"Sage    V.    Wilcox,    6    Conn.    81;  22  How.  (U.  S.)  28,  16  L.  ed.  360. 

Eaton  V.  Graham,  104  111.  App.  296;  ~  Bott  v.  Barr,  95  Ind.  243;  Hall 


463  STATUTE  OF  FRAUDS.  §  1 22 7 

executor  or  administrator  is  personally  liable  even  though  made 
for  the  benefit  of  the  estate  and  though  he  assumes  to  contract  as 
executor  or  administrator.""  Where  the  cause  of  action  exists 
against  the  deceased,  the  executor  or  administrator  may  make 
himself  personally  liable  by  a  written  promise  founded  upon  a 
sufficient  consideration."  There  must  be  assets  in  their  hands 
or  forbearance  for  the  creditor  to  constitute  a  consideration.  In 
case  there  are  no  assets  a  promise  by  an  executor  to  pay  his  tes- 
tator's debts  is  nudum  pactum. °-  The  giving  of  bond  by  an 
administrator  to  the  judge  of  the  probate  court  to  pay  the  debts 
and  legacies  of  the  testator,  has  been  held  to  operate  as  an  admis- 
sion of  assets.®^  In  order  to  fall  within  this  clause  of  the  statute 
there  must  first  be  a  liability  against  the  decedent's  estate  primar- 
ily, which  the  executor  or  administrator  promises  to  pay  out  of 
his  own  estate."* 

§  1227.  Fourth  section — Promise  to  answer  for  debt  of 
another — Scope  of  clause. — The  words  ''debt,  default,  or  mis- 
carriage," include  any  present  or  future  liability  whether  arising 
out  of  contract  or  tort.''''  The  words  "another  person"  as  here 
used  mean  some  person  other  than  the  immediate  parties  to  the 
promise,  that  is  to  say,  a  third  person.*"®     Thus  a  corporation  and 

V.  Richardson,  22  Hun    (N.    x.)  444,  "*' Stebbins      v.      Smith,      4      Pick, 

affd.,  89  N.Y.  636;  Bellows  v.Sowles,  (Mass.)    97. 

57  Vt.  164,  52  Am.  Rep.  118;  Temple-  **  Taylor  v.   Mygatt,  26  Conn.   184; 

tons  V.  Bascom,  33  Vt.  132;  Cross  v.  Holderbaugh   v.    Turpin,   75    Ind.   84, 

Richardson,  30  Vt.  641;   Lampson  v.  39  Am.   Rep.    124;    Cochrane   v.    Mc- 

Hobart's  Estate,  28  Vt.  697.  Entee  (N.  J.),  51  Atl.  279;  Wales  v. 

•«Sce  ante,   §§   512,  519.    See  also,  Stout,  115  N.  Y.  638,  21  N.  E.  1027; 

Meade  v.  Bowles,  123  Mich.  696,  82  N.  Bellows  v.  Sowles,  57  Vt.  164,  52  Am. 

W.  658;  Fehlinger  v.  Wood,   134  Pa.  Rep.  118. 

St.  517,  19  Atl.  746;  Jack  v.  Cassin,  9  °"  Matson  v.  Wharam,  2  T.  R.  80; 

Tex.    Civ.    App.   228,   28    S.    W.   832.  Kirkham  v.  Marter.  2  B.  &  Aid.  613; 

Promises  of  this  character  may,  how-  Mountstephen  v.  Lakeman,  L.  R.  7  Q. 

ever,  be  aflfected  by  other  clauses  of  B.    196;    Turner   v.    Hubbell,    2    Day 

the    local    statute.      See    Perkins    v.  (Conn.)  457,  2  Am.  Dec.  115;  Cahill 

Cooper   (Cal.),  24  Pac.  377.  reversed  v.    Bigelow,    18    Pick.    (Mass.)    369; 

on   another  point   in  87   Cal.  241,  25  Cole    v.    Hutchinson,    34    Minn.    410. 

Pac.  411.  26  N.  W.  319;   Mallory  v.  Gillett.  21 

"Davis  V.  French,  20  Maine  21,  37  N.    Y.    412;    Matthews    v.    Milton.    4 

Am.  Dec.  36.  Verg.   (Tenn.)  576.  26  Am.  Dec.  247; 

"Pearson    v.    Henrv.    5    T.    R.    6;  Mead  v.  Watson.  57  Vt.  426. 

Rann  v.  Hughes,  7  T."  R.  350n :  Bank  '"Windell  v.  Hudson.  102  Ind.  521. 

of  Trov  v.  Topping.  9  Wend.  (N.  Y.)  2  N.  E.  303;   Colt  v.  Root.   17  Mass. 

273;     ten     Evck    v,     Vandcrpoel,    8  229;    Prather    v.    Vinevard.    4    Gilm. 

Johns.  (N.  Y.')   120.  (111.)    40;    Furbish    v.    Goodnovv,    98 


§    1228  CONTRACTS.  464 

a  Stockholder  therein  are  distinct  entities,  and  a  promise  by  a 
stockholder  to  pay  a  debt  of  the  corporation,  no  other  element 
entering  in,  is  a  promise  to  pay  the  debt  of  another." 

§  1228.  Fourth  section — Promise  to  answer  for  the  debts 
of  another — General  matters. — The  clause  of  the  statute 
which  provides  that  one  shall  not  be  liable  on  a  verbal  promise  to 
answer  for  the  debts,  defaults  or  miscarriage  of  another  applies 
to  transactions  in  which  one  person  has  incurred  or  is  incurring  a 
liability  to  a  second  person  which  a  third  party  agrees  to  dis- 
charge. An  immense  amount  of  litigation  has  arisen  over  the 
construction  of  this  clause.  It  is  perhaps  impossible  to  reconcile 
the  decisions  that  have  been  made  under  it.^'  It  is  believed,  how- 
ever, that  the  conflict  among  the  cases  results  from  the  fact  that 
they  were  decided  under  different  theories  and  that  the  conflict 
is  more  apparent  than  real.  The  courts  have  applied  various 
rules  by  which  to  determine  whether  a  given  contract  comes  with- 
in the  provisions  of  the  act.  They  may  be  grouped  as  follows: 
If  the  promise  by  the  third  person  to  answer  for  the  debt  of 
another  discharges  the  latter's  obligation,  the  promise  is  not  with- 
in the  statute  but  if  the  one  originally  liable  still  remains  bound 
the  promise  of  a  third  person  is  within  the  statute."* 

By  other  courts  it  is  held  that  if  the  new  promise  does  not  de- 
Mass.  296;  Barker  v.  Bucklin,  2  De-  Rep.  310;  Perkins  v.  Hershey,  11 
nio  (N.  Y.)  45,  43  Am.  Dec.  726;  Mich.  504,  43  N.  W.  1021;  Ackley  v. 
Teeters  v.  Lamborn,  43  Ohio  St.  144,  Parmenter,  98  N.  Y.  425,  50  Am.  Rep. 
154    1  N    E   513  693;  Dougherty  v.  Bash,  167  Pa.  bt. 

"Temple  v.  Bush,  79  Conn.  41,  55  429,  31  Atl.  729;  Corbett  v.  Cochran, 
Atl.  557;  Home  Nat.  Bank  v.  Water-  3  Hill  L.  (S.  Car.)  41,  30  Am.  Dec. 
man,  134  111  461,  29  N.  E.  503;  Rog-  348;  Warren  v.  Smith,  24  Tex.  484, 
ers  V  Waters  2  Gill.  &  J.  (Md.)  64;  76  Am.  Dec.  115;  Anderson  v.  Davis, 
Hanson  v.  Donkersley.  Zl  Mich.  184;  9  Vt.  136,  31  Am.  Dec.  612;  Mankin 
Maule  V.  Buckncll,  50  Pa.  39 ;  Sea-  v.  Jones,  63  W.  Va.  ZIZ,  60  S.  E.  248, 
right  V.  Pavne,  2  Tenn.  Ch.  175.  15  L.  R.  A.  (N.  S.)  214n;  Hooker  v. 

"See  Dillaby  v.  Wilcox,  60  Conn.  Russell,  dl  Wis.  257,  30  N.  W.  358; 
71,  22  Atl.  491,  13  L.  R.  A.  643,  25  note  in  22  L.  R.  A.  (N.  S.)  1084. 
Am.  St.  299;  Fullam  v.  Adams,  11  Vt.  This  provision  has  been  said  to  apply 
391 ;  Gilmore  v.  Skookum  Box  Fac-  only  to  "an  undertaking  by  a  person 
torv,  20  Wash.  703,  56  Pac.  934.  not  before  liable,  for  the  purpose  of 

"Mallet  V.  Bateman,  L.  R.  1  C  P.  securing  or  performing  the  same 
163;  Packer  v.  Benton,  35  Conn.  343,  duty  for  which  the  party  for  whom 
95  Am.  Dec.  246;  Spann  v.  Baltzell.  the  undertaking  is  made,  continues 
1  Fla.  301,  46  Am.  Dec.  346;  Mitchell  liable."  Packer  v.  Benton,  35  Conn. 
V.  Griffin,  58  Ind.  559;  Andre  v.  Bod-  343,  95  Am.  Dec.  246,  quoted  in  Dil- 
man,  13  Md.  241,  71  Am.  Dec.  628;  laby  v.  Wilcox,  60  Conn.  71,  22  Atl. 
Dow  V.  Swett,  134  Mass.  140,  45  Am.    491,  13  L.  R.  A.  643,  25  Am.  St.  299. 


465 


STATUTE  OF  FRAUDS. 


§  1228 


pend  on  the  payment  of  the  pre-existing  indebtedness,  it  does  not 
fall  within  the  provisions  of  the  act,  but  that  if  it  does  depend 
on  the  payment  of  the  pre-existing  indebtedness,  it  is  within 
the  statute,  even  if  founded  on  a  consideration  and  is  primarily 
for  the  benefit  of  the  promisor.'"  Other  cases,  however,  uphold 
the  promise  when  it  is  based  on  a  new  consideration  which  is  of 
pecuniary  benefit  to  the  promisor. '^^  Where  the  leading  object 
of  the  promisor  is  to  subserve  some  interest  or  purpose  of  his  own, 
notwithstanding  the  effect  is  to  pay  or  discharge  the  debt  of 
another,  his  promise  is  not  within  the  statute.'^-  Thus  where  the 
assignee  of  an  equity  of  redemption  orally  agrees  to  pay  the  mort- 
gage debt  in  consideration  of  a  forbearance  to  foreclose,  his 
promise  is  not  invalid  under  the  statute  of  frauds  since  the  as- 
signee's promise  is  supported  by  a  sufficient  consideration." 
Under  this  rule  the  benefit  accruing  to  the  promisor  must  be  direct 


'"  Merrell  v.  Witherby.  120  Ala.  418, 
23  So.  994,  26  So.  974,  74  Am. 
St.  39;  Gibson  County  v.  Cincin- 
nati Steam-Heating  Co.,  128  Ind. 
240.  27  N.  E.  612,  12  L.  R.  A. 
502n;  King  v.  Lumber  Co.,  80  Minn. 
274,  83  N.  W.  170;  Giles  v.  Ma- 
honey,  79  Minn.  309,  82  N.  W.  583; 
Maurin  v.  Fogelberg,  37  Minn.  23, 
32  N.  W.  858,  5  Am.  St.  814;  Grant 
V.  Wolf,  34  Minn.  32.  24  N.  W.  289; 
Lamkin  v.  Palmer,  164  N.  Y.  201,  58 
N.  E.  123;  White  v.  Rintoul,  108  N. 
Y.  222,  15  N.  E.  318;  Garfield  v.  Rut- 
land Ins.  Co.,  69  Vt.  549,  38  Atl.  235 ; 
McKenzie  v.  Puget  Sound  Nat.  Bank, 
9  Wash.  442,  37  Pac.  668,  43  Am.  St. 
844.  "Original  promises,  as  distin- 
guished from  collateral  promises,  un- 
der the  statute  of  frauds  required  to 
be  made  in  writing,  are  such  as  are 
founded  on  a  new  consideration,  the 
debt  antecedently  contracted  for  still 
subsisting,  moving  to  the  promisor 
and  beneficial  to  him,  and  such  that 
the  _  promisor  thereby  comes  under 
an  independent  duty  of  payment,  ir- 
respective of  the  liabilitv  of  the  prin- 
cipal debtor."  White  v'  Rintoul.  108 
N.  Y.  222.  15  N.  E.  318  (from  sylla- 
bus in  15  N.  E.  318.  quoted  in  Greene 
V,  T.atcham,  2  Colo.  App.  416,  31  Pac. 
233). _  "A  consideration  to  support  a 
promise,  not  in  writing,  to  pay  the 
debt  of  another  must  be  of  a  peculiar 

30 — Contracts,  Vol.  2 


character,  and  must  operate  to  the 
advantage  of  the  promisor,  and  place 
him  under  a  pecuniary  obligation  to 
the  _  promisee,  independent  of  the 
original  debt,  which  obligation  is  to 
be  discharged  bv  the  payment  of  that 
debt."  McKenzie  v.  Bank,  9  Wash. 
442,  37  Pac.  668,  43  Am.  St.  844. 

"  Chapline  v.  Atkinson,  45  Ark.  67, 
55  Am.  Rep.  531 ;  Smith  v.  Delaney, 
64  Conn.  264,  29  Atl.  496,  42  Am.  St. 
181n  ;  Schaafs  v.  Wentz,  100  Iowa  708, 
69  N.  W.  1022;  Durgin  v.  Smith,  115 
Mich.  239,  73  N.  W.  361;  Lookout 
Mountam  R.  Co.  v.  Houston,  85 
Tenn.  224,  2  S.  W.  36;  Farnham  v. 
Chapman,  61  Vt.  395,  18  Atl.  152; 
Mankin  v.  Jones,  63  W.  Va.  373,  60 
S.  E.  248,  15  L.  R.  A.  (N.  S.)  214; 
Hurst  Hardware  Co.  v.  Goodman,  68 
W.  Va.  462.  69  S.  E.  898,  32  L.  R.  A. 
(N.  S.)  598  (reviewing  a  number  of 
authorities)  ;  Kellev  v.  Schupp,  60 
Wis.  76,  18  N.  W. '725. 

''Burns  v.  Bradford-Kennedy  Lum- 
ber Co.  (Wash.),  112  Pac.  359';  How- 
ell V.  Harvey,  65  W.  Va.  310,  64  S.  E. 
249,  22  L.  R.  A.  (N.  S.)  1077  and 
note. 

"^klanning  v.  Anthony,  208  Mass. 
399.  94  N.  E.  466.  32  L.  R.  A.  (N.  S.) 
1179.  See  also.  Enos  v.  Anderson, 
40  Colo.  305.  93  Pac.  475,  15  L.  R.  A. 
(N.  S.)   1087n. 


§    1229  CONTRACTS.  466 

and  immediate  and  not  be  merely  an  interest  of  the  promisor  in 
the  subject-matter  of  the  promise.'* 

Other  courts  apply  a  similar  but  broader  rule  to  the  effect  that 
if  the  third  party's  promise  rests  upon  a  new  and  distinct  consider- 
ation, the  statute  does  not  apply,  irrespective  of  whether  the  con- 
sideration is  a  benefit  to  the  promisor  or  a  detriment  to  the  prom- 
isee." 

No  effort  will  be  made  to  bring  all  the  cases  within  the  forego- 
ing rules  nor  will  any  attempt  be  made  to  reconcile  the  many  con- 
flicting decisions ;  instead  the  essential  features  of  the  clause  and 
its  application  to  certain  of  the  more  common  forms  of  contracts 
will  be  considered.  It  is  obvious  that  under  this  provision  of  the 
statute  there  must  be  ( i )  an  existing  liability  owing  by  one  to 
another,  (2)  for  which  a  third  person  promises  to  answer,  (3) 
by  a  promise  given  to  the  creditor,  and  (4)  not  be  merely  a  prom- 
ise by  the  promisor  to  pay  his  own  obligation. 

§  1229.    Necessity  for  a  subsisting,  binding  obligation. — 

The  party  for  whom  the  promise  is  made  must  be  liable  to  the 
party  to  whom  the  promise  is  made.  There  must  be  a  valid  debt, 
default  or  miscarriage,  present  or  prospective,  for  which  the 
promisor  agrees  to  answer  in  order  to  bring  the  case  within  the 
statute.'^^     A  promise  to  pay  the  debt  of  one  not  legally  com- 

'*Winne  v.  Mehrbach,  130  App.  W.  855;  Leonard  v.  Vredenburgh,  8 
Div.  (N.  Y.)  329,  114  N.  Y.  S.  618;  Johns.  (N.  Y.)  29,  5  Am.  Rep.  317; 
Hurst  Hardware  Co.  v.  Goodman,  68  (See,  however,  Mallory  v.  Gillett,  21 
W  Va.  462,  69  S.  E.  898,  32  L.  R.  A.  N.  Y.  412)  ;  Whitehurst  v.  Hyman, 
(X  S.)  598.  See  also.  Miles  v.  Oris-  90  N.  Car.  487;  Gainesville  &c.  Hos- 
coll,  201  Mass.  318,  87  N.  E.  579;  pital  Assn.  v.  Hobbs,  153  N.  Car. 
Snyder  v.  Monroe  Eckstein  Brewing  188,  69  S.  E.  79;  Cooper  v.  Cham- 
Co.,  107  App.  Div.  (N.  Y.)  328,  95  bers,  15  N.  Car.  261,  25  Am.  Dec. 
N  Y  S.  144,  affd.  188  N.  Y.  576,  80  710;  Tindal  v.  Touchberry,  3  Strob. 
N.  E.  1120.  (S.    Car.)     177,    49    Am.    Dec.    637; 

"Chapline  v.   Atkinson   &   Co.,   45  Templetons   v.    Bascom,   33   Vt.    132. 

Ark.  67,  55  Am.  Rep.  531;  Hughes  v.  See  also,  note  in  22  L.  R.  A.  (N.  S.) 

Lawson,  31   Ark.  613;   Kurtz  v.   Ad-  1082.     A  promise  to  pay  the  debts  of 

ams,  12  Ark.  174 ;  Craft  v.  Kendrick,  another    which    has    been    performed 

39  Fla    90,  21    So.   803;    Carraher  v.  is  not  within  the  statute  of    frauds. 

Allen,   112  Iowa  168,  83  N.  W.  902;  Milner  v.  Harris,  Nebr.   (unof.)  584, 

Creel  v.   Bell  &  Co.,  2  J.  J.   Marsh.  95  N.  W.  682. 

fKy.)     309;    Dearborn    v.    Parks,    5  '"  Kilbride  v.  Moss,  113  Cal.  432,  45 

Greenl.     (Maine)    81,    17    Am.    Dec.  Pac.  812,  54  Am.  St.  361;  Schotte  v. 

206;    Jones   v.    Hardesty,    10    Gill.    &  Puscheck,    79    111.    App.    31;    McKin- 

J.     (Md.)     404,    32    Am.    Dec.     180;  ney  v.   Armstrong,  97   111.   App.  208; 

Swayne  v.  Hill,  59  Nebr.  652,  81  N.  Resseter   v.   Waterman,    151    111.   169, 


467 


STATUTE  OF  FRAUDS. 


§  1230 


petent  to  contract  such  as  a  minor  need  not  be  in  writing."  The 
liabihty  of  a  party  for  whom  the  guaranty  is  given  must  be  a  legal 
liability  to  bring  it  within  the  statute"  and  there  must  be  a  clearly 
defined  liability  of  the  third  person." 

§  1230.  To  whom  the  promise  must  be  made. — To  bring  a 
promise  within  the  statute  it  must  be  made  to  the  person  entitled 
to  enforce  the  liability  assumed  by  the  promisor.**''  A  promise  to 
the  debtor  to  pay  his  debts  and  thereby  relieve  him  from  the  pay- 
ment of  it  himself  is  not  within  the  statute  and  is  a  valid  and  en- 
forcible  contract  when  based  upon  a  consideration."    Thus  prom- 


Zl  N.  E.  875;  Moorehouse  v.  Cran- 
gle,  36  Ohio  St.  130,  38  Am.  Rep. 
564 

"King  V.  Summitt,  11  Ind.  312,  38 
Am.  Rep.  145. 

''Harris  v.  Huntbach,  1  Burr.  Zll; 
Royal  Exchange  Assur,  Copr.  v. 
Sjoforsakrings  Aktebolaget  Vega,  70 
L.  Jour.  ::.  B.  874  (1901),  2  K.  B. 
IJ\  Chapin  V.  Lapham,  20  Pick. 
(MaFs.)   467. 

"Moorliouse  V.  Crangle,  36  Ohio 
St.  130,  cZ  Am.  Rep.  h'A  (promise  by 
the  stockholder  riid  president  of  a 
corporation  that  if  the  plaintiff  would 
subscribe  and  pay  live  hunched  dol- 
lars to  the  capital  stock  of  such  cor- 
poration he  should  receive  fifteen 
per  cent,  of  that  amount  in  a  year). 
See  also,  Beeler  v.  Finnel,  85  Mo. 
App.  438. 

**  Thomas  v.  Cook,  8  B.  &  C.  728; 
Reader  v.  Kingham,  13  C.  B.  (N.  S.) 
344;  Birkmyr  v.  Darnell,  1  Salk.  27; 
Fitzgerald  v.  Dressier,  5  C.  B.  (N. 
S.)  885;  Batson  v.  King,  4  H.  &  N. 
739;  Wildes  v.  Dudlow  (1874),  L.  R. 
19  Eq.  198;  Jones  v.  Shorter,  1  Ga. 
294,  44  Am.  Dec.  649;  Smith  v.  Say- 
ward,  5  Maine  504;  Tighe  v.  Morri- 
son (1889),  116  N.  Y.  263,  22  N.  E. 
164;  Harrison  v.  Sawtel,  10  Johns. 
(N.  Y.)  242,  6  Am.  Dec.  ZZl  \  Cha- 
pin V.  Merrill,  4  Wend.  (N.  Y.)  657; 
Barry  v.  Ransom,  12  N.  Y.  462;  San- 
ders V.  Gillespie,  59  N.  Y.  250;  Mc- 
Craith  v.  National  &c.  Bank,  104  N. 
Y.  414.  10  N.  E.  862.  "The  statute 
applies  only  to  promises  made  to  the 
persons  to  whom  another  is  already, 
or  is  to  become,  answerable."  Har- 
greaves  v.  Parsons,  13  M.  &  W.  560. 


"I  think  that  to  bring  a  promise 
within  the  statute  the  debt  for  which 
the  defendant  has  promised  to  an- 
swer must  be  a  debt  due  to  the  per- 
son to  whom  the  promise  is  made, 
and  that  the  promise  must  be  made 
to  a  person  who  could  bring  an  ac- 
tion for  the  debt."  Bowen,  L.  J., 
Hoyle  V.  Hoyle,  L.  R.  (1893),  1  Ch. 
84. 

^Eastwood  V.  Kenyon,  11  A.  &  E. 
438;  Nelson  v.  First  Nat.  Bank,  48 
111.  36,  95  Am.  Dec.  510;  Brown  v. 
Strait,  19  111.  88;  Rabbermann  v.  Wis- 
kamp,  54  111.  179;  Meyer  v.  Hartman, 
11  111.  442;  Botkin  v.  Middlesborough 
&c.  Land  Co.,  23  Ky.  L.  1964,  66  S. 
W.  747;  Alger  v.  Scoville,  1  Gray 
(Ma.=s.)  391;  Fish  v.  Thomas,  5  Gray 
(Mass.)  45,  66  Am.  Dec.  348;  Per- 
kins V.  Littlefield,  5  Allen  (Mass.) 
370;  Aldrich  v.  Ames.  9  Gray 
(Mass.)  76;  Chapin  v.  Lapham,  20 
Pick.  (Mass.)  467;  Goetz  v.  Foos,  14 
Gil.  (Minn.)  196,  100  Am.  Dec.  218; 
Gill  V.  Ferrin,  71  N.  H.  421,  52  Atl. 
558;  Barker  v.  Bucklin,  2  Denio  (N. 
Y.)  45,  60,  43  Am.  Dec.  726;  Merse- 
reau  v.  Lewis,  25  Wend.  (N.  Y.) 
243;  Feldman  v.  McGuire,  34  Ore. 
309,  55  Pac.  872;  Townsley  v.  Sum- 
rail,  2  Pet.  (U.  S.)  170,  7  L.  ed.  386; 
Beaman  v.  Russell,  20  Vt.  205,  49  Am. 
Dec.  775 ;  Gilmore  v.  Skookum  Box 
Factory,  20  Wash.  703,  56  Pac.  934; 
Shook  V.  Vanmater,  22  Wis.  532.  See 
also,  Esch  V.  White,  76  Minn.  220,  78 
N.  W.  1114.  A  partner  in  a  firm 
agreed  to  indemnify  the  firm  against 
certain  debts  owing  to  the  firm ;  it 
was  held  not  to  be  an  agreement  to 
answer    for    the    debt    of     another. 


§  I23I 


CONTRACTS. 


468 


ises  by  an  incoming  partner  to  pay  the  firm  debts^^  or  by  a  vendee 
of  land  to  assume  an  incumbrance  thereon*^  may  be  declared  not 
within  the  statute  when  supported  by  a  sufficient  consideration 
because  made  to  the  outgoing  partner  or  vendor. 

§  1231.  Original  and  collateral  promises. — It  is  pretty  gen- 
erally recognized,  that  if  the  real  promise  is  a  collateral  under- 
taking to  answer  for  the  debt,  default  or  miscarriage  of  another, 
it  comes  within  the  statute  and  is  unenforcible.^^  The  difficulty 
lies  in  determining  what  are  original  and  what  are  collateral 
agreements.     The  cases  upon  this  point  are  much  in  conflict.^^ 


Hoyle  V.  Hoyle,  L.  R.  (1893),  1  Ch. 
84. 

^Dickson  v.  Conde,  148  Ind.  279, 
46  N.  E.  998.  To  same  effect,  Wear- 
Boogher  Dry  Goods  Co.  v.  Kelly,  84 
Miss.  236,  36  So.  258;  Shufeldt  v. 
Smith,  139  Mo.  367,  40  S.  W.  887; 
Bartlett  v.  Smith,  5  Nebr.  (Unof.) 
ZZ7,  98  N.  W.  687;  Lyon  v.  Cloches- 
sy,  43  Misc.  (N.  Y.)  67,  86  N.  Y.  S. 
245;  Don  Yook  v.  Washington  Mill 
Co.,  16  Wash.  459,  47  Pac.  964. 

^Mudd  V.  Carico,  104  Ky.  719, 
20  Ky.  L.  898,  47  S.  W.  1080;  Flint 
V.  Winter  Harbor  Land  Co.,  89 
Maine  420,  36  Atl.  634;  Provenchee 
V.  Piper,  68  N.  H.  31,  36  Atl.  552; 
Thompson  v.  Chessman,  15  Utah  43, 
48  Pac.  477;  Fosha  v.  O'Donnell,  120 
Wis.  336,  97  N.  W.  924.  See  also. 
Smith  V.  Caldwell,  6  Idaho  436,  55 
Pac.  1065.  "Conceding,  for  argu- 
ment, that  the  agreement  of  defend- 
ant had  for  its  main  object  the  re- 
lease of  the  estate  from  the  indebted- 
ness to  the  bank,  (the  mortgagee), 
still  we  encounter  an  insuperable  ob- 
stacle to  the  conclusion  of  defend- 
ant that  it  was  an  agreement  to 
answer  for  the  debt  of  another 
within  the  meaning  of  the  statute. 
Courts  of  this  state  and  elsewhere 
repeatedly  have  declared  that  the 
statute  applies  only  to  promises  made 
to  the  creditor,  and  not  to  those  made 
to  the  debtor  or  some  person  stand- 
ing in  his  shoes,  such  as  a  purchaser 
of  encumbered  property.  *  *  * 
Defendant  is  driven  to  say  that  plain- 
tiff, under  the  terms  of  the  contract 
of  sale,  assumed  the  relation  of  the 
estate  to  the  debt,    and,   if  this   be 


true,  the  promise  of  defendant  was 
made  to  the  debtor,  not  to  the  cred- 
itor." Hedden  v.  Schneblin,  126  Mo. 
App.  478,  104  S.  W.  887. 

•**  Simpson  v.  Hall,  47  Conn.  417; 
Frame  v.  August,  88  111.  424;  Vaugh- 
an  V.  Smith,  65  Iowa  579,  22  N.  W. 
684;  Wickersham  v.  Orr,  9  Iowa  253, 
74   Am.   Dec.   348;    Doyle   v.   White, 

26  Maine  341,  45  Am.  Dec.  110; 
Stratton  v.  Hill,  134  Mass.  27;  Ames 
v.  Foster,  106  Mass.  400,  8  Am.  Rep. 
343;  Studley  v.  Earth,  54  Mich.  6, 
19  N.  W.  568;  Bates  v.  Donnelly,  57 
Mich.  521,  24  N.  W.  788;  Belknap 
V.  Bender,  75  N.  Y.  446,  31  Am. 
Rep.  476;  Durant  v.  Allen,  48  Vt.  58. 
Note  to  Packer  v.  Benton,  95  Am. 
Dec.  257.  Whether  a  promise  is 
original  or  collateral  is  to  be  deter- 
mined, not  by  the  particular  language 
used,  but  from  all  the  evidence 
in  the  case.  Blank  v.  Dreher,  25  111. 
331.  It  must  depend  upon  the  in- 
tention of  the  parties,  to  be  ascer- 
tained from  the  nature  of  the  prom- 
ise and  the  language  used.  Norris 
V.  Spencer,  18  Maine  324.  The  con- 
struction the  parties  themselves  place 
upon  the  promise  is  important.  Dix- 
on v.  Frazee,  1  E.  D.  Smith  (N. 
Y.)  32. 

**"  Anderson  v.  Spence,  72  Ind.  315, 

27  Am.  Rep.  162.  The  terms 
"original"  and  "collateral"  promises 
do  not  occur  in  the  statute  and  have 
been  introduced  by  courts  to  ex- 
plain its  objects  and  expound  its 
true  interpretation.  D'Wolf  v.  Ra- 
band,  1  Pet.  (U.  S.)  476,  7  L.  ed. 
672. 


469  STATUTE  OF  FRAUDS.  §  1 232 

However,  the  following  indicates  the  line  of  cleavage :  collateral 
liability  is  of  two  kinds, — that  of  suretyship  and  that  of  guaranty. 
No  matter  how  they  may  vary  in  other  respects  the  guarantor 
and  surety  are  both  bound  for  a  third  person.  The  contract  of 
guaranty  varies  from  the  contract  of  suretyship  in  that  the  guar- 
antor becomes  liable  by  his  own  separate  undertaking,  the  princi- 
pal not  joining  therein.  The  contract  of  guaranty  is  also  usually 
entered  into  at  a  different  time,  either  prior  or  subsequent  to  the 
time  the  principal  becomes  liable  and  is  frequently  founded  on  a 
consideration  different  from  that  which  binds  the  principal.  On 
the  other  hand,  the  surety  generally  becomes  bound  at  the  same 
time  and  his  agreement  is  supported  by  the  same  consideration 
as  the  promise  of  his  principal.  In  other  words,  the  surety  is  an 
original  promisor  while  the  promise  of  the  guarantor  is  collateral. 
All  contracts  of  guaranty  are  within  the  statute  and  must  be  in 
writing,  while  there  are  some  agreements  commonly  termed  con- 
tracts of  suretyship  which  may  be  made  orally  and  yet  not  fall 
within  the  statute.  Following  out  this  line  of  reasoning  it  will 
be  found  that  it  may  be  laid  down  as  a  general  proposition  that  if 
the  promise  sued  on  is  a  promise  to  be  collaterally  liable  for  an 
obligation  which  has  already  attached  or  is  to  attach  to  another 
or  which  the  law  makes  primarily  the  obligation  of  another  and 
has  no  other  consideration  to  support  it,  the  promise  must  be  in 
writing. 

§  1232.  General  rules  further  considered. — However,  the 
fact  that  all  the  parties  enter  into  the  contract  at  the  same  time 
does  not  necessarily  take  it  out  of  the  statute.  Thus  the  mere 
subscribing  of  one's  name  on  a  contract,  under  the  word  "surety" 
has  been  held  sufficient  as  a  note  or  memorandum  of  the  obliga- 
tion.^® On  the  other  hand,  in  so  far  as  the  statute  of  frauds  is 
concerned,  an  indorsement  in  blank  by  an  accommodation  party 
is  sufficient."     The  distinction  between  the  terms  original  and 

"Dodge    V.    Lean,    13    Johns.    (N.  "Sloan  v.   Gibbes,  56  S.   Car.  480, 

Y.)  508;  Mead  v.  Winslow,  53  Wash.  35   S.   E.  408,  76   Am.   St.   559.     See 

638,   102   Pac.  753,  23   L.  R.   A.    (N.  also,    Weeks   v.    Parsons,    176   Mass. 

S.)    1197n.    132    Am.    St.    1092.     See  570,  58  N.  E.  157. 
also,  Gould  V.  Moring,  28  Barb.   (N. 
Y.)  444. 


§  1233 


CONTRACTS. 


470 


collateral  promise  has  been  expressed  as  follows :  "Cases  are  not 
considered  as  coming  within  the  statute,  when  the  party  promising 
has  for  his  object  a  benefit  which  he  did  not  before  enjoy,  accru- 
ing immediately  to  himself;  but  where  the  object  of  the  promise 
is  to  obtain  the  release  of  the  person  or  property  of  the  debtor, 
or  other  forbearance  or  benefit  to  him,  it  is  within  the  statute."** 

§  1233.  Original  promises — Payment  out  of  property  of 
debtor. — In  the  following  cases  the  promise  has  been  held 
binding  without  writing :  Where  the  promisor  has  or  represents 
that  he  has  in  his  hands  funds  or  goods  belonging  to  the  debtor  out 
of  which  he  has  authority^"  and  where  he  is  in  duty  bound  to  pay 


**  Nelson  v.  Boynton,  3  Mete. 
(Mass.)  396,  2,7  Am.  Dec.  148.  To 
same  effect,  Fish  v.  Hutchinson,  2 
Ld.  Ken.  537,  2  Wils.  94;  Clifford  v. 
Luhring,  69  111.  401;  Furbish  v. 
Goodnow,  98  Mass.  296;  Ames  v. 
Foster,  106  Mass.  400,  8  Am.  Rep. 
343;  Wills  v.  Brown,  118  Mass.  137; 
Nelson  v.  Boynton,  3  Mete.  (Mass.) 
396,  ?,7  Am.  Dec.  148;  Jackson  v. 
Rayner,  12  Johns.  (N.  Y.)  291; 
Nugent  V.  Wolfe,  111  Pa.  St.  471, 
4  Atl.  15,  56  Am.  Rep.  291 ;  Cross  v. 
Richardson,  30  Vt.  641 ;  Watson  v. 
Jacobs,  29  Vt.  169.  "If  the  promise 
is  made  by  one  in  his  own  name  to 
pay  for  goods  or  money  delivered  to, 
or  services  done  for  another,  that 
is  original ;  it  is  his  own  contract 
on  good  consideration,  and  is  called 
original,  and  is  binding  on  him  with- 
out writing.  But  if  the  language  is, 
'Let  him  have  money  or  goods,  or 
do  service  for  him,  and  I  will  see 
you  paid,'  *  *  *  or,  'If  he  do 
not  pay,  I  will,'  this  is  collateral,  and, 
though  made  on  good  consideration, 
it  is  void  by  the  statute  of  frauds." 
Stone  V.   Walker,   79   Mass.  613. 

*°  Adams  v.  Craig,  24  Ont.  L.  Rep. 
490;  Hughes  v.  Stringfellow,  15  Ala. 
324;  United  Walnut  Co.  v.  Courtney, 
96  Ark.  46,  130  S.  W.  566;  Tevis  v. 
Savage.  130  Cal.  411,  62  Pac.  611; 
Hughes  V.  Fisher,  10  Colo.  383,  IS 
Pac.  702;  Tuttle  v.  Armstead,  53 
Conn.  175,  22  Atl.  677;  Davis  v. 
Banks,  45  Ga.  138;  Smith  v.  Cald- 
well, 6  Idaho  436,  55  Pac.  1065; 
Frame  v.   August,  88   111.   424;    Nel- 


son V.  Hardy,  7  Ind.  364;  Wood- 
ward V.  Wilcox,  27  Ind.  207;  Ben- 
bow  V.  Soothsmith,  76  Iowa  151,  40 
N.  W.  693;  Williams  Shoe  Co.  v. 
Gotzian,  130  Iowa  710,  107  N.  W. 
807;  Harrison  v.  Simpson,  17  Kans. 
508;  Apperson  v.  Exchange  Bank 
(Ky.),  10  Ky.  L.  943,  10  S.  W.  801; 
Watson  v.  Perrigo,  87  Maine  202,  32 
Atl.  876;  Ravmer  v.  Sim,  3  liar.  & 
Mc.  H.  (Md.)  451,  1  Am.  Dec.  379; 
Gower  v.  Stuart,  40  Mich.  747; 
Mitts  V.  McMorran,  64  Mich.  664,  31 
N.  W.  521;  Wills  v.  State  Bank,  23 
Nev.  59,  42  Pac.  490;  Robinson  v. 
Gilman,  43  N.  H.  485;  Olmstead  v. 
Greenly,  18  Johns.  (N.  Y.)  12; 
Griffin  v.  Cordon,  18  Misc.  (N.  Y.) 
236,  75  N.  Y.  St.  791,  41  N.  Y.  S. 
380;  Birchell  v.  Neaster,  36  Ohio  St. 
331;  Hiltz  V.  Scully,  1  Gin.  S.  C. 
(Ohio)  555;  Hall  v.  Lincoln  Sav.  &c. 
Co.,  220  Pa.  St.  485,  69  Atl.  994; 
Peck  v.  Goff,  18  R.  I.  94,  25  Atl. 
690;  Peele  v.  Powell  (N.  Car.),  73 
S.  E.  234;  Smith  v.  Rogers,  35  Vt. 
140.  "We  apprehend  the  true  prin- 
ciple why  the  promise  to  the  credit- 
or is  valid  without  writing,  is  *  *  * 
[that]  the  party  making  the  promise, 
holds  the  funds  of  the  debtor  for  the 
purpose  of  paying  his  debt,  and  as 
between  him  and  the  debtor  it  is 
his  duty  to  pay  the  debt,  so  that 
when  he  promises  the  creditor  to 
pay  it,  in  substance  he  promises  to 
pay  his  own  debt,  and  not  that  of  an- 
other; and  though  the  debtor  still  re- 
mains liable  for  the  debt,  his  real 
relation    is    rather   that   of   a   surety 


471 


STATUTE  OF  FRAUDS. 


§  1234 


the  debtors'  obligation,""  the  promise  is  not  within  the  provision 
of  the  act,  since  by  accepting  the  funds  or  other  goods  the  prom- 
isor has  assumed  the  position  of  a  trustee  for  the  creditor.®^ 

§  1234.  Original  promises — New  consideration  moving  to 
promisor. — "The  promise  of  one  person,  though  in  form  to 
answer  for  the  debt  of  another,  if  founded  upon  a  new  and  suf- 
ficient consideration,  moving  from  the  creditor  and  promisee  to 
the  promisor,  and  beneficial  to  the  latter,  is  not  within  the  statute 
of  frauds,  and  need  not  be  in  writing.""-  This  rule  applies  where 
the  promisee  has  transferred  or  released  to  the  promisor  some  in- 
terest in  the  property  of  the  debtor,"^  as  a  lien  given  by  law  to  the 
seller  for  the  price  of  goods  sold,  but  not  delivered  f*  or  to  a  land- 
lord upon  the  goods  of  his  tenant  for  rent;"^  or  where  the  prom- 
isee has  released  to  the  promisor  and  holder  of  the  property  an 
attachment,  or  a  trustee  process ;"°  or  where  he  has  released  to  the 
promisor  the  right  to  attach  property  of  the  debtor,"^  or  to  bring  a 


for  the  party  whose  duty  it  is,  and 
who  has  promised  to  pay  his  debt, 
than  of  a  principal  for  whom  the 
other  has  become  surety  or  guaran- 
tor. He  holds  a  fund  in  trust,  under 
a  duty  to  pay  it  to  the  creditor,  and 
he  makes  an  express  promise  to  per- 
form it.  In  such  case,  it  is  no  vio- 
lation of  the  spirit  of  the  statute,  to 
hold  such  promise  an  original  one, 
and  not  necessary  to  be  in  writing." 
Fullam  V.  Adams,  37  Vt.  391. 

»*'  Belknap  v.  Bender,  75  N.  Y.  446, 
31  Am.  Rep.  476;  Ackley  v.  Parmen- 
ter.  98  X.  Y.  425,  50  Am.  Rep.  693; 
Fullam  V.  Adams.  37  Vt.  391.  Com- 
pare, however,  with  Bates  v.  Don- 
nelly, 57  Mich.  521,  24  N.  W.  788, 
and  Birchell  v.  Neaster,  36  Ohio  St. 
331,  in  which  it  is  held  that  the  debt- 
or must  assent  to  such.  See  also, 
Dupuis  v.  Interior  Constr.  &c.  Co., 
88  Mich.  103,  50  X.  W.  103. 

•'Tevis  v.  Savage.  130  Cal.  411, 
62  Pac.  611;  Tuttle  v.  Armstead,  53 
Conn.  175,  22  Atl.  677;  Havward  v. 
Gunn.  82  111.  385 ;  Walden  v.  Karr,  88 
111.  49;  Watson  v.  Perrigo.  87  Maine 
202,  32  Atl.  876;  Mitts  v.  McMorran, 
64  Mich.  664,  31  X.  W.  521;  Grant 
V.  Wolf,  34  Minn.  32,  24  N.  W.  289; 


First  Nat.  Bank  v.  Chalmers,  144  X. 
Y.  432,  39  X.  E.  331;  Delp  v.  Bar- 
tholomay  Brewing  Co.,  123  Pa.  St. 
42,  15  Atl.  871;  Fehlinger  v.  Wood, 
134  Pa.  St.  517,  19  Atl.  746;  Peck  v. 
Goff,  18  R.  I.  94,  25  Atl.  690;  Wait 
V.  Wait,  28  Vt.  350;  Keves  v.  Allen, 
65  Vt.  667.  27  Atl.  319;  Lessel  v. 
Zillmer.  105  Wis.  334,  81  N.  W.  403. 

"=Dver  V.  Gibson,  16  Wis.  557, 
Quoted  in  Roy  v.  Flin,  10  Ariz.  80, 
85  Pac.  725.  See  also,  Emmerson  v 
Slater.  22  How.  (U.  S.)  28.  16  L 
ed.  360.  See  note  in  126  Am.  St 
497. 

"Barren  v.  Trussell,  4  Taunt.  117 
Tomlinson     v.      Gill,     Ambler     330 ; 
Perry  v.  Erb,  23  Misc.   (X.  Y.)    105, 
50  X.  Y.  S.  714. 

"  Fitzgerald  v.  Dressier,  5  C.  B. 
(N.  S.)  885. 

"nVilliams  v.  Leper,  3  Burr.  1886; 
Thomas  v.  Williams,  10  B.  &  C. 
664;  Edwards  v.  Kelly,  6  M.  &  S. 
204;  Bampton  v.  Paulin.  4  Bing.  264; 
Stephens  v.  Pell,  2  C  &  M.  710;  Sling- 
erland  v.  Morse,  7  Johns.  (X.  Y.) 
463. 

•"Cross  V.   Richardson,  30  Vt.  641. 

•^Lampson   v.   Hobart,  28  Vt.  697. 


§  1235 


CONTRACTS. 


472 


suit  to  enforce  a  lien.'^  The  agreement  by  a  vendee  of  real  estate 
to  assume  and  discharge  an  encumbrance  on  such  property  as  a 
part  of  the  purchase-price  is  not  within  the  clause  of  the  statute 
requiring  a  promise  to  answer  for  the  debt,  default  or  miscarriage 
of  another  to  be  in  writing,  and  an  action  may  be  maintained  on 
the  vendee's  promise  by  either  the  vendor"'*  or  the  holder  of  the 
encumbrance.^ 

§  1235.  Original  promises — Promise  to  pay  own  debt. — If 
the  debt  of  another,  which  a  man  promises  to  pay,  is  also  the  debt 
of  the  promisor  the  statute  has  no  application.^  A  promise  to 
the  debtor  himself  to  pay  his  own  obligation  is  not  within  the 
statute.^  Thus  the  assumption  of  partnership  debts  by  an  incoming 


""Fish  V.  Thomas.  5  Gray  (Mass.) 
45.  66  Am.  Dec.  348. 

"'Tuttle  V.  Armstead,  53  Conn. 
175,  22  Atl.  677;  Ford  v.  Finney,  35 
Ga.  258;  Crim  v.  Fitch,  53  Ind.  214; 
Neiswanger  v.  McClellan,  45  Kans. 
599,  26  Pac.  18  (assumption  clause 
in  a  deed)  ;  Goodwin  v.  Gilbert,  9 
Mass.  510;  Pike  v.  Brown,  7  Gush. 
(Mass.)  133  (assumption  clause  con- 
tained in  deed)  ;  Dobyns  v.  Rice,  22 
Mo.  App.  448;  Fiske  v.  McGregory, 
34  N.  H.  414;  Murray  v.  Smith,  1 
Duer.  (N.  Y.)  412  (assumption 
clause  contained  in  deed)  ;  Miller 
V.  Turnbach,  9  Lane.  Bar  (Pa.)  129; 
Bexar  Bldg.  &c.  Asn.  v.  Newman 
(Tex.  Civ.  App.),  25  S.  W.  461;  Mor- 
ris V.  Gaines,  82  Tex.  255,  17  S.  W. 
538. 

^Mulvany  v.  Gross,  1  Colo.  App. 
112,  27  Pac.  878;  Herrin  v.  Abbe 
(Fla.),  46  So.  183;  Helms  v.  Kearns, 
40  Ind.  124;  McDill  v.  Gunn,  43  Ind. 
315;  Bateman  v.  Butler,  24  Ind.  223, 
24  N.  E.  989;  Lowe  v.  Hamilton.  132 
Ind.  406,  31  N.  E.  1117;  Lamb  v. 
Tucker,  42  Iowa  118;  Senninger  v. 
Rowley,  138  Iowa  617,  116  N.  W. 
695,  18  L.  R.  A.  (N.  S.)  223n;  Botkin 
V.  Middlesborough  Town  &c.  Co., 
23  Ky.  L.  1964,  66  S.  W.  747;  Hodg- 
kins  V.  Jackson,  7  Bush  (Ky.)  342; 
Mudd  V.  Carico,  104  Kv.  719,  20  Ky. 
L.  898,  47  S.  W.  1080;  Daniels  v. 
Gibson.  20  Ky.  L.  847,  47  S.  W. 
621;  Flint  v.  Winter  Harbor  Land 
Co.,  89  Maine  420,  36  Atl.  634 
(assumption  of  risk  in  deed)  ;  Lee 


V.  Newman,  55  Miss.  365  (assump- 
tion of  risk  in  deed)  ;  Ruhling  v. 
Hackett,  1  Nev.  360;  Society  of 
Friends  v.  Haines,  47  Ohio  St.  423, 
25  N.  E.  119;  Taylor  v.  Preston,  79 
Pa.  St.  436;  Urquhart  v.  Brayton, 
12  R.  I.  169  (assumption  clause  in 
deed) ;  Moore  v.  Stovall,  2  Lea 
(Tenn.)  543  (assumption  clause  in 
deed) ;  Spann  v.  Cochran,  63  Tex. 
240;  Pickett  v.  Jackson  (Tex.), 
42  S.  W.  568;  Thompson  v.  Chess- 
man, 15  Utah  43,  48  Pac.  477;  Hoile 
V.  Bailey,  58  Wis.  434,  17  N.  W.  322; 
Green  v.  Hadfield,  89  Wis.  138,  61 
N.  W.  310.  See  also,  Enos  v.  An- 
derson, 40  Colo.  395,  93  Pac.  475,  15 
L.  R.  A.  (N.  S.)  1087  and  note; 
Emmerson  v.  Slater,  22  How.  (U. 
S.)  28,   16  L.  ed.  360. 

'Tevis  V.  Savage,  130  Cal.  411,  62 
Pac.  611;  Lester  v.  Bowman,  39 
Iowa  611 ;  Chamberlin  v.  Ingalls,  38 
Iowa  300 ;  Harlan  v.  Harlan,  102  Iowa 
701,  72  N.  W.  286;  Nelson  v.  Boynton, 
3  Mete.  (Mass.)  396,  Z1  Am.  Dec. 
148;  Besshears  v.  Rowe,  46  Mo.  501; 
Schufeldt  V.  Smith,  139  Mo.  367,  40 
S.  W.  887;  Robinson  v.  Gilman,  43 
N.  H.  485;  Goodman  v.  Cohen,  132 
N.  Y.  205,  30  N.  E.  399;  Snell  v. 
Rogers.  70  Hun  (N.  Y.)  462,  24  N. 
Y.  S.  379;  Stoudt  v.  Hine,  45  Pa. 
St.  30;  Putney  v.  Farnham,  27  Wis. 
187,  9  Am.  Rep.  459;  Morgan  v. 
South  Milw.  L.  V.  Co.,  97  Wis.  275, 
72  N.  W.  872. 

*  Eastwood  V.  Kenyon,  11  A.  &  E. 
438;    Enos    v.    Anderson,    40   Colo. 


473 


STATUTE  OF  FRAUDS. 


1235 


partner  who  has  purchased  the  interests  of  those  who  retire,  and 
has  agreed  with  the  continuing  members  to  form  a  new  partner- 
ship, is  usually  held  not  within  the  statute  for  the  foregoing 
reason.*  This  is  especially  true  when  the  promise  to  pay  the 
firm  debts  is  a  part  of  the  consideration  supporting  the  transac- 
tion,°  or  is  given  in  consideration  of  receiving  assets  of  the  old 
firm."  However,  it  has  been  held  that  where  the  retiring  partner 
is  not  discharged  by  the  promise,^  or  when  the  promise  to  pay  the 
debts  of  the  old  firm  is  made  subsequent  to  the  transaction,  it  must 
be  in  writing.^  A  promise  by  the  vendee  to  pay  the  debt  of  an- 
other as  part  of  the  consideration  paid  for  the  property  sold  and 
delivered  to  such  vendee,"  such  as  a  promise  to  assume  a  valid  and 
existing  mortgage  on  land  bought,^"  is  not  within  the  statute  of 
frauds. 


395.  93  Pac.  475,  15  L.  R.  A.  (N.  S.) 
1087  and  note  (purchaser  of  real  es- 
tate assuming  incumbrance  there- 
on) ;  Pratt  v.  Humphrey,  22  Conn. 
317;  Rabbermann  v.  Wiskamp,  54 
111.  179;  Meyer  v.  Hartman.  72  111. 
442;  Dickson  v.  Conde.  148  Ind.  279, 
46  N.  E.  998;  I^Ierchant  v.  O'Rourke, 
111  Iowa  351,  82  N.  W.  759;  Center 
V.  McQuesten,  -18  Kans.  476;  North 
V.  Robinson,  1  Duv.  (Ky.)  71;  Alger 
V.  Scoville,  1  Gray  (Mass.)  391;  Per- 
kins V.  Littlefield,  5  Allen  (Mass.) 
370;  Hubon  v.  Park,  116  Mass.  541; 
Green  v.  Brookins,  23  Mich.  48,  9 
Am.  Rep.  74;  Goetz  v.  Foos,  14  Gil. 
(Minn.)  196,  100  Am.  Dec.  218; 
Holt  V.  Dollashide.  61  Mo.  433; 
Green  v.  Estes,  82  Mo.  2,2>7  \  Gill  v. 
Ferrin,  71  N.  H.  421,  52  Atl.  558; 
Mersereau  v.  Lewis,  25  Wend.  (N. 
Y.)  243;  Barker  v.  Bucklin,  2  Denio 
(N.  Y.)  45.  43  Am.  Dec.  726;  Fosha 
V.  O'Donnell,  120  Wis.  336,  97  N.  W. 
924. 

*Lee  V.  Fontaine,  10  Ala.  755,  44 
Am.  Dec.  505 ;  Haggerty  v.  John- 
ston, 48  Ind.  41 ;  Poole  v.  Hintrager, 
60  Iowa  180,  14  N.  W.  223;  Wright 
V.  Carman.  47  N.  Y.  St.  125,  19  N. 
Y.  S.  696;  Reynolds  v.  Lawton,  62 
Hun  (N.  Y.)  596.  43  N.  Y.  St.  578, 
17  N.  Y.  S.  432;  First  Nat.  Bank  v. 
Eichelberger,  1  Woodw.  Dec.  (Pa.) 
397;  J.  &  H.  Clasgens  Co.  v.  Silber, 
93  Wis.  579,  67  N.  W.  1122. 


"  Bessemer  Sav.  Bank  v.  Rosen- 
baum  Grocery  Co.,  137  Ala.  530,  34 
So.   609. 

"  McKenzie  v.  Jackson,  4  Ala. 
230;  Schindler  v.  Euell,  45  How. 
Pr.  (N.  Y.)  Zi.  See  also,  Vanness 
V.  Dubois,  64  Ind.  338;  Radel  v.  Mc- 
Morran,  30  Hun  (N.  Y.)  309,  17  N. 
Y.  Week.  Dig.  258;  Townsend  v. 
Long,  77  Pa.  St.  143,  18  Am.  Rep. 
438;  McCreary  v.  Van  Hook's  Exrs., 
35  Tex.  631;  Brazee  v.  Woods,  35 
Tex.  302;  Wallace  v.  Freeman,  25 
Tex.   Supp.  91. 

'  Sternberg  v.  Callanan,  14  Iowa 
251.  See  also,  Shoemaker  v.  King, 
40   Pa.    107. 

'  Ringo  V.  Wing,  49  Ark.  457,  5  S. 
W.  787;  Freeman  v.  Badgley,  105 
Cal.  2>72,  38  Pac.  955. 

•Meyer  v.  Parsons,  129  Cal.  653, 
62  Pac.  216;  Daniels  v.  Gibson,  20  Ky. 
L.  847,  47  S.  W.  621;  Gilmore  v. 
Skookum  Box  Factory,  20  Wash.  703, 
56  Pac.  934. 

"Herrin  v.  Abbe  (Fla.),  46  So. 
183;  Senninger  v.  Rowlcv  138  Iowa 
617,  116  N.  W.  695,  18  L.  R.  A.  (N. 
S.)  223n;  Van  Meter  v.  Pool,  130 
Mo.  App.  433.  110  S.  W.  5;  Deaver 
V.  Deaver,  137  N.  Car.  240,  49  S.  E. 
113;  Pickett  v.  Jackson  (Tex.),  42 
S.  W.  568;  Morgan  v.  South  Mil- 
waukee Lake  View  Co.,  97  Wis.  275, 
72  N.  W.  872. 


1236 


CONTRACTS. 


474 


The  statute  contemplates  the  mere  promise  of  one  man  to  be  re- 
sponsible for  another,  and  cannot  be  interposed  as  a  cover  and 
shield  against  the  actual  obligations  of  the  debtor  himself.  The 
common  case  of  the  holder  of  a  third  person's  note,  assigning  for 
value  with  a  guaranty,  seems  to  be  clearly  referable  to  this  prin- 
ciple. The  assignor  owes  the  assignee,  and  that  particular  mode 
of  paying  him  is  adopted;  he  guarantees,  in  substance,  his  own 
debt.^^ 

§  1236.  Question  determined  by  person  to  whom  credit  is 
given. — As  a  general  rule,  if  the  creditor  relies  upon  the  per- 
son to  whom  the  property  is  delivered  to  any  extent  whatever,  the 
promise  is  collateral  and  unenforcible  if  not  in  writing.^^    On  the 


"Smith  V.  Corege,  53  Ark.  295,  14 
S.  W.  93 ;  Darst  v.  Bates,  95  111.  493 ; 
King  V.  Summitt,  IZ  Ind.  312,  38 
Am.  Rep.  145;  Voris  v.  Building  &c. 
Assn.,  20  Ind.  App.  630,  50  N.  E. 
779;  Little  v.  Edwards,  69  Md.  499, 
16  Atl.  134;  Huntington  v.  Welling- 
ton, 12  Mich.  10;  Crane  v.  Wheeler, 
48  ^linn.  207,  50  N.  W.  1033;  Bar- 
ker V.  Scudder,  56  Mo.  272;  Cardell 
V.  McXiel,  21  N.  Y.  336;  Milks  v. 
Rich,  80  N.  Y.  269,  36  Am.  Rep.  615 ; 
Kiernan  v.  Kratz,  42  Ore.  474,  69 
Pac.  1027.  70  Pac.  506;  Malone  v. 
Keener,  44  Pa.  St.  107;  Townsend  v. 
Long,  n  Pa.  143,  18  Am.  Rep.  438; 
Crawford  v.  Pyle,  190  Pa.  263,  42 
Atl.  687;  Eagle  Mowing  &c.  Mach. 
Co.  V.  Shattuck,  53  Wis.  455,  10  N. 
W.  690,  40  Am.  Rep.  780. 

"^latson  V.  Wharam,  2  T.  R.  80 
(goods  charged  to  buyer)  ;  Ander- 
son V.  Hayman,  1  H.  Bl.  120;  Croft 
V.  Smallwood,  1  Esp.  121;  Birkmyr 
V.  Darnell,  1  Salk.  27 ;  Webb  v.  Haw- 
kins Lumber  Co.,  101  Ala.  630,  14  So. 
407;  Swaboda  v.  Throgmorton- 
Bruce  Co.,  88  Ark.  592,  115  S.  W. 
380;  Harris  v.  Frank,  81  Cal.  280, 
22  Pac.  856;  Everett  v.  Morrison, 
Breese  (111.)  79;  Hardman  v.  Brad- 
ley, 85  111.  162;  Blank  v.  Dreher,  25 
111.  331;  Owen  v.  Stevens,  78  111.  462; 
Lomax  v.  McKinney,  61  Ind.  374; 
Parker  v.  Dillingham,  129  Ind.  542, 
29  N.  E.  23;  Indiana  Trust  Co.  v. 
Finitzer.  160  Ind.  647,  67  N.  E.  520; 
Langdon  v.  Richardson,  58  Iowa 
610,  12  N.  W.  622;  Moses  v.  Norton, 


36  Maine  113,  58  Am.  Dec.  738; 
Norris  v.  Graham,  ZZ  Md.  56;  Swift 
V.  Pierce,  13  Allen  (Mass.)  136;  Ca- 
hill  V.  Bigelow,  18  Pick.  (Mass.) 
369;  Gill  v.  Herrick,  111  Mass.  501; 
O'Connell  v.  College,  174  Mass.  511, 
55  N.  E.  460;  Studley  v.  Barth,  54 
Mich.  6,  19  N.  W.  568;  Sherman  v. 
Alberts,  153  Mich.  361,  116  N.  W. 
1090,  126  Am.  St.  486n;  Butters  &c. 
Lumber  Co.  v.  Vogel,  130  Mich.  Z2>, 
89  N.  W.  560;  Cole  v.  Hutchinson, 
34  Minn.  410,  26  N.  W.  319;  Will- 
iams v.  Auten,  62  Nebr.  832,  87  N. 
W.  1061;  Vicksburg  Mfg.  &c.  Co.  v. 
Jaffrey  Const.  Co.,  94  Miss.  282,  49 
So.  116;  Williams  v.  Auten,  62  Nebr. 
832,  87  N.  W.  1061 ;  Walker  v.  Rich- 
ards, 39  N.  H.  259 ;  Hetfield  v.  Dow, 
27  N.  J.  L.  440;  Brady  v.  Sackrider,  3 
N.  Y.  Super.  Ct.  514;  Allen  v. 
Scarff,  1  Hilt.  (N.  Y.)  209;  Larson 
V.  Wyman,  14  Wend.  (N.  Y.)  246; 
Shay  V.  Cruxton.  116  N.  Y.  S.  1123; 
Dougherty  v.  Bash,  167  Pa.  St.  429, 
31  Atl.  729;  Putnam  Mach.  Co.  v. 
Cann,  173  Pa.  St.  392,  34  Atl.  67; 
Wood  V.  Patch,  11  R.  I.  445;  Matte- 
son  v.  Moone,  25  R.  I.  129,  54  Atl. 
1058;  Wood  v.  Dodge,  23  S.  Dak. 
95,  120  N.  W.  774;  Ware  v.  Stephen- 
son, 10  Leigh  (Va.)  155;  American 
Brewing  Assn.  v.  Gossett  (Tex.  Civ. 
App.),  107  S.  W.  357;  Radclifif  v. 
Poundstone,  23  W.  Va.  724;  John- 
son V.  Bank,  60  W.  Va.  320,  55  S. 
E.  394;  Hurst  Hardware  Co  .v. 
Goodman,  68  W.  Va.  462,  69  S.  E. 
898,  32  L.  R.  A.    (N.  S.)   598. 


475 


STATUTE    OF    FRAUDS. 


§     1^3^ 


Other  hand,  if  the  goods  sold  to  such  other  are  furnished  upon 
the  sole  credit  of  the  promisor  the  promise  is  not  within  the 
statute.^'  Moreover,  if  it  was  the  intention  of  both  the  promisor 
and  the  promisee  that  the  former  was  to  be  liable  in  the  first  in- 
stance, the  promise  is  original  and  not  within  the  statute  notwith- 
standing the  benefit  inured  to  a  third  person.^* 


"Geary  v.  O'Ncil,  12>  111.  593; 
Lusk  V.  Throop,  189  111.  127,  59  N. 
E.  529;  Collins  v.  Stanficld,  139  Ind. 
184.  38  N.  E.  1091;  Cox  v.  Peltier, 
159  Ind.  355,  65  N.  E.  6;  Benbow  v. 
Sooysmith.  76  Iowa  151,  40  N.  W. 
693;  Myer  v.  Grafflin,  31  Md.  350, 
100  Am.  Dec.  66;  Walker  v.  Hill, 
119  Mass.  249;  Phelps  v.  Stone,  172 
Mass.  355,  52  N.  E.  517;  Hagadorn 
V.  Stronach  Lumber  Co.,  81  Mich. 
56,  45  N.  W.  650;  Foster  v.  Felchcr, 
119  Mich.  353,  78  N.  W.  120;  Mau- 
rin  V.  Fogelburg,  il  Minn.  2Z,  32  N. 
W.  858,  5  Am.  St.  814;  Amort  v. 
Christofferson,  57  Minn.  234,  59  N. 
W.  304 ;  McGowan  Commercial  Co.  v. 
Midland  Coal  &c.  Co.,  41  Mont.  211, 
108  Pac.  655 ;  Barras  v.  Pomeroy 
Coal  Co.,  38  Nebr.  311,  56  N.  W. 
890;  Walker  v.  Richards,  41  N.  H. 
388;  Herendeen  Mfg.  Co.  v.  Moore,  66 
N.  J.  L.  74,  48  Atl.  525  ;  Ridgeway  v. 
Corporation  Liquidating  Co.,  71  N. 
J.  L.  676.  62  Atl.  116;  Chase  v.  Day. 
17  Johns.  (N.  Y.)  114;  Raabe  v. 
Squier,  148  N.  Y.  81,  42  N.  E.  516; 
Mackey  v.  Smith,  21  Ore.  598,  28 
Pac.  974;  Jefferson  County  v.  Slagle, 
66  Pa.  St.  202;  Booth  v.  Heist,  94 
Pa.  St.  177:  McCullv  v.  Porzel,  158 
Pa.  St.  513,  27  Atl.  866;  Green  v. 
Burton,  59  Vt.  423,  10  Atl.  575 ;  Hop- 
kins V.  Stefan,  11  Wis.  45,  45  N.  W. 
676. 

"Ledlow  V.  Becton,  Z(3  Ala.  596; 
Smith  V.  Miller,  152  Ala.  485,  44  So. 
399  (goods  sold  to  third  party  on 
credit  of  promisor)  ;  Linam  v.  Jones. 
134  Ala.  570,  ZZ  So.  343;  Cauthron 
Lumber  Co.  v.  Hall,  76  Ark.  1.  88 
S.  W.  594  (goods  sold  and  delivered 
to  employes  on  the  employer's  re- 
quest and  charged  to  him)  ;  Sears  v. 
Flodstrom,  5  Idaho  314,  49  Pac.  11 
(owner  of  a  boarding  house  told 
the  proprietor  of  a  meat  market  to 
let  his  tenant  running  the  boarding 
house  have    what    meat    she   wanted, 


and  charge  it  to  him)  ;  Hughes  v. 
Atkins,  41  111.  213;  Ruggles  v.  Gat- 
ton,  50  111.  412;  Lusk  v.  Throop,  189 
111.  127,  59  N.  E.  529  (contractor 
promised  grocery  man  to  pay  for 
bill  of  groceries  furnished  subcon- 
tractor) ;  Clark  v.  Smith,  87  111.  App. 
409;  Johnson  v.  Hoover,  72  Ind.  395; 
Lessenich  v.  Pettit,  91  Iowa  609,  60 
N.  W.  192;  Porter  v.  Langhorn,  2 
Bibb  (Ky.)  63;  Stapp  v.  Anderson, 
I  A.  K.  Marsh.  (Ky.)  535;  Leisman 
V.  Otto,  1  Bush  (Ky.)  225;  Kennon 
V.  Tolle,  9  Kv.  L.  811 ;  Myer  v.  Graf- 
flin, 31  Md.'350.  100  Am.  Dec.  66; 
Phelps  V.  Stone,  172  Mass.  355.  52 
N.  E.  517;  Walker  v.  Hill,  119  Mass. 
249;  Hake  v.  Solomon.  62  Mich. 
Zll,  28  N.  W.  908;  Mitchell  v.  Beck, 
88  Mich.  342,  50  N.  W.  305;  Haga- 
dorn V.  Stronach  Lumber  Co.,  81 
Mich.  56,  45  N.  W.  650;  Wenzel  v. 
Johnston,  112  Mich.  243,  70  N.  W. 
549;  Temple  v.  Goldsmith,  118  Mich. 
172,  76  N.  W.  324;  Maurin  v.  Fogel- 
berg,  11  Minn.  23,  5  Am.  St.  814,  Z2 
N.  W.  358  (promisor  instructed  ven- 
dor to  give  all  the  goods  to  H.  and 
R.  that  they  want,  and  charge  di- 
rectly to  them,  and  every  first  of  the 
month  bring  in  the  bill,  and  he 
would  pay  it)  ;  Bennett  v.  Thuet,  98 
Minn.  497.  108  N.  W.  1;  Glenn  v.. 
Lehnen,  54  Mo.  45 ;  Chick  v.  Frey 
Coal  Co.,  78  Mo.  App.  234;  Beeler 
V.  Finnel,  85  Mo.  App.  438:  Lind- 
sey  V.  Heaton,  27  Nebr.  662,  43  N. 
W.  420;  Palmer  v.  Wicherlv,  15 
Nebr.  98.  17  X.  W.  364;  Price  v. 
Combs,  12  X.  J.  L.  188  (promise  to 
pay  for  property  sold  a  third  per- 
son, in  goods  to  be  furnished  by 
him  to  the  seller)  ;  Herendeen  Mfg. 
Co.  v.  IMoore,  66  X.  J.  L.  74.  48  Atl. 
525;  Gallagher  v.  McBride.  66  X.  J. 
L.  360.  49  Atl.  582;  Sheppard  v. 
Newton,  139  N.  Car.  533,  52  S.  E. 
143.  See,  Oldenburg  v.  Dorsev,  102 
Md.  172,  62  Atl.  576;  East  Baltimore 


^   ^^^Z7 


CONTRACTS. 


476 


§  1237.  Person  to  whom  credit  is  given — Services  ren- 
dered, and  the  like. — The  same  rule  appHes  where  services 
are  rendered  to  another.  A  promise  by  one  party  to  pay  for  serv- 
ices rende^iid  another  is  within  the  statute  if  the  credit  is  given 
to  the  on«i  for  whom  the  services  are  performed,"  but  if  per- 
formed on  the  credit  of  the  promisor  it  is  not  within  the  statute.^* 
Thus,  in  case  of  sudden  sickness  or  serious  injury  of  a  person 
where  immediate  medical  attention  is  necessary,  the  question  of 
whether  the  person  who  employs  a  physician  under  such  circum- 
stances becomes  liable  in  the  absence  of  a  writing  to  that  effect 
depends  upon  whether  the  services  are  performed  upon  the  credit 
*>i  the  person  who  is  sick,  or  of  the  one  employing  the  physician/^ 
The  promise  of  one  to  pay  for  goods  furnished  or  services  per- 
formed for  another  is  collateral  and  within  the  statute  if  fur- 
nished on  the  credit  of  the  beneficiary,^^  who  is  not  a  joint  con- 


Lumber  Co.  V.  K'Nessett  Israel 
Aushe  S'Phard  Congregation,  100 
Md.  689,  62  Atl.  575;  Mather  v. 
Perry,  2  Denio  (N.  Y.)  162;  McCaf- 
fil  V.  Radcliff,  3  Robt.  (N.  Y.)  445; 
Stilwell  V.  Otis,  2  Hilt.  (N.  Y.)  148; 
Pennell  v.  Pentz,  4  E.  D.  Smith  (N. 
Y.)  639;  Foster  v.  Persch,  68  N.  Y. 
400;  White  v.  Tripp,  125  N.  Car. 
523,  34  S.  E.  686;  Grand  Forks  Lum- 
ber &c.  Co.  V.  Tourtelot,  7  N.  Dak. 
587,  75  N.  W.  901;  Van  Leuven  v. 
Holmes,  13  Pa.  Super.  Ct.  77 ;  Merri- 
man  v.  Liggett,  1  W.  N.  C.  (Pa.) 
379;  Booth  v.  Heist,  94  Pa.  St.  177; 
Hazen  v.  Bearden,  4  Smeed  (Tenn.) 
48;  First  Nat.  Bank  v.  Greenville  Oil 
&c.  Co.,  24  Tex.  Civ.  App.  645,  60 
S.  W.  828;  Sampson  v.  Swift,  11 
Vt.  315;  Champion  v.  Doty,  31  Wis. 
190;  James  v.  Carson,  94  Wis.  632, 
69  N.  W.  1004. 

"Slone  V.  Berlin,  88  Iowa  205,  55 
N.  W.  341 ;  Dupuis  v.  Interior  Const. 
&c.  Co.,  88  Mich.  103,  50  N.  W.  103 ; 
King  V.  Lumber  Co.,  80  Minn.  274, 
83  N.  W.  170;  Brown  v.  Weber,  38 
N.  Y.  187;  Birchell  v.  Neaster,  36 
Ohio  St.  331 ;  Lewis  v.  Lumber  Co., 
156  Pa.  St.  217,  27  Atl.  20;  Aldrich  v. 
Jewell,  12  Vt.  125,  36  Am.  Dec.  330; 
Malone  v.  Knickerbocker  Ice  Co.,  88 
Wis.  542,  60  N.  W.  999. 

"Buchanan  v.  Moran,  62  Conn.  83, 
25   Atl.  396;   King  v.   Edmiston,  88 


III.  257 ;  Hardman  v.  Bradley,  85  III. 
162;  Harlan  v.  Harlan,  102  Iowa  701, 
72  N.  W.  286;  Marr  v.  Burling- 
ton &c.  R.  Co.,  121  Iowa  117,  96  N. 
W.  716;  Grant  v.  Wolf,  34  Minn.  32. 
24  N.  W.  289;  Peyson  v.  Conniff,  32 
Nebr.  269,  49  N.  W.  340;  Hazeltine 
V.  Wilson,  55  N.  J.  L.  250,  26  Atl. 
79;  Rounsevel  v.  Osgood,  68  N.  H. 
418,  44  Atl.  535;  Merriman  v.  Mc- 
Manus,  102  Pa.  St.  102;  Boston  v. 
Farr,  148  Pa.  St.  220,  23  Atl.  901; 
Eddy  V.  Davidson,  42  Vt.  56;  James 
v.  Carson,  94  Wis.  632,  69  N.  W. 
1004. 

"Geelan  v.  Reid,  22  111.  App.  165; 
Clark  V.  Waterman,  7  Vt.  76,  29  Am. 
Dec.  150.  See  also,  Crowder  v.  Keys, 
91  Ga.  180,  16  S.  E.  986;  Hentig  v. 
Kernke,  25  Kans.  559;  D'Witt  v. 
Root,  18  Nebr.  567,  26  N.  W.  360; 
Peyson  v.  ConnM,  32  Nebr.  269,  49 
N.  W.  340;  Ration's  Exr.  v.  Has- 
singer,  69  Pa.  St.  311. 

"  Pake  v.  Wilson,  127  Ala.  240,  28 
So.  665 ;  Harris  v.  Frank,  81  Cal. 
280,  22  Pac.  856;  Schoenfeld  v. 
Brown,  78  111.  487;  Billingsley  v. 
Dempewolf,  11  Ind.  414;  Miller  v. 
State,  35  Ind.  App.  379,  74  N.  E. 
260;  Norris  v.  Graham,  22>  Md.  56; 
Swift  V.  Pierce,  13  Allen  (Mass.) 
136;  O'Connell  v.  College,  174  Mass. 
511,  55  N.  E.  460;  Welch  v.  Marvin, 
36   Mich  59;   Wilhelm  v.  Voss,   118 


477 


STATUTE  OF  FRAUDS. 


§  1238 


tractor  with  the  promisor.^"  Thus,  a  promise  to  pay  for  beef 
furnished  a  jobber  working  on  the  promisor's  logs  has  been  held 
within  the  statute."'^ 

§  1238.    Language    indicative    of   collateral   promise. — No 

other  clement  entering  in,  a  promise  in  language  by  which  the 
promisor  merely  promises  to  see  the  seller  paid,-^  or  to  pay  if  the 


IMich.  106,  Id  N.  W.  308;  Cole  v. 
Hutchinson,  34  Minn.  410,  26  N.  W. 
319;  Swirgart  v.  Gentcrt,  63  Nebr. 
157,  88  X.  W.  159;  Walker  v.  Rich- 
ards, 39  N.  H.  259;  Matteson  v. 
Moone,  25  R.  I.  129,  54  Atl.  1058. 

"  See  Boyce  v.  Murphy,  91  Ind.  1, 
46  Am.  Rep.  567;  Oldenburgh  v. 
Dorsey,  102  Md.  172,  62  Atl.  576; 
Swift  V.  Pierce,  13  Allen  (Mass.) 
136;  Gibbs  v.  Blanchard,  15  Mich. 
292 ;  Dumanoise  v.  Townsend,  80 
Mich.  302,  45  x\.  W.  179;  Hetfield  v. 
Dow,  27  N.  J.  L.  440;  Eddy  v.  Dav- 
idson, 42  Vt.  56. 

""Sherman  v.  Alberts,  153  Mich. 
361.  116  N.  W.  1090,  126  Am.  St. 
486n. 

''Wagner  v.  liallack,  3  Colo.  176 
(goods  charged  to  debtor)  ;  Pettit  v. 
Bradcn,  55  Ind.  201  (third  person 
told  vendor  that,  if  he  would 
deliver  goods  to  the  vendee,  he 
would  see  that  he  received  his  pay)  ; 
Blake  V.  Parlin,  22  xMaine  395 
(promise  to  landlord  that  the  prom- 
isor would,  see  that  the  rent  was 
paid)  ;  Doyle  v.  White,  26  Maine 
341,  45  Am.  Dec.  110  (vendor  re- 
fused to  deliver  rock  to  buyer, 
promisor  then  said :  "You  bring  the 
rock  and  I  will  see  you  paid  for 
it")  ;  Cropper  v.  Pittman,  13  Md. 
190;  Cahill  v.  Bigelow,  18  Pick. 
(Mass.)  369  (goods  first  charged  to 
debtor)  ;  Hill  v.  Raymond,  3  Allen 
(Mass.)  540  (exclusive  credit  not 
given  to  promisor)  ;  Stone  v.  Walk- 
er, 13  Gray  (Mass.)  613  (attorney 
given  promise  to  induce  him  to  ren- 
der services  to  a  third  person)  ;  Hall 
V.  Woodin,  35  Mich.  67  (promise 
to  see  the  seller  of  goods  paid  there- 
for) ;  Butters  Salt  &c.  Co.  v.  Vogel, 
130  Mich.  Zl,  89  X.  W.  560  (employ- 
er promised  that  he  would  see  ven- 
dor paid  for  goods  sold  to  em- 
ployes) ;  Bloom  v.  McGrath,  53  Miss. 


249  (debtor  given  credit  in  the  first 
instance) ;  Wray  v.  Cox,  86  Miss. 
638,  38  So.  344  (goods  at  request  of 
promisor,  sold  and  charged  to  third 
person)  ;  Swigart  v.  Gentert,  63 
Nebr.  157,  88  N.  W.  159  (father's 
promise  to  a  physician  to  induce  him 
to  give  his  married  daughter  medical 
attention)  ;  Brown  v.  Bradshaw,  1 
Duer  (X.  Y.)  199  (goods  sold  and 
charged  to  debtor)  ;  Payne  v.  Bald- 
win, 14  Barb.  (N.  Y.)  570  (officer 
of  corporation  gave  promise  to  one 
furnishing  material  to  a  contractor 
doing  work  for  the  corporation; 
account  charged  to  the  corporation)  ; 
Allen  v.  Scarff,  1  Hilt.  (X.  Y.)  209 
(vendor  was  first  to  try  to  collect 
from  buyer)  ;  Garrett-Williams  Co. 
V.  Hamil,  131  N.  Car.  57,  42  S.  E. 
448  (charge  made  to  debtor)  ;  Bir- 
chell  V.  Neaster,  Zd  Ohio  St.  331 
(promise  given  by  owner  to  subcon- 
tractor) :  Rancil  v.  Krohne,  31  Pa. 
Super.  Ct.  130  (owner  of  property 
stated  to  men  laboring  thereon  "  'I 
want  to  see  you  men  to  stay  with 
the  job  and  complete  it,  and  if  you 
are  afraid  that  you  will  not  get  your 
mone.v,  I  will  see  that  you  get  your 
pay' ")  ;  Gable  v.  Graybill,  1  Pa. 
Super.  Ct.  29  (third  party  promised 
laborer  that,  if  the  latter  continued 
his  work  for  another,  he  would  see 
him  paid)  ;  Haverly  v.  Mercur,  78 
Pa.  257;  Robertson  v.  Hunter,  29  S. 
Car.  9,  6  S.  E.  850  (goods  sold  and 
charged  to  a  third  person  at  request 
of  promisor)  ;  Xichols  v.  Dixon 
(Tex.  Civ.  App),  85  S.  W.  1051, 
affd.,  99  Tex.  263,  89  S.  W.  765 
(owner  of  land  upon  which  a  build- 
ing was  being  erected  promised  ma- 
terialman to  see  him  paid)  ;  Skinner 
V.  Conant,  2  Vt.  453.  21  Am.  Dec. 
554;  Xewell  v.  Ingraham,  15  VL 
422. 


§    1239  CONTRACTS.  478 

debtor  fails  to  do  so,"  is  collateral  and  within  the  statute.  Thus, 
a  verbal  promise  on  the  part  of  the  owner  of  property  to  pay 
materialmen  and  laborers,  if  they  would  go  ahead  and  fulfill  their 
contracts  with  the  contractor,  if  the  contractor  failed  to  pay  them, 
has  been  held  insufficient."  However,  it  has  been  held  that, 
where  the  owner  was  anxious  to  have  the  building  completed  in 
order  that  he  might  use  it,  and  he  was  enabled  to  get  it  completed 
by  promising  a  subcontractor  that  he  would  pay  him,  the  promise 
w^as  original  and  the  owner  liable  thereon.^* 

§  1239.  Miscellaneous  promises. — In  the  following  in- 
stances promises  have  been  held  collateral  and  unenforcible  under 
the  statute  of  frauds:  a  promise  to  serve  as  security  for,  and 
guarantee  the  payment  of,  goods  to  be  sold  to  a  third  party  ;^^  an 
agreement  to  guarantee  the  payment  of  the  purchase  price  of 
goods  or  property  sold  to  another  r^  a  promise  to  pay  for  any 
goods  that  a  third  person  might  buy  of  the  one  to  whom  the 
promise  was  given ;"  or  of  an  agreement  to  hold  himself  responsi- 
ble for  the  payment  to  an  employe  by  his  employer  of  money  to 
be  earned  by  him  during  the  course  of  the  employment.^' 

§  1240.  Question  one  of  intention. — The  real  character  of 
the  promise  does  not  depend  altogether  upon  the  form  of  ex- 
pression, but  largely  on  the  situation  of  the  parties ;  and  the  ques- 
tion always  is  as  to  what  the  parties  mutually  understood  by  the 
language,  whether  they  understood  it  to  be  a  collateral  or  a  direct 
promise.^^    In  order  to  arrive  at  the  intention  of  the  parties  the 

^  Tones   v.    Cooper,    1    Cowp.   227;  N.  Y.  S.  188;  Loftus  v.  Ivy,  14  Tex. 

Schotte  V.  Puscheck,  79  111.  App.  31;  Civ.  App.  701,  Zl  S.  W.  766;  Nason 

Blank  v.   Dreher,    25    111.   331 ;    New-  v.  Blaisdell,  12  Vt.  165,  36  Am.  Dec. 

man    v.    Newman,  7  Kans.  App.  77,  52  331. 

Pac    908 ;    Connolly   v.    Kettlewell,    1  '*  Howell  v.  Harvey,  65  W.  Va.  310, 

Gill'  (Md.)    260    (purchaser   charged  64   S.  E.  249,  22   L.  R.  A.    (N.   S.) 

with  goods  "secured  by"  promisor)  ;  1077,  and  note.        ^^  ^    ,    ,     ^_     . 

Dufolt    v.    Gorman,    1    Gil.    (Minn.)  '''Wills  v.  Ross,  11  Ind.  1,  40  Am. 

234,  66  Am.  Dec.  543;   Morrissey  v.  Rep.  279. 

Kinsey,  16  Nebr.  17,   19  N.  W.  454;  ^  Dovenmuehle    v.    Eilenberger    70 

Knox  V.  Nutt,   1  Daly   (N.  Y.)   213;  111.    App.    180;    Brown   v.    Kmloch,   2 

Mead  v.  Watson,  57  Vt.  426.  Speers  L.    (S.  Car.)   284 

^^-Clay  V.  Walton,  9  Cal.  328;  War-  "Cutler  v.   Hmton,  6  Rand.   (Va.) 

ner  v.  Willoughby,  60  Conn.  468,  22  509. 

Atl.   1014,  25  Am.   St.  343;   Smith  v.  ^Miller  v.  Neihaus,  51  Ind.  401 

Burditt   107  App.  Div.  (N.  Y.)  628,95  "Davis  v.  Patrick,  141   U.   S.  479, 


479 


STATUTE    OF    FRAUDS. 


1 24 1 


obvious  import  of  the  entire  transaction  is  to  be  given  effect, 
and  this  is  not  controlled  by  the  mere  form  of  the  language 
used.^°  In  each  case  the  expressions  used,  the  situation  of  the 
parties  and  all  the  circumstances  of  the  case  should  be  taken 
into  consideration.^^  When  the  promisee  charges  the  account  on 
his  books  against  the  debtor,  and  not  the  promisor,  this  is  strong, 
but  not  conclusive,  evidence  that  credit  was  extended  to  the 
debtor.^"  Thus,  it  has  been  held  that  when  the  goods  are  charged 
to  the  debtor  the  usage  and  method  of  keeping  accounts  in  such 
cases  are  admissible  in  evidence,  in  order  to  enable  the  jury  to 
arrive  at  a  just  conclusion.^® 

§  1241.  When  a  question  for  the  jury. — When  the  words 
used  and  the  surrounding  facts  and  circumstances  leave  the  ques- 
tion of  whether  the  parties  intended  to  create  an  original  or  col- 
lateral obligation,  the  question  of  their  intention  is  for  the  jury. 
It  is  for  the  jury  to  say  whether  credit  was  given  exclusively  to 
the  promisor.^* 


35  L.  ed.  826,  12  Sup.  Ct.  58;  John- 
son V.  Bank,  60  W.  Va.  320,  55  S.  E. 
394. 

""  Forbes  v.  Temple,  22  N.  B.  511; 
Reed  v.  Holcomb,  31  Conn.  360;  Lusk 
V.  Throop,  189  111.  127,  59  N.  E.  529; 
Miller  V.  State,  35  Ind.  App.  379,  74 
N.  E.  260;  Norris  v.  Spencer,  18 
Maine,  324 ;  Rottmann  v.  Pohlmann, 
28  Mo.  App.  399;  Dixon  v.  Frazee,  1 
E.  D.  Smith  (N.  Y.)  32;  Allen  v. 
Scarff,  1  Hilt.  (N.  Y.)  209;  Brooks 
Watcrfield  Co.  v.  I.  N.  Walker  Co., 
4  Ohio  N.  P.  147. 

^^  Atlas  Lumber  &c.  Co.  v.  Flint, 
20  S.  Dak.  118.  104  N.  W.  1046.  "The 
question  whether  the  contract  was 
one  of  original  promise,  or  of  guar- 
anty merely,  is  one  for  the  jury  (or 
in  this  case  for  the  trial  court)  to 
determine  from  the  surrounding  cir- 
cumstances of  the  case."  Harris  v. 
Frank,  81  Cal.  280,  22  Pac.  856. 

""Harris  v.  Frank.  81  Cal.  280,  22 
Pac.  856;  Calverley  v.  Wirth,  59  111. 
.^pp.  553 :  Lomax  v.  McKinnev,  61 
Tnd.  374;  Runkle  v.  Kettering^  127 
Iowa  6,  102  N.  W.  142;  Langdon  v. 
Richardson,  58  Iowa  610.  12  N.  W. 
622;  Leisman  v.  Otto,  1  Bush   (Ky.) 


225;  Kennon  v.  Tolle,  9  Ky.  L.  811; 
Swift  V.  Pierce,  13  Allen  (Mass.) 
136;  Ridgeway  v.  Corporation  Liqui- 
dating Co.,  71  N.  J.  L.  676,  62  Atl. 
116;  Foster  v.  Persch,  68  N.  Y.  400; 
Nixon  V.  Jacobs,  22  Tex.  Civ.  App. 
97,  53  S.  W.  595. 

""  White  V.  Tripp,  125  N.  Car.  523, 
34  S.  E.  686.  In  this  case  the  prom- 
isor was  held  liable,  notwithstanding 
the  goods  had  been  charged  to  the 
debtor.  Proof  of  custom  is  not  ad- 
missible, however,  to  vary  the  terms 
of  an  absolute  written  contract.  Cov- 
ington V.  Kanawha  Coal  &c.  Co.  121 
Kv.  681,  28  Kv.  L.  636,  89  S.  W.  1126. 
3  L.  R.  A.  (N.  S.)  248n,  123  Am.  St. 
219. 

"Boykin  v.  Dohlonde,  37  Ala.  577 
(question  one  of  fact  for  the  jury  as 
to  whether  or  not  credit  was  given 
exclusively  to  promisor)  ;  Clark  v. 
Jones.  87  Ala.  474.  6  So.  362;  Ellis 
V.  Murray,  77  Ga.  542;  Billingsley 
v.  Dempewolf,  11  Ind.  414;  Elder 
V.  Warfield.  7  Har.  &  T.  (Md.)  391: 
Barrett  v.  McHugh.  128  Mass.  165; 
Larson  v.  Jensen,  53  Mich.  427,  19 
N.  W.  130;  Steele  v.  .Ancient  Order 
of  Pyramids,   125  Mo.  App.  680,   103 


§    1242  CONTRACTS.  480 

§  1242.  Relinquishment  of  lien. — It  is  settled  that  where 
a  creditor  has  a  hen  on  his  debtor's  property,  and  a  third  person, 
having  a  subordinate  hen  or  other  interest  in  the  same  property, 
promises  the  creditor  to  pay  the  debt  in  consideration  of  the  re- 
hnquishment  of  the  hen,  which  thus  inures  to  the  promisor's 
benefit,  the  statute  does  not  apply.  Certain  authorities  sustain  the 
view  that  the  new  promisor  must  have  an  interest  of  some  kind 
in  the  property  to  which  the  lien  attached,  so  that  the  surrender 
will  inure  to  his  benefit.^^  On  the  other  hand,  there  are  cases 
which  hold,  under  circumstances  of  this  character,  that  the  prom- 
isor need  not  derive  a  benefit,  and  that  any  damage  to  the  prom- 
isee or  benefit  to  the  promisor  affords  a  sufficient  consideration  to 
support  the  promise-^®  The  holder  of  the  lien  must  rely  on  the 
promise  of  such  third  person  to  pay  the  debt.^^ 

§  1243.  Independent  promise  releasmg  another. — An  inde- 
pendent promise  absolutely  to  pay  the  debt  of  another,  and  not 
on  condition  of  his  default,  and  which  in  fact  releases  him,  is 
not  a  promise  to  pay  the  debt  of  another  within  the  meaning  of 
the  statute  of  frauds.^^  Where  one  of  two  creditors  of  a  firm 
agrees  with  the  other  that  he  will  pay  the  latter's  debt  if  he  will 

S.   W.    108;    McCaffil   v.   RadcHff,   3  Waggener  v.  The  Bells,  4  T.  B.  Mon. 

Robt.  (N.  Y.)  445;  Speers  v.  Knarr,  (Ky.)  8;  Day  v.  Cloe,  4  Bush  (Ky.) 

4    Pa.    Super.    Ct.    80;    Hurst    Hard-  563;   Myles'   Exrs.  v.  Myles,  6  Bush 

ware    Co.    v.    Goodman,    68    W.    Va.  (Ky.)  237;  Fain  v.  Turner's  Admrs., 

462,  69  S.  E.  898,  32  L.  R.  A.  (N.  S.)  92  Ky.  634,  16  Ky.  L.  719,  29  S.  W. 

598  628;     Griffin     v.     Cunningham,     183 

^  Clark  V.  Jones,  85  Ala.  127,  4  So.  Mass.    505,    67    N.    E.    660.  "Where 

771 ;     Westmoreland     v.     Porter,     75  a  promise  is  made  to  pay  the  debt  of 

Ala.    452;    Dexter    v.    Blanchard,    11  another,   the   statute  has  no  applica- 

Allen   (Mass.)   365;  Nelson  v.  Boyn-  tion    if    the    original    debtor    is    dis- 

ton,   3    Mete.    (Mass.)    396,    Zl   Am.  charged.     In   such   case  the  promise 

Dec.  148;  Mallory  v.  Gillett,  21  N.  Y.  is  treated  as  original,  and  not  collat- 

412.    See  also,  Ellis  v.  Carroll,  68  S.  eral.     The  promisor  is  substituted  as 

Car.  376,  47   S.   E.  679,  102  Am.    St.  the  debtor,  and  the  discharge  of  the 

679;  Lee  v.  Unkefer,  11  S.  Car.  460,  original  debtor  is  a  sufficient  consid- 

58  S.  E.  343.  eration.     To   make  the   promise  col- 

^  Cornell    v.    Central    Electric    Co.,  lateral,  and  bring  it  within  the  stat- 

61  111.  App.  325.    See  also,  Crawford  ute,  it  must  be  a  promise  to  answer 

V.  King,  54  Ind.  6.  to  the  promisee  for  the  debt,  default, 

*'  Fuller  &c.  Lumber  Co.  v.  House-  or  miscarriage  of  a  third  person,  who 

man,  117    Mich.  553,  Id  N.  W.  11.  is    liable    therefore    to    the    promisee 

^  Abercrombie  v.  Fourth  Nat.  Bank  and    continues    so    liable."     Hyatt    v. 

(Ala.)   39  So.  606;   Smith  v.  Miller,  Bonham,  19  Ind.  App.  256,  49  N.  E. 

152  Ala.  485,  44  So.  399;    Pylant  v.  361. 
Webb,  2  Ga.  App.  171,  58  S.  E.  329; 


481  STATUTE  OF  FRAUDS.  §  1 244 

not  sue  the  firm  and  garnish  funds  which  the  promisee  has  in  his 
control  as  treasurer  of  a  company  which  is  indebted  to  such  firm, 
and  the  promisee  thereupon  discharges  such  firm,  the  promise  is 
not  within  the  statute  of  frauds.^'*  Where  defendants  contracted 
to  build  a  road  for  a  railway  company,  but  sublet  the  contract  to 
others,  who  assigned  to  defendants  all  money  due  the  laborers, 
and  defendants  agreed  to  pay  to  the  laborers  the  amount  assigned, 
and  the  subcontractors  abondoned  the  work,  and  gave  time- 
checks  to  the  laborers  and  plaintiff  bought  the  time-checks,  and 
defendants  promised  to  pay  them,  whereupon  plaintiff,  with  de- 
fendant's knowledge,  released  the  subcontractors,  it  was  held  that 
defendants  were  liable  upon  the  promise,  and  that  the  agreement 
was  not  within  the  statute  of  frauds/"  In  cases  of  this  character 
it  is  usually  held  that  unless  the  original  debtor  is  discharged  the 
promise  is  collateral  and  within  the  statute.^^  It  has  also  been 
held  that  the  release  of  the  original  debtor  and  the  substitution 
of  the  promisor  must  be  the  result  of  an  agreement  in  which  the 
creditor,  the  debtor  and  the  promisor  all  concur  in  order  to  take 
the  promise  out  of  the  statute." 

§  1244.  Del  credere  commission. — It  was  formerly  held 
that  the  contract  of  a  factor  binding  him  in  the  terms  implied  in 
a  del  credere  commission  was  a  collateral  obligation  and  within 
the  statute,*^  but  the  later  cases  do  not  so  hold.  The  undertaking 
of  the  factor  is  to  answer  for  the  solvency  of  the  buyers  of  the 
goods.  He  becomes  liable  to  pay  to  the  principal  the  amount  of 
the  purchase-money,  if  the  buyers  fail  to  pay  it  when  it  becomes 

^*  First  Nat.  Bank  v.  Border,  9  Tex.  crone   v.    American    Lumber    Co.,    55 
Civ.  App.  670,  29  S.  W.  659:    "As  to  ^lich.  622,  22  N.  W.  67:   Upham  v. 
the    statute    of    frauds,    the    petition  Clute,  105  Mich.  350,  63  N.  W.  317. 
does    not    disclose    that    the    promise  "'  Abercrombie  v.  Fourth  Xat.  Bank 
sued  on  was  verbal,  and  not  in  writ-  (Ala.),  39  So.  606;    Strauss  v.   Car- 
ing.     But,    if    it    had    done    so,    it  rett,  101  Ga.  307,  28  S.  E.  850;  Wil- 
also  shows  that,  by  the  terms  of  the  helm  v.  Voss,   118   Mich.    106,  76  N. 
agreement,    appellant    became    prima-  W.  308;  Bicknall  v.  Bicknall,  27  R.  I. 
rily    and    unconditionally    liable,    and  429,    62    Atl.    976;    Starr    v.    Taylor 
Burns  &  Dillon,  the  original  debtors,  (Tex.  Civ.  App.),  56  S.  W.  543. 
were  discharged.     In  such  a  case,  the  "  Palmetto  Mfg.  Co.  v.  Parker,  123 
statute    of    frauds    does    not    apply."  Ga.   798,   51    S.   E.   714;   Netterstrom 
See,  however.  Hamlin  v.  Drummond,  v.  Gallistel,  10  111.  App.  352. 
91  Maine  175,  39  Atl.  551.  "Morris  v.  Cleasby,  1  M.  &  S.  576; 

'"Gleason  v.  Fitzgerald,   105   Mich.  Peele  v.  Northcote,  7  Taunt.  478. 
516,   63   N.   W.   512.     See  also,   Mul- 

31 — Contracts,  Vol.  2 


§    1245  CONTRACTS,  482 

due,  and  his  engagement  is  held  to  be  an  original  and  absolute  one 
and  not  within  the  statute."  Although  the  factor  may  sue  the 
purchaser  in  his  own  name,  the  principal  has  also  the  right  to  sue. 
This,  however,  does  not  convert  an  express  original  undertaking 
of  the  factor  with  his  principal,  absolutely  to  pay  the  debt  at  ma- 
turity, into  a  collateral  and  conditional  agreement  to  pay  it  if 
the  purchaser  does  not."*^ 

§  1245.  As  to  contracts  of  indemnity. — There  is  an  impor- 
tant difference  between  a  contract  of  guaranty  and  one  of  in- 
demnity. The  former  is  a  collateral  undertaking,  and  presupposes 
some  contract  or  transaction  to  which  it  is  collateral.**'  A  contract 
of  indemnity  is  generally  held  to  be  an  original  one  and  not  within 
the  statute,  although  there  has  been  much  conflict  of  authority  on 
the  question,  produced  in  no  inconsiderable  degree  by  the  conflict- 
ing decisions  of  the  English  courts.*^  The  reasoning  of  the 
courts,  which  hold  that  the  promise  of  indemnity  is  not  within  the 
statute,  is  not  always  the  same.  The  more  common  one  is,  that 
the  promise  must  be  made  to  the  creditor,  to  be  within  the  statute ; 
that  a  promise  to  the  debtor  to  pay  his  debt  to  the  creditor,  or  to  a 

"Wickham  v.  Wickham,  2  K.  &  11  Am.  Rep.  162;  Jones  v.  Bacon 
J.  478;  Swan  v.  Nesmith,  7  Pick.  12  Hun  (N.  Y.)  506,  54  N. 
(Mass.)  220,  19  Am.  Dec.  282;  Os-  Y.  St.  764,  25  N.  Y.  S.  212,  afifd.  145 
borne  v.  Baker,  34  Minn.  307,  57  Am.  N.  Y.  446,  40  N.  E.  216.  The  old 
Rep.  55 ;  Suman  v.  Inman,  6  Mo.  case  of  Winckworth  v.  Mills,  2  Esp. 
App.  384;  Wolff  v.  Koppel,  2  Denio  484,  held  that  a  promise  of  indemnity 
(N.  Y.)  368,  5  Hill  (N.  Y.)  458;  was  within  the  statute,  but  in  Thomas 
Bradley  v.  Richardson,  23  Vt.  720,  2  v.  Cook  (1828),  8  B.  &  C.  728,  the 
Blatchf.  (U.  S.)  343,  Fed.  Cas.  No.  contrary  doctrine  was  declared.  This 
1786.  This  ruling  was  followed  in  case  was  overruled  in  Green  v.  Cress- 
England,  in  Couturier  v.  Hastie,  8  well  (1839),  10  A.  &  E.  453.  The 
Exch.  40,  where  Parke,  J.,  speaks  of  doctrine  of  Green  v.  Cresswell  was 
the  decision  as  a  very  able  one,  and  in  turn  overthrown  in  Reader  v. 
adopts  the  reasoning  in  the  case.  Kingham    (1862),    13   C.    B.    (N.    S.) 

"Sherwood  v.  Stone,  14  N.  Y.  267.  344,   and   Wildes  v.   Dudlow    (1874), 

"Reed  v.   Holcomb,  31  Conn.  360;  L.  R.  19  Eq.  198,  and  the  doctrine  in 

Stocking  V.  Sage,  1  Conn.  519;  Heg-  England    is    now   that    a    promise   to 

gie  v.  Smith,  87  111.  App.  141 ;  Ander-  indemnify   the   promisee    for   becom- 

son  V.    Spence,   72   Ind.  315,   Zl  Am.  ing  surety  for  another  is  not  within 

Rep.   162;   Taylor  v.   Taylor,  64  Ind.  the    statute,    and    the    same    doctrine 

356;  Dole  v.  Young,  24  Pick.  (Mass.)  generally    prevails    in    this    country. 

250;    Sanders   v.   Gillespie,   59  N.   Y.  See    McMillan    v.    The    Bull's    Head 

250;  Dutton  v.  Pyle,  7  Pa.  Super.  Ct.  Rank,   32   Ind.    11,  2  Am.   Rep.   323; 

126.  42  Week.  No.  Cas.  65;  Vogel  v.  Gaff  v.  Sims,  45  Ind.  262;  Dickinson 

Melms,  31  Wis.  306,  11  Am.  Rep.  608;  v.  Colter,  45  Ind.  445;  Taylor  v.  Tay- 

Shook  V.  Vanmater,  22  Wis.  532.  lor,  64  Ind.  356;   Dole  v.  Young,  24 

"Anderson  v.  Spence.  72  Ind.  315,  Pick.   (Mass.)  250. 


483 


STATUTE  OF  FRAUDS. 


1246 


surety  to  indemnify  him  for  becoming  surety  for  a  third  person  to 
a  fourth,  is  an  original  and  not  a  collateral  undertaking  when 
the  promisee  acts  solely  on  the  promise  of  the  promisor."® 

§  1246.  Oral  promise  to  indemnify  guarantor  not  within 
the  statute. — An  oral  promise  by  one  person  to  indemnify 
another  for  becoming  a  guarantor  for  a  third  is  not  within  the 
statute  of  frauds,  and  need  not  be  in  writing,  and  the  assumption 
of  the  responsibility  is  a  sufficient  consideration  for  the  promise.*® 
So,  also,  a  promise  to  indemnify  one  for  becoming  the  surety  on 
the  note  of  another  is  an  original  promise,  and  not  within  the 
statute  of  frauds.^"    Where  an  oral  promise  is  made  to  a  sheriff, 


*«Burr  V.  Cross,  3  Cal.  App.  414, 
86  Pac.  824;  Reed  v.  Holcomb,  31 
Conn.  360;  Jones  v.  Shorter,  1  Ga. 
294,  44  Am.  Dec.  649;  Mills  v.  Brown, 
11  Iowa,  314  (promise  to  indemnify 
one  if  he  will  be  surety  for  an- 
other) ;  Jones  v.  Letcher,  13  B.  Mon. 
(Ky.)  363;  Hoggatt  v.  Thomas,  35 
La.  Ann.  298  (one  surety  binding 
himself  to  hold  a  cosurety  harmless)  ; 
Smith  V.  Say  ward.  5  Greenl.  (Maine) 
504;  Hawes  v.  Murphy,  191  Mass. 
469,  78  N.  E.  109;  Aldrich  v.  Ames,  9 
Gray  (Mass.)  76  (promise  to  indem- 
nify another  from  his  liability  as 
bail  for  a  third  person;  Chapin  v.  Lap- 
ham,  20  Pick.  (Mass.)  467:  Potter  v. 
Brown,  35  Mich.  274  (promise  to  pay 
note)  ;  Comstock  v.  Norton,  36  Mich. 
277;  Esch  v.  White,  76  Minn.  220. 
78  N.  W.  1114;  Patrick  v.  Barker,  78 
Nebr.  823.  112  N.  W.  358;  Demeritt 
V.  Bickford,  58  N.  H.  523,  citing  au- 
thorities; Apgar's  Admrs.  v.  Hiler, 
24  N.  J.  L.  808  (promise  of  surety 
to  cosurety)  ;  Sanders  v.  Gillespie,  59 
N.  Y.  250  (oral  agreement  to  pay 
note)  ;  Chapin  v.  Merrill,  4  Wend. 
(N.  Y.)  657  (promise  of  defendant 
to  indemnify  the  plaintiff  from  the 
consequences  of  his  agreement  to  pay 
a  mercantile  firm  for  goods  delivered 
to  another  who  was  the  purchaser)  ; 
Peterson  v.  Creason,  47  Ore.  69,  81 
Pac.  574;  Beaman's  Admrs.  v.  Rus- 
sell, 20  Vt.  205,  49  Am.  Dec.  775: 
Vogel  V.  Melms,  31  Wis.  306,  11  Am. 
Rep.  608.  See,  also,  Wattenbarge  v. 
Hodges,  38  Tex.   Civ.  App.  329,  85 


S.  W.  1013;  McCord  v.  Edward 
Hines  Lumber  Co.,  124  Wis.  509,  102 
N.  W.  334.  Contra,  Brand  v.  Whc- 
lan,  18  111.  App.  186;  May  v.  Will- 
iams, 61  Miss.  125,  48  Am.  Rep.  80 
(to  indemnify  a  person  for  becom- 
ing surety  on  another's  bail  bond,  cit- 
ing cases;  Craft  v.  Lott,  87  Miss. 
590,  40  So.  426,  6  Am.  &  Eng.  Ann. 
Cas.  670;  Bissig  v.  Britton,  59  Mo. 
204,  21  Am.  Rep.  379;  Hurt  v.  Ford, 
142  Mo.  283,  44  S.  W.  228,  41  L.  R. 
A.  823,  Gansey  v.  Orr,  173  Mo.  532, 
73  S.  W.  477;  Hartley  v.  Sanford. 
66  N.  J.  L.  627,  50  Atl.  454,  55  L.  R. 
A.  206;  Ferrell  v.  Maxwell,  28  Ohio 
St.  383,  22  Am.  Rep.  393  (a  promise 
of  indemnity  by  one  not  a  party  to 
an  obligation  to  induce  another  to 
become  surety  thereon)  ;  Nugent  v. 
Wolfe,  111  Pa.  St.  471,  4  Atl.  15,  56 
Am.  Rep.  291.  In  re,  Hollowbush's 
Estate,  36  Leg.  Int.  (Pa.)  149,  13 
Phila.  (Pa.)  217;  Simpson  v.  Nance, 
1  Spears  (S.  Car.)  4;  Macey  v.  Chil- 
dress, 2  Tenn.  Ch.  438.  Even  in  cases 
where  Green  v.  Cresswell,  10  A.  & 
E.  453,  is  upheld  the  doctrine  that  a 
new  consideration  inuring  to  the  ben- 
efit of  the  promisor  will  take  the 
case  out  of  the  statute  is  counte- 
nanced. 

"Jones  V.  Bacon,  145  N.  Y.  446. 
40  N.  E.  216.  See,  however,  Craft 
V.  Lott,  87  Miss.  590,  40  So.  426,  6 
Am.  &  Eng.  Ann.  Cas.  670. 

■^George  v.  Hoskins.  17  Kv.  L. 
63,  30  S.  W.  406;  Minick  v.  Huff,  41 
Nebr.  516,  59  N.  W.  795   (reviewing 


§    1247  CONTRACTS.  484 

or  other  officer,  to  indemnify  him  against  damages  growing  out  of 
an  unlawful  seizure  of  goods  upon  execution/^  or  where  an  oral 
promise  is  made  to  indemnify  another  against  costs ;°'  or  to  in- 
demnify one  for  becoming  special  bail;^^  or  to  pay  damages  and 
expenses  of  suit;^*  or  surety  on  a  recognizance  bond;"  or  surety 
on  an  injunction  bond;'^*'  or  to  pay  damages  and  expenses  of 
suit  f^  or  to  pay  outstanding  debts  of  a  firm,  it  is  not  within  the 
statute.^^ 

§  1247.  Illustrations  of  collateral  promises. — An  oral  prom- 
ise to  accept  a  bill  of  exchange,  unsupported  by  a  new  considera- 
tion, is  usually  considered  as  a  collateral  undertaking  and  within 
the  statute,  especially  when  the  acceptor  has  no  funds  of  the 
drawer  in  his  hands  at  the  time  of  the  acceptance  and  does  not 
owe  the  drawer.^^  It  is  otherwise,  however,  if  the  acceptor  owes 
the  drawer  f^  or  the  bill  is  drawn  upon  a  particular  fund  in  the 
acceptor's  hands  f^  or  if  the  agreement  to  accept  is  part  of  the 
original  contract.^^  It  has  also  been  held  that  if  credit  is  ex- 
tended exclusively  to  the  promisors  it  constitutes  an  original 
promise  and  is  not  within  the  statute.'^^  A  promise  to  make  or 
indorse  a  promissory  note  with  others  for  the  purpose  of  raising 
money  to  pay  the  debt  of  a  third  party  has  been  held  within  the 
statute.^*    The  general  subjects  of  guarantyship  furnished  to  or 

many    authorities).      Contra   to   text  "^  Dent    v.    Arthur,    156    Mo.    App. 

in   Missouri,  Hurt  v.  Ford,  142  Mo.  472,  137  S.  W.  285.     See.  also,  Noyes 

283   44  S.  W.  228,  41  L.  R.  A.  823.  v.  Ostrom,  113  Minn.  Ill,  129  N.  W. 

"Lerch   v.    Gallap,   67    Cal.   595,   8  142;  Patrick  v.  Barker,  78  Nebr.  823, 

Pac.    322;    Stark   v.    Raney,    18   Cal.  112  N.  W.  358. 

622;   Tarr  v.   Northy,   17   Maine  113,  "  Marcy    v.     Crawford,     16     Conn. 

35  Am.  Dec.  232.     But  see  Nixon  v.  549,  41  Am.  Dec.  158. 

Vanhise,  5  N.  J.  L.  491,  8  Am.  Dec.  ''  Bonebright  v.  Pease,  3  Mich.  318. 

618.  '°  Chapline  v.  Atkinson,  45  Ark.  67, 

''Windell  v.  Hudson,  102  Ind.  521,  55  Am.  Rep.  531;  Emerson  v.  Slater, 

2    N     E.    303;    Knight    v.    Sawin,    6  22  How.   (U.  S.)  28,  16  L.  ed.    360. 

Greenl.    (Maine)    361;    Goodspeed   v.  *" Louisville  &c.  R.  Co.  v.  Caldwell, 

Fuller,   46   Maine    141,   71   Am.   Dec.  98  Ind.  245. 

572;  Weld  v.  Nichols,  34  Mass.  538.  "'Montague    v.    Myers,      67    Tenn. 

But  see  Nixon  v.  Vanhise,  5  N.  J.  L.  539. 

491,  8  Am.  Dec.  618.  "'Espalla  v.  Wilson,  86  Ala.  487,  5 

'^^' Harrison    v.    Sawtel,    10    Johns.  So.  867. 

(N.  Y.)  242,  6  Am.  Dec.  237.  "'  West  v.  O'Hara,  55  Wis.  645,  13 

"Marcy    v.    Crawford,     16    Conn.  N.  W.  894. 

549,  41  Am.  Dec.  158.  "^Willis  v.  Shinn,  42  N.  J.  L.  138; 

"McCormick  v.   Boylan,  83   Conn.  Birkmyr   v.    Darnell,   1    Smith    Lead. 

686.  78  Atl.  335,  Ann.  Cas.  1912A,  882  Cas.   (11th  ed.)   299;  Cowenhoven  v. 

and  note.  Howell,  7  Vroom   (N.  J.)  323;  Car- 


485 


STATUTE  OF  FRAUDS. 


§  1248 


services  rendered  another  have  already  been  given  brief  men- 
tion." 

§  1248.  Agreements  in  consideration  of  marriage — What- 
ever may  have  been  the  carher  decisions  upon  tlie  question,''"  the 
law  is  now  well  settled  that  a  promise  to  marry  is  not  a  promise 
"in  consideration  of  marriage"  so  as  to  require  it  to  be  evidenced 
by  writing,  under  the  statute  of  frauds."^  A  distinction  has  been 
made  between  agreements  in  consideration  of  marriage  and  agree- 
ments in  contemplation  of  marriage.  Where  parties,  contemplat- 
ing marriage,  agreed  that  certain  promissory  notes  which  were 
held  by  the  woman  against  the  man  should  not  be  extinguished  by 
the  marriage,  but  should  remain  her  separate  property,  collectible 
out  of  his  estate,  if  she  would  forbear  to  insist  on  their  payment 
before  marriage,  it  was  held  that  the  antenuptial  promise  was 
made  in  consideration  of  forbearance,  and  not  in  consideration  of 
marriage,  and  was  not  within  the  statute.*^^    Indeed,  any  promise 


ville  V.  Crane,  5  Hill  (N.  Y.)  483, 
40  Am.  Dec.  364.  In  Carville  v. 
Crane,  5  Hill  (N.  Y.)  483,  40  Am. 
Dec.  364,  the  statute  of  frauds  was 
held  to  apply  to  a  parol  promise  to 
indorse  a  note  for  the  purchaser  of 
goods  in  consideration  that  the  ven- 
dor would  sell  to  him  and  no  action 
will  lie  on  such  a  promise.  It  is 
unlike  the  case  of  an  acceptor  of  a 
bill.  The  indorser  of  a  note  is  the 
collateral  debtor,  the  maker  being  the 
principal. 

"Sec  ante,  §  1231. 

""Philpott  V.  Wallet,  3  Lev.  66, 
Skin.  24,  overruled  by  Cork  v.  Baker, 
1  Str.  34,  and  Harrison  v.  Cage,  1 
Ld.  Ravm.  386. 

"  Clark  V.  Pendleton,  20  Conn.  495 ; 
Blackburn  v.  Alann,  85  111.  222 ;  Short 
V.  Stotts,  58  Ind.  29;  Caylor  v.  Roe, 
99  Ind.  1 ;  Nichols  v.  Weaver,  7  Kans. 
ZJZ;  Morgan  v.  Yarborough,  5  La. 
Ann.  316;  Ogden  v.  Ogden,  1  Bland. 
(Md.)  284;  Wilbur  v.  Johnson,  58 
Mo.  600 ;  Hoitt  v.  jMoulton,  21  N.  H. 
586;  Derby  v.  Phelps,  2  N.  H.  515. 
"It  would  be  imputing  to  the  legis- 
lature too  great  an  absurdity  to  sup- 
pose that  they  had  enacted  that  all 
our  courtships,  to  be  valid,  must  be 
in  writing."    Withers  v.  Richardson, 


5  T.  B.  Mon.  (Ky.)  94,  17  Am.  Dec. 
44.  The  reason  of  the  provision  re- 
quiring agreements  in  consideration 
of  marriage  to  be  in  writing  is  to 
prevent  promises  thoughtlessly  made 
or  artfully  procured  during  court- 
ship from  being  perverted  into  delib- 
erate and  solemn  engagements,  con- 
ferring a  right)  to  compel  perform- 
ance. Dunn  V.  Tharp,  39  N.  Car.  7. 
In  New  York  and  many  other  states 
mutual  promises  to  marry  are  in 
terms  excepted  from  the  statute. 

"'  Riley  v.  Riley,  25  Conn.  154.  See 
also,  Rainbolt  v.  East,  56  Ind.  538; 
Nowack  V.  Berger,  133  Mo.  24,  34  S. 
W.  489,  31  L.  R.  A.  810,  54  Am.  St. 
663.  Letters  or  correspondence  be- 
fore marriage  may  furnish  the  writ- 
ten evidence  of  the  agreement  re- 
quired. Logan  V.  Wienholt,  1  CI.  & 
Fin.  611 ;  Hammersley  v.  De  Biel.  12 
CI.  &  Fin.  45;  Moorhouse  v.  Colvin. 
15  Beav.  341 ;  Kinnard  v.  Daniel,  13 
B.  Mon.  (Kv.)  496:  Peck  v.  Vande- 
mark,  99  N.Y.  29,  1  N.  E.  41.  Mar- 
riage is  not  such  a  part  performance 
as  will  take  the  case  out  of  the  stat- 
ute. Redding  v.  Wilkes,  3  Brown  Ch. 
400;  Montacute  v.  Maxwell,  1  P. 
Wms.  618;  Hammerslev  v.  De  Biel, 
12  CI.  &  Fin.  45;  Lass'ence  v.  Tier- 


§    1249  CONTRACTS.  486 

which  does  not  have  marriage  for  its  sole  consideration  is  not 
within  the  statute. "^ 

§  1249.  Promise  to  do  some  act  other  than  marry  in  con- 
sideration of  marriage. — But  while  it  has  been  decided  that 
mutual  promises  to  marry  and  contracts  which  have  a  considera- 
tion in  addition  to  marriage  are  not  within  the  operation  of  the 
statute,  it  remains  true  that  promises  to  marry,  given  in  con- 
sideration of  a  promise  to  do  some  act  other  than  to  marry,  are 
within  the  statute/*^  All  contracts  for  conveying  anything  of 
value  upon  the  sole  consideration  of  marriage  are  within  the 
operation  of  the  statute,'^^  even  though  the  contract  does  not  con- 
template the  conveyance  of  real  estate.'^ 

§  1250.  Antenuptial  contracts. — All  promises  or  agree- 
ments made  on  the  sole  consideration  of  marriage,  whether  be- 
tween the  parties  to  the  marriage,  or  with  a  third  person,  must 
be  in  writing  or  no  action  can  be  maintained  upon  them,  either  in 
the  way  of  enforcing  them,  or  for  damages  for  a  breach  of 
them.'^^    Where  there  has  been  no  fraud  and  no  agreement  to  re- 

ney,  1  MacN.  &  G.  551;  Caton  v.  Ca-  698,  11  Am.   St.  255;   McAnnulty  v. 

ton,  L.  R.  1  Ch.  App.  137,  L.  R.  2  H.  McAnnulty,  120  111.  26,  11  N.  E.  397, 

L.    127;    Bradley   v.   Saddler,   54  Ga.  60  Am.   Rep.  552;   Brenner  v.   Bren- 

681 ;  Flenner  v.  Flenner,  29  Ind.  564 ;  ner,  48  Ind.  262 ;   White  v.   Bigelow, 

Crane  v.  Gough,  4  Md.  316;   Brown  154  Mass.  593.  28  N.  E.  904;  Chase 

V.  Conger,  8  Hun  (N.  Y.)  625;  Hen-  v.   Fitz,   132  Mass.   359;   Manning  v. 

ry  V.  Henry,  27  Ohio  St.   121;  Finch  Riley,  52  N.  J.  Eq.  39,  27  Atl.  810; 

V.  Finch,  10  Ohio  St.  501.  Henry   v.    Henry,   27   Ohio   St.    121; 

'"Larsen  v.  Johnson,   78  Wis.  300,  Lloyd  v.  Fulton,  91  U.  S.  479,  23  L. 

47  N.  W.  615,  23  Am.  St.  404.     See  ed.  363. 
also,  cases  cited  in  the  preceding  note.        "Brenner  v.  Brenner,  48  Ind.  262; 

^"  Montacute  v.  Maxwell,  1  P.  Wms.  Flenner  v.  Flenner,  29  Ind.  564. 
618;   De   Biel  v.   Thompson,  3   Beav.        '"Ayliffe  v.  Tracy,  2   P.  Wms.  65; 

469;    Coverdale   v.    Eastwood,   L.   R.  Randall   v.    Morgan,    12   Ves.   Jr.   67 

15  Eq.  121 ;  Ungley  v.  Ungley,  L.  R.  (construction    of     a     letter     as     not 

5  Ch.  D.  887;  Flenner  v.  Flenner,  29  amounting  to  an  absolute  agreement 

Ind.  564;  Brenner  v.  Brenner,  48  Ind.  to  give   a   marriage  portion)  ;    Brad- 

262;    White    v.    Bigelow,    154    Mass.  ley  v.   Saddler,  54  Ga.  681;   Flenner 

593,  28  N.  E.  904;  Brown  v.  Conger,  v.  Flenner,  29  Ind.  564      (where  the 

8  Hun   (N.  Y.)  625;  Matter  of  Wil-  woman  promised  before  marriage  to 

loughby,  11  Paige  (N.  Y.)  257;  Hen-  release  a  judgment  recovered  against 

ry  V.  Henry,  27  Ohio  St.  121;   Stan-  the    man);    Brenner   v.    Brenner.    48 

ley  V.  Madison,  11  Okla.  288,  66  Pac.  Ind.  262    (to  same  effect   as   preced- 

280;  Adams  v.  Adams,   17  Ore.  247,  ing  case);  Powell  v.  Meyers,  23  Kv. 

20  Pac.  633.  L.  795.  64  S.  W.  428;  White  v.  Bige- 

"  Peek  v.  Peek,  11  Cal.  106,  19  Pac.  low,  154  Mass.  593,  28  N.  E.  904  (al- 

121,  1  L.  R.  A.  185,  11  Am.  St.  244;  leged  oral  agreement  not  sustained); 

Moore  v.  Allen,  26  Colo.  197,  57  Pac.  Chase  v.  Fitz,  132  Mass.  359;  Deshon 


487 


STATUTE  OF  FRAUDS. 


§  I25I 


duce  the  settlement  to  writing  there  can  be  no  departure  from  the 
statutory  rule.  If  the  wife  has  placed  reliance  solely  upon  the 
honor  or  promise  of  the  husband  no  relief  can  be  afforded.^*  It 
is  also  settled  that  an  antenuptial  agreement  by  a  husband  to 
make  a  settlement  upon  his  wife,  but  which  settlement  is  not 
made  until  after  marriage,  is  void  as  to  intervening  creditors.'^ 
But  the  statute  is  not  a  defense  in  an  action  for  the  rectification 
of  a  marriage  settlement  where  there  is  satisfactory  evidence  of 
a  mistake  made  in  drawing  the  deed." 

§  1251.  Antenuptial  parol  agreements  reduced  to  writing 
after  marriage. — It  has  been  held  in  a  number  of  cases  that,  if 
there  be  a  written  agreement  after  marriage,  in  pursuance  of 
a  parol  agreement  before  marriage,  this  takes  the  case  out  of  the 
statute.''^  However,  the  weight  of  authority  is  perhaps  to  the 
contrary.'^    Some  authorities  even  hold  that  a  post-nuptial  settlc- 


V.  Wood,  148  Mass.  132,  19  N.  E.  1, 
1  L.  R.  A.  518  (oral  promise;  bill 
in  equity  by  assignee  in  insolvency  to 
recover  certain  bonds  as  transferred 
in  fraud  of  creditors;  Henry  v.  Hen- 
ry, 27  Ohio  St.  121  (where  a  woman 
owning  lands  promised  a  man  that 
if  he  would  marry  her  and  make  cer- 
tain improvements  on  the  lands,  she 
would  convey  the  lands  to  him)  ; 
Dygert  v.  Remerschnider,  32  N.  Y. 
629  (agreement  to  pay  debts)  ;  Cush- 
man  v.  Burritt,  14  N.  Y.  Wkly.  Dig. 
59  (where  a  man  promised  to  pay  a 
woman  two  thousand  dollars  if  she 
would  marry  him).  In  re,  Willough- 
by,  11  Paige  Ch.  (N.  Y.)  257  (where 
the  wife  of  a  lunatic  applied  for  an 
allowance  for  support  of  her  daugh- 
ter by  a  former  marriage  on  the 
ground  of  an  alleged  antenuptial 
agreement)  ;  Ennis  v.  Ennis.  48  Hun 
(N.  Y.)  11,  15  N.  Y.  St.  243;  Stanley 
V.  Madison,  11  Okla.  288,  66  Pac. 
280  (attempt  by  a  wife  to  recover 
property  levied  on  by  creditor  of 
husband)  ;  Hackney  v.  Hackney,  8 
Humph.  (Tenn.)  452;  Llovd  v. 
Fulton,  91  U.  S.  479,  23  L.  ed.  363. 
See,  however,  in  re,  Krug's  Estate, 
196  Pa.   St.  484,  46  Atl.  484. 

'*  Pierce  v.  Pierce,  71  N.  Y.  154, 
27  Am.  Rep.  22;  Hunt  v.  Hunt,  171 
N.  Y.  396,  64  N.  E.  159,  59  L.  R.  A. 


306;  Hannon  v.  Hounihan,  85  Va. 
429    12  S.  E.  157. 

'"'Deshon  v.  Wood,  148  Mass.  132, 
19  N.  E.  1,  1  L.  R.  A.  518  (citing  a 
number  of  cases)  ;  Wood  v.  Savage, 
2  Doug.  (Mich.)  316.  See,  also.  Man- 
ning v.  Riley,  52  N.  J.  Eq.  39,  21  Atl. 
810;  Borst  v.  Corey.  15  N.  Y.  505; 
Stanley  v.  Madison,  11  Okla.  288,  66 
Pac.  280.  Compare  with  Satter- 
thwaite  v.  Emley,  4N.  J.  Eq.  489,  43 
Am.  Dec.  618. 

"Johnson  v.  Bragge,  70  Law  J.  Ch. 
41  (1901)  1  Ch.  28,  83  Law  T.  621, 
49   Wkly.   Rep.    198. 

""  Surcome  v.  Pinniger,  3  De  G. 
AL  &  G.  571 ;  Taylor  v.  Beech,  1  Ves. 
Sen.  297;  Montacute  v.  Maxwell,  1  P. 
Wms.  618,  1  Str.  236;  Barkworth  v. 
Young,  4  Drew  1 ;  Hammerslev  v. 
De  Biel,  12  CI.  &  F.  45 ;  Cooper  v. 
Wormald,  27  Beav.  266  (agreement 
fully  executed)  ;  Argenbright  v. 
Campbell,  3  Hen.  &  M.  (Va.)  144; 
Ex  parte  Whitehead.  L.  R.  14  Q.  B. 
Div.  419:  Buffington  v.  Buffington, 
151  Ind.  200,  51  N.  E.  328:  Moore  v. 
Harrison,  26  Ind.  App.  408,  59  N.  E. 
1077. 

™  Frazer  v.  Andrews,  134  Iowa 
621,  112  N.  W.  92,  11  L.  R.  A.  (N. 
S.)  593  and  note.  (Compare,  how- 
ever, with  Kohl  v.  Frederick,  115 
Iowa  517,  88  X.  W.  1055) ;  Borst  v. 


§    1252  CONTRACTS.  488 

ment  made  pursuant  to  the  terms  of  an  oral  antenuptial  settle- 
ment is  not  binding  on  the  parties  thereto.'**  Others  hold  the 
settlement  good  as  between  the  parties-"  but  invalid  against  in- 
tervening creditors  or  innocent  purchasers.®^ 

§  1252.  Antenuptial  agreement — Execution. — An  ante- 
nuptial contract  which  has  been  fully  executed  is  not  within  the 
statute.  Thus  where  in  consideration  of  marriage  the  husband 
agreed  that  he  would  have  the  wife  named  one  of  the  beneficiaries 
of  a  certificate  of  insurance  held  by  him  and  the  marriage  was 
solemnized  and  the  change  in  the  beneficiary  made,  this  was  a 
performance  which  took  the  agreement  out  of  the  statute.®" 


§  1253.    Contracts  relating  to   lands. — Under  the   fourth 
clause  in  the  fourth  section  of  the  statute  of  frauds,  a  contract 

Corey,  16  Barb.  (N.  Y.)  136,  afifd.  15  (Mich.)  316;  Borst  v.  Corey,  16 
N.  Y.  505;  Smith  v.  Greer,  3  Humph.  Barb.  (N.  Y.)  136,  affd.  15  N.  Y. 
(Tenn.)  118.  It  was  held  in  McAn-  505;  Izard  v.  Izard's  Admr.,  Bailey 
nulty  V.  McAnnulty,  120  111.  26,  Eq.  (S.  Car.)  228;  Davidson  v. 
11  N.  E.  397,  60  Am.  Rep.  552,  Graves,  Riley  Eq.  (S.  Car.)  219; 
that  the  reduction  to  writing  after  Smith  v.  Greer,  3  Humph,  (Tenn.) 
marriage  of  a  verbal  antenuptial  con-  118;  Caines  v.  Marley,  2  Yerg. 
tract  did  not  take  it  out  of  the  stat-  (Tenn.)  582;  Patton  v.  McClure, 
ute.  "Doubtless,  a  verbal  antenup-  Mart.  &  Yerg.  (Tenn.)  233;  Blow 
tial  agreement  might,  under  special  v.  Maynard,  2  Leigh  (Va.)  29.  See 
circumstances,  be  enforced  in  equity.  Warden  v.  Jones  (1857),  2  De  G.  & 
in  order  to  prevent  the  party  invok-  J.  76,  disapproving  Dundas  v.  Du- 
ing  the  statute  from  perpetrating  a  tens,  1  Ves.  Jr.  196,  2  Cox  Ch.  235, 
fraud  upon  the  other  party."  See  which  is  cited  as  holding  that  a  post- 
also,  Powell  v.  Meyers,  23  Ky.  L.  nuptial  settlement  reciting  the  ante- 
795,  64  S.  W.  428.  nuptial    agreement    was     good     even 

'"Carter   v.    Worthington,    82    Ala.  against   creditors.    Warden  v.   Jones, 

334,   2    So.   516,    60    Am.    Rep.    738;  2  De  G.  &  J.  76,  was  an  appeal  from 

Bradley    v.     Saddler,    54    Ga.     681 ;  the    decision    of    the    master    of    the 

Reade    v.    Livingston,    3    Johns.    Ch.  rolls,  setting  aside  a  post-nuptial  set- 

(N.  Y.)   481,  8  Am.  Dec.  520;  Man-  tlement     as     fraudulent    against    the 

ning  v.  Riley,  52  N.  J.  Eq.  39,  27  Atl.  creditors  of  the  settlor.     Lord  Chan- 

810;    Henry   v.    Henry,    27   Ohio    St.  cellor  Cranworth  said:    "Lord  Thur- 

121 ;  Hackney  v.  Hackney,  8  Humph,  low  decided  in  Dundas  v.  Dutens,  2 

(Tenn.)    452.  Cox  235,  that  such  settlement  is  good, 

""  Satterthwaite  v.  Emley,  3  Green's  and  on  that  decision  I  will  only  re- 

Ch.   489    (4   N.   J.   Eq.  489),  43  Am.  mark  that  if  it  be  a  correct  view  of 

Dec.   618.    See,    also,    Argenbright   v.  the  law,  the  whole  policy  of  the  stat- 

Campbell,  3   Hen.   &   M.    (Va.)    144.  ute  is  defeated.    It  cannot  be  enough 

"Andrews   v.   Jones,    10   Ala.   400;  merely  to  say  in  writing  that  there 

Jones  V.   Henry,  3   Litt.    (Ky.)    427;  .vas  a  previous  parol  agreement.     It 

Albert  v.   Winn,  5   Md.  66    (holding  must  be  proved  that  there  was  such 

that    the    subsequent    written    instru-  an    agreement,    and    to    let    in    such 

ment   does  not  relate  back   so  as  to  proof    is    precisely    what    the    statute 

make  the  original  parol  contract  the  meant  to  forbid." 

contract)  ;  Wood  v.  Savage,  2  Dougl.  *'  Supreme  Lodge  &c.   K.  of   P.  v. 


489 


STATUTE    OF    FRAUDS. 


S    1^54 


relating  to  the  sale  of  lands,  tenements  or  hereditaments  or  any 
interest  in  or  concerning-  them  must  be  in  writing,  and  signed  by 
the  party  to  be  charged,  or  by  some  other  person  by  him  there- 
unto lawfully  authorized,**^  and  the  statute  is  equally  binding  on 
courts  of  equity  as  courts  of  law/* 

§  1254.  Necessity  for  and  sufficiency  of  writing. — An  un- 
executed verbal  agreement  for  the  conveyance  of  land,  without 
more,  is  within  the  statute  and  unen forcible. ^°  Neither  is  such 
oral  contract  of  sale  available  as  a  defense  to  an  action  in  eject- 
ment brought  by  the  vendor.®*  It  is  well  settled  that  the  form  of 
the  writing  required  by  the  statute  is  not  material.  The  contract 
may  be  evidenced  by  one  writing  or  more.  It  may  be  shown  en- 
tirely by  written  correspondence.  Whatever  form  the  agreement 
may  assimie,  if  the  writing  or  writings,  viewed  as  a  whole,  consti- 
tute in  essence  or  substance,  upon  their  face,  a  note  or  memoran- 
dum in  writing,  subscribed  by  the  party  sought  to  be  charged,  or 


Ferrell,  83  Kans.  491,  112  Pac.  155,33 
L.  R.  A.  (N.  S.)  m. 

"Lyons  v.  Bass.  108  Ga.573,34S. 
E.  721 ;  Howton  v.  Gilpin,  24  Ky.  L. 
630,  69  S.  W.  766 ;  Blood  v.  Hardy,  15 
Maine  61 ;  Patterson  v.  Cunning- 
ham, 12  Maine  506;  Hurley  v.  Don- 
ovan, 182  Mass.  64,  64  N.  E.  685; 
Glucksman  v.  Bowers,  68  N.  J.  L.  146, 
52  Atl.  218:  Borie  v.  Satterthwaite, 
180  Pa.  St.  542.  Zl  Atl.  102. 

"Russell  V.  Briggs.  165  N.  Y.  500; 
59  N.  E.  303.  53  L.  R.  A.  556.  revg. 
12  App.  Div.  (N.  Y.)  624,  44 
N.  Y.  S.  1128;  Vick  v.  Vick, 
126  N.  Car.  123,  35  S.  E.  257; 
Purccll  V.  Miner,  4  Wall.  (U. 
S.)  513,  18  L.  ed.  435.  Courts  of 
equity  may  decree  a  specific  perform- 
ance of  parol  contracts  relating  to  the 
sale  of  lands,  where  there  has  been 
a  part  performance  of  the  contract. 
But  the  ground  of  relief  there,  in 
such  cases,  is  fraud.  Buckmaster  v. 
Harrop,  7  Ves.  Jr.  341 ;  Lane  v. 
Shackford,  5  N.  H.  130;  Phillips  v. 
Thompson,  1  Johns.  Ch.  (N.  Y.)  131. 
See,  also,  Zeuske  v.  Zeuske.  55  Ore. 
65.  103  Pac.  648,  105  Pac.  249,  Ann. 
Cas.  1912A.  557.  Mere  breach  of  a 
contract  within  the  statute  does  not 
give  rise  to   such   an  equity  as  will 


authorize  specific  performance.  Hen- 
derson V.  Henrie,  68  W.  Va.  562,  71 
S.  E.  172,  34  L.  R.  A.  (N.  S.)  628, 
Ann.   Cas.    1912B.  318. 

^  Seymour  v.  National  Bldg.  &c. 
Assn.,  116  Ga.  285,  42  S.  E.  518,  94 
Am.  St.  131  (sale  of  real  estate  at 
public  outcry  by  mortgagee)  ;  McLen- 
nan V.  Boutell,  117  Mich.  544,  76  N. 
W.  75;  Hall  v.  Fisher.  126  N.  Car. 
205,  35  S.  E.  425;  Cleveland  v.  Ev- 
ans, 5  S.  Dak.  53,  58  N.  W.  8.  And 
see  also,  Fargusson  v.  Duluth  Imp. 
Co.,  56  Minn.  222,  57  N.  W.  480. 

*"  Zeuske  v.  Zeuske,  55  Ore.  65, 
103  Pac.  648,  105  Pac.  249,  Ann.  Cas. 
1912A.  557.  It  may  be  otherwise, 
however,  when  there  has  been  suffi- 
cient performance  to  take  the  case 
out  of  the  statute.  Souci  v.  Ouillette, 
Z7  N.  B.  393;  Arguello  v.  Edinger, 
10  Cal.  150;  Vanduzer  v.  Christian, 
30  Ga.  ZZd;  Holcomb  v.  Dowell,  15 
Kans.  378;  South-Side  Town  Min. 
&c.  Co.  V.  Rhodes,  2>l  Kans.  229,  6 
Pac.  278;  Chandler  v.  Neil.  46  Kans. 
67,  26  Pac.  470 ;  Young  v.  Montgom- 
erv.  28  Mo.  604;  Ford  v.  Steele,  31 
Nebr.  521.  48  N.  W.  271;  Bigler  v. 
Baker.  40  Nebr.  325,  58  N.  W.  1026, 
24  L.  R.  A.  255. 


S    1255  CONTRACTS.  49O 

his  agent  lawfully  authorized  in  writing,  showing  who  the  con- 
tracting parties  are,  the  subject-matter  of  the  sale,  and  the  con- 
sideration, the  statute  is  satisfied.®^  If  the  several  writings, 
viewed  in  the  light  of  the  situation  and  circumstances  of  the 
parties  at  the  time  they  were  written,  clearly  relate  to,  and  con- 
nect themselves  with,  each  other,  and  when  their  contents  are 
adjusted  to  each  other  there  appears  to  have  been  clearly  made 
known  the  names  of  the  contracting  parties,  the  subject-matter 
of  the  sale,  and  the  consideration,  and  if  it  appears  that  all  this 
has  received  the  sanction  of  the  subscription  of  the  party  sought  to 
be  charged,  or  some  person  by  him  thereunto  lawfully  authorized 
in  writing,  the  statute  requirement  in  reference  to  subscription, 
as  well  as  all  other  particulars  is  met.*^ 

§  1255.  Scope  of  the  clause. — A  contract  of  sale  of  an  "in- 
terest in  or  concerning"  lands,  tenements,  hereditaments,  includes 
contracts  to  convey  any  portion  of  the  legal  or  equitable  title  of 
all  realty  whatsoever,  such  as  a  contract  for  the  transfer  of  a 
pre-emption,^"  or  squatter's  rights,"**  or  a  possessory  right,®^  or 
the  interest  of  a  vendee  under  an  executory  contract,"^  or  the 
beneficial  interest  of  a  cestui  que  trust,®^  or,  in  fact,  any  equitable 
interest  in  realty."*     However,  it  has  been  denied  that  possession 

*^  Jenkins  v.  Harrison,  (i^  Ala.  345;  of   frauds.     Pembroke  v.   Logan,  71 

Carter     v.     Shorter,     57     Ala.     253;  Ark.  364,  74  S.  W.  297. 

Thompson   v.    New    South   Coal    Co.  **  Lester   v.   White's   Heirs,  44  111. 

(Ala.),  34  So.  31;  Gray  v.  Smith,  76  464. 

Fed.  525,  affd.  83  Fed.  824,  28  C.  C.  A.  ^  Hayes  v.   Skidmore,  27  Ohio  St. 

168;   Allan  v.   Bemis,   120   Iowa   172,  331. 

94  N.  W.  560.  ''East  Omaha  Land   Co.  v.   Han- 

'' Brooks  V.  Miller,  103  Ga.  712,  30  sen,  117  Iowa  96,  90  N.  W.  705;  Nor- 
S.  E.  630;  Mull  v.  Smith,  132  Mich,  ton  v.  Webb,  35  Maine  218;  Boyd  v. 
618,  94  N.  W.  183 ;  Peay  v.  Seigler,  Paul,  125  Mo.  9,  28  S.  W.  171 ;  How- 
48  S.  Car.  496,  26  S.  E.  885,  59  Am.  ard  v.  Easton,  7  Johns.  (N.  Y.)  205. 
St.  731.  The  consideration  must  be  "^Dougherty  v.  Catlett,  129  111.  431, 
expressed.  Cooley  v.  Lobdell,  153  21  N.  E.  932;  Grunow  v.  Salter,  118 
N.  Y.  596,  47  N.  E.  783.  See,  how-  Mich.  148,  76  N.  W.  325;  Hackett  v. 
ever,  post,  §  1313.  The  writing  must  Watts,  138  Mo.  502,  40  S.  W.  113. 
identify  the  land  to  be  conveyed  so  See,  also,  Gilbert  v.  Bulkley,  5  Conn, 
that  it  can  be  distinguished  from  262,  13  Am.  Dec.  57  (grantor  to  re- 
other  land.  Lippincott  v.  Bridge-  tain  possession  until  purchase-price 
water,  55  N.  J.  Eq.  208,  36  Atl.  672;  paid). 

Cooley  V.  Lobdell,  153  N.  Y.  596,  47  "'Richards    v.     Richards,    9    Gray 

N.  E.  783.     The  payment  of  the  pur-  (Mass.)    Z\Z. 

chase-price    and    the    making   of   im-  "  Ellis  v.  Hill,  162  111.  557,  44  N.  E. 

provements   by   a   vendee   in   a  parol  858;    Cox    v.    Roberts,   25    Ind.    App. 

contract   for  the   sale   of   real   estate  252,  57  N.  E.  937;  Hughes  v.  Moore, 

takes  the  contract  out  of  the  statute  7  Cranch  (U.  S.)  176. 


491 


STATUTE    or    FRAUDS. 


constitutes  an  estate  or  interest  in  lands  which  cannot  be  assigned 
or  granted  except  by  deed  or  note  in  writing  signed  by  the  proper 
parties.  Thus  it  has  been  held  that  one  holding  by  adverse  posses- 
sion may  transfer  and  pass  such  possession  to  another  by  parol  or 
bargain  and  sale  accompanied  by  delivery."'*  An  equity  in  lands  is 
as  much  within  the  statute  as  the  legal  title,  and  it  is  no  more  com- 
petent to  convey  the  one  by  parol  than  the  other."''  The  assign- 
ment or  transfer  of  the  purchaser's  interest  in  a  land  contract  is 
generally  held  a  grant  of  an  interest  in  real  property  which  must 
comply  w^ith  the  clause  of  the  statute."^  The  same  is  true  of  an 
oral  agreement  by  one  who  negotiates  a  sale  of  real  estate,  to  pay 
back  at  the  purchaser's  option  the  money  advanced  and  assume 
the  contract."*  An  oral  contract  for  the  exchange  of  lands  is 
within  the  statute.""  It  goes  without  saying  that  estates  in  fee^ 
or  for  life,"  are  within  the  statute. 


"Crawford  v.  Viking  Refrigerator 
&c.  Co.,  84  Kans.  203,  114  Pac.  240, 
35  L.  R.   A.    (X.   S.)    498  and  note. 

°*Morgart  v.  Smouse,  103  Md.  463, 
63  Atl.  1070,  115  Am.  St.  367,  7  Am. 
&  Eng.  Ann.  Cas.  1140;  Scott  v.  Mc- 
Farland,  13  IMass.  309;  Connor  v. 
Tippett,  57  Miss.  594;  Marble  v.  Mar- 
ble, 5  N.  H.  374 ;  Kelley  v.  Stanbery, 
13  Ohio  408.  "If  there  is  any  case 
that  calls  more  than  another  upon 
the  courts  to  insist  upon  the  salutary 
provisions  of  this  useful  statute  be- 
ing enforced,  it  is  the  case  of  the 
release  of  an  equity  of  redemption." 
Van  Keuren  v.  McLaughlin,  19  N.  J. 
Eq.  187 ;  Henderson  v.  Henrie,  68  W. 
Va.  562.  71  S.  E.  172,  34  L.  R.  A. 
(N.  S.)  628. 

"'  Reams  v.  Thompson,  5  Ga.  App. 
226.  62  S.  E.  1014 :  Dougherty  v.  Cat- 
lett,  129  111.  431,  21  N.  E.  932;  Con- 
nor V.  Tippett,  57  Miss.  594;  Hackett 
V.  Watts.  138  Mo.  502.  40  S.  W.  113; 
Flinner  v.  McVay,  Zl  Mont.  306,  96 
Pac.  340,  19  L.  R.  A.  (N.  S.)  879n ; 
Brown  v.  Jones,  46  Barb.  (X.  Y.) 
400:  Love  v.  Cobb,  63  X.  Car.  324; 
Wilkie  V.  Womble,  90  X.  Car.  254; 
Smith  V.  Burnham,  3  Sumn.  (U.  S.) 
345,  Fed.  Cas.  Xo.  13019;  Smith  v. 
Clarke,  7  Wis.  551  ;  Whitney  v.  State 
Bank.  7  Wis.  620.  Compare  with, 
Currier  v.  Howard,  14  Gray  (Mass.) 


511;  Proctor  v.  Thompson,  13  Abb. 
X.  Cas.   (X.  Y.)   340. 

"*  Esslinger  v.  Pascoe,  129  Iowa  86, 
105  X.  W.  362,  3  L.  R.  A.  (X.  S.) 
147. 

"^  Gordon  v.  Simmons,  136  Ky.  273, 
124  S.  W.  306,  Am.  Cas.  1912A.  305, 
and  note  where  the  authorities  are 
collected. 

'  McKinnon  v.  Mixon,  128  Ala.  612, 
29  So.  690;  Manning  v.  Pippen,  86 
Ala.  357,  5  So.  572,  11  Am.  St.  46; 
Pond  V.  Sheean,  132  111.  312,  8  L.  R. 
A.  414,  23  X.  E.  1018;  Austin  v.  Da- 
vis, 128  Ind.  472,  26  X.  E.  890.  12 
L.  R.  A.  120.  25  Am.  St.  456;  Jack- 
son v.  Myers,  120  Ind.  504,  22  X.  E. 
90,  23  X.  E.  86;  McLennan  v.  Bou- 
tell,  117  Mich.  544.  76  X.  W.  75; 
McDonald  v.  Maltz,  78  Mich.  685.  44 
X.  W.  Zn ;  Fargusson  v.  Duluth  Im- 
provement Co.,  56  Minn.  222,  57  X.  W. 
480;  Taylor  v.  Von  Schroeder,  107 
Mo.  206,  16  S.  W.  675:  Bloomticld 
State  Bank  v.  Miller.  55  Xebr.  243. 
75  X.  W.  569,  44  L.  R.  A.  387,  70 
Am.  St.  381 ;  Jordan  v.  Furnace  Co., 
126  X.  Car.  143,  35  S.  E.  247,  78  Am. 
St.  644 ;  Kling  v.  Bordner,  65  Ohio 
St.  86.  61  X.  E.  148;  Cleveland  v.  Ev- 
ans, 5  S.  Dak.  53.  58  X.  W.  8 ;  Swash 
V.  Sharpstein,  14  Wash.  426,  44  Pac. 
862,  Z2  L.  R.  A.  796. 

'Such  as  a  dower  right  (Brown  v. 


^    1256  CONTRACTS.  49^ 

A  contract  for  the  exchange  of  lands  stands  on  the  same  foot- 
ing as  a  contract  for  their  sale.^  It  seems  to  be  clear  that  the 
statute  has  made  it  necessary  that  a  partition  of  lands  must  be 
effected  by  writing*  but  a  parol  partition  which  is  followed  by 
possession  in  accordance  therewith  and  the  exercise  of  acts  of 
exclusive  ownership  is  legal  and  binding.^ 

§  1256.    Cases  not  within  the  statute — Constructive  trusts. 

It  is  well  settled  that  where  property  is  acquired  by  fraud  or 

undue  influence  the  person  so  acquiring  it  is  a  trustee  ex  malificio 
for  the  benefit  of  the  person  entitled  thereto.''  Thus  where  a 
party  purchases  land  at  a  foreclosure  sale  for  the  benefit  of  the 
owner  of  the  equity  at  a  price  below  its  value,  he  cannot  set  up 
the  statute  of  frauds  against  the  party  for  whom  he  purchased, 
but  will  be  treated  as  a  trustee  ex  malificio."^  Where  a  person,  old 
and  ignorant,  under  representations  by  the  grantee,  in  whom  he 
had  implicit  confidence,  that  it  was  the  best  course  to  pursue  to 
avoid  liability  on  a  false  claim,  conveys  land,  receiving  an  oral 
assurance  from  the  grantee  that  he  will  reconvey  on  request,  the 
grantee  having,  however,  no  intention  to  reconvey,  the  agree- 
ment to  reconvey  is  not  within  the  statute  of  frauds,  since,  in 
such  a  case,  the  constructive  trust  growing  out  of  the  grantee's 
fraud  is  excepted  from  the  operation  of  the  statute  of  frauds.^ 

Rawlings     72    Ind.    505 ;    Gordon    v.  tenants  in  common  are  valid  at  law, 

Gordon,  54  N.  H.  152;  Keeler  v.  Tat-  at  least  for  some  purposes,  when  fol- 

nell     23    N     J     L    62)    even    if    un-  lowed  by  possession,  and  m  most  of 

assigned.      Finch   v.    Finch,    10    Ohio  them  by  such   acts  of   occupation   as 

5^    5Q1  would  be   sufficient   to    secure    a   de- 

^  Stark  V.    Cannady,   3   Litt.    (Ky.)  cree     for     specific     performance     in 

399     14    Am     Dec.    76;    Connor    v.  equity.      Shepard    v.    Rinks,    78    HI. 

Tippett,  57   Miss.  594;   Beckmann  v.  188;    Moore   v.    Kerr    46    Ind.    468; 

Menham    97  Mo    App.  161,  70  S.  W.  Pipes  v.  Buckner,  51  Miss.  848;  Tay- 

1^94    Moss  V    Culver^  64  Pa.  St.  414.  lo,^  v.  Millard,  118  N.  Y.  244,  23  N. 

3  Ar^i    Rep   601 ;  Purcell  v.  Miner,  4  E.  Z1(i,  6  L.  R.  A.  667.    In  re  Long  s 

Wall'CU.   S.)   513,  18  L.  ed.  435.  Appeal,    11    Pa.    St.    151 ;    Stuart    v. 

Mohn   V    Sebattis,   69   Maine  473;  Baker,     17    Texas     417;     Buzzell   v. 

Porter   v.   Hill,   9   Mass.   34,   6   Am.  Gallagher.  28  Wis.  678. 

Dec    22;   Ballou   v.   Hale,  47   N.   H.  "Donnelly    v.    Rees,    141    Gal.    56, 

347   93  Am    Dec   438;  Llovd  v.  Con-  74    Pac.    433.      See    also,    Logan    v. 

over  25  N    J    L  47 ;  Medlin  v.  Steel.  Brown,    20    Okla.    334,   95    Pac.   441, 

75  N.  Car. '154;  Pollard's  Code  (Va.)  20  L.  R.  A.  (N^  S.)  298n. 

1904    §  2413  ^Dickson  v.   Stewart,  71  Nebr.  424, 

'Wood  V.'  Fleet    (1867),  36  N.  Y.  98  N.  W    1085    115  Am.  St.  596. 

499,  93   Am.   Dec.   528,    (citing  cases  ^Rozell  v.  Vansyckle,  11  Wash.  79, 

showing  an  unbroken  current  of  deci-  2)9  Pac.  270. 
sions).     Verbal     partitions     between 


493  STATUTE  OF  FRAUDS.  §  I257 

But  covenants  relating  to  the  management  and  sale  of  real  estate, 
contained  in  a  declaration  of  trust  which  was  signed  only  by  the 
trustee,  cannot,  in  case  of  resulting  trusts,  be  considered  as  cove- 
nants or  limitations  of  their  estates,  on  the  part  of  the  other  per- 
sons for  whose  benefit  the  trusts  are  declared.  Nor  does  their 
acceptance  of  the  declaration  of  trust,  in  such  cases,  dispense  with 
the  necessity  of  their  signatures,  under  the  statute  of  frauds, 
when  the  declaration  is  claimed  to  limit,  or  give  an  interest  in, 
their  equitable  estates,  which  arose  independently  of  the  declara- 
tion of  trust." 

§  1257.  Cases  not  within  the  statute — Party  fences  and  lo- 
cation of  boundary  line. — An  oral  agreement  between  the 
owners  of  adjoining  lands  with  reference  to  the  maintenance  of 
a  line  fence  between  them  is  not  within  the  statute  of  frauds." 
Thus  adjoining  occupants  may  agree  to  divide  the  work  of  keep- 
ing up  a  line  fence  as  a  temporary  arrangement  binding  until 
abandoned  by  mutual  consent^^  especially  when  acquiesced  in  and 
acted  upon  by  the  parties  for  a  long  period  of  time.^^  It  has  been 
held  that  an  agreement  between  adjacent  owners  that  there  shall 
be  a  lane  but  no  line  fence  need  not  be  in  writing.  ^^  Agreements 
between  adjoining  owners,  establishing  the  boundary  between 
their  lands,  when  the  true  boundary  is  unknown  and  in  dispute, 
are  not  within  the  statute  of  frauds.-*  Agreements  of  this  char- 
Adams  V.  Carey,  53  N.  J.  Eq.  H.  241  (holding  such  an  agreement 
334,  31   Atl.   600.  obligatory    until     overruled    by    the 

"Guyer  v.  Stratton,  29  Conn.  421;  fence  viewers);  Tupper  v.  Clark,  43 
Baynes  v.  Chastain,  68  Ind.  376;  Vt.  200  (holding  that  such  an  agree- 
Ivins  V.  Ackerson,  38  N.  J.  L.  220 ;  mcnt  must  be  adhered  to  until  re- 
Castner  v  Riegel,  54  N.  J.  L.  498,  24    pudiated). 

Atl.  484;  Talmadge  v.  Rensselaer  &c.  "Meyer  v.  Perkins,  89  Nebr.  59, 
R.  Co.,  13  Barb.  (N.  Y.)  493;  Fleming  130  N.  W.  986,  Am.  Cas.  1912C.  468 
V.  Ramsev,  46  Pa.  252.  See  also,  Dod-    and   note. 

der  V.  Snyder,  110  ]\Iich.  69.  67  N.  "Bills  v.  Belknap,  38  Iowa  225. 
W.  1101.  See,  however,  Rudisell  "Sherman  v.  King,  71  Ark.  248, 
V.  Cross,  54  Ark.  519,  16  S.  W.  575,  72  S.  W.  571 ;  Pavne  v.  McBride,  96 
26  Am.  St.  57;  De  Mers  v.  Rohan,  Ark.  168.  131  S.  W.  463,  Ann.  Cas. 
126  Iowa  488,  102  N.  W.  413 ;  Knox  1912B.  661 ;  Dierssen  v.  Nelson.  138 
V.  Tucker,  48  Maine  373,  77  Am.  Cal.  394,  71  Pac.  456;  Young  v. 
Dec.  233;  Heath  v.  Ricker,  2  Greenl.  Blakeman,  153  Cal.  477,  95  Pac.  888; 
(Maine)  72;  Kellog  v.  Robinson,  6  Loustalot  v.  McKeel,  157  Cal.  634, 
Vt.  276,  27  Am.  Dec.  550.  108  Pac.  707;  Farr  v.  Woolfolk,  118 

"  ^IcAf ee  v.  Walker,  82  Kans.  182,  Ga.  277.  45  S.  E.  230 ;  Clavton  v. 
107  Pac.  637,  27  L.  R.  A.  (N.  S.)  Feig,  179  111.  534.  54  N.  E.  149; 
226n.    See  also,  York  v.  Davis,  11  N.    Kitchen  v.  Chantland,   130  Iowa  618, 


§  1258 


CONTRACTS. 


494 


acter  are  not  subject  to  the  objection  that  they  are  within  the 
statute  of  frauds,  because  they  are  not  considered  as  extending 
to  the  title/' 

However,  where  there  has  been  no  dispute  about  the  Hne,^°  or  if 
the  adjoining  owners  with  full  knowledge  of  a  line  which  is  fixed 
verbally  agree  to  make  another  line  or  consent  that  a  line  which 
has  been  run  elsewhere  shall  be  the  true  line,"  or  if  they  establish 
a  division  line  known  by  both  parties  not  to  be  the  true  line,^^ 
their  agreement  is  within  the  statute  of  frauds. 

§  1258.  Cases  not  within  the  statute — Licenses  to  enter  on 
lands. — A  license  is  defined  to  be  "an  authority  to  do  a  par- 
ticular act,  or  series  of  acts,  upon  another's  land,  without  pos- 
sessing any  estate  therein.  It  is  founded  on  personal  confidence, 
and  is  not  assignable  nor  within  the  statute  of  frauds."^"     It  has 


105  N.  W.  367,  8  Am.  &  Eng.  Ann. 
Cas.  81;  Kulas  v.  McHugh,  114 
Iowa  188,  86  N.  W.  288  (holding 
that  an  agreement  to  make  the  line 
established  the  true  line  may  be  im- 
plied) ;  Warden  v.  Addington,  131 
Ky.  296,  lis  S.  W.  241;  Gordon  v. 
Simmons,  136  Ky.  273,  124  S.  W. 
306 ;  Fields  v.  Sizemore.  32  Ky.  L. 
237,  105  S.  W.  438;  Walker  v.  Cor- 
nett  (Ky.  App.),  122  S.  W.  841;  Duff 
V.  Cornett.  23  Ky.  L.  297,  62  S.  W. 
895  (holding  the  above  especially 
true  when  the  contract  has  been 
acted  on  for  many  years)  ;  Ferguson 
V.  Crick,  15  Ky.  L.  461,  23  S.  W. 
668;  Grigsby  v.  Combs,  14  Ky.  L. 
651,  21  S.  W.  27;  Higginson  v. 
Schaneback,  23  Ky.  L.  2230,  66  S. 
W.  1040;  Patterson  v.  Meyer,  28 
Okla.  304,  114  Pac.  256;  Rozelle  v. 
Lewis,  Z7  Pa.  Super.  Ct.  563;  McKeon 
V.  Roan  (Tex.),  106  S.  W.  404; 
Caruthers  v.  Hadley  (Tex.),  134  S. 
W.  757;  Masterson  v.  Bockel,  20 
Tex.  Civ.  App.  416,  51  S.  W.  39;  Le- 
comte  V.  Toudouze,  82  Tex.  208,  17 
S.  W.  1047,  27  Am.  St.  870.  See 
also,  Hall  v.  Conlee,  23  Ky.  L.  177, 
62  S.  W.  899;  Brummell  v.  Harris, 
162  Mo.  397,  63  S.  W.  497;  Contra 
Strickly  v.  Hill,  22  Utah  257,  62 
Pac.  893.  83  Am.  St.  786. 

^'Lonstalot  v.  McKeel,  157  Cal. 
634,  108  Pac.  707.  See  also,  McKeon 
V.  Roan   (Tex.),  106  S.  W.  404. 


^"Olin  V.  Henderson,  120  Mich. 
149,  79  N.  W.  178.  See  also,  Mann 
V.  Mann,  152  Cal.  23,  91  Pac.  994; 
Fuelling  v.  Fuesse,  43  Ind.  App.  441, 
87  N.  E.  700;  Clarke  v.  Clarke,  28 
Ky.  L.  704,  90  S.  W.  244;  Sweet  v. 
Warner,  14  N.  Y.  St.  312;  Haddock 
V.  Leary,  148  N.  Car.  378,  62  S.  E. 
426. 

"Gilchrist  v.  McGee,  9  Yerg. 
(Tenn.)  455.  To  same  effect.  Hoar 
V.  Hennessy,  29  Mont.  253,  74  Pac. 
452 ;  Nichol  v.  Lytle's  Lessee,  4  Yerg. 
(Tenn.)  456,  26  Am.  Dec.  240;  Hous- 
ton's Heirs  v.  Matthews,  1  Yerg. 
(Tenn.)  116;  Lewallen  v.  Overton, 
9  Hump.   (Tenn.)   76. 

''  Lewis  v.  Ogram,  149  Cal.  505,  87 
Pac.  60,  10  L.  R.  A.  (N.  S.)  610n, 
117  Am.  St.  151. 

"3  Kent's  Com.  452.  See  also, 
Smart  v.  Jones,  15  C.  B.  (N.  S.) 
717;  Wells  v.  Kingston-upon-HuU 
(1875),  L.  R.  10  C.  P.  402  (use  of  a 
lock)  ;  De  Montague  v.  Bacharach, 
181  Mass.  256,  63  N.  E.  435;  John- 
son v.  Wilkinson,  139  Mass.  3,  29 
N.  E.  62,  52  Am.  Rep.  698;  White  v. 
Maynard,  111  Mass.  250,  15  Am.  Rep. 
28:  Turner  v.  Stanton,  42  Mich.  506, 
4  N.  W.  204;  Johnson  v.  Skilman.  29 
Minn.  95,  12  N.  W.  149,  43  Am.  Rep. 
192;  Sampson  v.  Burnside,  13  N.  H. 
264  (parol  license  to  enter  on  land 
and  lay  an  aqueduct  to  convey  water 
from   a   spring) ;    Silsby   v.   Trotter, 


495 


STATUTE  OF  FRAUDS. 


1258 


accordingly  been  held  that  a  parol  license,  while  it  remains  execu- 
tory, may  be  revoked  at  pleasure  by  the  licensor,^'*  unless  it  is 
coupled  with  an  interest  in  the  same  realty,^^  or  circumstances 
exist  such  as  will  work  an  estoppel.^"  The  erection  of  improve- 
ments upon  the  faith  of  parol  licenses  is  an  important  element  in 
determining  their  revocability  in  many  cases.'^  But  licenses 
which  in  their  nature  amount  to  the  granting  of  an  estate  for  ever 
so  short  a  time  are  not  good  unless  in  writing.^* 


29  N.  J.  Eq.  228  (to  take  ore  from 
a  mine)  ;  Olmstead  v.  Abbott,  61  Vt. 
281,   18  Atl.  315. 

^Wallis  V.  Harrison,  4  M.  &  W. 
538  (parol  executory  license  counter- 
mandable  at  any  time)  ;  Garner  v. 
Mahonv.  115  Iowa  356.  88  N.  W. 
828;  McCrea  v.  Marsh,  12  Gray 
(Mass.)  211,  71  Am.  Dec.  745n  (re- 
fusal to  admit  a  colored  person  to 
a  theater,  following  Wood  v.  Lead- 
bitter,  13  M.  &  W.  838)  ;  Whittemore 
V.  New  York,  N.  H.  &  H.  R.  R.  Co., 
174  Mass.  363.  54  N.  E.  867;  Hodg- 
kins  V.  Farrington,  150  Mass.  19, 
22  N.  E.  72,,  5  L.  R.  A.  209,  15  Am. 
St.  168;  Kitchens  v.  Shaller,  32  Mich. 
496;  Ewing  v.  Rhea,  Z7  Ore.  583,  62 
Pac.  790,  52  L.  R.  A.  140,  82  Am.  St. 
783;  Drew  v.  Peer,  93  Pa.  St.  234 
(refusal  to  admit  colored  persons 
to  theater  on  tickets  held  by  them). 
In  Taylor  v.  Waters,  7  Taunt  374, 
it  was  held  that  a  beneficial  license 
to  be  exercised  upon  land  may  be 
granted  without  deed  and  without 
writing. 

^  Greenwood  v.  School  District, 
126  Mich.  81.  85  N.  W.  241 ;  Holland 
V.  O'Neal,  81  Minn.  15,  83  N.  W. 
471,  83  Am.  St.  362. 

~  Legg  V.  Horn,  45  Conn.  409; 
Hiers  v.  Mill  Haven  Co.,  113  Ga. 
1002,  39  S.  E.  444;  Wilson  v.  Chal- 
fant,  15  Ohio  248,  45  Am.  Dec.  574; 
Ainsworth  v.  Stone,  72>  Vt.  101,  50 
Atl.  805. 

"^Liggins  V.  Inge,  7  Ring.  682  (dis- 
tinguishing between  licenses  which, 
when  countermanded,  leave  the  party 
in  statu  quo  and  licenses  for  the 
construction  of  buildings  and  works 
which  are  not  revocable)  ;  Hazelton 
V.   Putnam,  3   Pinney    (Wis.)    107,  3 


Chand.   117,  54  Am.   Dec.   158,  cases 
collated  in  notes. 

**  Foot  V.  New  Haven  &  Northamp- 
ton Co.,  23  Conn.  214  (parol  license 
to  overflow  land  void  as  the  grant  of 
an  easement  or  incorporeal  heredita- 
ment) ;  Collins  Co.  v.  Marcy,  25 
Conn.  239  (an  addition  to  a  building 
erected  upon  the  land  of  another)  ; 
Woodward  v.  Seely,  11  111.  157,  50 
Am.  Dec.  445n ;  Tanner  v.  Volentine, 
75  111.  624  (to  flood  land)  ;  Moulton 
v.  Faught,  41  Maine  298  (parol  agree- 
ment that  a  party  may  abut  and  erect 
a  dam  upon  the  land  of  another  for  a 
permanent  purpose  void)  ;  Cook  v. 
Stearns,  11  Mass.  533;  Kitchens  v. 
Shaller,  Z2  Mich.  496  (to  dig  ditches)  ; 
Druse  v.  Wheeler.  22  Mich.  439  (to 
erect  buildings)  ;  Putnev  v.  Dav,  6  N. 
H.  430,  25  Am.  Dec.  470;  Woodbury 
v.  Parshlev,  7  N.  H.  237.  26  Am.  Dec. 
739;  Mumford  v.  Whitnev,  15  Wend. 
(N.  Y.)  380,  30  Am.  Dec.  60  (which 
contains  an  able  review  of  many  of 
the  conflicting  cases  and  holds  that 
the  conferring  of  a  right  to  enter 
upon  lands  and  to  erect  and  main- 
tain a  dam  as  long  as  there  shall  be 
employment  for  the  water  power 
thus  created,  is  more  than  a  license; 
it  is  a  transfer  of  an  interest  in  land 
and  to  be  valid  must  be  in  writing)  ; 
Pierrepont  v.  Barnard,  6  N.  Y.  279; 
Phillips  v.  Thompson,  1  Johns.  Ch. 
(N.  Y.)  131;  McKellip  v.  Mcllhenny, 
4  Watts  (Pa.)  317,  28  Am.  Dec.  711; 
Alien  v.  Fiske,  42  Vt.  462.  A  grant 
of  a  right  to  shoot  over  land  and  to 
take  away  a  part  of  the  game  killed 
held  to  be  a  profit  a  prendre  and  a 
grant  of  an  interest  in  land  and  with- 
in the  statute.  Webber  v.  Lee  (1882), 
9  Q.  B.  Div.  315. 


§    1259  CONTRACTS.  496 

§  1259.  Fixtures. — The  statute  had  in  view  the  avoidance 
of  only  such  parol  agreements  as  would  create  some  interest  in 
the  land  itself.  It  does  not  affect  such  contracts  as  are  collateral 
and  by  which  no  kind  of  interest  is  gained  in  the  land.^°  Con- 
sequently contracts  for  the  sale  of  fixtures  which  are  a  part  of  the 
realty  come  with  the  provisions  of  the  statute,-"  but  agreements 
for  the  sale  of  such  fixtures  as  are  removable  or  mere  improve- 
ments on  lands  are  not  within  the  statute.^'  Moreover,  if  a  fix- 
ture, which  is  generally  considered  as  realty,  is  to  be  severed  by 
the  seller  and  delivered  by  him  to  the  purchaser,  the  contract  for 
the  sale  of  such  fixture  need  not  be  in  writing,  such  as  a  contract 
for  the  sale  of  a  dwelling  which  was  to  be  severed  from  the  realty 
and  delivered  on  rollers.^^  An  oral  agreement  between  the  land- 
lord and  his  tenant  by  which  the  tenant  is  to  remove  buildings 
erected  by  him  on  the  leasehold  premises  has  been  held  valid. ^° 
The  word  "house,"  in  its  ordinary  legal  meaning,  signifies  real 
property,  but  the  meaning  is  not  a  fixed  one.  The  sale  of  a  build- 
ing with  the  right  of  removal  is  not  necessarily  the  sale  of  an  in- 
terest in  land  within  the  meaning  of  the  statute.  The  reasonable 
doctrine  is,  that  where  the  effect  of  the  contract  between  the  par- 
ties is  to  impress  upon  the  structure  the  character  of  personalty 
it  takes  that  character,  whether  the  contract  was  made  before 
or  after  its  erection,  unless  the  structure  is  inseparably  annexed 
to  the  land.^° 

^Frear   v.    Hardenbergh,   5   Johns,  waukee  Lake  View  Co.,  97  Wis.  275, 

(N.   Y.)  272.  72  N.  W.  872;  Lower  v.  Winters,  7 

'«Towson    V.    Smith,    13    App.    (D.  Cow.     (N.    Y.)     263;    Thouvenin    v. 

C.)    48;    Smith   v.    Price,   39   111.   28,  Lea,  26  Texas  612 ;  Brown  v.  Roland, 

89  Am.    Dec.   284;   Aldrich   v.   Hus-  11  Tex.  Civ.  App.  648,  33  S.  W.  273 

band,   131   Mass.  480;  Noble  v.  Bos-  ''Long  v.  White,   42'  Ohio   St.   59 

worth,   19   Pick.    (Mass.)    314;    Con-  To  same  effect,  Rogers  v.  Cox,  96  Ind, 

nor  V.  Coffin,  22  N.  H.  538;  Bond  v.  157,    49    Am.    Rep.    152;    Keyser    v 

Coke,  71   X.  Car.  97.  Dist.  No.  Eight,  35  N.  H.  477.  Com- 

^Lee  V.  Gaskell,   1   Q.  B.  D.  700;  pare  with  Meyers  v.   Schemp,  67  111 

Ronanye  v.    Sherrard,   11   Irish   Rep.  469. 

(C.  L.)  146;  Hallen  v.  Runder,  1  Cr.  =*  Powell  v.   McAshan,  28   Mo.   70. 

M.   &  R.  266;   Scoggin   v.   Slater,  22  To  same  effect,   Broaddus  v.   Smith, 

Ala.  687;   Cassell  v.   Collins,  23  Ala.  121  Ala.  335,  26  So.  34,  11  Am.  St.  61 5 

676;     Bostwick     v.     Leach,     3     Day  Keyser  v.   District  No.   Eight,  35  N 

(Conn.)  476;  Lombard  v.  Ruggles,  9  H.  477. 

Greenl.   (Maine)  62;  Clark  v.  ShuUz.  =* Griffin   v.   Ransdell,   71    Ind.   440; 

4  Mo.   235;    Powell   v.    McAshan,   28  Rogers  v.   Cox,  96  Ind.   157,  49  Am. 

Mo.  70;  Benedict  v.  Beebe,   11  John.  Rep.    152;    Russell    v.    Richards,    10 

(N.  Y.)    145;  Morgan  v.  South  Mil-  Maine  429,  25   Am.    Dec.   254    (saw- 


I 


497 


STATUTE  OF  FRAUDS. 


§  1260 


§  1260.  Fructus  industriales. — A  contract  for  the  sale  of 
growinj,^  crops,  produced  annually  by  labor  and  the  cultivation  of 
the  earth,  and  which  are  included  within  the  meaning  of  the  term 
"emblements,"  is  not  a  contract  for  the  sale  of  land,  or  any  inter- 
est in  it,  or  concerning  it,  and  it  is  not  material  whether  they  have 
come  to  maturity  or  not  at  the  time  of  the  sale.  Emblements  are 
considered  distinct  from  the  real  estate,  and  subject  to  many  of 
the  incidents  attending  personal  chattels,  and  this  without  regard 
to  the  state  of  maturity  to  which  they  have  arrived.  It  follows 
that  the  owner  is  generally  held  to  have  the  right  to  make  sale  of 
them  by  parol  contract.^^  It  has  been  held  that  contracts  for  the 
sale  of  an  unharvested  crop  of  potatoes,^^  corn,^^  wheat,^*  tur- 


mill);  Ham  v.  Kendall,  111  Mass.  297 
(ice-house)  ;  Shaw  v.  Carbrey,  13 
Allen  (Mass.)  462;  Keyser  v.  Dist- 
rict No.  Eight,  35  N.  H.  477;  Long 
V.  White,  42  Ohio  St.  59.  Buildings 
are  realty  or  personalty  according  to 
the  intention  of  the  parties,  and  when 
the  parties  agree  that  they  may  be 
severed  and  moved  from  the  realty, 
buildings  are  held  and  treated  as  per- 
sonalty. Hartwell  v.  Kellv,  117  Mass. 
235;  Beach  v.  Allen,  7  Hun  (N.  Y.) 
441  (church  building  severed  from 
land  and  placed  on  rollers)  ;  Long  v. 
White,  42  Ohio  59.  "Buildings, 
crops,  and  earth  itself,  sold  to  be 
separated  from  the  land,  are  not 
within  the  statute  of  frauds;  for,  by 
reason  of  the  understanding  and 
agreement  of  the  parties,  they  have 
lost  their  character,  as  parcel  of  the 
realty."  Curtiss  v.  Hoyt,  19  Conn. 
154,  48  Am.  Dec.  149. 

'^Marshall  v.  Green  (1875),  1  C. 
P.  Div.  35 ;  Mayfield  v.  Wadsley.  3  B. 
&  C.  357 ;  Knowles  v.  Michel,  13  East 
249;  Earl  of  Falmouth  v.  Thomas,  1 
Cromp.  &  Mees.  89.  Note  to  Duppa 
V.  Mayo,  1  William  Saund.  275d; 
Marshall  v.  Ferguson,  23  Cal.  65; 
Bull  v.  Griswold,  19  111.  631 ;  Bricker 
V.  Hughes,  4  Ind.  146 ;  Sherry  v. 
Picken,  10  Ind.  375 ;  Craddock  v.  Rid- 
dlesbarger,  2  Dana  (Ky.)  205;  Bry- 
ant v.  Crosby,  40  Maine  9  (oats  and 
wheat)  ;  Davton  v.  Dakin's  Estate, 
103  Mich.  65,  61  N.  W.  349;  Garth 
V.  Caldwell.  72  Mo.  622;  Holt  v. 
Holt,    57    Mo.    App.   272;    Smock   v. 


Smock,  Zl  Mo.  App.  56;  Cooper  v. 
Kennedy,  86  Nebr.  119,  124  N.  W. 
1131,  31  L.  R.  A.  (N.  S.)  761,  136 
Am.  St.  701  (reviewing  a  number  of 
authorities)  ;  Westbrook  v.  Eager,  16 
N.  J.  L.  81 ;  Austin  v.  Sawyer,  9  Cow. 
(N.  Y.)  39;  Green  v.  Armstrong,  1 
Denio  (N.  Y.)  550;  Brittain  v.  Mc- 
Kay, 23  N.  Car.  265,  35  Am.  Dec. 
738;  Wisely  v.  Barclew,  1  Ohio  Dec. 
(Reprint)  216;  Carson  v.  Browder,  2 
Lea  (Tenn.)  701 ;  Buck  v.  Pickwell, 
27  Vt.  157. 

^-  Sainsbury  v.  IMatthews,  4  M.  & 
W.  343;  Warwick  v.  Bruce  (1813). 
2  M.  &  S.  205;  Parker  v.  Staniland. 
11  East  362  (a  sale  of  an  unharvested 
crop  of  potatoes  was  held  not 
within  the  statute.  Land  was  a  mere 
warehouse  for  them  until  they  were 
removed);  Evans  v.  Roberts  (1826), 
5  B.  &  C.  829. 

^Northern  v.  State,  1  Ind.  113, 
Smith  71  (corn  only  a  few  inches 
high  at  time  of  sale)  ;  Newcomb  v. 
Ramer,  2  Johns.  (N.  Y.)  421n. 

"Jones  V.  Flint  (1839),  10  A.  &  E. 
753  (relating  to  certain  crops  of 
wheat,  barley  and  potatoes,  and  also 
certain  grass)  ;  Davis  v.  McFarlane, 
Zl  Cal.  634,  99  Am.  Dec.  340 ;  Whipple 
v.  Foot,  2  Johns.  (N.  Y.)  418,  3 
Am.  Dec.  442.  In  West  Virginia  a 
growing  crop  of  wheat  has  been  held 
realty.  Kerr  v.  Hill,  27  W.  Va.  576, 
following  Crews  v.  Pendleton.  1 
Leigh  (Va.)  297.  19  Am.  Dec.  750. 
To  same  effect.  Mcllvaine  v.  Harris, 
20  Mo.  App.  457,  64  Am.  Dec.  196. 


32 — Contracts,  Vol.  2 


§  i26o 


CONTRACTS. 


498 


nips,"  nursery  stock,''  hops,^^  and  fruit  growing  on  trees,*^  need 
not  be  in  writing.  Grass  which  has  already  been  cut  may  be  sold 
by  parol. ^*  A  parol  contract  for  the  sale  of  a  growing  perennial 
crop  is  taken  out  of  the  statute  of  frauds  by  the  purchaser's  entry 
on  the  land  with  the  owner's  consent  and  harvesting  the  crop.*'' 
A  number  of  cases  hold  that  the  vendor  who  has  sold  real  estate 
may  show  by  parol  evidence  that  growing  crops  were  reserved 
from  the  sale  of  the  land  when  such  reservation  does  not  appear 
on  the  face  of  the  deed.'*^  It  is  held,  however,  by  what  is  perhaps 
the  weight  of  authority  that  parol  evidence  of  an  oral  reservation 
is  inadmissible  on  the  theory  that  the  terms  of  a  written  instru- 
ment cannot  be  varied  by  parol  evidence.*^  It  is  true,  as  a  gen- 
eral rule,  that  the  sale  of  unharvested  perennial  grasses  is  con- 


See,  however,  in  connection  with  this 
last  case,  Garth  v.  Caldwell,  72  Mo. 

622. 

"  Dunne  v.  Ferguson,  Hayes  Exch. 
540.  Contra,  Emmerson  v.  Heelis,  2 
Taunt  38. 

''Whitmarsh  v.  Walker,  1  Mete. 
(Mass.)  313. 

"  Latham  v.  Atwood,  Cro.  Car. 
515;  Frank  v.  Harrington,  36  Barb. 
(N.  Y.)  415;  Webster  v.  Zielly,  52 
Barb.  (N.  Y.)  482  (sale  of  hop 
roots).  See,  however,  Waddington  v. 
Bristow,  2   Bos.  &   P.  452. 

^  Vulicevich  v.  Skinner,  11  Cal. 
239,  19  Pac.  424;  Pruner  v.  Piercy, 
40  Md.  212,  17  Am.  Rep.  591 ;  Smock 
V.  Smock,  Zl  Mo.  App.  56;  Brown  v. 
Stanclift,  20  Alb.  L.  J.  (N.  Y.)  55. 
"It  would  be  a  perversion  of  the 
objects  of  the  statute  to  hold  as  in- 
valid the  sale,  in  other  respects  legal, 
of  the  growing  crop  of  peaches,  with 
no  intent  of  the  parties  to  sell  or 
purchase  the  soil,  but  affording  a 
mere  license,  express  or  implied,  to 
the  purchaser  to  go  upon  the  land 
to  gather  the  fruit  and  remove  the 
same.  Substantially,  to  use  the  lan- 
guage of  §  271,  of  1  Greenleaf's  Ev., 
the  transaction  takes  its  character  of 
realty  or  personalty  from  the  prin- 
cipal subject-matter  of  the  contract 
and  the  interest  of  the  parties,  and, 
therefore,  a  sale  of  any  growing  pro- 
duce of  the  earth  in  actual  existence 
at  the  time  of  the  contract,  whether 


it  be  in  a  state  of  maturity  or  not,  is 
not  to  be  considered  a  sale  of  an  in- 
terest in  or  concerning  land."  Pur- 
ner  v.  Pieny,  40  Md.  212,  17  Am. 
Rep.  591,  23  L.  R.  A.  (N.  S.)  1220. 
Contra,  Rodwell  v.  Phillips,  9  M.  & 
W.  501. 

^Cutler  V.   Pope,   13  Maine  Zll. 

^'Mowrey  v.  Davis,  12  Ind.  App. 
681,  40  N.  E.  1108. 

*^  Bourne  v.  Bourne,  12  Ky.  L. 
(abstract)  467;  Cooper  v.  Kennedy, 
86  Nebr.  119,  124  N.  W.  1131,  31  L. 
R.  A.  (N.  S.)  761  (corn  crop  re- 
served) ;  Walton  v.  Jordan,  65  N. 
Car.  170;  Baker  v.  Jordan,  3  Ohio  St. 
438;  Grabow  v.  McCracken,  23  Okla. 
612,  102  Pac.  84,  23  L.  R.  A.  (N.  S.) 
1218  and  note;  Backenstoss  v.  Stab- 
ler, Z2>  Pa.  St.  251,  75  Am.  Dec.  592. 

"  Gibbons  v.  Dillingham,  10  Ark.  9, 
50  Am.  Dec.  233;  Fiske  v.  Soule,  87 
Cal.  313,  25  Pac.  430;  Gam  v.  Cor- 
drey,  4  Pennew.  (Del.)  143,  53  Atl. 
334;  Smith  v.  Price,  39  111.  28,  89 
Am.  Dec.  284;  Damery  v.  Ferguson, 
48  111.  App.  224;  Chapman  v.  Long, 
10  Ind.  465;  Turner  v.  Cool,  23  Ind. 
56,  85  Am.  Dec.  449 ;  Brown  v.  Thurs- 
ton, 56  Maine  126,  96  Am.  Dec.  438; 
Vanderkarr  v.  Thompson,  19  Mich. 
82;  Adams  v.  Watkins,  103  Mich. 
431,  61  N.  W.  774;  Mcllvaine  v. 
Harris,  20  Mo.  457,  64  Am.  Dec.  196 ; 
Wintermute  v.  Light,  46  Barb.  (N. 
Y.)   278. 


i 


499  STATUTE  OF  FRAUDS.  §  I260 

sidered  as  the  sale  of  an  interest  in  land  and  must  be  in  writing." 
A  distinction  may,  however,  be  drawn  between  spontaneous 
grasses  and  those  which  require  an  annual  planting.**  And 
while  not  necessary  to  the  decision  of  the  case,  it  has  been  inti- 
mated that  if  the  grass  is  to  be  severed  by  the  vendor  himself,  an 
oral  contract  of  sale  may  be  upheld."  It  has  also  been  held  that 
the  verbal  contract  of  sale  may  be  available  as  a  license  but  not 
as  a  sale."  The  rule  adopted  in  England  after  considerable  hesi- 
tancy*^ is  to  the  effect  that,  if  it  is  intended  that  the  things  sold, 
growing  on  the  land  at  the  time,  not  being  fructus  industriales, 
shall  remain  on  the  land  for  the  benefit  of  the  purchaser,  and  that 
they  are  to  derive  benefit  from  so  remaining,  then  part  of  the 
subject-matter  of  the  contract  is  an  interest  in  the  land,  and 
the  case  comes  within  the  statute.  If,  on  the  contrary,  the  things 
sold  are  to  derive  no  benefit  from  the  land,  and  are  to  be  taken 
away  iinmediately,  the  contract  is  not  for  an  interest  in  land. 
Where  the  process  of  vegetation  is  over,  or  the  parties  agree  that 
the  things  sold  shall  be  immediately  withdrawn  from  the  land, 
the  contract  is  for  goods.  In  Maryland  it  has  been  held  that  the 
question  turns  on  the  nature  of  the  contract  as  shown  by  the  in- 
tention of  the  parties,  and  that,  if  the  products  of  the  eartli 
are  sold  specifically,  and  by  the  terms  of  the  contract  to  be  sepa- 
rately delivered,  as  chattels,  such  a  sale  is  not  a  sale  of  any  interest 
in  the  land.  When  such  is  the  character  of  the  transaction,  it 
matters  not  whether  the  product  be  trees,  grass  or  grain,  vegeta- 
bles or  other  crops,  or  whether  the  produce  is  fully  grown  or  in 
the  process  of  growing.*^ 

"Crosby   v.     Wadsworth,    6    East  sale    of    wild    grass);    Lansingburgh 

602;    Powers   v.    Clarkson,    17    Kans.  Bank  v.  Crary,   1  Barb.   (X.  Y.)   542 

218;    Smith    v.    Leighton,    38    Kans.  (grass  an   interest  in   land). 

544,  17  Pac.  52,  5  Am.  St.  778;  Ross  "  Craddock     v.     Riddlesbarger,     2 

V.  Cook,  71    Kans.   117,  80    Pac.  38;  Dana    (Ky.)    205. 

Bank    of    Lansingburgh    v.    Crary,    1  "  Kirkeby    v.    Erickson,    90    Minn. 

Barb.  (N.  Y.)  542;  Hobbs  v.  Wether-  299,    96    N.  W.  705,  101  Am.  St. 411; 

wax.  38  How.   Pr.    (N.   Y.)   385.     A  See  also,  post,  §  1268. 

contract  for  growing  grass  to  be  cut  *'Carrington  v.  Roots,  2  M.  &.  W. 

by  the  purchaser  was  held  to  be  with-  248. 

in    the   statute    in    Crosbv   v.    Wads-  "Marshall  v.   Green    (1875)    L.   R. 

worth    (1805),   6   East   602;    Stearns  1  C.  P.  Div.  35;  Lavery  v.  Pursell.  L. 

V.    Washburn,    7    Gray    (Mass.)     187  R.  39  Ch.  Div.  508. 

(grass  not  personalty  until  severed)  ;  **  Purner  v.   Piercy,  40  Md.  212,   17 

Kirkebv   v.   Erickson.  90   Minn.  299,  Am.   Rep.   591. 
96  N.  W.  70S.  101  Am.  St.  411  (parol 


I26l 


CONTRACTS. 


500 


§  1261.  Other  collateral  contracts  not  within  fourth  clause 
— Illustrations. — It  has  been  held  that  an  agreement  to  lo- 
cate*® and  work  mines  is  not  within  the  statute,^"  nor  is  a  contract 
to  plant  crops,^^  or  erect  a  barn/"  or  dig  a  well,^^  or  drill  an  oil 
well,^*  or  a  contract  to  sell  lands  for  another,  for  a  certain  sum, 
or  upon  a  commission.^^  The  same  has  been  held  true  of  agree- 
ments to  pay  an  assessment,^®  divert  a  watercourse,^^  build  a 
dam/®  construct  an  irrigation  ditch  over  the  land  of  another,^'' 
build  and  maintain  a  switch  for  plaintiff's  benefit  for  shipping 
purposes  "so  long  as  he  needed  it,""^  release  certain  land  from  a 
mortgage,®^  or  to  assign  dower  to  a  widow.^^ 

§  1262.  Cases  not  within  fourth  clause — Partnership  to 
deal  in  lands. — It  has  been  a  mooted  question  whether  a  part- 
nership can  be  created  by  parol  for  the  purpose  of  buying  and 
selling  lands  for  profit.  It  is  now  quite  generally  accepted  as  the 
established  doctrine  that  such  an  agreement  is  not  within  the 


"  Shea  V.  Nilima,  133  Fed.  209,  66 
C.  C.  A.  263.  See  also,  Doyle  v. 
Burns,  123  Iowa  488,  99  N.  W.  195. 

^Murley  v.  Ennis,  2  Colo.  30O; 
Boone  v.  Stover,  66  Mo.  430. 

"  State  V.  Sanders,  52  S.  Car.  580, 
30   S.   E.  616. 

'■  Scales  V.  Wiley,  68  Vt.  39,  33  Atl. 
771. 

"Plunkett  V.  Meredith,  72  Ark.  3, 
77  S.  W.  600. 

"Haight  V.  Conners,  149  Pa.  St. 
297,  24  Atl.  302. 

"^  Watson  V.  Brightwell,  60  Ga.  212 ; 
Lesley  v.  Rosson,  39  Miss.  368,  77 
Am.  Dec.  679;  Fiero  v.  Fiero,  52 
Barb.  (N.  Y.)  288;  Lamb  v.  Baxter, 
130  N.  Car.  67,  40  S.  E.  850;  Cot- 
ton V.  Rand  (Tex.  Civ.  App.),  51  S. 
W.  55,  reversed  93  Tex.  7,  51  S.  W. 
838,  and  modified  on  rehearing,  93 
Tex.  7,  53  S.  W.  343.  See  also, 
Friedman  v.  Suttle,  10  Ariz.  57,  85 
Pac.  726,  9  L.  R.  A.  (N.  S.)  933n. 
In  some  jurisdictions,  however,  there 
has  been  enacted  a  special  statute 
which  provides  that  all  contracts  to 
compensate  one  for  procuring  a  pur- 
chaser for  real  estate  must  be  in  writ- 
ing. The  constitutionality  of  this  leg- 
islation has  been  upheld.  Selvage  v. 
TalboU   (Ind.),  95  N.  E.   114,  33  L. 


R.  A.  (N.  S.)  973;  Baker  v.  Gillan, 
68  Nebr.  368,  94  N.  W.  615 ;  Ross  v. 
Kaufman,  48  Wash.  678,  94  Pac.  641. 
Compare  with  Fisher  Co.  v.  Woods, 
187  N.  Y.  90,  79  N.  E.  836,  12  L.  R. 
A.   (N.  S.)  707n. 

■^'Carr  v.  Dooley,  119  Mass.  294; 
McCormick  v.  Cheevers,  124  Mass. 
262;  Preble  v.  Baldwin,  6  Cush. 
(Mass.)  549;  Brackett  v.  Evans,  1 
Cush.  (Mass.)  79;  Remington  v.  Pal- 
mer, 62  N.  Y.  31. 

"  Hamilton  &c.  Hydraulic  Co.  v. 
Cincinnati  &c.  R.  Co.,  29  Ohio  St. 
341 ;  Le  Fevre  v.  Le  Fevre,  4  Serg. 
&  Rawle  (Pa.)  241,  8  Am.  Dec.  696 
(holding  that,  after  the  execution  of 
a  deed  conveying  a  right  to  lay  down 
pipes  to  conduct  water,  the  route 
might  be  altered  by  parol). 

''Pitman  v.  Poor,  38  Maine  237; 
Jackson  v.  Litch,  62  Pa.  St.  451. 
But  see,  Mumford  v.  Whitney,  15 
Wend.  (N.  Y.)  380,  30  Am.  Dec.  60. 

"■  Croke  v.  American  National 
Bank.   18  Colo.  App.  3,  70  Pac.  229. 

*"  Warner  v.  Texas  &c.  Co.,  164  U. 
S.  418,  41  L.  ed.  495,  17  Sup.  Ct.  147. 

^  Hemmings  v.  Doss,  125  N.  Car. 
400,  34  S.  E.  511. 

'=  Pearce  v.  Pearce,  184  III.  289,  56 
N.  E.  311. 


^01 


STATUTE  OF  FRAUDS. 


§  1262 


statute.  A  partnership  of  this  kind,  Hke  any  other  contract  of 
partnership,  is  an  agreement  to  share  in  the  profit  and  loss  of 
certain  business  transactions,  and  may  be  formed  for  the  purpose 
of  buying  and  selHng  land  generally,  or  it  may  be  limited  to  a 
speculation  upon  a  single  venture."^  The  rule,  as  stated  in  a 
leading  case  on  this  question"*  to  the  effect  that  the  existence  of 
such  a  partnership  can  be  shown  by  general  evidence,  without  the 
necessity  of  a  written  agreement,  has  been  generally  followed, 
and,  although  there  are  some  decisions  to  the  contrary,  it  may 
now  be  said  to  be  the  prevailing  rule  upon  that  subject.  The 
cases  proceed  upon  the  theory  that  the  real  estate  of  a  partnership 
is  treated  and  administered  in  equity  or  between  partners  and  for 
all  the  purposes  of  the  partnership,  as  personal  property  and  part- 


•"  Bates  V.  Babcock,  95  Cal.  479,  30 
Pac.  605,  16  L.  R.  A.  745n;  Jones  v. 
Patrick,  140  Fed.  403 ;  Van  Housen  v. 
Copeland,  180  111.  74.  54  N.  E.  169, 
affd.  79  111.  App.  139;  Speyer  v. 
Desjardins,  144  111.  641,  32  N.  E.  283, 
36  Am.  St.  473;  Garth  v.  Davis,  120 
Ky.  106,  85  S.  W.  692,  117  Am.  St. 
571;  Vaught  v.  Hogue,  32  Ky.  L. 
1061,  107  S.  W.  757;  Mallon  v.  Bus- 
ter, 121  Ky.  379,  89  S.  W.  257,  123 
Am.  St.  201 ;  Morgart  v.  Smouse,  103 
Md.  463,  63  Atl.  1070,  115  Am.  St. 
367,  7  Am.  &  Eng.  Ann.  Cas.  1140; 
Stitt  V.  Rat  Portage  Lumber  Co.,  98 
Minn.  52,  107  N.  W.  824;  Rice  v. 
Parrott,  Id  Nebr.  501,  107  N.  W.  840, 
111  N.  W.  583;  Buckley  v.  Doige,  188 
N.  Y.  238,  80  N.  E.  913,  11  Am.  & 
Eng.  Ann.  Cas.  263;  Ranch  v.  Dono- 
van, 126  App.  Div.  (N.  Y.)  52.  110  N. 
Y.  S.  690;  Pounds  v.  Egbert,ll7  App. 
Div.  (N.  Y.)  756,  102  N.  Y.  S.  1079; 
Miller  V.  Ferguson,  107  Va.  249,  57 
S.  E.  649,  122  Am.  St.  840,  13  A. 
&  E.  Ann.  Cas.  138;  Floyd  v.  Duffy, 
68  W.  Va.  339,  69  S.  E.  993,  Zl  L. 
R.  A.  (N.  S.)  883n.  See  also,  note 
in  4  L.  R.  A.    (N.   S.)   427. 

"Dale  v.  Hamilton  (1846),  5 
Hare  369.  While  Dale  v.  Hamilton, 
5  Hare  369,  is  to  some  extent  shaken 
by  the  case  of  Caddick  v.  Skidmore 
(1851),  2  DeG.  &  J.  51  (an  agree- 
ment to  become  partners  in  a  mine), 
it  is  still  recognized  as  authority. 
Gray  v.  Smith  (1889),  43  L.  R.  Ch. 


Div.  208;  Essex  v.  Essex,  20  Beav. 
442;  Bunnel  v.  Taintor,  4  Conn.  568; 
Kilbourn  v.  Latta,  5  Mack.  (D.  C.) 
304;  Bates  v.  Babcock,  95  Cal.  479, 
30  Pac.  605,  16  L.  R.  A.  745.  29  Am. 
St.  133;  Black  v.  Black,  15  Ga.  445; 
Holmes  v.  McCray,  51  Ind.  358,  19 
Am.  Rep.  735;  Richards  v.  Grin- 
nell,  63  Iowa  44,  18  X.  W.  668, 
50  Am.  Rep.  Ill:  Pennybacker 
V.  Leary,  65  Iowa  220,  21  N. 
W.  575;  Marsh  v.  Davis,  2)1  Kans. 
326,  6  Pac.  612;  Fall  River  &c. 
Co.  v.  Borden.  10  Cush.  (Mass.)  458; 
Fountain  v.  Menard,  53  Minn.  443, 
55  N.  W.  601,  39  Am.  St.  617;  Per- 
sonette  v.  Pryme,  34  N.  J.  Eq.  26; 
Chester  v.  Dickerson,  54  N.  Y.  1,  13 
Am.  Rep.  550;  Bissell  v.  Harrington, 
18  Hun  (N.  Y.)  81;  Traphagen  v. 
Burt,  67  N.  Y.  30;  Babcock  v.  Read, 
99  N.  Y.  609,  1  N.  E.  141 ;  Gibbons  v. 
Bell,  45  Tex.  417.  See  note  to 
McCTormick's  Appeal,  98  Am.  Dec. 
197.  See  also,  cases  cited  in  the  pre- 
ceding note.  Contra,  Butts  v.  Cooper, 
152  Ala.  375.  44  So.  616.  Everhart's 
Appeal,  106  Pa.  St.  349;  Smith  v. 
Burnham,  3  Sumn.  (U.  S.)  435.  Fed. 
Cas.  No.  13019;  Walker  v.  Herring.  21 
Grat.  (Va.)  678,  8  Am.  Rep.  616; 
Bird  v.  ]\Iorrison.  12  Wis.  138;  Lang- 
ley  v.  Sanborn,  135  Wis.  178,  114  X. 
W.  787 ;  Scheuer  v.  Cochem.  126  Wis. 
209,  105  X.  W.  573.  4  L.  R.  A.  (X. 
S.)  427n:  McMillen  v.  Pratt,  89 
Wis.  612,  t2  X.  W.  588  (holding  ver- 


§    1263  CONTRACTS.  502 

nership  assets.®'  Although  a  partnership  in  land  may  be  proved 
by  parol  evidence,  yet  an  agreement  by  one  of  the  parties  to  retire 
and  assign  his  share  in  the  partnership  assets  is  an  agreement  to 
assign  an  interest  in  land.®®  So,  also,  an  oral  contract  between 
the  members  of  a  copartnership  to  convey  firm  realty  from  one  to 
the  other  is  within  the  statute," 

§  1263.  Cases  distinguished — How  contract  may  be  taken 
out  of  statute. — While  there  is  apparently  much  conflict 
among  the  authorities  as  to  whether  a  verbal  partnership  may  be 
formed  to  deal  in  lands,  it  is  believed  that  very  little  conflict  in 
fact  exists.  On  account  of  different  ends  sought  by  the  litigants, 
two  lines  of  authorities  have  been  announced  neither  of  which 
is  necessarily  inconsistent  with  the  other.  In  those  cases  in 
which  an  action  is  brought  for  an  accounting  or  for  a  share  of 
the  profits  of  speculation  on  resale,®^  the  oral  contract  is  upheld ; 
but  when  the  action  is  brought,  not  to  enforce  an  interest  in  the 
profits  of  the  transaction,  but  in  the  land  itself,  and  the  real  estate 
has  not  been  bought  with  partnership  funds  and  there  are  no 
other  circtunstances  to  take  the  case  out  of  the  statute,  the  parol 

bal  contract  for  the  promotion  of  a  39  Am.  St.  617;  Chester  v.  Dicker- 
partnership  to  purchase  standing  son,  54  N.  Y.  1,  13  Am.  Rep.  550; 
timber  within  the  statute).  Babcock  v.  Read,  99  N.  Y.  609,  1  N.  E. 
•"Dale  V.  Hamilton,  5  Hare  369;  141;  King  v.  Barnes,  109  N.  Y.  267, 
McClintock  V.  Thweatt,  71  Ark.  323,  16  N.  E.  ?>2,2;  Howell  v.  Kelly,  149 
7Z  S.  W.  1093 ;  Flower  v.  Barnekoff,  Pa.  St.  473,  24  Atl.  224 ;  Bruce  v. 
20  Ore.  132,  25  Pac.  370,  11  L.  R.  Hastings,  41  Vt.  380;  98  Am.  Dec. 
A  149;  Bates  v.  Babcock,  95  592.  See  also,  Darrow  v.  Calkms, 
Cal  479,  30  Pac.  605,  16  L.  154  N.  Y.  503,  49  N.  E.  61,  48  L.  R. 
R  A.  745,  29  Am.  St.  133;  Meag-  A.  299,  61  Am.  St.  637,  affg.  6  App. 
her  V.  Reed.  14  Colo.  335,  24  Pac.  Div.  (N.  Y.)  28,  39  N.  Y.  527. 
681,  9  L.  R.  A.  455;  Bunnel  v.  '-Gray  v.  Smith  (1889),  L.  R.  43 
Taintor,    4     Conn.     568;    Morrill    v.  Ch.  Div.  208. 

Colehour,  82  111.  618;  Speyer  v.  Des-  '^Brewer  v.  Cropp,  10  Wash.  136, 
jardins,  144  111.  641,  32  N.  E.  283,  36  38  Pac.  866,  "While  the  real  estate 
Am.  St.  473;  Van  Housen  v.  Cope-  owned  by  the  partnership  is  re- 
land,  180  111.  74,  54  N.  E.  169;  Holmes  garded  as  personal  property  for  some 
V.  McCray,  51  Ind.  358,  19  Am.  Rep.  purposes,  it  is  an  equitable  conver- 
735;  Richards  v.  Grinnell,  6Z  Iowa  sion  only,  and  the  requirements  of 
44,  18  N.  W.  668,  50  Am.  Rep.  727;  the  law  relating  to  conveyances  of 
Pennybaker  v.  Leary,  65  Iowa  220,  21  land  must  be  observed  in  disposing 
N.  W.  575 :  Garth  v.  Davis,  120  Ky.  of  it."  See  also.  Henderson  v.  Hen- 
106  85  S.  W.  692,  117  Am.  St.  571;  rie,  68  W.  Va.  562,  71  S.  E.  172,  34 
Trowbridge  v.  Wetherbee,  11  Allen  L.  R.  A.  (N.  S.)  628. 
(Mass.)  361;  Newell  v.  Cochran,  41  **  Bates  v.  Babcock,  95  Cal.  479, 
Minn.  374,  43  N.  W.  84 ;  Fountain  v.  30  Pac.  605,  16  L.  R.  A.  74Sn ;  Rice  v. 
Menard,  53  Minn.  443,  55  N.  W.  601,  Parrott    (Nebr.),    Ill    N.    W.    583; 


^03  STATUTE    OF    FRAUDS.  §    1 264 

partnership  agreement  to  (leal  in  lands  will  be  lield  within  the 
statute.^"  But  the  statute  does  not  apply  where  real  estate  is 
bought  in  connection  with  the  partnership  business  and  is  paid 
for  with  firm  funds  even  though  title  is  taken  in  the  name  of 
one  partner  only.'^'^  Part  performance  of  an  oral  contract  of 
partnership  in  lands  otherwise  witliin  the  statute  may  take  the 
agreement  out  of  the  statute."  The  taking  possession  of  the 
land  by  the  partnership  has  been  held  sufficient  part  performance 
to  take  the  contract  out  of  the  statute."  An  entry  on  the  books 
of  the  partnership  may  be  sufficient  to  comply  with  the  statute." 
A  partner  may  also  take  by  operation  of  law  regardless  of  the 
statute  of  frauds. ''■' 

§  1264.  Appointment  of  agent  to  buy  land. — Where  the 
contract  is  merely  one  of  agency  by  which  the  defendant  is  ap- 
pointed to  purchase  land  in  the  plaintiff's  name,  it  is  not  within 
the  statute  and  the  plaintiff  may  maintain  an  action  for  damages 
for  breach  of  contract,"  or  where  the  agent  agrees  to  resell  the 
property  as  agent  and  does  so  and  receives  the  money  therefor  the 
principal  may  maintain  an  action  for  the  proceeds."  But  where 
the  agent  buys  property  with  his  own  money  and  takes  title  in  his 
own  name  it  has  been  held  that  the  principal  cannot  compel  a  con- 
veyance by  the  agent."   The  foregoing  has  to  do  with  the  rela- 

Norton  v.  Brink  (Nebr.),  HO  N.  W.  "Tillis    v.    Folmar,    145    Ala.    176, 

669.  7  L    R.  A.    (N.  S.)   945;   Smith  39   So.  913,   117  Am.  St.   31,  8  Ann. 

V.  Putnam,   107  Wis.   155,  82  N.  W.  Cas.   78. 

1077  83  N.  W.  288.     See  also,  Logan  '"National  Union  Bank  v.  Xation- 

V.  Brown,  20  Okla.  334,  95  Pac.  441,  al   Mechanics'   Bank,   80  Md.  371,  30 

20  L.  R.  A.  (X.  S.)  298  and  note.  Atl.  913,  27  L.  R.  A.  476,  45  Am.  St. 

^Parsons     v.     Phelan,     134     Mass.  350. 

109;    Norton    v.    Brink    (Nebr.),    110  "  Gorden   &    Son    v.    Pankonm,    83 

N.  W.  669,  7  L.  R.  A.   (N.  S.)   945;  Nebr.  204,   119  N.  W.  449,   131   Am. 

Mancuso  v.  Rosso,  81  Nebr.  786,  116  St.  629. 

N.  W.  679.    See  also,  Nester  v.  Sulli-  "  Schmidt  v.   Beiseker,   14  N.  Dak. 

van.  147  Mich.  493,  111  N.  W.  85,  9  587.  105  N.  \V.  1102.  5  L.  R.  A.   (N. 

L.   R.   A.    (N.   S.)    1106:    Dodson  v.  S.  123n,   116  Am.  St.  706. 

Dodson,  26  Ore.  349,  TH  Pac.  542.  '"  Logan  v.  Brown,  20  Okla.  334,  95 

'"Hodgson  V.  Fowler,  24  Colo.  278.  Pac.  441,  20  L.  R.  A.  (N.  S.)  298  and 

50    Pac.    1034;    Lucas   v.    Cooper,    15  note. 

Ky.   L.   642,  23    S.    W.  959;   Stitt  v.  ''Allen  v.  Richard.  83  Mo.  55.  See 

Rat   Portage   Lumber   Co.,  98   Minn,  also,    Boos   v.    Hinkle,    18    Ind.    App. 

52    107  N.  W    824.  509,    48    N.    E.    383;    Henderson    v. 

"  McKinnon  v.   McKinnon.  56  Fed.  Henrie,  68  W.  Va.  562.  71  S.  E.  172, 

409,  5  C.  C.  A.  530.  14  U.  S.  App.  433;  Ann.    Cas.    1912B.    318    (An    agree- 

Chase  v.  Angell,  148  Mich.  1,  108  N.  ment    between    two    persons    to    bid 

W.  1105,  118  Am.  St.  568.  at  a  judicial  sale  of  land  in  which 


§  1265 


CONTRACTS. 


504 


tions  of  the  principal  and  agent  inter  se.  As  between  the  principal 
and  a  third  party,  the  general  rule  is  that  unless  the  statute  ex- 
pressly requires  the  authority  to  be  in  writing,  an  agent  may  be 
authorized  by  parol  to  make  a  contract  for  the  sale  or  purchase  of 
land.'^*  Clear  and  convincing  proof  may,  however,  be  required  to 
establish  the  parol  authority,^''  The  statute  may  provide  that  the 
authority  of  the  agent  shall  be  in  writing,  in  which  case  a  verbal 
authorization  is  insufficient.^"  Under  a  statute  of  this  sort,  the 
authority  may  be  contained  in  a  single  writing  or  several  writ- 
ings. ^^ 

§  1265.    Cases  not  within  the  fourth  clause — Judicial  sales. 

^ — ^Judicial  sales,  made  in  compliance  with  a  decree  or  order  of  a 
court  of  competent  jurisdiction  and  under  its  supervision,  are  not 
within  the  statute.^-  This  rule  is  not  universal,  however.^^  In 
some  jurisdictions  the  statute  provides  that  it  "shall  not  apply 
to  sales  upon  execution  or  by  any  officer  or  person  pursuant  to 


neither  had  an  interest  and  that  if 
either  was  the  successful  bidder  the 
land  should  be  divided  between  the 
two,  is  a  contract  for  the  sale  of 
land  within  the  statute  of  frauds). 
To  same  effect,  Largey  v.  Leggat,  30 
Mont.  148,  75  Pac.  950. 

'"  Davis  V.  Spann,  92  Ark.  213,  122 
S.  W.  495 ;  Jacobson  v.  Hendricks, 
83  Conn.  120,  75  Atl.  85;  Kaigler  v. 
Brannon,  137  Ga.  36,  72  S.  E.  400; 
Brandon  v.  Pritchett,  126  Ga.  286, 
55  S.  E.  241,  7  Am.  &  Eng.  Ann.  Gas. 
1093  (action  for  specific  perform- 
ance) ;  Monroe  v.  Bailey,  145  Ky. 
794,  141  S.  W.  412;  Lawson  v.  Will- 
iams (Ky.),  115  S.  W.  730;  Brown 
V.  Honiss,  74  N.  J.  L.  501,  68  Atl. 
150;  Donnell  v.  Currie  (Tex.),  131 
S.  W.  88 ;  Le  Vine  v.  Whitehouse,  Zl 
Utah  260,  109  Pac.  2;  Armstrong  v. 
Maryland  Coal  Co.,  67  W.  Va.  589, 
69  S.  E.  195;  Mustard  v.  Big  Creek 
Development  Co.,  69  W.  Va.  713,  72 
S.  E.  1021. 

"  Degginger  v.  Martin,  48  Wash.  1, 
92  Pac.  674. 

^Elliott  V.  Bankston  (Ala.),  45 
So.  173;  Lambert  v.  Gerner,  142  Cal. 
399,  76  Pac.  53 ;  Stemler  v.  Bass,  153 
Cal.  791. 96  Pac.  809;  Seymour  v.  Oel- 
richs,  156  Cal.  782.  106  Pac.  88,  134 
Am.  St.  154n:  Goldstein  v.  Webster, 
7  Cal.  App.  705,  95  Pac.  677;  Vaughn 


V.  Slater,  147  111.  App.  441 ;  Adams  v. 
Carlton,  11  Kans.  546,  95  Pac.  390; 
Thomas  v.  Rogers,  108  Minn.  132, 
121  N.  W.  630,  133  Am.  St.  421 ;  Mat- 
teson  V.  United  States  &c.  Land  Co., 
112  Minn.  190,  127  N.  W.  629,  affd., 
on  rehearing,  112  Minn.  196,  127  N. 
W.  997;  Moots  v.  Cope,  (Mo.),  126 
S.  W.  184 ;  Ross  v.  Cravens.  84  Nebr. 
520,  121  N.  W.  451;  Finkelstein  v. 
Fabyik,  107  N.  Y.  S.  67.  See  also, 
Chick  V.  Bridges,  56  Ore.  1,  107  Pac. 
478,  Ann.  Cas.  1912B.  1293. 

'^  Paris  V.  Johnson,  155  Ala.  403, 
46  So.  642;  Furse  v.  Lambert,  85 
Nebr.  739,   124  N.  W.  146. 

^'Halleck  v.  Guy,  9  Cal.  181,  70 
Am.  Dec.  643;  Chandler  v.  Morey, 
195  111.  596,  63  N.  E.  512;  Watson's 
Admr.  v.  Violett,  63  Ky.  332;  War- 
field  v.  Dorsey,  39  Md.  299,  17  Am. 
Rep.  562;  Warehine  v.  Graf,  83  Md. 
98,  34  Atl.  364;  Andrews  v.  O'Ma- 
honey,  112  N.  Y.  567,  20  N.  E.  374; 
Tate  V.  Greenlee,  15  N.  Car.  149; 
King  V.  Gunnison,  4  Pa.  St.  171 ; 
Robertson  v.  Smith,  94  Va.  250,  26 
S.  E.  579,  64  Am.  St.  723. 

^Jackson  v.  Scott,  67  Ala.  99;  Cur- 
rie V.  Mann.  6  Ala.  .531 ;  Gossard  v. 
Ferguson,  54  Ind.  519;  Pepper  v. 
Commonwealth.  6  T.  B.  Mon.  (Ky.) 
27;  Barney  v.  Patterson's  Lessee,  6 
Har.  &  J.   (Md.)   182;  Joslin  v.  Er- 


505 


STATUTE  OF  FRAUDS. 


§  1266 


a  decree  or  order  of  a  court  of  record."®*     A  sale  of  real  estate 
by  an  administrator  has  been  held  within  the  statute  of  frauds.®' 

§  1266.  Contracts  within  statute — Parol  contract  to  arbi- 
trate.— A  parol  submission  to  arbitration  may  generally  be 
made  by  parol ;  but  an  exception  to  the  rule  prevails  where  the 
title  to  land  is  involved.  A  parol  agreement  to  arbitrate  the  title 
to  real  estate  is  within  the  statute,  and  award  based  thereon  is 
invalid. ®°  Thus,  where  the  question  involved  was  the  title  to  a 
certain  roadbed,  a  submission  to  arbitration  by  parol  rendered  the 
award  incapable  of  specific  performance.**^ 

§  1267.  Cases  within  clause  four — Easements. — At  the 
present  day  the  distinction  between  an  easement  and  a  license  is 
well  settled,  although  it  is  difficult  in  some  of  the  cases  to  discover 
a  substantial  difference  between  them.®®  An  easement  is  a  lib- 
erty, privilege  or  ownership  of  the  soil.  It  is  an  interest  in  an- 
other's land  with  a  right  to  enjoy  it,  while  a  license  carries  no  such 
interest.®"     "i\n  easeinent  must  be  an  interest  in  or  over  the 


vien,  50  N.  J.  L.  39.  12  Atl.  136.  Will- 
ets  V.  Van  Alst,  26  How.  Fr.  (N.  Y.) 
344;  Remington  v.  Linthicum,  14  Pet. 
(U.  S.)  84,  10  L.  ed.  364. 

"  Rev.  Stat.  111.,  chap.  59,  §  2.  See 
also,  Armstrong  v.  Vroman,  11  Gil. 
(Minn.)  42,  88  Am.  Dec.  81;  Emley 
V.  Drum,  36  Pa.  123. 

"  Bozza  V.  Rowe,  30  111.  198,  83  Am. 
Dec.  184. 

*"  Walters  v.  Morgan,  2  Cox  Ch. 
Cas.  369;  Bvrd  v.  Odem,  9  Ala.  755; 
Brown  v.  Mize.  119  Ala.  10,  24  So. 
453;  Shaw  v.  State.  125  Ala.  80,  28 
So.  390;  Smith  v.  Douglass,  16  111.34; 
Wilmington  Water  Power  Co.  v.  Ev- 
ans, 166  111.  548.  46  N.  E.  1083;  Stark 
V.  Cannady,  3  Litt.  (Ky.)  399,  14  Am. 
Dec.  76 ;  Evans  v.  ^I'Kinsey,  Litt.  Sel. 
Cas.  (Kv.)  262;  Logsdon  v.  Roberts' 
Exrs.,  3T.  B.  Mon.  (Kv.)  255;  Rovse 
v.  McCall.  5  Bush  (Kv.)  695;  Thom- 
asson  V.  Risk,  11  Bush  (Kv.)  619; 
Philbrick  v.  Preble.  18  Maine  255.  36 
Am.  Dec.  718;  Byam  v.  Robbins.  6 
Allen  (Mass.)  63;  Copeland  v.  Wad- 
ing River  Reservoir  Co.,  105  Mass. 
397:  Peabodv  v.  Rice.  113  Mass.  31; 
McMullen  v.  Mavo,  8  Sm.  &  AI. 
(Miss.)  298;  Gray  v.  Berry,  9  N.  H. 


473;  Hewitt  v.  Lehigh  &c.  R.  Co.,  57 
N.  J.  Eq.  511,  42  Atl.  325;  Jackson 
v.  Gager,  5  Cow.  (N.  Y.)  383;  Mitch- 
ell v.  Bush,  7  Cow.  (N.  Y.)  185;  Val- 
entine v.  Valentine,  2  Barb.  Ch.  (X. 
Y.)  430;  French  v.  New,  28  X.  Y. 
147,  2  Abb.  Dec.  209;  Crissman  v. 
Crissman,  27  N.  Car.  498;  Fort  v. 
Allen,  110  X.  Car.  183,  14  S.  E.  685; 
Gratz  V.  Gratz,  4  Rawle  (Pa.)  411; 
Bowen  v.  Cooper,  7  Watts  (Pa.)  311; 
Miller  v.  Graham,  1  Brev.  (S.  Car.) 
448;  Daw  v.  Faw,  7  Cranch  (U.  S.) 
171,  3  L.  ed.  305 ;  Smith  v.  Bullock,  16 
\'t.  592.  Compare  with  Green  v.  Ford, 
17  Ark.  586  (dower  interest  in  per- 
sonalty belonging  to  deceased  hus- 
band alone  considered). 

"  McKnight  v.  Parsons,  136  Iowa 
390,  113  N.  W.  858,  22  L.  R.  A.  (N. 
S.)  718,  125  Am.  St.  265.  See  also, 
ante,  §  1257. 

^nVolf  V.  Frost,  4  Sandf.  Ch.  (N. 
Y.)  72  (distinguishing  between  ease- 
ments and  licenses)  ;  Hazelton  v.  Put- 
nam, 3  Pinnev  (Wis.)  107,  54  Am. 
Dec.  158n. 

'•'Pomeroy  v.  Mills.  3  Vt.  279.  23 
.•\m.  Dec.  207,  3  Kent.  Comm.  452. 
In  Massachusetts  the  Supreme  Court 


§    126/ 


CONTRACTS. 


506 


soil,"^'*  and  it  is  well  settled  that  it  cannot  exist  in  parol. ®^  Con- 
tracts for  the  creation  of  a  permanent  right  of  way,"-  for  the 
right  of  overflow"^  or  drainage/*  or  for  any  easement  or  servi- 


has  defined  an  easement  or  servitude 
to  be  "a  right  which  one  proprietor 
has  to  some  profit,  benefit  or  lawful 
use,  out  of  or  over  the  estate  of  an- 
other proprietor."  Ritger  v.  Parker, 
8  Cush.  (Mass.)  145,  54  Am.  Dec. 
744;  Owen  v.  Field,   102  Mass.  90. 

'"Rowbotham  v.  Wilson.  8  El.  & 
Bl.  123,  per  Cresswell,  J.  (distinction 
between  easements  and  profits  a  pren- 
dre) ;  Hill  V.  Lord,  48  Maine  83. 

"  Hewlins  v.  Shippam,  5  B.  &  C. 
221 ;  Cocker  v.  Cowper,  1  Cromp. 
M.  &  R.  418;  Thomas  v.  Sorrell, 
Vaughan  330 ;  Snowden  v.  Wilas,  19 
Ind.  10,  81  Am.  Dec.  370;  Hays  v. 
Richardson,  1  Gill.  &  J.  (Md.)  366; 
Fitch  V.  Seymour,  9  Mete.  (Mass.) 
462;  Lawrence  v.  Springer,  49  N.  J. 
Eq.  289,  24  Atl.  933,  31  Am.  St.  702; 
Wiseman  v.  Lucksinger,  84  N.  Y. 
31  (drain  through  another's  land)  ; 
Sweeney  v.  St.  John,  28  Hun  (N. 
Y.)  634;  Brown  v.  Woodworth,  5 
Barb.  (X.  Y.)  550;  Babcock  v.  Ut- 
ter, 1  Keves  (N.  Y.)  397,  1  Abb.  Dec. 
27,  32  How.  Pr.  439;  Day  v.  New 
York  &c.  R.  Co.,  31  Barb.  (N.  Y.) 
548;  Thompson  v.  Gregory,  4  Johns. 
(N.  Y.)  81;  Miller  v.  Auburn  &c.  R. 
Co.,  6  Hill  (X.  Y.)  61;  Pitkin  v. 
Long  Island  R.  Co.,  2  Barb.  Ch.  (N. 
Y.)  221,  47  Am.  Dec.  320;  Doolittlev. 
Eddy,  7  Barb.  (N.  Y.)  74;  Huff  v. 
McCauley,  53  Pa.  St.  206,  91  Am. 
Dec.  203 ;  Pifer  v.  Brown,  43  W.  Va. 
412,  27  S.  E.  399.  In  Fentiman  v. 
Smith,  4  East  107,  Lord  Ellenbor- 
ough  stated  that  the  right  to  have 
water  pass  over  the  lands  of  an- 
other by  a  tunnel  could  not  be  ac- 
quired by  a  parol  license. 

"Forbes  v.  Balenseifer,  74  111.  183; 
St.  Louis  Nat.  Stock  Yards  v.  Wig- 
gins Ferry  Co.,  112  111.  384,  54  Am. 
Rep.  243;  Ashelford  v.  Willis,  194 
111.  492,  62  N.  E.  817;  Simons  v. 
Morehouse.  88  Ind.  391 ;  Nowlin  v. 
Whipple,  120  Ind.  596,  22  N.  E.  669, 
6  L.  R.  A.  159;  Phoenix  Ins.  Co.  v. 
Haskett,  64  Kans.  93,  (P  Pac.  446; 
Hall  V.  McLeod.  2  Mete.  (Ky.)  98; 
74  Am.  Dec.  400;  Baltimore  &c.  R. 
Co.   V.   Algire,  63   Md.  319;    Cole  v. 


Hadley,  162  Mass.  579,  29  N.  E.  279 ; 
IMinneapolis  &c.  R.  Co.  v.  Marble, 
112  Mich.  4,  70  N.  W.  319;  Minne- 
apolis Western  R.  Co.  v.  Minneap- 
olis &c.  R.  Co.,  58  Minn.  128,  59  N. 
W.  983;  Bonelli  v.  Blakemore,  66 
Miss.  136,  5  So.  228,  14  Am.  St.  550; 
Blaisdell  v.  Portsmouth  &c.  R.  Co., 
51  N.  H.  483;  Foster  v.  Browning,  4 
R.  I.  47,  67  Am.  Dec.  505.  Compare 
with  New  Iberia  &c.  Co.  v.  Romero, 
105  La.  439,  29  So.  876. 
°^Foot  V.  New   Haven  &c.  R.  Co., 

23  Conn.  214;  Woodward  v.  Seely, 
11  111.  157,  50  Am.  Dec.  445n;  Tan- 
ner V.  Volentine,  75  111.  624;  Wil- 
mington Water  Power  Co.  v.  Evans, 
66  111.  548,  46  N.  E.  1083;  Snowden 
V.  Wilas,  19  Ind.  10,  81  Am.  Dec. 
370;  Buck  v.  Foster,  147  Ind.  530,  46 
N.  E.  920;  Stevens  v.  Stevens,  11 
Mete.  (Mass.)  251,  45  Am.  Dec.  203; 
Johnson  v.  Skillman,  29  Minn.  95,  12 
N.  W.  149,  43  Am.  Rep.  192;  Batch- 
elder  V.  Hibbard,  58  N.  H.  269; 
Mumford  v.  Whitney,  15  Wend.  (N. 
Y.)  380,  30  Am.  Dec.  60;  Oimstead 
v.  Abbott.  61  Vt.  281,  18  Atl.  315; 
Clute  V.  Carr,  20  Wis.  531,  91  Am. 
Dec.  442. 

®*  Hewlins  v.    Shippam,   5   B.   &   C. 
221 ;  Deyo  v.  Ferris,  22  111.  App.  154, 

24  111.  App.  416:  Hunt  v.  Sain,  181 
111.  372,  54  N.  E.  970.  See  Wessels 
v.  Colebank,  174  111.  618,  51  N.  E. 
639;  Ferguson  v.  Spencer,  127  Ind. 
66,  25  N.  E.  1035;  Schultz  v.  Huff- 
man, 127  Mich.  276,  86  N.  W.  823; 
Wilson  v.  St.  Paul  &c.  R.  Co.,  41 
Minn.  56,  42  N.  W.  600,  4  L.  R.  A. 
378;  Pitzman  v.  Boyce,  111  Mo.  387, 
19  S.  W.  1104,  ZZ  Am.  Rep.  536; 
Great  Falls  Water  Works  Co.  v. 
Great  Northern  R.  Co.,  21  Mont. 
487,  54  Pac.  963 ;  Lawrence  v.  Spring- 
er, 49  N.  J.  Eq.  289,  24  Atl.  933,  31 
Am.  St.  702;  Van  Horn  v.  Clark,  56 
N.  J.  Eq.  476,  40  Atl.  203 ;  Wiseman 
V.  Lucksinger,  84  N.  Y.  31 ;  Wilkins 
V.  Irvine,  ZZ  Ohio  St.  138;  Ewing  v. 
Rhea,  Zl  Ore.  583,  62  Pac.  790,  52  L. 
R.  A.  140,  82  Am.  St.  783 ;  Hathaway 
v.  Yakima  Water  &c.  Co.,  14  Wash. 
469,  44  Pac.  896,  53  Am.  St.  874;  Pi- 


507  STATUTE  OF  FRAUDS.  §  1 268 

tude  whatsoever,®"  are  within  the  statute.  In  case  a  contract  for 
the  execution,  maintenance  and  use  of  a  party  wall  is  considered 
as  creating  an  easement  it  is  within  the  statute.""  On  the  other 
hand,  if  the  verbal  agreement  concerning  a  party  wall  relates  to 
duties  imposed  by  law,  and  imposes  no  greater  liability  than  that 
imposed  by  law,  it  is  enforcible.''^ 

§  1268.  Contracts  within  the  fourth  clause — Contracts  for 
the  sale  of  grovi^ing  trees. — Contracts  for  the  sale  of  growing 
trees  are  generally  held  to  concern  an  interest  in  land.  The  word 
**land"  in  its  legal  signification  embraces  much  more  than  thu 
word  literally  imports.  It  is  a  comprehensive  term  and  includes, 
standing  trees,  buildings,  fences,  stones  and  waters,  as  well  as  the 
earth,  and  all  pass  under  the  general  description  of  land  in  a  deed. 
Standing  trees  pass  to  the  heir  as  a  part  of  the  inheritance,  and 
not  to  the  executor  as  emblements  or  chattels.  For  this  reason  it 
has  been  usually  held  that  a  sale  of  growing  trees  with  a  right 
at  any  future  time,  whether  fixed  or  indefinite,  to  enter  upon  the 
land  and  remove  them,  conveys  an  interest  in  the  land.®*     It  is 

fer  V.  Brown,  43  W.  Va.  412,  27  S.  v.    Breckenridge,    29    Ohio    St.    642; 

E.  399;  Thoemke  v.  Fiedler,  91  Wis.  Huff  v.  McCauley,  53  Pa.  St.  206,  91 

386,  64  N.  W.  1030.  Am.  Dec.  203;  Pierce  v.  Cleland.  133 

"'Tillis  V.  Treadwell,  117  Ala.  445,  Pa.    St.    189,    19   Atl.   352;    Clark   v. 

22  So.  983;  Plunkett  v.  Meredith,  72  Glidden,  60  Vt.  702,    15   Atl.   358. 

Ark.  3.  n  S.  W.  600;  Dorris  v.  Sulli-  "Tillis  v.  Treadwell,  117  Ala.  445, 

van,  90  Cal.  279.  27  Pac.  216:  Hayes  22  So.  983;  Price  v.   Lien,  84   Iowa, 

V.  Fine,  91  Cal.  391,  27  Pac.  772;  Col-  590,   51   N.   W.  52;   Rice  v.   Roberts, 

lins    Co.    V.    Marcv.    25    Conn.    239;  24  Wis.  461,  1  Am.  Rep.  195.     Com- 

Dwight  V.  Hayes,  150  111.  273,  Zl  N.  pare  with  Stuht  v.  Sweesy,  48  Nebr. 

E.   218,   41    Am.    St.   367;   Lambe   v.  767,  67  N.  W.  748. 

Manning.  171  111.  612.  49  X.  W.  509;  ^^  Swift   v.   Calnan,    102    Iowa   206, 

Entwhistle  v.  Henke,  211  111.  273.  71  71  N.  W.  233,  2,1  L.  R.  A.  462,  63  Am. 

N.  E.  990,  103  Am.  St.  196;  Richter  St.  443.     See  also.  Price  v.  Lien,  84 

V.  Irwin,  28  Ind.  26;  Joseph  v.  Wild,  Iowa  590,  51   N.  W.  52. 

146  Ind.  249,  45  N.  E.  467;  Cook  v.  *"  Jenkins  v.  Lykes,  19  Fla.  148,  45 

Chicago    &c.    R.    Co.,   40    Iowa   451;  Am.  Rep.  19;  Corbin  v.  Durden,  126 

Cook  V.  Stearns,  11  Mass.  533;  Hodg-  Ga.  429,  55  S.  E.  30;  Terrell  v.  Fra- 

kins  V.   Farrington.    150  Mass.   19,  22  zier,  79  Ind.  473;  Owens  v.  Lewis,  46 

N.  E.  12,,  5  L.  R.  A.  209,  15  Am.  St.  Ind.  488,   15  Am.   Rep.  295;   Cool  v. 

168;    Xowlin  Lumber  Co.  v.  Wilson,  Peters   &c.    Co.,    87    Ind.    531;    Arm- 

119  Mich.   406,  78  N.  W.  338;   Peer  strong  v.  Lawson,  1Z  Ind.  498;  Gar- 

V.  Wadsworth,  67  N.  J.   Eq.   191,  58  ner   v.    Mahonev,    115    Iowa   356,    88 

Atl.   379;    Jamieson   v.    Millemann,   3  N.   W.   828;   Wiggins  v.   Jackson.  24 

Duer     (N.     Y.)     255;     Cronkhite    v.  Ky.  L.  2189.  IZ  S.  W.  779;  Jackson 

Cronkhite.  94  X.  Y.  323;  Crosdale  v.  v.  Evans.  44  Mich.  510,  7  N.  W.  79; 

Lanigan,  129  N.  Y.  604,  29  N.  E.  824,  Oconto   Co.  v.   Lundquist.   119  Mich. 

26  Am.  St.  551;  Wilson  v.  Chalfant,  264.    11    N.    W.    950;    Macomber    v. 

15  Ohio  248,  45  Am.  Dec.  574;  Meek  Detroit   &c.    R.    Co.,    108   Mich.   491. 


§  1268 


CONTRACTS. 


508 


frequently  held,  however,  that  a  contract  for  the  sale  of  standing 
wood  or  timber  to  be  cut  and  severed  from  the  freehold  by  the 
vendee,  does  not  convey  any  interest  in  the  land,  being  in  contem- 
plation of  the  parties  a  sale  of  chattels  only.  Such  contracts  are 
considered  as  executory  contracts  for  the  sale  of  chattels  as  they 
shall  be  thereafter  severed  from  the  real  estate  with  a  license 
to  enter  on  the  land  for  the  purpose  of  removal."^     In  case  the 


66  N.  W.  Zlt,  32  L.  R.  A.  102,  62  Am. 

St.  713;  Herrick  v.  Newell,  49  Minn. 
198,  51  N.  W.  819;  Kileen  v.  Ken- 
nedy, 90  Alinn.  414,  97  N.  W.  126; 
Harrell  v.  Miller,  35  Miss.  700,  12 
Am.  Dec.  154;  Walton  v.  Lowrey, 
74  IMiss.  484,  21  So.  243;  Alt  v.  Gros- 
close,  61  Mo.  App.  409;  Lyle  v.  Shin- 
nebarger,  17  Mo.  App.  66;  Mine  La 
Motte  Lead  &c.  Co.  v.  White,  106 
Mo.  App.  222,  80  S.  W.  356;  Howe 
V.  Batchelder,  49  N.  H.  204;  Kings- 
ley  V.  Holbrook,  45  N.  H.  313,  86  Am. 
Dec.  173;  Reid  v.  McQuesten,  61  N. 
H.  421;  Slocum  v.  Seymour  (1873), 
36  N.  J.  L.  138,  13  Am.  Rep.  432; 
Green  v.  Armstrong,  1  Denio  (N.  Y.) 
550;  McGregor  v.  Brown,  10  N.  Y. 
114,  Seld.  Notes  225;  Bishop  v. 
Bishop,  11  N.  Y.  123,  62  Am.  Dec. 
68  (hop-poles  part  of  real  estate)  ; 
Bank  of  Lansingburgh  v.  Crary,  1 
Barb.  (N.  Y.)  542;  Silvernail  v.  Cole, 
12  Barb.  (N.  Y.)  685;  Bennett  v. 
Scutt,  18  Barb.  (N.  Y.)  347;  Vore- 
beck  V.  Roe,  50  Barb.  (N.  Y.)  302; 
IMizell  V.  Burnett,  4  Jones  Law  (N. 
Car.)  249,  69  Am.  Dec.  744;  Mid- 
yette  v.  Grubbs,  145  N.  Car.  85,  58  S. 
E.  795,  13  L.  R.  A.  (N.  S.)  278; 
Green  v.  North  Carolina  R.  Co.,  IZ 
N.  Car.  524;  Drake  v.  Howell,  133 
N.  Car.  162,  45  S.  E.  539;  Ward  v. 
Gay,  137  N.  Car.  397,  49  S.  E.  884; 
Hawkins  v.  Goldsboro  Lumber  Co., 
139  N.  Car.  160,  51  S.  E.  852;  Ives 
V.  Atlantic  &c.  R.  Co.,  142  N.  Car. 
131,  55  S.  E.  74.  115  Am.  St.  12>2; 
Yeakle  v.  Jacob,  ZZ  Pa.  St.  Zld  (per- 
petual right  to  enter  on  land  and  cut 
timber)  ;  Bowers  v.  Bowers,  95  Pa. 
St.  477;  Sterling  v.  Baldwin,  42  Vt. 
306;  Buck  v.  Pickwell,  27  Vt.  157; 
Ellison  V.  Brigham,  38  Vt.  64;  Flu- 
harty  v.  Mills,  49  W.  Va.  446,  38  S. 
E.  521;  Bruley  v.  Garvin,  105  Wis. 
625,  81  N.  W.  1038,  48  L.  R.  A.  839; 
Lillie  V.  Dunbar,  62  Wis.  198,  22  N. 


W.  467;  Daniels  v.  Bailey,  43  Wis. 
566;  Seymour  v.  Cushway,  100  Wis. 
580,  It  N.  W.  769,  69  Am.  St.  957. 
See  note  to  Kingsley  v.  Holbrook,  45 
N.  H.  313,  86  Am.  Dec.  173.  In 
Anonymous,  1  Ld.  Ray.  182,  growing 
timber  was  held  to  be  a  chattel  inter- 
est, a  dictum  which  HuUock,  B.,  in 
Scorell  V.  Boxall  (1827),  1  Y.  &  J. 
396,  says  he  had  never  heard  referred 
to  as  authority.  In  that  case  (Sco- 
rell V.  Boxall)  it  was  held  that  the 
sale  of  growing  underwood  to  be 
cut  by  the  purchaser  was  a  contract 
for  an  interest  in  land  and  must  be 
in  writing.  In  Teal  v.  Auty  (1820), 
2  Brod.  &  Bing.  99,  4  Moore  542, 
it  was  held  that  a  sale  of  growing 
trees  for  hop-poles  was  a  contract 
for  an  interest  in  land.  In  Smith  v. 
Surman  (1829),  9  Barn.  &  Cress. 
561,  the  standing  timber  was  sold  for 
so  much  a  foot.  It  was  held  not 
to  be  an  interest  in  the  land.  In 
Vorebeck  v.  Roe,  50  Barb.  (N.  Y.) 
302,  the  court  says :  "It  is  well  settled, 
by  the  authorities  in  this  state,  that 
standing  trees  form  a  part  of  the 
land,  and,  as  such,  are  real  property. 
And  a  contract  for  the  sale  of  them 
is  a  contract  for  the  sale  of  an  in- 
terest in  the  land."  See,  however, 
Leonard  v.  Medford,  85  Md.  666,  Z7 
Atl.  365 ;  Z1  L.  R.  A.  449. 

^  Bostwick  v.  Leach,  3  Day 
(Conn.)  476;  Cain  v.  McGuire,  13 
B.  Mon.  (Ky.)  340;  Byassee  v. 
Reese,  4  Mete.  (Ky.)  Z12,  83  Am. 
Dec.  481 ;  Emerson  v.  Shores,  95 
Maine  237,  49  Atl.  1051,  85  Am.  St. 
404;  Erskine  v.  Plummer,  7  Greenl. 
(Maine)  447,  22  Am.  Dec.  216;  Cut- 
ler V.  Pope,  13  Maine  Zll  (grass 
grown  and  ready  to  be  cut)  ;  Smith  v. 
Bryan,  5  Md.  141,  59  Am.  Dec.  104; 
White  V.  Foster  (1869),  102  Mass. 
375;  Poor  v.  Oakman,  104  Mass. 
309;     Giles     v.     Simonds,     15     Gray 


509  STATUTE  OF  FRAUDS.  §  1 269 

parol  sale  is  considered  as  a  license  to  enter  and  cut  the  timber, 
such  license  may  be  revoked  by  the  death  of  the  licensor/  or  by 
a  subsequent  sale  of  the  land  to  another  person.^     It  may  also 

be  revoked  at  the  will  of  the  licensor.^ 

§  1269.  Sale  of  standing  timber  to  be  immediately  removed. 
— It  is  held  in  a  number  of  cases  that  a  sale  of  standing  timber 
to  be  immediately  removed  is  not  an  interest  in  land  and  therefore 
if  made  by  parol,  is  neither  within  the  statute  of  frauds,  nor  is  it 
revocable.*  When  severed  from  the  freehold  it  is  well  settled 
that  trees  become  chattels.  It  is  also  held  that  when  the  vendor 
is,  by  the  contract  of  sale,  required  to  cut  and  deliver  the  trees, 
they  will  be  considered  as  personalty  and  that  therefore  the  agree- 
ment is  not  within  this  clause  of  the  statute.^  When  one  has 
under  a  valid  and  binding  contract  acquired  the  right  to  cut  and 
remove  certain  designated  timber  it  has  been  held  that  he  may 
give  to  another  a  lien  on  the  trees  for  advances  to  be  made  and 
that  such  agreement  is  not  within  section  four  of  the  statute.® 
It  has  also  been  held  that  where  it  appeared  that  the  parties  to  a 

(Mass.)  441,  11  Am.  Dec.  ZIZ  (li-  356,  88  N.  W.  828;  Walton  v.  Low- 
cense  to  enter  on  land  and  cut  tim-  rey,  74  Miss.  484,  21  So.  243;  Ben- 
ber)  ;  Douglas  v.  Shumway,  13  Gray  nett  v.  Scutt,  18  Barb.  (X.  Y.)  347. 
(Mass.)  498;  Nettlcton  v.  Sikes,  8  *  Marshall  v.  Green,  L.  R.  1  C.  P. 
Mete.  (Mass.)  34;  Drake  v.  Wells,  35;  Dils  v.  Hatcher.  24  Ky.  L.  826, 
11  Allen  (Mass.)  141;  Claflin  v.  Car-  69  S.  W.  1092;  Tilford  v.  Dotson, 
penter,  4  Mete.  (Mass.)  580,  38  Am.  106  Ky.  755.  51  S.  W.  583;  Byasse 
Dec.  381 ;  Whitmarsh  v.  Walker,  1  v.  Reese,  4  Mete.  (Ky.)  THl,  83  Am. 
Mete  (Mass.)  313;  Ellis  v.  Clark,  Dec.  481 ;  Robbins  v.  Farwell,  193  Pa. 
110  Mass.  391,  14  Am.  Rep.  609;  St.  Z1 ,  44  Atl.  260.  In  re  McClin- 
Grecn  v.  North  Carolina  R.  Co.,  12>  N.  tock's  Appeal,  71  Pa.  St.  365.  See 
Car.  524  (wood  standing  sold  by  also,  Wiggins  v.  Jackson  (Ky.),  Ti 
the  cord);  Fluhartv  v.  Mills,  49  W.  S.  W.  779;  Midyette  v.  Grubbs.  145 
Va.  446,  38  S.  E.  521.  In  several  of  N.  Car.  85,  58  S.  E.  795.  13  L.  R.  A. 
these  cases  the  reason  for  holding  (N.  S.)  278.  An  agreement  for  the 
that  a  sale  of  growing  trees  was  a  sale  of  trees  growing  in  a  nursery 
sale  of  chattels,  was  that  immediate  and  raised  to  be  sold  and  transplant- 
separation  from  the  land  was  con-  ed  is  not  a  contract  for  the  sale  of 
templated.  an    interest    in,    or   concerning    lands 

'Spacv  V.   Evans,   152  Ind.  431,  52  within    the    statute.      Whitmarsh    v. 

N.  E.  605.  Walker,   42   ^lass.   313. 

''Jenkins  v.  Lykes,  19  Fla.  148,  45  "  Dorris   v.    King    (Tenn.    Ch.),   54 

Am.    Rep.    19;    Polk   v.    Carney,    21  S.  W.  683;   Kleeb  v.  Bard,  7  Wash. 

S.  Dak.  295,  112  N.  W.  147,  130  Am.  41,  34  Pac.  138. 

St.   719;    Brulev  v.   Garvin,   105  Wis.  'Helfreck  Lumber  &c.  Co.  v.  Ho- 

625,  81  N.  W.  '1038,  48  L.  R.  A.  839.  naker,  25  Ky.  L.  717,  76  S.  W.  342. 

*  Garner    v.     Mahoney,     115     Iowa 


§    1270  CONTRACTS.  5IO 

contract  for  the  sale  of  growing  trees  did  not  intend  to  convey 
any  interest  in  the  land,  the  agreement  is  not  within  the  statute.'^ 

§  1270.  Cases  within  the  fourth  clause — Leases. — An  oral 
lease  of  realty  for  a  term  of  years  is  imenforcible  if  not  specific- 
ally excepted  by  the  statute  from  its  operation.^  A  lease  within 
the  statute  will  not  support  an  action  for  specific  performance,® 
nor  be  successfully  interposed  as  a  defense  in  an  action  by  the 
lessor  for  possession/'*  An  oral  contract  to  lease  premises  for  a 
period  of  one  year,  with  a  privilege  of  three,  at  an  annual  rental, 
is,  when  wholly  executory,  within  the  statute/^  However,  a 
tenancy  from  year  to  year  as  where  a  tenant  holds  over  after  the 
expiration  of  his  term  has  been  held  not  within  the  prohibition  of 
the  statute/^  A  contract  for  a  church  pew  for  a  period  greater 
than  one  year  has  been  held  within  the  statute/^  The  same  has 
been  held  true  of  an  oral  subletting  of  premises  held  by  a  tenant 
under  a  written  lease  ;^*  the  oral  modification  over  the  telephone 
of  a  written  lease  not  yet  accepted,  and  orally  accepted  as  modi- 
fied ;^^  and  as  to  the  assignment,^*'  extension,^"  or  surrender^^  of 

^Banton  v.  Shorey,  11  Maine  48.  statute.       Caley    v.     Thornquist,    89 

'Bailey   v.    Ferguson,    39    111.   App.  Minn.  348,  94  N.  W.   1084. 

91;     Emery     v.     Terminal     Co.,    178  "Brown  v.  Kayser,  60   Wis.   1,    18 

Mass.  172,  59  N.  E.  763,  86  Am.  St.  N.  W.  523.     See  also,   McClelland  v. 

473;    Smalley  v.   Mitchell,   110   Mich.  Rush,   150  Pa.  St.  57,  24  Atl.  354. 

650,  68  N.  W.  978;  Smith  v.  Phillips,  "First   Baptist  Church  v.  Bigelow, 

69  N.   H.  470,   43  Atl.    183;   Unglish  16  Wend.  (N.  Y.)  28. 

V.  Marvin,   128  N.  Y.  380,  28  N.   E.  "  Fratcher  v.  Smith,  104  Mich.  537, 

634;  Browning  v.  Berry,  107  N.  Car.  62  N.  W.  832. 

231,   12  S.  E.   195,   10  L.  R.  A.  726;  "Wiessner  v.  Ayer,  176  Mass.  425, 

Jordan  v.   Furnace  Co.,   126  N.   Car.  57   N.    E.   672. 

143.  35   S.   E.  247,  78  Am.   St.  644n;  "Chicago  Attachment  Co.  v.  Davis 

Davis  V.   Pollock,  36  S.  Car.  544,   15  Sewing  Machine  Co.,   142  111.   171.  31 

S.  E.  718;  Schulz  v.  Schirmer   (Tex.  N.  E.  438,  15  L.  R.  A.  754,  affirming 

App.),  49   S.   W.   246;   Utah   Optical  on   rehearing  28   N.   E.   959,    revers- 

Co.  V.    Keith,    18   Utah   464,   56   Pac.  ing  25  N.  E.  669,  and  distinguishing 

155.  Webster    v.    Nichols,    104    111.     160; 

"Strehl    v.     D'Evers,     66    111.    11',  Kingsley  v.    Siebrecht,  92   Maine  23, 

Charlton    v.    Columbia    Real    Estate  42  Atl.  249,  69  Am.  St.  486;   Penney 

Co.,  64  N.  J.  Eq.  631,  54  Atl.  444.  v.  Lynn,  58  Minn.  371,  59  N.  W.  1043; 

'°  Creighton  v.  Sanders,  89  111.  543.  Nally  v.  Reading,  107  Mo.  350,  17  S. 

"Hand    v.    Osgood,    107    Mich.    55,  W.    978;    Tiefenbrun   v.    Tiefenbrun, 

64  N.   W.  867,  30  L.  R.   A.  379,  61  65   Mo.   App.   253. 

Am.    St.    312.      See    also,    Storch    v.  "  Sidebotham    v.    Holland     (1895), 

Harvey,   45    Kans.   39,   25    Pac.   220;  1  Q.  B.  378;  Emery  v.  Terminal  Co., 

Rosen  v.  Rose,  13  Misc.  (N.  Y.)  565,  178  Mass.  172,  59  N.  E.  763,  86  Am. 

2  N.  Y.  Ann.  Cas.  194,  68  N.  Y.  St.  St.  473. 

370,  34  N.  Y.  S.  467.     But  execution  "  Rees  v.  Lowry,  57  Minn.  381,  59 

of  the  agreement  takes  it  out  of  the  N.  W.  310. 


511 


STATUTE  OF  FRAUDS. 


§  I27I 


such  lease.  In  a  majority  of  the  states  an  oral  lease  of  realty  for 
a  term  not  exceeding  one  year  is  allowed.^"  In  a  number  of 
states  an  oral  lease  for  a  term  not  exceeding  three  years  is  al- 
lowed.^" A  parol  lease  which  is  within  the  statute  does  not  vest 
any  term  whatsoever  in  the  lessee. ^^  Its  only  effect  is  to  create 
an  estate  which  has  the  force  and  effect  of  a  tenancy  at  will.** 

§  1271.  How  contract  concerning  land  may  be  taken  out 
of  the  statute. — If  the  parol  agreement  is  clearly  and  satis- 
factorily proven,  and  the  plaintiff,  relying  upon  such  agree- 
ment and  the  promise  of  the  defendant  to  perform  his  part,  has 
done  some  act  or  acts  of  performance  on  the  faith  of  the  contract 
and  to  the  knowledge  of  the  defendant,  a  court  of  equity  may 
decree  specific  performance,  when  it  would  be  a  virtual  fraud  to 
allow  the  defendant  to  interpose  the  statute  as  a  defense  and  at 
the  same  time  secure  to  himself  the  benefit  of  what  has  been  done 
in  performance.^^     The  statute  by  its  terms  does  not  affect  the 


"  Higgins  V.  Gager,  65  Ark.  604, 
47  S.  W.  848;  Chicago  Attachment 
Co.  V.  Davis  Sewing  Machine  Co., 
142  111.  171,  31  N.  E.  438,  15  L.  R. 
A.  754;  Marr  v.  Rav,  151  111.  340,  Z1 
N.  E.  1029,  26  L.  R.  A.  799;  Whit- 
ing V.  Ohlert,  52  Mich.  462,  18  N.  W. 
219,  50  Am.  Rep.  265;  Rev.  Stat.  111. 
Ch.   59    §  2. 

="Railsback  v.  Walke,  81  Ind.  409; 
Nash  V.  Berkmeir,  83  Ind.  536;  Union 
Banking  Co.  v.  Gittings,  45  Md.  181 ; 
Birchhead  v.  Cummins,  Z2>  N.  J.  L. 
44;  Wade  v.  Newbern,  11  N.  Car. 
460;  Dumn  v.  Rothermel,  112  Pa.  St. 
272,  3  Atl.  800;  Jennings  v.  McComb, 
112  Pa.   518,  4  Atl.  812. 

"'Borderre  v.  Den,  106  Cal.  594, 
39  Pac.  946  (lease  executed  by  an 
agent  of  qwner  acting  under  oral 
authority.  Lease  supposed  to  be  for 
a  period  of  only  one  year)  ;  Talamo 
v.  Spitzmiller.  120  N.  Y.  37,  23  N. 
E.  980,  8  L.  R.  A.  221n,  17  Am.  St. 
607:  Thomas  v.  Nelson,  69  N.  Y.  118. 

""The  following  cases  were  de- 
cided in  jurisdictions  in  which  the 
statute  made  no  exception  as  to  short 
leases :  Duley  v.  Kelley,  74  Maine 
5.56;  Elliott  v.  Stone,  1  Grav  (Mass.) 
571 :  Whitney  v.  Swett.  22  N.  H.  10, 
53  Am.  Dec.  228;  Currier  v.  Perley, 


24  N.  H.  219;  Barlow  v.  Wainright, 
22  Vt.  88,  52  Am.  Dec.  79;  Silsby  v. 
Allen,  43  Vt.  172.  See,  however, 
Myers  v.  Croswell,  45  Ohio  St.  543, 
15  N.  E.  866;  Baltimore  &  Ohio  Rail- 
road Co.  V.  West,  57  Ohio  St.  161, 
49  N.  E.  344.  As  to  the  right  of  the 
tenant  to  surrender  the  premises  and 
avoid  payment  of  the  agreed  rent, 
see  Bless  v.  Jenkins,  129  Mo.  647,  31 
S.  W.  938.  See  also,  Eubank  v.  May 
&c.  Hardware  Co.  105  Ala.  629,  17 
So.   109. 

==■  Flickinger  v.    Shaw,   87   Cal.    126, 

25  Pac.  268,  11  L.  R.  A.  134,  22  Am. 
St.  234;  Legg  v.  Horn.  45  Conn.  409; 
Martin  v.  Martin,  170  111.  639,  48  N. 
E.  924,  62  Am.  St.  411;  Ashelford 
v.  Willis,  194  111.  492.  62  X.  E.  817; 
Teague  v.  Fowler,  56  Ind.  569;  Fos- 
ter Lumber  Co.  v.  Harlan  County 
Bank,  71  Kans.  158,  80  Pac.  49,  114 
Am.  St.  470;  Bennett  v.  Dver.  89 
Maine  17,  35  \W.  1004;  Low  v.  Low, 
173  Mass.  580,  54  N.  E.  257;  Jorgen- 
sen  V.  Jorgensen,  81  Minn.  428,  84 
N.  W.  221:  Johnson  v.  Hurlev,  115 
Mo.  513.  22  S.  W.  492:  Lucas  v. 
Lucas.  64  Nebr.  190,  89  N.  W.  769; 
Miller  v.  Ball,  64  N.  Y.  286:  Beards- 
lev  v.  Duntlev.  69  N.  Y.  577 ;  Sprague 
V.'  Cochran,  144  N.  Y.  104,  38  N.  E. 


§    I27I 


CONTRACTS. 


512 


power  which  courts  of  equity  have  to  reheve  against  fraud  by 
compelhng  performance  of  the  contract.  In  such  case  the  court 
grants  rehef,  not  on  the  ground  that  there  is  a  vahd  contract,  but 
that  unless  the  court  interposes  one  party  will  be  enabled  to  de- 
fraud the  other  and  that  the  best  way  to  prevent  this  is  to  enforce 
the  contract."  "In  a  suit  founded  on  such  part  performance  the 
defendant  is  really  charged  upon  the  equities  resulting  from  the 
acts  done  in  the  execution  of  the  contract,  and  not  (within  the 
meaning  of  the  contract)  upon  the  contract  itself. "^^  Thus 
where  possession  has  been  taken  in  accordance  with  the  provision 
of  a  parol  contract  for  the  sale  of  land,^^  with  the  acquiescence 
of  the  vendor,^^  and  the  vendee  has  paid  the  agreed  purchase- 
price  or  otherwise  performed  the  consideration/®  or  has  made 


1000 ;  Canda  v.  Totten,  157  N.  Y.  281, 
51  N.  E.  989;  Hancock  v.  Melloy, 
187  Pa.  St.  371,  41  Atl.  313;  Higgles 
V.  Erney,  154  U.  S.  244,  38  L.  ed.  976, 
14  Sup.  Ct.  1083. 

**  Jacobs  V.  Peterborough  &  Shir- 
ley R.  Co.,  8  Cush.  (Mass.)  223; 
Wheeler  v.  Reynolds,  66  N.  Y.  227. 
"The  ground  on  which  a  court  of 
equity  proceeds,  where,  to  use  the 
common  expression,  contracts  have 
been  taken  out  of  the  statute  by  part 
performance,  is  not  that  there  is 
a  valid  contract,  but  that  unless  the 
court  interposes  one  party  will  be 
enabled  to  defraud  the  other."  Drum 
V.   Stevens,  94  Ifid.   181,  183. 

"  Maddison  v.  Alderson,  8  App. 
Cas    467. 

'"Wood  V.  Thornly,  58  111.  464; 
Shovers  v.  Warrick,  152  111.  355,  38 
N.  E.  792;  Wright  v.  Raftree,  181 
111.  464,  54  N.  E.  998;  Waymire  v. 
Waymire.  141  Ind.  164,  40  N.  E.  523 ; 
Nay  V.  Mograin,  24  Kans.  75 ;  Ben- 
nett V.  Dyer,  89  Maine  17,  35  Atl. 
1004;  Glass  v.  Hulbert,  102  Mass. 
24,  3  Am.  Rep.  418;  Burns  v.  Dag- 
gett, 141  Mass.  368,  6  N.  E.  727; 
Bresnahan  v.  Bresnahan,  71  Minn.  1, 
Ti  N.  W.  515;  Charpiot  v.  Sigerson, 

25  Mo.  63;  Phillips  v.  Thompson,  1 
Johns.  Ch.  131;  Miller  v.  Ball,  64  N. 
Y.  292 ;  Frye  v.  Shepler,  7  Pa.  St.  91. 

"Foster  v.    Maginnis,  89   Cal.  264, 

26  Pac.  828;  Pickerell  v.  Morss,  97 
111.  220;  Cloud  v.  Greasley,  125  111. 
313,  17  N.  E.  826;  Barnett  v.  Wash- 


ington Glass  Co.,  12  Ind.  App.  631, 
40  N.  E.  1102;  Cockrell  v.  Mclntyre, 
161  Mo.  59,  61  S.  W.  648;  Poland  v. 
O'Conner.  1  Nebr.  50,  93  Am.  Dec. 
ZZl ;  Nibert  v.  Baghurst,  47  N.  J.  Eq. 
201,  20  Atl.  252;  Baxter  v.  Doane, 
208  Pa.  585,  57  Atl.  1062;  Williams 
v.  Morris,  95  U.  S.  444,  24  L.  ed. 
360;  Purcell  v.  Miner*  (sub  nomine 
Coleman),  4  Wall.  (U.  S.)  513,  18 
L.  ed.  435. 

-*  Thornton  v.  Heirs  of  Henry,  2 
Scam.  (111.)  218;  Fitzsimmons  v. 
Allen,  39  111.  440;  Tibbs  v.  Barker,  1 
Blackf.  (Ind.)  58;  Denlar  v.  Hile, 
123  Ind.  68,  24  N.  E.  170;  Mills  v. 
McCaustland,  105  Iowa  187,  74  N. 
W.  930;  Green  v.  Jones,  76  Maine 
563;  Bechtel  v.  Cone,  52  Md.  698; 
Kent  Furniture  Mfg.  Co.  v.  Long,  HI 
Mich.  383,  69  S.  W.  657 ;  Pike  v.  Pike, 
121  Mich.  170.  80  N.  W.  5,  80  Am. 
St.  488;  Pawlak  v.  Granowski,  54 
Minn.  130,  55  N.  W.  831;  Carnev  v. 
Carney,  95  Mo.  353,  8  S.  W.  729; 
Hanlon  v.  Wilson,  10  Nebr.  138,  4 
N.  W.  1031;  Malins  v.  Brown,  4  N. 
Y.  403;  Dunckel  v.  Dunckel,  141  N. 
Y.  427,  7>6  N.  E.  405;  Jamison  v. 
Dimock,  95  Pa.  St.  52.  But  see  Brad- 
ley V.  Owsley,  74  Texas  69,  11  S.  W. 
1052;  Brown  v.  Sutton,  129  U.  S. 
238,  32  L.  ed.  664,  9  Sup.  Ct.  273; 
Townsend  v.  Vanderwerker,  160  U. 
S.  171,  40  L.  ed.  383,  16  Sup.  Ct.  258; 
Frede  v.  Pflugradt,  85  Wis.  119,  55 
N.  W.  159. 


513                   STATUTE  OF  FRAUDS.  §  1 272 

valuable  and  permanent  improvements"'*  on  the  faith  of  the  con- 
tract,^" a  court  of  equity  will  decree  specific  performance  of  the 
contract. 

§  1272.  Insufficient  performance — Possession. — The  mere 
continuance  of  a  former  possession,  which  is  referable  to  some 
other  origin  or  authority,  is  not,  however,  sufficient  to  take  the 
case  without  the  operation  of  the  statute,^^  as  where  the  vendee 

was  already  in  possession  as  a  cotenant,^"  or  as  a  tenant^^  or 

*»Moulton  V.   Harris,   94  Cal.   420,  60  Iowa  750,   14  N.  W.  205;  Harts- 

29  Pac.  706;  Blunt  v.  Tomlin,  27  111.  horn  v.  Smart,  67  Kans.  543,  12>  Pac. 

93;  Morrison  v.  Herrick,  130  111.  631,  IZ;  Barnes  v.  Boston  &c.  R.  Co.,  130 

22   N.   E.   537;    Moreland   v.    Lemas-  :\Iass.  388;  Emmel  v.  Hayes,  102  Mo. 

ters,   4   Blackf.    (Ind.)    383;    Starkey  186,  14  S.  W.  209,  11  L.  R.  A.  Z22>,  22 

V.    Starkey,    136  Ind.    349,    36    N.    E.  Am.    St.    769;    Lamme   v.   Dodson,   4 

287;   Edwards  v.   Fry,  9  Kans.  417;  Mont.  560,  2  Pac.  298 ;  Peters  v.  Dick- 

Burnell    v.    Bradbury,   69   Kans.   444,  inson.    67    N.    H.    389,    Z2    Atl.    154; 

77   Pac.  85;      Woodbury  v.   Gardner,  Campbell  v.   Campbell,   11   N.  J.    Eq. 

n   Maine  68;   Potter  v.   Jacobs,   111  268;  Cooley  v.  Lobdell,  153  N.  Y.  596, 

Mass.  Z2 ;  Haves  v.  Railroad  Co.,  108  47  N.  E.  783 ;  Myers  v.  Byerly,  45  Pa. 

Mo.   544,   18   S.   W.    1115;    Bigler   v.  St.  368,  84  Am.   Dec.   497;    Poag  v. 

Baker,  40  Nebr.  325,  58  N.  W.  1026,  Sandifer,  5   Rich.   Eq.    (S.   C.)    170; 

24   L.   R.   A.  255 ;    Stillings   v.    Still-  Charles  v.  Byrd,  29  S.  Car.  544,  8  S. 

ings,  67  N.  H.  584.  42  Atl.  271 ;  Fee  E.  1 ;  Ducie  v.  Ford,  138  U.  S.  587,  34 

V.  Sharkey,  59  N.  J.  Eq.  284,  44  Atl.  L.  ed.  1091,  11  Sup.  Ct.  417;  Winslow 

673,  affd.  60  N.  J.  Eq.  446,  45  Atl.  109;  v.    Baltimore   &c.    R.   Co.,    188   U.    S. 

Veeder  v.  Horstmann,  83  N.  Y.  S.  99,  646,  47  L.  ed.  635;  Pence  v.  Life,  104 

85  App.  Div.  (X.  Y.)   154;  Schuey  v.  Va.  518,  52  S.  E.  257.     See  also,  note 

Schaeffer,    130    Pa.    St.    16,    18    Atl.  in  3  L.  R.  A.  (N.  S.)  808. 

544;     Townsend     v.     Vanderwerker,  ^'Haines  v.  IMcGloyne,  44  Ark.  79; 

160  U.  S.  171,  40  L.  cd.  383,  16  Sup.  Wilmer  v.  Farris,  40  Iowa  309;  Peck- 

Ct.  258;  Wall  v.   Minneapolis  &c.  R.  ham  v.  Balch,  49  Mich.  179,  13  N.  W. 

Co..  86  Wis.  48,  56  N.  W.  367.  506;    Roberts    v.    Templeton    (Ore.) 

""Wood    V.    Thornly,    58    111.    464;  80  Pac.  481,  3  L.  R.  A.   (\.  S.)  790; 

Padfield  v.  Padfield,  92  111.  198 ;  Pick-  Workman  v.  Guthrie,  29  Pa.  St.  495, 

erell  v.   Morss.  97   111.  220;   Shovers  72  Am.  Dec.  654;    Spencer's  Appeal, 

V.    Warrick,    152   111.    355.    38    N.    E.  80  Pa.  St.  317 ;  Hill  v.  ^levers,  43  Pa. 

792;  Wright  v.  Raftree,  181   111.  464,  St.    170;   Munk  v.   Weidner,   9   Tex. 

54   X.   E.  998;   Mournin   v.   Trainor,  Civ.  App.  491.  29  S.  W.  409. 

63  Minn.  230,  65   X.  W.  444;   Tuni-  "In  re  Brady's  Case,  15  Week.  Rep. 

son  V.    Bradford,  49  N.   J.    Eq.   210,  753;  Abbott  v.  The  76  Land  &  Wa- 

22  Atl.   1073 :   Cooley  v.  Lobdell,   153  ten  Co.,  101  Cal.  567.  36  Pac.  1 ;  Sho- 

N.  Y.  596,  47  N.  E.  783;  Plunkett  v.  vers  v.  Warrick,  152  111.  355,  38  X.  E. 

Brvant,  101  Va.  814,  45  S.  E.  742.  792;  Clark  v.  Clark,  122  111.  388,  13 

"Moore   v.    Gordon,   44   .Xrk.   334;  N.  E.  553;   Koch  v.  Xational  Union 

Lake  Erie  &c.  R.  Co.  v.  Michigan  &c.  Bldg.   Assn.,    137    111.   497,   27   X.    E. 

R.  Co..  86  Fed.  840;  Padfield  v.  Pad-  530;  Barrett  v.  Geisinger,  148  111.  98. 

field,  92  111.  198;  Johns  v.  Johns,  67  35  N.  E.  354;  Pickercll  v.  Morss,  97 

Ind.    440;    Felton    v.    Smith,   84    Ind.  111.     220     (possession     under     a    life 

485:  Swales  v.  Jackson,  126  Ind.  282.  lease)  ;  Johnston  v.  Glancy,  4  Blackf. 

26   X.    E.  62;    Green  v.    Groves,    109  (Ind.)    94.   28  Am.   Dec.   45;    Swales 

Ind.  519,    10   X.   E.   401;    Carlisle   v.  v.    Jackson.    126   Ind.   2^2,  26   X.   E. 

Brennan,  67  Ind.  12;  Johns  v.  Johns,  62;   Mahana  v.   Blunt,  20  Iowa   142; 

67  Tnd.  440;  Higgs  v.  Louisa  County,  Hutton  v.   Doxsee,   116  Iowa  13,   89 

Z7> — CoNTR.\cTS,  Vol.  2 


§    12/3 


CONTRACTS. 


514 


lessee.^*  This  same  rule  applies  to  possession  taken  under  a  siib- 
eequent  arrangement."'^  But  the  fact  that  one  who  claims  under 
an  oral  agreement  was  in  possession  prior  to  such  alleged  con- 
tract, and  continued  in  possession  without  interruption,  and  has 
made  lasting  and  valuable  improvements  upon  the  premises  pur- 
suant to  and  in  part  performance  of  the  oral  agreement,  may  be 
resorted  to  as  evidence  showing,  or  tending  to  show,  that  his  pos- 
session after  he  became  entitled  thereto  under  the  oral  agreement 
is  held  under  that  agreement.^" 

§  1273.  Taking  possession — English  doctrine. — The  mere 
taking  possession  in  pursuance  of  the  oral  contract  is  held  not  of 
itself  sufficient  to  warrant  a  decree  for  specific  performance.^^  A 
contrary  doctrine  obtains  in  England^^  and  Canada,  to  the  effect 


N.  W.  79;  Allen  v.  Bemis,  120  Iowa 
172,  94  N.  W.  560 ;  O'Brien  v.  Foulke, 
69  Kans.  475,  11  Pac.  103;  Billings- 
lea  V.  Ward,  ZZ  Md.  48;  Messmore 
V.  Cunningham,  78  Mich.  623,  44  N. 
W.  145;  Bigler  v.  Baker,  40  Nebr. 
325,  58  N.  W.  1026,  24  L.  R.  A.  255 ; 
Lewis  V.  North,  62  Nebr.  552,  87  N. 
W.  312;  Shields  v.  Horbach,  49  Nebr. 
262,  68  N.  W.  524;  Cole  v.  Potts,  10 
N.  J.  Eq.  67 ;  Greenlee  v.  Greenlee, 
22  Pa.  St.  225;  Williams  v.  Morris, 
95  U.  S.  444,  24  L.  ed.  360. 

"'Linn  V.  McLean,  85  Ala.  250,  4 
So.  m ;  Osborn  v.  Phelps,  19  Conn. 
63,  48  Am.  Dec.  133;  Koch  v.  Na- 
tional Union  BIdg.  Assn.,  137  111.  497, 
27  N.  E.  530;  Rosenthal  v.  Freebur- 
ger,  26  Md.  75 ;  Spalding  v.  Conzel- 
man,  30  Mo.  177;  Schneider  v.  Cur- 
ran,  19  Ohio  C.  C.  224;  Armstrong 
V.  Kattenhorn,  11  Ohio  265;  Craw- 
ford V.  Wick,  18  Ohio  St.  190,  98 
Am.  Dec.  103 ;  Jones  v.  Peterman, 
3  Serg.  &  R.  (Pa.)  543,  8  Am.  Dec. 
672. 

"^Von  Trotha  v.  Bamberger,  15 
Colo.  1,  24  Pac.  883;  Willey  v.  Day, 
51  Pa.  St.  51,  88  Am.  Dec.  562. 

'« Morrison  v.  Herrick,  130  111.  631, 
22  N.  E.  537.  See  also,  Moore  v. 
Gordon,  44  Ark.  334;  Tate's  Admr. 
V.  Jones'  Exr.,  16  Fla.  216;  Pfiffner 
V.  Stillwater  &c.  R.  Co.,  23  Minn. 
343 ;  Aurand  v.  Wilt,  9  Pa.  St.  54. 

''Carroll  v.  Powell,  48  Ala.  298; 
Heflin  v.  Milton,  69  Ala.  354;  Man- 


ning V.  Pippen,  95  Ala.  537,  11  So. 
56;  Bright  v.  Bright,  41  111.  97;  Geer 
V.  Goudy,  174  111.  514,  51  N.  E.  623; 
Glass  V.  Hulbert,  102  Mass.  24,  3  Am. 
Rep.  418;  Miller  v.  Ball,  64  N.  Y. 
292;  Ogsbury  v.  Ogsbury,  115  N.  Y. 
290,  22  N.  E.  219;  Galbreath  v.  Gal- 
breath,  5  Watts  (Pa.)  146;  Douganv. 
Blocher,  24  Pa.  St.  28;  Ballard  v. 
Ward,  89  Pa.  St.  358.  See,  however, 
in  connection  with  the  foregoing 
Pennsylvania  cases,  Pugh  v.  Good,  3 
Watts  &  S.  (Pa.)  56,  Zl  Am.  Dec. 
534;  Reed  v.  Reed,  12  Pa.  St.  117; 
Ann  Berta  Lodge  v.  Leverton,  42 
Tex.  18;  Alabama  Code,  1896,  §  2152. 
See  also,  Updike  v.  Armstrong,  4  111. 
564;  Holmes  v.  Holmes,  44  111.  168; 
Ferbrache  v.  Ferbrache,  110  III.  210; 
Wright  v.  Raftree,  181  111.  464,  54 
N.  E.  998;  Cochran  v.  Ward,  5  Ind. 
App.  89,  29  N.  E.  795,  31  N.  E.  581, 
51  Am.  St.  229;  Weed  v.  Terry,  2 
Dougl.  (Mich.)  344,  45  Am.  Dec.  257; 
Curtis  v.  Abbe,  39  Mich.  441;  Wis- 
consin &c.  R.  Co.  V.  McKenna,  139 
Mich.  43,  102  N.  W.  281 ;  Allen's  Es- 
tate, 1  Watts  &  S.  (Pa.)  383;  Brad- 
ley v.  Owsley,  74  Tex.  69,  11  S.  W. 
1052;  Montgomery  v.  Carlton,  56 
Tex.  361 ;  Purcell  v.  Coleman,  6  D.  C. 
59,  affd.  4  Wall.  (U.  S.)  513,  18  L. 
ed.  435. 

^*  Morphett  v.  Jones,  1  Swanst.  172 ; 
Butcher  v.  Stapely,  1  Vern.  ZdZ  ;  Clerk 
V.  Wright,  1  Atk.  12  ;  Pain  v.  Coombs, 
1    DeG.    &   J.    34;    Wilson    v.    West 


515 


STATUTE  OF  FRAUDS. 


§  1274 


that  taking  possession  is  sufficient  part  performance  to  satisfy  the 
statute.^^  And  the  English  doctrine  is  favored  by  a  number  of 
decisions  in  this  country.*" 

§  1274.  Insufficient  performance — Payment  of  purchase- 
price — Exchange  of  lands. — The  mere  payment  of  tlie  pur- 
chase-price is  not  of  itself  sufficient  to  warrant  a  decree  for  spe- 
cific performance.*^  "The  payment  of  money  is  an  equivocal  act, 
not  (in  itself),  until  the  connection  is  established  by  parol  testi- 
mony, indicative  of  a  contract  concerning  land."*"  However,  a 
parol  contract  for  the  exchange  of  land  which  is  executed  by  the 


Hartlepool  R.  Co.,  2  DeG.  J.  &  S. 
475;  Ungley  v.  Ungley,  L.  R.  4  Ch. 
Div.  72  \  Mortal  v.  Lyons,  8  Ir.  Ch. 
Rep.   112. 

"Bodwell  V.  McNiven,  5  Ont.  L. 
Rep.  m ;  Cameron  v.  Spiking,  25 
Grant  Ch.  116;  Crane  v.  Rapple,  22 
Ont.  519,  20  Ont.  App.  291. 

*'Keatts  V.  Rector,  1  Ark.  391; 
Blakeney  v.  Ferguson,  8  Ark.  272; 
AlcXeill  V.  Jones,  21  Ark.  277;  Ar- 
guello  V.  Edinger,  10  Cal.  150;  Cal- 
anchini  v.  Barnstetter,  84  Cal.  249, 
24  Pac.  149;  Eaton  v.  Whitaker,  18 
Conn.  222,  44  Am.  Dec.  586 ;  Andrew 
V.  Babcock,  63  Conn.  109,  26  Atl. 
715;  Arnold  v.  Stephenson,  79  Ind. 
126;  Felton  v.  Smith,  84  Ind.  485; 
Robinson  v.  Thrailkill,  110  Ind.  117, 
10  N.  E.  647;  Mowrey  v.  Davis,  12 
Ind.  App.  681,  40  N.  E.  1108;  Mahana 
V.  Blunt,  20  Iowa  142 ;  Anderson  v. 
Simpson,  21  Iowa  399;  Edwards  v. 
Fry,  9  Kans.  417;  Baldwin  v.  Bald- 
win, 73  Kans.  39,  84  Pac.  568,  4  L. 
R.  A.  (N.  S.)  957;  Bresna- 
han  V.  Bresnahan,  71  Minn.  1, 
72,  N.  W.  515;  Young  v.  Mont- 
gomery, 28  Mo.  604;  Wharton  v. 
Stoutenburgh,  35  N.  J.  Eq.  266; 
More  V.  Beasley,  3  Ohio  294 ;  Flinn 
V.  Manning,  13  Ohio  Dec.  446,  1  Cin. 
Sup.  Ct.  (Ohio)  110;  Anderson  v. 
Chick,  Bail.  Eq.  (S.  Car.)  118; 
Smith  V.  Smith,  1  Rich.  Eq.  (S.  Car.) 
130;  Conev  v.  Timmons,  16  S.  Car. 
378;  Jomsiand  v.  Wallace,  39  Wash. 
487,  81  Pac.  1094.  The  English  rule 
is  statutory  in  Iowa,  except  as  to 
leases.  Iowa  Code,  1897,  §§  4625, 
4626. 


*"  Robinson  v.  Driver,  132  Ala.  169, 
31  So.  495 ;  Forrester  v.  Flores,  64 
Cal.  24,  28  Pac.  107 ;  Temple  v.  John- 
son, 71  111.  13;  Gorham  v.  Dodge, 
122  111.  528,  14  X.  E.  44;  Pond  v. 
Sheean,  132  111.  312,  23  N.  E.  1018; 
Dicken  v.  McKinlay,  163  111.  318,  45 
N.  E.  134,  54  Am.  St.  471;  Carlisle 
V.  Brennan,  67  Ind.  12;  Green  v. 
Groves,  109  Ind.  519,  10  X.  E.  401; 
Goddard  v.  Donaha,  42  Kans.  754,  22 
Pac.  708;  Glass  v.  Hulbert,  102 
Mass.  24,  3  Am.  Rep.  418;  Blodgett 
V.  Hildreth,  103  Alass.  484;  Peck- 
ham  v.  Balch,  49  Mich.  181,  13  N. 
W.  506;  Kellv  v.  Kelly,  54  Mich.  30, 
19  N.  E.  580;  Grindling  v.  Revhl, 
149  Mich.  641,  113  X.  W.  290,  15  L. 
R.  A.  (N.  S.)  466;  Townsend  v. 
Fenton,  30  Minn.  528,  16  X.  W.  421 ; 
Lvdick  V.  Holland,  83  Mo.  703; 
Baker  v.  Wiswell,  17  Nebr.  52,  22  N. 
W.  Ill;  Peters  v.  Dickinson,  67  N. 
H.  389,  32  Atl.  154;  Brown  v.  Brown, 
2)Z  N.  J.  Eq.  650 ;  Cooper  v.  Colson, 
66  X.  J.  Eq.  328,  58  Atl.  2>Z7.  105  Am. 
St.  660;  Cooley  v.  Lobdell,  153  N. 
Y.  596,  47  N.  E.  783;  Crabill  v. 
Marsh,  38  Ohio  St.  331;  Kling  v. 
Bordner,  65  Ohio  St.  86,  61  X.  E. 
148;  Parker  v.  Wells.  6  Whart.  (Pa.) 
153;  Gangwer  v.  Fry.  17  Pa.  491,  55 
Am.  Dec.  578;  Purcell  v.  Coleman, 
4  Wall.  (U.  S.)  513,  18  L.  ed.  435; 
Biern  v.  Rav,  49  W.  Va.  129.  38  S. 
E.  530;  Harney  v.  Burhans,  91  Wis. 
348,  64  N.  W.  1031.  Contra  under 
Iowa  statute.  Querv  v.  Liston,  92 
Iowa    288.   60    N.    W.    524. 

*°Maddison  v.  Alderson,  8  App. 
Gas.  475. 


^  12/5 


CONTRACTS. 


516 


parties  putting  each  other  in  possession  pursuant  to  the  temis  of 
the  agreement  is  thereby  taken  out  of  the  operation  of  the  statute. 
The  mutual  exchange  is  equivalent  to  both  delivery  of  possession 
and  payment. ^^  This  is  especially  true  when  to  permit  a  rescission 
would  be  inequitable.** 

§  1275.  Additional  illustrations  of  the  rule. — A  parol  gift 
of  land  will  be  upheld,  and  the  agreement  to  convey  enforced, 
when  the  donee  has  taken  possession  and,  on  the  faith  of  the  gift, 
has  made  permanent  and  valuable  improvements  thereon,*^  with 
his  own  money.*®  The  doctrine  that  when  there  has  been  such 
part  performance  of  an  oral  contract  as  to  take  the  same  out  of 
the  operation  of  the  statute  of  frauds,  specific  performance  there- 
of may  be  enforced,  applies  to  parol  agreements  for  a  lease  of  real 
estate  exceeding  three  years. *^  The  mere  taking  possession,  in 
the  absence  of  the  erection  of  valuable  and  permanent  improve- 
ments, or  the  performance  of  services  or  some  other  circum- 


^'McLure  v.  Tennille,  89  Ala.  572, 
8  So.  60;  Kimbrough  v.  Nelms,  104 
Ala.  554,  16  So.  619;  Savage  v.  Lee, 
101  Ind.  514;  Baldwin  v.  Thompson, 
15  Iowa  504;  Beebe  v.  Dowd,  22 
Barb.  (N.  Y.)  255;  Brown  v. 
Bailey,  159  Pa.  121,  28  Atl.  245; 
Wilkinson  v.  Wilkinson,  1  Des. 
Eq.  (S.  Car.)  201.  See  also, 
Goodlett  V.  Hansen,  66  Ala.  151; 
Moss  V.  Culver,  64  Pa.  St.  414,  3 
Am.  Rep.  601.  Note  in  Ann.  Cas. 
1912A.  308.  See,  however,  Connor 
V.  Tippett,  57  Miss.  594;  Barnes  v. 
Teague,  54  N.  Car.  277,  62  Am.  Dec. 
200. 

**  Johnston  v.  Johnston,  6  Watts 
(Pa.)  370;  Jermyn  v.  McClure,  195 
Pa.  St.  245,  45  Atl.  938. 

*^Lobdell  V.  Lobdell,  36  N.  Y.  327, 
4  Abb.  Prac.  (N.  S.)  (N.  Y.)  56,  33 
How.  Prac.  (N.  Y.)  347;  Freeman 
V.  Freeman,  43  N.  Y.  34,  3  Am.  Rep. 
657;  Young  v.  Overbaugh,  145  N.  Y. 
158,  39  N.  E.  712;  Syler  v.  Eckhart, 
1  Binn.  (Pa.  St.)  378;  Young  v. 
Glendenning,  6  Watts  (Pa.  St.)  509, 
31  Am.  Dec.  492;  Christy  v.  Barn- 
hart,  14  Pa.  St.  260,  52  Am.  Dec.  538; 
Sower's  Admr.  v.  Weaver,  84  Pa. 
St.  262. 

**Burlingame  v.   Rowland,  77   Cal. 


315,  19  Pac.  526,  1  L.  R.  A.  829; 
Kurtz  v.  Hibner,  55  111.  514,  8  Am. 
Rep.  665;  Irwin  v.  Duke,  114  111. 
302,  1  N.  E.  913;  Fouts  v.  Roof.  171 
111.  568,  50  N.  E.  653;  Dunn  v.  Berk- 
shire, 175  111.  243,  51  N.  E.  770;  San- 
ford  V.  Davis,  181  111.  570,  54  N.  E. 
977;  Geer  v.  Goudy,  174  111.  514,  51 
N.  E.  623 ;  Horner  v.  McConnell,  158 
Ind.  280,  63  N.  E.  472;  Peters  v. 
Jones,  35  Iowa  512;  Gilmore  v.  As- 
bury,  64  Kans.  383,  67  Pac.  864;Har- 
desty  V.  Richardson,  44  Md.  617,  22 
Am.  Rep.  57;  Briggs  v.  Briggs,  113 
Mich.  371,  71  N.  W.  632;  Hubbard  v. 
Hubbard,  140  Mo.  300,  41  S.  W.  749; 
Story  V.  Black,  5  Mont.  26,  1  Pac. 
1,  51  Am.  Rep.  37;  Wylie  v. 
Charlton,  43  Nebr.  840,  62  N. 
W.  220;  Seavey  v.  Drake,  62  N. 
H.  393;  Young  v.  Young,  45  N.  J. 
Eq.  27,  16  Atl.  921;  Scott  v.  Lewis, 
40  Ore.  37,  66  Pac.  299;  Cauble  v. 
Worsham,  96  Tex.  86,  70  S.  W.  737, 
97  Am.  St.  871;  Neale  v.  Neale,  9 
Wall.  (U.  S.)  1,  19  L.  ed.  590;  Mack- 
all  V.  Mackall,  135  U.  S.  167,  10  Sup. 
Ct.  705. 

"  St.  Joseph  &c.  Co.  V.  Globe  Tis- 
sue-Paper  Co.,  156  Ind.  665,  59  N. 
E.  995. 


517  STATUTE  OF  FRAUDS.  §  1 275 

stance  such  as  will  show  that  a  refusal  to  enforce  the  contract 
would  work  an  injustice  and  fraud  on  the  promisee,  is  not  suffi- 
cient ground  for  granting  specific  performance  of  a  parol  gift  or 
contract  to  convey  real  property.*® 

The  complete  performance  of  the  contract  by  one  contracting 
party  forecloses  his  adversary  from  interposing  the  statute  of 
frauds  as  a  defense."  So,  equally,  a  contract  for  the  transfer 
of  an  interest  in  land,  in  consideration  of  legal  services  rendered 
in  settlement  of  an  estate,  and  the  signing  of  a  bond,  is  taken 
out  of  the  statute  by  the  performance  of  the  consideration  by 
the  attorney;  all  that  remained  to  be  done  being  the  formal 
order  of  court  approving  the  settlement. '^^  And  where  the  plain- 
tiff bought  land  from  the  purchaser  at  a  sale  made  under  order 
of  court,  and  paid  part  of  the  price,  and  a  later  order  recited 
the  sale  and  the  transfer  to  plaintiff,  and  directed  that  a  deed 
be  made  to  plaintiff,  but  no  such  deed  was  ever  made,  and 
thereafter  plaintiff,  who  had  taken  possession,  orally  agreed  to 
transfer  the  land  to  defendant,  provided  defendant  would  pay 
plaintiff's  debts,  including  the  balance  of  the  price  of  such  land, 
and  defendant  thereafter,  without  plaintiff's  knowledge,  procured 
a  deed  of  the  land  from  the  court,  it  was  held  in  a  suit  to  compel 
a  conveyance  to  plaintiff,  that  he  had  an  equitable  title,  and  that 
the  sale  to  such  purchaser  and  the  transfer  to  plaintiff,  with 
the  order  of  court  directing  a  deed  to  be  made  to  him  took  the 
case  out  of  the  statute  of  frauds.^^  Where  the  owner  of  land 
had  a  contract  written  out  for  the  sale  of  certain  land  to  plaintiff, 

"Price   V.   Lloyd,    31   Utah   86,   86  gett's   Admr.    v.    Cason's  Admr.,  26 

Pac.  767,  8  L.  R.  A.  (N.  S.)  870  and  Mo.    221;    Self    v.    Cordell,    45    Mo. 

note.    For  a  statement  of  the  reasons  345 ;   McConnell  v.   Brayner,  63  Mo. 

for  the  rule  see,  Poorman  v.  Kilgore,  461 ;   De  Hierapolis  v.   Reilly,  60  N. 

26    Pa.    St.   365,    67    Am.    Dec.    425;  Y.   S.  417,  affd.   168  X.  Y.  585.   See 

Miller  v.  Lorentz,  39  W.  Va.  160.  19  also,    Moore    v.    Chicago    &c.    Co.,    7 

S.    E.    391.      See    also.    Forward    v.  Kans.  App.  242,  53  Pac.  775;  Maupin 

Armstead.  12  Ala.   124,  46  Am.  Dec.  v.  Chicago  &c.  R.  Co..   171   Mo.   187, 

246;    Evans   v.    Battle.    19   Ala.   398;  71  S.  W.  334;  Alexander  v.  McDan- 

Pinckard   v.    Pinckard.   23   Ala.   649;  iel.    56    S.    Car.   252,    34    S.    E.    405. 

Conn  V.  Prewitt,  48  Ala.  636;  Thomp-  Compare   with    Sevmour  v.   Warren, 

son  V.  Ray,  92  Ga.  285,  18  S.  E.  59;  86  App.  Div.   (N.  Y.)   403,  83  N.  Y. 

Murphv  V.   Stell,  43  Tex.   123;  West  S.  871. 

V.  Webster.   39  Tex.   Civ.   App.  272,  ^Mitchell   v.    Colby,  95   Iowa  202, 

87  S.  W.  196.  63  N.  W.  769. 

•»  Blanton   v.    Knox,    3    Mo.    342 ;  "  Howard  v.  Howard,  96  Ky.  445, 

Pitcher  V.  Wilson,  5   Mo.  46;   Sug-  29  S.  W.  285. 


§    1276  CONTRACTS.  518 

but  it  was  not  signed  by  either,  and  several  months  after  the 
owner  died,  having  made  a  will  in  which  he  expressed  the  desire 
that  the  land  might  be  sold  to  plaintiff  "according  to  the  under- 
standing" between  them,  in  an  action  by  plaintiff  for  the  specific 
performance  of  the  contract,  it  was  held  that  the  will  did  not 
refer  to  the  unexecuted  contract  with  sufficient  certainty  to  entitle 
them  to  be  read  together  and  so  constitute  a  contract  within  the 
statute  of  frauds.^^  A  parol  partition  of  land  between  coheirs, 
carried  out  and  followed  by  actual  possession  in  severalty  of  the 
several  parcels,  has  been  held  valid  and  enforcible  notwithstand- 
ing the  statute  of  frauds,  on  the  ground  of  part  performance, 
when  the  partition  is  equitable,  and  the  parties  acted  understand- 
ingly.^^  Part  performance  of  an  oral  lease  by  the  parties  may 
take  it  out  of  the  statute.^* 

§  1276.  Performance  of  services. — It  is  true  generally  that 
where  the  consideration  for  a  contract  to  devise  realty  is,  in 
whole  or  part,  the  performance  of  work  and  services,  the  per- 
formance of  such  services  will  not,  of  themselves,  entitle  one  to 
a  decree  of  specific  performance  when  the  value  of  the  services 
so  rendered  may  be  estimated  and  their  value  liquidated  in  money 
so  as  measurably  to  make  the  vendee  whole  on  rescinding  the 
contract.^^  But  where  the  services  rendered  are  of  such  a  pecu- 
liar character  that  it  is  impossible  to  estimate  their  value  and 
the  vendee  cannot  be  placed  in  statu  quo,  a  court  of  equity  may 
interpose  its  authority  and  compel  specific  performance  in  order 
to  prevent  the  perpetration  of  a  fraud.^^     It  has  also  been  said  in 

"' Darling  v.  Gumming,  92  Va.  521,  R.  A.   (N.  S.)   466;   Conlon  v.  Mis- 

23  S.  E.  880.  sion  of  Immaculate  Virgin,  39  Misc. 

■"Welchel  V.     Thompson,     39     Ga.  (N.  Y.)  215,  79  N.  Y.  S.  406;  Cooper 

559,  99  Am.  Dec.  470;  Tomlin  v.  Hil-  v.  Golson,  66  N.  J.  Eq.  328,  58  Atl. 

yard,  43  111.  300,  92  Am.  Dec.  118n;  32,7,  105  Am.    St.    660;     Ludwig    v. 

McMahan  v.   McMahan,   13   Pa.   St  Buengart,  48  App.  Div.  (N.  Y.)  613, 

376,  53  Am.  Dec.  481 ;  Ehert  v.  Wood,  63  N.  Y.   S.  91 ;   Braun  v.  Ochs,  77 

1   Bin.   (Pa.)   216,  2  Am.  Dec.  436;  App.  Div.    (N.  Y.)  20,  79  N.  Y.  S. 

Ayres  v.  Jack,  7  Utah  249,  26  Pac.  100. 

300;    Whittemore  v.   Cope,    11    Utah  '^Franklin  v.  Tuckerman,  68  Iowa 

344,   40    Pac.    256.  572,  27  N.  W.  759 ;  Svanburg  v.  Fos- 

"  Deeds  v.   Stephens,  8  Idaho  514,  seen,  75   Minn.  350,  78  N.  W.  4,  43 

69  Pac.  534.  L.  R.  A.  427,  74  Am.  St.  490;  Teske 

"  Collins  V.   Collins,   138  Iowa  470,  v.  Dittberner,  70  Nebr.  544,  98  N.  W. 

114  N.  W.  1069;  Grindling  v.  Reyhl,  57,      113      Am.      St.     802;      Rhodes 

149  Mich.  641,  113  N.  W.  290,  15  L.  v.     Rhodes,     3     Sandf.      Ch.      (N. 


519 


STATUTE    OF    FRAUDS. 


§    1277 


relation  to  contracts  of  this  character  that  after  a  parol  contract 
to  sell  land  has  been  completely  performed  on  both  sides  as  to 
everything  except  conveyance,  "the  matter  has  advanced  beyond 
the  stage  of  contract;  and  the  equities  which  arise  out  of  the 
stage  which  it  has  reached  cannot  be  administered  unless  the 
contract  is  regarded. "^"^ 

§  1277.  Agreements  not  to  be  performed  within  a  year — 
Scope  of  the  clause. — The  clause  of  the  statute  in  regard  to 
agreements  "not  to  be  performed  within  the  space  of  one  year 
from  the  making  thereof"  means  to  include  any  agreement  which, 
by  a  fair  and  reasonable  interpretation  of  the  terms  used  by  the 
parties,  and  in  view  of  all  the  circumstances  existing  at  the  time, 
does  not  admit  of  its  performance,  according  to  its  language  and 
intention,  within  a  year  from  the  time  of  its  making.^^  If  an 
agreement  is  capable  of  being  performed  within  a  year  from  the 
making  thereof, — in  other  words,  if  the  obligation  of  the  contract 


Y.)  279;  Hall  v.  Gilman,  11  App. 
Div.  (N.  Y.)  458,  79  N.  Y.  S. 
303,  ZZ  Civ.  Proc.  R.  283 ;  Lothrop  v. 
Marble,  12  S.  Dak.  511,  81  N.  W. 
885,  76  Am.  St.  626;  Brinton  v.  Van 
Cott,  8  Utah  480,  Z7>  Pac.  218;  Bry- 
son  V.  McShane,  48  W.  Va.  126,  35 
S.  E.  848,  49  L.  R.  A.  527.  See  also, 
Loffus  V.  Maw,  32  L.  J.  Ch.  49,  8 
Jur.  N.  S.  607.  See,  however,  Rod- 
man V.  Rodman,  112  Wis.  378,  88  N. 
W.  218;  Maddison  v.  Alderson,  L. 
R.  8  App.  Cas.  467.  The  court  said 
further :  "The  choice  is  between  un- 
doing what  has  been  done  (which  is 
not  always  possible,  or,  if  possible, 
just)  and  completing  what  has  been 
left  undone.  The  line  may  not  al- 
ways be  capable  of  being  so  clearly 
drawn  as  in  the  case  which  I  have 
supposed ;  but  it  is  not  arbitrary  or 
unreasonable  to  hold  that,  when  the 
statute  says  that  no  action  is  to  be 
brought  to  charge  any  person  upon  a 
contract  concerning  land,  it  has  in 
view  the  simple  case  in  which  he  is 
charged  upon  the  contract  only,  and 
not  that  in  which  there  are  equities 
resulting  from  res  gestae  subsequent 
to  and  arising  out  of  the  contract. 
So  long  as  the  connection  of  those 
res  gestae  with  the  alleged  contract 
does    not    depend    upon    mere    parol 


testimony,  but  is  reasonably  to  be 
inferred  from  res  gestae  themselves, 
justice  seems  to  require  some  such 
limitation  of  the  scope  of  the  statute, 
which  might  otherwise  interpose  an 
obstacle  even  to  the  rectification  of 
material  errors,  however  clearly 
proved,  in  an  executed  conveyance, 
founded  upon  an  unsigned  agree- 
ment." 

■^a  Maddison  v.  Alderson,  L.  R.  8 
App.  Cas.  467.  See  also  15  L.  R.  A. 
(N.  S.)  466  note. 

"Heflin  v.  Milton,  69  Ala.  354; 
Warner  v.  Texas  &c.  R.  Co.,  54  Fed. 
922,  4  C.  C.  A.  673;  Wooldridge  v. 
Stern,  42  Fed.  311,  9  L.  R.  A.  129; 
Haynes  v.  Mason,  30  111.  App.  85; 
Rardin  v.  Baldwin,  9  Kans.  App.  516, 
60  Pac.  1097  (holding  a  three-year 
verbal  lease  void  under  the  Kansas 
statute)  ;  Miller  v.  Goodrich  Bros. 
Banking  Co.,  53  Mo.  App.  430; 
Schultz  V.  Tatum,  35  Mo.  App.  136; 
Revnolds  v.  First  Nat.  Bank,  62 
Nebr.  747,  87  X.  W.  912;  Lockwood 
V.  Barnes,  3  Plill  (N.  Y.)  128.  38  Am. 
Dec.  620;  Jordan  v.  Greensboro  Fur- 
nace Co..  126  N.  Car.  143.  35  S.  E. 
247,  78  Am.  St.  644  (holding  that 
the  North  Carolina  statute  affects 
the  contract  itself)  ;  Foote  v.  Emer- 
son, 10  Vt.  338.  Z2>  Am.  Dec.  205  ;  Par- 
kersburg    Mill    Co.   v.   Ohio   R.   Co., 


§  1^/7 


CONTRACTS. 


520 


is  not,  by  its  very  terms  or  necessary  construction,  to  endure  for 
a  longer  period  than  one  year, — the  statute  does  not  apply  al- 
though the  contract  is  not  actually  performed  until  after  that 
period,  or  is  capable  of  indefinite  continuance.^^  The  presump- 
tions are  all  in  favor  of  the  validity  of  the  contract,  and  oral 
agreements  have  been  upheld  in  numerous  instances  where  the 
parties  must  have  expected  that  they  would  not  be  performed 
within  a  year,  and  performance  within  the  year  was  not  even 
probable  on  the  ground  that  consistently  with  their  terms  they 
could  be  fully  performed  within  that  time.^°  In  order  to  bring  a 
parol  contract  within  this  clause,  it  must  either  have  been  ex- 


50  W.  Va.  94,  40  S.  E.  328.  The 
mischief  meant  to  be  prevented  was 
the  leaving  to  memory  the  terms  of 
a  contract  for  a  longer  time  than  a 
year.  The  persons  might  die  who 
were  to  prove  it,  or  they  might  lose 
their  faithful  recollection  of  the 
terms  of  it.  Boydell  v.  Drummond, 
11  East  142;  Smith  v.  Westall,  1 
Lord  Ray.  316;  Bartlett  v.  Wheeler, 
44  Barb.    (N.  Y.)    162. 

"**  Devalinger  v.  Maxwell,  4  Pen- 
new.  (Del.)  185,  54  Atl.  684;  Phoenix 
Ins.  Co.  V.  Ireland,  9  Kans.  App. 
644,  58  Pac.  1024;  Fain  v.  Turner,  96 
Ky.  634,  16  Ky.  L.  719,  29  S.  W.  628; 
Howard  v.  Burgen,  4  Dana  (Ky.) 
137;  Scribner  v.  Flagg  Mfg.  Co.,  175 
Mass.  536,  56  N.  E.  603;  Drew  v. 
Billings-Drew  Co.,  132  Mich.  65,  92 
N.  W.  774,  9  Det.  Leg.  News;  Kiene 
v.  Shaeffing,  33  Nebr.  21,  49  N.  W. 
773.  To  same  effect,  Bank  v.  Fin- 
nell,  133  Cal.  475,  65  Pac.  976;  Hin- 
kle  V.  Fisher,  104  Ind.  84,  3  N.  E.  624 ; 
Saunders  v.  Kastenbine's  Exrs.,  6  B. 
Mon.  (Ky.)  17;  Farwell  v.  Tillson,  76 
Maine  227;  Somerby  v.  Buntin,  118 
Mass.  279,  19  Am.  Rep.  459;  War- 
ren &c.  Co.  V.  Holbrook,  118  N.  Y. 
586,  23  N.  E.  908,  16  Am.  St.  788; 
Walker  v.  Johnson.  96  U.  S.  424,  24 
L.  ed.  834;  Kimmins  v.  Oldham,  27 
W.  Va.  258.  See  the  leading  case  of 
Peter  v.  Compton,  Skinner  353,  and 
notes  in  1  Smith's  Leading  Cases 
(9  Am.  ed.)  586.  In  that  case  the 
defendant  made  an  oral  agreement 
with  the  plaintiff  that,  in  considera- 
tion of  one  guinea,  then  paid  him  by 
the  plaintiff,  he  would  pay  the  plain- 


tiff a  certain  greater  sum  upon  the 
day  of  his  marriage.  The  marriage 
did  not  happen  within  the  year,  but 
it*was  held  that  an  action  would 
lie,  although  the  contract  was  not 
reduced  to  writing,  as  there  was 
nothing  in  the  contract  which  ren- 
dered it  incapable  of  being  performed 
within  the  year. 

""Osment  v.  McElrath,  68  Cal.  466, 
9  Pac.  731,  58  Am.  Rep.  17;  Woodall 
V.  Mfg.  Co.,  9  Colo.  App.  198,  48  Pac. 
670  (contract  of  employment  for  one 
year  with  promise  of  better  pay  for 
following  year)  ;  Russell  v.  Slade,  12 
Conn.  455 ;  Wooldridge  v.  Stern,  42 
Fed.  311,  9  L.  R.  A.  129;  Wiggins  v. 
Keizer,  6  Ind.  252;  Blair  Town  Lot 
&  Land  Co.  v.  Walker,  39  Iowa  406; 
Sutphen  v.  Sutphen,  30  Kans.  510,  2 
Pac.  100;  Aiken  v.  Nogle,  47  Kans. 
96  27  Pac.  825;  Standard  Oil  Co.  v. 
Denton,  24  Ky.  L.  906,  70  S.  W.  282 
(contract  to  furnish  oil  for  five  years, 
or  so  long  as  plaintiff  remained  in 
business)  ;  Ellicott  v.  Turner  (sub 
nomine  Peterson),  4  Md.  488;  Cole 
V.  Singerly,  60  Md.  348;  Sanford  v. 
Orient  Ins.  Co.,  174  Mass.  416,  54  N. 
E.  883,  75  Am.  St.  358  (holding  life 
insurance  policy  not  within  the  stat- 
ute) ;  Wynn  v.  Followill,  98  Mo.  App. 
463,  72  S.  W.  140  (contract  for  the 
furnishing  of  "hired  help"  for  the 
purpose  of  keeping,  supporting  and 
caring  for  an  infant  for  a  period  of 
two  years  and  eight  months)  ;  Kiene 
V.  Shaeffing,  33  Nebr.  21,  49  N.  W. 
773  (indefinite  term  of  employment)  ; 
Reynolds  v.  First  Nat.  Bank,  62  Nebr. 
747,  87   N.   W.  912;   Powder   River 


521 


STATUTE  OF  FRAUDS. 


§  1278 


pressly  stipulated  by  the  parties,  or  it  must  appear  to  have  been 
understood  by  them  that  it  was  not  to  be  performed  within  a 
year,  and  this  stipulation  or  understanding  must  be  absolute  and 
certain,  and  not  depend  on  any  contingency.*" 

§  1278.  Contracts  within  the  fifth  clause — Contracts  to 
last  a  year  from  a  date  in  future — Leases. — In  those  juris- 
dictions in  which  the  statute  requires  an  agreement  to  be  in  writ- 
ing, which  "by  its  terms  is  not  to  be  performed  within  a  year 
from  the  making  thereof,"  the  year  meant  is  the  time  from  the 
making  of  the  agreement  to  the  end  of  its  performance,  and  if  by 
the  terms  of  the  contract  it  is  to  last  for  a  year  from  the  time  that 
performance  begins,  and  performance  thereof  is  to  commence  in 
futuro,  the  contract  cannot  be  performed  within  one  year  from 
the  date  on  which  it  is  made  and  is  therefore  within  the  statute.*"^ 


Live  Stock  Co.  v.  Lamb,  38  Nebr. 
339,  56  N.  W.  1019;  Gault  v.  Brown, 
48  N.  H.  183,  2  Am.  Rep.  210;  Bland- 
ing  V.  Sargent,  33  N.  H.  239,  66  Am. 
Dec.  720;  Warren  Chemical  &c.  Co. 
V.  Holbrook,  118  X.  Y.  586,  23  N.  E. 
908,  16  Am.  St.  788;  Kent  v.  Kent,  62 
N.  Y.  560,  20  Am.  Rep.  502;  Jones 
V.  Pouch,  41  Ohio  St.  146  (perform- 
ance contemplated  within  the  year, 
but  extra  time  added  for  emergen- 
cies) ;  Thomas  v.  Hammond,  47  Tex. 
42 ;  Seddon  v.  Roscnbaum,  85  Va. 
928,  9  S.  E.  326,  3  L.  R.  A.  337; 
Richmond  Union  Pass.  R.  Co.  v. 
Richmond  &c.  R.  Co.,  96  Va.  670,  32 
S.  E.  787  (contract  between  two  car- 
riers to  erect  gates  and  keep  a  watch- 
man at  a  crossing  of  their  respective 
tracks,  the  expense  to  be  borne  equal- 
ly by  the  companies).  See.  English 
and  American  Decisions  Collected,  in 
notes  to  Dovle  v.  Dixon,  97  Mass. 
208,  93  Am.  Dec.  80. 

~  Dollar  V.  Parkington,  84  Law  T. 
470;  Boydell  v.  Drummond,  11  East 
142;  Arkansas  &c.  R.  Co.  v.  Whit- 
ley, 54  Ark.  199,  15  S.  W.  465,  11  L. 
R.  A.  621n;  Hall  v.  Solomon,  61 
Conn.  476.  23  Atl.  876,  29  Am.  St. 
218;  Blackburn  v.  Mann,  85  111.  222; 
Hinkle  v.  Eisher,  104  Ind.  84,  3  N.  E. 
624;  Durham  v.  Hiatt,  127  Ind.  514. 
26  N.  E.  401 ;  Marlev  v.  Xoblett.  42 
Ind.  85;   Wilson   v.   Rav,   13  Ind.   1; 


Aiken  v.  Nogle,  47  Kans.  96,  27  Pac. 
825;  Larimer  v.  Kelley,  10  Kans.  298; 
Somerby  v.  Buntin,  118  Mass.  279, 
19  Am.  Rep.  459;  Green  v.  Pennsyl- 
vania Steel  Co.,  75  Md.  109,  23  Atl. 
139;  Reynolds  v.  First  Nat.  Bank,  62 
Nebr.  747,  87  N.  W.  912;  Roberts 
V.  Summit  Park  Co.,  72  Hun  (N. 
Y.)  458;  Warren  Chemical  &c.  Co. 
V.  Holbrook,  118  X.  Y.  586,  23  N.  E. 
908,  16  Am.  St.  788;  Van  Woert  v. 
Albany  &c.  R.  Co.,  67  N.  Y.  538; 
Hodges  V.  Richmond  Mfg.  Co.,  9  R. 
I.  482 ;  Clark  v.  Reese,  26  Tex.  Civ. 
App.  619,  64  S.  W.  783;  Walker  v. 
Johnson,  96  U.  S.  424,  24  L.  ed.  834. 
"The  statute  of  frauds  plainly  means 
an  agreement  not  to  be  performed 
within  the  space  of  a  year,  and  ex- 
pressly and  specifically  so  agreed.  *  *  * 
It  does  not  extend  to  cases  where  the 
thing  only  may  be  performed  within 
the  year.'  Fenton  v.  Emblers,  3  Burr. 
(1762)  1278.  Justice  Miller,  in  Mc- 
Pherson  v.  Cox,  96  U.  S.  404,  24  L. 
ed.  746,  says :  "The  statute  of  frauds 
applies  only  to  contracts  which,  by 
the  terms,  are  not  to  be  performed 
within  a  year.  *  *  *  In  other 
words,  to  make  a  parol  contract  void, 
it  must  be  apparent  that  it  was  the 
understanding  of  the  parties  that  it 
was  not  to  be  performed  within  a 
vear  from  the  time  it  was  made." 
"Wickson    v.    Monarch    &c.    Mfg. 


§  1^79 


CONTRACTS. 


522 


Thus,  a  verbal  lease  for  a  period  of  one  year,  to  commence  in  the 
future,  is  generally  held  within  the  statute  in  those  jurisdictions 
in  which  the  statute  declares  unenforcible  an  oral  lease  for  a 
longer  period  than  one  year  from  the  making  thereof,**^  although 
there  is  authority  to  the  contrary."^  However,  where  the  statute 
contains  a  special  provision  which  authorizes  the  making  of  a 
verbal  lease  for  a  period  longer  than  one  year,  and  which  also 
provides  that  no  action  shall  be  brought  whereby  to  charge  any 
person  upon  any  contract  for  the  sale  of  land,  tenements  or 
hereditaments,  or  the  making  of  any  lease  thereof,  for  a  longer 
term  than  one  year  (omitting  from  the  making  thereof),  a  lease 
for  one  year  to  commence  in  futuro  will  be  upheld.^* 

§  1279.    Contracts  to  last  a  year  from  a  date  in  futuro — 
Services. — Parol  contracts  for  a  year's  service,  performance 


Co.,  128  Cal.  156,  60  Pac.  764,  49  L. 
R.  A.  141,  79  Am.  St.  36;  Cooney  v. 
Murray,  45  111.  App.  463;  HoUoway 
V.  Hampton,  4  B.  Mon.  (Ky.)  415; 
Frary  v.  Sterling,  99  Mass.  461 ;  Reyn- 
olds V.  First  Xat.  Bank,  62  Nebr. 
747,  87  N.  W.  912. 

^Bain  V.  McDonald,  111  Ala.  269, 
20  So.  11;  Higgins  v.  Gager,  65  Ark. 
604,  47  S.  W.  848;  Wickson  v.  Mon- 
arch Cycle  Mfg.  Co.,  128  Cal.  156, 
60  Pac.  764,  79  Am.  St.  36.  In  the 
above  case  it  appeared  that  the  time 
was  only  some  three  days  more  than 
a  year  after  the  contract  was  made, 
but  the  court  said,  "We  are  not  at 
liberty  to  extend  it  three  days,  nor 
any  time  beyond  the  year."  Olt  v. 
Lohnas,  19  111.  576;  Wheeler  v. 
Frankenthal,  78  111.  124;  Comstock 
V.  Ward,  22  111.  248;  Wolf  v.  Dozer, 
22  Kans.  436;  Thomas  v.  McManus 
(Ky  ),  64  S.  W.  446;  Greenwood  v. 
Strother.  91  Ky.  482,  16  S.  W. 
138;  Delano  v.  Montague,  4  Cush. 
(Mass.)  42:  Whiting  v.  Ohlert,  52 
Mich.  462,  18  N.  W.  219,  50  Am.  Rep. 
265;  Jellett  v.  Rhode,  43  Minn.  166, 
45  N.  W.  13,  7  L.  R.  A.  671 ;  Brosius 
V.  Evans.  90  Minn.  521,  97  N.  W. 
373 ;  McCroy  v.  Toney,  66  Miss.  233, 
5  So.  392,  2  L.  R.  A.  847;  Hitt  v. 
Greeser,  71  Mo.  App.  206;  Butts  v. 
Fox,  96  Mo.  App.  437,  70  S.  W.  515; 
Cook  V.  Redman,  45  Mo.  App.  397; 


White  V.  Holland,  17  Ore.  3,  3  Pac. 
573;  Whiting  v.  Pittsburgh  Opera 
House  Co.,  88  Pa.  St.  100;  Hawley 
V.  Moody,  24  Vt.  603. 

'"Sears  v.  Smith,  3  Colo.  287; 
Steininger  v.  Williams,  63  Ga.  475 ; 
Jones  V.  Marcy,  49  Iowa  188;  Young 
v.  Dake,  5  N.  Y.  463,  55  Am.  Dec. 
356;  Becar  v.  Flues,  64  N.  Y.  518; 
Ward  V.  Hasbrouck,  169  N.  Y.  407, 
62  N.  E.  434;  Hillhouse  v.  Jennings, 
60  S.  Car.  392,  38  S.  E.  596;  Hayes 
V.  Arrington,  108  Tenn.  494,  68  S.  W. 
44;  Bateman  v.  Maddox,  86  Tex.  546, 
26  S.  W.  51.  As  a  general  rule  the 
cases  which  hold  to  the  contrary 
were  decided  under  statutes  which 
required  agreements  to  be  in  writing 
if  by  their  terms  they  are  not  to  be 
performed  within  a  year,  and  do  not 
contain  the  additional  clause  "from 
the  making  thereof."  It  has  been 
held  that  the  clause,  "Providing  that 
no  action  shall  be  brought  upon  any 
agreement  not  to  be  performed  with- 
in one  year  from  the  making  thereof, 
unless  the  same,  or  some  memoran- 
dum or  note  thereof,  was  in  writing, 
has  no  application  to  contracts  con- 
veying an  interest  in  land."  St.  Jo- 
seph Hydraulic  Co.  v.  Globe  Tissue 
Paper  Co.,  156  Ind.  665,  59  N.  E. 
995. 

**  Hayes  v.  Arrington,  108  Tenn. 
494,  68  S.  W.  44. 


523 


STATUTE    OF    FRAUDS. 


§    1279 


to  begin  at  some  future  time,  have  been  declared  within  the 
statute.**^  Thus  a  contract  entered  into  the  latter  part  of  Octo- 
ber for  a  year's  services  to  commence  the  following  Monday, 
November  first,  has  been  held  within  the  statute."®  The  same  has 
been  held  true  of  a  verbal  agreement  by  the  lessor  of  a  hotel  not 
to  sell  cigars  in  the  hotel  office  during  a  year  from  a  future  time.®^ 
But  if  the  contract  must  be  performed  within  a  year  from 
the  making  thereof  owing  to  the  nature  of  the  subject-matter, 
the  contract  is  not  within  the  statute  although  the  date  set  for 
performance  exceeds  a  period  of  one  year.*^"*     However,  a  con- 


«*  Britain  v.  Rossiter,  11  Q.  B.  D. 
123 ;  Strong  v.  Bent,  31  N.  S.  1  ; 
Scoggin  V.  Blackwell,  36  Ala.  351; 
Meyer  v.  Roberts,  46  Ark.  80,  55  Am. 
Rep.  567 ;  Comes  v.  Lamson,  16  Conn. 
264;  Fish  v.  Glass,  54  111.  App.  655; 
Haynes  v.  Mason,  30  111.  App.  85; 
Caldwell  v.  Huntington,  132  Ind.  9?., 
31  X.  E.  566;  Shumate  v.  Farlow, 
125  Ind.  359,  25  N.  E.  432,  9  L.  R. 
A.  657;  Clark  County  v.  Howell,  21 
Ind.  App.  495,  52  N.  E.  769;  Cald- 
well V.  Huntington,  132  Ind.  92,  31 
N.  E.  566;  Kleeman  v.  Collins,  9 
Bush  (Ky.)  460;  Smith  v.  Theobald, 
86  Ky.  141,  5  S.  W.  394;  Hern  v. 
Hadbourne,  65  Maine  302;  King  v. 
Welcome,  5  Gray  (Mass.)  41;  Davis 
V.  Michigan  &c.  Ins.  Co.,  127  Mich. 
559,  86  N.  W.  1021 ;  Lally  v.  Crook- 
stron  Lumber  Co.,  85  Minn.  257,  88 
N.  \V.  846 ;  Jellett  v.  Rhode,  43  Minn. 
166,  45  N.  VV.  13,  7  L.  R.  A.  671; 
Sharp  V.  Rhiel,  55  Mo.  97;  Biest  v. 
Versteeg  Shoe  Co.,  97  Mo.  App.  137, 
70  S.  \V.  1081;  Kansas  Citv  &c.  R. 
Co.  V.  Conlee,  43  Xebr.  121,  61  X.  W. 
Ill;  McElrov  v.  Ludlum,  32  X.  J. 
Eq.  828;  Oddy  v.  James,  48  X.  Y. 
685;  Hartwell  v.  Young,  67  Hun  (X. 
Y.)  472,  51  X.  Y.  St.  333,  22  X.  Y. 
S.  486;  Sutcliffe  v.  Atlantic  Mills, 
13  R.  I.  480;  43  Am.  Rep.  39;  Hill- 
house  V.  Jennings,  60  S.  Car.  373,  38 
S.  E.  599;  Mendelsohn  v.  Banov,  57 
S.  Car.  147,  35  S.  E.  499;  Duckett  v. 
Pool,  33  S.  Car.  238,  11  S.  E.  689; 
Moodv  V.  Jones  (Tex.  Civ.  App.),  37 
S.  W".  379;  Hincklev  v.  Southgate, 
11  Vt.  428;  Parkersburg  Mill  Co.  v. 
Ohio  Railroad  Co.,  50  W.  Va.  94, 
40  S.  E.  328;  Lee  v.  Hill,  87  Va.  497, 


12  S.  E.  1052,  24  Am.  St.  666;  Dra- 
heim  v.  Evison,  112  Wis.  27,  87  X. 
W.  795. 

*"  Chase  v.  Hinkley,  126  Wis.  75, 
105  X.  W.  230,  2  L.  R.  A.  (X.  S.) 
738,  110  Am.  St.  896.  "Any  excess 
of  the  year  period,  however  short, 
is  sufficient  to  satisfy  the  statute. 
That  was  stated  very  forcibly  by 
Lord  EUenborough  in  Bracegirdle  v. 
Heald,  1  B.  &  Aid.  722,  the  reason 
therefor  being  expressed  in  these 
words:  'If  we  were  to  hold  that  a 
case  which  extended  one  minute  be- 
yond the  time  pointed  out  by  the 
statute,  did  not  fall  within  its  prohi- 
bition, I  do  not  see  where  we  should 
stop ;  for  in  point  of  reason,  an  ex- 
cess of  twenty  years  will  equally  not 
be  within  the  act.  Such  difficulties 
rather  turn  upon  the  policy,  than 
upon  the  construction  of  the  stat- 
ute.' "  Chase  v.  Hinklev,  126  Wis. 
75,  105  X.  W.  230,  2  L.  R.  A.  (X.  S.) 
738n,  110  Am.  St.  896.  In  order  that 
the  foregoing  cases  will  not  conflict 
with  those  holding  that  contracts 
which  may  be  discharged  by  the 
death  of  either  party  are  not  within 
the  statute  it  would  seem  that  the 
parties  must  expressly  contemplate 
that  the  contract  is  to  continue  in 
force  for  one  year  from  the  date 
when  the  performance  begins.  Chase 
V.  Hinklev,  126  Wis.  75,  105  X.  W. 
230,  2  L.  R.  A.  (X.  S.)  738n,  110  Am. 
St.  896. 

^  Higgins  V.  Gager,  65  Ark.  604, 
47  S.  W.  848. 

°'  Brown  v.  Throop,  59  Conn.  596, 
22  Atl.  436,  13  L.  R.  A.  646. 


§    I28o  CONTRACTS.  524 

tract  for  a  year's  employment  to  begin  in  futuro  is  not  taken 
out  of  the  statute  by  part  performance,""  or  by  the  fact  that  the 
contract  may  be  terminated  at  the  option  of  either  party  before 
the  expiration  of  the  year,"  or  that  wages  are  to  be  paid  by  the 
month. ^^  But  a  contract  of  hiring  made  in  June,  performance  to 
commence  in  August,  "for  thirty-five  or  forty  weeks,  perhaps  a 
year"  has  been  held  not  within  the  statute  since  no  obligation  was 
created  to  continue  the  employment  for  a  year.^^ 

§  1280.  Method  of  computing  time. — Contracts  to  run  for 
one  year  from  the  day  following  their  execution  are  not  within 
the  statute  for  the  reason  that  in  the  computation  of  time  frac- 
tions of  days  are  excluded,  and  for  the  further  reason  that  the 
first  day  is  excluded  and  the  last  day  included.^^  If,  however, 
when  judged  by  this  standard,  the  time  from  the  making  of  an 
agreement  to  the  end  of  its  performance  exceeds  a  year  ever  so 
little,  the  statute  of  frauds  applies.^*  Thus  intervals  of  two,^^ 
three,^°  seven"  and  twelve^"*  days,  or  of  one,^°  two^°  or  three*^ 
months,  between  the  time  when  the  contract  is  made  and  the  time 
that  performance  begins,  have  been  held  to  bring  the  contract 
within  the  provisions  of  the  act  when  it  was  to  run  a  year  from 
the  time  that  performance  began.®^     However,  if  the  parties 

°*  Kleeman  &  Co.  V.  Collins,  9  Bush  268;   Levison   v.   Stix,    10   Daly    (N. 

(Ky.)  460;  Hillhouse  v.  Jennings,  60  Y.)    229. 

S.   Car.  372,,  38  S.  E.   599;   Draheim  "  Wickson  v.  Monarch  Cycle  Mfg. 

V.  Evison,  112  Wis.  27,  87  N.  W.  795;  Co.,   128  Cal.  156,  60  Pac.  764,  49  L. 

Chase  v.  Hinkley,  126  Wis.  75,  105  N.  R.  A.  141,  79  Am.  St.  36. 

W.  230,  2  L.  R.  A.   (N.  S.)  738,  110  "Reynolds  v.  First  Nat.  Bank,  62 

Am.   St.  896.  Nebr.  747,  87  N.  W.  912. 

"  Biest   V.   Versteeg    Shoe    Co.,   97  '*  Wickson  v.  Monarch  Cycle  Mfg. 

Mo.  App.  137,  70  S.  W.  1081.  Co.,  128  Cal.  156,  60  Pac.  764,  49  L. 

"  Kansas  City  W.  &  N.  W.  &c.  R.  R.  A.  141,  79  Am.  St.  36. 

Co.  V.  Conlee,  43  Nebr.  121,  61  N.  W.  "  Davis   v.   Michigan  &c.   Ins.   Co., 

Ill;    Moody    v.    Jones     (Tex.    Civ.  127  Mich.  559,  86  N.  W.  1021;   Sut- 

App.),  2,7   S.   W.   379.  cliffe  v.  Atlantic  Mills,  13  R.  I.  480, 

^"Haines  v.  Thompson,  2  Misc.  (N.  43  Am.  Rep.  39. 

Y.)  385,  21  N.  Y.  S.  991.  ''*  Kansas  City  &c.   R.  Co.  v.   Con- 

"  Britain  v.   Rossiter,  L.  R.   11   Q.  lee,  43  Nebr.  121,  61  N.  W.  111. 

B.  Div.  123;  Dickson  v.  Frisbee,  52  ™  Draheim  v.  Evison,  112  Wis.  27, 
Ala.  165,  23  Am.  Rep.  565,  citing  and  87  N.  W.  795. 

following  Cawthorne  v.   Cordrey,   13        **  Lee's  Admr.  v.   Hill,  87  Va.  497, 

C.  B.   (N.  S.)   406.  Contra,   McElroy     12  S.  E.  1052,  24  Am.  St.  666. 

V.  Ludlum,  32  N.  J.  Eq.  828;  Billing-  *^  Mendelsohn  v.  Banov,  57  S.  Car. 

ton  V.   Cahill,  51   Hun    (N.   Y.)    132,  147,  35  S.  E.  499. 

20  N.  Y.   St.  615,  4  N.  Y.   S.  660;  ''See    also,    Aiken    v.    Nogle,    47 

Blanck   v.   Littell,   9   Daly    (N.   Y.)  Kans.  96,  27   Pac.  825;   Sanborn  v. 


525  STATUTE  OF  FRAUDS.  §  1 28 1 

contemplate  that  performance  shall  begin  at  once,  the  contract  is 
not  within  the  statute,  although  actual  performance  is  postponed 
until  the  happening  of  an  uncertain  or  contingent  event.^'  A 
contract  for  a  year's  employment  which  provided  that  if  after  a 
month's  trial  the  parties  are  mutually  satisfied  has  been  held  not 
within  the  statute  since  under  such  a  contract  performance  may 
begin  on  the  date  on  which  the  contract  was  executed  and  last 
for  one  year/*  And  where  the  contract  was  in  the  first  instance 
to  have  been  performed  within  one  year,  it  has  been  held  that 
its  extension  for  six  months  longer  prior  to  the  expiration 
of  the  year  first  agreed  upon  did  not  bring  the  contract  within 
the  statute  when,  after  the  extension,  time  ceased  to  be  of  the 
essence  of  the  contract.*®  It  has  been  held,  moreover,  that  the 
parties  may  stipulate  that  the  contract  shall  not  become  binding 
on  the  parties  until  a  time  subsequent  to  that  at  which  perform- 
ance begins.'^*'  Thus  a  contract  by  which  the  promoters  of  a 
corporation  hire  a  person  to  serve  the  corporation  for  a  period 
of  one  year  after  its  organization  is  not  within  the  statute 
of  frauds  because  so  far  as  the  corporation  is  concerned  it  could 
not  come  into  existence  until  after  its  organization.'*^  An  oral 
contract  to  make  a  lease  is  not  within  the  statute  since  it  may  be 
executed  within  a  year.®^ 

§  1281.  Contracts  which  cannot  be  performed  within  a 
year. — It  is  of  course  true  that  the  statute  applies  wdien  from 
the  language  used  it  must  necessarily  be  understood  that  the  con- 
tract was  not  to  be  performed  within  a  year  or  it  was  the  dis- 
tinct intention  of  the  parties  that  it  should  not  be  performed 
in   that  time.^^      Thus  this   clause   of   the   statute   is   applica- 

Fireman's  Ins.  Co.,  16  Gray  (Mass.)  *' Blake   v.   Voight,    134   N.   Y.  69, 

448,  n  Am.  Dec.  419.  31  N.  E.  256,  30  Am.  St.  622. 

"  Baltimore   Breweries   Co.  v.   Cal-  ^  McArthur  v.  Times  Printing  Co., 

lahan,  82  Md.    106,   Z}>  Atl.  460.     In  48  Minn.  319,  51  X.  W.  216,  31  Am. 

the  above  case  the  time  at  which  the  St.  653. 

performance   was   to  commence   was  *'  Shakespeare  v.  Alba,  Id  Ala.  351. 

contingent  upon  the  employe  obtain-  **  Rogers  v.  Brightman,  10  Wis.  55. 

ing   a   release    from   his    contract    of  See  also,  Swift  v.  Swift,  46  Cal.  266; 

employment  with  a  former  employer.  Russell  v.  Slade,  12  Conn.  455 ;  Saun- 

"  A.  B.  Smith  Co.  v.  Jones,  75  Miss,  ders  v.  Kastenbine's  Exrs.,  6  B.  Mon. 

325,  22  So.  802.  (Ky.)   17;  Hinckley  v.  Southgate,  11 

°Ward   V.    Matthews,    11    Cal.    13,  Vt.  428. 
14  Pac.  604. 


§    1282  CONTRACTS.  526 

ble  to  promises  to  marry  after  the  expiration  of  one  year.^" 
The  same  has  been  held  true  of  a  verbal  promise  to  pay 
money  after  the  expiration  of  a  year,"^  Agreements  to  pay  a 
specified  sum  of  money  in  three  annual  instalments^^  and  to  pay 
at  intervals  less  than  a  year,  the  whole  period  of  payment  to  ex- 
tend beyond  the  year,**^  and  an  agreement  to  pay  money  after  the 
lapse  of  a  year  for  land  to  be  presently  conveyed/*  have  been  held 
within  the  statute.  A  verbal  agreement  to  sell  crops  for  two  suc- 
cessive years  has  been  held  within  the  statute,^^  and  the  same  has 
been  held  true  of  a  contract  to  clear  land  within  three  years,  and 
seed  down  one  acre  the  first,  one  acre  the  second,  and  one  acre  the 
third  year.^^  A  verbal  contract  by  a  firm  to  pay  rent,  to  become 
due  under  a  prior  lease  to  one  of  a  subsequent  firm,  has  been  de- 
clared within  the  statute  where  the  rent  fell  due  more  than  a  year 
after  the  agreement  and  when  the  firm  had  been  dissolved.®^  An 
oral  contract  to  lease  real  estate  from  July  i,  1903,  to  January, 
1906,  has  been  declared  within  the  provisions  of  the  Oregon 
statute.^^  It  has  also  been  said  that  if  a  contract  to  maintain  a 
factory  was  not  reduced  to  writing  an  action  could  not  be  main- 
tained on  the  promise,  since  it  was  not  capable  of  being  performed 
within  a  year.®^ 

§  1282.  Cases  not  within  the  fifth  clause — Contracts  which 
may  be  performed  within  a  year. — An  oral  agreement  which 
may  be  fully  performed  within  a  year  is  not  within  the  statute, 
even  though  it  is  doubtful,  or  expected  by  the  parties  that  it  will 
not  be  performed  within  a  year.^  It  follows  that  the  statute 
does  not  apply  to  a  contract  which  may  be  fully  performed  within 

'"Ullman  v.    Meyer,    10   Fed.   241;  ^  Marcy  v.  Marcy,  9  Allen  (Mass.) 

Barge  V.  Haslam,  63  Nebr.  296,  88  N.  8;    Kellogg   v.    Clark,   23    Hun.    (N. 

W.    516,    affirmed    on    rehearing,    65  Y.)   393. 

Nebr.  656,  91   N.   W.  528;    Derby  v.  "' Atwood's  Admr.  v.  Fox,  30  Mo. 

Phelps,    2    N.    H.    515;    Nichols    v.  499. 

Weaver,  7  Kans.  373.     Contra,  Lewis  ''"  Herrin  v.  Butters,  20  Maine   119. 

V.  Tapman,  90  Md.  294,  45  Alt.  459,  "  Durand  v.  Curtis,  57  N.  Y.  7. 

47  L.  R.  A.  385 ;  Brick  v.  Ganner,  36  "'  Dechenbach  v.  Rima,  45  Ore.  500, 

Hun   (N.  Y.)  52.  77  Pac.  391,  78  Pac.  666. 

'"Wilson  V.  Ray,  13  Ind.  1.  '"Akins  v.  Hicks,  109  Mo.  App.  95, 

''Berry    v.    Grady,     1     Mete.   553;  83  S.  W.  75. 

Parks  V.  Francis,  50  Vt.  626,  28  Am.  ^  Heflin    v.    Milton,    69    Ala.    354 ; 

Rep.  517.  Fraser  v.  Gates,  118  111.  99,  1   N.  E. 

**Hill  V.  Hooper,  1   Gray   (Mass.)  817;    Blair    Town    Lot    &c.    Co.    v. 

131.  Walker,    39    Iowa    406;    Scribner   v. 


527 


STATUTE  OF  FRAUDS. 


1283 


the  year,  where  no  time  for  performance  is  designated,"  where  the 
agreement  is  to  be  performed  before  a  certain  date  more  than  a 
year  in  the  future,^  or  where  a  period  of  time  greater  than  a  year 
is  given  "within"  which  to  perform.'  If  the  contract  is  one 
which  might  have  been  performed  within  a  year,  and  which  the 
plaintiff,  at  his  option,  might  have  reqnired  the  defendant  to  per- 
form within  a  year,  it  is  not  within  the  statute.'^ 

§  1283.  Performance  within  a  year  possible — Rule  illus- 
trated and  considered  further. — Thus,  a  promise  to  marry 
within  a  period  of  more  than  a  year,*^  as  within  three  or  four 
years,''  or  at  the  end  of  a  voyage  expected  to  last  about  eighteen 
months,*  has  been  held  not  within  the  statute."  The  same  is  true 
of  a  promise  to  marry  generally.'*'     Neither  does  the  statute 


Flags  Mfg.  Co.,  175  Mass.  536,  56  N. 
E.  603;  Smalley  v.  Mitchell,  110  Mich 
650,  68  N.  W.  978;  DeLand  v.  Hall, 
134  Mich.  381,  96  N.  W.  449;  Martin 
V.  Batchelder,  69  N.  H.  360,  41  Atl. 
83;  Kent  v.  Kent,  62  N.  Y.  560,  20 
Am.  Rep.  502 ;  Warren  Chemical  Co. 
V.  Holbrook,  118  N.  Y.  586,  23  N.  E. 
908,  16  Am.  St.  788;  Ward  v.  Has- 
brouck,  169  N.  Y.  407,  62  N.  E.  434; 
Blakcney  v.  Goode,  30  Ohio  St.  350; 
Thomas  v.  Armstrong,  86  Va.  323, 
10  S.  E.  6,  5  L.  R.  A.  529;  Treat  v. 
Hiles,  68  Wis.  344.  32  N.  W.  517,  60 
Am.  Rep.  858.  See  also,  Johnston 
V.  Bowcrsock,  62  Kans.  148,  61  Pac. 
740;  Blake  v.  Voight,  134  N.  Y.  69, 
31  N.  E.  256,  30  Am.  St.  622. 

-Raynor  v.  Drew.  72  Cal.  307,  13 
Pac.  866 ;  Dougherty  v.  Rosenberg, 
62  Cal.  32 ;  Russell  v.  Slade,  12  Conn. 
455 ;  Haussman  v.  Burnham,  59 
Conn.  117.  22  Atl.  1065.  21  Am.  St. 
74;  Vocke  v.  Peters,  58  111.  App.  338; 
Hinkle  v.  Fisher,  104  Ind.  84,  3  N.  E. 
624;  Durham  v.  Hiatt,  127  Ind.  514, 
26  N.  E.  401 ;  Sprague  v.  Benson,  101 
Iowa  678.  70  N.  W.  731 ;  Larimer  v. 
Kellev,  10  Kans.  298;  Atchison  &c. 
R.  Co.  V.  English,  38  Kans.  110,  16 
Pac.  82 ;  Fain  v.  Turner,  96  Ky.  634, 
16  Ky.  L.  719,  29  S.  W.  628;  Duffy 
V.  Patten,  74  Maine  396;  Ncal  v. 
Parker,  98  Md.  254,  57  Atl.  213;  Som- 
erbv  V.  Buntin,  118  Mass.  279,  19  \m. 
Rep.  459 ;  Drew  v.  Wiswall,  183  Mass. 
554,  67  N.  E.  666;  Durgin  v.  Smith, 


115  Mich.  239,  73  N.  W.  361;  Thom- 
as V.  South  Haven  &c.  R.  Co.,  138 
.Mich.  50.  100  N.  W.  1009;  Kiene  v. 
Shaeffing,  33  Nebr.  21,  49  N.  W.  773; 
Esty  V.  Aldrich,  46  N.  H.  127;  Jack- 
son V.  Higgins,  70  N.  H.  637,  49  Atl. 
574 ;  VanWoert  v.  Albany  &c.  R.  Co., 
67  N.  Y.  538;  McGinnis  v.  Cook,  57 
Vt.  36,  52  Am.  Rep.  115;  White  v. 
Hanchett,  21  Wis.  415. 

^  Brown  v.  Throop,  59  Conn.  596, 
22  Atl.  436,  13  L.  R.  A.  646;  First 
Presbyterian  Church  v.  Swanson,  100 
111.  App.  39;  Powder  River  Live 
Stock  Co.  V.  Lamb,  38  Xebr.  339,  56 
N.  W.  1019;  Plimpton  v.  Curtiss,  15 
Wend.  (N.  Y.)  336;  Walker  v.  John- 
son. 96  U.  S.  424.  24  L.  ed.  834. 

niarlev  v.  Xoblett,  42  Ind.  85; 
Kent  v.  Kent,  18  Pick.  (Mass.)  569; 
Jones  V.  Pouch,  41  Ohio  St.  146. 

''Walker  v.  Johnson,  96  U.  S.  424, 
24  L.  ed.  834;  McPherson  v.  Cox,  96 
U.  S.  404,  24  L.  ed.  746. 

'Paris  v.  Strong,  51  Ind.  339;  Law- 
rence V.  Cooke.  56  Maine  187,  96  Am. 
Dec.  443 ;  Lewis  v.  Tapman,  90  Md. 
294.  45  Atl.  459.  47  L.  R.  A.  385. 

'  Paris  V.  Strong,  51  Ind.  339. 

*  Clark  V.  Pcndieton,  20  Conn.  495. 

'  See  also.  Brick  v.  Ganner,  36  Hun 
(X.  Y.)   52. 

"  Clark  v.  Pcndieton.  20  Conn.  495 ; 
Blackburn  v.  Mann,  85  111.  222;  Mc- 
Conahcv  v.  Griffev.  S2  Iowa  564,  48 
X.  W.  983;  McElree  v.  Wolfersber- 
ger,  59  Kans.  105,  52  Pac.  69. 


§  1284 


CONTRACTS. 


528 


apply  to  a  contract  to  refrain  from  a  certain  course  of  action  for 
an  indefinite  period,"  as  never  to  practice  medicine  in  a  certain 
town,*-  or  not  to  engage  in  the  livery  business  in  a  certain  town 
indefinitely.^^  Contracts  of  employment  indefinite  as  to  time  are 
not  within  the  statute.^*  This  applies  to  contracts  by  which  an 
agent  is  employed  to  serve  for  an  indefinite  time.^'' 

§  1284.    Performance  depending  upon  a  contingency. — A 

contract  which  may  or  may  not  be  performed  within  a  year,  de- 
pending upon  the  happening  of  a  contingency,  is  not  within  the 
statute.^"  For  example,  a  promise  to  pay  when  money  is  received 
from  a  third  person,"  or  an  agreement  to  take  stock  in  a  company 
and  pay  for  it  when  the  company  is  incorporated,^®  or  to  pay 
money  when  a  certain  statute  is  passed  and  becomes  effective,^* 
or  not  to  engage  in  a  certain  business,-"  or  a  contract  of  employ- 
ment to  continue  so  long  as  the  employer  should  be  engaged  in  a 


"Worthy  v,  jcnes,  11  Gray 
(Mass.)  168,  71  Am.  Dec.  696;  Fos- 
ter V.  McO'Blenis,  18  Mo.  88;  Per- 
kins V.  Clay,  54  N.  H.  518. 

"Blanding  v.  Sargent.  33  N.  H. 
239,  66  Am.  Dec.  720;  Blanchard  v. 
Weeks,  34  Vt.  589. 

"Lvon  V.  King,  11  Mete.  (Mass.) 
411,  45  Am.  Dec.  219.  See  also,  Welz 
V.  Rhodius,  87  Ind.  1,  44  Am.  Rep. 
747  (agreement  not  to  engage  in  a 
rival  hotel  business)  ;  Richardson  v. 
Pierce,  7  R.  I.  330  (contract  to  re- 
linquish the  trade  and  business  of  a 
butcher  in  and  around  the  village  of 
K).  See  also,  Dovle  v.  Dixon,  97 
Mass.  208,  93  Am.  Dec.  80. 

"Mathews  v.  Wallace,  104  Mo. 
App.  96,  78  S.  W.  296;  Jagau  v. 
Goetz,  11  Misc.  (N.  Y.)  380.  65  N. 
Y.  St.  292,  32  N.  Y.  S.  144 ;  Roches- 
ter Folding  Box  Co.  v.  Browne,  55 
App.  Div.  (N.  Y.)  444,  66  N.  Y.  S. 
867,  affd.  179  N.  Y.  542,  71  N.  E. 
1139. 

^'Kutz  V.  Fleisher,  67  Cal.  93,  7 
Pac.  195;  Niagara  &;c.  Ins.  Co.  v. 
Greene,  77  Ind.  590  (employed  for  a 
reasonable  time)  ;  Hill  v.  Jamieson, 
16  Ind;  125.  79  Am.  Dec.  414;  Scrib- 
ner  v.  Flagg  Mfg.  Co.,  175  Mass.  536, 
56  X.  E.  603;  Bartlett  v.  Mystic 
River  Corp.,  151  Mass.  433,  24  N.  E. 


780;  Royal  Remedy  &c.  Co.  v.  Greg- 
ory  Grocer  Co.,  90  Mo.  App.  53; 
Jackson  v.  Higgins,  70  N.  H.  637,  49 
Atl.  574;  Burlingame  v.  Mandeville, 
44  Hun  (N.  Y.)  623,  7  N.  Y.  S.  858, 
affd.  113  N.  Y.  633,  20  N.  E.  878; 
Sterling  Organ  Co.  v.  House,  25  W. 
Va.  64.  _ 

"  Indiana  &  I.  C.  R.  Co.  v.  Scearce, 
23  Ind.  223;  Straughan  v.  Indianap- 
olis &  St.  Louis  R.  Co.,  38  Ind.  185; 
Bullock  v.  Falmouth  &  C.  H.  Tpk. 
Co.,  85  Ky.  184,  8  Ky.  L.  835,  3  S.  W. 
129 ;_  Cole  v.  Singerly,  60  Md.  348; 
Baltimore  Breweries  Co.  v.  Callahan, 
82  Md.  106,  33  Atl.  460;  Blake  v. 
Cole,  22  Pick.  (Mass.)  97;  Barton 
v.  Gray,  57  Mich.  622,  24  N.  W.  638; 
Weatherford  &c.  R.  Co.  v.  Wood,  88 
Tex.  191,  30  S.  W.  859,  28  L.  R.  A. 
526;  Walker  v.  Johnson,  96  U.  S. 
424,  24  L.  ed.  834;  Sherman  v.  Cham- 
plain  Transp.  Co.,  31  Vt.  162;  Seddon 
V.  Rosenbaum,  85  Va.  928,  9  S.  K 
326,  3  L.  R.  A.  337n. 

"Artcher  v.  Zeh,  5  Hill  (N.  Y.) 
200 ;  Hedges  v.  Strong,  3  Ore.  18. 

"Bullock  v.  Fairmouth  &  C.  H. 
Tpk.  Co.,  85  Ky.  184,  8  Ky.  L.  835, 
3  S.  W.  129. 

"Maxwell  v.  DeValinger,  2 
Pennew.  (Del.)  504,  47  Atl.  381. 

="*  Dickey  v.  Dickinson,  105  Ky.  748, 


529 


STATUTE  OF  FRAUDS. 


§  1284 


particular  business, ^^  docs  not  come  within  this  clause  of  the  stat- 
ute. The  same  has  been  held  true  of  a  contract  of  employment 
which  was  to  continue  so  long  as  the  employe  faithfully  and  hon- 
estly worked  for  his  employer,"  or  which  was  to  continue  as  long 
as  satisfactory  services  were  rendered,-^  or  as  long  as  the  parties 
were  mutually  satisfied,-^  or  as  long  as  the  employe  might  wish  to 
continue  in  the  employment."'  Contracts  to  pay  money  upon  the 
sale  of  certain  real  estate/"  such  as  the  payment  of  commissions,"^ 
or  the  division  of  profits,^®  upon  the  closing  out  of  a  transaction 
or  business,-'-*  or  that  one  is  to  retain  property  until  he  is  reim- 
bursed the  cost  of  an  improvement  from  the  profits,®"  or  until  the 
net  profits  amount  to  fifty  thousand  dollars,®^  have  been  held  not 
within  the  statute  because  they  may  be  performed  within  a  year, 
dependent  upon  the  happening  of  a  contingent  event.  A  con- 
tract to  marry  upon  the  restoration  of  health®^  has  been  held  not 
within  the  statute.  This  has  also  been  held  true  of  a  contract  to 
labor  for  five  years,  or  so  long  as  A  shall  be  agent  for  the  com- 
pany.®^   Farming  contracts  and  the  like  which  may  be  performed 


20  Ky.  L.  1559;  49  S.  W.  761,  88  Am. 
St.  2,2,7. 

"'  Yellow  Poplar  Lumber  Co.  v. 
Rule,  106  Ky.  455,  20  Ky.  L.  2006,  50 
S.  VV.  685;  Carter  White  Lead  Co. 
V.  Kinlin,  47  Nebr.  409.  66  N.  W.  536. 
See  also,  Glenn  v.  Rudd,  3  Ont.  L. 
Rep.  422 ;  Roberts  v.  Rockbottom  Co., 
7  Mete.  (Mass.)  46. 

="  Louisville  &  N.  R.  Co.  v.  Offutt, 
99  Kv.  427,  18  Kv.  L.  303,  36  S.  W. 
181,  59  Am.  St.  467. 

"Sax  V.  Detroit  &c.  R.  Co.,  125 
Mich.  252,  84  N.  \V.  314,  84  Am.  St. 
572;  Harrington  v.  Kansas  City  Ca- 
ble R.  Co.,  60  Mo.  App.  223. 

^"Beeston  v.  CoUyer,  4  Bing.  309; 
Greene  v.  Harris,  9  R.  I.  401.  See 
also,  Brigham  &  Co.  v.  Carlisle,  78 
Ala.  243,  56  Am.  Rep.  28. 

'''Carter  White  Lead  Co.  v.  Kin- 
lin, 47  Nebr.  409,  66  N.  W.  536;  East 
Line  &c.  R.  Co.  v.  Scott.  72  Tex.  70, 
10  S.  W.  99,  13  Am.  St.  758. 

"^  Bartlett  v.  Mystic  River  Co.,  151 
Mass.  433.  24  N.  E.  780;  McPherson 
V.  Cox.  96  U.  S.  404.  24  L.  ed.  746. 

"  Bartlett  v.  Mvstic  River  Corp., 
151  Mass.  433,  24  N.  E.  780;  Scribner 
V.  Flagg  Mfg.  Co.,  175  Mass.  536,  56 

34 — Contracts,  Vol.  2 


N.  E.  603.  Citing  McGregor  v.  Mc- 
Gregor, 21  Q.  B.  Div.  424;  Peters  v. 
Westboro,  19  Pick.  (Mass.)  364,  31 
Am.  Dec.  142;  Lyon  v.  King,  11 
Mete.  (Mass.)  411.  45  Am.  Dec.  219; 
Doyle  V.  Dixon,  97  Mass.  208,  93  Am. 
Dec.  80;  Somerby  v.  Buntin,  118 
Mass.  279,  19  Am.  Rep.  459;  Carnig 
V.  Carr,  167  Mass.  544,  46  N.  E.  117, 
35  L.  R.  A.  512,  57  Am.  St.  488; 
Jackson  v.  Higgins,  70  N.  H.  637,  49 
Atl.  574. 

« Durham  v.  Hiatt,  127  Ind.  514, 
26  N.  E.  401;  Jordan  v.  Miller,  75 
Va.  442.  See  also,  Treat  v.  Hiles. 
68  Wis.  344,  32  N.  W.  517,  60  Am.; 
Rep.  858  (contract  to  buy  and  oper- 
ate a  quarry  and  to  divide  resulting 
profits).  ' 

'» Osment  v.  AIcElrath,  68  Cal.  466. 
9  Pac.  731,  58  Am.  Rep.  17. 

"  Dailev  V.  Cain,  11  Ky.  L.  936,  13 
S.  W.  424. 

*"  Hodges  V.  Richmond  Mfg.  Co.,  9 
R.  I.  482. 

"McConahey  v.  Griffey,  82  Iowa 
564.  48  N.  W.  983. 

•^  Roberts  v.  Rockbottom  Co.,  7 
Mete.  (Mass.)  46. 


§  1285 


CONTRACTS. 


530 


within  a  year,  such  as  the  filling  of  an  ice  house,^*  or  to  put  in  and 
han-est  a  crop  of  vvheat'°  or  tobacco,^*'  or  to  pay  the  reasonable 
value  of  smnmer  fallowing,"  have  been  held  not  within  the  stat- 
ute. 

§  1285.  Contracts  not  within  the  fifth  clause — Contracts 
to  continue  during  life. — A  contract  which  is  to  continue  dur- 
ing the  life  of  either  of  the  parties  thereto  does  not  come  within 
the  provision  of  the  act  as  the  person  whose  life  is  involved  may 
die  within  a  year.  Thus  a  contract  by  one  to  support  another  or 
others  for  life  need  not  be  in  writing  since  death  is  a  contingency 
which  may  happen  within  a  year.^^  Contracts  to  support  one 
during  minority  or  for  a  term  of  years  are  usually  upheld  for  the 
same  reason.^^     Thus,  an  agreement  to  support  a  child  twelve 


"Brown  v.  Throop,  59  Conn.  596, 
22  Atl.  436,  13  L.  R.  A.  646. 
""Cuyler  v.  Crane,  25  Hun  (N.  Y.) 

67. 

"^Burden  v.  Lucas,  19  Ky.  L.  1581, 
44  S.  W.  86. 

"'Bank  of  Orland  v.  Finnell,  133 
Cal.  475,  65  Pac.  976. 

"*  Murphy  V.  O'Sullivan,  18  Ir.  Jur. 
(11  N.  S.)  Ill,  14  Week.  Rep.  407 
(promise  to  support  and  clothe  a 
person  during  the  remainder  of  his 
life  and  to  give  him  pasture  for  two 
sheep)  ;  Harper  v.  Harper,  57  Ind. 
547  (promise  by  grantee  of  proper- 
ty to  support  grantor  during  life)  ; 
Bailey  v.  Cain,  11  Ky.  L.  936,  13  S. 
W.  424  (contract  to  board  a  person 
for  life)  ;  Howard  v.  Burgen,  4  Dana 
(Ky.)  137  (promise  to  clothe  and 
board  a  person  during  the  life  of 
the  promisor)  ;  Bull  v.  McCrea,  8 
B.  Mon.  (Ky.)  422  (promise  to  sup- 
port a  free  woman  of  color)  ;  Whit- 
ley V.  Whitley's  Admr.,  26  Ky.  L. 
134,  80  S.  W.  825  (contract  to  sup- 
port a  widow  during  her  life)  ; 
Stowers  v.  Hollis,  83  Ky.  544  (agree- 
ment by  putative  father  to  support 
the  child  until  she  was  able  to  sup- 
port herself  or  until  its  death)  ; 
Hutchinson  v.  Hutchinson,  46  Maine 
154;  Carr  v.  McCarthy  70  Mich.  258, 
38  N.  W.  241  (contract  by  a  son 
to  support  his  parents  during  the 
remainder  of  their  natural  lives)  ; 
McCormick  v.  Drummet,  9  Nebr. 
384,  2  N.  W.  729  (agreement  to  sup- 


port owner  of  land  and  his  wife  for 
their  lives)  ;  Eiseman  v.  Schneider, 
60  N.  J.  L.  291,  11  Atl.  623  (promise 
to  support  one  for  life  in  consider- 
ation of  personal  services)  ;  McCabe 
V.  Green,  18  App.  Div.  (N.  Y.)  625, 
46  N.  Y.  S.  I2i  (agreement  to  pay 
board  of  another  during  life)  ;  Dres- 
ser V.  Dresser,  35  Barb.  (N.  Y.) 
573,  revd.,  on  another  point,  26  How. 
Pr.  (N.  Y.)  600  (agreement  to  sup- 
port a  person  during  life  in  considera- 
tion of  a  transfer  of  property)  ; 
Rhodes  v.  Rhodes,  3  Sandf.  Ch.  (N. 
Y.)  279  (contract  to  support  brother 
in  consideration  of  his  property)  ; 
Heath  v.  Heath,  31  Wis.  223  (con- 
tract between  brothers  to  support 
their  mother  during  her  life).  See 
also.  Chase  v.  Hinkley,  126  Wis.  75, 
105  N.  W.  230,  2  L.  R.  A.  (N.  S.) 
738,  110  Am.  St.  896. 

'"White  v.  Murtland,  71  111.  250, 
22  Am.  Rep.  100 ;  Wiggins  v.  Keizer, 
6  Ind.  252.  Contra,  Goodrich  v. 
Johnson,  66  Ind.  258;  Stowers  v. 
Hollis,  83  Ky.  544;  EUicott  v.  Peter- 
son (Turner,  sub  nomine),  4  Md. 
476;  Peters  v.  Westborough,  19 
Pick.  (Mass.)  364,  31  Am.  Dec.  142. 
See,  however.  Hill  v.  Hooper,  1 
Gray  (Mass.)  131.  See  also,  Wynn 
v.  Followill,  98  Mo.  App.  463,  72  S. 
W.  140  (contract  to  support  for  two 
years  and  eight  months)  ;  McKinney 
v.  McCloskey,  76  N.  Y.  594,  8  Daly 
(N.  Y.)  368;  Taylor  v.  Deseve,  81 
Tex.  246,   16  S.  W.   1008.     See  also. 


531 


STATUTE  OF  FRAUDS. 


§  1286 


years  old  until  she  should  become  eighteen  has  been  held  not 
within  the  statute,  as  the  death  of  the  child  within  the  year  would 
put  an  end  to  the  contract/"  The  same  has  been  held  true  of  a 
contract  to  educate  and  support  a  child. *^  Contracts  of  hiring 
to  continue  during  the  life  of  the  employe  are  not  considered  as 
within  the  statute  by  the  courts  of  this  country.'*-  In  England, 
however,  it  has  been  held  that  where  the  parties  contemplated  that 
the  contract  should  continue  to  be  binding,  at  least  as  against  the 
employer  during  the  life  of  the  employe,  the  circumstance  that 
the  contract  might  be  determined  within  the  year  by  the  death  or 
retirement  or  misconduct,  or  at  the  will  of  the  employe,  would 
not  prevent  the  operation  of  the  statute.*^ 


§  1286.  Contracts  to  be  performed  on  death  of  one  of  the 
parties  or  third  person. — A  contract  to  be  performed  on  the 
death  of  one  of  the  parties  or  of  a  third  person  is  not  within  the 


Souch  V.  Strawbridge,  2  C.  B.  808 
(contract  to  support  child  "so  long" 
as  the  defendant  shall  think  proper). 

"Peters  v.  Westborough,  19  Pick. 
(Mass.)  364,  31  Am.  Dec.  142.  To 
same  effect,  Wooldridge  v.  Stern, 
42  Fed.  311,  9  L.  R.  A.  129  (promise 
to  support  a  child  fifteen  years  old 
until  he  became  of  age)  ;  McLees  v. 
Hale,  10  Wend.  (N.  Y.)  426  (agree- 
ment to  support  until  child  should 
arrive  at  age  of  five  or  six  years). 
See  also.  White  v.  Murtland,  71  111. 
250,  22  Am.  Rep.  100. 

"Wiggins  V.  Keizer,  6  Ind.  252; 
Jones  V.  Comer.  25  Ky.  L.  IIZ,  76  S. 
W.  392;  Benge  v.  Hiatt's  Admr.,  82 
Ky.  666,  6  Ky.  L.  714,  56  Am.  Rep. 
912  (promise  made  by  putative 
father)  ;  Ellicott  v.  Turner  (sub 
nomine,  Peterson),  4  Md.  476.  See, 
however,  Farrington  v.  Donohoe,  1 
Ir.  R.  C.  L.  675  (agreement  to  sup- 
port a  child  then  five  years  of  age 
until  she  could  do  for  herself  held 
within  the  statute)  ;  Goodrich  v. 
Johnson,  66  Ind.  258  (contract  to 
support  child  until  majority  held 
within  the  statute)  ;  Van  Schoyck 
V.  Bacus,  9  Hun  (N.  Y.)  68;  Shute 
V.  Dorr,  5  Wend.  (N.  Y.)  204  (a 
promise  to  pay  for  the  services  of  a 


youth  sixteen  years  of  age  when  he 
became  of  age  held  to  be  within  the 
statute)  ;  Deaton  v.  Tennessee  &c. 
Coal  Co.,  12  Heisk.  (Tenn.)  650  (a 
contract  for  the  payment  of  a  speci- 
fic amount  monthly  until  the  young- 
est child  should  become  of  age  held 
within  the  statute).  See  also.  Baker 
V.  Lauterback,  68  Md.  64,  11  Atl. 
703.  In  the  case  of  Souch  v.  Straw- 
bridge,  2  C.  B.  808,  10  Jur.  357,  a 
contract  to  maintain  a  child  as  long 
as  the  defendant  pleased  was  held 
not  to  be  within  the  statute. 

*^  Revere  v.  Boston  Copper  Co.. 
15  Pick.  (Mass.)  351  (contract  of 
employment  to  continue  during  life 
of  the  plaintiff  or  during  the  exist- 
ence of  the  defendant  corporation)  ; 
Boggs  V.  Pacific  &c.  Laundry  Co., 
86  IMo.  App.  616.  See  also,  Pennsyl- 
vania Co.  v.  Dolan,  6  Ind.  App.  109, 
32  N.  E.  802;  Updike  v.  Tenbroeck, 
32  N.  J.  L.   105. 

"  Elev  V.  Positive  Government  Se- 
curity &c.  Co.,  L.  R.  1  Exch.  Div. 
20  (an  agreement  to  employ  a  solicit- 
or for  life  subject  to  removal  for 
misconduct).  See  also.  Sweet  v. 
Lee,  3  M.  &  G.  452  (an  agreement 
to  pay  an  author  an  annuity  for  life 
for  his  work  and  manuscript). 


128; 


CONTRACTS. 


532 


statute,  as  the  contingency  of  death  may  occur  within  a  year/* 
Thus  a  contract  to  pay  for  work  and  labor  performed  or  services 
rendered  payable  at  the  death  of  the  promisor  has  been  held  not 
within  the  statute.*^  Insurance  contracts  are  held  not  to  be 
within  the  statute,  since  the  event  on  which  payment  is  to  be  made 
is  uncertain  and  may  occur  within  a  year.*" 

§  1287.  Statute  of  frauds  applies  to  contracts  which  cannot 
possibly  or  reasonably  be  performed  within  a  year. — A  con- 
sideration of  the  subject  of  a  contract  may,  however,  show  just 
as  clearly  that  it  was  not  to  be  performed  within  a  year  as  if  there 
were  an  express  agreement  in  the  terms  of  the  contract  not  to  be 
performed  within  a  year.  So,  also,  a  consideration  of  the  circum- 
stances and  subject-matter  might  show  that  performance  of  it 


"Frost  V.  Tarr,  53  Ind.  390;  Rid- 
dle V.  Backus,  38  Iowa  81 ;  Sword  v. 
Keith,  31  Mich.  247;  Thompson  v. 
Gordon,  3   Strob.   L.    (S.   Car.)    196. 

"  Fenton  v.  Emblers,  3  Burr.  1278 
(promise  by  employer  to  provide  a 
servant  with  an  annuity  for  life  on 
the  death  of  the  employer)  ;  Bell  v. 
Hewitt,  24  Ind.  280  (contract  to 
leave  a  certain  sum  to  an  employe 
by  will  in  consideration  of  his  con- 
tinuing to  live  on  the  farm)  ;  Myles 
V.  Myles,  6  Bush  (Ky.)  237  (agree- 
ment to  provide  for  compensation  by 
will);  Thomas  v.  Feese,  21  Ky.  L. 
206,  51  S.  W.  150  (promise  by  hus- 
band and  wife  to  devise  all  their 
property  to  the  plaintiff  in  consider- 
ation of  services  rendered  them)  ; 
Hill  V.  Chambers,  30  Mich.  422 
(promise  by  son  to  perform  work 
and  labor  on  the  farm  and  support 
his  father  and  mother  and  receive 
their  property  at  their  death)  ;  Sword 
v.  Keith,  31  Mich.  247  (services  to  be 
paid  for  out  of  the  estate  of  the 
promisor  at  his  death)  ;  Updike  v. 
Tenbroeck,  Z2  N.  J.  L.  105  (father 
at  his  death  to  provide  for  son  in 
payment  for  services  rendered)  ; 
Thorp  V.  Stewart,  44  Hun  (N.  Y.) 
232  Cson  to  care  for  his  father  and 
mother  in  consideration  of  receiv- 
ing the  farm  owned  by  them)  ;  Kent 
v.  Kent,  62  N.  Y.  560,  20  Am.  Rep. 
502  (agreement  to  render  services, 
to  be  paid  for  after  the  employer's 
death)  ;     Quackenbush     v.     Ehle,     5 


Barb.  (N.  Y.)  469  (son  to  labor  on 
the  farm  during  his  father's  life, 
the  father  to  provide  for  the  son  by 
will)  ;  Kenyon  v.  Youlen,  53  Hun 
(N.  Y.)  591,  25  N.  Y.  St.  299,  6  N. 
Y.  S.  784  (contract  to  convey  or  de- 
vise premises  in  consideration  of 
support  of  the  promisor  during  life)  ; 
Patterson  v.  Patterson,  13  Johns. 
(N.  Y.)  379  (holding  that  an  action 
can  not  be  maintained  during  the 
promisor's  life  on  an  agreement  to 
provide  compensation  by  will,  but 
that  if  the  will  fails  to  make  such  a 
provision  then  the  action  could  be 
maintained)  ;  Thomas  v.  Armstrong, 
86  Va.  323,  10  S.  E.  6,  5  L.  R.  A. 
529  (agreement  to  leave  support  for 
housekeeper)  ;  Jilson  v.  Gilbert,  26 
Wis.  637,  7  Am.  Rep.  100  (prom- 
ise to  cancel  a  note  by  will).  See 
also,  Snyder  v.  Castor,  4  Yeates 
(Pa.)  353;  Bayliss  v.  Pricture's  Es- 
tate, 24  Wis.  651.  See  also,  cases 
cited  in  the  preceding  note. 

^'  Springfield  &c.  Ins.  Co.  v.  Dejar- 
nett,  111  Ala.  248,  19  So.  995;  How- 
ard Ins.  Co.  V.  Owens,  94  Ky.  197,  21 
S.  W.  1037,  14  Ky.  L.  881;  Matting- 
ly  V.  Springfield  Ins.  Co.,  120  Ky. 
768,  83  S.  W.  577 ;  Walker  v.  Metro- 
politan Ins.  Co.,  56  Maine  371 ;  San- 
ford  V.  Orient  Insurance  Co.,  174 
Mass.  416,  54  N.  E.  883,  75  Am.  St. 
358;  Wiebeler  v.  Milwaukee  &c.  Ins. 
Co.,  30  Minn.  464,  16  N.  W.  363; 
First  Baptist  Church  v.  Brooklyn 
Fire  Ins.  Co.,  19  N.  Y.  305,  28  N.  Y. 


533 


STATUTE  OF  FRAUDS. 


1287 


within  a  year  would  require  such  extraordinar}^  methods,  such  ex- 
traordinary appHances  or  resources,  as  could  not,  by  fair  construc- 
tion, be  regarded  as  within  the  intention  of  the  parties  at  the  time 
when  the  contract  was  made."  Thus,  contracts  for  the  cutting  and 
sawing  of  timber,  where,  when  considered  in  connection  with  the 
amount  of  timber  to  be  cut  and  the  facilities  for  doing  the  work, 
it  is  apparent  that  a  period  longer  than  one  year  will  elapse  before 
the  work  can  be  fully  performed,  have  been  held  within  the  stat- 
ute." Contracts  by  which  a  railroad  company  agrees  to  do  or 
maintain  certain  things  permanently,  such  as  an  agreement  to 
stop  cars  permanently  at  a  certain  place,"  or  to  use  plaintiff's  land 
as  a  stock  yard  for  unloading  all  eastbound  stock,'"  have  been  held 
within  the  statute  of  frauds."*"  Contracts  whereby  abutting  own- 
ers agree  that  each  would  build  a  certain  share  of  the  partition 
fence  between  their  farms  and  maintain  it  always  have  been  held 
within  the  statute  of  frauds.'^     The  same  has  been  held  true  of 


153;  Franklin  Fire  Ins.  Co.  v.  Colt, 
20  Wall.   (U.  S.)   560,  22  L.  ed.  423. 

"White  V.  Pitts,  102  Maine  240, 
66  Atl.  533,  15  L.  R.  A.  (N.  S.)  313n, 
120  Am.  St.  483. 

*nVhite  V.  Fitts,  102  Maine  240, 
66  Atl.  533,  15  L.  R.  A.  (N.  S.)  313, 
120  Am.  St.  483 ;  Jones  v.  McMichael, 

12  Rich.  L.  (S.  Car.)  176.  See, 
however,  Nester  v.  Diamond  Match 
Co.,  143  Fed.  72,  74  C.  C.  A.  266; 
Barton  v.  Gray,  48  IMich.  164,  12 
N.  W.  30,  57  Mich.  622,  24  N.  W. 
638;  Travis  v.  Myers,  67  N.  Y.  542; 
Van  Woert  v.  Albany  &c.  R.  Co.,  1 
Thomp.  &  C  (N.  Y.)  256,  affd.  67 
N.  Y.  538;  Long  Mfg.  Co.  v.  Gray, 

13  Tex.  Civ.  App.  172,  35  S.  W.  32; 
Rogers  v.   Brightman,    10  Wis.  55. 

"Pitkin  V.  Long  Island  R.  Co.,  2 
Barb.  Ch.  (N.  Y.)  221,  47  Am.  Dec. 
320. 

'"  Day  V.  New  York  &c.  R.  Co.,  31 
Barb.  (N.  Y.)  548,  53  Barb.  (N.  Y.) 
255.  affd.  51  N.  Y.  583,  second  ap- 
peal 22  Hun  (N.  Y.)  412,  affd.  89 
N.   Y.  616. 

"  However,  a  contract  by  which 
a  railroad  company  agrees  to  do 
or  maintain  certain  things  which 
depend  upon  a  certain  contingency 
which  may  happen  within  a  year  is 
not   within   the   statute.     Warner   v. 


Texas  &c.  R.  Co.,  164  U.  S.  418,  41 
L.  ed.  495,  17  Sup.  Ct.  147,  revg.  54 
Fed.  992,  4  C.  C.  A.  673,  13  U.  S.  App. 
236  (agreement  to  maintain  a  switch 
as  long  as  one  of  the  parties  to  the 
contract  needed  it)  ;  Arkansas  Mid- 
land R.  Co.  V.  Whitley,  54  Ark.  199, 
15  S.  W.  465,  11  L.  R.  A.  621  (con- 
tract to  construct  and  maintain  cat- 
tle guards  across  its  road  on  each 
side  of  appellee's  land  so  long  as  it 
should  maintain  and  operate  its  road 
over  appellee's  land)  ;  Sweet  v. 
Desha  Lumber  Co..  56  Ark.  629,  20 
S.  W.  514  (agreement  by  railroad 
company  to  furnish  plaintiff  with 
cars  until  such  time  as  his  business 
would  justify  the  building  of  a 
switch)  ;  Straughn  v.  Indianapolis 
&c.  R.  Co.,  38  Ind.  185  (contract  to 
construct  road  and  run  trains  be- 
tween two  given  points  within  two 
vears)  ;  Thomas  v.  South  Haven  &c. 
R.  Co.,  138  Mich.  50.  100  N.  W. 
1009  (agreement  to  put  in  a  side 
track  in  consideration  of  the  re- 
moval of  a  building  near  the  rail- 
road). For  a  contract  within  the 
statute  relating  to  a  railroad,  see 
Wilson  V.  Ray.  13  Ind.  1. 

"Osborne    v.    Kimball,    41     Kans. 
187,  21   Pac.  163. 


§    1288  CONTRACTS.  534 

a  contract  to  erect  and  maintain  a  cannery,  the  court  saying: 
"The  cannery  may  have  been  erected  within  one  year  of  the  date 
of  the  contract,  but  that  B  (the  promisor)  should  maintain  it  im- 
pHes  a  much  greater  length  of  time,  (than  one  year)  to  say  the 
least.""  A  bargain  entered  into  in  the  spring  of  one  year  for 
the  potatoes  of  that  year  and  also  for  the  crop  to  be  raised  the 
succeeding  year  has  been  held  within  the  statute  of  frauds  as  to 
the  potatoes  of  the  last  year  at  least,  for  the  reason  that  it  could 
not  be  performed  within  one  year.^*  A  contract  which  in  the 
course  of  nature  cannot  be  performed  within  a  year  from  the 
time  it  was  made  is  within  the  statute.^^ 

§  1288.  Agreement  not  to  be  performed  within  a  year — 
Option  to  terminate. — While  it  is  consistently  held  that  if 
there  is  no  mention  of  time,  and  the  time  is  uncertain,  the  agree- 
ment is  not  within  the  statute ;  yet  if  the  time  mentioned  is  more 
than  one  year,  though  subject  to  determination  on  proper  notice 
by  either  party,  it  seems  that  it  is  within  the  statute.^^  Thus  a 
contract  by  one  person  to  render  service  to  another  for  a  period 
longer  than  one  year  has  been  held  within  the  statute  notwith- 
standing one  of  the  parties  may  have  an  option  to  terminate  the 
contract  before  the  expiration  of  a  year." 

§  1289.    Performance  on  one  side  within  the  year. — ^There 

is.a  conflict  of  authority  as  to  whether  or  not  the  statute  of  frauds 
applies  to  contracts  which  are  wholly  executed  on  one  side  or 
which  may  be  executed  on  one  side  within  a  year,  where  the 
execution  of  the  contract  on  the  part  of  the  other  party  is  de- 

=>'Akins    V.    Hicks,    109    Mo.    App.        "  Pitkin   v.    Noyes,  48   N    H    294, 

95    83    S    W    75      However,   where  97  Am.  Dec.  615;  2  Am.  Rep.  218. 

the   contract   provides   that   a   desig-  ^"Butler    v.    Shehan,    61    111     App. 

nated    building    or    fence    is    to    be  561;    Groves   v     Cook,   88   Ind.    169, 

erected    within   a   given   time   and   it  45  Am.   Rep.  46^. 

is  possible  for  the  contract  to  be  per-  J"  Hanan   v.    Ehrl.ch    (1912)    A    C. 

formed  within  a  year,  it  is  not  with-  39,  Ann.   Cas.   1912B.  730   (might  be 

in  the  statute.     First  Presby.  Church  terminated    by    either    party    on    six 

V    Swanson    100   111.   App.  39;   Mar-  months'    notice);    Wagiere    v.    Dun- 

kyV    Noblett    42   Ind.   85;   Duff   v.  nell,  29  R.  I.  580,  IZ  Atl.  309,  17  Am. 

Snider,    54    Miss.    245;    Connolly    v.  &    Eng.    Ann.    Cas.    205.      See    also 

Giddings,  24  Nebr.  131,  37  N.  W.  939;  Keller   v.    Mayer   Fertihzer   Co.,    153 

Talmadge  v.  Rensselaer  &  S.  R.  Co.,  Mo.  App.  120,  132  S.  W    314. 
13   Barb.    (N.  Y.)    493;   Plimpton  v.        "  Biest   v.    Versteeg    Shoe   Co.,   97 

Curtiss,    15    Wend.     (N.    Y.)     336;  Mo.  App.  137,  70  S.  W.  1081. 
Jones  V.  Pouch,  41  Ohio  St.  146. 


535 


STATUTE  OF  FRAUDS. 


§  1289 


ferred  for  a  longer  period  than  one  year.  In  England  it  seems 
to  have  been  definitely  determined  after  a  considerable  vacilla- 
tion that  the  statute  does  not  extend  to  contracts  which  are  wholly 
executed  on  one  side,  or  which  may  be  executed  on  one  side 
within  a  year,  but  applies  only  to  contracts  which,  as  a  whole,  are 
not  to  be  performed  within  that  time.  In  other  words,  perform- 
ance by  one  party  within  the  year  takes  the  case  out  of  the  statute, 
notwithstanding  the  execution  of  the  contract  on  the  part  of  the 
other  party  is  deferred  for  a  longer  period  than  one  year.^^  In 
this  country  the  preponderance  of  authority  is  in  favor  of  the  va- 
lidity of  a  contract  which  has  been  fully  performed  upon  one  side 
at  or  near  the  time  of  making,  although  the  execution  thereof  by 
the  other  party  to  the  contract  is  deferred  for  a  longer  period  than 
one  year.^"  The  courts  of  Massachusetts,  New  York,  Vermont 
and  perhaps  some  other  states  hold  that  contracts  in  which  all  that 
one  of  the  parties  is  to  do  in  performance  of  the  agreement  is  to 
be  or  has  been  done  within  a  year,  the  performance  by  the  other 
party  being  postponed  for  a  period  longer  than  one  year,  are  with- 
in the  statute."" 


■^Donellan  v.  Read,  3  Barn.  &  Ad. 
899  (leading  case)  ;  Cherry  v.  Hem- 
ing,  4  Exch.  631 ;  Smith  v.  Neale 
(1857).  2  C.  B.  (N.  S.)  67;  Bevan 
V.  Carr  (1885),  1  Cab.  &  El.  499; 
Miles  V.  New  Zealand  Alford  Estate 
(1886),  L.  R.  32  Ch.  Div.  266,  54  L.  J. 
Eq.    1035. 

**Rake  v.  Pope,  7  Ala.  161;  John- 
son V.  Watson,  1  Ga.  348;  Curtis  v. 
Sage,  35  111.  22;  Eraser  v.  Gates, 
118  111.  99,  1  N.  E.  817;  Lowman  v. 
Sheets  (1890),  124  Ind.  416,  24  N.  E. 
351,  7  L.  R.  A.  784;Harper  v.  Har- 
per, 57  Ind.  547;  Bell  v.  Hewitt's 
Exrs.,  24  Ind.  280;  Riddle  v.  Backus. 
38  Iowa  81 ;  Smallev  v.  Greene,  52 
Iowa  241,  3  N.  W.  78,  35  Am.  Rep. 
267n;  Atchison  T.  &  S.  F.  R.  Co.  v. 
English.  38  Kans.  110,  16  Pac.  82; 
Bull  V.  McCrea,  8  B.  Mon.  (Ky.) 
422;  Dant  v.  Head.  90  Kv.  255,  12 
Ky.  L.  153,  13  S.  W.  1073,  29  Am. 
St.  369;  Holbrook  v.  Armstrong,  10 
Maine  31 ;  Hutchison  v.  Hutchison, 
46  Maine  154;  Horner  v.  Frazier,  65 
Md.  1,  4  Atl.  133;  Ellicott  v.  Tur- 
ner (sub  nomine  Peterson),  4  Md. 
476;  Hoyle  v.  Bush,  14  Mo.  App.  408; 


Self  V.  Cordell,  45  Mo.  345;  McCor- 
mick  V.  Drummet.  9  Nebr.  384,  2 
N.  W.  729;  Berry  v.  Doremus,  30 
N.  J.  L.  399;  Durfee  v.  O'Brien,  16 
R.  I.  213,  14  Atl.  857;  Compton  v. 
Martin,  5  Rich.  L.  (S.  Car.)  14; 
Seddon  v.  Rosenbaum,  85  Va.  928; 
9  S.  E.  326,  3  L.  R.  A.  337n ;  Grace 
V.  Lvnch,  80  Wis.  166,  49  N.  W.  751 ; 
McClellan  v.  Sanford,  26  Wis.  595; 
Coyle  V.  Davis,  20  Wis.  564. 

""Frary  v.  Sterling,  99  Mass.  461; 
Marcy  v.  Marcy,  9  Allen  (Mass.)  8; 
Cabot  V.  Haskins,  3  Pick.  (Mass.) 
83;  Whipple  v.  Parker,  29  Mich.  369; 
Emery  v.  Smith.  46  N.  H.  151 ;  Kel- 
logg V.  Clark,  23  Hun  (N.  Y.)  393; 
Broadwell  v.  Getman,  2  Denio  (N. 
Y.)  87;  Bartlett  v.  Wheeler.  44  Barb. 
(N.  Y.)  162;  Pierce  v.  Paine,  28  Vt. 
34;  Parks  v.  Francis.  50  Vt.  626.  28 
Am.  Rep.  517.  Compare  the  forego- 
ing case  with  Blanding  v.  Sargent, 
33  N.  H.  239,  66  Am.  Dec.  720; 
Perkins  v.  Clav,  54  N.  H.  518;  Dodge 
V.  Crandall,  30  N.  Y.  294;  Weir  v. 
Hill,  2  Lans.  (N.  Y.)  278;  Sheehv  v. 
Adarens,  41  Vt  541,  98  Am.  Dec. 
623. 


§    1290  CONTRACTS.  536 

§  1290.  Performance  by  one  party  within  a  year — Suf- 
ficiency of  question  of  construction. — The  question  turns 
upon  the  construction  of  the  words  "not  to  be  performed  within 
a  year."  Those  cases  which  uphold  the  vaHdity  of  contracts  per- 
formed on  one  side  within  a  year  construe  these  words  as  mean- 
ing not  to  be  performed  on  either  side.  The  decisions  are  also 
based  upon  the  ground  that  the  statute  of  frauds  was  designed  to 
prevent  frauds  and  perjuries,  and  that  the  court  will  not  enforce 
the  statute  when  to  do  so  would  perpetrate  a  fraud  and  injustice 
and  that  one  who  has  reaped  the  benefits  of  the  other  party's 
performance  cannot  defeat  an  action  on  the  contract  by  alleging 
that  he  himself  was  not  to  perform  his  part  of  the  agreement 
within  a  year.  The  courts  which  declare  such  contracts  invalid 
do  so  on  the  ground  that  performance  by  one  party  is  not  per- 
formance of  the  agreement,  and  that,  in  any  view,  the  part  of  the 
contract  sued  upon  comes  within  the  statute,  for  which  the  part 
performance  is  only  the  consideration,  and  that  a  valid  legislative 
enactment  is  binding  upon  the  court  and  all  parties  until  repealed 
or  modified  by  the  legislature,  and  that  to  hold  that  performance 
on  one  side  within  the  year  takes  the  case  out  of  the  statute 
amounts  to  judicial  legislation.*'^ 

§  1291.  Seventeenth  section  of  the  statute. — The  seven- 
teenth section  of  the  statute  of  frauds  provided  "noe  Contract  for 
the  Sale  of  any  Goods,  Wares  or  Merchandises  for  the  price  of  ten 
pounds  Sterling  or  upwards  shall  be  allowed  to  be  good  except  the 

"^  See  cases  cited  in  preceding  ance.  But  when  the  contract,  on 
section.  In  the  case  of  Duff  the  part  of  this  party,  was  not  to  be 
V.  Snider,  54  Miss.  245,  the  performed  within  one  year  from  the 
question  was  said  to  be  merely  one  time  it  was  made,  the  recovery  is 
of  pleading,  if  confined  to  promises  not  upon  the  contract,  but  upon  the 
to  pay  money  when  the  considera-  quantum  meruit  or  valebat,  or  upon 
tion  has  been  received  by  the  de-  money  counts.  It  is  a  recovery  back 
fendant.  To  the  same  effect,  Dur-  of  the  consideration  of  a  contract 
fee  V.  O'Brien,  16  R.  I.  213,  14  Atl.  upon  which  no  action  will  lie,  and 
857.  In  Pierce  v.  Paine,  28  Vt.  34,  which  has  been  repudiated  by  the 
it  is  said:  "If  the  contract  has  been  other  party.  *  *  *  But  the  pay- 
performed  on  one  side,  in  such  a  ment  or  performance  of  the  consid- 
manner  that  the  performance  goes  eration  of  an  agreement  or  contract, 
to  the  benefit  of  the  other  party,  within  any  section  of  the  statute  of 
whether  this  was  done  within  the  frauds,  never  takes  it  out  of  the 
year  or  not,  it  undoubtedly  lays  the  statute;  if  it  were  so,  no  contract 
foundation  of  a  recovery  against  upon  an  executed  consideration 
the  party  benefited  by  such  perform-  would  ever  come  within  the  statute." 


537  STATUTE  OF  FRAUDS.  §  1 292 

Buyer  shall  accept  part  of  the  Goods  soe  sold  and  actually  receive 
the  same  or  give  something  in  earnest  to  bind  the  Bargaine  or  in 
part  of  payment,  or  that  some  Note  or  Memorandum  in  writeing 
of  the  said  bargaine  be  made  and  signed  by  the  partyes  to  be 
charged  by  such  Contract  or  their  Agents  thereunto  lawfully  au- 
thorized." This  enactment  was  held  not  to  extend  to  certain  ex- 
ecutory contracts  for  the  sale  of  goods  and  by  the  statute  of 
9  George  IV,  chapter  14,  commonly  known  as  Lord  Tenter- 
den's  Act,  it  was  provided  that  the  enactment  should  extend  to  all 
contracts  for  the  sale  of  goods  of  the  value  of  ten  pounds  sterling 
and  upward,  notwithstanding  the  goods  may  be  intended  to  be 
delivered  at  some  future  time,  or  may  not  at  the  time  of  such 
contract  be  actually  made,  procured,  or  provided,  or  fit  or  ready 
for  delivery,  or  some  act  may  be  requisite  for  the  making  of  or 
completing  thereof,  or  rendering  the  same  fit  for  delivery.  This 
statute  has  in  substance  been  enacted  by  the  various  legislatures 
of  the  several  states,  although  the  different  enactments  differ 
greatly  as  to  the  amount  or  value  of  the  article  ordered  or  pur- 
chased which  may  be  required  to  be  in  writing,  some  placing  the 
amount  at  thirty  dollars  others  as  high  as  three  hundred  doUars.^- 

§  1292.  Scope  of  the  statute. — This  section  of  the  statute 
relates  to  sales*'^  of  goods,  wares  and  merchandise,  and  in  some 
jurisdictions  includes  personal  property  in  its  broadest  significa- 
tion. Thus  promissory  notes''*  and  sales  of  issued  corporate 
stock^°  are  generally  held  within  the  statute.  Thus  it  has  been  held 
that  a  verbal  contract  to  transfer  to  a  lawyer  certain  shares  of 

""The  statutes  of  Florida  and  Iowa  299;  Whittemore  v.  Gibbs,  24  N.  H. 

fix  no  minimum  limit  and  as  a   re-  484. 

suit    all    contracts    for    the    sale    of  "  :\rayer   v.     Child,    47    Cal.     142; 

goods  are  within  the  statutes.  North  v.  Forest,   15  Conn.  400   (sale 

■^  Stewart  v.  Cook,  118  Ga.  541,  45  of   shares  of   stock  in  a  jomt   stock 

S.  E.  398  (holding  a  contract  of  sale  company)  ;     Hightower     v.     Ansley, 

partly    in    writing    and    partly    oral,  126  Ga.  8,  54  S.  E.  939,  7  Am.  &  Eng. 

within  the  statute).  Ann.    Cas.   927    (refusmg   to    follow 

**  Hudson    V.    Weir,    29    Ala.    294;  Rogers  v.   Burr,   105   Ga.  432.  31   S. 

Gooch    V.    Holmes,    41    J^Iaine    523  E.    438.    70    Am.    St.    50)  ;    Pray    v. 

(bank   bills)  ;    Baldwin    v.    WiUiams,  Mitchell.     60     Maine    430     (sale     of 

3   Mete.    (Mass.)    365;   Riggs  v.  Ma-  shares  of  stock  in  a  joint  stock  com- 

gruder.    2    Cranch    C    C.    143,    Fed.  panv)  ;    Colvin    v.    Williams.    3    Har. 

Case  No.   11828   (notes  of  a  private  &  J.  (Md.)  38.  5  Am.  Dec.  417  (sale 

bank).       See,     however,     Vawter    v.  of   hank   stock);    Tisdale   v.    Hams, 

Griffin,  40  Ind.  593;  Howe  v.  Jones,  Zl  Mass.  9   (sale  of  shares  in  manu- 

57  Iowa  130,  8  N.  W.  451,  10  N.  W.  facturing    corporation)  ;     Boardman 


1292 


CONTRACTS. 


538 


corporate  stock  in  consideration  of  services  to  be  thereafter  ren- 
dered is  within  the  clause  requiring  contracts  for  the  sale  of  goods 
and  chattels  to  be  in  writing  in  the  absence  of  any  other  circum- 
stance to  take  the  case  out  of  the  statute."*  Under  the  more  re- 
cent English  authorities,  shares  of  corporate  stock  are  not  consid- 
ered as  "goods,  wares  and  merchandise"  within  the  statute  of 
frauds."  Cases  prior  to  these,  however,  announced  a  contrary 
doctrine."^  It  has  also  been  held,  that  an  undertaking  by  com- 
plainant to  transfer  to  defendant  his  right  of  subscription  to 
one  hundred  shares  of  new  stock  in  a  corporation  as  soon  as 
books  should  be  opened  for  subscriptions  for  the  same  was  not 
within  the  statute.^®  The  words  of  the  statute  have  not  been  ex- 
tended beyond  securities,  which  are  subjects  of  common  sale  and 
barter,  and  which  have  a  visible  and  palpable  form;  therefore, 
an  agreement  for  the  sale  of  an  interest  in  an  invention  before 
letters  patent  are  obtained  was  held  not  to  be  within  the  statute. ^^ 


V.  Cutter,  128  Alass.  388  (sale  of 
shares  in  manufacturing  corpora- 
tion) ;  Sprague  v.  Hosie,  155  Mich. 
30,  118  N.  W.  497,  19  L.  R.  A.  (N. 
S.)  874  and  note,  130  Am.  St.  558 
(sale  of  bank  stock)  ;  Fine  v.  Horns- 
by,  2  Mo.  App.  61  (sale  of  shares  of 
stock  in  a  manufacturing  corpora- 
tion). Compare  with  Vawter  v. 
Griffin,  40  Ind.  593.  See  also,  Ray- 
mond V.  Colton,  104  Fed.  219,  43  C. 
C.  A.  501 ;  French  v.  Boston  Nat. 
Bank,  179  Mass.  404,  60  N.  E.  793; 
Green  v.  Brookins,  23  Mich.  48,  9 
Am.  Rep.  74;  French  v.  White,  78 
Vt.  89,  62  Atl.  35,  2  L.  R.  A.  (N.  S.) 
804. 

"  Franklin  v.  Matoa  Gold  Min.  Co., 
158  Fed.  941,  86  C.  C.  A.  145,  16  L. 
R.  A.  (N.  S.)  381n.  Cohtra,  Spin- 
ney V.  Hill,  81  Minn.  316,  84  N.  W. 
116. 

"  Hibblewrite  v.  M'Morine,  6  M. 
&  W.  200 ;  Knight  v.  Barber,  2  Carr. 
&  K.  333;  Bowlby  v.  Bell,  3  C.  B. 
284  (railway  shares)  ;  Watson  v. 
Spratley,  10  Exch.  222;  Humble  v. 
Mitchell,  11  Ad.  &  El.  205  (banking 
company)  ;  Duncuft  v.  Albrecht,  12 
Sim.  189  (railway  shares)  ;  Tempest 
V.  Kilner,  3  C.  B.  249  (railway 
shares)  ;  Heseltine  v.  Siggers,  1 
Exch.  856. 

•«  CruU  V.  Dodson,  Sel.  Ch.  Cas.  41 ; 


Mussel!  V.  Cooke,  Free,  in  Ch.  533 ; 
Colt  V.  Neltervill,  2  P.  Wm.  S.  308; 
Pickering  v.  Appleby,  1  Comyns. 
Rep.  354. 

'"Gadsden  v.  Lance,  McMuU  Eq. 
(S.  C.)  87,  37  Am.  Dec.  548.  In 
Meehan  v.  Sharp,  151  Mass.  564,  the 
plaintifif  had  a  certificate  showing 
that  he  was  the  beneficial  owner  of 
fifty  shares  of  stock  in  a  corporation. 
The  shares  had  not  been  issued,  but 
were  held  in  pool,  and  were  to  be 
issued  whenever  the  board  of  direct- 
ors should  vote  to  authorize  a  de- 
livery of  them.  The  court  said: 
"It  is  at  least  doubtful  whether  the 
contract,  which  was  for  the  sale  of 
stock  that  had  not  been  regularly 
issued,  can  properly  be  brought  with- 
in the  statute."  The  statute  of  New 
York  includes  "things  in  action ;" 
that  of  Florida  and  some  other  states 
is  extended  to  sales  of  "personal 
property."  See,  however,  Fine  v. 
Hornsby,  2  Mo.  App.  61  (sale  of 
shares  of  stock  in  company  not  yet 
organized  held  not  within  the 
statute). 

'"Somerby  v.  Buntin,  118  Mass. 
279,  19  Am.  Rep.  459.  Before  let- 
ters patent  are  obtained,  the  inven- 
tion exists  only  in  right,  and  neither 
that  right  nor  any  evidence  of  it 
has  any  outward  form  which  is  ca- 


c^g  STATUTE    OF    FRAUDS.  §    1 293 

§  1293.    Transactions   construed   as   contracts   for   sale. — 

The  term  "sale"  as  used  in  this  clause  of  the  statute  includes  all 
contracts  for  the  transfer  of  title  to  goods,  wares  and  merchan- 
dise. The  statute  applies  to  contracts  of  barter  and  exchange  of 
goods,  wares  and  merchandise  in  return  for  goods  of  a  similar 
character,  as  well  as  contracts  strictly  for  the  sale  of  goods.'^  An 
agreement  to  deliver  goods  exceeding  fifty  dollars  in  value  in 
payment  of  an  antecedent  debt  is  also  within  the  statute.'^'  But 
where  the  contract  is  not  for  the  sale  and  delivery  of  the  property 
or  title  to  goods  the  statute  does  not  apply.  Thus  an  agreement 
between  a  creditor  and  a  debtor  where  his  creditor  had  attached 
property  by  which  the  debtor  forbore  to  defend  the  suit  in  consid- 
eration of  the  creditor's  promise  to  purchase  the  goods  at  the  sher- 
iff's sale  and  give  the  debtor  credit  for  the  cash  price  of  the  goods 
irrespective  of  the  amount  bid  at  the  sheriff's  sale,  has  been  held 
not  within  the  statute."  Contracts  of  partnerships*  and  agency'® 
have  been  held  not  within  the  statute,  although  the  title  to  personal 
property  might  be  indirectly  involved.  A  contract  for  the  manu- 
facture of  bricks  by  which  the  owner  of  the  soil  was  to  remain 
the  owner  of  the  bricks  until  the  clay  and  wood  consumed  was 
paid  for  has  been  held  not  within  the  statute.'"  An  agreement  to 
remunerate  an  agent  for  the  sale  of  personal  property  in  accord- 
ance with  the  amount  he  obtained  therefor  has  been  held  not  an 
agreement  for  the  sale  of  chattels  and  therefore  need  not  be  in 
writing.''     A  contract  for  advertising  matter,  the  total  cost  of 

pable    of    being    transferred    or    de-  Ind.  App.  34,  43  N.  E.  575;  Gorman 

livered  in  specie,  or  which  upon  any  v.  Brossard,  120  Alich.  611,  79  N.  W. 

construction,     however     liberal,     can  903;   Brabin  v.  Hyde,  32  N.  Y.  519; 

be  considered   as  goods,   wares,  and  Milos  v.  Covacevich,  40  Ore.  239,  66 

merchandise.     In  a  contract  for  the  Pac.    914;    Norwegian    Plow    Co.    v. 

sale  of  gold  this  article  is  regarded  Hanthorn,    71    Wis.    529,   27    N.    W. 

as  a  commodity,  not  as  money.     Pea-  825. 

body  V.  Speyers,  56  N.  Y.  230.  "Jacobs  v.  Union   Mercantile  Co., 

"Raymond    v.     Colton,     104    Fed.  17  Mont.  61.  42  Pac.   109.     See  also, 

219,  43  C.  C.  A.  501 ;  Kuhns  v.  Gates,  Mygatt  v.   Tarbell,   78   Wis.   351,   47 

92   Ind.   66;    Dowling  v.   McKenney,  N.  W.  618. 

124  Mass.  478;  Gorman  v.  Brossard,  '*  Somerby    v.    Buntin.    118    Mass. 

120  Mich.  611,  79  N.  W.  903;  Harris  279,  19  Am.  Rep.  459. 

Photographic    Supply    Co.    v.    Fisher,  "Hatch  v.  McBrien,  83  Mich.  159, 

81  Mich.  136.  45  N.'  W.  661 ;  Ash  v.  47  N.  W.  214. 

Aldrich,  67   N.   H.   581,  39  Atl.  442.  '"Brown  v.  Morris.  83  N.  Car.  251. 

"Norton  v.   Davison    (1899),   1   Q.  "Hamilton     v.      Frothingham,     59 

B.  D.  401 ;  Galbraith  v.  Holmes,  15  Mich.  253,  26  N.  W.  486. 


§    1294  CONTRACTS.  54O 

which  was  more  than  fifty  dollars,  has  been  declared  not  one  for 
the  sale  of  goods,  chattels  or  things  in  action  within  the  meaning 
of  the  statute  of  frauds/^  Executory  contracts  for  the  sale  of 
goods  have,  in  this  country,  always  been  held  within  the  statute, 
and  are  not  taken  out  of  it  by  the  mere  circumstance  that  the 
goods  are  not  ready  for  delivery,  or  are  intended  to  be  delivered 
at  some  future  time.^* 

§  1294.  Work  and  labor  contracts  distinguished  from  con- 
tracts of  sale. — Under  this  section  the  courts  have  met  with 
considerable  difficulty  in  determining  whether  a  given  contract  is 
for  the  sale  of  goods,  wares  or  merchandise,  or  where  the  article 
is  not  in  existence  at  the  time,  whether  it  is  for  work  and  labor. 
The  difficulty  arises  from  "the  infinitely  various  shades  of  differ- 
ent contracts."^"  It  is  generally  true  that  where  the  work  or 
labor  is  the  essential  object  contracted  for,  although  such  work 
or  labor  is  to  be  expended  on  materials  of  the  party  who  is  to 
furnish  the  article  at  a  given  price,  such  contract  is  not  for  a  sale, 
and  consequently  is  not  within  the  statute.®^  If  what  is  contem- 
plated by  the  agreement  is  the  peculiar  skill,  labor  or  care  of  the 
maker,  then  the  contract  is  for  work  and  labor  and  need  not  be 
proved  by  a  note  in  writing.^^  Thus  a  contract  to  paint  a  portrait 
of  a  child  for  its  parents  was  held  not  to  be  a  sale  of  chattels,  the 
skill  and  labor  of  the  artist  being  the  essential  consideration.^^ 

''Goodland    v.    LeClair,    78    Wis.  79   Am.   Dec.   229;    Gardner   v.    Toy, 

176,  47  N.  W.  268.  9  Mete.   (Mass.)   177. 

"Atwater  v.  Hough,  29  Conn.  508,  "'Finney  v.  Apgar,  31  N.  J.  L.  266. 

79  Am.  Dec.  229   (an  agreement  for  ^^  Hight   v.    Ripley,    19   Maine    137 

the  purchase  and  sale  of  sewing  ma-  Abbott    v.    Gilchrist,    38    Maine   260 

chines)  ;  Cason  v.  Cheely,  6  Ga.  554;  Crockett  v.   Scribner,  64  Maine  447 

Edwards    v.    Grand    Trunk    R.    Co.,  Pitkin    v.    Noyes,   48   N.    H.    294,   97 

48    Maine    379;    Weeks    v.    Crie,    94  Am.  Dec.  615,  2  Am.  Rep.  218;  Pres- 

Maine  458,  48  Atl.   107,  80  Am.   St.  cott  v.  Locke,  51   N.  H.  94,   12  Am. 

410;  Burrell  v.   Highleyman,  33  Mo.  Rep.  55;   Higgins  v.   Murray,  4  Hun 

App.    183;    Carman   v.    Smick,    15    N.  (N.  Y.)  565,  affd.  73  N.  Y.  252;  Bird 

J.  L.  252;   Prescott  v.  Locke,  51  N.  v.    Muhlinbrink,    1    Rich.    (S.    Car.) 

H.  94.   12   Am.   Rep.   55;    Gilman   v.  199,    44    Am.    Dec.    247;    Forsyth   v. 

Hill,  36  N.  H.  311 ;  Pitkin  v.  Noyes,  Mann,  68  Vt.  116,  34  Atl.  481,  32  L. 

48   N.   H.  294,  97  Am.   Dec.  615,  2  R.  A.  788. 

Am.   Rep.   218;   Bennett  v.   Hull,   10  ^Turner  v.   Mason,  65  Mich.  662, 

Johns.   (N.  Y.)  364;  Ide  v.  Stanton,  32    N.    W.   846.     See   also,    Day   v. 

15  Vt.  685,  40  Am.  Dec.  698.  Yates,    1    H.    &    N.    73.      But    see, 

"•Atwater  v.  Hough,  29  Conn.  508,  Isaacs  v.  Hardy,  1  Cab.  &  El.  287. 


541  STATUTE  OF  FRAUDS.  §  1 295 

The  same  has  been  held  true  of  a  contract  to  manufacture  dishes 
and  to  place  the  monogram  of  the  vendee  on  them.** 

§  1295.  Massachusetts  rule. — The  mere  fact  that  the  goods 
are  not,  at  the  making-  of  the  contract,  in  existence  or  in  the  condi- 
tion in  which  they  are  to  be  when  delivered,  does  not  necessarily 
take  the  case  out  of  the  statute.'*'^  Thus,  an  agreement  for  the 
manufacture  of  an  article  to  be  made  in  the  course  of  the  general 
business  in  which  the  vendor  is  engaged,  is  usually  held  within  the 
statute.^"  If,  on  the  other  hand,  the  goods  are  to  be  manufac- 
tured especially  for  the  purchaser,  and  upon  his  special  order,  and 
not  for  the  general  market,  the  case  is  not  within  the  statute.  This 
has  been  termed  the  Massachusetts  rule.®^  Thus  it  has  been 
held  in  this  jurisdiction  that  where  the  agreement  was  to  build 
a  carriage  for  a  party  who  was  to  take  it  when  finished  and 
pay  for  it,  this  was  not  a  contract  of  sale  within  the  mean- 
ing of  the  statute.  The  rule  was  laid  down  that  when  the  con- 
tract is  a  contract  of  sale,  either  of  an  article  then  existing,  or  of 
articles  which  the  vendor  usually  has  for  sale  in  the  course  of  his 
business,  the  statute  applies  whether  the  contract  is  to  be  executed 
at  a  future  time  or  to  be  executed  immediately,  but  where  it  is 

**In    re    Gies,    160  Mich.  502,   125  S.   App.   465    (contract  to   manufac- 

N.    W.    420,    30    L.    R.    A.    (N.    S.)  ture    and    furnish    stationery    of    a 

318n.  special  and  exclusive  nature  for  the 

*^  Pitkin    V.    Noves,    48    N.    H.   294,  pecuHar  use  of  the  vendee);   Brown 

97  Am.  Dec.  615,  2  Am.  Rep.  218.  &c.    Co.    v.    Wunder,    64    Minn.    450, 

^Edwards_v.  Grand  Trunk  R.  Co.,  67  N.  W.  357,  32  L.  R.  A.  593   (ar- 

48    Maine   379;    Lamb    v.    Crafts,    12  tides  not  suitable   for  general  trade 

Mete.   (Mass.)  353;  Mechanical  Boil-  but  to  be  of  a   special  and   peculiar 

er-Cleaner   Co.   v.    Kellner,  62    N.   J.  design)  ;    Pitkin  v.   Noyes,  48  N.  H. 

L.  544,  43  Atl.  599;  Pitkin  v.  Noyes,  294,   97   Am.   Dec.   615.   2  Am.   Rep. 

48   N.    H.   294,   97   Am.    Dec.   615,   2  218;    Hientz    v.    Burkhard.    29    Ore. 

Am.  Rep.  218;   Smith  v.   New  York  55,  43  Pac.  866,  31  L.  R.  A.  508,  54 

Central  R.  Co.,  4  Key    (N.  Y.)    180.  Am.  St.  Ill  (iron  work  to  be  manu- 

"  Spencer  v.    Cone.   42    Mass.   283 ;  factured    for    a    particular    building 

Mixer  v.  Howarth,  21  Pick.   (Mass.)  according     to     special     designs     and 

205.    32    Am.    Dec.    256;    Goddard    v.  measurements);    Courtney   v.    Bridle 

Binney.   115   Mass.  450,   15  Am.  Rep.  Veil    Box   Factory,   55   Ore.   210.    105 

112.      See    also.    Moore    v.    Camden  Pac.  S96    (special  order  of  boxes  to 

Marble  &c.  Works,  80   Ark.   274,  96  be  used  for  special  purpose)  •   Puget 

S.  W.  1063,   117  Am.   St.  87,  10  Am.  Sound    Machinery    Depot    v.    Ricbv, 

&   Eng.   Ann.    Cas.   308    (tomb   stone  13   Wash.   264,   43   Pac.   39    (contract 

to  be  carved  according  to  the  order  for    pumping   plant    of    special   value 

of  the  party  making  the  selection)  ;  to    the    person    giving    the    order)  : 

Beck    &    Pauli     Lithograph     Co.     v.  Gross  v.    Heckert.    120   Wis.   314.  97 

Colorado    Milling    &    Elevator    Co.,  N.    W.   952    (articles    not    salable   to 

52  Fed.   700,  3   C.   C.  A.  248,   10  U.  any  other  person  at  any  price). 


§    1295  CONTRACTS.  542 

an  agreement  with  a  workman  to  put  materials  together  and 
construct  an  article  for  the  employer,  whether  at  an  agreed  price 
or  not,  although  in  common  parlance  it  may  be  called  a  purchase 
and  sale  of  the  article,  to  be  completed  in  the  future,  it  is  not  a 
sale  until  an  actual  or  constructive  delivery  and  acceptance.®^  In 
other  words,  when  the  contract  is  to  furnish  materials  and  manu- 
facture the  article  according  to  specifications  furnished  or  model 
selected,  and  when  without  the  special  contract  the  thing  would 
never  have  been  manufactured  in  the  particular  manner,  shape  or 
condition  in  which  it  was  made,  the  contract  is  essentially  for  spe- 
cial skilled  labor  or  workmanship  and  is  not  within  the  statute.®^ 
Thus,  a  verbal  agreement  to  manufacture  and  furnish  iron  work 
for  a  brick  building  according  to  special  designs  and  measure- 
ments, suitable  only  for  use  in  that  particular  building,  has  been 
held  not  within  the  statute  of  frauds  as  a  sale  of  personal  prop- 
erty.®" In  those  cases  following  this  rule  the  test  question  is 
whether  the  vendor  stipulates  that  he  will  himself  manufacture 
the  article,  and  the  buyer  has  the  right  to  require  him  to  do  it, 
and  cannot  be  compelled  to  take  one  as  good  or  even  better  if 
made  by  another,  if  so,  the  contract  is  not  within  the  statute; 
while,  on  the  other  hand,  if  the  vendor  only  agrees  to  sell  and  de- 
liver the  article,  and  is  under  no  obligation  to  make  it  himself, 
but  may  purchase  it  of  another,  the  contract  is  one  of  sale  and 
within  the  statute.®^ 

^Alixer    V.     Howarth,     21     Pick.  v.  Brooks,  9  Wyo.  424,  64  Pac.  342 

(Mass.)  205,  32  Am.  Dec.  256;  Gard-  (sale   of   shoes   of   the  kind  usually 

ner    v.    Joy,    9    Aletc.     (Mass.)     177  sold  by   house). 

(where   the   agreement   was    for   the  *°  Schloss  v.  Josephs,  98  Minn.  442, 

delivery  of   candles   which  were  not  108  N.  W.  474  (order  for  a  specified 

then  in  existence)  ;  Goddard  v.  Bin-  number   of    suits)  ;    Bird   v.    Muhlin- 

ney,    115    Mass.    450,    15    Am.    Rep.  brink,   1   Rich.   L.    (S.   Car.)    199,  44 

112,    affg.     Mixer    v.    Howarth,    21  Am.   Dec.  247;   Wallace  v.  Dowling, 

Pick.  (Mass.)  205,  32  Am.  Dec.  205;  86  S.  Car.  307,  68  S.  E.  571,  138  Am. 

Smalley  v.   Hamblin,    170   Mass.   380,  St.    1058;    Meincke   v.    Falk,   55   Wis. 

49    N.    E.    626     (sale    of    bottles)  ;  427,  13  N.  W.  545,  42  Am.  Rep.  722. 

Dowling    V.    McKenney,    124    Mass.  *"Heintz  v.  Burkhardt,  29  Ore.  55, 

478.     See  also,  Yoe  v.  Newcomb,  33  43  Pac.  866,  31  L.  R.  A.  508,  54  Am. 

Ind.  App.  615,  71  N.  E.  256  (sale  of  St.    111.     To   same   effect,    Flynn   v. 

shoes   habitually   made    by    vendor)  ;  Dougherty,  91  Cal.  669,  27  Pac.  1080, 

Mechanical    Boiler    Cleaner    Co.    v.  14  L.   R.  A.  230. 

Kellner,  62  N.  J.  L.  544,  43  Atl.  599  "'  Edwards  v.  Grand  Trunk  R.  Co., 

(sale    of    mechanical    boiler-cleaning  48  Maine  379. 
appliance)  ;    Williams   &c.    Shoe   Co. 


543 


STATUTE    OF    FRAUDS. 


1296 


§  1296.  The  rule  in  New  York. — It  is  held  in  New  York, 
by  a  long  course  of  decisions,  that  an  agreement  for  the  sale  of 
any  commodity  not  in  existence  at  the  time,  but  which  the 
vendor  is  to  manufacture  or  put  in  condition  to  be  delivered,  such 
as  flour  from  wheat  not  yet  ground,  or  nails  to  be  made  from 
iron  belonging  to  the  manufacturer,  is  not  a  contract  of  sale. 
Stress  is  laid  on  the  word  "sale".®^ 


"Cooke  V.  Millard,  65  N.  Y.  352, 
22  Am.  Rep.  619,  in  which  the  au- 
thorities upon  the  subject  are  col- 
lated and  the  different  views  in  re- 
gard thereto  of  the  English,  Mass- 
achusetts and  New  York  courts 
pointed  out,  distinguishing  the  fol- 
lowing cases :  Eichelberger  v.  Mc- 
Cauley,  5  Har.  &  J.  (Md.)  213,  9 
Am.  Dec.  514;  Parsons  v.  Loucks, 
48  N.  Y.  17,  8  Am.  Rep.  517  (a  con- 
tract to  manufacture  and  deliver 
20,000  pounds  of  paper)  ;  Sewall  v. 
Fitch,  8  Cow.  (N.  Y.)  215  (to  make 
300  casks  of  nails)  ;  Crofoot  v.  Ben- 
nett, 2  N.  Y.  258;  Kimberly  v. 
Patchin,  19  N.  Y.  330,  75  Am.  Dec. 
334;  questioning  Mead  v.  Case,  33 
Barb.  (N.  Y.)  202;  Crookshank  v. 
Burrell,  18  Johns.  (N.  Y.)  58,  9  Am. 
Dec.  187;  Sewall  v.  Fitch,  8  Cow. 
(N.  Y.)  215;  Robertson  v.  Vaughn, 
5  Sandf.  (N.  Y.)  1;  Downs  v.  Ross, 
23  Wend.  (N.  Y.)  270;  Warren 
Chemical  &c.  Co.  v.  Holbrook,  118 
N.  Y.  586,  23  N.  E.  908,  16  Am.  St. 
788  (contract  for  the  future  manu- 
facture and  delivery  of  a  patented 
roofing  material)  ;  Gerli  v.  Louis 
Metzger  &  Co.,  51  Misc.  (N.  Y.)  46, 
99  N.  Y.  S.  858  (contract  to  manu- 
facture silk  into  an  article  known  as 
"tussah")  ;  Ruttv  v.  Consolidated 
Fruit  Jar  Co.,  58  Hun  (N.  Y.)  611, 
36  N.  Y.  St.  121,  13  N.  Y.  S.  331 
(glove  clasp  to  be  manufactured  by 
the  vendor).  In  Parsons  v.  Loucks, 
48  N.  Y.  17,  8  Am.  Rep.  517.  it  is 
held  that  the  statute  applies  to  an  oral 
contract  for  the  sale  of  goods  in 
existence  at  the  time  of  making 
the  contract,  but  not  to  an  agree- 
ment to  manufacture  and  deliver 
goods.  The  statute  alludes  to  a 
sale  of  goods,  assuming  that  the  ar- 
ticles are  already  in  existence.  See 
also,  Roubicek  v.   Haddad,  67   N.  J. 


L.  522,  51  Atl.  938  (order  for  a  num- 
ber of  articles  to  be  thereafter  manu- 
factured. This  New  York  contract 
decided  in  accord  with  law)  ;  Sewall 
v.  Fitch,  8  Cow.  (N.  Y.)  215;, 
Robertson  v.  Vaughn,  5  Sandf.  (N. 
Y.)  1;  Bronson  v.  Wiman,  10  Barb. 
(N.  Y.)  406;  Donovan  v.  Willson, 
26  Barb.  (N.  Y.)  138;  Parker  v. 
Schenck,  28  Barb.  (N.  Y.)  38;  Mead 
v.  Case,  33  Barb.  (N.  Y.)  202; 
Smith  V.  New  York  &c.  R. 
Co.,  4  Key.  (N.  Y.)  180.  See, 
however,  Juilliard  v.  Trokie,  139 
App.  Div.  (N.  Y.)  530,  124  N. 
Y.  S.  121,  in  which  it  was  held 
that  a  contract  by  which  the  vendee 
agreed  to  buy,  and  the  vendor,  who 
was  not  the  manufacturer  agreed  to 
sell  a  specified  number  of  yards  of  a 
designated  article.  The  contract 
was  held  to  be  a  contract  of  sale 
within  the  meaning  of  the  statute 
notwithstanding  it  contained  a  pro- 
vision to  the  effect  that  if  the  pro- 
duction of  the  mills  from  which  the 
goods  were  to  be  procured  was  cur- 
tailed by  strikes  or  any  unavoidable 
accident,  the  amount  delivered  should 
be  proportioned  to  the  production 
of  the  factory.  Shrimpton  &  Sons  v. 
Dworsky,  2  Misc.  (N.  Y.)  123,  21 
N.  Y.  S.  461  (sale  of  needles  al- 
ready in  existence.  The  only  thing 
remaining  to  be  done  being  to  print 
the  purchaser's  business  style  thereon. 
Held  a  sale  of  goods)  ;  Pelletreau  v. 
United  States  Electric  &c.  Co.,  13 
Misc.  (N.  Y.)  237,  34  N.  Y.  S.  125 
(letter  heads  for  the  exclusive  use 
of  the  company  giving  the  order)  ; 
Hinds  v.  Kellogg.  37  N.  Y.  St.  Rep. 
356.  13  N.  Y.  S.  922.  affd.  133  N.  Y. 
536.  30  N.  E.  1148  (circulars  de- 
signed to  be  exclusively  used  in  the 
business  of  the  person  giving  the 
order). 


'§  1^97 


CONTRACTS. 


544 


§  1297.  The  English  rule. — The  rule  which  now  prevails 
in  England  was  laid  down  in  i86i  by  a  case  in  which  it  was  held 
that  a  contract  to  make  a  set  of  artificial  teeth  was  a  contract  for 
the  sale  of  goods,  wares  and  merchandise.  As  then  stated,  in 
order  to  ascertain  whether  the  action  should  be  brought  for  goods 
sold  and  delivered,  or  for  work  and  labor  done  and  materials  pro- 
vided, the  particular  contract  entered  into  between  the  parties 
must  be  looked  at.  If  the  subject-matter  is  such  that  it  will  result 
in  the  sale  of  a  chattel  to  be  afterward  delivered,  then  the  action 
must  be  for  goods  sold  and  delivered.  Reference  is  had  to  the 
time  of  delivery  as  contemplated  by  the  parties.  If  at  that  time 
it  is  a  chattel,  it  is  enough  according  to  this  rule.  If  the  work 
and  labor  be  bestowed  in  such  a  manner  that  the  result  is  not 
anything  that  can  properly  be  said  to  be  the  subject  of  a  sale,  the 
action  is  for  work  and  labor.^"  The  net  result  of  the  English  rule 
is  to  treat  all  contracts  for  the  sale  of  any  commodity  not  in  ex- 
istence at  the  time,  but  which  the  vendor  is  to  manufacture,  or 
put  in  a  condition  to  be  delivered,  as  contracts  for  the  sale  of 
chattels.** 


"  Lee  V.  Griffin,  1  B.  &  S.  272. 

"Atkinson  v.  Bell,  8  B.  &  C.  277. 
See  Marberley  v.  Sheppard,  10  Bing. 
99;  Howe  v.  Palmer,  3  B.  &  Aid.  321 ; 
Baldey  v.  Parker,  2  B.  &  C.  i7.  The 
English  rule  is  followed  in  Burrell 
V.  Highleyman,  iZ  Mo.  App.  183; 
Schmidt  v.  Rozier,  121  Mo.  App. 
306,  98  S.  W.  791  (order  for  coat 
and  vest  of  particular  and  unusual 
style)  ;  Tower  Grove  Planing  Co.  v. 
McCormack,  127  Mo.  App.  349,  106 
S.  W.  113  (contract  for  doors  and 
windows  to  be  manufactured  ac- 
cording to  certain  plans  and  specifi- 
cations). See  also,  Pratt  v.  Miller, 
109  Mo.  78,  18  S.  W.  965,  32  Am.  St. 
656.  In  Wolfenden  v.  Wilson,  ZZ  U. 
C.  Q.  B.  442,  the  rule  is  stated  as 
follows:  If  the  contract  is  intended 
to  result  in  transferring  for  a  price 
from  B  to  A,  a  chattel  in  which  A 
had  no  previous  property,  it  is  a 
contract  for  the  sale  of  a  chattel.  It 
is  thus  made  to  appear  that  the  New 
York  rule  and  the  English  rules  are 
on  either  extreme  and  that  the  Mas- 
sachusetts rule  is  a  compromise  be- 
tween   the    two.      In    the    case    of 


Hientz  v.  Burkhead,  29  Ore.  55,  43 
Pac.  866,  31  L.  R.  A.  508,  54  Am.  St. 
777,  it  is  said:  "There  appear  to  be 
substantially  three  distinct  views 
upon  the  statute,  which,  for  conve- 
nience, are  generally  designated  as 
the  English,  the  New  York,  and  the 
Massachusetts  rules,  as  represented 
by  the  decisions  of  their  respective 
courts.  In  England,  after  a  long 
series  of  cases  in  which  various 
tests  have  been  suggested,  the  rule 
seems  to  have  been  settled  in  Lee  v. 
Griffin,  1  Best  &  S.  272,  23  Eng.  Rul. 
Gas.  191,  that  'if  the  contract  be 
such  that,  when  carried  out,  it  would 
result  in  the  sale  of  a  chattel,  the 
party  can  not  sue  for  work  and 
labor;  but  if  the  result  of  the  con- 
tract is  that  the  party  has  done  work 
and  labor  which  ends  in  nothing  that 
can  become  the  subject  of  a  sale, 
the  party  cannot  sue  for  goods  sold 
and  delivered.'  *  *  *  In  New 
York  the  rule  prevails  that  a  contract 
concerning  personal  property  not 
existing  in  solido  at  the  time  of  the 
contract,  but  which  the  vendor  is 
to   manufacture  or  >put  in   condition 


545  STATUTE  OF  FRAUDS.  §  1 298 

§  1298.  Sale  of  timber  products. — When,  under  a  contract 
to  furnish  lumber,  it  is  necessary  for  the  vendor  to  have  the 
lumber  cut  and  prepared  for  delivery,  the  agreement  is  not  one 
for  the  sale  of  goods,  wares  and  merchandise."'^  However,  a 
contract  to  deliver  a  specified  number  of  ties  of  given  dimensions 
and  description,  at  a  named  price,  has  been  held  a  contract  of 
sale.®"  So  a  sale  of  nursery  stock  is  not  taken  out  of  the  statute 
by  the  fact  that  the  trees  must  be  dug  up  and  packed."^ 

§  1299.  Realty  improvement  contracts. — Contracts  for  the 
improvement  of  realty,  notwithstanding  they  may  involve  the 
furnishing  of  materials  of  a  value  in  excess  of  fifty  dollars,"^ 
such  as  the  preparing  of  materials  for  and  the  erection  of  a  build- 
ing or  a  portion  thereof  on  real  estate,"®  or  to  take  down  a  build- 
ing and  erect  it  on  the  land  of  another,^  or  a  bridge,^  or  a  monu- 
ment^ or  to  install  a  steam  heating  plant  in  a  factory*  or 
automatic  stokers  under  boilers^  or  for  the  removal  of  earth,*' 
have  been  held  not  to  be  contracts  of  sale  within  the  meaning  of 
the  statute. 

§  1300.  Work  in  raising  crops  and  the  like. — Contracts  by 
which  one  party  is  to  perform  work  and  labor  in  raising  a  crop 

for  delivery,  such  as  the  woodwork  sin  &c.  Fibre  Co.  v.  Jefifris  Lumber 

for  a     wagon,     or     wheat     not     yet  Co.,   132  Wis.  1,  111  N.  W.  237. 

threshed,  or  nails  to  be  made   from  "'  Elli^s  v.  Denver  &c.  R.  Co.,  7  Colo. 

iron   belonging  to   the  manufacturer,  App.  350,  43  Pac.  457. 

and  the  like,  is  not  within  the  statute.  "  Jones    v.    Pettigrew,   25    S.    Dak. 

*     *     *     By    the  ^lassachusetts  rule  432,   127  N.  W.  538. 

the    test     is    not    the     existence    or  *'  Campbell   &   Co.   v.    Mien   Bros., 

nonexistence    of    the    commodity    at  6  Ga.  App.  134,  64  S.  E.  571. 

the  time  of  the  contract,  as  in  New  ""  Flynn  v.  Dougherty,  91  Cal.  669, 

York,   or   whether   the   contract   will  27  Pac.  1080,  14  L.  R.  A.  230 ;  B_rown 

ultimately   result   in   the   transfer   of  &c.  Co.  v.  Wunder,  64  Minn.  450,  67 

title  of  a  chattel  from  the  vendor  to  N.  W.  357,  32  L.  R.  A.  593. 

the     vendee,     as     in     England,     but  ^  Scales    v.    Wiley,    68    Vt.    39,    33 

whether    the    article    is    such    as    the  Atl.  771. 

manufacturer  ordinarily  produces   in  ■  McDonald    v.    Webster's    Estate, 

the   course   of  business   and    for  the  71  Vt.  392,  45  Atl.  895. 

trade,   or  as   the   result   of  a   special  ^Forsyth  v.   Mann,  68  Vt.    116.  34 

order   and   for   special   purposes.     If  Atl.   481,    32    L.    R.    A.   788;    Fox   v. 

the  former,  it  is  regarded  as  a  con-  Utter,  6  Wash.  299.  33   Pac.  354. 

tract  of  sale,  and  within  the  statute;  *  Putnam  &c.  Mach.  Co.  v.  Canfield, 

if  the  latter,  it  is  held  to  be  essen-  25  R.  I.  548,  56  Atl.  1033. 

tiallv  a   contract   for  labor  and   ma-  *  Underfeed     Stokers    Co.    v.    Salt 

terial,   and   therefore  not  within  the  Co.  (Mich.),  97  N.  W.  959. 

statute."  'Welever  v.  Detwiler  Co.,  IS  Ohio 

"  Bagby  V.  Walker,  78  Md.  239,  27  C.  C  680. 
Atl.   1033.     To  same  effect,  Wiscon- 

35 — Contracts,  Vol.  2 


§    130 1  CONTRACTS.  546 

at  a  specified  price  are  not  within  the  statute.'  However,  a  verbal 
agreement  for  the  sale  of  growing  grain,  to  be  delivered  in  a  mar- 
ketable condition,  when  no  part  of  the  purchase-price  is  paid  or 
any  of  the  crop  delivered,  is  not  taken  out  of  the  operation  of  the 
statute  of  frauds  by  virtue  of  an  exception  in  the  statute  provid- 
ing that  it  shall  not  apply  "when  the  article  of  personal  property 
sold  is  not,  at  the  time  of  the  contract,  owned  by  the  vendor  and 
ready  for  delivery,  but  labor,  skill  or  money  are  necessarily  to  be 
expended  in  producing  or  procuring  the  same,"  notwithstanding 
money  and  labor  must  be  expended  to  make  the  crop  marketable.^ 

§  1301.  Sufficiency  of  the  memorandum  required  by  the 
fourth  and  seventeenth  sections. — Both  the  fourth  and  sev- 
enteenth sections  of  the  statute  of  frauds  are  alike  in  that  they 
require  contracts  of  the  kind  enumerated  to  be  evidenced  by  some 
memorandum  or  note  thereof  in  writing  and  signed  by  the  parties 
to  be  charged  therewith  or  some  other  person  thereto  by  him  law- 
fully authorized.  The  seventeenth  section,  besides  this  provision, 
has  certain  other  alternative  clauses  which  will  be  hereinafter  con- 
sidered. 

§  1302.  Form  of  memorandum. — The  form  of  memoran- 
dum is  not  material  so  long  as  it  is  sufficient  to  comply  with  the 
requirements  of  the  statute.^  But  the  writing  must,  within  itself, 
or  by  reference  to  other  writings,  state  the  whole  contract  so 
clearly  that  parol  proof  is  not  required  to  supply  an  essential 
element  thereof. ^"^     A  receipt  acknowledging  the  purchase-money 

'Talmadge  v.   Lane.   17  Misc.   (N.  sell  v.  Renfro.  14  Okla.  674,  78  Pac 

Y.)  731,  41  N.  Y.  S.  413.  118,  affd.  202  U.  S.  287,  50  L.  ed.  1030, 

*Mighell  V.  Dougherty,  86  Iowa  26  Sup.  Ct.  610. 
480,  53  N.  E.  402.  17  L.  R.  A.  755,  41  "Thompson  v.  New  South  Coal 
Am.  St.  511.  See  also,  Lewis  v.  Co.,  135  Ala.  635,  34  So.  31  (check 
Evans,  108  Iowa  296,  79  N.  W.  81 ;  which  did  not  describe  land  sold  in- 
Dierso'n  v.  Petersmeyer,  109  Iowa  sufficient);  Craig  v.  Zelian,  137  Cal. 
233,  80  N.  W.  389;  Johnson  v.  Hoi-  105,  69  Pac.  853  (sale  of  land  in- 
land, 124  Iowa  1,  49  N.  W.  708.  sufficient  description)  ;  Snow  v.  Nel- 

*  Adams     v.     McMillan,     7     Port,  son,   113  Fed.  353   (time  uncertain); 

(Ala.)    IZ;    Woodruff   v.    Butler,   75  Douglass  v.  Bunn,  110  Ga.  159,  35  S. 

Conn.    679,   55    Atl.    167;    Stewart    v.  E.  339    (description  of  property  un- 

Cook,  118  Ga.  541,  45  S.  E.  398;  First  certain)  ;    North   v.    Mendel,    12,    Ga. 

Presbyterian  Church  v.  Swanson,  100  400,  54  Am.  Rep.  879;  Watt  v.  Wis- 

111.   App.  39;   Ruzicka  v.   Hotovy,  72  consin  Cranberry  Co.,  63  Iowa  730,  18 

Nebr.  589,  101  N.  W.  328 ;  Clason  v.  N.  W.  898 ;  Fry  v.  Piatt,  32  Kans.  62, 

Bailey,  14  Johns.   (N.  Y.)  484;  Hal-  3  Pac.  781;  Bruckman  v.  Hargadine- 


547 


STATUTE  OF  FRAUDS. 


§  I3OI 


is  sufficient  if  it  contains  the  requisites  to  constitute  it  valid  evi- 
dence of  an  agreement."  A  bill  of  parcels,  although  not  the  con- 
tract itself,  may  amount  to  a  note  or  memorandum  of  the  contract 
within  the  meaning  of  the  statute.^-  An  order  for  goods  by  the 
buyer  accepted  in  writing  by  the  seller  may  be  sufficient  to  satisfy 
the  requirements  of  the  statute."  An  instrument  which  pur- 
ported to  be  a  will  leaving  land  that  the  testator  had  orally  agreed 
to  give  to  the  beneficiary  therein  named  has  been  held  a  sufficient 
memorandum  in  writing  to  satisfy  the  requirements  of  the  statute 
of  frauds.^''  Any  document  signed  by  the  party  to  be  charged 
containing  the  terms  of  the  contract  will  suffice,  as  a  letter  to  a 
third  party,  a  will,  or  an  affidavit  in  a  different  matter."  An 
entry  in  its  book  of  minutes  of  a  resolution  passed  by  the  govern- 
ing or  legislative  body  of  a  municipal  corporation,  expressing  the 
terms  of  a  contract  signed  by  the  clerk,  is  held  a  satisfactory  com- 
pliance with  the  statute.^"     An  auctioneer  is,  as  we  have  seen. 


McKittrick  Dry  Goods  Co..  91  Mo. 
App.  454;  Cushman  v.  Burritt,  14  N. 
Y.  Week.  Dig.  59;  Wright  v.  Weeks, 
25  N.  Y.  153;  Bailey  v.  Ogden,  3 
Johns.  (N.  Y.)  399,  3  Am.  Dec.  509; 
Buck  V.  Pickwell,  27  Vt.  157.  "The 
meaning  of  the  statute  is  to  reduce 
contracts  to  a  certainty,  in  order  to 
avoid  perjury  on  the  one  hand,  and 
fraud  on  the  other,  and  therefore  both 
in  this  court,  and  in  the  courts  of 
common  law,  where  an  agreement 
has  been  reduced  to  such  a  certainty, 
and  the  substance  of  the  statute  has 
been  complied  with  in  the  material 
part,  the  forms  have  never  been  in- 
sisted upon."  Lord  Hardwicke  in 
Welford  v.  Beazelv,  3  Atk.  503. 

"  Evans  v.  Prothero,  1  DeG.,  M.  & 
G.  572;  Camp  v.  Moreman.  84  Ky. 
635.  8  Kv.  L.  552.  2  S.  W.  179;  Voor- 
heis  V.  Eiting  (Ky.).  22  S.  W.  80  (in 
this  case  the  receipt  was  held  insuffi- 
cient. Sale  of  land.  Property  sold 
not  identified)  ;  Hardt  v.  Recknagel, 
62  App.  Div.  (N.  Y.)  106,  70  N.  Y. 
S.  782. 

"  Saunderson  v.  Jackson,  2  B.  & 
P.  238.  Contra.  Slade  v.  Boutin,  63 
App.  Div.  (N.  Y.)  537,  71  N.  Y.  S. 
740. 

"  Austrian  &  Co.  v.  Springer,  94 
Mich.  343,  54  N.  W.  50.  34  Am.  St. 
350;   Lash   v.    Parlin,   78   Mo.   391; 


Hawkinson  v.  Harmon,  69  Wis.  551, 
35  N.  W.  28.  But  see  Haw  v.  Amer- 
ican Wire  Nail  Co.,  89  Iowa  745.  56 
N.  W.  501.  A  receipt  signed  is  suffi- 
cient. Kundy  v.  Rogers  (Idaho),  79 
Pac.  195;  Hall  v.  Misenheimer,  137 
N.  Car.  183,  49  S.  E.  104,  107  Am.  St. 
474;  Henry  v.  Black,  210  Pa.  St.  245, 
59  Atl.  1070,  105  Am.  St.  802. 

"Shrover  v.  Smith,  204  Pa.  St. 
310,  54  Atl.  24.  See  also.  Brown  v. 
Webster,  90  Nebr.  591,  134  N.  W. 
185,  2,7  L.  R.  A.  (N.  S.)  1196. 

"  First  Pres.  Church  v.  Swanson, 
100  111.  App.  39;  In  re  Hovle  (1893), 
1  Ch.  84;  Cooth  v.  Jackson.  6  Ves. 
Jr.  12;  Barkworth  v.  Young.  4  Drew. 
1,  26  L.  J.  Ch.  153  (affidavit)  ;  Gib- 
son V.  Holland,  L.  R.  1  C.  P.  1,  where 
the  subject  is  fullv  considered.  Wade 
v.  Curtis,  96  Maine  309,  52  Atl.  762 
(nonnegotiable  note)  ;  Peabody  v. 
Speyers,  56  N.  Y.  230. 

"Chase  v.  Lowell.  7  Gray  (Mass) 
ZZ  (record  of  a  resolution  of  city 
council)  ;  Tufts  v.  Plvmouth  &c. 
Mining  Co.,  14  Allen  (Alass.)  407 
(record  of  votes  sufficient  to  bind 
corporation)  ;  Argus  Co.  v.  .Mbanv, 
55  N.  Y.  495.  14  Am.  Rep.  296.  Tn 
Johnson  v.  Dod.gson.  2  M.  &  W.  653. 
the  defendant  made  the  note  of  the 
sale  in  his  own  book,  and  got  the 
agent  of  the  plaintiff  to  sign  it  and 


1^0 


o^o 


CONTRACTS. 


548 


deemed  the  agent  of  both  parties,  and  his  memorandum,  entered 
in  his  own  book,  is  taken  to  be  a  memorandum  in  writing,  binding 
upon  both  parties,  because  by  them  respectively  authorized."  In 
order  to  satisfy  the  statute  of  frauds  it  is  unnecessary  that  the 
terms  of  the  contract  be  contained  in  a  single  instrument. ^^  Thus 
where  the  specifications  for  a  public  improvement  fully  describe 
the  work  to  be  done,  and  a  bid  in  writing  is  made  to  do  such  work 
and  it  is  accepted  and  entered  of  record,  sufficient  evidence  of  a 
contract  exists  to  satisfy  the  statute  of  frauds.^® 

§  1303.    Correspondence  as  evidence  of  the  contract. — The 

principle  is  well  established  that  a  complete  contract  binding  under 
the  statute  may  be  gathered  from  letters,  writings  and  telegrams 
between  the  parties  relating  to  the  subject-matter  of  the  contract, 
and  so  connected  with  each  other  that  they  may  be  fairly  said  to 
constitute  one  paper  relating  to  the  contract.^"     The  correspond- 


the  defendant  retained  the  book;  held 
sufficient  memorandum. 

"  Hawkins  v.  Chace,  19  Pick. 
(Mass.)  502.  So,  also,  in  the  case  of 
a  broker,  Coddington  v.  Goddard,  16 
Gray   (Mass.)   436. 

'"Crystal  Palace  Flour  Mills  v. 
Butterfield,  15  Colo.  App.  246,  61 
Pac.  479;  Schneider  v.  Anderson,  75 
Kans.  11,  88  Pac.  525,  121  Am.  St. 
356;  Bristol  v.  Mente,  79  App.  Div. 
(N.  Y.)  67,  80  N.  Y.  S.  52,  affd.  178 
N.  Y.  599,  70  N.  E.  1096;  Flegel  v. 
Dowling,  54  Ore.  40,  102  Pac.  178, 
135  Am.  St.  812. 

'*  Central  Bitulithic  Pav.  Co.  v. 
Highland  Park,  164  Mich.  223,  129 
N.^  W.  46,   Ann   Cas.   1912B.  719. 

""  Fitzmaurice    v.    Bayley,   9   H.    L. 
Cas.  78 ;  Baumann  v.  James,  L.  R.  3 
Ch.  508 ;  Shardlow  v.  Cotterell,  L.  R 
18  Ch.  Div.  280,  L.  R.  20  Ch.  Div.  90 
Studds  V.  Watson,  28  Ch.  Div.  305 
Oliver  V.  Hunting,  44  Ch.  Div.  205 
Ridgw^ay  v.   Wharton.  6  H.   L.   Cas 
238 ;  Coles  v.  Trecothick,  9  Ves.  248 
Cave  V.  Hastings,  L.  R.  7  Q.  B.  Div 
125;  Long  v.   Millar,  L.   R.  4  C.   P 
Div.    450;    Higginson   v.    Clowes,    15 
Ves.  516;  Sandilands  v.  Marsh,  2  B 
&   Aid.   673 ;   Gaston   v.   Frankum,   2 
DeG.   &   S.   561;    Byrne  v.   Marshall. 
44  Ala.  355;   Brewer  v.  Horst-Lach- 
mund  Co.    rCal.),  60   Pac.  418;   Es- 
may   v.    Gortor,    18   111.   483;    Wills 


V.  Ross,  77  Ind.  1,  40  Am.  Rep.  279; 
O'Donnell  v.  Leeman,  43  Maine  158, 
69  Am.  Dec.  54;  Drury  v.  Young,  58 
Md.  546,  42  Am.  Rep.  343;  Freeland 
V.  Ritz  (1891),  154  Mass.  257,  28  N. 
E.  226,  12  L.  R.  A.  561,  26  Am.  St. 
244;  Lydig  v.  Braman,  117  Mass.  212, 
58  N.  E.  696;  Atwood  v.  Cobb,  16 
Pick.  (Mass.)  227,  26  Am.  Dec.  657; 
Peycke  v.  Ahrens,  98  Mo.  App.  456, 
72  S.  W.  151;  Packard  v.  Putnam. 
57  N.  H.  43;  Wright  v.  Weeks,  25 
N.  Y.  153;  Peabody  v.  Spevers,  56  N. 
Y.  230 ;  Peck  v.  Vandemark,  99  N.  Y. 
29,  1  N.  E.  41;  Louisville  Asphalt 
&c.  Co.  v.  Lorick,  29  S.  Car.  533,  8 
S.  E.  8,  2  L.  R.  A.  212;  Grafton  v. 
Cummings,  99  U.  S.  100,  25  L.  ed. 
366;  Williams  v.  Morris,  95  U.  S. 
444,  24  L.  ed.  360;  Ryan  v.  United 
States,  136  U.  S.  68,  34  L.  ed.  447,  10 
Sup.  Ct.  913;  Beckwith  v.  Talbot,  95 
U.  S.  289,  24  L.  ed.  496.  Where 
parties  negotiated  for  the  exchange 
of  certain  real  estate  and  defendant 
was  to  pay  a  sum  agreed  upon  as  the 
difference  in  the  value  of  the  land 
to  be  exchanged,  the  receipt  and  the 
check  held  to  constitute  the  contract. 
Raubitschek  v.  Blank.  80  N.  Y.  478. 
A  telegram  properly  identified  is 
equivalent  to  a  letter.  McRlain  v. 
Cross,  25  L.  T.  (N.  S.)  804;  Mur- 
phy V.  Thompson,  28  U.  C.  C.  P.  233 ; 
Coupland  v.   Arrowsmith,    18   L.   T. 


549  STATUTE  OF  FRAUDS.  §  I304 

ence  must  of  course  be  sufficient  to  establish  the  contract. ^^ 

§  1304.  Bought  and  sold  notes--"Slip  contracts".— The 
bought  and  sold  notes  of  a  broker,  when  they  correspond  and 
state  all  the  tenns  of  the  bargain,  are  held  to  be  a  sufficient  mem- 
orandum.*- "Slip  contracts"  in  the  form  prescribed  by  the  rules 
and  regulations  of  the  New  York  Cotton  Exchange,  showing 
upon  their  face  that  the  purchasers  named  therein  bought  cotton, 
stating  the  quantity  sold,  the  price,  tiie  name  of  purchasers  and 
sellers,  the  latter  designated  by  fictitious  names,  were  held  to  sat- 
isfy the  statute.  Parol  evidence  is  admissible  to  show  who  are 
the  parties  represented  by  the  fictitious  names  for  whose  account 
the  sales  were  made."^ 

§  1305.  The  contents  of  the  memorandum. — The  memo- 
randum must  contain  within  itself,  or  by  some  reference  to  other 
written  evidence,  all  the  essential  terms  and  conditions  of  the  con- 
tract, expressed  with  such  reasonable  certainty  that  they  may  be 
understood  from  the  memorandum  and  other  written  evidence 


(N.  S.)  755;  Dilworth  v.  Bostwick, 
1  Sweeny  (N.  Y.)  581;  Kinghorne  v. 
Montreal  Tel.  Co.,  18  U.  C.  Q.  B.  60. 

^Lee  V.  Vaughan  (Ark.),  141  S. 
W.  496,  2n  L.  R.  A.  (N.  S.)  352; 
Jackson  v.  Stearns,  58  Ore.  57,  113 
Pac.  30,  Zl  L.  R.  A.   (N.  S.)  639. 

-Parton  v.  Crofts  (1864),  2,1  L.  J. 
C.  P.  189;  Grant  v.  Fletcher,  5  B.  & 
C.  436 ;  Gregson  v.  Ruck,  4  Q.  B.  Ill ; 
Suvdam  v.  Clark,  2  Sandf.  (N.  Y.) 
133;  Peltier  v.  Collins,  3  Wend.  (N. 
Y.)  459,  20  Am.  Dec.  711;  Davis  v. 
Shields,  26  Wend.  (N.  Y.)  341; 
Greeley  Burnham  Co.  v.  Capen 
(1886),  2Z  Mo.  App.  301;  Sieve- 
wright  V.  Archibald,  6  Eng.  L.  &  Eq. 
286.  where  the  subject  was  elabo- 
rately discussed.  There  was  a  dis- 
crepancy in  that  case  between  the 
bought  and  sold  notes.  The  diversity 
was  held  to  avoid  the  contract.  It 
has  been  frequently  said  by  English 
judges  that  brokers'  bought-and-sold 
notes  were  in  their  origin  merely 
copies  of  the  entries  in  their  books 
(per  Lord  Ellenborough,  in  Heyman 
V.  Neale,  2  Camp.  ZZi  \  per  Abbott, 
C.  J.,  in  Grant  v.  Fletcher,  5  B.  & 
C.  436;  per  Lord  Campbell  in  Sieve- 


wright  V.  Archibald  (1851),  6  Eng. 
L.  &  Eq.  286),  but  this  view  is  not 
adopted  by  Blackburn  (Blackburn  on 
Sales,  86).  Bought  and  sold  notes  are 
not  peculiar  to  brokers.  They  appear 
to  be  in  familiar  use  in  England  be- 
tween buyer  and  seller  where  no 
broker  intervenes,  the  seller  deliver- 
ing to  the  buyer  a  sold  note  and  the 
buyer  delivering  to  the  seller  a 
bought  note.  Buxton  v.  Rust,  L.  R. 
7  Ex.  1 ;  Wilmhurst  v.  Bowker,  7 
Man.  &  Gr.  882 ;  Tarling  v.  Ba.xter, 
6  B.  &  C.  360.  When  a  broker  inter- 
venes he  does  for  the  parties  respect- 
ively what  each  would  otherwise  do 
for  himself,  that  is,  he  makes  out 
and  signs  a  sold  note  on  behalf  of 
the  seller,  and  a  bought  note  on  be- 
half of  the  buver.  Moore  v.  Camp- 
bell, 10  Ex.  zii. 

=n^ibb  V.  .Mien,  149  U.  S.  481,  11 
L.  ed.  819,  13  Sup.  Ct.  950.  The  slip 
contracts  were  in  the  following 
form:  "New  York,  Nov.  10,  1886  — 
B.  10,  ac.  Albert;  10  ac.  Alexander; 
5  ac.  Andrew.  Seller,  — ,  Buyer, 
Zerega  &  White.  On  contract  sub- 
ject to  rules  and  regulations  of  New 
York    Cotton    Exchange,    twenty-five 


§    1306  CONTRACTS.  55O 

referred  to  without  aid  from  parol  testimony.^*  Under  this  rule 
it  is  essential  that  the  writing  or  writings  show  that  the  parties 
thereby  intended  to  enter  into  a  binding  contract  or  that  they  have 
already  entered  into  an  agreement  which  the  writing  is  to  evi- 
dence."^ Thus  a  writing  submitted  by  the  vendor  to  the  vendee 
on  which  the  latter  had  noted  "no  description  of  property"  on  the 
margin  and  had  replied  that  he  would  call  with  an  agreement^' 
or  a  writing  by  which  one  gives  the  refusal  of  certain  property  to 
another,'^  or  which  states  that  the  signer  can  spare  a  designated 
quantity  of  corn,"^  or  which  merely  gives  expression  to  an  inten- 
tion,^® or  of  a  desire,^"  or  a  letter  which  asked  the  party  addressed 
to  call  by  phone  and  they  would  talk  it  over^^  has  in  each  case 
been  declared  insufficient  evidence  of  a  contract.  Where  an  auc- 
tioneer entered  in  his  sales  book  the  names  of  the  vendor  and 
purchaser,  the  subject-matter  of  the  sale  and  the  amount  of  the 
purchase  money,  but  omitted  any  reference  to  the  particulars  or 
conditions  subject  to  which  the  sale  was  made,  the  memorandum 
was  held  insufficient.^^ 

§  1306.    Names  of  parties  must  be  shown. — It  is  well  estab- 
lished, where  the  statute  requires  a  contract  to  be  in  writing, 

hundred  bales  of  cotton.    Jan.  1  de-  117,   62   N.   W.   658;    Leatherbee   v. 

livery;  price  8.99.     Pre  Z.  &  White,  Bernier,    182    Mass.    507,    65    N.    E. 

seventy-five."  842;   Kling  v.   Bordner,  65  Ohio  St. 

'*  Salomon  v.  McRae,  9  Colo.  App.  86,  61  N.  E.  148;  Davis  v.  Brigham, 
23,  47  Pac.  409;  Crystal  Palace  Flour  56  Ore.  41,  107  Pac.  961,  Ann.  Cas. 
Mills  v.  Butterfield,  15  Colo.  App.  1912B.  1340;  In  re  Wright's  Estate, 
246,  61  Pac.  479;  Oglesby  Grocery  155  Pa.  St.  64,  25  Atl.  877;  Master- 
Co.  V.  Williams  M.  Co.,  112  Ga.  359,  son  v.  Little,  75  Tex.  682,  13  S.  W. 
Zl  S.  E.  372  (holding  that  writing  154;  Munk  v.  Weidner,  9  Tex.  Civ. 
must  show  the  parties  to  the  con-  App.  491,  29  S.  W.  409. 
tract)  ;  Worthem  v.  Stith,  23  Ky.  L.  "*  Andrew  v.  Babcock,  63  Conn. 
1882,  66  S.   W.  390    (insufficient  de-  109,  26  Atl.  715. 

scription    of    land);    Bernheimer    v.  "Williams    v.     Smith,     161     Mass. 

Verdon,  63  N.  J.  Eq.  312,  49  Atl.  732:  248,  Zl  N.  E.  455. 

Kling  V.  Bordner,  65  Ohio  St.  86,  61  '*  Redus    v.    Holcomb    (Miss.),    21 

N.    E.    148;     Cammack    v.    Prather  So.  524. 

(Tex.  Civ.  App.),  74  S.  W.  354  (in-  ™ White  v.  Bigelow,  154  Mass.  593, 

sufficient  description  of  land)  ;  Rahm  28  N.  E.  904. 

v.  Klerner,  99  Va.  10,  Zl  S.  E.  292  =*  In  re  Wright's  Estate,  155  Pa. 
(contract  with  agent  not  identifying  St.  64,  25  Atl.  877.  Compare,  how- 
territory  in  which  such  agent  was  to  ever,  with  North  Platte  &c.  Co.  v. 
sell).  Price,  4  Wyo.  293,  ZZ  Pac.  664. 

^  Salomon  v.  McRae,  9  Colo.  App.  ^  Mathes  v.  Bell,  121  Iowa  722,  96 

23,  47  Pac.  409;  Andrew  v.  Babcock,  N.  W.   1093. 

63  Conn.  109,  26  Atl.  715;  American  ^Rishton    v.    Whatmore,    L.    R.   8 

Oak  Leather  Co.  v.  Porter,  94  Iowa  Ch.  D.  467;  Kenworthy  v.  Schofield, 


551  STATUTE  OF  FRAUDS.  §  I307 

that  there  can  be  no  binding  contract  unless  both  parties  thereto 
are  named  in  the  writing,  or  so  described  therein  so  that  they  may 
be  identified.  This  makes  it  necessary  that  the  written  memoran- 
dum should  show  not  only  who  is  the  party  to  be  charged  but  also 
who  is  the  party  in  whose  favor  he  is  charged. ^^  Thus  it  has  been 
held  that  if  the  contract  for  the  sale  of  property  shows  that  one 
of  the  parties  subscribing  it  acted  as  agent  for  some  undisclosed 
principal  it  cannot  be  enforced  against  such  principal  for  his  rela- 
tion to  it  must  be  established  by  parol  evidence.'*  The  naming  of 
an  auctioneer  has  been  held  not  to  sufficienily  designate  the 
seller.^'*  A  written  memorandum  which  does  not  identify  the 
vendor^"  or  vendee'^  is  insufficient.^^ 

§  1307.    Description  of  subject-matter — Personal  property. 

■ — It  must  appear  from  the  memorandum  what  the  subject-matter 
of  the  contract  is,  and  while  it  need  not  be  described  in  a  com- 
plete and  detailed  manner  it  must  be  sufficiently  definite  to  enable 
the  subject-matter  to  be  identified.  Thus  where  a  travelling 
salesman  was   employed  to   sell  the   defendant's  goods   in  the 

2  B.  &  C.  945;  Peirce  v.  Corf,  L.  R.  308,  26  N.  E.  861,  10  L.  R.  A.  815, 

9  Q.  B.  210.  25  Am.  St.  632;  Alentz  v.  Newwitter, 

^Oglesby  Grocery  Co.  v.  Williams  122  N.  Y.  491,  25  N.  E.   1044,  11  L. 

Mfg.  Co.,  112  Ga.  359,  Zl  S.  E.  372;  R.  A.  97.  19  Am.  St.  514. 

To  same  eflfect,  American  Oak  Lea-  '"Coombs  v.  Wilkes   (1891),  3  Ch. 

ther  Co.  v.   Porter,  94  Iowa  117,  62  11;  Ross  v.  Allen,  45  Kans.  231,  25 

N.   W.   658;    Mertz   v.    Hubbard,   75  Pac.   570,   10  L.   R.   A.   835.     In  the 

Kans.  1,  88  Pac.  529,  121  Am.  St.  352;  above  case  the  contract   was   signed 

Lincoln   v.    Erie   Preserving  Co.,   132  by  one  as  agent  without  his  principal 

Mass.    129;    Coddington   v.    Goddard,  being    in    any    way    indicated.      See 

16    Gray    (Mass.)    436;    McKeag    v.  contra,  however,   Mantz  v.   Maguire, 

Piednoir,  74   Mo.  App.   593 ;   Carrick  52  Mo.  App.  136.     Compare  the  fore- 

v.  Mincke,  60  Mo.  App.  140;  Brown  going    Massachusetts    case    with    the 

V.  Whipple,  58  N.  H.  229;  Mentz  v.  case  of   Tobin  v.   Larkin,   183   Mass. 

Newwitter,  122  N.  Y.  491,  25  N.  E.  389,  67   N.   E.  340,   in   which   it  was 

1044,  11  L.  R.  A.  97,  19  Am.  St.  514;  said   that   if   the   memorandum   gave 

Grafton  v.  Cummings,  99  U.  S.   100,  the  name  of  the  agent  by  whom  one 

25  L.  ed.  366.     It  is  held  in  Salmon  party  is  represented  the  principals  of 

Falls  Mfg.  Co.  V.  Goddard,  14  How.  the    agent    may    be    shown    by    parol 

(U.  S.)   446,  14  L.  ed.  493,  that  the  testimony. 

memorandum   need   not    identify   the  "Lewis   v.    Wood,    153    Mass.    321, 

parties.      Grafton    v.    Cummings,    99  26  N.  E.  862,   11  L.  R.  A.  143;  Cat- 

U.  S.  100,  25  L.  ed.  366,  criticizes  this  terlin  v.  Bush,  39  Ore.  496,  58  Pac. 

case  and  it  was  disapproved  in  Mentz  706,   65    Pac.    1064;    Harney   v.    Bur- 

v.  Newwitter,  122  N.  Y.  491,  25  N.  E.  bans,  91    Wis.   348,   64   N.   W.    1031. 

1044,    11    L.    R.    A.   97n,    19  Am.    St.  So  of   a   sheriff's   sale  on   execution, 

514.  where  the  statute  of   frauds  applies. 

"  Mertz  v.  Hubbard,  75  Kans.  1,  88  Tombs  v.  Basve.  65  Mo.  App.  30. 

Pac.  529,  121  Am.  St.  352.  "As  to  the  form  of  the  signature, 

"  McGovern    v.    Hern,    153    Mass.  see  post,  §  1317. 


§    1308  CONTRACTS. 


00- 


"southern  states"  it  was  held  that  the  territory  in  which  the 
salesman  had  a  right  to  sell  was  one  of  the  essential  terms  of  the 
contract  and  that  the  term  "southern  states"  was  not  sufficiently 
definite  and  that  the  defect  could  not  be  supplied  by  a  parol 
proof. ^^  A  memorandum  of  a  contract  for* the  delivery  of  rail- 
road ties  which  merely  gave  the  number  of  the  ties  bargained  for 
without  designating  the  number  of  ties  of  various  descriptions 
has  been  held  too  indefinite  to  take  the  contract  out  of  the  stat- 
ute." 

§  1308.  Contents  of  memorandum — Admissibility  of  evi- 
dence aliunde. — However,  if  the  subject-matter  of  the  con- 
tract is  capable  of  being  made  certain  by  evidence  aliunde  which 
does  not  add  to  the  terms  of  the  contract  the  memorandum  is 
sufficient.^^  It  has  been  held  that  where  a  third  person  promised 
in  writing  to  pay  a  bill  that  a  debtor  owed  his  creditor  it  was 
competent  for  the  creditor  to  prove  by  parol  the  nature  and 
amount  of  the  debt*^  Nor  is  the  memorandum  rendered  indefi- 
nite by  the  fact  that  one  of  the  parties  is  given  an  option  to  de- 
liver either  of  two  or  more  kinds  of  property  set  out  in  the  memo- 
randum.^^ Abbreviations  do  not  render  it  defective  within  the 
meaning  of  the  act  when  their  meaning  may  be  explained  as  it 
was  understood  between  the  parties.** 

§  1309.  Contents  of  memorandum — Descriptions  of  real 
estate. — No  more  particular  description  is  necessary  under 
the  statute  in  a  contract  for  the  sale  of  real  estate,  than  one  relat- 

^'Rahm  v.  Klerner,  99  Va.   10,  2>1  held  sufficient.    The  above  case  also 

S.  E.  292.     Compare  with   Kaufman  holds  that  where  there  are  two   de- 

V.    Manufacturing  Co.,   78  Iowa  679,  scriptions,  one  correct  and  the  other 

43    N.   W.   612,    16   Am.    St.   462,   in  false,  the  latter  should  be  rejected  as 

which  an  agreement  to  sell  goods  in  surplusage. 

a  designated   city  "and  the  territory  ^  Haskell   v.   Tuksberry,  92   Maine 

tributary  thereto"  was  held  to  locate  551,  43  Atl.  500,  69  Am.  St.  529  (the 

the  territory   with   sufficient   definite-  promise    was    contained    in    a    letter 

ness.  written  to  the  creditor). 

*^  Ellis    V.    Denver    &c.    R.    Co.,    7  "American   &c.   Mfg.   Co.  v.   Mid- 
Colo.  App.  350,  43  Pac.  457.  land  Steel  Co.,  101  Fed.  200 ;  Burgess 

"Woods  V.  Hart,  50  Nebr.  497,  70  Sulphite  Fiber  Co.  v.  Broomfield,  180 

N.  W.  53.  _  In  the  above  case  where  Mass.  283,  62  N.  E.  367. 

the  stock   intended   to   be  exchanged  "  See    Brewer   v.    Horst-Lachmund 

was  described  as  "being  the  same  cat-  Co.,   127  Cal.  643,  60  Pac.  418,  50  L. 

tie  picked  out  by  said  Woods  on  Jan-  R.  A.  240;  Sanborn  v.  Flagler,  9  Al- 

uary  27,   1893,"  this   description  was  len    (Mass.)   474. 


553  STATUTE  OF  FRAUDS.  §  I309 

ing  to  personal  property.  In  each,  to  constitute  a  bargain  and 
sale,  or  a  contract  which  will  be  specifically  enforced  in  equity, 
the  subject-matter  thereof  must  ]xt  identified.'"^  It  is  not  neces- 
sary that  the  contract  for  the  sale  of  realty  contain  such  a  de- 
scription as,  without  the  aid  of  extrinsic  testimony,  designates 
precisely  the  land  agreed  to  be  sold.  It  should,  however,  contain 
a  sufficient  description  to  evidence  a  common  intent  of  the  par- 
ties to  deal  with  respect  to  a  particular  piece  of  property  as  dis- 
tinguished from  the  other  property.^"  When  the  description  is 
sufficiently  definite  to  comprehend  the  property,  it  is  a  compliance 
with  the  statute  of  frauds ;  and  resort  may  be  had  to  extrinsic  evi- 
dence to  ascertain  the  boundaries  or  fix  its  identity,  and  apply  the 
description  to  the  very  property  intended,  provided  that  it  does 
not  dispute  or  add  to  the  agreement.'*^  Thus  even  though  the 
writing  does  not  state  in  what  county  or  state  the  land  is  situated 
the  description  may  be  sufficiently  certain  provided  it  contains  or 
provides  other  means  for  identifying  the  land  conveyed.*®  No 
other  question  entering  in,  descriptions  of  real  property  omitting 
the  town,  county  or  state  where  the  property  is  situated  have  been 

"Shardlow  v.   Cotterell,   L.   R.   20  267,    44    N.    W.    118;    Lippincott    v. 

Ch.    Div.   90;    Hurley   v.    Brown,   98  Bridgewater,    55    N.    J.    Eq.   208,    36 

Mass.  545,  96  Am.  Dec.  671;   Sharer  Atl.  672;   Kling  v.  Bordner,  65  Ohio 

V.  Trowbridge,  135  Mass.  500;  Whe-  St.  86,  61  N.  E.  148;  Bogard  v.  Bar- 

lan  V.  Sullivan,  102  Mass.  204;  Bishop  han,   52   Ore.    121,  96   Pac.   673,    132 

V.  Fletcher,  48  :^Iich.  555,   12  N.  W.  Am.  St.  676;  Ferguson  v.  Staver,  33 

849;    Pierson    v.    Ballard.    32    Minn.  Pa.  St.  411. 

263,  20  N.  W.  193;  Scarritt  v.  St.  "Bogard  v.  Barnhan,  52  Ore.  121, 
John's  Church,  7  Mo.  App.  174;  96  Pac.  673,  132  Am.  St.  676  (in  the 
Webster  v.  Clark,  60  N.  H.  36;  Fer-  above  case  it  is  said,  "The  rule  for 
guson  V.  Staver,  33  Pa.  St.  411;  determining  the  sufficiency  of  a  de- 
Johnson  v.  Granger,  51  Tex.  42;  Will-  scription  in  a  deed  or  any  other 
iams  V.  Morris,  95  U.  S.  444,  24  L.  writing  in  relation  to  real  property  is, 
ed.  360.  can  a  surveyor,  with  a  deed  or  other 

*'Kopp   V.    Reiter,    146   111.  437,   34  instrument  before  him,  with  or  with- 

N.   E.  942,  22  L.  R.  A.  273,  37  Am.  out    the    aid    of    extrinsic    evidence, 

St.    156;    Edens    v.    Miller,    147    Ind.  locate    the    land    and    establish    the 

208,  46  N.  E.  526;  Flegel  v.  Dowling,  boundaries?")      See    also,    Bacon    v. 

54  Ore  40,  102  Pac.  178,  135  Am.  St.  Leslie.  50  Kans.  494.  31  Pac.  1066,  44 

812.       See     also,     Alabama     Mineral  Am.  St.  134;  Moavon  v.  Moayon,  114 

Land  Co.  v.  Jackson,  121  Ala.  172,  25  Ky.  855,  24  Kv.  L.  1641,  72  S.  W.  33, 

So.  709,  77  Am.   St.  46;  Ridgway  v.  60  L.   R.   A.   415,   102   Am.   St.  303; 

Ingram,    SO    Ind.    145.    19    Am.    Rep,  Kennedy  v.  Gramling.  33  S.  Car.  367, 

706;  Frv  v.  Piatt,  32  Kans.  62.  3  Pac.  11  S.  E.  1081.  26  Am.  St.  676. 

781;  Sh'erer  v.  Trowbridge,  135  Mass.  **  Hollev's  Exr.  v.  Currv.  58  W.  Va. 

500;    Burgon   v.    Cabanne,   42   ^linn.  70,  51  S.  E.  135,  112  Am.  St.  944. 


§    I3IO  CONTRACTS.  554 

held  sufficient  where  the  deed  or  writing  provides  other  means  of 
identification.*" 

§  1310.    Further  illustrations  of  the  rule. — A  memorandum 
which  describes  the  property  sold  as  the  hotel  Duquesne  property 
has  been  held  sufficiently  definite  to  support  an  action  for  specific 
performance  where  the  property  bargained   for  was  a  promi- 
nent hotel  on  one  of  the  principal  streets  of  the  city  and  the  ident- 
ity of  the  hotel  site  was  fixed  by  the  city  and  county  records.^'' 
The  statute  of  frauds  has  been  held  satisfied  for  a  written  agree- 
ment by  which  the  appellee  agrees  to  convey  one-third  of  his  estate 
of  whatever  nature  acquired  under  his  mother's  will,  or  other- 
wise borrowed  or  owned  by  him,  since  it  was  possible  to  identify 
the  property  by  parol  evidence."     A  written  contract  which  de- 
scribed the  land  exchanged  as  ">4  of  sec.  7 — 23 — 7,  and  all  of 
sec_  18 — 23 — 7,  all  being  in  Sycamore  township,  in  Butler  county, 
Kansas ;"  has  been  held  sufficiently  definite  to  support  an  action 
for  a  specific  performance  when  it  is  alleged  and  proved  at  the 
trial  "that  at  the  time  of  the  execution  of  the  agreement  the 
defendant  was  the  owner  of  section  18,  and  the  south  half  of  sec- 
tion 7,  all  in  township  23  south  of  range  7  east,  in  Butler  county, 
Kansas ;  and  that  the  defendant  was  then  the  owner  of  no  other 
real  estate  in  said  section  7.""     Descriptions  of  land  which  give 
the  section^^  or  lot  numbers,^*  or  describe  the  boundaries  so  that 
it  may  be  located,"  and  a  description  which  identifies  the  land  as 
that  where  the  vendor  now  lives,^^  or  as  his  "home-place  and 

**  Hawkins  v.  Hudson,  45  Ala.  482;  "  Moayon  v.  Moayon,  114  Ky.  855, 

Webb  V.   Mullins,  78  Ala.   Ill;   Mc-  24  Ky.  L.  1641,  72  S.  W.  33,  60  L.  R. 

Cullough   V.    Olds,    108    Cal.   529,   41  A.  415,  102  Am.  St.  303. 

Pac.   420-    Garden   City   Sand   Co.   v.  "'Bacon  v.  Leslie,  50  Kans.  494,  31 

Miller     157    111.   225,   41    N.    E.   753;  Pac.   1066,  34  Am.  St.  134. 

Tewksbury  v.  Howard,  138  Ind.  103,  ^  Mann  v.   Higgins,  83   Cal.  66,  23 

37   N     E.   355;    Lloyd   v.    Bunce,   41  Pac.  206;  Wilson  v.  Emig,  44  Kans. 

Iowa  660 ;  Mee  v.  Benedict,  98  Mich.  125,    24    Pac.    80 ;    Ryan    v.    United 

260,  57  N.  W.  175,  22  L.  R.  A.  641,  States,   136  U.   S.  68,  34  L.   ed.  447; 

39    Am     St.    543;    Quinn    v.    Cham-  Combs  v.   Scott,  76  Wis.  662,  45  N. 

pagne,  38  Minn.  322,  37  N.  W.  451 ;  W.  532. 

Norfleet    v.    Russell,    64    Mo.     176;  "St.  Paul  Land  Co.  v.  Dayton,  42 

Robeson  v.  Hornbaker,  3  N.  J.  Eq.  Minn.  73,  43  N.  W.  782. 

60;    Flegle   v.   Dowling,  54   Ore.   40,  '"Kyle  v.  Rhodes,  71  Miss.  487,  15 

102  Pac.  478,  135  Am.  St.  812 ;  Crotty  So.  40 ;  Sherman  v.  Simpson,  121  N. 

V.    Effler,   60  W.   Va.   258,   54   S.   E.  Car.  129,  28  S.  E.  186. 

345,  9  Ann.  Cas.  770.  "'Falls  of  Nuese  Mfg.  Co.  v.  Hen- 

'"  Henry  v.  Black,  210  Pa.  St.  245,  dricks,  106  N.  Car.  485,  11  S.  E.  586. 
59  Atl.  1070,  105  Am.  St.  802. 


555  STATUTE  OF  FRAUDS.  §  I3II 

Storehouse""  have  been  held  sufficient  to  comply  with  the  statute. 
Where  the  memorandum  executed  by  the  defendant  described  the 
lot,  acknowledged  the  receipt  of  money  as  part  of  the  pur- 
chase-price, and  declared  the  trust  and  taking  of  the  title  by 
defendant,  it  was  held  that  recovery  by  plaintiff  was  not  pre- 
vented by  the  statute  of  frauds,"^  and  where  an  agent,  who  was 
orally  appointed  by  a  married  woman  with  her  husband's  sanc- 
tion, purchased  land  at  auction,  and  the  auctioneer  made  a  memo- 
randum in  his  book  of  the  purchaser's  name  and  terms  of  sale,  the 
purchase  was  held  binding  on  the  woman,  and  not  within  the 
statute  of  fraud. ^" 

§  1311.    Contract  to  convey  one  of  several  tracts. — It  is 

true  generally  that  a  memorandum  agreement  to  convey  any  one 
of  several  definitely  described  tracts  of  land  to  be  selected  is  suffi- 
cient to  comply  with  the  statute.  The  contract  becomes  absolute 
when  the  selection  is  made.^'*  But  where  the  land  from  which 
the  lots  were  to  be  selected  had  not  been  platted  at  the  time  the 
memorandum  was  made  it  was  held  that  the  description  was 
wholly  vague  and  indefinite  in  the  absence  of  such  allotment.'^ 
There  is  authority  to  the  effect  that  a  memorandum  for  the  sale 
of  real  estate,  the  specific  tract  to  be  conveyed  to  be  selected  by 

"  Henderson    v.    Perkins,    94    Ky.  107  Ind.  432,  8  N.  E.  167  (agreement 

207,  21   S.  W.  1035.  giving   the   grantee   the    right   to    se- 

'^  Waterburv  V.  Fisher,  5  Colo.  App.  lect   a    certain    amount    of    land    for 

362    38  Pac    846.  a  railroad  right  of  way)  ;  Cape  Gira- 

'"  Moore  v.  Taylor,  81   Aid.  644,  32  deau   &c.    R.    Co.    v.    Wingerter,    124 

Atl.  320,  33  Atl.  886.  Mo.  App.  426,  101  S.  W.  1113  (agree- 

""  Alabama  C.  R.  Co.  v.  Long,   158  ment  to  convey  land   for  a  railroad 

Ala.    301,    48    So.    363     (contract    to  right     of     way     when     located     by 

convev  a  strip  of  land  out  of  a  speci-  grantee)  ;  Repetto  v.  Baylor,  61  N.  J. 

fied   larger  tract  to   a   railroad   com-  Eq.  501,  48  Atl.  774   (a  contract  for 

pany  for  a  right  of  way)  ;  Lauder  v.  the   sale  of   lots  as   designated  on  a 

Peoria   Agri.    &c.    Soc,    71    111.   App.  certain    map,    with    the    proviso    that 

475   (contract  to  convey  one  lot  in  a  if  the  grantor  had  already  sold  any 

subdivision  to  be  made  of  a  portion  of  such  lots,  the  grantee  might  select 

of   certain  designated  lands,   as  indi-  others)  ;     Simpson    v.     Breckenridge, 

cated  by  a  certain  plat  thereof,  which  32  Pa.  St.  287  (an  agreement  as  fol- 

lot  was  to  be  designated  by  a  named  lows:  "I  will  give  J.  S.  100  acres  of 

committee);    Carpenter   v.    Lockhart,  land  next  to  either  S.  or  N.  for  $450; 

1  Ind.  434,  Smith  326  (an  agreement  or  I  will  give  the  200  acres  with  a 

to    convey    a    designated    number    of  clear   title,   for  his  house  and  lot  ). 

acres    of    land,    to    be    selected    by  "Chellis  v.  Grimes.  72  N.   H.  3o7, 

seller   out   of   a   certain   larger  tract,  56    Atl.    742.      See    also.    Scanlan    v. 

on    plaintiff's    election    to    take    them  Oliver,  42  Minn.  538.  44  N.  \\  .  1031 

and  pay  the  purchase-money)  ;   Bur-  (land  to  be  conveyed  to  be  mutually 

row    V.   Terre   Haute   &    L.    R.    Co.,  agreed  upon). 


§    13 1 2  CONTRACTS.  556 

the  purchaser,  is  within  the  statute  until  such  selection  has  been 
actually  made  in  writing."  Other  courts  hold  that  failure  on  the 
part  of  the  one  in  whom  the  power  of  selection  rests  to  make  a 
selection  does  not  destroy  the  validity  of  the  contract.  By  enter- 
ing into  the  agreement  he  agrees  to  make  the  selection  and  on 
failure  so  to  do  an  action  may  be  brought  to  compel  specific  per- 
formance/^ or  for  damages  for  breach  of  contract.^* 

§  1312.  Contents  of  memorandum — Descriptions  of  real 
estate  held  insufficient. — While  extrinsic  evidence  may  be  ad- 
missible to  apply  the  description  given  to  the  very  property  in- 
tended, the  description  or  designation  of  the  property  in  the  agree- 
ment must  be  such  as  to  render  the  intention  entirely  manifest  and 
resort  can  not  be  had  to  extrinsic  evidence  to  determine  what 
property  was  intended."^  Thus  a  memorandum  in  writing  as  fol- 
lows :  "I  have  sold  this  place,"  naming  the  vendee  and  the  price, 
has  been  held  insufficient  to  satisfy  the  statute  of  frauds.*'*'  A 
mortgage,  to  be  effective,  must  in  some  way  describe  and  identify 
the  indebtedness  it  is  intended  to  secure."  A  promise  to  convey 
any  one  of  four  tracts  of  land  in  consideration  of  marriage,  the 
tract  to  be  conveyed  being  in  no  way  identified,  has  been  held 
within  the  statute.*'^  A  paper  acknowledging  receipt  from  the 
husband  of  the  signor's  deceased  mother  of  a  specified  sum  in  full 
payment  and  satisfaction  of  the  amount  due  them  from  their 
mother's  estate  is  not  sufficient  as  a  memorandum,  within  the 
statute  of  frauds,  of  a  contract  of  sale  of  their  interest  in  land 

''Alabama    Mineral    Land    Co.    v.  son  v.  Stearns,  58  Ore.  57,  113  Pac. 

Jackson,  121  Ala.  172,  25  So.  709,  11  30,  2>1  L.  R.  A.  (N.  S.)  639.   See  post, 

Am.    St.    46.      See    also,    Patrick    v.  §    1326. 

Sears,    19  Fla.  856;    Carr  v.    Passaic  ^  The     memorandum     m     question 

Land  Imp.  &c.  Co.,  19  N.  J.  Eq.  424;  contains   no    reference   to   any   other 

Ensminger    v.    Peterson,   53    W.    Va.  document,  and  we  are  clearly  of  the 

324,  44  S.  E.  218.  opinion   that   it   is   not   competent  to 

*^Peckham  v.   Lane,  81   Kans.  489,  consider    the    deed    alleged    to    have 

106   Pac.   464,   25   L.   R.   A.    (N.    S.)  been  delivered  as  a  part  of  the  mem- 

967,  19  Am.  &  Eng.  Ann.  Cas.  369.  orandum     required     by    the    statute. 

"■'  Lingeman  v.   Shirk,  15  Ind.  App.  Cunha  v.  Callery,  29  R.  I.  230,  69  Atl. 

432,  43  N.  E.  2>Z.     See  also,  Jenkins  1001,  132  Am.  St.  811. 

v.   Green,  27   Beav.  437,  5   Jur.    (N.  *"  Bowen  v.   Ratcliff,   140  Ind.  393, 

S.)   304;  Lingle  v.  Clemens,   17  Ind.  39  N.  E.  860.  49  Am.  St.  203. 

124  "'Cole  v.  Cole  (Miss.),  54  So.  953, 

"'Bogard  V.  Barnhan,  52  Ore.  121,  34  L.  R.  A.  (N.  S.)  147  and  note. 
96  Pac.  673,  132  Am.  St.  676;  Jack- 


557  STATUTE  OF  FRAUDS.  g  I3I3 

inherited  from  their  mother.*'"  A  written  agreement  to  sell  a 
half-acre  of  land  adjoining  a  certain  lot  on  the  east  and  running 
due  east  does  not  sufficiently  describe  the  land,  and  the  descrip- 
tion given  could  not  be  aided  by  parol  evidence.''"  An  agreement 
to  convey  ten  out  of  forty  acres,  owned  by  the  vendor,  has  been 
held  insufficient  for  indefiniteness.''^  A  memorandum  of  sale  de- 
scribing the  land  as  "The  Baldwin  Place,"  where  the  property 
was  not  otherwise  identified,  has  also  been  held  insufficient.''" 
The  fact  that  a  part  of  the  assigned  contract  is  in  writing  is  not 
sufficient  to  prevent  the  operation  of  the  statute  of  frauds  when 
the  written  part  does  not  contain  all  the  essentials  of  the  con 
tract.'^ 

§  1313.  'Whether  the  memorandum  must  show  the  consid- 
eration.— -In  England  it  has  been  declared  that  the  memoran- 
dum must  contain  the  consideration  for  the  promise.  This  hold- 
ing was  based  mainly  upon  the  assumption  that  the  word  "agree- 
ment" was  used  in  its  strict  legal,  and  not  in  its  popular,  sense.''* 
This  rule  has  been  followed  in  England  in  a  long  series  of  cases. ''^ 
In  the  courts  of  this  country  there  has  been  a  contrariety  of  opin- 
ion on  this  point,  depending  to  some  extent  upon  the  language  of 
the  statute  of  tlie  different  states.  In  some  states  the  statute  ex- 
pressly provides  that  the  consideration  need  not  appear  in  the 

•'  Munk  V.   Weidner,  9  Tex.  App.  from    promise,    and    that    something 

491,  29  S.  VV.  409.  besides    the    mere    promise    was    re- 

"  Sherer  v.  Trowbridge,  135  Mass.  quired  to  be  stated.    And  as  the  con- 

500.  sideration  for  the  promise  is  part  of 

■^  Omaha    Loan    &    Trust    Co.    v.  the  agreement,  that  ought  also  to  be 

Goodman,   62   Nebr.    197,  86   N.   W.  stated   in   writing."     Wain  v.   Warl- 

1082.  ters,  5  East  10. 

"Wood  V.  Zeigler,99Tenn.515,  42  "Saunders    v.    Wakefield,   4   B.   & 

S.  W.  447.  Aid.    595;    Jenkins    v.    Rej-nolds,    3 

"Wright  V.   Raftree,    181    111.   464,  Brod.  &  Bing.  14;  J^Iorley  v.  Booth- 

54  N.  E.  998.  by,    3    Bing.    107;    Hawes    v.    Arm- 

'*"If     the     question     had     arisen  strong,    1    Bing.   N.   C.   761;   Cole  v. 

merely  on  the  first  part  of  the  clause,  Dyer,    1    Cro.   &  Jer.   461 ;   James  v. 

I   conceive   that   it   would   only  have  Williams,  3  Nev.  &  Man.  196 ;  Clancy 

been     necessary     that     the     promise  v.    Piggott,    4    Nev.    &     Man.    496; 

should  have  been   stated  in   writing;  Raikes    v.    Todd,   8   Ad.    &    El.    846; 

but  it  goes  on  to  direct  that  no  per-  Sweet  v.  Lee,  3  Man.  &  G.  452.  But 

son  shall  be  charged  on  such  promise,  by    statutes    19   and    20   Vic,   ch.   97 

unless   the   agreement,  or  some  note  (1856),    a    memorandum   of   a   guar- 

or  memorandum  thereof,  that  is.  of  anty  need  not  state  the  consideration, 

the  agreement,  be  in  writing;  which  Holmes   v.   Durkee,   1    Cababe  &   E. 

shews  that  the  word  agreement  was  23. 
meant  to  be  used  in  a  sense  different 


§  I3I4 


CONTRACTS. 


55S 


memorandum/*'  while  in  others  the  statute  requires  the  considera- 
tion to  appear." 

§  1314.  Weight  of  authority. — The  weight  of  American 
authority  would  seem  to  preponderate  against  the  rule,  even 
where  the  construction  depends  on  the  legal  meaning  of  the 
word  "agreement.""  The  words  "for  value  received"  sufficiently 
express  the  consideration  to  amount  to  a  compliance  with  the  re- 
quirements of  the  law.  This  seems  to  be  so,  both  in  those  states 
whose  statute  expressly  requires  the  consideration  to  be  expressed 
and  in  those  whose  courts  follow  the  English  doctrine.''^ 

§  1315.  Statement  of  consideration — Executory  contracts 
— Price  and  terms. — Where  the  parties  have  actually  agreed 


'"Edgerton  v.  Edgerton,  8  Colo. 
6;  Dunlop  v.  Hopkins,  95  Fed.  234 
(construing  Illinois  statute)  ;  Hiatt 
V.  Hiatt,  28  Ind.  53;  Scott  v.  Bush, 
26  Mich.  418,  12  Am.  Rep.  311; 
Jones  V.  Palmer,  1  Doug.  (Mich.) 
379;  Hall  v.  Soule,  11  Mich.  494; 
Detroit  &c.  R.  Co.  v.  Forbes,  30 
Mich.  165;  Palmer  v.  Marquette  &c. 
Mill  Co.,  32  Mich.  274;  Neibert  v. 
Baghurst  (N.  J.  Eq.),  25  Atl.  474; 
Hawaii  Rev.  Laws  1905,  §  1997. 
2  Starr  &  Curtis's  Illinois  Ann.  Stat. 
(2d  ed.)  1896,  ch.  59,  §  9.  Burn's 
Indiana  Rev.  Stat.  1908,  §  7464; 
Massachusetts  Rev.  Laws  1902,  ch. 
74,  §  2;  Michigan  Comp.  Laws  1897, 
(9512)  §  9,  (9519)  §  6.  Cobby's 
Nebr.  Ann.  Stat.  1911,  §  6043;  New 
Jersey  Gen.  Stat.  1895,  §  9.  A  pro- 
vision of  this  character  does  not  of 
course  dispense  with  the  considera- 
tion.    Hite  v.   Wells,   17   111.  88. 

"Catterlin  v.  Bush,  39  Ore.  496, 
58  Pac.  706,  65  Pac.  1064;  Corbitt 
V.  Salem  Gas.  Co.,  6  Ore.  405,  25 
Am.  Rep.  541n ;  Bellinger  &  Cotton's 
Oregon  Codes  and  Stat.  1902,  §  797. 
It  was  held  in  Violett  v.  Patton,  5 
Cranch  (U.  S.)  142,  3  L.  ed.  61,  that 
the  reasoning  of  the  judge  in  the 
cases  in  which  they  had  decided  that 
the  consideration  ought  to  be  in 
writing  turned  upon  the  word 
"agreement,"  and  that  this  reason- 
ing did  not  apply  where  the  word 
"promise"  was  introduced. 

'*  Sage    v.    Wilcox,    6    Conn.    81 ; 


Sanders  v.  Barlow  (1884),  21  Fed. 
836;  Davis  v.  Tift,  70  Ga.  52;  White 
V.  Dahlquist,  179  Mass.  427,  60  N. 
E.  791;  Brown  v.  Fowler,  70  N.  H. 
634,  47  Atl.  412;  Britton  v.  Angier, 
48  N.  H.  420;  Thornburg  v.  Masten 
(1883),  88  N.  Car.  293;  Reed  v. 
Evans,  17  Ohio  128;  Fulton  v.  Robin- 
son, 55  Texas  401 ;  Patchin  v.  Swift, 
21  Vt.  292;  Smith  v.  Ide,  3  Vt.  290. 
See  also,  Harraway  v.  Harraway, 
136  Ala.  499,  34  So.  836.  Contra, 
Hutton  V.  Padgett,  26  Md.  228; 
Nichols  V.  Allen,  23  Minn.  542; 
Drake  v.  Seaman  (1884),  97  N.  Y. 
230  (an  elaborate  discussion  of  the 
present  New  York  law).  See  also, 
holding  that  under  the  Wisconsin 
act  a  contract  to  pay  the  obligation 
of  a  third  person  must  express  the 
consideration,  Coxe  Bros.  &  Co.  v. 
Milbrath,  110  Wis.  499,  86  N.  W. 
174. 

'"Wain  V.  Warlters,  5  East  10; 
Brooks  V.  Morgan,  1  Harr.  (Del.) 
123;  Whitney  v.  Stearns,  16  Maine 
394;  Edelen  v.  Gough,  5  Gill  (Md.) 
103;  Osborne  v.  Baker,  34  Minn.  307, 
57  Am.  Rep.  55;  Miller  v.  Cook,  23 
N.  Y.  495,  and  cases  cited,  22  How. 
Pr.  (£\  McMorris  v.  Herndon,  2 
Bailey  (S.  Car.)  56,  21  Am.  Dec. 
515;  Lapham  v.  Barrett,  1  Vt.  247; 
Dahlman  v.  Hammel,  45  Wis.  466; 
Cheney  v.  Cook,  7  Wis.  413;  Jansen 
V.  Kuenzie,  145  Wis.  473,  130  N.  W. 
450,  Ann.  Cas.  1912A.  1241  and  note. 
The  text-writers  also  generally  state 


559 


STATUTE    OF    FRAUDS. 


§   i3i^J 


as  to  the  price  of  the  goods  bargained  for,  this  is  considered  as 
an  essential  element  of  the  contract  and  must  be  shown  in  writing 
in  order  to  satisfy  the  statute,  and  parol  evidence  is  admissible  to 
show  that  a  price  was  actually  agreed  on  in  order  to  establish  the 
insufficiency  of  a  meinorandum  which  is  silent  as  to  price.*'"  On 
the  other  hand,  if  there  is  no  actual  agreement  as  to  price,  the 
memorandum  of  the  bargain  is  sufficient  even  though  silent  as  to 
the  price,  for  the  reason  that  the  law  supplies  the  deficiency  by 
implying  a  promise  on  the  part  of  the  buyer  to  pay  a  reasonable 
price."  Other  cases  lay  down  the  rule  that  the  memorandum 
of  an  executory  contract  must,  in  order  to  be  sufficient  under  the 
statute  of  frauds,  contain  a  statement  of  the  price.^-  If  the 
memorandum  or  agreement  is  insufficient  by  reason  of  not  stating 
the  price,  it  becomes  valid  where,  in  fact,  the  price  has  been  paid.*^ 

§  1316.  Memorandum — Time  of  payment. — Under  the  rule 
that  a  memorandum,  to  be  sufficient  under  the  statute  of  frauds, 
must  be  complete  in  itself  and  leave  nothing  to  rest  in  parol,  it 


the  law  to  be  that  the  words  "for 
value  received"  sufficiently  express 
the  consideration.  It  has  been  held 
that,  if  the  consideration  expressed 
was  a  fictitious  one,  it  was  sufficient. 
Happe  V.  Stout.  2  Cal.  460. 

*"  Elmore  v.  Kingscote,  5  B.  &  C 
583,  29  Rev.  Rep.  341;  Acebal  v. 
Levy,  10  Bing.  376.  4  Moore  &  S. 
217  (actual  agreement  as  to  price 
shown  by  parol)  ;  Goodman  v.  Grif- 
fiths, 1  H.  &  N.  574,  26  L.  J.  Exch. 
(N.  S.)  145.  In  the  above  case  the 
plaintiff  showed  defendant  an  in- 
voice of  his  price-list,  and  then  verb- 
ally agreed  to  sell  him  at  a  deduc- 
tion of  twenty-five  per  cent,  of  the 
price  on  those  prices  for  cash,  where- 
upon an  order  was  written  by  de- 
fendant which  read  "Please  put  in 
hand,  to  my  account,  the  following: 
4  mechanical  binders"  and  signed  it. 
Adams  v.  McMillan.  7  Porter  (Ala.) 
IZ;  Ashcroft  v.  Butterworth.  136 
Mass.  511 ;  Hanson  v.  Marsh,  40 
Minn.  1.  40  N.  W.  841;  Phelps  v. 
Stilling,  60  N.  H.  505;  Soles  v.  Hick- 
man. 20  Pa.  St.  180;  Kinloch  v.  Sav- 
age. Speers  Eq.  (S.  Car.)  464;  Smith 
v.   Arnold,   5    Mason    (U.    S.)    414; 


Ide  V.  Stanton,  15  Vt.  685.  40  Am. 
Dec.  698.  See,  however,  Armsby  Co. 
v.  Eckerly,  42  Mo.  App.  299;  O'Neil 
v.  Crain,  G  Mo.  250.  See  also,  Peo- 
ria Grape  Sugar  Co.  v.  Babcock  Co., 
67  Fed.  892;  Turner  v.  Lorillard  Co., 
100  Ga.  465.  28  S.  E.  383.  62  Am.  St. 
345;  Norris  v.  Blair.  39  Ind.  90,  10 
Am.  Rep.  135;  Rector  Provision  Co. 
v.  Sauer,  69  Miss.  235,  13  So.  623. 

'^  Hoadlv  V.  M'Laine,  10  Bing.  482, 
4  Moore  &  S.  340;  Cristie  v.  Bur- 
nett, 10  Ont.  Rep.  609;  Prenatt  v- 
Runvon.   12  Ind.   174. 

'=  Arnold  v.  Garth.  106  Fed.  13, 
modified  115  Fed.  468,  53  C.  C  A. 
200;  Reid  v.  Diamond  Plate-Glass 
Co..  85  Fed.  193.  29  C.  C  A.  110 
(construing  Michigan  statute)  ; 
James  v.  Muir,  ZZ  Mich.  223.  See 
also.  Phillips  v.  Adams.  70  Ala.  ZIZ; 
Bowser  &  Co.  v.  Marks.  96  Ark.  113. 
131  S.  W.  334,  32  L.  R.  A.  (N.  S.) 
429n;  Fry  v.  Piatt.  32  Kans.  62.  3 
Pac.  781:  Kav  v.  Curd,  6  B.  Mon. 
(Kv.)  100;  Newbery  v.  Wall,  65  N. 
Y.  484. 

^  Sayward  v.  Gardner.  5  Wash. 
247,  31  Pac.  761.  II  Pac.  289. 


I3I7 


CONTRACTS. 


560 


is  generally  held  that  if  the  memorandum  fails  to  express  the 
time  or  times  of  payment  of  the  purchase-price  and  there  is  no 
known  nor  recognized  custom  to  fix  what  is  thus  left  undeter- 
mined, it  is  insufficient  to  meet  the  requirements  of  the  statute.®* 
There  is,  however,  authority  to  the  contrary.®^  A  number  of 
cases  lay  down  the  rule  that  if  the  contract  is  entirely  silent  as  to 
the  time  of  payment  it  will  be  presumed  that  a  cash  sale  has  been 
made.®®  It  is  held  in  other  jurisdictions  that  the  court  cannot 
presume  that  the  sale  was  for  cash.®^  A  fortiori,  if  the  memo- 
randum itself  show^s  that  the  transaction  was  a  sale  on  credit,  the 
terms  on  which  credit  was  extended  must  be  stated.®® 

§  1317.  Form  of  signature. — Much  liberality  has  been  in- 
dulged in  in  regard  to  this  requirement  of  the  statute.®"  The  sig- 
nature is  held  valid  and  binding,  though  made  with  the  initials  of 
the  party  only,  and  parol  evidence  is  admissible  to  explain  and 
apply  them."''     The  statute  is  satisfied  by  the  mark  of  the  person 


**Hussey  v.  Horne-Payne,  L.  R. 
4  App.  Cas.  311,  27  Week.  Rep.  585; 
Nelson  v.  Shelby  Mfg.  &c.  Co.,  96 
Ala.  515,  11  So.  695,  38  Am.  St.  116; 
O'Donnell  v.  Leeman,  43  Maine  158, 
69  Am.  Dec.  54;  Elliott  v.  Barrett, 
144  Mass.  256,  10  N.  E.  820;  Ebert 
V.  Cullen,  165  Mich.  75,  130  N.  W. 
185,  33  L.  R.  A.  (N.  S.)  84n;  Gault 
V.  Stormont,  51  Mich.  636,  17  N.  W. 
214;  Harney  v.  Burhans,  91  Wis.  348, 
64  N.  W.  1031.  See  also,  St.  Loui.s 
&c.  R.  Co.  V.  Beidler,  45  Ark.  17; 
Webster  v.  Brown,  67  Mich.  328,  34 
N.  W.  676;  Conrade  v.  O'Brien,  1 
Pa.  Super.  Ct.  104;  Greenlee  v. 
Greenlee,  22  Pa.  St.  225. 

"  Camp  V.  Moreman,  84  Ky.  635, 
8  Ky.  L.  552,  2  S.  W.  179;  Ellis  v 
Bray,  79  :\Io.  227  (The  above  case 
was  declared  erroneous  in  Darnell  v 
Lafferty,  113  Mo.  App.  282,  88  S.  W 
784.  See  also.  Ringer  v.  Holtzclaw, 
112  Mo.  519,  20  S.  W.  800  and  Boyd 
V.  Paul,  125  Mo.  9,  28  S.  W.  171) 
Fulton   V.    Robinson,   55    Tex.   401. 

^Eppich  V.  Clifford,  6  Colo.  493. 
Ryan  v.  Hall,  13  Mete.  (Mass.)  520 
(cash  on  demand  within  a  reasonable 
time)  ;  Mull  v.  Smith,  132  Mich.  618, 
,94  N.  W.  183  (contract  held  an 
agreement  to  pay  cash  within  a  rea- 


sonable time)  ;  Darnell  v.  Laffertv, 
113  Mo.  App.  282,  88  S.  W.  784; 
Smith  V.  Jones,  7  Leigh  (Va.)  165,  30 
Am.  Dec.  498. 

'MVood  V.  Midgley,  2  Sm.  &  G. 
115,  23  L.  J.  Ch.  553,  2  Week.  Rep. 
301 ;  Hussey  v.  Horne-Payne,  L.  R. 
4  App.  Cas.  311,  48  L.  J.  Ch.  846, 
41  L.  T.  (N.  S.)  1,  27  Week.  Rep. 
585 ;  Queen's  College  v.  Jayne,  10 
Ont.  L.  319;  Major  v.  Shepherd,  18 
Manitoba  L.  505 ;  Carroll  v.  Powell, 
48  Ala.  298;  Wright  v.  Weeks,  25 
N.  Y.  153,  affg.  3  Bosw.  (N.  Y.) 
372.  See  also,  Snow  v.  Nelson,  113 
Fed.  353. 

^Wood  V.  Midgley,  2  Sm.  &  G. 
lis,  23  L.  J.  Ch.  553,  2  Week.  Rep. 
301 ;  Hussey  v.  Horne-Payne,  L.  R.  4 
App.  Cas.  311,  48  L.  J.  Ch.  (N.  S.) 
846,  41  L.  T.  (N.  S.)  1,  27  Week. 
Rep.  585;  Major  v.  Shepherd,  18 
Manitoba  L.  505;  Eppich  v.  Clifford, 
6  Colo.  493. 

«» Raphael  v.  Hartman,  87  111.  App. 
634;  Cabot  v.  Haskins,  3  Pick. 
(Mass.)   83. 

'"Sanborn  v.  Flagler,  9  Allen 
(Mass.)  474.  The  words  "your  af- 
fectionate mother"  at  the  end  of  a 
letter,  were  held  insufficient  as  a 
signature.     Selby  v.  Selby,  3  Mer.  2. 


56i 


STATUTE  OF  FRAUDS, 


I317 


to  be  charged,  or  any  figure  or  designation,  if  the  party  affixing 
intends  to  be  bound  thereby."^  It  is  not  even  essential  that  the 
party  to  be  charged  should  have  affixed  either  signature,  initial 
or  mark  of  any  kind,  with  his  own  hand.  If  his  name  be  even 
printed  with  his  authority,  and  the  printed  signature  be  intended 
to  bind,  it  will  be  sufficient.**"  A  printed  letter-head  followed  by 
the  memorandum  of  sale  has  been  held  sufficient  as  a  signature."^ 
The  signature  may  be  stamped  on  the  memorandum,'**  or  written 
thereon  by  a  typewriter.®^ 

However,  the  writing,  stamping  or  printing  of  his  name  by  the 
party  to  be  charged,  in  person  or  through  a  duly  authorized  agent, 
must  be  done  with  the  intention  of  authenticating  and  finally 
adopting  the  writing  as  his  own.""  Thus  a  petition  in  an  action 
on  a  written  assurance  on  the  letter-heads  of  a  bank,  signed  by 


"^Helshavv  v.  Langley,  11  L.  J.  Ch. 
17;  Hubert  v.  Moreau,  2  Car  &  P. 
528;  Weston  v.  Myers,  33  111.  424; 
Palmer  v.  Stephens,  1  Denio  (N. 
Y.)  471;  Brown  v.  Butchers'  &  Drov- 
ers' Bank,  6  Hill  (N.  Y.)  443,  41 
Am.  Dec.  755.  In  re  McFarson's 
Appeal,  11  Pa.  St.  503.  A  mere  scrawl 
held  sufficient.  Baker  v.  Dening,  8 
A.  &  E.  94.  An  agreement  annexed 
to  conditions  of  sale  by  auction,  to 
which  D  (an  illiterate  person)  had 
put  his  mark,  held  a  good  memo- 
randum within  the  statute.  Dyas  v. 
Stafford,  7  L.  R.  Ir.  590. 

''Jones  V.  Joyner,  82  L.  T.  (N. 
S.)  768;  Hucklesby  v.  Hook,  82  L. 
T.  (N.  S.)  117;  Drury  v.  Young,  58 
Md.  546,  42  Am.  Rep.  343  (an  in- 
structive case)  ;  Schneider  v.  Norris, 
2  M.  &  S.  286  (where  the  seller 
filled  the  blank  in  a  printed  bill  of 
parcels  with  the  name  of  the  pur- 
chaser, and  delivered  it  to  him). 
But  in  Boardman  v.  Spooner,  13  Al- 
len (Mass.)  353,  90  Am.  Dec.  196, 
where  the  purchaser  stamped  his 
name  and  date  on  the  bill  of  par- 
cels, without  delivering  it  to  the  sel- 
ler, in  the  absence  of  evidence  to 
show  that  he  had  adopted  such  a 
stamp  as  a  signature  and  had  affixed 
it  to  the  instrument  with  the  intent 
to  bind  himself,  it  was  held  an  in- 
sufficient memorandum. 

36 — CoNTR.\cTS,  Vol.  2 


"Tourret  v.  Cripps,  48  L.  J.  Ch. 
(N.  S.)  567,  27  Week.  Rep.  706; 
Drury  v.  Young,  58  Md.  546,  42  Am. 
Rep.  343 ;  Anderson  v.  Wallace  Lum- 
ber &  Mfg.  Co.,  30  Wash.  147,  70 
Pac.  247.  See  also,  Saunderson  v. 
Jackson,  2  Bos.  &  P.  238,  3  Esp.  180, 
5  Rev.  Rep.  382 ;  Delaware  Ins.  Co. 
V.  Pennsylvania  &c.  Ins.  Co.,  126  Ga. 
380,  55  S.  E.  330,  7  Am.  &  Eng.  Ann. 
Cas.  1134  (insurance  policy  com- 
mencing with  the  name  of  the  com- 
pany held  sufficient  as  a  signature 
by  the  insurer). 

"Deep  River  Nat.  Bank,  73  Conn. 
341,  47  Atl.  675;  Laudeker  v.  Co- 
operative Bldg.  Bank,  71  Misc.  (N. 
Y.)   517,  130  N.  Y.  S.  780. 

"^  Landecker  v.  Co-operative  Bldg. 
Bank,  71  Misc.  (N.  Y.)  517,  130  N. 
Y.  S.  780;  Degginger  v.  :\Iartin,  48 
Wash.  1,  92  Pac.  674  (in  the  above 
case  the  firm  name  appeared  fol- 
lowed l^y  the  initials  of  the  broker). 

°^  Lee  v.  Vaughan  Seed  Store 
(Ark.),  141  S.W.496.  37  L.R.  A.  (N. 
S.)  352  and  note.  See  also,  Hucklesbv 
V.  Hook,  82  L.  T.  (N.  S.)  117;  Rich- 
mond Standard  Steel  Spike  &  Iron 
Co.  V.  Chesterfield  Coal  Co.,  160  Fed. 
832,  87  C.  C.  A.  636;  Boardman  v. 
Spooner,  13  Allen  (Mass.)  353,  90 
Am.  Dec.  196;  Ferguson  v.  Trovaten, 
94  Minn.  209,  102  N.  W.  373. 


§    1318  CONTRACTS.  562 

an  officer  thereof,  must  show  the  authority  of  the  officer  to  exe- 
cute the  instrument  as  a  binding  obHgation.^' 

§  1318.  Place  of  signature. — If  the  name  appears  in  the 
memorandum,  and  is  appHcable  to  the  whole  substance  of  the 
writing,  and  is  put  there  by  the  party,  or  by  his  authority,  it  is 
immaterial  in  what  part  of  the  instrument  it  appears,  whether  at 
the  top,  in  the  middle,  or  at  the  bottom."^  Thus,  when  one  of  the 
parties  refuses  to  sign  a  contract  until  a  modification  is  written 
on  the  back  thereof,  the  mere  fact  that  the  signature  of  the  par- 
ties is  on  the  preceding  page  does  not  prevent  that  which  was 
written  on  the  back  from  becoming  a  part  of  the  contract.^^  A 
memorandum  of  a  contract  for  the  purchase  of  goods,  written  by 
a  broker,  employed  to  make  the  purchase,  with  a  lead  pencil,  in 
his  book,  in  the  presence  of  the  vendor,  the  names  of  the  vendor 
and  vendee  and  the  terms  of  purchase  being  in  the  body  of  the 
memorandum,  but  not  subscribed  by  the  parties,  has  been  held  to 
be  sufficient/  But  the  signature  must  be  intended  to  govern  the 
whole  contract,  otherwise  its  position  may  make  a  difference.^ 
It  has  also  been  held  that  when  the  statute  provides  that  the  mem- 
orandum must  be  subscribed  by  the  party  to  be  charged,  the  word 
"subscribed"  meant  an  actual  manual  subscription  at  the  end  of 
the  instrument.^ 

"'Lieeett    v.    Levy,    233    Mo.    590,  sas  475,  94  Pac.  798,  15  L.  R.  A.  (N. 

136  S    W.  299,  Ann.  Cas.  1912C.  70.  S.)  612n,  127  Am.  St.  428n 

°' Knight  V.  Crockford,  1  Esp.  190,  ^  Dyas    v.     Stafford,    7   L.    R.     Ir. 

5    R     R.    729;    Saunderson   v.    Jack-  590;    Clason's    Exrs.    v.    Bailey,    14 

son    2  Bos.  &  P.  238,  3  Esp.  180,  5  Johns.     (N.     Y.)     484.      When    the 

R.    R.    382;    Higdon    v.    Thomas,    1  agreement   is    required   to   be     "sub- 

Har.    &    G.     (Md.)     139;    Evans    v.  scribed"  by  the  terms  of  the  statute, 

Hoare    (1892),    1    Q.    B.    593;    Cali-  the  signature,  to  be  binding,  must  be 

fornia  Can.  Co.  v.  Scatena,  117  Cal.  at    the    foot.     Davis    v.    Shields,    26 

447,  49   Pac.   462    (signature   written  Wend.    (N.    Y.)    341;    McGivern    v 

across  the  face  of  the  instrument)  ;  Fleming,    12   Daly    (N.    Y.)    289,   66 

Bonewell  v.  Jacobson,  130  Iowa  170,  How.  Pr.   (N.  Y.)   300 

106  N    W    614,  5  L.  R.  A.    (N.  S.)  -  Caton  v.  Caton,  36  L.  J.  Ch.  886, 

436  and    note ;    Drury   v.   Young,   58  L.  R.  2  H.  L.  127,  16  W.  R.  1. 

Md    546   42  Am.  Rep.  343;  Hawkins  'Vielie  v.  Osgood,  8  Barb.  (N.  Y.) 

v  Chace,  19  Pick.  (Mass.)  502;  Don-  130;    Zachrisson    v.    Poppe,    3    Bosw. 

nell  Mfg.  Co.  v.  Repass,  75  Mo.  App.  (N.   Y.)    171.     Compare   with   Equi- 

420;  Barry  v.  Coombe,  1  Pet.  (U.  S.)  table  Life  Assur.  Soc.  v.  Meuth,  145 

640.  Ky.  160,  140  S.  W.  157  (signature  of 

**  Bonewell  v.   Jacobson,   130   Iowa  president   on  the   face   of  the  policy 

170,  106  N.  W.  614,  5  L.  R.  A.   (N.  on  the  back  of  which  his  own  name 

S.)'  436  and  note.     See  also,   Kurth  was  printed  at  the  close  of  the  list 

V.  Farmer's  &c.  State  Bank,  11  Kan-  of   privileges). 


5^3 


STATUTE  OF  FRAUDS. 


§  I319 


§  1319.  Who  must  sign. — While  there  are  a  few  early  cases 

that  suggested  that  a  distinction  might  exist,*  it  is  now  uniformly 
held  that  there  is  no  difference  between  the  fourth  and  seventeenth 
sections  of  the  statute  caused  by  the  use  of  the  word  "party"  in 
the  fourth  section  and  the  plural  "parties"  in  the  seventeenth  sec- 
tion."* It  is  not  necessary  that  both  parties  sign  the  agreement." 
In  the  absence  of  any  special  provisions  in  local  statutes,  the 
memorandurn  need  be  signed  only  by  the  party  "to  be  charged," 
that  is  to  say,  the  party  who  is  to  be  bound  or  held  chargeable  and 
legally  responsible  on  the  contract.^ 


*  See  Champion  v.  Plummer,  5  Esp. 
240,  1  Bos.  &  P.  (N.  R.)  252,  8  R. 
R.  795. 

"  Cunningham  v.  Williams,  43  Mo. 
App.  629;  Clason's  Exrs.  v.  Bailey, 
14  Johns.  (N.  Y.)  484;  Justice  v. 
Lang,  42  N.  Y.  493,  1  Am.  Rep.  576. 

'Ormond  v.  Anderson,  2  Ball  &  B. 
370,  12  R.  R.  103;  Thornton  v. 
Kempster,  5  Taunt.  786,  1  Marsh. 
355,  15  R.  R.  658;  Allen  v.  Bennett, 
3  Taunt.  169,  12  R.  R.  633;  Seton  v. 
Slade,  7  Ves.  265,  6  R.  R.  124;  Field 
V.  Boland,  1  Dru.  &  Wal.  11;  Smith 
V.  Neale,  2  C.  B.  (N.  S.)  67;  Reuss 
V.  Picksley,  4  H.  &  C.  588;  Gaunt  v. 
Hill,  1  Stark.  10;  Raphael  v.  Hart- 
man,  87  111.  App.  634;  First  Presby- 
terian Church  V.  Swanson,  100  111. 
App.  39;  Smith  v.  Theobold,  86  Ky. 
141,  5  S.  W.  394;  Justice  v.  Lang,  42 
N.  Y.  493,  1  Am.  Rep.  576;  Himrod 
Furnace  Co.  v.  Cleveland  &  M.  R. 
Co.,  22  Ohio  St.  451;  Kearby  v. 
Hopkins,  14  Tex.  Civ.  App.  166,  36 
S.  W.  506.  In  Fenly  v.  Stewart,  5 
Sandf.  (N.  Y.)  101,  it  is  said:  "This 
construction  has  proceeded  not  on 
the  ground  that  contracts  need  not 
be  mutual,  but  that  the  statute,  in 
certain  enumerated  cases,  has  taken 
away  the  power  of  enforcing  con- 
tracts, which  would  otherwise  be  mu- 
lually  binding,  unless  the  parties 
against  whom  they  are  sought  to  be 
enforced,  have  subscribed  some  riote 
or  memorandum  thereof  in  writing. 
If  a  mutual  contract  is  made,  and 
one  of  the  parties  to  it  gives  the 
other  a  memorandum,  in  pursuance 
of  the  statute,  but  neglects  to  take 
from  that  other  a  corresponding 
memorandum,  he  has  but  himself  to 
blame  if  he  is  unable  to  compel  its 


performance,  while  he  is  bound  to 
the  other  party.  The  difficulty  is 
not  that  the  contract,  as  originally 
entered  into,  is  not  mutual,  but  that 
one  of  the  parties  has  not  the  evi- 
dence which  the  statute  has  made 
indispensable  to  its  enforcement." 
Contra,  Lawrenson  v.  Butler,  1  Sch. 
&  Lef.  13;  Wilkinson  v.  Haven- 
rich,  58  Mich.  574,  26  N.  W.  139,  55 
Am.  St.  708;  Co-operative  Tel.  Co. 
V.  Katus,  140  Mich.  367,  103  N.  W. 
814,  112  Am.  St.  414;  Adams  v.  Har- 
rington Hotel  Co.,  154  Mich.  198, 
117  N.  W.  551,  19  L.  R.  A.  (N.  S.) 
919;  Mcllroy  v.  Richards,  148  Mich. 
694,  112  N.  W.  489.  See  also.  Hal- 
sell  V.  Renfrow,  202  U.  S.  287,  50 
L.  ed.  1032,  26  Sup.  Ct.  610,  6  Am. 
&  Eng.  Ann.  Cas.  489  (pointing  out 
a  distinction  between  the  Oklahoma 
statute  and  the  statute  as  usually 
worded). 

'  Egerton  v.  Matthews,  6  East  307 ; 
Liverpool  Borough  Bank  v.  Eccles, 
4  H.  &  N.  139,  28  L.  J.  Ex.  122; 
Bank  of  British  America  v.  Simp- 
son, 24  U.  C.  C.  P.  354;  Kizer  v. 
Lock,  9  Ala.  269;  Vassault  v.  Ed- 
wards, 43  Cal.  458;  Harper  v.  Gold- 
schmidt,  156  Cal.  245.  104  Pac.  451, 
28  L.  R.  A.  (N.  S.)  689,  134  Am.  St. 
124;  Weldin  v.  Porter,  4  Houst. 
(Del.)  236;  Linton  v.  Williams,  25 
Ga.  391;  Perkins  v.  Hadsell,  50  111. 
216;  Cook  v.  Ander.son.  20  Ind.  15; 
]Murrav  v.  Crawford  (Ky.),  127  S. 
W.  494,  28  L.  R.  A.  (N.  S.)  680; 
Williams  v.  Robinson,  IZ  Maine  186, 
40  Am.  Rep.  352;  Dresel  v.  Jordan. 
104  Mass.  407;  Scott  v.  Bush,  26 
Mich.  418.  12  Am.  Rep.  311;  Mar- 
queze  v.  Caldwell,  48  ^Iiss.  23 ;  Luc- 
kett  V.  Williamson,  Zl  Mo.  388;  Na- 


§    I320 


CONTRACTS. 


564 


§  1320.  Who  is  the  party  to  be  charged. — The  term  "party 
to  be  charged"  as  used  in  the  statute  of  frauds  does  not  mean  the 
vendor,  nor  the  vendee,  but  by  it  is  meant  the  person  sought  to 
be  charged  in  court  with  the  performance  of  the  obhgation. 
"Party  defendant"  is  the  party  to  be  charged  with  the  habihties 
dependent  on  and  resuhing  from  the  evidence,  and  it  is  he  who  is 
intended  to  be  protected  against  the  danger  of  false  oral  testi- 
mony.^ Thus,  in  cases  which  involve  contracts  for  the  sale  of 
real  property,  it  has  been  held  that  a  vendor  who  did  not  sign, 
may  enforce  the  agreement  against  a  vendee  who  did  sign,  either 
by  an  action  for  specific  performance,^  or  by  an  action  at  law.^" 
The  same  has  been  held  true  where  the  contract  was  for  the  sale 


tional  Fire  Ins.  Co.  v.  Loomis,  11 
Paige  (N.  Y.)  431;  Mizell  v.  Bur- 
nett, 4  Jones  (N.  Car.)  249,  69  Am. 
Dec.  744;  Johnston  v.  Cowan,  59 
Pa.  St.  275 ;  Sheid  v.  Stamps,  2  Sneed 
(Tenn.)  172;  Le  Vine  v.  White- 
house,  Z1  Utah  260,  109  Pac.  2,  Ann. 
Cas.  1912C.  407;  Brandon  Mfg.  Co. 
V.  Morse,  48  Vt.  322. 

*Heflin  v.  Milton,  69  Ala.  354; 
Lee  V.  Vaughan  Seed  Store  (Ark.), 
131  S.  W.  496,  Zl  L.  R.  A.  (N.  S.) 
352 ;  Harper  v.  Goldschmidt,  156  Cal. 
245,  104  Pac.  451,  28  L.  R.  A.  (N. 
S.)  689,  134  Am.  St.  124;  Ehren- 
strom  V.  Phillips  (Del.),  11  Atl.  81; 
Beckwith  V.  Clark,  188  Fed.  171,  110 
C.  C.  A.  207;  Breen  v.  Mayne,  141 
Iowa  399,  118  N.  W.  441  (see  also, 
Schaefer  v.  Whitman,  146  Iowa  64, 
124  N.  W.  763)  ;  Wiley  v.  Hellen,  83 
Kans.  544,  112  Pac.  158;  Justice  v. 
Lang,  42  N.  Y.  493,  1  Am.  Rep.  576 ; 
Davis  V.  Martin,  146  N.  Car.  281, 
59  S.  E.  700;  Miller  v.  Carolina 
Monazite  Co.,  152  N.  Car.  608,  68 
S  E.  1.  (See  also.  Brown  v.  Hobbs, 
154  N.  Car.  544,  70  S.  E.  906); 
Flegel  V.  Dowling,  54  Ore.  40,  102 
Pac.  178;  19  Am.  &  Eng.  Ann.  Cas. 
1159,  135  Am.  St.  812;  Jackson  v. 
Stearns,  58  Ore.  57,  113  Pac.  30; 
Wharton  v.  Tolbert,  84  S-  Car.  197, 65 
S.  E.  1056 ;  Shillinglaw  v.  Sims,  86  S. 
Car.  76,  67  S.  E.  906;  Cotulla  v. 
Barlow  (Texas),  115  S.  W.  294; 
Hazzard  v.  Morrison  (Texas  Civ. 
App.),  130  S.  W.  244.  (See  also, 
Dockery  v.  Thorne  (Texas),  135 
S.  W.  593)  ;  Armstrong  v.  Maryland 


Coal  Co.,  (n  W.  Va.  589,  69  S.  E. 
195.  (See  also,  Crotty  v.  Effler,  60 
W.  Va.  258,  9  Am.  &  Eng.  Ann. 
Cas.  770,  54  S.  E.  345)  ;  Montana 
&c.  Oil  Co.  V.  Gibson  (Wyo.), 
113  Pac.  784.  See  also,  note  in  3 
Am.  &  Eng.  Ann.  Cas.  1036,  where 
many  additional  American  and  Eng- 
lish authorities  are  collected.  Com- 
pare with,  Ullsperger  v.  Meyer,  217 
111.  262,  75  N.  E.  482,  3  Ann.  Cas. 
1032,  2  L.  R.  A.  (N.  S.)  221n;  Le 
Vine  V.  Whitehouse,  11  Utah  260, 
109  Pac.  2,  Ann.  Cas.  1912C.  407; 
Bailey  v.  Heishman,  32  Utah  123,  89 
Pac.  78,  13  Am.  &  Eng.  Ann.  Cas. 
1115. 

"Hodges  V.  Kowing,  58  Conn.  12, 
18  Atl.  979,  7  L.  R.  A.  87;  Old  Col- 
ony R.  Corp.  V.  Evans,  6  Gray 
(Mass.)  25,  66  Am.  Dec.  394;  Dresel 
V.  Jordan,  104  Mass.  407;  Ivory  v. 
Murphy,  36  Mo.  534;  Marqueze  v. 
Caldwell,  48  Miss.  23  (overruling 
intimations  to  contrary  in  Lee  V. 
Dozier,  40  Miss.  477)  ;  Hunter  v. 
Seton  (sub  nomine  Seton  v.  Slade), 
7  Ves.  Jr.  265;  Butcher  v.  Nash,  61 
L.  T.   (N.  S.)   72. 

"Oliver  V.  Alabama  Gold  L.  Ins. 
Co.,  82  Ala.  417,  2  So.  445  (suit 
for  rent)  ;  Byers  v.  Aiken,  5  Ark. 
419  (action  to  recover  purchase- 
price)  ;  Drennen  v.  Boyer,  5  Ark. 
497;  Booklover  Library  v.  Bogigian, 
193  Mass.  444,  79  N.  E.  769  (action 
for  failure  to  take  a  lease  of  prem- 
ises) ;  Browning  v.  Walburn^  45 
Mo.  477  (suit  to  recover  on  breach 
of  an  agreement  to  accept  premises 


565 


STATUTE  OF  FRAUDS. 


§  I32I 


of  chattels, — the  seller,  who  did  not  sign,  being  permitted  to 
enforce  the  contract  against  the  purchaser  who  did  sign." 

§  1321.  Vendor  as  party  to  be  charged. — Other  authorities 
hold,  however,  that  the  purpose  of  the  statute  is  to  protect  the 
holder  of  the  title  from  alleged  verbal  agreements  for  its  sale, 
and  that  the  party  to  be  charged  is  the  vendor,  and  that  the  obliga- 
tion of  the  contract  is  unen forcible  unless  the  memorandum  is 
signed  by  the  vendor.  They  so  hold  on  the  theory  that  the  vendor 
is  the  party  vested  with  title,  and  that  it  is  he  who  can  assume  a 
liability  which  will  compel  him  to  convey  the  title  to  the  property 
to  the  vendee,  and  that  the  law  intended  him  to  be  protected  in  his 
right  to  the  property  until  he  voluntarily  disposed  of  it  by  a 
writing.^^  Where  this  rule  obtains,  a  memorandum  signed  by  the 
vendor  alone  is  sufficient,  and  he  may  maintain  an  action  on 
the  contract  against  a  vendee  who  did  not  sign." 


and  pay  rent)  ;  Laythoarp  v.  Bryant, 
2  Bing.  (N.  Car.)  735  (action  to  re- 
cover for  refusal  to  pay  for  lease- 
hold premises)  ;  Crutchfield  v.  Dona- 
thon,  49  Texas  691,  30  Am.  Rep. 
112;  Anderson  v.  Tinsley  (Tex.  Civ. 
App.),  28  S.  W.  121  (suit  to  recover 
for  damages  for  breach  of  contract 
to  purchase  land). 

"  Egerton  v.  Mathews,  6  East  307 ; 
In  re  Neff,  157  Fed.  57,  84  C.  C  A. 
561,  28  L.  R.  A.  (N.  S.)  349  (pro- 
moter of  a  corporation  signed  a 
promise  to  pay  for  stock  taken  by  a 
subscriber  upon  its  surrender  within 
a  certain  time)  ;  Schaefer  v.  White- 
man,  146  Iowa  64.  124  N.  W.  763; 
Barstow  v.  Gray,  3  Greenl.  (Maine) 
409;  Penniman  v.  Hartshorn,  13 
Mass.  87;  Wemple  v.  Knopf,  15 
Minn.  440,  Gil.  355,  2  Am.  Rep.  147; 
Kessler  v.  Smith.  42  J^Iinn.  494,  44 
N.  W.  794;  Cunningham  v.  Williams, 
43  Mo.  App.  629 ;  Clason's  Exrs.  v. 
Bailey,  14  Johns.  (N.  Y.)  484 
(obiter)  ;  Mason  v.  Decker,  72  N. 
Y.  595.  28  Am.  Rep.  190;  Cameron 
Coal  &c.  Co.  V.  Universal  Aletal  Co., 
26  Okla.  615,  110  Pac.  720.  31  L.  R. 
A.  (N.  S.)  619;  J.  I.  Case  Thresh- 
ing Mach.  Co.  v.  Smith,  16  Ore.  381, 
18  Pac.  641.  See  Dvkers  v.  Townsend, 
24  N.  Y.  57.  Contra.  Wilkinson  v. 
Heavenrich,  58  Mich.  574,  26  N.  W. 


139,  55  Am.  Rep.  708;  Mcllroy  v. 
Richards,  148  ^lich.  694,  112  X.  W. 
489.  See  also,  Murray  v.  Crawford 
(Ky.),  127  S.  W.  494,  28  L.  R.  A. 
(N.  S.)  680,  which  holds  that  a 
vendor  of  real  estate  who  has  not 
signed  a  contract  for  the  sale  there- 
of cannot  maintain  an  action  to 
charge  the  vendee  thereon  on  the 
ground  that  the  party  to  be  charged 
is  the  vendor. 

"Murray  v.  Crawford  (Kv.),  127 
S.  W.  494.  28  L.  R.  A.  (N.  S.)  680; 
Sears  v.  Ohler,  144  Ky.  473,  139  S. 
W.  759;  Allen  v.  Stailev  (Ky.).  119 
S.  W.  755;  Frazer  v.  Ford.  2  Head 
(Tenn.)  464;  Lee  v.  Cherrv,  85 
Tenn.  707.  4  S.  W-  835,  4  Am.  St.  800. 
See  also,  Curtis  v.  Blair,  26  Miss. 
309,  59  Am.  Dec.  257;  Johnson  v. 
Brook,  31  Miss.  17,  66  Am.  Dec.  547; 
Peevey  v.  Haughton.  72  Miss.  918, 
17  So.  378.  18  So.  857.  48  Am.  St. 
592;  Bailev  v.  Leishman.  32  Utah 
123,  89  Pac.  78.  13  Am.  &  Eng. 
Ann.  Cas.  1116;  Le  Vine  v.  White- 
house,  2<7  Utah  260,  109  Pac.  2,  Ann. 
Cas.    1912C.   407. 

"Evans  v.  Stratton.  142  Kv.  615. 
134  S.  W.  1154.  34  L.  R.  A.  (N.  S.) 
393.  The  cases  which  hold  that  the 
vendor  is  the  party  to  be  charged 
seem  to  overlook  the  fact  that  the 
vendee  is  as   much   entitled  to   pro- 


§    1322 


CONTRACTS. 


566 


§  1322.  Trustee  as  party  to  be  charged. — It  has  been  held 
that  when  a  trust  is  not  created  in  and  by  the  instrument  of  con- 
veyance, it  may  be  sufficiently  declared  and  evidenced  by  the 
trustee  to  whom  the  land  is  conveyed.  He  is  the  party  to  be 
charged  and  his  declaration  of  the  trust  takes  the  transaction  out 
of  the  statute.'* 

§  1323.  Special  statutes  relating  to  the  signature  of  the 
parties. — The  statute  of  frauds  as  it  exists  in  certain  states 
does  not  contain  the  phrase  "party  to  be  charged."  Thus,  in  a 
number  of  jurisdictions,  the  statute  requires  the  contract  for  the 
sale  or  leasing  of  real  property  to  be  signed  by  the  grantor  or 
lessor.'^  The  statute  in  New  York  as  originally  passed  provided 
that  a  contract  relating  to  real  estate  must  be  signed  by  the  party 
to  be  charged,  and  under  this  act  it  was  held  that  the  signature  of 
the  defendant  was  sufficient."  Subsequently  the  law  was  changed 
so  as  to  require  a  memorandum  for  the  sale  of  real  property  to  be 
signed  by  the  vendor  or  his  lawfully  authorized  agent."     Under 


tection  as  the  vendor.  The  Supreme 
Court  of  North  Carolina  has  pointed 
this  out  in  apt  words.  It  is  said 
"The  danger  seems  as  great,  that 
a  purchase  at  an  exorbitant  price 
may  by  perjury  be  imposed  on  one, 
who  did  not  contract  for  it,  as  that 
by  similar  means  a  feigned  contract 
of  sale  should  be  established  against 
the  owner  of  the  land.  Hence  the 
act  in  terms  avoids  entirely  every 
contract  of  which  the  sale  of  land 
is  the  subject,  in  respect  of  a  party, 
that  is,  either  party,  who  does  not 
charge  himself  by  his  signature  to 
it  after  it  has  been  reduced  to  writ- 
ing." Simms  V.  Killian,  34  N.  Car. 
252. 

^Holmes  v.  Holmes,  65  Wash. 
572,  118  Pac.  7ZZ,  38  L.  R.  A.  (N. 
S.)  645.  See  also,  Dale  v.  Hamilton, 
2  Phill.  Ch.  266,  16  L.  J.  Ch.  (N.  S.) 
397,  11  Jur.  574;  Myers  v.  Myers, 
167  111.  52,  47  N.  E.  309.  See  how- 
ever, Tierney  v.  Wood,  19  Beav.  30, 
23  L.  T.  Ch.  (N.  S.)  895,  2  Week. 
Rep.   577. 

'*^Mull  v.  Smith,  132  Mich.  618, 
94  N.  W.  183;  Ehrmantraut  v.  Robin- 
son, 52  Minn.  333,  54  N.  W.  188; 
Ide  V.  Leiser,   10   Mont.  5,  24  Pac. 


695,  24  Am.  St.  17 ;  Gartrell  v.  Staf- 
ford, 12  Nebr.  545,  11  N.  W.  72,2, 
41  Am.  Rep.  767;  Robinson  v.  Che- 
ney, 17  Nebr.  673,  24  N.  W.  378; 
Roberts  v.  Cheney,  17  Nebr.  681,  24 
N.  W.  382;  Lowry  v.  Mehaffy,  10 
Watts.  (Pa.)  387;  Tripp  v.  Bishop, 
56  Pa.  St.  424;  Johnson  v.  Cowan, 
59  Pa.  St.  275;  Smith's  Appeal,  69 
Pa.  St.  474;  Everhart  v.  Dolph,  133 
Pa.  St.  628,  19  Atl.  431;  Borie  v. 
Satterthwaite,  180  Pa.  St.  542,  Z7 
Atl.  102;  Witman  v.  Reading,  191 
Pa.  St.  134,  43  Atl.  140;  Brodhead  v. 
Reinbold,  200  Pa.  St.  618,  50  Atl. 
229,  86  Am.  St.  735 ;  Hodson  v.  Car- 
ter, 3  Pin.  (Wis.)  212,  3  Chand. 
(Wis.)  234;  Cheney  v.  Cook,  7  Wis. 
413;  Lowber  v.  Connit,  36  Wis.  176. 
See  also.  Matter  of  Eargood,  1  Pear- 
son (Pa.)  399;  Shoof stall  v.  Adams, 
2  Grant  Cas.  (Pa.)  209.  In  M'Far- 
son's  Appeal,  11  Pa.  St.  503. 

"Worral  v.  Munn,  5  N.  Y.  229, 
55  Am.  Dec.  330n;  Earl  v.  Camp- 
bell. 14  How.  Pr.  (N.  Y.)  330; 
M'Crea  v.  Purmort,  16  Wend.  (N. 
Y.)  460,  30  Am.  Dec.  103. 

"  Bleecker  v.  Franklin,  2  E.  D. 
Smith  (N.  Y.)  93;  Cammeyer  v. 
United    German   Lutheran   Churches, 


567  STATUTE  OF  FRAUDS.  §  1 324 

this  Statute  it  has  been  held  that  where  property  was  conveyed  to 
the  plaintiff  with  an  agreement  to  repurchase  for  the  defendant 
and  the  plaintiff  did  not  sign  defendant's  agreement  to  repur- 
chase, the  defendant  could  not,  under  the  circumstances,  defeat  an 
action  on  the  agreement  on  the  ground  that  the  plaintiff  was  the 
vendor.^® 

§  1324.  Time  when  memorandum  must  be  made. — The 
memorandum  is  only  necessar}^  to  evidence  the  contract,  not  to 
constitute  it.  It  is  unnecessary  that  all  the  terms  of  the  contract 
be  agreed  to  at  one  time  or  written  down  at  one  time,  or  on  one 
piece  of  paper.  If  all  the  papers,  taken  together,  contain  the  whole 
bargain,  they  form  such  a  memorandum  as  will  satisfy  the  stat- 
ute.^°  The  memorandum  may  be  prepared  before  the  contract  be- 
comes a  binding  obligation  on  the  parties.  An  offer  which  is  signed 
by  the  party  to  be  charged,  which  contains  the  essential  terms  of 
the  contract,  and  which  is  subsequently  accepted  orally  by  the  par- 
ty to  whom  the  proposal  is  made,  is  sufficient  as  a  memorandum.^" 
The  memorandum  may,  except  when  made  by  a  mere  auction- 
eer," be  prepared  subsequently  to  the  time  the  oral  contract  is 
entered  into  at  any  time  before  the  action  is  brought."     Thus, 

2  Sandf.  Ch.   (N.  Y.)   186;  Miller  v.  same    thing.      The    memorandum    is 

Pelletier,  4  Edw.    Ch.    (N.   Y.)    102;  understood  to  be  a  note  or  minute, 

Champlin    v.    Parish,    11    Paige    (N.  informally    made    of    the    agreement, 

Y.)   405;  Earl  v.  Campbell,  14  How.  which  may  have  but  a  verbal  exist- 

Pr.  (N.  Y.)  330;  West  v.  Newton,  1  ence,  expressing  briefly  the   essential 

Duer     (N.     Y.)      277;    National    F.  terms,    and    was    never    intended    to 

Ins.  Co.  V.  Loomis,  11  Paige  (N.  Y.)  stand  as  and   for  the  agreement  it- 

431;  Biden  v.  James.  42  Hun  (N.  Y.)  self."    Catterlin  v.  Bush,  39  Ore.  496, 

654.  3  N.  Y.  St.  734,  affd.  Ill  N.  Y.  501,  65  Pac.  1064,  59  Pac.  706. 

680,    19    N.    E.    284;    De    Beerski    v.  ="  Brewer  v.    Horst-Lachmund    Co., 

Paige,   47   Barb.    (N.   Y.)    172,   afifd.  127  Cal.  643,  60  Pac.  418,  50  L.  R.  A. 

36  N.  Y.  537;  Havdock  v.   Stow,  40  240;    Western    Union    Tel.    Co.    v. 

N.  Y.  363.     See  Edwards  v.   Farm-  Chicago   &c.   R.   Co.,   86   111.   246,  29 

ers'  Fire  Ins.  &  Loan  Co.,  21  Wend.  Am.   Rep.   28;   Austin   v.   Davis.   128 

(N.    Y.)    467,    afTd.    26   Wend.    (N.  Ind.  472,  26  N.  E.  890,  12  L.  R.  A. 

Y.)   541.  120,    25    Am.    St.    456;    Williams    v. 

"Van  Name  v.  Queens  Land  and  Smith.  161  Mass.  248,  11  N.  E.  455; 

Title    Co.,    130    App.    Div.    (N.    Y.)  Sanborn  v.  Flagler,  9  Allen   (Mass.") 

857,  15  N.  Y.  S.  905.  474;   Hickey  v.  Dole.  66  N.   H.  336, 

"Charlton    v.    Columbia    Real    Es-  29  Atl.  792.  49  Am.  St.  614;  Thaver 

tate  Co..  (il  N.  J.  Eq.  629.  60  Atl.  192.  v.  Luce.  22  Ohio  St.  62;  Bibb  v.  A1- 

69  L.   R.   A.   394.    110   Am.    St.   495.  len.  149  U.  S.  481.  Zl  L.  ed.  819.  13 

See    also,    Ingraham    v.    Strong.    41  Sup.  Ct.  950. 

111.    App.    46.      "The    memorandum  ^  Benj.   Principles  of  Sales,  p.  300. 

and   the    contract    or    agreement    are  ^  Dominick   v.   Randolph.    124    .-Ma. 

not  to  be  confounded  as  one  and  the  557,  27  So.  481 ;  Lamkin  v.  Baldwin 


§    1325  CONTRACTS.  568 

an  unauthorized  contract  of  sale  made  by  an  agent  which  is 
within  the  statute  of  frauds  may  be  taken  out  of  the  statute  by 
a  written  ratification  of  the  contract  by  the  principal.^^  Letters 
written-*  after  the  agreement  is  entered  into,  although  a  consid- 
erable period  of  time  has  elapsed,-^  may  be  sufficient  as  a  memo- 
randum. A  written  memorandum  made  after  a  breach  of  the 
contract  but  before  any  action  is  brought  for  the  breach,  has  been 
held  sufficient  to  satisfy  the  statute  of  frauds.-^  When  the  writ- 
ing is  executed  subsequent  to  the  verbal  agreement,  such  memo- 
randum need  not  be  supported  by  a  new  consideration."  Such 
memorandum  does  not,  however,  retroact  so  as  to  afifect  third 
persons.^®  It  has  been  held,  moreover,  that  where  the  written 
memorandum  of  a  verbal  antenuptial  contract  was  not  prepared 
until  after  the  marriage  it  did  not  meet  the  requirements  of  the 
statute  for  the  reason  that  the  statute  required  the  contract  itself 
to  be  in  writing.^'' 

§  1325.  Must  memorandum  be  prepared  before  action  is 
brought? — There  are  authorities  v^hich  hold  that  the  memo- 
randum must  be  prepared  at  a  time  prior  to  the  bringing  of  the 

&  Lamkin  Mfg.  Co.,  12  Conn.  57,  43  683,  120  Pac.  528,  38  L.  R.  A.    (N. 

Atl.  593,  1042.  44  L.  R.  A.  786;  Whiton  S.)  783. 

V.  Whiton,  179  111.  32,  53  N.  E.  722,  ^^  Pitcher  v.  Lowe,  95   Ga.  423    22 

affg.  76  111.  App.  553;  Miller  v.  Kan-  S.  E.  678;  Lyons  v.  Wait  (sub  nom- 

sas  City  &c.  R.  Co.,  58  Kans.  189,  48  ine   Lyons   v.    Pyatt),    51    N.    T.    Eq. 

Pac.  853;  Tyler  v.  Onzts,  93  Ky.  331,  60,   26  Atl.   334;   Townsend   v.    Ken- 

20   S.   W.   256;   Bird   v.    Miinroe,  66  nedy,  6   S.   Dak.  47,  60   N.  W.   164; 

Maine   ZZl,   22   Am.    Rep.    571 ;    Mc-  Bayne  v.  Wiggins,  139  U.  S.  210,  35 

Manus  v.  Boston,  171   Mass.   152,  50  L.   ed.   144,   11    Sup.   Ct.   521;   Ide  v. 

N.   E.   607;   Merson  v.   Merson,    101  Stanton,    15    Vt.    685,    40    Am.    Dec. 

Mich.    55,    59    N.    W.    441;  Sheehy  698. 

V.     Fulton,     38     Nebr.     691,     57     N.  '=Lee  v.  Butler,  167  Mass.  426,  46 

W.     395,     41     Am.     St.     767;     Gar-  N.  E.  52,  57  Am.   St.  466;   Newkirk 

dels     V.     Kloke,     36    Nebr.     493,    54  v.    Place,  47  N.   J.   Eq.   477,   21    Atl. 

N.   W.  834;    Curtis    v.    Portsmouth,  124. 

(iJ  N.  H.  506,  39  Atl.  439;  Argus  Co.  ^'Bird  v.  Munroe,  d^  Maine  ZZI ,  22 

V.  Albany,  55  N.  Y.  495,  14  Am.  Rep.  Am.   Rep.   571. 

296;    Townsend    v.    Kennedy,    6    S.  "Sheehy  v.   Fulton,   38  Nebr.  691, 

Dak.  47,  60  N.  W.  164 ;  Ide  v.  Stan-  57  N.  W.  395,  41  Am.  St.  767. 

ton,    IS   Vt.   685,   40   Am.   Dec.   698;  =*  Fclthouse    v.    Bindley,    11    C.    B. 

Newport   News   &c.    Co.   v.   Newport  (N.    S.)     869;    Emery    v.    Terminal 

&c.  R.  Co.,  97  Va.  19,  32  S.  E.  789;  Co.,  178  Mass.  172,  59  N.  E.  16,2,,  86 

Prignon    v.    Daussat,    4    Wash.    199,  Am.   St.  473. 

29  Pac.  1046,  31  Am.  St.  914.  =*  McAnnulty    v.    McAnnulty,    120 

'•McLeod   V.   Morrison,  66  Wash.  111.  26,  11   N.  E.  397,  60  Am.   Rep. 

552. 


569  STATUTE  OF  FRAUDS.  §  1 326 

action.^"  Other  authorities  inchne  to  the  doctrine  that  the 
memorandum  may  be  prepared  after  the  action  is  brought.  Thus, 
where  the  vendor  was  sued  on  his  contract  to  sell  land  and  in 
answer  to  the  complaint  pleaded  that  he  was  willing  to  convey  and 
in  writing  offered  to  do  so,  it  was  held  that  the  assignee  of  the 
vendor  had  no  right  to  plead  the  statute  of  frauds  for  the  vendor 
who  refused  to  do  so,  but,  on  the  contrary,  offered  to  convey.^ ^  It 
has  also  been  held  that  where  a  purchaser  at  a  sheriff's  sale 
brought  an  action  in  ejectment  against  the  one  in  possession,  a 
special  return  of  the  sheriff  made  after  the  action  was  brought 
and  the  jury  empaneled  was  sufficient  as  a  memorandum.^"  The 
declaration  of  a  trust  contained  in  an  answer  to  a  suit  for  parti- 
tion showing  the  terms  and  conditions  of  the  trust  has  been  held  a 
sufficient  memorandum.^^  The  filing  of  a  pleading,  however, 
which  has  for  its  purpose  the  avoidance  of  a  parol  contract  for  the 
sale  of  land,  is  not  such  a  written  memorandum  of  the  contract 
and  a  description  of  the  land  as  will  take  it  out  of  the  statute  of 
frauds.^^ 

§  1326.  Necessity  for  delivery  of  memorandum. — A  num- 
ber of  authorities  lay  down  the  rule  that  an  undelivered  memo- 
randum does  not  operate  to  take  the  contract  out  of  the  statute 
of  frauds. ^°  In  a  number  of  cases  this  doctrine  is  given  a  very 
broad  statement.^*^     The  rule  which  holds  that  the  memorandum 

~Bill  V.  Bament,  9  M.  &  W.  36;  Cush.  (Mass.)  151;  Sanborn  v.  San- 
Lucas  V.  Dixon.  22  Q.  B.  Div.  357.  born,  7  Gray  (]\Iass.)  142;  Grant  v. 
In  re  Hoyle  (1893),  1  Ch.  84;  Gaines  Levan,  4  Pa.  St.  393;  Nichols  v.  Op- 
V.  IMcAdam,  79  111.  App.  201.  See  perman,  6  Wash.  618,  34  Pac.  162. 
also.  Bird  v.  Munroe.  66  Maine  2)Z7,  ^""To  make  it  operative,  it  must 
22  Am.  Rep.  571.  In  the  case  last  have  been  executed,  and  delivered 
cited,  however,  it  is  said:  "There  has  to  the  plaintiffs,  or  to  some  one  in 
been  some  judicial  inclination  to  their  behalf."  Parker  v.  Parker,  1 
favor  the  doctrine  to  that  extent  Gray  (Mass.)  409,  411.  "We  have 
even,  and  there  may  be  some  logic  been  able  to  find  no  case  in  which  a 
in   it."  writing  signed  by  a  party  and  kept 

"Walker  v.   Walker    (Ky.),  41    S.  in  his  possession,  without  delivery  to 

W.  315,  second  appeal  55  S.  W.  726.  the  other  party,  has  been  held  to  be  a 

"Remington  v.   Linthicum,  14  Pet.  compliance  with  the  statute."    Johnson 

(U.  S.)  84,  10  L.  ed.  364.  v.  Brook,  31   Miss.   17,  66  Am.  Dec. 

^'Mvers   v.    Myers,    167   111.   52,   47  547.  quoted  in  Steel  v.  Fife.  48  Iowa 

N.  E.  309.  99.  30  Am.  Rep.  388.    "We  have  made 

**  Davis    V.    Ross    (Tenn.),    50    S.  a    pretty   thorough    search,   but   have 

W.  650.  been   unable  to   find   any  case   which 

''Day  V.  Lacasse,  85  Maine  242,  27  sustains    the    position    that    an    un- 

Atl.    124;    Merriam    v.    Leonard,    6  delivered   deed  may  be  treated  as  a 


§    1326  CONTRACTS.  5/0 

must  be  delivered  is  especially  applicable  to  deeds^^  or  some  other 
instrument  conveying  an  interest  in  real  property,  such  as  a  mort- 
gage^® or  a  lease.^®  The  same  is  true  of  a  deed  which  is  placed 
in  escrow  but  over  which  the  grantor  retains  control/"  How- 
ever, when  a  deed  is  placed  in  escrow  but  beyond  all  control  of 
the  grantor,  it  is  sufficient  as  a  memorandum.*^  It  has  also  been 
held  that  a  deed  not  delivered  as  such,  may,  nevertheless,  be  deliv- 
ered as  an  executory  contract,  or  as  partial  evidence  of  a  contract 
to  sell  and  convey  the  land  described,  and  if  signed  and  delivered 
by  the  vendor  and  accepted  by  the  vendee,  is  sufficient  to  take  the 
case  out  of  the  operation  of  the  statute  of  frauds.*^  In  a  suit  for 
specific  performance  of  an  oral  agreement  to  make  a  lease  it  has 
been  held  proper  to  admit  in  evidence  all  the  paper  writings 
signed  by  the  parties  to  the  negotiation,  even  though  some  of  the 
papers  be  signed  but  undelivered  instruments,  in  order  to  see, 
when  all  the  papers  are  taken  together,  whether  they  contain  the 
completed  terms  for  a  lease  as  agreed,  so  that  a  decree  may  be 
made.*^ 

Other  authorities  held  that  a  memorandum  under  the  statute 
of  frauds  need  not  be  delivered.**  It  would  seem  that  if  the 
memorandum  is  merely  the  evidence  of  the  contract  and  is  not 

memorandum   in   writing."    Wier   v.  43  N.  Y.  550;  Nichols  v.  Opperman, 

Batdorf,  24  Nebr.  83,  38  N.  W.  22.  6  Wash.  618,  34   Pac.   162;    Popp  v. 

It    is   essential    that    the    writing    re-  Swanke,  68  Wis.  364,  31  N.  W.  916. 

quired    by    the    statute    be    delivered.  "  Griel    v.    Lomax,   89   Ala.   420,   6 

Nichols   V.   Opperman,  6  Wash.  618,  So.    741 ;    Osborne    v.    Eslinger,    155 

34  Pac.  162.  Ind.  351,  58   N.   E.  439,  80  Am.   St. 

"Lodgsdon  v.  Newton,  54  Iowa  240;  Lippold  v.  Lippold,  112  Iowa 
448,  6  N.  W.  715;  Morrow  v.  Moore,  134,  83  N.  W.  809,  84  Am.  St.  331. 
98  Maine  Z7Z,  57  Atl.  81,  99  Am.  St.  "Thayer  v.  Luce,  22  Ohio  St.  62 
410;  Parker  v.  Parker,  1  Gray  (the  above  case  was  approved  but 
(Mass.)  409;  Comer  v.  Baldwin,  16  distinguished  in  Wier  v.  Batdorf, 
Gil.  (Minn.)  151 ;  Schneider  v.  Vog-  24  Nebr.  83,  38  N.  W.  22  and  Nichols 
ler  (Nebr.),  97  N.  W.  1018;  Wier  v.  Opperman,  6  Wash.  618,  34  Pac. 
V.  Batdorf,  24  Nebr.  83,  38  N.  W.  22;  122).  As  to  the  effect  that  an  un- 
Brown  v.  Brown,  ZZ  N.  J.  Eq.  650;  delivered  deed  may  have  as  an  ad- 
Wilson  V.  Winters,  108  Tenn.  398,  mission  of  some  contract  to  convey 
67   S.   W.   800.  see.  Hart  v.  Carroll,  85  Pa.  St.  508; 

"Merriam    v.    Leonard,    6    Cush.  McGibbeny  v.  Burmaster,  53  Pa.  St. 

(Mass.)    151.  332. 

"  Chesebrough  v.  Pingree,  72  Mich.  *^  Charlton   v.    Columbia    Real    Es- 

438,  40  N.  W.  747,  1  L.  R.  A.  529.  tate  Co..  67  N.  J.   Eq.  629,  60  Atl. 

*"Kopp  V.   Reiter,   146   111.   437,   34  192,   69  L.   R.   A.   394,    110  Am.    St. 

N    E.  942,  22  L.  R.  A.  273,  Z7  Am.  495. 

St.   156;   Day   v.   Lacasse,   85   Maine  "Johnson  v.  Dodgson,  2  M.  &  W. 

242,  27  Atl.  124;  Cagger  v.  Lansing,  653;    Drury  v.   Young,   58   Md.   546, 


571  STATUTE  OF  FRAUDS.  §  1 327 

the  contract,  and  the  contract  itself  is  not  of  such  a  character  as 
to  require  delivery,  it  is  immaterial  whether  the  memorandum 
is  delivered  or  not.  All  that  is  necessary  is  that  it  be  intended  to 
evidence  the  agreement  upon  which  the  minds  of  the  parties  met. 
It  would  perhaps  be  more  accurate  to  say  that  the  memorandum 
need  not  pass  between  the  parties.  Thus  a  memorandum  made 
by  the  defendant's  bookkeeper  at  the  formers'  direction  and  by 
the  bookkeeper  placed  in  their  safe  has  been  held  sufficient  as  a 
memorandum. ^^  A  recital  contained  in  a  will  which  gives  ex- 
pression to  the  terms  of  the  contract  is  sufficient  as  a  memo- 
randum.*^ An  entry  in  the  records  of  a  corporation  may  be  suffi- 
cient as  a  memorandum  and  does  not  seem  to  be  open  to  the 
objection  that  it  has  not  been  delivered.*^  The  undelivered 
memorandum,  to  be  sufficient,  must  of  course  contain  all  the 
essential  elements  of  the  contract  the  same  as  any  other  memo- 
randum. Thus  a  resolution  adopted  on  the  part  of  the  directory 
or  at  a  stockholders'  meeting  of  the  corporation  declaring  their 
willingness  to  sell  the  corporate  property  at  a  certain  figure,  and 
empowering  the  president  to  consummate  the  sale  by  executing 
and  delivering  the  necessary  deeds,  does  not  constitute  a  valid 
contract  for  the  sale  of  real  estate  within  the  statute  of  frauds.*^ 

§  1327.  Taking  contract  out  of  operation  of  seventeenth 
section — Part  performance. — The  circumstances  may  be  such 
that  mere  performance  by  the  vendee  of  some  service  or  labor 
in  reference  to  the  goods  purchased  may  be  considered  as  such 
a  part  performance  or  part  payment  or  payment  of  an  earnest 

42  Am.  Rep.  343;  Hovekamp  v.   El-  Conn.   57,  43   Atl.   593,  44  L.   R.  A. 

shoff,  3  Ohio   N.   P.   158,  4  Ohio  S.  786;    Grimes    v.    Hamihon    Co..    37 

&  C.  P.  Dec.  171.  Iowa  290;  Johnson  v.  Trinitv  Church 

'"Drury  v.  Young,  58  Md.  546,  42  Society.  11  Allen  (Mass.)  123;  Tufts 

Am.  Rep.  343.  v.    Plymouth  Gold   Min.   Co.,    14   Al- 

*'In   re    Hoyle    (1893),    1    Ch.   84;  len    (Mass.)   407;   McManus  v.  Bos- 

Maddox  v.  Rowe,  23  Ga.  431.  68  Am.  ton,    171    Mass.    152.   50   N.    E.   607; 

Dec.    535;    Whiton    v.    Whiton,    179  Curtis  v.   Portsmouth.  67  N.  H.  506, 

111.    32,    53    N.    E.    722;    Brinker    v.  39  Atl.  439;  Argus  Co.  v.  Albany,  55 

Brinker.    7    Pa.    St.    53    Shrover    v.  N.  Y.  495,  14  Am.  Rep.  296;  Marden 

Smith,  204  Pa.  310,  54  Atl.  24;  Smith  v.    Champlin,    17    R.    I.    423,    22    Atl. 

V.  Tuit,  127  Pa.  St.  341,  17  .A.tl.  995,  938;   Central   Land  Co-   v.  Johnston, 

14  Am.  St.  851.  95  Va.  223,  28  S.  E.  175. 

"Greenville    v.    Water-works    Co.,         "Cumberland    &    O.   V.    R.    Co    v 

125  Ala.  625,  27  So.  764;   Lamkin  v.  Shelbyville  B.  &  O.   R.   Co..   117  Ky 

Baldwin    &    Lamkin    Mfg.    Co.,    72  95,  25  Ky.  L.  1265,  77  S.  W.  690. 


§    I3-S  CONTRACTS  572 

as  will  take  the  case  out  of  the  statute.  Thus  the  baling  of  hay 
by  the  vendee  has  been  held  a  sufficient  part  payment  of  the  pur- 
chase-price to  take  the  contract  for  the  buying  of  hay,  the  pur- 
chaser to  do  the  baling,  out  of  the  statute/®  However,  a  parol 
contract  for  the  purchase  of  a  large  amount  of  corn,  the  purchaser 
as  a  part  consideration  of  the  sale  to  furnish  bags  in  which  to  put 
the  corn  when  shelled,  has  been  declared  within  the  statute,  not- 
withstanding the  sacks  were  furnished  in  accordance  with  the 
terms  of  the  contract.^" 

§  1328.  Taking  contract  out  of  operation  of  seventeenth 
section — Receipt  and  acceptance — Necessity  for. — If  the  con- 
tract is  oral,  and  no  part  of  the  price  is  paid  by  the  vendee, 
there  must  not  only  be  a  delivery  of  the  goods,  or  a  part  of  them, 
by  the  vendor,  but  a  receipt  and  acceptance  of  the  same  by  the 
vendee  to  pass  the  title  or  to  make  the  vendee  liable  for  the 
price.^^  When  the  contract  for  the  sale  of  chattels  is  oral  and 
nothing  has  been  given  as  earnest  or  by  way  of  payment  and 
neither  the  goods  nor  any  part  thereof  have  been  delivered  and 
accepted  and  the  vendee  has  performed  no  acts  of  ownership, 
it  is  within  the  statute  of  frauds  and  unenforcible.^^     Nor  is 

*»  Driggs    V.    Bush,    152    Mich.    53,  327,  70  S.  W.  256 ;  Shepherd  v.  Pres- 

115  N.  W.  985,  15  L.  R.  A.    (N.  S.)  sey,  Z2  N.  H.  49;   Caulkins  v.   Hell- 

654,   125  Am.  St.  389n   (In  this  case  man,  47  N.  Y.  449,  7  Am.  Rep.  461; 

the  action  was  brought  by  the  pur-  Stone    v.    Browning,    51    N.    Y.    211; 

chaser  to  recover  damages  for  breach  Gibbs  v.  Benjamin,  45  Vt.  124;  Rich- 

of  contract.).    See  also,    Edwards  v.  ardson  v.  Squires,  Zl  Vt.  640;  Amson 

Brown,  98  Maine  165,  56  Atl.  654.  v.  Dreher,  35  Wis.  615.     If  the  con- 

"^Hudnut  V.  Weir,  100  Ind.  501   (In  tract  be  for  specified  goods,  the  ac- 

this  case  the  action  was  brought  by  ceptance  takes  place  at  the  time  of 

the  vendor   to   recover   damages    for  the   bargain   and   the   same    evidence 

breach  of  contract.).  that  proves  the  bargain  will  prove  the 

"'Smith  V.  Hudson,  6  B.  &  S.  431,  acceptance.  Cusack  v.  Robinson,  1 
34  L.  J.  Q.  B.  145;  Hinde  v.  White-  B.  &  S.  299;  Phillips  v.  Bistolh,  2  B. 
house,  7  East  558,  3  Smith  528,  8  R.  &  C.  511,  3  D.  &  R.  391,  2  L.  J. 
R.  676;  Wilhams  v.  Savers  (Ala.),  (O.  S.)  K.  B.  116.  The  general  rule 
29  So.  995;  Pusev  &  Jones  v.  Dodge,  is  that  as  between  seller  and  pur- 
3  Pennew.  (Del.)  63,  49  Atl.  248;  chaser,  and  as  agamst  strangers  and 
Brunswick  Grocery  Co.  v.  Lamar,  116  trespassers,  the  title  to  personal 
Ga.  1,  42  S.  E.  366;  Denmead  v.  property  passes  by  sale  without  de- 
Glass,  30  Ga.  637;  Greenleaf  v.  Ham-  livery,  when  no  question  arises  in  re- 
ilton,  94  Maine  118,  46  Atl.  798;  Max-  lation  to  the  statute  of  frauds.  Curn- 
well  V.  Brown,  39  Maine  98,  (^Z  Am.  mings  v.  Gilman,  90  Maine  524,  38 
Dec.  605;  Corbett  v.  Wolford,  84  Md.  Atl.  538.  ,„  ^  ,  ,-0 
426.  35  Atl.  1088;  Jones  v.  Mechanics'  "'Jamison  v.  Simon,  68  Gal  17,  8 
Bank,  29  Md.  287,  96  Am.  Dec.  533;  Pac.  502;  Alderton  v.  Buchoz,  3 
Palmer  v.  Elsberry,  79  Mo.  570;  Mich.  322. 
Shelton  V.   Thompson,  96  Mo.  App. 


573  STATUTE  OF  FRAUDS.  §  1 328 

delivery  alone,  in  such  case,  sufficient  to  satisfy  the  statute. 
There  must  also  be  a  voluntary  receipt  and  acceptance  of  the 
goods."*^  Nor  is  the  fact  that  the  goods  have  been  received 
necessarily  sufficient.  In  a  proper  case  the  vendee  may  have 
the  right  to  reject  the  goods  within  a  reasonable  tune  after  they 
have  been  received."  When  the  seller  gives  to  the  buyer  the 
actual  control  of  the  goods,  and  the  buyer  accepts  such  control, 
he  has  actually  received  them.  Receipt  of  goods  is  often  evi- 
dence of  acceptance,  but  it  is  not  the  same  thing.  The  receipt  by 
the  buyer  is  often  for  the  purpose  of  seeing  whether  he  will 
accept  or  not."  The  mere  fact  that  the  vendee  sells  or 
offers  to  sell  the  goods  prior  to  their  receipt  has  been  held 
not  to  amount  to  such  an  assumption  of  authority  or  owner- 
ship as  to  constitute  an  acceptance  and  receipt  within  the 
statute."''  However,  it  is  not  necessary  that  the  acceptance 
should  follow  or  be  contemporaneous  with  the  receipt  of  the 
goods.  The  acceptance  may  take  place  prior  to  the  receipt  or 
thereafter."^  It  is  well  settled  that  an  oral  agreement  in  relation 
to  goods  may  be  taken  out  of  the  statute  by  a  subsequent  delivery 
and  acceptance  of  the  chattels  which  are  the  subject-matter  of  the 
contract.  The  contract  is  thus  rendered  binding  on  the  vendor"^ 
and  on  the  vendee."^    The  statute  does  not  fix  or  limit  the  time 

"'  Edwards  v.  Grand  Trunk  R.  Co.,  O'Donnell,  44  N.  Y.  661.  4  Am.  Rep. 

48  Maine  379;  Wainscott  v.   Kellog,  721.      In    Saunders    v.    Topp,    4    Ex. 

84  IMo.  App.  621 ;  Oilman  v.  Hill,  36  390,  it  was  doubted  whether  "accept- 

N.   H.  311;   Caulkins  v.  Hellman,  47  ance"  could  precede  "actual  receipt," 

N.  Y.  449,  7  Am.  Rep.  461 ;  Clark  v.  but  that  doubt  was  removed  bv  Cus- 

Tucker,    4    N.    Y.    Super.    Ct.    157;  ack  v.  Robinson,  1  B.  &  S.  299. 
Dinnie  v.  Johnson,  8  N.  Dak.  153,  11        ''  Edirar  v.  Breck  &  Sons  Corp.,  172 

N.  W.  612;  Gibbs  v.  Benjamin,  45  Vt.  Mass.  581,  52  N.  E.  1083;  Jackson  v. 

124.  Tupper.  101   N.  Y.  515,  5  N.  E.  65; 

"Edwards  v.  Grand  Trunk  R.  Co.,  Lawton    v.    Keil.   61    Barb.    (N.    Y.) 

48  Maine  379;   Wainscott  v.   Kellog,  558;    Petrie   v.    Dorwin.    1    Hun    CN. 

84  Mo.  App.  621 ;  Stone  V.  Browning,  Y.)    617.    4    Thomp.    &-    C.    (N.    Y.) 

68  N.  Y.  598  (goods  received  subject  695;    Matthiessen   &c.   Co.   v.   McMa- 

to  examination).     See  also,  first  ap-  hon's  Admr.,  38  N.  J.  L.  536;  Gabriel 

peal  of  Stone  v.  Browning,  51  N.  Y.  v.    Kildare    Elevator    Co..    18    Okla. 

211.  318,  90  Pac.  10,  10  L.  R.  A.  (N.  S.) 

"Kent  V.  Huskinson.  3  Bos.  &  P.  638n. 
233,  6  R.  R.  777  (receipt  but  no  ac-        "'Coffin  v.  Bradburv.  3  Tdaho  770. 

ceptance).  35  Pac.  715.  95  .\m.  St.  37:  McCarthy 

'"' Tones  V.  Mechanics' Bank,  29  Md.  v.  Nash,   14  Minn.  127.  Gil.    (Minn.) 

287.  96  Am.  Dec.  533.  95 ;    Slater   Brick   Co.   v.    Shackleton. 

"Cusack   V.    Robinson.    1    B.   &    S.  30  Mont.  3O0,  76  Pac.  805:   Rilev  v. 

299;  Bog  Lead  Mining  Co.  V.  Monta-  Bancroft,    51    Nebr.    864,    71    N.    W. 

gue,  10  C.  B.   (N.  S.)  481;  Cross  v.  745;  Amson  v.  Dreher,  35  Wis.  615. 


§  1329 


CONTRACTS. 


574 


\vhen  the  acceptance  and  actual  receipt  of  the  goods  must  take 
place,  in  order  to  make  the  contract  valid ;  the  acceptance  and  re- 
ceipt may  be  after  the  sale.  The  authorities  allow  an  oral  order 
on  one  day  and  an  acceptance  on  another.^" 

§  1329.    Kind  of  acceptance — Must  be  unconditional. — In 

this  country  the  language  of  the  decisions  is  that  there  must  be 
acts  of  such  a  character  as  to  place  the  property  unequivocally 
within  the  power  and  under  the  exclusive  dominion  of  the  buyer, 
as  absolute  owner,  discharged  of  all  lien  for  the  price.^^  If  the  con- 


^  Buckingham  v.  Osborne,  44  Conn. 
133;  Davis  v.  Moore,  13  Maine  424; 
Marsh  v.  Hyde.  3  Gray  (Mass.)  331; 
Sprague  v.  Blake,  20  Wend.  (N.  Y.) 
61 ;  IMcKnight  v.  Dunlop,  5  N.  Y.  537, 
55  Am.  Dec.  370  (where  the  plain- 
tiff, by  a  verbal  agreement,  in  June, 
purchased  5,000  bushels  of  barley 
malt  of  the  defendant,  at  a  fixed 
price,  to  be  paid  for  by  the  plaintiff's 
note,  whenever  $1,000  worth  of  malt 
should  be  delivered.  The  defendant, 
in  August  and  September,  delivered 
about  1,400  bushels  in  pursuance  of 
the  agreement  and  refused  to  deliver 
the  residue.  It  was  held  that  the 
contract  was  valid,  and  that  the  plain- 
tiff was  entitled  to  damages  for  the 
nondelivery  of  the  residue  of  the 
5.000  bushels)  ;  Schmidt  v.  Thomas, 
75  Wis.  529,  44  N.  W.  771. 

•^Bill  v.  Bament,  9  M.  &  W.  36. 
To  constitute  delivery,  "the  posses- 
sion must  have  been  parted  with  by 
the  owner,  so  as  to  deprive  him  of 
the  right  of  lien."  Malone  v.  Plato, 
22  Cal.  103;  Devine  v.  Warner,  75 
Conn.  375,  53  Atl.  782,  96  Am.  St. 
211,  and  note;  Edwards  v.  Grand 
Trunk  R.  Co.,  54  Maine  105;  Kirby 
v.  Johnson,  22  Mo.  354;  Matthiessen 
&c.  Co.  v.  McMahon's  Admr.,  38  N. 
J.  L.  536;  Marsh  v.  Rouse,  44  N.  Y. 
643;  Rodgers  v.  Phillips,  40  N.  Y. 
519;  Shindler  v.  Houston,  1  N.  Y. 
261,  49  Am.  Dec.  316,  and  notes 
where  the  cases  are  collected.  (In 
that  case  the  plaintiff  and  defendant 
bargained  respecting  the  sale  by  the 
former  to  the  latter  of  a  quantity  of 
lumber,  piled  apart  from  other  lum- 
ber, on  a  dock,  and  in  view  of  the 
parties  at  the  time  of  the  bargain, 
and  which  had  before  that  time  been 


measured  and  inspected.  The  parties 
having  agreed  as  to  the  price,  the 
plaintiff  said  to  the  defendant,  "the 
lumber  is  yours."  The  defendant 
then  told  the  plaintiff  to  get  the  in- 
spector's bill  and  take  it  to  one 
House,  who  would  pay  the  amount. 
This  was  done  the  next  day  and  pay- 
ment refused.  The  price  was  over 
fifty  dollars.  It  was  held,  in  an  ac- 
tion to  recover  the  price,  that  there 
was  no  delivery  and  acceptance  of  the 
lumber  within  the  meaning  of  the 
statute.  This  case  is  regarded  as  a 
leading  authority  on  the  subject  in 
the  state  of  New  York,  and  has  been 
uniformly  followed  there,  and  is  rec- 
ognized and  supported  by  the  de- 
cisions of  the  highest  courts  in  many 
other  states).  Hinchman  v.  Lincoln, 
124  U.  S.  38,  8  Sup.  Ct.  369,  31  L. 
ed.  337.  In  Knight  v.  Mann,  120 
Mass.  219,  by  the  terms  of  the  con- 
tract the  buyer  was  to  send  for  the 
goods  which  were  picked  out  in  ac- 
cord with  his  orders  and  placed  ready 
for  delivery,  and  seen  by  buyer,  who 
promised  to  send  for  them.  They 
were  destroyed  by  fire  before  he  did 
so ;  it  was  held  there  had  been  no 
such  unequivocal  act  of  acceptance  as 
would  take  the  case  out  of  the  stat- 
ute. No  receipt  and  acceptance  un- 
less the  vendor's  lien  is  abandoned. 
See  also.  Smith  v.  Surman,  9  B.  & 
Cr.  561;  Howe  v.  Palmer,  3  B.  & 
Aid.  321 ;  Hanson  v.  Armitage,  5  B. 
&  Aid.  557,  1  Dowl.  &  R.  128,  24 
Rev.  Rep.  478;  Holmes  v.  Hoskins, 
9  Exch.  753;  Baldey  v.  Parker,  2  B. 
&  C.  37;  Long  v.  Martin,  152  Mo. 
668,  54  S.  W.  473.  But  see,  Wright 
v.  Percival,  8  L.  J.  Q.  B.  258;  Dods- 
ley  V.  Varley,  12  A.  &  E.  632,  4  P. 


575  STATUTE  OF  FRAUDS.  §  1 329 

tract  provides  that  the  absoUite  legal  title  is  not  to  pass  until  pay- 
ment, it  seems  that  there  may  still  be  such  a  receipt  and  acceptance 
as  will  take  the  case  out  of  the  statute.  Thus,  where  a  sewing- 
machine  was  sold  to  be  paid  for  in  monthly  instalments,  and  it 
was  agreed  that  the  machine  should  remain  the  property  of  the 
vendor  until  the  last  instalment  was  paid  and  the  machine  was  de- 
livered and  accepted  at  the  time  of  the  contract,  it  was  held  that 
the  acceptance  of  the  machine  by  the  vendee  was  a  sufficient  ac- 
ceptance under  the  statute."^  In  such  cases  the  payment  is  often 
regarded  as  a  condition  precedent,  and  until  performance,  the 
property  is  not  vested  in  the  vendee,  but  remains  in  the  vendor, 
subject  to  be  divested  by  the  performance  of  the  condition.®^ 
Neither  is  the  statute  satisfied  when  the  goods  are  left  in  posses- 
sion of  the  vendor,  in  order  to  enable  him  to  inventory  the  goods 
and  determine  the  price  to  be  paid  for  them."^  In  order  to 
satisfy  the  statute  "The  delivery  must  be  made  of  the  prop- 
erty; the  vendee  must  take  the  actual  possession;  that  posses- 
sion must  be  open  and  unequivocal,  carrying  with  it  the  usual 
marks  and  indications  of  ownership  by  the  vendee.  It  must  be 
such  as  to  give  evidence  to  the  world  of  the  claims  of  the 
new  owner.  He  must,  in  other  words,  be  in  the  usual  relation  to 
the  property  which  owners  of  goods  occupy  to  their  property. 
This  possession  must  be  continuous — not  taken  to  be  surrendered 
back  again — not  formal,  but  substantial.  But  it  need  not  neces- 
sarily continue  indefinitely,  when  it  is  bona  fide  and  openly  taken, 
and  is  kept  for  such  a  length  of  time  as  to  give  general  advertise- 
ment to  the  status  of  the  property  and  the  claim  to  it  by  the 
vendee."-' 

&  D.  448,  considered  overruled  as  to  Co.)    v.    Old    Sec.    Nat.    Bank,    112 

lien  Mich.  223,  81    N.   W.  92;   Burditt  v. 

'■  Pinkham    v.    Mattox,    53    N.    H.  Howe,  69  Vt.  563.  38  Atl.  240- 

600.     See  also,  Gardet  v.  Belknap,  1  "  Brunswick  Grocery  Co.  v.  Lamar, 

Cal.  399.  116  Ga.  1.  42  S.  E.  366. 

"^  Goodwin    v.    May,    23    Ga.    205 ;  "  Stevens  v.  Irwin.  15  Cal.  503,  76 

Shireman    v.    Jackson,    14    Ind.    459;  Am.  Dec.  500.     See  also,  Dauphiny  v 

Bailey  v.  Harris,  8  Iowa  331,  74  Am.  Red    Poll    Creamerv    Co.,     123    Cal. 

Dec.  312;   Patton   v.   McCane,   15   B.  548.  56  Pac.  451;  Maxwell  v.  Brown, 

Mon.    (Ky.)   555;  Hussey  v.  Thorn-  39  Maine  98,  63  Am.  Dec.  605;  Jones 

ton,   4   Mass.  405,   3   Am.   Dec.  224;  v.   Mechanics'  Bank.  29  Md.  287,  96 

Armington  v.  Houston,  38  Vt.  448,  91  Am.  Dec.  533 ;   Hewes  v.  Jordan,  39 

Am.   Dec.   366.     See  also,   McArthur  Md.  472,  17  Am.  Rep.  578;   Snow  v. 

Co.  (sub  nomine  W.  &  A.  McArthur  Warner,    10    Mete.    (Mass.)    132,   43 


§    1330  CONTRACTS.  576 

§  1330.  Mere  words  insufficient. — To  constitute  a  delivery 
and  acceptance,  such  as  the  statute  requires,  something  more  than 
mere  words  is  necessary.  Superadded  to  the  language  of  the 
contract,  there  must  be  some  act  of  the  parties  amounting  to  a 
transfer  of  the  possession  and  an  acceptance  thereof  by  the  buy- 
er.*® And  the  fact  that  the  goods  are  already  in  the  contemplated 
vendee's  possession  at  the  time  the  verbal  offer  of  sale  and  its 
acceptance  is  made  does  not  necessarily  amount  to  a  delivery  and 
acceptance."  Nor  does  the  fact  that  the  articles  sold  are  ponder- 
ous change  the  rule.  There  must  then  be  a  symbolical  or  construc- 
tive delivery.**  Mere  words  unaccompanied  by  acts  do  not  amount 
to  a  delivery  and  acceptance  of  the  goods.  Acts  must  be  per- 
formed which  place  the  property  under  the  control  and  power  of 
the  vendee.*^ 

§  1331.  Acts  construing  an  acceptance. — An  acceptance  to 
satisfy  the  statute  has  been  held  to  mean  some  act  done,  after 
the  vendee  has  exbrcised,  or  had  the  means  of  exercising,  his  right 
of  rejection.'^"  He  may  refuse  or  neglect  to  accept  unreasonably, 
assigning  insufficient  reasons,  or  giving  no  reason  at  all ;  the  ques- 

Am    Dec.  417;  Remick  v.  Sandford,  white  v.  Devereux,  15  M.  &  W.  285; 

120    Mass.    309;    Mechanical    Boiler  Taylor  v.  Wakefield,  6  El.  &  Bl.  765, 

Cleaner  Co.  v.  Kellner,  62  N.  J.  L.  2  Jur.  (N.  S.)   1086;  Smith  v.  Bryan, 

544,  43  Atl.  599;  Caulkins  v.  Hellman,  5  Md.  141,  59  Am.  Dec.  104. 

47  N    Y   449   7  Am.  Rep.  461.  **  Shindler  v.  Houston,  1  N.  Y.   (1 

*' Tempest 'v.    Fitzgerald,    3    B.    &  Comstock)   261,  49  Am.  Dec.  316. 

Aid    680    22  R.  R.   526;   Nicholle  v.  ™Gardet  v.  Belknap,   1   Cal.  399. 

Plume    1   Car    &  P.  272;   Thompson  '"Hunt   v.   Hecht,  8  Exch.  814,  22 

V    Fra'kes    112  Iowa  585,  84   N.   W.  L.  J.  Ex.  293;   Coombs  v.  Bristol  & 

703;     Dole    v.     Stimpson,    21     Pick.  Exeter  R.  Co.,  3  H    &  N.  1,  27  L.  J. 

(Mass.)    384;    Gorman    v.    Brossard,  Ex.  269,  6  W.  R.  335 ;  Smith  v.  Hud- 

120  Mich.  611,  79  N.  W.  903;   Ham  son,  6  B    &   S.  431,  34  L.  J    Q-   B. 

V.  Van  Orden,  4  Hun   (N.  Y.)   709;  145;   Caulkms  v.   Hellman    47  N.  Y. 

Caulkins  V.   Hellman,  47  N.   Y.  449,  449,    7    Am.    Rep.    461.      Acceptance 

7  Am.  Rep.  461 ;  Bassett  v.  Camp,  54  *  .  *     *     means  something  beyond  re- 

Vt.    232       See    also.     Slaughter    v.  ceipt."    Taylor  v.  Smith  (1893),  2  Q. 

Moore     17    Tex.    Civ.    App.    233,   42  B.  65.    There  is  no  acceptance  unless 

S    W  '372  the  purchaser  has   exercised  his   op- 

'«"  Charlotte  &c    R.   Co.  v.  Burwell,  tion  to  receive  the  goods  or  not    or 

56   Fla    217    48    So.   213;    Godkin    v.  done  something  that  has  deprived  him 

Weber,  154  Mich.  207,  117  N.  W.  628,  of  his  option.    Gilman  v.  Hill,  36  N 

20   L    R    A     (N.    S.)    498;    Duplex  H.   311.     Gorham   v.   Fisher,   30  Vt. 

Safety    Boiler    Co.    v.    :\IcGinness,    1  428.    If  the  goods  are  made  to  order. 

City  Ct.   (N.  Y.)  438,  64  How.  Prac.  very  decisive  acts  will  be  required  to 

(N    Y)  99-  Silkman  Lumber  Co.  v.  prove  acceptance  before  they  are  fin- 

Hunhol/     132   Wis.   610.    112   N.    W.  ished    and    ready    for    delivery.     Ma- 

1081    1  L    R    A.   (N    S.)    1186n,   122  berley  v.  Sheppard,  3  M.  &  Scott  436, 

Am.'  St.    1008.     See,   however,   Lilly-  10  Bing.  99,  2  L.  J.  C.  P.  181. 


577  STATUTE  OF  FRAUDS.  §  1 332 

tion  is  not  why  he  did  not,  or  whether  he  ought  to  accept,  but 
whether  he  did  accept.  And  whether  he  has  accepted  is  to  be 
determined  in  every  case  by  his  acts.^^  As  a  general  rule  if  the 
vendee  uses  a  portion  of  the  property  purchased  for  the  purpose 
for  which  it  was  bought  or  sells  a  portion  of  it  to  a  third  party 
this  constitutes  such  an  act  of  ownership  as  to  constitute  an  ac- 
ceptance." This  is  generally  true  even  though  the  resale  is  made 
by  the  first  purchaser  before  the  goods  are  delivered  to  him." 
A  resale  is  deemed  a  waiver  of  the  right  to  inspect  the  goods 
before  acceptance.^*  An  oral  contract  for  the  sale  of  a  device 
has  been  upheld  where  a  model  thereof  was,  at  the  time  of  the 
making  of  the  contract,  delivered  to  and  retained  by  the  pur- 
chaser, who  subsequently  obtained  a  patent  thereon."  The  tak- 
ing possession  of  a  slave  without  any  qualifying  act,'^°  or  inspec- 
tion of  goods  by  the  vendee  and  the  ordering  of  them  placed  at  a 
certain  place  in  his  possession,"  or  the  execution  and  delivery 
of  a  chattel  mortgage  on  goods  by  the  purchaser  after  they  have 
been  received  by  him,'®  or  the  taking  of  an  inventory  of  a  stock 
of  goods  in  a  store  by  the  purchaser  and  his  directing  his  clerk 
to  keep  the  keys  for  him  till  morning,'^  has  in  each  case  been  held 
to  show  such  an  acceptance  as  would  take  the  contract  out  of  the 
statute. 

§  1332.    Further  illustrations. — The  act  or  conduct  on  the 

part  of  the  buyer  to  constitute  acceptance  must  be  such  as  would 

"Knight  V.   Mann,   118  Mass.   143.  is   not   whether   he   ought   to   accept, 

"First.    The   statute   is   not   complied  but    whether    he    has    accepted   them, 

with  unless  two  things  concur:    The  Fourth.    The  question   of  acceptance 

buyer   must    accept   and   actually    re-  or  not  is  a  question  as  to  what  was 

ceive  part  of  the  goods,  and  the  con-  the  intention  of  the  buyer,  as  signi- 

tract  will  not  be  good,  unless  he  does  fied  by  his  outward  acts."    Mechanical 

both.    Second.    There  may  be  an  ac-  Boiler  Cleaner  Co.  v.  Kellner,  62  N. 

tual   receipt   without   acceptance   and  J.  L.  544,  43  Atl.  599. 

an  acceptance  without  a  receipt,  and  "  Phillips  v.  Ocmulgee  Mills,  55  Ga. 

acceptance   to   be   inferred    from   the  633. 

assent  of  the  buyer,  meant  by  him  to  "  Bowe  v.   Ellis,  3   Misc.    (N.   Y.) 

be   final,   that   the    goods    are    to   be  92.  22  N.  Y.  S.  369. 

taken  bv  him  as  his  property  under  '*  Hill  v.  McDonald,  17  Wis.  97. 

the  contract.    Third.    It  is  immaterial  "Jones  v.  Reynolds,  120  N.  Y.  213, 

whether   the  buyer's    refusal   to   take  24  N.  E.  279. 

the  goods  be  reasonable  or  not.   If  he  "  Kelly  v.  Brooks,  25  Ala.  523. 

refuses  the  goods,  assigning  grounds  "  Barkalow  y.  Pfeiffer.  38  Ind.  214. 

false    or    frivolous,    or    assigning    no  "Wyler  v.  Rothchild,  53  Nebr.  566, 

reasons  at  all,  it  is  clear  that  he  does  74  N.  W.  41. 

not  accept  the  goods.    The  question  "  Gray  v.  Davis,  10  N.  Y.  285. 

37— CoNTR.\CTS.  Vol.  2 


§    1332  CONTRACTS.  578 

reasonably  lead  the  seller  to  think  the  goods  are  accepted,  and  this 
may  be  by  retention  of  them  for  such  a  time  as  might  reasonably 
lead  to  that  conclusion.^"  The  vendee,  having  an  election  to  re- 
pudiate the  delivery,  must  do  it  within  a  reasonable  time,  or  he  is 
bound  by  the  acquiescence  as  an  acceptance.**^  The  mere  use  of 
an  article  on  trial  may  in  some  cases  be  contemplated  by  the  par- 
ties as  a  means  of  ascertaining  whether  it  corresponds  in  quality 
with  the  article  agreed  to  be  furnished.  In  such  cases  mere  use 
will  not  constitute  an  acceptance. ^^  If  a  chattel  is  sold  and  de- 
livered upon  condition  that  it  shall  be  returned  to  the  seller  at  a 
fixed  price,  in  a  certain  event,  and  the  buyer  agrees  so  to  return  it, 
it  has  been  held  that  such  agreement  is  not  for  a  resale  of  the 
chattel,  and  so  not  within  the  statute.*^  But  where  goods  had 
been  sold  and  delivered,  and  a  part  used  and  appropriated  by  the 
vendee,  and  by  a  subsequent  agreement  between  the  parties  the 
vendor  was  to  "buy  back"  the  property,  it  was  held  not  a  modi- 
fication or  rescission  of  the  original  contract  simply,  but  a  new 
contract  required  to  be  in  writing  or  accompanied  by  a  delivery 
to  take  it  out  of  the  statute.^* 

§  1333.  Acceptance  of  part  of  the  goods. — The  acceptance 
and  receipt  of  part  of  the  articles  purchased,  or  of  all  of  one  class 
of  articles  purchased,  under  an  entire  contract  of  sale,  may  take 

^  Bowes    V.    Pontifex,    3    F.    &    F.  back."    Similar  language  was  used  by 

739-  Downs  v.  Marsh,  29  Conn.  409;  the  same  judge  in  Hopkins  v.  Apple- 

Cop'lay  Iron  Co.  v.  Pope,  108  N.  Y.  by,  1  Stark  477. 

232,  15  N.  E.  335.  «=  Curtis  v.  Pugh,  10  Q.  B.  Ill,  16 

"  Coleman    v.    Gibson,    1    M.    &    R.  L.  J.  Q.  B.  199  (question  whether  the 

168;  Parker  v.  Wallis,  5  El.  &  Bl.  21,  article  was   dealt  with  by  vendee  so 

3  W    R    417;  Hirshborn  v.   Stewart,  as  to  constitute  acceptance);  Pierson 

49  Iowa  418;  Schofield  v.  Conley,  126  v.   Crooks,   115   N.  Y.  539,  22  N.  E. 

Mich.  712,  86  N.  W.  129;  Strauss  v.  349,  12  Am.  St.  831. 

National    Parlor    Furniture    Co.,    76  "'Williams  v.  Burgess,  10  A.  &  E. 

Miss.  343,  24  So.  703;  Hornberger  v.  499;    Fremont   Carriage   Mfg.   Co.   y. 

Feder    30  Misc    (N.  Y.)    121,  61   N.  Thomsen,    65    Nebr.    370,   91    N.    W. 

Y    S    865-  Pierson  v.  Crooks,  115  N.  ^Id   (agreement  to  repurchase  shares 

Y.  539,  22  N.  E.  349,  12  Am.  St.  831;  of  stock  sold). 

Spencer  v.  Hale.  30  Vt.  314,  12>  Am.  ^  Blanchard  v.  Trim,  38  N.  Y.  225. 
Dec  309  It  was  said  by  Lord  El-  "Where  the  title  of  the  vendee  has 
lenborough,  in  Fisher  v.  Samuda,  1  not  been  perfected  for  any  reason. 
Camp.  190,  that  "It  was  the  duty  of  a  where  there  has  not  been  a  perfect 
purchaser  of  any  commodity,  immedi-  delivery,  where  fraud  has  occurred, 
atelv  on  discovering  that  it  was  not  or  where  the  contract,  in  any  respect, 
according  to  order  and  unfit  for  the  remains  executory,  the  idea  of  a  re- 
purpose  intended,  to  return  it  to  the  scission  is  quite  appropriate." 
vendor,  or  give  him  notice  to  take  it 


579 


STATUTE  OF  FRAUDS. 


§  1333 


the  whole  contract  out  of  the  statute^'  although  the  rest  are  not  in 
existence  at  the  time  of  the  contract.*"  And  even  though  no  part 
of  the  purchase  is  paid  an  acceptance  and  receipt  of  a  part  of  the 
goods  sold  by  parol  contract  meets  the  requirements  of  the 
statute  of  frauds.*^  The  acceptance  of  a  part  of  an  entire  verbal 
order  of  goods  renders  the  entire  contract  valid,  although  the  re- 
mainder of  the  goods  are  shipped  at  a  different. time.*^^  And  when 
a  large  amount  of  wood  is  contracted  for,  the  vendor  to  deliver  as 
much  of  it  as  he  could  the  first  winter  and  the  remainder  during 
the  following  winter  and  year,  a  delivery  and  acceptance  of  a  part 
of  the  wood  the  first  winter  has  been  held  to  take  the  entire  con- 
tract out  of  the  statute. ^°  The  same  holding  has  been  made 
when  part  of  the  total  amount  of  hay,""  or  total  number  of 
staves"^  has  been  received  by  the  vendee.^-  That  which  has  pre- 
ceded makes  it  obvious  that  a  part  delivery  and  acceptance  sub- 
sequent to  the  making  of  the  oral  agreement  is  in  a  proper  case 
sufficient  to  take  it  out  of  the  statute  and  make  it  binding  on  both 
the  vendor"^  and  vendee.^^ 


*  Sloan  Sawmill  Co.  v.  Guttshall,  3 
Colo.  8;  Weeks  v.  Crie,  94  Maine 
458,  48  Atl.  107,  80  Am.  St.  410;  Da- 
mon V.  Osborn,  1  Pick.  (Mass.)  476, 
11  Am.  Dec.  229;  New  England  &c. 
Co.  V.  Standard  Worsted  Co.,  165 
Mass.  328.  43  N.  E.  112,  52  Am.  St. 
516;  Joseph  v.  Struller,  25  Misc.  (N. 
Y.)  173,  54  N.  Y.  S.  162;  Van  Woert 
V.  Albany  &c.  R.  Co.,  67  N.  Y.  538; 
Bradley  v.  Wheeler,  44  N.  Y.  495; 
Brock  V.  Knower,  2,7  Hun  (N.  Y.) 
609;  Garfield  v.  Paris.  96  U.  S.  557, 
24  L.  ed.  821  ;  Danforth  v.  Walker, 
40  Vt.  257;  Cotterill  v.  Stevens,  10 
Wis.  422. 

^  "If  a  man  enters  into  an  entire 
agreement  for  goods  made,  and  for 
others  to  be  made,  his  accepting  part 
of  the  goods  made  is  evidence  of  his 
having  entered  into  the  agreement." 
Scott  v.  Eastern  Counties  R.  Co..  12 
M.  &  W.  Z2,,  13  L.  J.  Ex.  14,  7  Jur. 
996. 

"Davis  V.  Moore,  13  Alaine  424; 
Rickey  v.  Tenbroeck,  63  Mo.  563; 
Meyer  v.  Thompson,  16  Ore.  194,  18 
Pac.   16. 

**  Farmer  v.  Gray,  16  Nebr.  401, 
20  N.  W.  276. 


«»Gault  v.   Brown,  48  N.  H.    183, 

2  Am.  Rep.  210. 

»°Towne  v.  Davis,  66  N.  H.  396, 
22  Atl.  450. 

•^  Theilen  v.  Roth,  80  Wis.  263,  SO 
N.  W.  183. 

"  See,  however,  Atherton  v.  New- 
hall,  123  Mass.  141,  25  Am.  Rep.  47; 
Chapin  v.  Potter,  1  Hilt  (N.  Y.) 
366.  Compare  Dauphiny  v.  Red  Poll 
Creamery  Co.,  123  Cal.  548,  56  Pac. 
451. 

"'Marsh  v.  Hyde,  3  Gray  (Mass.) 
331;  Bush  v.  Holmes,  53  Maine  417; 
Field  V.  Runk,  22  N.  J.  L.  525:  Meri- 
den  Britannia  Co.  v.  Zingsen,  4  Robt. 
{27  N.  Y.  Super  Ct.)  312;  Allen  v. 
Aguira,  5  N.  Y.  Legal  Obs.  380; 
Chapin  v.  Potter,  1  Hilt.  (N.  Y.) 
366;  McKnight  v.  Dunlop,  5  N.  Y. 
537,  55  Am.  Dec.  370  (overruling 
Sevmour  v.  Davis,  2  Sandf.  (X.  Y.) 
239;  Gabriel  v.  Kildare  Elevator  Co.. 
18  Okla.  318,  90  Pac.  10,  10  L.  R.  A. 
(N.  S.)   638n. 

•*  Sloan  Saw  Mill  Co.  v.  Guttshall. 

3  Colo.  8;  Davis  v.  Moore.  13  Maine 
424:  Townsend  v.  Hargraves,  118 
Mass.  325 :  Gaslin  v.  Pinney,  24  Minn. 
322;    Rickey    v.    Tenbroeck,    63    Mo. 


§    1334  CONTRACTS.  580 

§  1334.  Goods  sold  by  sample. — Where  the  goods  are  sold 
by  sample,  that  fact  must  be  considered  as  an  element  in  the  case 
in  determining  whether  the  buyer  has  taken  actual  or  construc- 
tive possession  as  owner,  so  as  to  indicate  an  acceptance  thereby.®' 
"In  the  case  of  an  executory  contract  for  the  future  sale  and  de- 
liver}^ of  goods  of  a  specified  quality,  in  the  absence  of  express 
warranty  the  quality  is  a  part  of  the  description  of  the  thing 
agreed  to  be  sold,  and  the  vendor  is  bound  to  furnish  articles  cor- 
responding with  the  description.  If  he  tenders  articles  of  an  infer- 
ior quality  the  purchaser  is  not  bound  to  accept  them.  It  has  been 
held  that  if  he  does  accept  them,  he  is,  in  the  absence  of  fraud, 
deemed  to  have  assented  that  they  correspond  with  the  descrip- 
tion, and  is  concluded  from  the  subsequent  questioning  of  it.  This 
imposed  upon  the  vendee  the  duty  of  inspection  before  acceptance 
if  he  wishes  to  save  his  rights  in  case  the  goods  are  of  inferior 
quality."®^  But  where  the  question  is  whether  the  contract  has 
been  fulfilled,  it  is  sufficient  to  show  an  acceptance  and  actual  re- 
ceipt of  a  part  of  the  thing  sold,  even  though  it  does  not  preclude 
the  purchaser  from  refusing  to  accept  the  residue  of  the  goods,  if 
it  clearly  appears  that  they  do  not  conform  to  the  contract." 

563;   Farmer  v.   Gray,  16  Nebr.  401,  sold.     Hinde  v.  Whitehouse,  7  East 

20  N.   W.  276;   Gault  v.   Brown,   48  558,  3  Smith  528,  8  R.  R.  676;   Kli- 

N.  H.   183,  2  Am.  Rep.  210;  Towne  nitz  v.  Surry,  5  Esp.  267;  Talver  v. 

V   Davis,  66  N.  H.  396,  22  Atl.  450;  West,  Holt    (N.   P.)    178;   Smith  v. 

Sprague  v.  Blake,  20  Wend.  (N.  Y.)  Stoller,  26  Wis.  671. 
61;   Van   Woert  v.   Albany  &   S.   R.        'M  Beach  on  Contracts,  §  560,  cit- 

Co     67  N.  Y.  538;   Vincent  v.  Ger-  ing    Pierson    v.    Crooks,    115    N.    Y. 

mond,   11  Johns.    (N.  Y.)   283;  Out-  539,  22  N.  E.  349, 12  Am.  St.  831 ;    Pope 

water   v.    Dodge,   6  Wend.    (N.   Y.)  v.  Allis,  115  U.  S.  363,  29  L.  ed.  393, 

397;  Sale  v.  Darragh,  2  Hilt.  (N.  Y.)  6   Sup.  Ct.  69.     In  Bacon  v.   Eccles, 

184;   Boutwell   v.   O'Keefe,   32   Barb.  43   Wis.  227,  the  vendee  msures  the 

(N.    Y.)    434;    Good   v.    Curtiss,    31  goods   in  transitu,   pays   the   freight, 

How.    Pr.    (N.    Y.)    4;    Danforth    v.  and  intending  to  accept  the  goods  if 

Walker,  40  Vt.  257 ;  Cotterill  v.  Stev-  found  to  be   such   as   ordered,   takes 

ens,  10  Wis.  422 ;  Schmidt  v.  Thomas,  them  into  his  possession  for  examin- 

75  Wis.  529,  44  N.  W.  771.  ation,   and  then   within   a  reasonable 

"'Gardner   v.    Grout,    2    C.   B.    (N.  time  refuses  to  accept  them,   as  not 

S.)     340;    Remick    v.    Sanford,     120  according  to  order.     Held,  that  there 

Mass.  309;  Simon  v.  Wood,  17  Misc.  was    not    an    acceptance    within    the 

(N.  Y.)  607,  40  N.  Y.  S.  675;  Balti-  meaning  of  the  statute,  if  the  goods 

more    Brick'  Co.    v.    Coyle,    18    Pa.  are   not   in   fact   such   as   the   order 

Super.    Ct.    186;   Albree  v.   Philadel-  called  for. 

phia    Co.,   201    Pa.    St.    165.    50    Atl.        "Morton  v.  Tibbett,  15  Q.   B.  428 

984.     If  the  buyer  has  received  and  (leading  case,  holding  that  there  may 

retained  a  sample  of   the  goods,  the  be  an   acceptance  and   receipt   "with- 

statute  will  be  satisfied  if  the  sample  out   the  buyer   having   examined   the 

was    actually    a    part    of    the    goods  goods  or  done  anything  to  preclude 


58i 


STATUTE    OF    FRAUDS. 


§  133; 


§  1335.  Constructive  delivery  and  acceptance. — The  deliv- 
ery may  be  actual  or  symbolical.  Where  the  goods  are  so  situ- 
ated as  not  to  admit  of  actual  delivery,  the  sale  will  be  valid  with- 
out it.  Where  the  articles  sold  are  ponderous,  a  symbolical  or 
constructive  delivery  will  be  equivalent  in  its  effect  to  an  actual 
one.  When  goods  are  sold  in  a  warehouse,  the  delivery  of 
the  key  has  been  deemed  sufficient.  The  delivery  of  wine  in  a 
cellar  is  held  to  be  made  by  a  delivery  of  the  keys  of  the  cellar. 
The  title  to  a  ship  at  sea  may  pass  by  a  delivery  of  the  bill  of 
sale."*^  The  circumstances  held  tantamount  to  an  actual  delivery- 
ought,  however,  to  be  so  strong  and  unequivocal  as  not  to  leave 
the  intent  of  the  parties  doubtful."''     The  delivery  to  the  vendor 


him  from  contending  that  they  do 
not  correspond  with  the  contract"). 
Kibble  V.  Gough.  38  L.  T.  204,  C.  A. 
(goods  equal  to  sample)  ;  Rickard  v. 
Moore.  38  L.  T.  841,  C.  A.  (goods 
not  equal  to  sample)  ;  Page  v.  Mor- 
gan, L.  R.  15  Q.  B.  D.  228,  in  which 
Brett  M.  R.,  said,  referring  to  Kib- 
ble V.  Gough,  38  L.  T.  (X.  S.)  204: 
"It  was  there  pointed  out  that  there 
must  be  under  the  statute  both  an  ac- 
ceptance and  actual  receipt,  but  such 
acceptance  need  not  be  an  absolute 
acceptance."  In  Taylor  v.  Smith 
(1893),  2  Q.  B.  65,  in  which  the 
above  mentioned  cases  were  consid- 
ered Lord  Herschell  said :  "  'Accep- 
tance' is  not  used  in  the  statute  ac- 
cording to  its  own  common  accep- 
tation, and  in  what  precise  sense  it  is 
used  has  never  been  determined." 
Tower  v.  Tudhope,  Zl  U.  C.  Q.  B. 
200;  Hewes  v.  Jordan,  39  Md.  472, 
17  Am.  Rep.  578.  Strong  v.  Dodds, 
47  Vt.  348,  where  the  court  said : 
"No  doubt  some  confusion  in  the 
cases  deciding  what  would  or  would 
not  constitute  an  acceptance  by  the 
purchaser  within  the  meaning  of  the 
statute,  has  arisen  by  not  clearly  dis- 
tinguishing an  acceptance  by  the  pur- 
chaser that  will  remove  the  statute 
disability,  from  an  acceptance  that 
amounts  to  a  waiver,  at  common  law, 
by  the  purchaser,  of  his  right  to  ob- 
ject to  the  goods  because  they  do 
not  answer  to  the  order  in  quantity 
or  quality."  Garfield  v.  Paris.  06  U. 
S.  557.  24  L.  ed.  821.  See  also,  Smith 
V.  Stoller,  26  Wis.  671. 


•*Currie  v.  Anderson,  2  El.  &  El. 
592,  29  L.  J.  Q.  B.  87,  8  Week.  Rep. 
274,  6  Jur.  (N.  S.)  442;  Chaplin  v. 
Rogers,  1  East.  192  (the  bulk  of  the 
commodity  precluded  actual  de- 
livery) ;  Burton  v.  Curvea,  40  111. 
320,  89  Am.  Dec.  350  (discussing  the 
subject  of  delivery  of  warehouse  re- 
ceipts) ;  Vining  v.  Gilbreth,  39  Maine 
496;  Boynton  v.  Veazie,  24  Maine 
286  (sale  of  logs)  ;  Badlam  v.  Tuck- 
er. 1  Pick.  (Mass.)  389,  11  Am.  Dec. 
202  (ship  at;  sea)  ;  Putnam  v.  Dutch, 
8  Mass.  287  (sale  of  vessel  by  bill  of 
sale)  ;  Pratt  v.  Parkman,  24  Pick. 
(Mass.)  42  (delivery  of  a  bill  of 
lading,  etc.)  ;  Ricker  v.  Cross,  5  N. 
H.  570,  22  Am.  Dec.  480;  Wilkes  &c. 
V.  Ferris,  5  John.  (X.  Y.)  335  (de- 
livery of  keys)  ;  Benford  v.  Schell, 
55  Pa.  St.  393  (delivery  of  keys  of  a 
safe  sold,  and  of  the  room  in  which 
it  stood).  In  Meredith  v.  Meigh,  2 
El.  &  Bl.  364,  Erie.  J.,  says:  "I  have 
no  doubt  that  the  bill  of  lading, 
which  is  the  symbol  of  property,  may 
be  so  received  and  dealt  with  as  to 
be  equivalent  to  an  actual  receipt  of 
the  property  itself."  See.  however, 
Quintard  v."  Bacon.  99  Mass.  185  (a 
bill  of  lading  left  at  office  of  the  buy- 
er who  before  knowing  that  it  had 
been  left  there  gave  notice  that  he 
would  not  receive  the  goods.  It 
was  held  no  de1iver\'.) 

~  Proctor  V.  Tones.  2  Carr.  Sr  P. 
532:  Bentall  v.  Burn.  3  B.  &  C.  423: 
Devine  v.  Warner,  75  Conn.  375,  53 
Atl.  782,  96  Am.  St.  211  and  note 
(question  as  to  the  acceptance  and 


■OOJ 


CONTRACTS. 


582 


of  the  import  entry  of  the  goods  to  the  agent  of  the  vendee  has 
been  held  not  to  be  sufficiently  certain  to  amount  to  a  construc- 
tion delivery/  If  the  goods  are  in  the  custody  of  a  third  person 
as  bailee  of  the  seller,  the  possession  is  changed  as  soon  as  such 
custodian,  with  the  authority  and  consent  of  the  seller,  becomes 
the  bailee  of  the  buyer.'  But  where  the  vendor  gave  the  buyer  an 
order  on  the  warehouseman  without  notifying  the  warehouseman 
this  was  held  insufficient  as  a  delivery  and  acceptance,  to  satisfy 
the  statute.^  The  vendor  may  be  the  agent  of  the  vendee  to  re- 
ceive the  goods,  as  where  they  are  so  situated  that  the  vendee 
can  rightfully  take  possession  at  his  pleasure,  but  by  mutual  con- 
sent they  are  retained  in  the  custody  of  the  vendor.*  However, 
it  has  been  held  that  where  the  vendor  retains  the  possession  and 
control  of  the  goods  as  the  vendee's  agent  there  is  not  sufficient 
delivery  and  acceptance  is  insufficient  to  take  the  contract  out 
of  the  statute  as  against  creditors  of  the  vendor,  notwithstanding 
the  sale  to  the  vendee  was  made  in  good  faith.^     There  may  also 


receipt  of  tobacco  on  poles  in  barn)  ; 
Clark  V.  Labreche,  63  N.  H.  397.  In 
Farina  v.  Home,  16  M.  &  W.  119, 
where  the  seller  indorsed  and  deliv- 
ered to  the  buyer  a  document  by 
which  the  bailee  of  goods  agreed  to 
deliver  them  to  the  seller  or  his  in- 
dorsee, it  was  held  that  there  was  no 
actual  receipt  by  the  buyer  until  the 
bailee  attorned  to  him.  In  Boardman 
V.  Spooner,  13  Allen  (Mass.)  353, 
90  Am.  Dec.  196,  it  was  held  that 
the  acceptance  of  a  bill  of  goods  in  a 
warehouse  in  New  York,  with  an  or- 
der on  the  warehouseman  for  their 
delivery  without  notice  to  the  ware- 
houseman, was  not  an  acceptance  or 
receipt  of  the  goods  which  would 
take  the  sale  out  of  the  operation 
of  the  statute.  An  agreement  with 
the  vendor  about  the  storage  of  the 
goods,  and  the  delivery  by  him  of 
the  import  entry  to  the  agent  of  the 
vendee,  were  held  not  to  be  sufficient- 
ly certain  to  amount  to  a  construc- 
tive delivery,  or  to  afford  an  in- 
dicium of  ownership  in  Bailey  v. 
Ogden,  3  Johns.  (N.  Y.)  399,  3  Am. 
Dec.  509,  a  leading  case  on  the  stat- 
ute of  frauds  and  frequently  cited  in 
Xew  York,  and  elsewhere. 


'  Bailey  v.  Ogden,  3  Johns.  (N.  Y.) 
399,  3  Am.  Dec.  509. 

^Searle  v.  Keeves,  2  Esp.  598; 
Simmonds  v.  Humble,  13  C.  B.  (N. 
S.)  258;  Auhman  Miller  &  Co.  v. 
Nilson,  112  Iowa  634,  84  N.  W.  692. 

^  Boardman  v.  Spooner,  13  Allen 
(Mass.)  353,  90  Am.  Dec.  196. 

*  Castle  v.  Sworder,  29  L.  J.  R. 
Ex.  235,  30  L.  J.  R.  310;  Marvin  v. 
Wallace,  6  E.  &  B.  726;  Elmore  v. 
Stone,  1  Taunt.  458;  Means  v.  Wil- 
liamson, Zl  Maine  556;  Barrett  v. 
Goddard,  3  Mason  (U.  S.)  107,  Fed. 
Cas.  No.  1046.  But  if  the  vendor 
does  not  part  with  his  lien  there  is 
no  delivery.  Baldey  v.  Parker,  2  B. 
&  C.  37 ;  Rodgers  v.  Jones,  129  Mass. 
420;  Safford  v.  McDonough,  120 
Mass.  290.  See  also,  Knight  v. 
Mann,  120  Mass.  219.  In  the  above 
case  the  vendee  was  to  send  for  the 
goods.  He  went  to  the  vendee's 
store  and  they  were  pointed  out  to 
him.  He  said  he  would  send  for 
them.  Field  not  such  an  acceptance 
and  receipt  as  would  take  the  con- 
tract out  of  the  statute. 

"Fitzgerald  v.  Gorham,  4  Cal.  289, 
60  Am.  Dec.  616. 


583 


STATUTE    OF    FRAUDS. 


^3:^^ 


be  a  constructive  acceptance  under  the  statute,  such  as  may  arise 
from  the  vendee  deahng  with  the  goods  as  owner,"  as  directing 
an  alteration  in  a  carriage  and  using  it  for  driving  purposes.' 

§  1336.  Acceptance  by  agent,  bailee  or  joint  purchaser. — 
Delivery  to  and  acceptance  of  the  goods  by  an  agent  or  bailee, 
who  is  expressly  authorized  by  the  vendee  to  receive  and  accept 
them  is  sufficient  to  take  a  verbal  contract  of  purchase  out  of  the 
statute.®  The  vendor  may  hold  the  goods  as  the  bailee  of  the  ven- 
dee.® It  has  been  held,  however,  that  the  same  person  cannot  act  as 
both  agent  of  the  seller  to  negotiate  the  sale  and  as  agent  of  the 
vendee  to  receive  and  accept  the  goods."  Nor  does  the  mere  fact, 
that  the  vendee  or  his  agent  may  have  possession  of  the  goods  at 
the  time  the  verbal  contract  of  sale  is  made,  of  itself,  show  such  a 
delivery  and  acceptance  as  will  establish  the  contract  under  the 
statute  of  frauds."     It  would  seem  on  principle  that  delivery  to 


•  Parker  v.  Wallis,  5  El.  &  Bl.  21 
Baines  v.  Jevons,  7  Car.  &  P.  288 
Maberley  v.  Sheppard,  10  Bing.  99 
Currie  v.  Anderson,  2  El.  &  El.  592 
IMarshall  v.  Green,  L.  R.  1  C.  P.  Div. 
35. 

^  Beaumont  v.  Brengeri,  5  C.  B. 
301 ;  Robinson  v.  Gordon,  23  U.  C. 
Q.  B.  143;  Rice  v.  Austin,  17  Mass. 
197;  Bass  v.  Walsh,  39  Mo.  192; 
Shepherd  v.  Pressey,  32  N.  H.  49; 
Garfield  v.  Paris,  96  U.  S,  557,  24 
L.  ed.  821.  "If  *  *  *  the  vendee 
does  any  act  to  the  goods,  of  wrong 
if  he  is  not  the  owner  of  the  goods 
and  of  right  if  he  is  the  owner  of  the 
goods,  the  doing  of  that  act  is  evi- 
dence that  he  has  accepted  them." 
Parker  v.  Wallis,  5  E.  &  B.  21.  Chap- 
lin V.  Rogers,  1  East  192.  which  was 
assumpsit  for  a  stack  of  hay.  The 
plaintiff  was  put  to  the  proof  of  the 
delivery  of  it,  which  he  maintained 
by  showing  that  the  defendant  had 
sold  a  part  of  the  hay  to  one  who 
had  taken  it  away.  This  was  held 
sufficient  to  prove  that  the  defend- 
ant had  the  possession ;  inasmuch  as 
he  had  made  a  valid  sale  of  the  hay, 
and  dealt  with  the  property  as  his 
own.  Directing  silverware  to  be  en- 
graved with  the  buyer's  name  be- 
fore delivery  has  been  held  a  good 
acceptance.      Walker    v.    Boulton,    3 


U.  C.  Q.  B.  (O.  S.)  252.  Green  v. 
Merriam,  28  Vt.  801,  is  an  authority 
for  the  doctrine  that  all  that  a  pur- 
chaser needs  to  do  to  accept  personal 
property  sold  by  parol  so  as  to  re- 
move the  statute  of  disability  is  to 
assume  control  over  the  property.  If 
the  goods,  at  the  time  of  the  bargain, 
are  on  the  land  of  a  third  person 
(such  person  not  having  the  custody 
of  them  as  bailee),  or  are  in  some 
public  place  to  which  buyer  and  seller 
have  equal  right  of  access,  it  seems 
that  the  possession,  as  well  as  the 
title,  may  be  transferred  by  the  mere 
agreement  of  the  parties  to  that 
effect.  Tansley  v.  Turner,  2  Bing. 
N.  Cas.  151;  Cooper  v.  Bill,  3  H.  & 
C.   722. 

*Rodgers  v.  Jones,  129  Mass.  420; 
Vanderbilt  v.  Central  R.  R.  Co..  43 
X.  J.  Eq.  669.  12  At).  188;  Cutwater 
V.  Dodge,  6  Wend.   (X.  Y.)  397. 

'Janvrin  v.  Maxwell,  23  Wis.  51. 
See  also,  Bassett  v.  Camp,  54  Vt. 
232. 

"Caulkins  v.  Hellman,  14  Hun  (N. 
Y.)  330,  47  X.  Y.  449,  7  Am.  Rep. 
461. 

"IMatter  of  Hoover,  33  Hun  (X. 
Y.  553:  Dorsey  v.  Pike,  50  Hun.  (N. 
Y.)  534,  3  X.  Y.  S.  730,  20  X.  Y. 
St.   676. 


§    1337  CONTRACTS.  584 

one  of  several  joint  purchasers  and  acceptance  by  him  renders  the 
contract  vahd  as  to  all  the  joint  purchasers.^^ 

§  1337.  Delivery  at  a  place  or  to  a  person  designated  by 
the  buyer. — When  the  buyer  instructs  the  seller  to  deliver  the 
goods  to  a  designated  person,  who  accepts  them  without  objec- 
tion, and  the  goods  are  in  fact  such  as  were  ordered,  and  are  with- 
out defect  or  deficiency,  they  are  deemed  to  have  been  received 
and  accepted  by  the  purchaser  himself  and  the  contract  is  thereby 
taken  out  of  the  statute.^^  However,  the  mere  delivery  of  the 
chattels  purchased  at  the  place  designated  by  the  buyer  does  not, 
as  a  general  rule,  constitute  an  acceptance  sufficient  to  satisfy  the 
statute  when  the  buyer  exercises  no  act  of  ownership  over  the 
goods  subsequent  to  delivery/*  Thus,  the  placing  of  goods  in 
a  highway  at  a  point  designated  by  the  vendee  has  been  held  in- 
sufficient to  take  the  case  out  of  the  statute/^  So  where  the 
vendor  directed  that  the  goods  be  shipped  by  sea  from  a  desig- 
nated wharf  and  there  was  a  delivery  on  the  wharf,  the  delivery 
was  held  insufficient  to  satisfy  the  statute.^^ 

§  1338.  Delivery  to  a  carrier. — Acceptance  and  receipt  may 
be  through  an  authorized  agent.  But  a  common  carrier,  whether 
selected  by  the  seller  or  the  buyer,  to  whom  the  goods  are  en- 
trusted without  the  express  instructions  to  do  anything  but  to 
carry  and  deliver  them  to  the  buyer,  is  no  more  than  an  agent  to 
carry  and  deliver  the  goods,  and  has  no  implied  authority  to  do 
the  acts  required  to  constitute  an  acceptance  and  receipt  on  the 

"Smith  V.  Milliken,  7  Lans.  (N.  Co.,  88  Ga.  578.  15  S.  E.  327;  Moore 
Y.)  336.  See,  however.  Chamber-  v.  Hays,  12  Ind.  App.  476,  40  N.  E. 
lain  V.  Dow,  10  Mich.  319.  See  dis-  638;  Snow  V.  Warner,  10  Mete, 
senting  opinion  of  Martin,  C.  J.,  in  (Mass.)  132,  43  Am.  Dec.  417;  Dean 
which  he  said :  "In  every  joint  pur-  v.  Tallman,  105  Mass.  443 ;  Dyer  v. 
chase,  each  joint  purchaser  makes.  Forest,  2  Abb.  Prac.  (N.  Y.)  282. 
of  necessity,  his  copurchaser  his  "  Howard  v.  Borden,  13  Allen 
agent  for  the  receipt  of  the  proper-  (Mass.)  299;  Cooke  v.  Millard,  65 
ty;  in  other  words,  the  delivery  to  N.  Y.  352,  22  Am.  Rep.  619;  Brew- 
one  under  the  contract  is  a  delivery  ster  v.  Taylor,  63  N.  Y.  587. 
to  all.  *  *  *  The  acceptance  by  "Finney  v.  Apgar,  31  N.  J.  L.  266. 
one  of  the  plaintiffs  in  error  was  Compare  with  Bulkley  v.  Waterman, 
the  acceptance  by  both,  as  joint  pur-  13  Conn.  328. 

chasers;    either   obtaining    the    prop-  "Hart  v.  Bush,  El.  Bl.  &  El.  494. 

erty  under  the  order  acted  for  both.  See  also,     Hanson    v.     Armitage,     5 

and  his  act  bound  both."  Barn.  &  Aid.  557,  1  Dowl.  &  R.  128, 

"•Schroder   v.    Palmer    Hardware  24  Rev.  Rep.  478. 


585 


STATUTE  OF  FRAUDS. 


§  1338 


part  of  the  buyer."  It  follows  that  as  a  general  rule  the  delivery 
to  a  carrier  is  alone  insufficient  to  render  valid  and  binding-  a  sale 
which  is  void  under  the  statute  of  frauds.^*  "Delivery  to  a  com- 
mon carrier  is  not  evidence  of  acceptance,  in  the  absence  of  any 


I 


"Nicholson  v.  Bower,  1  El.  &  El. 
172;  Norman  v.  Phillips,  14  M.  &  W. 
277  (in  which  the  effect  of  the  de- 
livery of  goods  at  a  railway  station, 
to  be  forwarded  to  the  vendee  in 
pursuance  of  the  terms  of  a  verbal 
contract  of  sale,  was  discussed,  and 
a  verdict  for  the  plaintiff,  founded 
upon  such  a  delivery  and  upon  the 
additional  fact  that  the  vendor  sent 
an  invoice  to  the  vendee  which  he  re- 
tained for  several  weeks,  was  set 
aside)  ;  United  Hardware  &c.  Co.  v. 
Blue,  59  Fla.  419,  52  So.  364,  35  L. 
R.  A.  (N.  S.)  1038  and  note;  Kei- 
wert  V.  Meyer,  62  Ind.  587,  30  Am. 
Rep.  206;  Maxwell  v.  Brown,  39 
Maine  98,  63  Am.  Dec.  605  (in  which, 
after  an  examination  and  reference 
to  the  English  authorities,  the  court 
held  that  the  delivery  to  the  carrier 
was  insufficient  to  show  an  accep- 
tance by  the  vendee)  ;  Snow  v.  War- 
ner, 10  Mete.  (Mass.)  132,  43  Am. 
Dec.  417;  Frostburg  IMining  Co.  v. 
New  England  Glass  Co.,  9  Cush. 
(Mass.)  115;  Quintard  v.  Bacon,  99 
Mass.  185;  Johnson  v.  Cuttle.  105 
Mass.  447.  7  Am.  Rep.  545;  Gill  v. 
Johnson-Brinkman  Com.  Co..  84  Mo. 
App.  456;  Pierson  v.  Crooks,  115  N. 
Y.  539,  22  N.  E.  349,  12  Am.  St.  831 ; 
Rodgers  v.  Phillips,  40  N.  Y.  519; 
In  Morton  v.  Tibbett,  15  Q.  B.  428, 
the  defendant  sent  a  carrier  for  the 
grain  purchased  by  sample,  and  pre- 
vious to  its  arrival  resold  it  by  the 
same  sample,  before  he  had  in- 
spected it ;  and  it  was  held  that  its 
receipt  by  the  carrier  was  not  an 
acceptance,  but  that  his  resale  of  it 
was  evidence  of  an  acceptance. 

"Smith  v.  Hudson.  11  Jur.  (N. 
S.)  622,  6  B.  &  S.  431.  34  L.  J.  Q. 
B.  N.  S.  145,  12  L.  T.  ill,  13  W.  R. 
683 ;  United  Hardware  &c.  Co.  v. 
Blue.  59  Fla.  419.  52  So.  364,  35  L. 
R.  A.  (N.  S.)  1038  and  note;  Den- 
mead  V.  Glass,  30  Ga.  637;  Hausman 
V.  Nye,  62  Ind.  485.  30  Am.  Rep.  199; 
Maxwell  v.  Brown,  39  Maine  98,  63 
Am.  Dec.  605  ;  Ft.  Worth  Packing  Co. 


v.  Consumers'  Meat  Co.,  86  Md.  635, 

39  Atl.  746;  Frostburg  Min.  Co.  v. 
New  England  Glass  Co.,  9  Cush. 
(Mass.)  115;  Quintard  v.  Bacon,  99 
Mass.  185;  Webber  v.  Howe.  36 
Mich.  150,  24  Am.  Rep.  590;  Rind- 
skopf.  v.  DeRuyter,  39  Mich.  1,  ZZ 
Am.  Rep.  340;. Smith  v.  Brennan,  62 
Mich.  349,  28  N.  W.  892,  4  Am.  Rep. 
867;  Winner  v.  Williams,  62  Mich. 
363,  28  N.  W.  904 ;  Gatiss  v.  Cyr,  134 
IVIich.  233,  96  N.  W.  26,  2  Am.  & 
Eng,  Ann.  Cas.  544;  Waite  v.  Mc- 
Kelvy,  71  Minn.  167,  11  N.  W.  727; 
M.  H.  Eichberg  Co.  v.  Benedict 
Paper  Co.,  119  Mo.  App.  262,  95  S. 
W.  963.  Ex  parte  Parker,  11  Nebr. 
309,  9  N.  W.  ZZ;  Shepherd  v.  Pres- 
sev,  32  N.  H.  49  (obiter)  ;  Standard 
Wall  Paper  Co.  v.  Towns,  72  N.  H. 
324,  56  Atl.  744;  Rodgers  v.  Phillips, 

40  N.  Y.  519;  Caulkins  v.  Hellman, 
14  Hun  (N.  Y.)  330,  47  N.  Y.  449, 
7  Am.  Rep.  461;  Fein  v.  Weir.  120 
App.  Div.  (N.  Y.)  299,  114  N.  Y.  S. 
426  affd.  in  199  N.  Y.  540,  92  N.  E. 
1084;  Langeman  v.  Stevens,  5  N.  Y. 
Leg.  Obs.  19;  Sherman  v.  Williams, 
4  N.  Y.  Week.  Dig.  415;  Dinnie  v. 
Johnson,  8  N.  Dak.  153,  11  N.  W. 
612 ;  Tinkelpaugh-Kimmel  Hardware 
Co.  V.  Minneapolis  Threshing  Mach. 
Co.,  20  Okla.  187,  95  Pac.  427;  Wil- 
liams-Havward  Shoe  Co.  v.  Brooks, 
9  Wyo.  424,  64  Pac.  342.  See  also, 
Rickard  v.  Moore,  38  L.  T.  (N.  S-) 
841.  "Where  a  valid  and  subsist- 
ing contract  for  the  sale  of  personal 
property  may  be  shown  to  exist,  and 
by  its  terms  the  property  is  to  be 
shipped  by  the  vendor  to  the  vendee, 
then  a  delivery  of  it  to  a  responsible 
carrier  for  the  vendee,  to  be  carried 
and  delivered  to  him,  will,  ordinar- 
ily, transfer  the  title  to  the  vendee 
and  place  the  property  at  his  risk. 
But  this  rule  requires  that  the  con- 
tract between  the  parties  shall  be  at 
the  time  legal,  valid  and  subsisting. 
It  does  not  include  cases  like  the 
present  one,  where,  on  account  of  a 
failure    to   comply   with   the   positive 


§  I33S 


CONTRACTS. 


586 


evidence  that  the  carrier  was  the  defendant's  agent  for  the  pur- 
pose of  accepting  the  goods."^®  Thus,  where  an  agent  of  a  busi- 
ness firm  called  upon  a  party  with  the  samples  of  goods,  and  arti- 
cles were  selected  which  the  party  agreed  to  take,  the  goods  to 
be  shipped  by  a  designated  express  company,  and  they  were  ac- 
cordingly shipped,  and  a  bill  of  the  goods  sent  to  the  purchaser, 
who  declined  to  receive  them  on  the  ground  that  they  were  not 
like  the  samples,  it  was  held  that  the  sole  duty  of  the  carrier 
was  to  receive  and  transport  the  goods,  and  there  was  no  implied 
authority  from  the  buyer  to  accept  the  goods  for  him.^"  Nor  is 
the  rule  changed  by  the  fact  that  the  goods  are  shipped  to  the 
vendee  and  that  he  reshipped  them  to  the  vendor,  the  former  pay- 
ing the  freight  both  ways.'^  While  some  cases  emphasize  the 
fact  that  the  carrier  was  not  selected  by  the  vendee,""  it  is  gener- 
ally true  that  the  fact  that  the  carrier  is  selected  by  the  buyer,  is 
not,  of  itself,  sufficient  to  satisfy  the  statute. ^^  But  it  has  been 
held  that  when  the  goods  have  been  accepted  by  the  buyer,  so  as  to 


rule  prescribed  by  the  statute,  the 
contract  is  void,  and  must  remain  so 
until  some  act  has  been  performed 
that  will  have  the  effect  of  giving  it 
legal  validity."  Rodgers  v.  Phillips, 
40  N.  Y.  519.  To  same  effect,  Shep- 
herd V.  Pressey,  32  N.  H.  49. 

^^  Standard  Wall  Paper  Co.  v. 
Towns,  72  N.  H.  324,  56  Atl.  744. 
See  also.  United  Hardware  &c.  Co.  v. 
Blue,  59  Fla.  419,  52  So.  364,  35  L. 
R.  A.   (X.  S.)   1038n. 

^Allard   v.    Greasert,   61    N.    Y.    1. 

^  Jarrell  v.  Young,  &c.  Co.,  105  Md. 
280,  66  Atl.  50,  23  L.  R.  A.  (N.  S.) 
367,  12  Am.  &  Eng.  Ann.  Cas.  1. 

"  Coates  V.  Chaplin,  2  Q.  B.  483,  2 
Gale  &  D.  522,  11  L.  J.  Q.  B.  315,  6 
Jur.  1123;  Meredith  v.  Meigh,  2  El. 
&  Bl.  364.  17  Jur.  649,  22  L.  J.  Q.  B. 
401,  1  Week.  Rep.  368,  23  Eng.  Rul. 
Cas.  217  ("the  court  referring  to 
Hart  v.  Sattley,  as  overruled) ; 
Nugent  v.  Beakes,  34  App.  Div.  (N. 
Y.)  123,  54  N.  Y.  S.  486;  Hudson 
Furniture  Co.  v.  Freed  Furniture  & 
Carpet  Co..  10  Utah  31.  36  Pac.  132. 
See  also,  Hausman  v.  Nve.  62  Tnd. 
485.  30  Am.  Rep.  199  Tdecided  under 
a  statute,  which  provided  that  the 
contract   should  be  within   the   stat- 


ute,  "unless  the  purchaser  shall   re- 
ceive   part    of    such    property"). 

''Norman  v.  Phillips,  9  Jur.  832, 
14  L.  J.  Exch.  306,  14  M.  &  W.  277; 
Taylor  v.  Smith  (1893),  2  Q.  B.  65, 
61  L.  J.  Q.  B.  331,  67  L.  T.  (N.  S.) 
39,  40  W.  R.  486;  Scott  v.  Melady, 
27  Ont.  App.  193 ;  Billin  v.  Henkel,  9 
Colo.  394,  13  Pac.  420;  Jones  v. 
Mechanics'  Bank,  29  Md.  287,  96  Am. 
Dec.  533 ;  Kemensky  v.  Chapin,  193 
Alass.  500,  79  N.  E.  781,  9  Am.  & 
Eng.  Ann.  Cas.  1164;  Simmons 
Hardware  Co.  v.  Mullen,  33  Minn. 
195,  22  N.  W.  294;  Allard  v.  Greas- 
ert, 61  N.  Y.  1.  See  also,  the  opin- 
ions of  Parke,  B.,  and  Abiger,  C.  B., 
in  Johnson  v.  Dodgson,  2  Mees.  & 
W.  653,  6  L.  J.  Exch.  185.  In  John- 
son v.  Cuttle,  105  Mass.  447,  7  Am. 
Rep.  545,  it  is  said :  "A  common  car- 
rier (whether  selected  by  the  seller 
or  by  the  buyer),  to  whom  the  goods 
are  intrusted  without  express  in- 
structions to  do  anything  but  to  carry 
and  deliver  them  to  the  buyer,  is  no 
more  than  an  agent  to  carry  and  de- 
liver the  goods,  and  has  no  implied 
authority  to  do  the  acts  required  to 
constitute  an  acceptance  and  receipt 
on  the  part  of  the  buyer  and  to  take 


587  STATUTE  OF  FRAUDS.  §  1 339 

answer  that  portion  of  the  statute  which  requires  acceptance,  a 

delivery  to  a  carrier  selected  by  the  buyer  will  answer  that  portion 
of  the  statute  which  re(|uires  the  buyer  to  receive  them."*  Accept- 
ance may  also  be  shown  by  a  resale  of  the  goods  while  they  are  in 
transit,"  or  other  acts  of  ownership,-"  or  conduct  showing  acqui- 
escence."^ The  courts  of  Iowa  hold  that  according  to  the  statute 
as  it  exists  in  that  state  delivery  to  the  carrier  is  sufficient.*" 
Delivery  to  the  carrier  by  the  vendor  has  also  been  held  such  a 
performance  of  the  contract  as  would  take  it  out  of  the  operation 
of  the  statute.-" 

§  1339.    Delivery  which  takes  contract  out  of  the  statute. — 

The  fact  that  logs  were  banked  and  marked  with  the  vendee's 
name  ready  to  be  put  in  the  river  is  not  a  sufficient  delivery  to  take 
the  contract  out  of  the  statute  of  frauds.  And  payment  for  logs 
sold  under  a  verbal  contract  after  the  contract  was  made  is  not 
a  sufficient  payment  of  some  part  of  the  purchase-money  "at  the 
time"  to  take  the  contract  out  of  the  statute  of  frauds,  when  the 
logs  were  not  delivered.^"  But  where  one  orally  contracting  to 
buy  goods,  on  being  told  by  the  seller  to  take  them,  directs  a  third 
person  to  do  so,  the  latter,  upon  doing  so,  is  not  liable  for  their 

the  case  out  of  the  statute  of  frauds."  own  that  part  of  a  shipment  of  lum- 

In  Lloyd  v.  Wright,  25  Ga.  215,  the  ber  saved  from  a  loss  at  sea), 

court  said:  "The  statute  requires  that  "Bushel  v.  Wheeler,  15  Q.  B.  442; 

the    purchaser    should    'actually    re-  Curri  v.  Anderson,  2   El.  &  El.  592, 

ceive'  the  goods.  And  although  goods  29  L.  J.  Q.  B.  87,  8  W.  R.  274,  6  Jur. 

are  forwarded  to  him  by  a  carrier  by  (N.    S.)    442. 

his  direction,  or  delivered  abroad  on  "*  Leggett  &  Meyer  Tobacco  Co.  v. 

board    of    a   ship    chartered   by    him,  Collier,  89  Iowa  144,  56  N-  W.  417; 

still  there  is  no  actual  acceptance  to  Fruit    Despatch    Co.    v.    Gilinsky.    84 

satisfy  the  act,  so  long  as  the  buyer  Xebr.  821,  122  X.  W.  45;  Bullock  v. 

continues  to  have  the  right,  either  to  Teschergi,   4   McCrary    (U.    S.)    184, 

object  to  the  quantum  or  quality  of  13      Fed.      345       (construing      Iowa 

the  goods."  Contra,  Strong  v.  Dodds,  statutes). 

47  Vt.  348;   Spencer  v.  Male,  30  Vt.  ="  Castlen  v.  Ma.shburn,  8  Ga.  App. 

314,  72,  Am.  Dec.  309.  400.    69    S.    E.    317.      Compare    with 

=*Cusack  V.    Robinson,    1    B.   &.    S.  Mendel  v.  Miller,   134  Ga.  610.  68  S. 

299,  7  Jur.    (X.  S.)    542,  30  L.  J.  Q.  E.  430,   former  hearing  126  Ga.  834, 

B.  261;  Allard  v.  Greascrt,  61  X.  Y.  56  S.  E.  88,  7  L.  R.  A.  (X.  S.)   1184. 

1;  Cross  v.  O'Donnell,  44  X.  Y.  661,  ^^  See    also.    Shaw    Lumber    Co.    v. 

4  Am.  Rep.  721;  Wilcox  Silver  Plate  Manville  (Idaho).  39  Pac.  55^:  Bns- 

Co.  V.  Green,  72  X.  Y.  17.  tol  v.  Mente,  79  Aop.  Div.    (X.   Y.) 

» Morton  V.  Tibbett,  15  Q.  B.  428,  67.  80  X.  Y.   S.  52.  aflFd.  178  X.  Y. 

19  L.  J.  Q.  B.  382.  14  Jur.  669.  599,  70  X.  E.  1096:  Crosbv  Hardwood 

'•Goddard  v.   Demerritt.  48  Maine  Co.    v.    Tester,   90   Wis.   412,   63    N. 

211    (receiving   and    claiming    as    his  W.    1057. 


I340 


CONTRACTS. 


588 


value  to  the  seller,  his  receipt  of  the  goods  having  the  effect  of 
taking  the  contract  of  sale  out  of  the  statute  of  frauds/^  And  a 
payment  by  the  vendee  for  the  pasturage  of  a  colt  after  his  pur- 
chase thereof,  the  vendor  having  previously  paid  therefor,  con- 
stitutes a  constructive  delivery  of  the  colt.^^  When  the  contract 
does  not  specify  the  time  within  which  delivery  must  be  made, 
delivery  may  be  had  within  a  reasonable  time,^^  regard  being  had 
to  the  nature  and  subject-matter  of  the  contract. 

§  1340.  Question  for  the  jury. — It  is  the  general  rule  that 
it  is  a  question  for  the  jury  whether,  under  all  the  circumstances, 
the  acts  which  the  buyer  does  or  forbears  to  do  amount  to  a 
receipt  and  acceptance  within  the  terms  of  the  statute.^*  And 
any  acts  of  the  parties  indicative  of  ownership  by  the  vendee 
may  be  given  in  evidence  to  show  the  receipt  and  acceptance. ^^ 
But  when  the  facts  in  relation  to  a  contract  of  sale  alleged  to  be 


^  Moore  v.  Hays,  12  Ind.  App.  476, 
40  N.  E.  638.  In  Burchinell  v. 
Smidle,  5  Colo.  App.  417,  38  Pac. 
1097,  plaintiff  bought  a  restaurant, 
and  paid  full  consideration  therefor. 
When  the  bill  of  sale  was  made  and 
the  purchase-price  paid,  the  vendor 
went  with  plaintiff  to  the  restaurant 
and  gave  plaintiff  possession,  and, 
after  notifying  the  help  of  the  sale, 
went  away,  and  plaintiff  assumed 
control.  Defendant's  officers  then 
came  and  took  possession  of  the 
place,  under  attachment  against  the 
vendor.  The  vendor's  name  never 
was  on  the  outside  of  the  restaurant, 
the  only  sign  being  one  designating 
it  "Jim's  Place,"  and  this  sign  had 
been  allowed  to  remain  as  it  was. 
The  bills  of  fare  had  not  been 
changed.  It  was  held  that  there  was 
such  a  change  of  possession  as  would 
satisfy  the  statute  of  frauds. 

''Stockwell  V.  Baird  (Del.),  31  Atl. 
811. 

^^  Cameron  Coal  &c.  Co.  v.  Univer- 
sal Metal  Co.,  26  Okla.  615,  110  Pac. 
720.  31  L.  R.  A.   (N.  S.)  618. 

^'Bushell  V.  Wheeler,  15  Q.  B. 
443n;  Morton  v.  Tibbett,  15  Q.  B. 
428;  Thompson  v.  Frakes,  112  Iowa 
585,  84  N.  W.  703 ;  Sprankle  v.  Tru- 


love,  22  Ind.  App.  577,  54  N.  E.  461 ; 
Weeks  v.  Crie,  94  Maine  458,  48 
Atl.  107,  80  Am.  St.  410;  Greenleaf 
V.  Hamilton,  94  Maine  118,  46  Atl. 
798;  Corbett  v.  Wolford,  84  Md.  426, 
35  Atl.  1088;  Borrowscale  v.  Bos- 
worth,  99  Mass.  378 ;  Taylor  v.  Muel- 
ler, 30  Minn.  343,  15  N.  W.  413,  44 
Am.  Rep.  199 ;  Bass  v.  Walsh,  39  Mo. 
192;  Pinkham  v.  Mattox,  53  N.  H. 
600;  Stone  v.  Browning,  68  N.  Y. 
598;  Burrows  v.  Whitaker,  71  N.  Y. 
291,  27  Am.  Rep.  42;  Hinchman  v. 
Lincoln,  124  U.  S.  38,  31  L.  ed.  Z2>7, 
8  S.  Ct.  369.  "The  question  in  re- 
gard to  what  constitutes  a  delivery 
under  the  statute,  and  what  consti- 
tutes an  acceptance,  is  rather  one  of 
fact  for  the  jury  than  of  law  for  the 
court."  Smith  v.  Stoller,  26  Wis.  671. 
'''Gray  v.  Davis,  10  N.  Y.  285; 
Jones  V.  Reynolds,  120  N.  Y.  213,  24 
N.  E.  279;  Garfield  v.  Paris,  96  U. 
S.  557,  24  L.  ed.  821 ;  Becker  v.  Holm, 
89  Wis.  86,  61  N.  W.  307.  The  bur- 
den of  proof  to  show  acceptance  is 
on  the  party  setting  up  the  contract. 
Remick  v.  Sanford,  120  Mass.  309. 
See  also,  Pratt  v.  Chase,  40  Maine 
269;  Pinkham  v.  Mattox,  SZ  N.  H. 
600. 


589  STATUTE  OF  FRAUDS.  §  1 34 1 

within  the  statute  are  not  in  dispute,  it  belongs  to  the  court  to  de- 
termine their  legal  effect.^* 

§  1341.  Earnest  or  part  payment. — Earnest  and  part  pay- 
ment are  two  distinct  things,  each  of  which  is  sufficient  to  give 
validity  to  a  parol  contract  under  the  seventeenth  section  of  the 
statute.^^  Where  part  payment  is  made  in  order  to  render  the 
contract  binding,  it  is  not  required  that  such  payment  shall  be 
shown  in  writing.  The  statute  leaves  the  parties  to  prove  pay- 
ment by  such  proof  as  they  may  have,  but  actual  part  payment  is 
required.  A  mere  agreement  to  pay  or  to  apply  in  payment  is  not 
sufficient.^^  Part  payment  does  not  require  the  actual  passing  of 
money  from  the  vendee  to  the  vendor.  The  giving  of  a  check 
is  not  absolute  payment,  but  when  it  is  received  as  such,  and  is 
afterward  paid,  it  becomes  a  good  and  valid  payment  as  of  the 
time  when  it  was  given.^"  The  payment  may  be  made  in  prop- 
erty or  in  the  discharge  of  an  existing  debt,  in  whole  or  in  part, 
due  from  the  vendor  to  enforce  the  contract  of  sale.  The  note 
should  be  delivered  up  and  canceled,  or  if  not  fully  paid,  an  in- 
dorsement should  be  made  upon  it  in  writing,  which  shall  operate 
effectually  as  an  extinguishment  pro  tanto.     Or  if  the  money  is 

'     '•Norman  v.  Phillips,  14  M.  &  W.  "Colton  v.  Raymond,  114  Fed.  863, 

277 ;   Howe  v.   Palmer,  3   B.  &  Aid.  52  C.  C.  A.  382 ;  Hershey  Lumber  Co. 

321;   Tempest  v.   Fitzgerald,   3  B.  &  v.   St.   Paul   Sash  &c.  Co.,  66  ^Minn. 

Aid.  680;   Carter  v.  Toussaint,  5   B.  449,  69  N.  W.  215;   Matthiessen  &c. 

&  Aid.  855;    Hanson  v.   Armitage,   5  Co.   v.    McMahon's   Admr.,   38   N.   J. 

B.  &  Aid.  557;  Thompson  v.  Macir-  L.  536;  Dow  v.  Worthen.  Zl  Vt.  108; 

oni,  3   B.   &   C.    1;    Holmes   v.    Hos-  Edgcrton  v.  Hodge,  41  Vt.  676.     The 

kins,  9  Exch.  753;  Hunt  v.  Hecht,  8  object   was   to   have    something   pass 

Exch.  814;   Coombs  v.    Bristol  &   E.  between    the    parties     besides     mere 

R.   Co.,   3   H.    &    N.    1;    Shepherd  v.  words.     Archer   v.    Zeh.    5    Hill    (N. 

Pressey,  Zl  N.   H.  49.  Y.)  200.   In  Walker  v.  Nussey,  16  M. 

"  The  practice  of  giving  something  &  W.  302,  it  was  verbally  agreed  that 

to  signify  the  conclusion  of  the  con-  the    debt    which    the    vendee    owed 

tract,    sometimes    a    sum    of    money,  should  go  in  part  payment  for  leath- 

sometimes  a  ring  or  other  object,  to  er.     It  was  contended  that  the  credit 

be  repaid  or  redelivered  on  the  com-  on  the  invoice  was  sufficient  to  take 

pletion  of  the  contract,  appears  to  be  the   case   out    of   the    statute,    but    it 

one   of   great   antiquity.     It   was   fa-  was    held    not.      "Where   one   of    the 

miliar  to  the  law  of  Rome  and  was  terms  of  an  oral  bargain  is   for  the 

an  old  common-law  mode  of  binding  seller  to  take  something  in  part  pay- 

a   bargain   to   show    that    the   parties  ment,     that    term     cannot    alone    be 

were    in    earnest.        Howe   v.    Smith,  equivalent  to  part  pavment." 

L.  R.  27  Ch.  Div.  89;  Blenkinsop  v.  "» Hunter  v.   Wetsell,    17   Hun   135, 

Clayton,    7    Taunt.    597.      See    also,  affd.  84  N.  Y.  549,  38  Am.  Rep.  544. 
Bervvin  v.    Bowles,    183    Mass.    340, 
67  N.  E.  323. 


§    1342  CONTRACTS.  59O 

to  be  applied  to  pay  an  open  account,  in  whole  or  in  part,  the 
creditor  and  purchaser  should  part  with  some  written  evidence  of 
such  application,  which  shall  bind  him  and  put  it  into  the  power 
of  his  debtor  and  vendor  to  enforce  the  contract.  This,  or  some- 
thing like  this,  is  necessary  to  bring  the  case  within  the  statute/'^ 

§  1342.  Auctioneer's  sale. — A  sale  by  auction  is  within  the 
statute,  and  the  auctioneer  who  makes  the  sale  is  the  agent  of  both 
parties,  and  has  authority  to  sign  the  promise,  contract  or  agree- 
ment, or  a  memorandum  or  note  thereof,  for  the  party  to  be 
charged  therewith.*^  The  actual  agreement  is  constituted  by  the 
bidding  on  the  one  part,  and  acceptance  of  it  by  the  auctioneer 
on  the  other ;  the  auctioneer  is  the  agent  for  the  vendor  in  setting 
up  the  property  for  sale,  in  receiving  the  biddings  for  it,  and  ac- 
cepting that  of  the  highest  bidder,  and  thus  concluding  the  bar- 
gain. He  is  agent  for  the  highest  bidder  in  recording  his  bid.'*^ 
The  auctioneer's  authorization  need  not  be  in  writing.*^ 

§  1343.  Judicial  sales. — Judicial  sales  are  not  within  the 
statute,  and  are  binding  upon  the  purchaser  without  any  written 

'"Brabin  v.  Hyde,  32  N.  Y.  519.  Emmerson  v.  Heelis,  2  Taunt.  38; 
Where  parties  made  an  oral  contract  Blagden  v.  Bradbear,  12  Ves.  466; 
for  the  sale  of  property  and  each  of  Kenworthy  v.  Schofield,  2  B.  &  C. 
theci  deposited  the  sum  of  $200  in  945,  overruling  Simon  v.  Metivier,  1 
the  hands  of  a  third  party  as  a  for-  Wm.  Bl.  599;  Kennell  v.  Boyer,,  144 
feiture  to  be  paid  over  to  the  party  Iowa  303,  122  N.  W.  941,  24  L.  R. 
who  was  ready  to  perform  the  con-  A.  (N.  S.)  488n,  Ann.  Cas.  1912A. 
tract  if  the  other  party  neglected  to  1127;  O'Donnell  v.  Leeman,  43  Maine 
do  so,  it  was  held  that  the  deposit  158,  69  Am.  Dec.  54;  Pike  v.  Balch, 
was  not  an  earnest  to  bind  the  bar-  38  Maine  302,  61  Am.  Dec.  248 ;  Mor- 
gain.  nor  part  payment  within  the  ton  v.  Dean,  13  Mete.  (Mass.)  385; 
statute  that  earnest  was  regarded  as  Davis  v.  Rowell,  2  Pick.  (Mass.)  64, 
a  part  payment  of  the  price.  Howe  13  Am.  Dec.  398;  Cleaves  v.  Foss,  4 
V.  Hayward.  108  Mass.  54,  11  Am.  Greenl.  (Maine)  1;  McKeag  v.  Pied- 
Rep.  306.  To  same  effect,  Noakes  nor,  74  Mo.  App.  593;  M'Comb  v. 
V.  Morey,  30  Ind.  103.  A  pecuniary  Wright,  4  John.  Ch.  (N.  Y.)  659; 
deposit  upon  a  purchase  is  to  be  con-  Hicks  v.  Whitmore,  12  Wend.  (N. 
sidered  as  a  payment  in  part  of  the  Y.)  548;  Smith  v.  Arnold,  5  Mass. 
purchase-monev   and   not    as    a  mere  (U.    S.)   414. 

pledge.     Ockenden  v.   Henly,  El.   Bl.  ^Dyas  v.  Stafford,  7  L.  R.  Ir.  590; 

&   El.  485.     The   question   as  to  the  White  v.  Dahlquist,  179  Mass.  427,  60 

right  of  the  purchaser  to  the  return  N.  E.  791. 

of   the  deposit-money   must,   in   each  "Kennell  v.   Boyer,    144   Iowa  303, 

case,  be  a  question  of  the  conditions  122  N.  W.  941,  24  L.  R.  A.    (N.  S.) 

of  the  contract.     Howe  v.   Smith,  L.  488n,  Ann.  Cas.  1912A.  1127;  Love  v. 

R.  27  Ch.  Div.  89.  Harris,  156  N.  Car.  88,  72  S.  E.  150. 

"  Bird  V.  Boulter,  4  B.  &  Ad.  443 ; 


591  STATUTE  OF  FRAUDS.  §  1 343 

contract  or  memorandum  of  the  terms  of  sale.  The  sale  is  made 
by  the  court  through  the  sheriff  acting  as  its  officer.  The  sheriff 
in  such  a  case  is  under  no  duty  to  bind  himself  personally,  or  to 
demand  that  the  bidder  shall  be  bound  to  him  personally.  By 
bidding  one  subjects  himself  to  the  jurisdiction  of  the  court,  and 
in  effect  becomes  a  party  to  the  proceeding,  and  he  may  be  com- 
pelled to  complete  his  purchase  by  an  order  of  the  court,  and  by 
its  process  for  contempt  if  necessary.** 

**  Attornev-General  v.  Day,   1   Ves.  20  N.  E.  374;   Hepeman  v.  Johnson, 

Jr.  218;   Halleck  v.  Guv.  9  Cal.  181,  35  Barb.  (N.  Y.)  200;  Cazet  v.  Hub- 

70  Am.  Dec.  643;  Chandler  v.  Morev,  bell.  36  N.  Y.  677;   Miller  v.  Collyer. 

195   111.  596.  63  N.  E.  512;  Warfield  36    Barb.    (N.    Y.)    250;    Matter    of 

V.  Dorsey,  39  Md.  299,  17  Am.  Rep.  Davis,  7  Daly   (N.  Y.)    1;   Emley  v. 

562;    Armstrong   v.   Vroman,    11    Gil.  Drum,  36  Pa.  St.  123;  King  v.  Gun- 

(Minn.)    142,   88   Am.   Dec.   81;    An-  nison,     4     Pa.     St.     171;     Fulton    v. 

drews  v.  O'Mahoney,  112  N.  Y.  567,  Moore,  25  Pa.  St.  468. 


CHAPTER  XXXI. 


IMPLIED  CONTRACTS. 


i  1355.  Implied    and    quasi    contracts    §  1379. 
— Introductory. 

1356.  Judgments.  1380. 

1357.  Duties    imposed    by    statute. 

1358.  Acts  of  parties. 

1359.  Contracts  not  implied  by  law        1381. 

where    express    contracts. 

1360.  Limits    of    rule    that    express 

contract     excludes     implied        1382. 
contract. 

1361.  Right  to  recover  where  minds 

of  parties  did  not  meet  on       1383. 
attempted    express   contract.        1384. 

1362.  Accounts  stated. 

1363.  Work  and   services.  1385. 

1364.  Contracts    for   services   where       1386. 

skill   is    required.  1387. 

1365.  Same       subject       continued — 

When    silence    imports    as-       1388. 
sent. 

1366.  Where   law   will   not   imply  a       1389. 

promise    owing   to    relation- 
ship   of    parties. 

1367.  Parent  and  child— Rule  as  to       1390. 

services    rendered. 

1368.  Persons      standing      in      loco        1391. 

parentis. 

1369.  Same       subject       continued —       1392. 

Further   illustrations. 

1370.  Same       subject       continued — 

During    illicit    cohabitation. 

1371.  Same    subject    continued — In        1393. 

expectation   of   marriage.  1394. 

1372.  Money  had  and  received. 

1373.  Rule   illustrated.  1395. 

1374.  Nature   of   the   action.  _  1396. 

1375.  When    action    may    be    main-       1397. 

tained.  1398. 

1376.  Money  lent. 

1377.  Money    lent    to    a    municipal       1399. 

corporation.  1400. 

1378.  Money   received  and  used  by 

borrower. 


Money  paid — Receiving  with- 
out consent  of  owner. 

One  to  whom  an  obligation 
is  due  may  proceed  against 
one  holding  the  money. 

Money  voluntarily  paid  to 
another  with  owner's  con- 
sent. 

Rule  as  to  voluntary  and  in- 
voluntary payments  further 
illustrated. 

Effect  of  protest. 

Recovery  of  money  paid  under 
duress   or   compulsion. 

The  rule  illustrated. 

Voluntary   payment   of    taxes. 

Recovery  of  illegal  taxes 
paid  under  compulsion. 

Money  paid  by  or  under  mis- 
take. 

Payments  by  banks — Insur- 
ance companies — G  e  n  e  r  a  1 
matters. 

Effect  of  negligence  upon  the 
right  of  recovery. 

Recovery  of  money  paid  un- 
der  mistake  of   law. 

Ignorantia  juris  neminem 
excusat — Exception  in  the 
case  of  ignorance  of  a  for- 
eign law. 

Contribution. 

When  contribution  may  be 
enforced. 

Goods  sold  and  delivered. 

Board  and  lodging. 

Use  and  occupation. 

Waiver  of  torts  and  suing  on 
implied  contracts. 

Rule  further  considered. 

Other  instances  in  which  the 
tort  may  be  waived  and 
suit  brought  on  the  implied 
contract. 


§  1355.    Implied  and  quasi  contracts — Introductory. — As 
already  shown,  in  another  chapter,  contracts  are  frequently  class- 

592 


593  IMPLIED   CONTRACTS.  §    1 3 56 

ified  as  either  express  or  implied/  and  implied  contracts  are 
divided  into  contracts  implied  in  fact  and  contracts  implied  in 
lavv.^^  But,  as  also  shown  in  the  chapter  referred  to,  while  con- 
tracts implied  in  fact  are  true  contracts  growing  out  of  the  inten- 
tion of  the  parties  and  differ  from  express  contracts  only  in  the 
manner  in  which  they  are  formed  or  mode  of  proof,  the  inten- 
tion being  gathered  and  the  contract  inferred  or  implied  from 
acts,  conduct  and  surrounding  circumstances  rather  than  express 
words,  so-called  contracts  implied  in  law  are  not  true  contracts 
but  may  exist  where  there  is  no  agreement  and,  indeed,  contrary 
to  the  actual  intention  of  the  party.  They  are  called  contracts 
by  a  legal  fiction  adopted  for  the  purpose  of  accomplishing  justice 
and  for  the  sake  of  the  remedy  to  enforce  the  legal  obligations 
so  created  by  law  by  actions  in  form  ex  contractu,  and  are  more 
properly  called  quasi  contracts.^  It  is  this  latter  class  of  con- 
tracts that  will  be  briefly  treated  in  this  chapter. 

§  1356.  Judgments. — It  appears  from  the  foregoing  that  in 
a  broad  sense  the  term  implied  and  "quasi  contracts"  applies  to 
those  contractual  duties  which  are  not  enforcible  by  special 
assumpsit  or  by  the  action  of  debt.'  Debts  of  record,  such  as 
judgments,  are  generally  termed  quasi  contracts.* 

*  See  ante,  Ch.  2,  §  18.  action  in  assumpsit  is  based  requires 

^a  See    ante,    chapter    2.     See  also,  a  consideration  for  its  legal  support 

Highway  Comrs.  v.  Bloomington,  253  and    existence.      Shannon    &    Co.    v. 

111.  164,  97  N.  E.  280.  McElroy   (Ala.),  57  So.  118. 

'  See  Keener,  Quasi  Contracts  1893,        ^  See   2    Street    on    Foundation   of 

chap.    1 ;    Maine's    Ancient    Law    (3d  Legal  Liabilities  206. 
Am.  ed.)   2Z2;  Pracht  v.  Daniels,  20        '  Bidleson  v.  Whvtel.  3  Burr  1545; 

Colo.    100,    36    Pac.    845;    Sceva    v.  Rae  v.  Hulbert,  17  111.  572;  O'Brien  v. 

True,    53    N.    H.    627;    Commercial  Young,  95   N.   Y.  428,  47  Am.   Rep. 

Bank  v.    Pfeiffer.   22   Hun    (N.    Y.)  64;  Taylor  v.  Root,  4  Key.   (N.  Y.) 

Z27;  People  v.  Speir,  77  N.  Y.   144;  335;    Gutta-Percha    Co.    v.    Houston. 

Hertzog  v.   Hertzog,  29  Pa.   St.  465.  108  N.  Y.  276,   15  N.  E.  402,  2  Am. 

"Whenever  there  is  a  legal  liability,"  St.    412;    First    Nat.    Bank    v.    Van 

says  the  court  very  broadly  in  IMerri-  Vooris,  6  S.  Dak.  548,  62  N.  W.  378; 

wether  v.  Bell,  139  Ky.  402,  58  S.  W.  State  v.  New  Orleans,  109  U.  S.  285, 

987,   139  Am.   St.  488,  491.   "the  law  3  Sup.  Ct.  211.     This,  it  is  believed, 

creates  a  promise  upon  which  an  ac-  results  from  the  obvious  fact  that  a 

tion  of  assumpsit  will  lie."  See  also,  judgment  is  not  an  express  assump- 

De  Leonis  v.  Etchepare,  120  Cal.  407,  tial     obligation     voluntarily     entered 

52     Pac.     718;    Highway    Comrs.    v.  into  by  the  parties.     For  want  of  a 

Bloomington,   253    111.    164,   97    N.   E.  better  term  perhaps  more  than  any- 

280;    Lawson's    Exr.    v.  Lawson,   16  thing     else,     judgments     have     been 

Grat.    (Va.)    230,   80   Am.    Dec.    702;  classed   as  quasi  contracts.     A  judg- 

notes  to  Cutter  v.   Powell.  2  Smith's  ment  might  perhaps  be  classed  as  a 

Leading    Cases    17-61.     The    express  debt    (Morse   v.     Toppan,     3     Gray 
or    implied    promise    upon    which    an 
38 — Contracts,  Vol.  2 


§1357  CONTRACTS.  594 

§  1357.  Duties  imposed  by  statute. — What  is  said  in  the 
preceding  section  in  regard  to  judgments  applies  with  equal  force 
to  statutory  legal  and  official  duties.  They  are  termed  "quasi 
contracts".'* 

§  1358.  Acts  of  parties. — As  above  stated,  the  term  "quasi 
or  implied  contract"  is  generally  used  to  denote  a  promise  which 
the  law,  from  the  existence  of  certain  facts,  presumes  that  a  party 
has  made  or  imputes  to  him.  Obligations  of  this  nature  are  such 
as  reason  and  justice  dictate  and  which,  it  is  said,  the  law  pre- 
sumes every  man  has  contracted  to  perform,  and  upon  this  pre- 
sumption makes  him  answerable  to  such  person  as  suffers  by  his 
nonperformance.®  Implied  contracts,  as  a  class,  include  obli- 
gations imposed  by  law  upon  one  person  to  give  value  for  a 
benefit  conferred  by  another  when  it  appears  that  the  benefit 
conferred  was  not  intended  as  a  gratuity  and  it  was  so  under- 
stood by  the  person  benefited,  such  beneficiary  having  power  and 
capacity  to  bind  himself  by  an  express  promise  if  one  had  been 
given.     Thus,  when  one  person,  in  the  absence  of  any  express 

(Mass.)  411),  upon  which  an  action  ity  created  by  the  express  terms  of  a 
in  debt  will  lie.  Williams  v.  Jones,  statute  (Bullard  v.  Bell,  1  Mason  (U. 
13  M.  &  W.  628;  Kingsland  v.  For-  S.)  243),  or  which  results  from  an 
rest,  18  Ala.  519,  52  Am.  Dec.  232;  official  duty  (Perkinson  v.  Gilford, 
Drennen  v.  Dunn,  166  Ala.  213,  52  Cro.  Car.  539;  Ruggles  v.  Beikie,  3 
So.  313,  139  Am.  St.  28;  Kauffman  Up.  Can.  K.  B.  (O.  S.)  276;  Neal 
V.  Richardson,  142  Ala.  429,  11  So.  v.  Haygood,  1  Ga.  514;  Bodenham- 
673,  110  Am.  St.  40;  Spilde  v.  John-  er  v.  Bodenhamer,  6  Humph, 
son,  132  Iowa  484,  109  N.  W.  1023,  (Tenn.)  264)  has  also  been  con- 
8  L.  R.  A.  (N.  S.)  439n,  119  Am.  sidered  as  a  debt  which  will  support 
St.  578.  See  also,  Haynes  v.  Blanch-  an  action  of  debt, 
ard,  194  Mass.  244,  80  N.  E.  504,  120  "  Brackett  v.  Norton,  4  Conn.  517, 
Am.  St.  551;  Citizens'  Nat.  Bank  v.  10  Am.  Dec.  179;  Chudnovski  v. 
Lucas,  26  Wash.  417,  67  Pac.  252,  56  Eckels,  232  111.  312,  83  N.  E.  846; 
L  R.  A.  812,  90  Am.  St.  748.  Com-  Ottumwa  Mill  &c.  Co.  v.  Manchester, 
pare,  however,  with  Ilson  v.  Dahl,  99  139  Iowa  334,  115  N.  W.  911 ;  People 
Alinn.  433,  8  L.  R.  A.  (N.  S.)  444n,  v.  Bennett,  6  Abb.  Pr.  (N.  Y.)  343; 
116  Am.  St.  435;  Berkson  v.  Cox,  IZ  Osborne  Co.  v.  Franklin  Mills  Co., 
Miss.  339,  18  So.  934,  55  Am.  St.  45  App.  Div.  (N.  Y.)  325,  60  N.  Y. 
539.  S.  1013;  3  Bl.  Com.  150.  "A  promise 
°  See  Augner  v.  Mayor,  14  App.  is  implied  only  upon  principles  of 
Div.  (N.  Y.)  461,  43  N.  Y.  S.  803;  equity  and  natural  justice,  and  no 
Pacific  Mail  Steamship  Co.  v.  Joliffe,  implication  to  pay  arises  where  the 
2  Wall.  (U.  S.)  450,  17  L.  ed.  805.  circumstances  are  such  that  the  im- 
However,  a  recognizance  (Smith  v.  plication  would  be  inequitable."  Ir- 
Collins,  42  Kans.  259,  21  Pac.  1058;  win  v.  Jones,  46  Ind.  App.  588,  92 
State  V.  McGuire,  42  Minn.  27,  43  N.  E.  787.  A  promise  will  be  im- 
N.  W.  687;  Green  v.  Ovington,  16  plied  when  equity  and  good  con- 
Johns.  (N.  Y.)  55;  Bodine  v.  Com-  science  require  one  even  though  none 
monwealth,  24  Pa.  St.  69),  or  a  liabil-  was     expressly     made.       Turner     v. 


595 


IMPLIED   CONTRACTS. 


§    1358 


agreement,  renders  valuable  services  to  another,  which  are  know- 
ingly accepted  by  such  other,  the  law  will  imply  a  promise  to  pay 
a  fair  and  reasonable  compensation  for  such  services.^  If  an  at- 
torney renders  services  witliout  any  express  agreement  as  to  the 
amount  of  compensation  to  be  received,  the  law  implies  a  promise 
to  pay  him  a  reasonable  compensation  for  the  work  done.**  The 
furnishing  of  merchandise  and  the  performance  of  services  and 
the  acceptance  by  the  defendant  of  such  merchandise  and  services 
constitute  a  sufficient  consideration  to  support  the  promise  for 
compensation  therefor  which  is  implied  in  law.''  After  a  partner- 
ship has  been  dissolved  and  a  balance  has  been  struck  and  agreed 
upon  by  the  partners,  one  may  maintain  assumpsit  against  the 
other  to  recover  his  balance  upon  an  implied  promise.^"  And 
when  the  master  of  a  ship  obtained  a  chronometer  from  appellees 
for  the  benefit  of  the  ship  it  was  held  that  appellant  by  retaining 


Jones,  1  Lans.  (N.  Y.)  147.  "A  con- 
tract is  express  when  the  agreement 
is  formal,  and  stated  either  verbally 
or  in  writing,  and  is  implied  when 
the  agreement  is  matter  of  inference 
and  deduction.  In  other  words,  a 
contract  is  express  when  it  con- 
sists of  words,  written  or  spoken, 
expressing  an  actual  agreement  of 
the  parties.  It  is  implied  when  it  is 
evidenced  by  conduct  manifesting  an 
intention  of  an  agreement."  Gillan 
V.  O'Larrv,  124  App.  Div.  (N.  Y.) 
498,  108  N.  Y.  S.  1024.  To  same  ef- 
fect, Indianapolis  Coal  Traction  Co. 
v.  Dalton,  43  Ind.  App.  330,  87  N. 
E.  552.  "It  seems  clear  that,  where 
a  contract  is  made  which  is  perform- 
able  at  the  time  of  the  occurrence 
of  a  future  event,  the  law  imputes 
to  the  promisor  an  agreement  that 
he  will  put  no  obstacle  in  the  way 
of  the  happening  of  that  event,  and 
that  he  will  hold  himself  in  readi- 
ness to  co-operate  where  his  co-op- 
eration is  a  necessary  element  in  the 
happening  of  the  contingency.  If, 
in  violation  of  this  implied  covenant 
on  his  part,  he  does  something  which 
prevents  the  happening  of  the  event, 
the  contract  becomes  absolute  and 
must  be  performed  as  if  the  event 
had  occurred.  *  *  *  The  rule  is; 
that  an  implied  promise  always  ex- 
ists where  equity  and  justice  require 


the  party  to  do  or  refrain  from  doing 
the  thing  in  question,  where  the  cov- 
enant on  one  side  involves  some  cor- 
responding obligations  on  the  other, 
where  by  the  relations  of  the  parties 
and  subject-matter  of  the  contract  a 
duty  is  owing  by  one  not  expressly 
bound  by  the  contract  to  the  other 
party  in  reference  to  the  subject  of 
it,  and  where  it  may  be  rightfully  as- 
sumed that  it  would  have  been  made 
if  attention  had  been  drawn  to  it." 
Marvin  v.  Rogers,  53  Tex.  Civ.  App. 
423,  115  S.  W.  863.  In  the  follow- 
ing case  the  plaintiff  was  held  not 
liable  on  an  implied  contract  when  it 
had  knowledge  that  the  materials  and 
labor  sued  for  were  being  furnished 
by  defendant  and  when  the  only  in- 
terest the  plaintiff  had  in  the  prem- 
ises arose  out  of  its  contract  to  fur- 
nish heat  when  the  defendant  placed 
an  acceptable  system  in  the  building. 
Citizens'  Electric  Light  &  Gas  Co.  v. 
\^an  Lent   (Iowa),   103  X.  W.  795. 

'  McFarlane  v.  Dawson,  125  Ala. 
428,  29  So.  327.  See  also,  Anderson 
V.  Caldwell  (Mo.),  146  S.  W.  444, 
445. 

Mliller  v.  Tracey,  86  Wis.  330. 
56    N.   W.   866. 

•  Krieger  v.  Feenev,  14  Cal.  App. 
538,   112  Pac.  901. 

"Beede  v.  Eraser,  66  Vt.  114.  44 
Am.    St.   824. 


§    1358  CONTRACTS.  596 

and  using  the  instrument  after  he  had  knowledge  that  it  was 
rented  from  some  one  else  ratified  an  implied  contract  of  the 
master  to  pay  the  reasonable  rental  value  for  the  whole  term  of 
use." 

In  the  case  of  contracts  implied  in  fact,  a  contract  actually  ex- 
ists which  is  proved  not  by  introducing  evidence  as  to  its  express 
terms,  since  none  have  been  expressly  agreed  upon,  but  the  agree- 
ment of  the  parties  is  arrived  at  by  a  consideration  of  their  acts 
and  conduct  and  will  be  implied  as  of  fact.^^  In  the  case  of  a 
quasi  contract  or  contract  implied  by  law,  however,  the  liability 
arises  from  the  facts  and  circumstances  independent  of  agreement 
or  presumed  intention.  The  intention  of  the  parties  in  such  case 
may  be  entirely  disregarded,  while  in  cases  of  express  and  implied 
contracts,  in  fact,  the  intention  is  the  essence  of  the  transaction. 
The  obligation  arises  not  from  consent,  but  from  the  law  or  natu- 
ral equity."  As  a  general  rule,  a  contract  will  not  be  implied 
when  an  express  contract  would  be  invalid."  And  it  has  been 
held  that  no  contract  can  be  implied  from  the  acts  of  the  parties, 
or  result  by  law  from  benefits  received,  but  such  as  the  same  par- 
ties were  competent  expressly  to  enter  into."     So,  it  has  been 

"Reed  v.  Weule,  176  Fed.  660,  100  to  recover  upon  an  implied  contract. 

C.  C.  A.  212.  Weber  v.  Lewis  (N.  Dak.),  126  N.  W. 

"^ Highway  Comrs.  v.  Bloomington,  105,  34  L.  R.  A.  (N.  S.)  364. 
253  111.  164,  97  N.  E.  280.  Ottumwa  "Highway  Comrs.  v.  Blooming- 
Mill  &c.  Co.  V.  Manchester,  139  Iowa  ton,  253  111.  164,  97  N.  E.  280.  See 
334,  115  N.  W.  911  (holding  that  a  also,  Anderson  v.  Caldwell  (Mo.), 
tenant  in  possession  of  premises  to  146  S.  W.  444;  Sceva  v.  True,  53  N. 
be  improved  might,  under  the  cir-  H.  627;  Columbus,  H.  V.  &  T.  R. 
cumstances,  hold  the  contractor  liable  Co.  v.  Gaffney,  55  Ohio  St.  104,  6 
for  damages  resulting  from  failure  N.  E.  152;  Hertzog  v.  Hertzog,  29 
to  make  the  improvements  within  the  Pa.  St.  465;  Leonard  v.  State,  56 
time  agreed  upon).  It  does  not  fol-  Tex.  Cr.  307,  120  S.  W.  183.  In  a 
low  that  merely  because  there  was  no  proper  case  the  law  will  imply  a  con- 
express  promise  there  may  not  be  an  tract  against  the  actual  dissent  of  the 
actual  contract,  as  distinguished  from  party.  Harty  Bros.  v.  Polakow,  237 
one  implied  by  law.  See  Weinsberg  111.  559,  86  N.  E.  1085,  revg.  141  111. 
v.  St.  Louis  Cordage  Co.,  135  Mo.  App.  570.  As  drawing  the  distinc- 
App.  533,  116  S.  W.  461.  See  also,  tion  between  promises  implied  in  fact 
Harley  v.  United  States,  39  Ct.  CI.  and  those  implied  in  law,  see  Chi- 
(U.  S.)  105,  affd.  198  U.  S.  229,  49  cago  v.  Pittsburgh  &c.  R.  Co.,  146 
L.  ed.  1029,  25  Sup.  Ct.  634;  Wojahn  111.  App.  403. 

v.  National  Union  Bank,  144  Wis.  646,  "  Chase  v.  Second  Ave.  R.  Co.,  97 

129  N.  W.  1068.     It  is  neither  neces-  N.  Y.  384,  49  Am.  Rep.  531. 

sary  nor  proper  to  allege  a  promise  "Church     v.    Imperial    Gas    Light 

to  pay  on  defendant's  part  in  actions  and  Coke  Co.,  6  Ad.  &  El.  846. 


597 


IMPLIED    CONTRACTS. 


§    1359 

held  that  a  mere  moral  obligation  is  not  a  sufficient  consideration 
to  raise  an  implied  promise." 

§  1359.  Contracts  not  implied  by  law  where  express  con- 
tracts.— It  is  well  settled  as  a  general  rule  that  the  law  will 
not  imply  a  promise  when  there  is  a  subsisting  express  agreement 
between  the  parties  which  covers  the  same  subject,  and  this  is  true 
regardless  of  whether  such  agreement  be  verbal  or  in  writing." 
The  rule  that  "where  parties  have  come  to  an  express  contract 
none  can  be  implied"  has  prevailed  so  long  as  to  be  reduced  to 
axiom  in  the  law."  This  is  true  for  the  reason  that  parties  to  an 
agreement  are  bound  tliereby  and  no  ground  can  exist  upon  which 
to  base  an  implied  promise  or  contract  covering  the  subject  where 


"Newlin  v.  Duncan,  1  Har.  (Del.) 
204,  25  Am.  Dec.  66.  See  ante,  ch.  9. 
Consideration. 

"  Toussaint  v.  Martinnant,  2  T.  R. 
100;  Draper  v.  Randolph,  4  Har. 
(Del.)  454;  Brougham  v.  Paul,  138 
111.  App.  455;  Turner  v.  Owen,  122 
111.  App.  501;  Ford  v.  McVay,  55  111. 
119;  Brown  v.  Fales,  139  Mass.  21, 
29  N.  E.  211;  Massachusetts  General 
Hospital  V.  Fairbanks,  129  Mass.  78, 
2)1  Am.  Rep.  303;  Galloway  v. 
Holmes,  1  Doug.  (Mich.)  330;Cashin 
V.  Pliter,  168  Mich.  386.  134  N.  W. 
482;  Efron  v.  Stees,  113  Minn.  242, 
129  N.  W.  374 ;  Lindersmith  v.  South 
Missouri  Land  Co.,  31  Mo.  App. 
258;  Work  v.  Beach,  53  Hun 
(N.  Y.)  7,  6  N.  Y.  S.  27;  Lynch  v. 
Onondaga  Salt  Co.,  64  Barb.  (N. 
Y.)  558;  Vanderkarr  v.  Vanderkarr, 
11  Johns.  (N.  Y.)  122;  Preston  v. 
Yates,  24  Hun  (N.  Y.)  534;  Creigh- 
ton  V.  Toledo,  18  Ohio  St.  447;  Ap- 
pleton  Waterworks  Co.  v.  Appleton, 
132  Wis.  563,  113  N.  W.  44  (hold- 
ing that  when  no  new  contract  is 
agreed  upon  by  the  parties  at  the 
beginning  of  a  new  year's  service  it 
constitutes  a  new  hiring  at  the  for- 
mer terms)  ;  Tietz  v.  Tietz,  90  Wis. 
66,  62  N.  W.  939.  Where  the  par- 
ties have  made  an  express  contract 
the  law  will  not  imply  and  raise  a 
contract  different  from  that  which 
the  parties  have  entered  into,  ex- 
cept upon  some  farther  transaction 
between  the  parties.  Britton  v.  Tur- 
ner, 6  N.  H.  481.     See  also,  Kurtz  v. 


Pavne  Inv.  Co.  (Iowa),  135  N.  W. 
1075. 

^^  ''  Cutter  V.  Powell,  6  T.  R.  324. 
"As  in  physics,  two  solid  bodies  can- 
not occupy  the  same  space  at  the 
same  time,  so  in  law  and  common 
sense,  there  cannot  be  an  express  and 
an  implied  contract  for  the  same 
thing,  existing  at  the  same  time. 
This  is  an  axiomatic  truth."  Walker 
V.  Brown,  28  111.  378,  81  Am.  Dec. 
287.  "It  is  an  ancient  and  deep- 
rooted  axiom  of  the  common  law, 
Avhich  'use  has  made  familiar  and 
time  has  rendered  sacred,'  that  'the 
law  will  not  imply  a  promise  where 
there  was  an  express  promise;  so 
the  law  will  not  imply  a  promise  of 
any  person  against  his  own  express 
declaration,  because  such  declaration 
is  repugnant  to  any  implication  of  a 
promise.'  Whiting  v.  Sullivan,  7 
Mass.  107;  Earle  v.  Coburn,  130 
Mass.  596.  While  there  are  instances 
where  the  law  will  imply  a  promise 
to  pay  by  a  party  who  protests,  as 
where  the  law  creates  a  duty  to  per- 
form that  for  which  it  implies  a 
promise  to  pay,  as  in  the  illustration 
of  the  refusal  of  a  man  to  furnish 
food  and  clothing  to  his  wife  and 
children,  yet  the  rule  is  that  such 
promise  shall  never  be  implied  against 
protest,  except  in  cases  where  the 
law  itself  imposes  the  duty,  which 
must  be  a  legal,  and  not  a  mere  mor- 
al or  sentimental  dutv."  Third  Nat. 
Bank  v.  Rice,  161  Fed.  822. 


§    1360  CONTRACTS.  598 

there  is  a  valid  and  subsisting  express  agreement,^^  and  it  has  been 
held  immaterial  whether  the  contract  is  made  by  the  parties  them- 
selves or  by  others  for  them.^"  When  a  written  contract  exists  it 
takes  precedence  of  all  others,  and  forms  the  only  contract  be- 
tween the  parties  during  the  time  of  its  existence.^^  Thus,  where 
services  have  been  performed  under  an  express  contract,  an  action 
to  recover  compensation  for  such  services  must  be  founded  on 
that  contract  and  on  that  only,  unless  in  consequence  of  the  fault 
or  consent  of  the  defendant."  The  existence  of  an  express 
contract  for  hire  for  one  year,  at  a  stated  weekly  compensation, 
excludes  any  implied  agreement  or  understanding  about  wages, 
and  the  contract-price  cannot  be  increased  without  a  further 
agreement  to  that  effect  between  the  parties.^^  A  previous  im- 
plied contract  is  merged  in  a  subsequent  express  agreement  con- 
cerning the  same  matter.^*  Nor,  in  many  jurisdictions,  can  one 
who  declares  on  a  special  contract  recover  on  an  implied  agree- 
ment.'^ So  on  the  other  hand,  it  is  held  in  the  same  jurisdictions 
that  if  suit  is  brought  on  an  implied  promise  and  the  evidence 
discloses  the  breach  of  a  special  contract,  there  can  be  no  re- 
covery.^® 

§  1360.  Limits  of  rule  that  express  contract  excludes  im- 
plied contract. — The  above  rule  to  the  effect  that  where  there 
is  an  express  contract  the  law  will  not  imply  one,  is  only  applica- 

^' Walker  v.  Brown,  28  111.  378,  81  agreed  between  the  parties  that  the 

Am   Dec   287.  services   should   be   rendered   gratui- 

=°  Walker  v.  Brown,  28  111.  378,  81  tously). 

Am    Dec    287  ^  Schurr  v.  Savigny,  85  Mich.  144, 

=^  North  V.   Nichols,   37   Conn.  375.  48   N.   W.   547. 

The  above  case  lays   down  the  rule  ""  Riedmger     v.     Diamond     Match 

that  there  can  be  no  implied  contract  Co.,  123  Fed.  244,  60  C.  C.  A.  1. 

to   pay  rent   for  use  and  occupation  "^  Sanders  v.   Hartge,   17  Ind.  App. 

of  premises  where  there  is  a  written  243,  46  N.  E.  604;  Indianapolis  Coal 

lease       See    also.    Snow    v.    Indiana  &c.  Co.  v.  Dalton,  43  Ind.  App.  330, 

B    &  W    R.  Co.,  109  Ind.  422,  9  N.  87    N.    E.    552;    Price   v.    Price,    101 

E.  702;  Waters  v.  Richmond  &c.  R.  Ky.  28,  19  Ky.  L.  211,  39  S.  W.  429; 

Co.,  110  N.  Car.  338,  14  S.  E.  802,  16  Birlant  v.   Cleckley,   48   S.   Car.   298, 

L.    R.    A.    834;    Normile    v.    Oregon  26  S.  E.  600;  Orynski  v.  Menger.  15 

&c.  R.  Co.,  41  Ore.  177,  69  Pac.  928.  Tex.  Civ.  App.  448,  39  S.  W.  388. 

""See  Waite   v.    Merrill,   4   Greenl.  "" Jackson   v.    Creek,   47   Ind.    App. 

(Maine)  102,  16  Am.  Dec.  238  (hold-  541,  94  N.   E.  416.     See  also,  Bacob 

ing  that  there  can  be  no  recovery  on  v.   Phenix  Ins.  Co.,  96  Miss.  223,  50 

an  implied  promise  for  the  value  of  So.  729,  25  L.  R.  A.   (N.  S.)   1226. 
services     rendered     where     it     was 


599 


IMPLIED    CONTRACTS. 


§    1360 


ble  to  those  cases  in  which  the  express  contract  and  that  impHed 
by  law  relate  to  the  same  subject-matter,  and  where  the  provisions 
of  the  express  contract  are  intended  to  control  and  supersede  those 
which  would  otherwise  be  raised  by  implication."  Neither  does 
the  general  rule  apply  where  the  provisions  of  the  express  con- 
tract are  not  intended  to  control  all  subsequent  conduct  between 
the  parties.^*  Thus  it  has  been  held  that  the  sale  of  a  manuscript 
by  an  author  to  a  publisher  for  the  purpose  of  publication  implies 
an  agreement  to  publish  the  work  and  on  the  refusal  of  the  pub- 
lisher so  to  do  the  author  is  entitled  to  tender  the  purchase-price 
received  by  him  and  recover  the  manuscript.*"  And  where  the 
express  contract  is  rescinded,^"  or  where  both  parties  have  de- 
parted there  from, ^^  resort  may  be  had  in  a  proper  case  to  an  im- 
plied promise.  So  where  the  contract  has  been  fully  executed  and 
the  time  of  payment  passed,  a  suit  may  be  maintained  either  on 


''Commercial  Bank  v.  Pfieffer,  22 
Hun   (N.  Y.)    327. 

"Efron  V.  Stees,  113  Minn.  242,  129 
N.  W.  374  (action  by  lessee  to  re- 
cover from  lessor  for  the  reasonable 
value  of  the  leased  premises  subse- 
quently occupied  by  the  lessor,  the 
lease  having  made  no  provision  for 
such  occupancy)  ;  Waldron  v.  Davis, 

70  N.  J.  L.  788.  In  the  above  case 
there  was  an  express  contract  be- 
tween the  plaintiff  and  the  defend- 
ant's decedent  under  which  the  board 
and  lodging  of  the  deceased  were 
agreed  upon  at  a  fixed  price.  Subse- 
quently the  deceased  became  insane 
and  was  afflicted  with  a  cancer  and 
it  was  necessary  to  give  her  constant 
nursing  and  attention.  It  was  held 
that  a  recovery  might  be  had  on  an 
implied  contract  to  pay  for  services 
rendered  in  nursing,  notwithstand- 
ing the  express  contract  for  board 
and  lodging.  To  same  effect, 
Pfeiffer  v.  Michelsen,  112  Mich.  614, 

71  N.  W.  156.  Compare  with  Hough- 
ton v.  Kittleman,  7  Kans.  App.  207, 
52  Pac.  898,  in  which  case  one  em- 
ployed as  a  housekeeper  at  a  fixed 
compensation  was  not  permitted  to 
recover  for  services  rendered  as  a 
nurse. 

"•I^Iorang  v.  Le  Sneur,  45  Can. 
Sup.   Ct.  95. 

"Towers  v.  Barrett,  1  T.  R.  133; 
Cody     v.     Raynaud,     1     Colo.     272; 


Walker  v.  Brown,  28  111.  378,  81  Am. 
Dec.  287;  Morrison  v.  Ives,  4  Smed. 
&  M.  (Miss.)  652;  Columbia  Bank 
V.  Patterson,  7  Cranch  (U.  S.)  299, 
3  L.  ed.  351. 

'' Goodrich  v.  Lafflin.  1  Pick. 
(Mass)  57;  Ladue  v.  Sevmour,  24 
Wend.  (N.  Y.)  60.  See  also,  Ot- 
tumwa  Mill  &c.  Co.  v.  Manchester, 
139  Iowa  334.  115  N.  W.  911,  holding 
that  the  law  will  imply  a  promise  to 
pay  damage  for  nonperformance  of 
the  contract.  Connolly  v.  SulHvan, 
173  Mass.  1,  53  N.  E.  143,  holding 
that  if  the  plaintiff  was  prevented  by 
the  defendant  from  going  on  with 
the  contract  he  may  recover  on  an 
implied  contract  the  value  of  his 
services.  But,  on  the  other  hand,  if 
the  contract  was  terminated  with  his 
consent  he  is  entitled  to  recover  only 
the  contract-price.  "That  one  can- 
not maintain  an  action  on  a  contract 
without  a  prior  substantial  compliance 
on  his  part  is  the  well  settled  law, 
Init  this  principle  must  have  a  rea- 
sonable application.  If  there  is  a 
substantial  performance,  the  action 
thereon  may  be  maintained,  but  with- 
out prejudice  to  any  set-off  or  coun- 
terclaim which  may  be  presented  by 
the  defendant  in  the  action.  This  is 
a  reasonable  and  just  rule,  and  is  the 
well  settled  law  of  this  state."  Mc- 
Gowan  v.  Gate  City  Malt  Co.,  89 
Neb.  10,  130  N.  W.  965,  966. 


§    1 361  CONTRACTS.  60O 

the  Special  contract  or  recover}^  may  be  had  as  on  an  implied  con- 
tract or  in  general  assumpsit ;  but  in  the  latter  case  the  amount  re- 
covered will  be  the  rate  of  compensation  fixed  by  the  special  con- 
tract.^' When  an  express  contract  is  the  same  as  the  law  implies, 
an  action  may  lie  on  either  of  them.^^  In  the  case  of  a  surety 
who  had  a  written  promise  of  indemnity  from  the  principal,  and 
sued  on  the  implied  promise,  it  was  held  that  as  the  written  con- 
tract contained  nothing  more  than  what  the  law  would  imply,  the 
plaintiff  might  make  use  of  his  written  promise  or  sue  on  his  im- 
plied promise  as  he  pleased.^* 

§  1361.  Right  to  recover  where  minds  of  parties  did  not 
meet  on  attempted  express  contract. — The  law  will  imply  a 
contract  in  fact  when  the  parties  attempt  to  contract  but  their 
minds  fail  to  meet  on  an  essential  element  thereof,  and  no  inten- 
tion touching  the  question  appears,  and  one  party  has  executed  his 
undertaking,  and  the  other  has  accepted  the  benefits  resulting 
therefrom. ^^  Thus,  when  the  minds  of  the  parties  meet  upon 
everything  but  the  compensation  to  be  paid  for  the  services  ren- 
dered, the  law  will  imply  a  promise  to  pay  a  reasonable  compen- 

^  James  v.  Cotton,  7  Bing.  266,  20  CI.      (U.     S.)      105,     afifd.     198     U. 

E.  C.  L.  125;  Londregon  v.  Crowley,  S.    229,    49    L.    ed.     1029,    25    Sup. 

12  Conn.   558;   Walker  v.   Brown,  28  Ct.     634.      Compare     the     foregoing 

111    378,   81    Am.   Dec.   287;    Holmes  case   with   United    States   v.    Societe 

V.    Stummel,  24   111.    370;   Jackson  v.  Anonyme  &c.   Cail    (U.   S.),  32   Sup. 

Creek,   47    Ind.    App.   541,   94   N.   E.  Ct.  479,  affg.  43  Ct.  CI.    (U.  S.)   25. 

416    (contract    fully    executed    except  Both  involve  the  use  of  a  patent;  in 

payment  of  rent)  ;    Charles  v.  Dana,  the    former    case    it    was    held    there 

14  Maine  383;   Gambrill  v.  Schooley,  was  no  implied  liability,  in  the  latter 

89    Md.    546,   43    Atl.   918;    Columbia  the  United  States  was  held  liable  on 

Bank  v.  Patterson,  7  Cranch  (U.  S.)  an  implied  contract  for  the  use  of  a 

299,  3  L.  ed.  351;   Hilliard  v.  Doug-  patent.     Wojahn    v.    National    Union 

las  Oil  Fields   (Wyo.),  122  Pac.  626.  Bank  of  Oshkosh,  144  Wis.  646,  129 

See   also,   Appleton  Waterworks   Co.  N.    W.    1068.     In   the   above   case   it 

V.    City    of    Appleton,    132   Wis.    563,  is  said:   "(a)    appellant  was  requested 

113  N.  W.  44.  on  behalf  of  respondent  to  perform 

^Cornwall      v.      Gould,      4      Pick,  for  it  services;   (b)  he  complied  with 

(Mass.)  444;  Princeton  &c.  Turnpike  such    request,    continuing    his    labor 

Co.  V.  Gulick,  16  N.  J.  L.  161 ;  Bank  till    the    task    assigned    to    him    was 

of  Columbia  v.  Patterson's  Admr.,  7  ended ;    (c)    his    services    were    very 

Cranch     (U.    S.)     299;    Maynard    v.  valuable    to    the    respondent.  _    From 

Tidball,  2  Wis.  34.  such    circumstances    there    arises,    as 

"Gibbs  V.  Bryant,  1  Pick.   (Mass.)  matter    of    law,    a    presumption    of 

118.  fact  that  the  services  were  performed 

"Weinsberg  v.   St.   Louis   Cordage  under  contractual   relations.     It  is  a 

Co.,    135    Mo.    App.    553,    116    S.    W.  mistake,    in    the    technical    sense,    to 

461;  Harley  v.  United  States,  39  Ct.  speak  of  the  contract  as  one  implied 


6oi  IMPLIED    CONTRACTS.  §    1 36 1 

sation  or  the  quantum  meruit  of  the  services  rendered.^^  And 
where  the  minds  of  the  parties  fail  to  meet  on  the  price  to  be 
paid  for  work  in  grading  a  city  lot,  the  reasonable  value  thereof 
is  recoverable."  The  courts  do  not,  as  a  general  rule,  forbid 
a  recovery  because  the  minds  of  the  parties  did  not  meet  on 
some  essential  element  thereof,  either  because  of  a  mutual  mis- 
take or  uncertainty  as  to  such  term.  Instead,  a  party  thereto 
who  furnishes  material  or  renders  services  to  the  other  party  in 
accordance  with  and  in  reliance  upon  the  terms  of  the  contract 
as  he  understands  them,  is  generally  entitled  to  recover  what  his 
labor  and  materials  were  reasonably  worth.^*     The  reason  for 

by  law.  There  are  such  contracts,  contract-price  therein  named  was 
They  arise  when  there  is  a  legal  ^33,721.  When  the  defendant  signed 
duty  to  respond  in  money  which  by  them  the  contract-price  stated  in 
a  legal  fiction  may  be  enforced  as  each  was  $23,200.  For  this  reason 
upon  an  implied  promise.  In  such  the  minds  of  the  parties  failed  to 
case  there  is  no  element  of  contract  meet  on  the  contract  price, 
strictly  so-called.  There  is  only  the  '"Beers  v.  Kuehn,  84  Wis.  33,  54 
duty  to  which  the  law  fixes  a  legal  N.  W.  109.  Compare,  however,  with 
obligation  of  performance  as  in  case  Shaw  v.  Armstrong,  88  Mich.  311, 
of  a  promise  inter  partes.  So  it  is  50  N.  W.  248,  in  which  it  is  held 
called  in  the  books  a  quasi-contract,  that  where  the  parties  disagree  as  to 
They  are  implied  contracts  in  the  the  amount  to  be  paid  for  certain 
strict  sense  of  the  term.  In  this  services  rendered  under  an  express 
case  we  are  dealing  with  the  subject  contract,  there  was  no  room  for  the 
of  implied  contracts  in  such  sense,  theory  that  the  minds  of  the  parties 
Such  a  contract  requires,  the  same  did  not  meet  with  reference  to  this 
as  an  express  contract,  the  element  of  element  of  the  agreement  and  that 
mutual  meeting  of  minds  and  of  in-  it  was  for  the  jury  to  determine  which 
tention  to  contract.  The  two  species  of  the  parties  was  right  as  to  the 
differ  only  in  methods  of  proof.  One  amount  of  compensation  to  be  paid, 
is  established  by  proof  of  expression  '^Rowland  v.  New  York,  N.  H. 
of  intention,  the  other  by  proof  of  &  H.  R.  Co.,  61  Conn.  103,  23  Atl. 
circumstances  from  which  the  inten-  755,  29  Am.  St.  175  (contract  of 
tion  is  implied  as  matter  of  fact,  affreightment)  ;  The  Stanley  M. 
The  implication  arises  upon  legal  Miner,  172  Fed.  486  (sunken  schooner 
principles  and  is  conclusive  in  the  to  raise  and  deliver)  ;  Hall  v.  Luck- 
absence  of  something  efficiently  dis-  man.  133  Iowa  518,  110  N.  W.  916 
placing  it,  as  a  presumption  of  law.  (stenographer  to  take  certain  testi- 
Unlike  the  latter  it  being  an  implica-  mony  and  make  transcript  thereof)  ; 
tion  of  fact  though  springing  into  Voss  v.  Schebeck.  25  Ky.  L.  481,  76 
existence  as  matter  of  law,  it  is  re-  S.  W.  21  (building  repair  contract)  ; 
buttable."  See  §  1358,  Acts  of  Par-  Cobb  v.  Stevens,  14  Maine  472  (con- 
ties,  tracts  for  performance  of  labor)  ; 
"Turner  v.  Webster,  24  Kans.  38,  Hawkins  v.  Lange,  22  Minn.  557 
36  Am.  Rep.  251 ;  Vickerv  v.  Ritchie,  (contract  to  cut  and  haul  timber)  ; 
202  Mass.  247.  88  X.  E.  835.  26  L.  R.  Russell  v.  Clough,  71  N.  H.  177,  51 
A.  (N.  S.)  810n.  In  the  above  case  a  Atl.  632,  93  Am.  St.  507  (contract 
contract  for  the  erection  of  a  build-  to  cut  timber  and  make  it  into 
ing  was  prepared  bv  an  architect,  lumber)  ;  Bluemner  v.  Garvin.  120 
At  the  time  the  plaintiff  signed  both  App.  Div.  (N.  Y.)  29,  104  N.  Y.  S. 
copies  of  the  contract  the  defend-  1009  (architect  to  furnish  plans  for 
ant's  signature  was  attached  and  the  a  building)  ;  Beers  v.  Kuehn,  84  Wis. 


§    1362  CONTRACTS.  602 

this  has  been  stated  as  follows :  "The  minds  of  the  parties  met 
upon  everything  but  the  compensation.  As  to  that  there  was 
no  aggregatio  mentium.  What,  then,  should  result  ?  Should  he 
receive  nothing  because  there  was  no  mutual  assent  to  the  compen- 
sation? That  were  manifest  injustice.  Should  his  understand- 
ing bind  both  parties?  That  were  a  wrong  to  them.  Should 
theirs  control?  That  were  an  equal  wrong  to  him.  The  law, 
discarding  both,  says  a  reasonable  compensation  must  be  paid."^** 

§  1362.  Accounts  stated. — An  account  stated  is  defined  as 
"an  agreement  between  parties,  who  have  had  previous  transac- 
tions of  a  monetary  character,  that  all  items  of  the  account  repre- 
senting such  transactions  are  true,  and  also  that  the  balance  struck 
is  correct,  together  with  the  promise,  express  or  implied,  for  the 
payment  of  such  balance."**'  The  stating  of  an  account  is  not 
strictly  and  in  every  sense  the  making  of  a  new  contract  as  a  crea- 
tion of  a  new  debt.*^  An  account  stated  is,  however,  regarded  at 
common  law  as  creating  an  implied  promise  to  pay  the  balance 
thus  ascertained  which  is  in  the  nature  of  a  new  promise  and  an 
action  brought  is  upon  it  and  not  upon  the  original  items  of  the 
account.*^     An  account  stated  is  prima  facie  evidence  of  its  cor- 

33,  54  N.  W.  109  (lot  to  be  graded) ;  &c.     Ins.     Co.    v.    Batt    (Ind.),    97 

Buck  V.  Pond,   126  Wis.  382,  105  N.  N.  E.  195;  Ida  County  Sav.  Bank  v. 

W.    909    (improvements    made    upon  Johnston    (Iowa),    136    N.    W.    225; 

land  under   invalid   contract  of   pur-  Watson  v.  Dodson.  —  Tex.  Civ.  App. 

chase).     See  also,  McGowan  v.  Gate  — ,   143   S.  W.  329,  citing  Elliott  on 

City  Malt  Co.,  89  Nebr.  10,  130  N.  W.  Ev.,  §   1609;   1   Cyc.  364.     The  mere 

965.     Plaintiff  furnished  brick  to  de-  rendition    of    an    account    does    not 

fendant    for    which    the    former    was  make  it  an  account  stated.    Kent  v. 

compelled  to  pay  $7.50  per  thousand.  Wilson,   134  N.  Y.  S.  206. 

Defendant   had   contracted   for   brick  ^  See     and     compare     Laycock     v. 

at  $7.00  per  thousand  but  neverthe-  Pickles,    4    B.    &    S.    497;    Chace    v. 

less    accepted    and    used    those    fur-  Trafford,  116  Mass.  529,  17  Am.  Rep. 

nished  by  plaintiff.     Held  that  plain-  171 ;     McKinster     v.     Hitchcock,     19 

tiff   might   recover  the  price    ($7.50)  Nebr.   100,  26  N.  W.  705;   Goings  v. 

paid  for  the  brick.  Patten,   17  Abb.   Pr.    (N.  Y.)    339,   1 

''Turner  v.  Webster,  24  Kans.  38,  Daly  (N.  Y.)  168.  It  has  been 
36  Am.  Rep.  251.  To  same  effect,  termed  evidence  of  a  debt.  Van- 
Russell  V.  Clough,  71  N.  H.  177,  51  bebber  v.  Plunkett  (Ore.),  27  L.  R. 
Atl.  632,  93  Am.  St.  507  (cutting  and  A.  811  and  notes, 
sawing  lumber).  See  further  on  this  *"  Foster  v.  Allanson,  2  T.  R.  479; 
subject  in  the  subsequent  sections  on  Arthur  v.  Dartch,  9  Jur.  118;  Hendy 
Work  and  Services,  Money  had  and  v.  March,  75  Cal.  566,  17  Pac.  702; 
Received,  Money  Lent,  &c.,  §§  1363,  Throop  v.  Sherwood,  9  111.  92; 
1372  et  seq.  United  States  Health  &c.  Ins.  Co.  v. 

'"3    Elliott   Ev.,    §    1605,   quoting    1  Ratt   (Ind.),  97  N.  E.  195;  Columbia 

Am.  &  Eng.  Encyc.  of  Law  (2d  ed.)  Brewing  Co.  v.  Berney,  90  Mo.  App. 

437.     See  also,  United  States  Health  96;  Holmes  v.  DeCamp,  1  Johns.  (N. 


603  IMPLIED   CONTRACTS.  §    1 363 

rectness  and  the  burden  rests  upon  the  party  disputing  the  same 
to  show  mistake.  It  does  not,  however,  operate  as  an  absokite 
estoppel. ^^  The  ordinary  account  stated,  as  distinguished  from 
an  express  settlement  of  cross-demands,  consists  of  money  trans- 
actions or  debts.  Thus,  a  single  item,  not  of  a  debt  due,  and 
owing,  but  of  an  unliquidated  claim  for  damages  for  the  breach 
of  parol  or  simple  contract  cannot  form  the  basis  for  an  account 
stated.** 

§  1363.  Work  and  services. — Where  there  is  no  family  re- 
lationship between  the  parties,  and  one  accepts  and  retains  the 
beneficial  results  of  another's  services,  which  he  had  no  reason  to 
suppose  were  gratuitous,  and  which  he  could  accept  or  not  at  his 
option,  the  law  will  imply  a  previous  request  for  the  services  and 
a  promise  to  pay  what  they  were  reasonably  worth. *^  Where  a 
city  ordinance  provided  that  a  fireman  should  be  assigned  to  at- 
tend all  theater  performances,  his  wages  to  be  paid  by  the  man- 
ager, it  was  held  tliat  the  fireman  so  assigned  might  bring  an 
action  against  the  manager  to  recover  the  reasonable  value  of  his 

Y.)   34,  3  Am.  Dec.  293;   Holmes  v.  A.  480,   19  L.   R.  A.  796;   Harris  v. 

Page,  19  Ore.  232,  23  Pac.  961.     See  Johnson,  98  Ga.   434,  25   S.   E.   525 

also,    Shaw   v.    Lobe,   58   Wash.   219,  De    Wolf    v.    Chicago,    26    111.    443 

108   Pac.  450,  29  L.   R.   A.    (N.   S.)  Linn  v.  Linderoth,  40  111.  App.  320 

333,    and    note    on    the    effect    of    re-  Lockwood  v.   Robbins,    125   Ind.   398, 

taining  statement  of  accounts  to  ren-  25    N.    E.   455;    Chamness   v.    Cox,   2 

der   it   an   account   stated.     The   evi-  Ind.    App.    485,    28    N.    E.    777;    Mc- 

dence  to   support   the  account   stated  Garvy  v.  Roods,  73  Iowa  363,  35  N. 

may  be  wholly  in  writing  or  wholly  W.    488;    Cowan     v.     Musgrave,     73 

by  parol,  or  in  part  by  writing  and  Iowa  384,  35  N.  W.  496;  Shelton  v. 

in    part    bv    parol.      Whittington    v.  Johnson,  40  Iowa  84 ;  Perrv  v.  Bailey, 

Stanton    (Fla.),   58    So.   489.     For   a  12  Kans.  539;  Nimmo  v.  Walker,   14 

general  discussion  of  accounts  stated  La.  Ann.  581;  Casey  v.  May  (Mass.), 

see   1    Cyc.  351.     See  also,    1   .\m.  &  97   N.    E.   913    (services   rendered   in 

Eng.  Encyc.  of  L.    (2d  ed.)   433.  devising  a  system  for  accurately  de- 

"  Watson    V.    Dodson     (Tex.    Civ.  termining  the  amount  of  leather  re- 

App.),  143  S.  W.  329.  quired  for  cutting  pieces  for  various 

**Vanbebber    v.     Plunkett     (Ore.),  sizes   of   shoes);    Fowler   v.    Fowler, 

27  L.  R.  A.  811  and  note.     See  also,  111  Mich.  676,  70  N.  W.  336  (house- 

Charnley   v.    Sibley,   73    Fed.  980,   20  keeper)  ;   Rvans  v.   Hospes,    167   Mo. 

C.  C.  A.  157,  34  U.  S.  App.  705:  Fra-  342,  67  S.  W.  285   (services  as  nurse 

ley   v.    Bispham,    10    Pa.    St.    320,    51  and    companion)  ;    Allen's    Admx.    v. 

Am.  Dec.  486.  Richmond  College,  41   Mo.  302;   Mc- 

"  Alabama   &c.   R.    Co.   v.   Hill,   76  Queen  v.  Wilson,  51   Mo.  App.   138; 

Ala.  303;  Ford  v.  Ward,  26  Ark.  360;  In   re  Cooper.  6  Misc.    (N.  Y.)    501, 

Joseph    v.    Johnson.    7    Del.    468,    82  27  N.  Y.  S.  425:  Ladue  v.  Sevmour. 

Atl.    30;    Johnson    v.    The    Frank    S.  24    Wend.    (N.    Y.)    60;    Gordon    v. 

Hall,  38  Fed.  258;   Cincinnati  &c.  R.  French  .A.merican  Stores  Co.,  132  N. 

Co.  v.  Bensley,  51  Fed.  738,  2  C  C.  Y.  S.  762;  Blount  v.  Guthrie,  99  N. 


§  I. 


163 


CONTRACTS. 


604 


sen-Ices  rendered.""'  A  fortiori  is  this  true  where  the  party  bene- 
fited requests  that  the  services  be  performed.*^  Thus,  where  one 
person  employs  another  to  labor  for  him  or  to  render  him  other 
services,  the  law  is  said  to  imply  a  contract  and  a  promise  to  pay 
a  reasonable  sum  for  the  services  received,  although  nothing  is 
stipulated  concerning  the  price  or  payment. ^^  And  where  a  part- 
ner requests  board  for  the  other  member  of  the  firm  and  employes 
and  the  board  is  furnished,  the  partner  requesting  the  board 
may  be  held  liable  on  an  implied  promise  to  pay  therefor.** 


Car.  93;  Moreland  v.  Davidson,  71 
Pa.  St.  371;  Pierce  v.  Aiken  (Tex. 
Civ.  App.),  146  S.  W.  950;  Morris- 
sey  V.  Faucett,  28  Wash.  52,  68  Pac. 
352  (sister  living  with  brother's  fam- 
ily and  rendering  services,  brother 
promising  to  make  it  right  with  her)  ; 
McMillan  v.  Page,  71  Wis.  655,  38 
N.  W.  173;  Hay  v.  Peterson,  6  Wyo. 
419,  45  Pac.  1073,  34  L.  R.  A.  581n. 
Where  a  railroad  company  has  been 
carrying  the  mails  and  receiving  pay 
therefor,  no  express  contract  being 
proven,  the  law  implies  a  contract. 
Western  Union  R.  Co.  v.  United 
States,  101  U.  S.  543,  25  L.  ed.  1068. 
Where  services  are  rendered  by  one 
person  to  another  and  knowingly  ac- 
cepted, unless  there  is  something  in 
the  relation  of  the  parties,  the  na- 
ture of  the  services  rendered,  or 
other  circumstances  to  rebut  the  pre- 
sumption, the  law  will  presume  an 
obligation  to  pay  therefor.  Hood  v. 
League,  102  Ala.  228,  14  So.  572.  Al- 
though a  request  to  do  certain  work 
may  not  have  been  satisfactorily 
proved  against  a  corporation  sued 
upon  a  quantum  meruit,  yet  if  the 
plaintiff  in  good  faith  and  with  full 
knowledge  on  the  part  of  the  de- 
fendant, did  the  work  and  the  de- 
fendant availed  itself  of  the  fruits  of 
plaintiff's  labor,  it  is  liable  to  the 
extent  of  the  benefit  received. 
Thomas  v.  Walnut  Land  &c.  Co.,  43 
Mo.  App.  653.  Compare  with  Clary 
V.  Wolf  (R.  L),  83  Atl.  115,  hold- 
ing that  the  mere  fact  that  a  tenant 
may  have  made  use  of  an  unauthor- 
ized improvement  does  not  amount 
to  a  ratification  by  the  landlord. 
See  also,  Simons  v.  Paine  (Tex.  Civ. 
App.),  140  S.  W.  855  (denying  re- 
covery on  quantum  meruit   for  dig- 


ging a  well  when  it  did  not  comply 
with  the  contract  and  the  owner  had 
refused  to  accept  it).  Recovery  can- 
not be  had  on  an  implied  contract 
when  the  express  agreement  is  con- 
trary to  law.  Cashin  v.  Pliter,  168 
Mich.  386,  134  N.  W.  482. 

*°  Tannebaum  v.  Rehm,  152  Ala. 
494,  44  So.  532,  11  L.  R.  A.  (N.  S.) 
700n,  126  Am.  St.  52. 

"Freel  v.  Harken  (Iowa),  135  N. 
W.  648;  Weinsberg  v.  St.  Louis 
Cordage  Co.,  135  Mo.  App.  553,  116 
S.  W.  461 ;  Thomas  v.  Thomasville 
Shooting  Club,  121  N.  Car.  238,  28 
S.  E.  293;  Meyer  v.  Livesley 
(Ore.),  107  Pac.  476,  108  Pac.  121 
(defendant  requested  plaintiff  to  care 
for  a  hop  crop)  ;  Wojahn  v.  National 
Union  Bank,  144  Wis.  646,  129  N. 
W.  1068;  McCann  v.  Doherty,  98 
Wis.  335,  1Z  N.  W.  782. 

"Weston  V.  Davis,  24  Maine  374; 
Lewis  v.  Trickey,  20  Barb.  (N.  Y.) 
387.  An  acceptance  of  beneficial 
services  raises  an  implied  assumpsit. 
Donovan  v.  Halsey  Fire  Engine  Co., 
58  Mich.  38,  24  N.  W.  819.  One  who 
employs  another  to  perform  certain 
services  for  his  benefit,  without  any 
agreement  as  to  terms,  impliedly 
agrees  to  pay  reasonable  compensa- 
tion for  the  services.  Humes  v.  De- 
catur &c.  Co.,  98  Ala.  461,  13  So. 
368.  Sir  William  Blackstone  gives 
this  example  of  an  implied  contract: 
"If  I  employ  a  person  to  do  any 
business  for  me,  or  perform  any 
work,  the  law  implies  that  I  under- 
took, or  contracted  to  pay  him  as 
much  as  his  labor  deserves."  2  Bl. 
Com.   443. 

**Gessner  v.  Roeming,  135  Wis. 
535,  116  N.  W.  171. 


605  IMPLIED   CONTRACTS.  §    1 363 

If  a  man  build  a  house  upon  the  land  of  another,  with  his  as- 
sent, in  the  absence  of  anything  to  the  contrary  the  law  raises 
an  obligation  on  his  part  to  pay  its  value,  since  he  has  been 
benefited  to  that  extent,  and,  if  he  did  not  intend  to  pay,  it  was 
his  duty  to  forbid  its  construction,  or  at  least  to  give  notice  that 
he  would  not  be  chargeable.  So,  if  he  had  expressly  contracted 
to  pay  for  the  house,  provided  it  were  built  in  a  certain  manner 
and  within  a  certain  time,  and  he  accepted  it,  although  it  was  not 
built  in  the  manner  or  within  the  time  contracted  for,  he  is  bound 
to  pay  its  value,  not  exceeding  the  contract-price,  less  any  dam- 
ages he  may  have  suffered  by  reason  of  the  failure  of  the  other 
party  to  comply  with  the  exact  conditions  of  the  contract.^"'  One 
who  has  accepted  the  results  of  a  broker's  services  in  effecting  an 
exchange  of  property  has  been  held  liable  for  the  reasonable  value 
of  the  broker's  services.^^  If  a  man  serves  a  stranger  in  the  capac- 
ity of  clerk,  or  of  a  menial  servant,  or  servant  in  husbandry,  for  a 
continued  period,  the  law  presumes  that  the  service  has  been  ren- 
dered in  fulfilment  of  a  contract  of  hiring  and  service,  and  if  the 
party  has  served  without  anything  having  been  said  as  to  wages, 
the  law  presumes  that  there  was  a  contract  for  customary  and  rea- 
sonable wages.^^  But  no  recovery  can  be  had  for  services  volun- 
tarily rendered  and  with  the  express  assurance  that  no  charge 
would  be  made  therefor.^^  Moreover,  if  services  are  rendered  in 
the  mere  expectation  of  remuneration,  as  by  a  legacy,  and  there  is 
nothing  in  the  conduct  or  language  of  the  person  benefited  by  the 
services  to  induce  such  an  expectation,  they  are  deemed  volun- 
tary and  gratuitous.^*     But  where,  from  the  circumstances  of  the 

"^Vanderbilt  v.  Eagle  Iron  Works,  and  set  to  work,  no  contract  of  hiring 

25  Wend.    (N.   Y.)    665.     A  promise  and  service  is  implied  therefrom.  In 

to  pay  may  be  implied  where  an  archi-  such   cases,    an    express    hiring    must 

tect  prepares  plans  and  specifications  be  proved  in  order  to  support  a  claim 

for     another.       Frost     v.     Grimmer  for   wages.      Bennett   v.    Stephens,    8 

(Tex.   Civ.   App.),   142  S.  W.  615.  Ore.  444. 

"Millard     v.     Loser    (Colo.),    121  '* Cochran    v.    Zachery,    137    Iowa 

Pac.    156.      But    where    the    broker's  585,  115  N.  W.  486,  16  L.  R.  A.   (N. 

compensation   is  fixed  by  an  express  S.)   235n,   126  Am.   St.  307.     "Where 

contract  he  is  not  entitled  to  recover  services     are     rendered     gratuitously 

on    the    quantum    meruit.      Kurtz    v.  with    no    intention    of    charging    for 

Payne   Inv.   Co.    (Iowa),   135   N.  W.  the    same,    the    party    cannot    subse- 

1075.  quently     recover     compensation     for 

"If  a  poor  person  is  taken  out  of  such   gratuitous   service."     Joseph   v. 

charity  and  provided  with  food,  lodg-  Johnson,  7  Del.  468,  82  Atl.  30. 

ing,   clothing    and    other    necessaries,  "  Osborn    v.    Governors    of    Guy's 


§    1364  CONTRACTS.  606 

case,  it  is  manifest  that  it  was  understood  by  both  parties  that 
compensation  should  be  made  by  will,  and  none  is  made,  an  action 
lies  to  recover  what  the  services  were  reasonably  worth. °^ 

§  1364.  Contracts  for  services  where  skill  is  required. — 
Ordinarily,  when  one  undertakes  any  trust,  office  or  employment, 
the  law  raises  a  promise  on  his  part  to  perform  his  undertaking 
with  integrity,  diligence  and  skill,  and  if  he  injures  his  employer 
by  want  of  either  of  these  qualities,  he  is  liable  to  an  action  on 
his  implied  contract  for  reparation.^"  Where  a  man  holds  him- 
self out  to  the  world  as  a  person  of  skill  and  competency  in  any 
particular  trade  or  calling,  and  is  employed  to  perform  work  in 
that  trade  or  calling,  the  law  implies  a  contract  on  his  part  to  do 
the  work  in  a  skilful  and  workmanlike  manner.^^  But  if  the  em- 
ployer has  in  any  manner  acquiesced  in  the  improper  or  inferior 
work,  or  has  suffered  the  other  party  to  perform  it  and  taken  it 
off  his  hands,  he  is  bound  to  pay  for  whatever  benefit  or  advan- 
tage he  has  derived  from  the  work.^^  Where  a  man  works  by  the 
day  he  is  required  to  exercise  ordinary  care  and  skill,  and  to  do  his 
work  in  an  ordinary,  fair,  workmanlike  manner,  and,  if  he  does 
not,  he  cannot  recover  as  wages  the  value  of  work  properly  done, 
without  the  employer  being  entitled  to  a  deduction  for  any  defect 
in  the  labor,  or  in  the  manner  of  its  performance.^*^  A  person  con- 
Hospital,  2  Str.  728;  Gross  v.  New-  J.  Eq.  394,  74  Atl.  703.  And  where 
man's  Admr.,  20  Ky.  L.  1910,  SO  S.  the  recipient  of  the  services  so  con- 
W.  530;  Thompson  v.  Stevens,  71  ducts  himself  as  to  warrant  a  rescis- 
Pa.  St.  161 ;  Swires  v.  Parsons,  5  sion  of  the  contract  by  the  other 
W.  &  S.  (Pa.)  357;  In  re  Hartman's  party,  the  quantum  meruit  of  the 
Appeal,  3  Grant's  Gas.  (Pa.)  271;  services  rendered  may  be  recovered, 
Messier  v.  Messier  (R.  I.),  82  Atl.  not  to  exceed  the  amount  of  pros- 
996.  pective  benefits   receivable  under  the 

"Norton's     Estate     v.      McAlister     will.     Mug  v.  Ostendorf  (Ind.  App.), 
(Colo.  App.),  123  Pac.  963;  Hart  v.    96  N.  E.  780. 

Hart,  57  N.  J.  Eq.  543,  42  Atl.  153;        '"*' Chudnovski    v.    Eckels,    232    111. 
Anderson  v.  Eggers,  61  N.  J.  Eq.  85,     312,  83  N.  E.  846. 
47  Atl.  727,  revg.  63  N.  Y.  Eq.  264,        "Hall  v.   Cannon,  4  Harr.    (Del.) 
49  Atl.  578,  55  L.  R.  A.  570;  Cullen    360. 

V.  Woolverton,  65  N.  J.  L.  279,  47  "'Hall  v.  Cannon,  4  Harr.  (Del.) 
Atl.  626;  Gillan  v.  O'Leary,  124  App.  360;  Walsh  v.  Jenvey,  85  Md.  240, 
Div.  (N.  Y.)  498,  108  N.  Y.  S.  36  Atl.  817  (see  38  Atl.  938  for  dis- 
1024;  Shakespeare  v.  Markham,  10  senting  opinion).  See  also,  Ludlow 
Hun  (N.  Y.)  311;  Graham  v.  Gra-  Lumber  Co.  v.  Kuhling,  119  Kv.  251, 
ham's  Exrs.,  34  Pa.  St.  475;  Cross  v.  83  S.  W.  634,  115  Am.  St.  254  and 
Dunlavy     (Tenn.),    46    S.    W.    473;     note. 

Jones  V.   Jincey,  9  Grat.    (Va.)    708.        «» Eaton  v.  Woolly,  28  Wis.  628. 
See  also,  Deseumeur  v.  Rondel,  76  N. 


607  IMPLIED   CONTRACTS.  §    1 365 

tracting  to  perform  services  for  another  agrees  to  exercise  such 
care  and  dihgence  in  his  employment  as  men  of  common  care  and 
prudence  usually  exercise  in  their  own  business  of  a  similar  kind.^" 
Reasonable  skill  constitutes  the  measure  of  the  engagement  and 
responsibility  in  regard  to  the  work  undertaken  by  him,  unless  he 
professed  to  the  highest  degree  of  skill  in  regard  to  it,  and  ex- 
pressly engaged  to  do  it  in  the  best  manner.  If  a  party  is  em- 
ployed in  a  particular  business  or  work,  who  is  known  to  the 
party  employing  him  not  to  possess  any  skill  in  it,  or  that  it  is  not 
and  never  has  been  his  particular  art,  business  or  employment, 
and  the  employer,  with  full  notice  or  knowledge  of  that  fact, 
trusts  him  with  the  undertaking,  the  party  so  employed  is  bound 
only  for  a  reasonable  exercise  of  the  skill  which  he  possesses,  or 
the  judgment  which  he  can  employ  in  it,  and  if  any  loss  ensues 
from  his  lack  of  skill  in  it,  he  is  not  in  law  chargeable  with  it  or 
liable  for  it.**^  A  dentist  is  required  to  use  a  reasonable  degree 
of  care  and  skill  in  the  manufacture  and  fitting  of  artificial  teeth. "^ 
So  a  common  carrier  of  goods  or  passengers  may  be  sued  for  an 
injury  to  the  passenger  or  goods  carried,  resulting  from  its  neg- 
ligence either  in  assumpsit  for  the  breach  of  its  contract,  whether 
express  or  implied,  to  carry  safely,  or  in  an  action  on  the  case 
for  the  wrong.*^^ 

§  1365.  Same  subject  continued — When  silence  imports 
assent. — In  the  case  of  contracts  which  are  made  by  the  act 
of  the  parties,  and  not  by  proposal  and  acceptance  in  words, 
silence,  to  give  assent  must,  ordinarily  at  least,  be  silence  under 
such  circumstances  as  amounts  to  acquiescence."*  Whether  the 
silence  of  the  party,  with  knowledge  that  another  was  doing  val- 
uable work  for  his  benefit,  and  with  the  expectation  of  payment, 

•"  Leighton    v.    Sargent,    27    N.    H.  *"  McCombs  v.  McGratten,  3  Houst. 

460,   59  Am.   Dec.   388.     All   persons  (Del.)   35. 

impliedly    undertake,    when    they    en-  *"  Simonds  v.  Henry,  39  Maine  155, 

gage   to   do   work,   that   they  have   a  63  Am.  Dec.  611. 

reasonable    amount    of    skill    in    the  "  Chudnovski  v.  Eckels,  232  III.  312. 

employment    and    that    they    will    use  83  N.  E.  846.     See  also,  4  Elliott's  R. 

it,  and  also  engage  for  a  reasonable  R.    (2d   ed),    §§    1693,    1694  and   nu- 

amount    of    care,    and    a    failure    in  merous  cases  there  cited, 

these    respects    prevents    them    from  "  See   Coles   v.    Flack.  90   111.    App. 

recovering     the     contract-price,     but  545 ;    Murphy  v.   Northern   Steamship 

only    what    the    labor    is    reasonably  Co.,  131  Mich.  120,  91  N.  W.  142. 
worth.     Parker  v.   Piatt,  74  111.  430. 


§    1365  CONTRACTS.  608 

indicates  that  consent  which  gives  rise  to  the  inference  of  a  con- 
tract, must  be  determined  by  the  facts  and  circumstances  devel- 
oped in  each  case.^°  Thus  in  an  action  to  recover  the  value  of  one- 
half  of  a  party  wall  erected  partly  on  the  estate  of  the  plaintiff 
and  partly  on  that  of  the  defendant,  it  was  held  that  the  jury 
might  infer  a  promise  on  the  part  of  the  defendant  to  pay,  if  the 
plaintiff  undertook  and  completed  the  building  of  the  wall  with 
the  expectation  that  the  defendant  would  pay  him  for  it  and  the 
defendant  had  reason  to  know  that  the  plaintiff  had  so  acted  with 
that  expectation,  and  allowed  him  to  so  act  without  objection."" 
There  are  some  cases  so  free  from  ambiguity  that  a  court  can 
legally  presume  the  intention  of  the  parties  by  their  actions ;  but 
in  all  cases  of  doubt  it  is  well  settled  to  be  a  matter  proper  for  the 
determination  of  the  jury  from  the  evidence  whether  a  promise 
can  be  inferred  or  not."^ 

The  operation  of  the  foregoing  rules  is,  however,  confined 
within  the  limits  stated.  Furthermore,  certain  well  recog- 
nized exceptions  exist  thereto.  Before  there  can  be  a  re- 
covery for  services  so  rendered,  upon  the  theory  of  a  contract 
implied  in  fact  at  least,  it  must  appear  that  the  parties  had 
capacity  to  contract  and  that  their  minds  met  in  the  intention  to 
form  a  contractual  relation."*  To  render  the  beneficiary  liable 
as  a  debtor  under  an  implied  promise  it  must  be  shown  not  only 
that  the  services  were  valuable  but  also  that  they  were  rendered 
under  such  circumstances  as  to  raise  a  presumption  that  the  par- 
ties intended  and  understood  that  they  were  to  be  paid  for,  or, 
at  least,  that  the  circumstances  were  such  that  a  reasonable  man 
in  the  same  situation  with  the  person  who  received  and  was 
benefited  by  them  would  and  ought  to  understand  that  compensa- 
tion was  to  be  paid  for  such  services."^     The  mere  fact  that  the 

"See  Seals  v.  Edmondson,  IZ  Ala.  162,    16    Am.    Dec.    536.      See    also, 

295,  49  Am.  Rep.  51;  Botkin  v.  Mc-  Campbell  v.  Day,  90  111.  363;  Tascott 

Intyre,   81    Mo.    557.  v.   Grace,    12   111.   App.   639;    Wagner 

•^Day  V.   Caton,   119  Mass.  513,  20  v.  Edison  Elec.  &c.  Co.,  177  Mo.  44, 

Am    Rep.   347.     See   also,   Bailey  v.  75   S.  W.  966;   Hannah  v.  Woodson 

Rutjes,  86  N.  Car.  517.  (Va.),  25  S.  E.  1014. 

"Keel    V.    Larkins,    52    Ala.    493;  **  See  ante,  §  1358. 

Godfrey    v.    Haynes,    74    Maine    96;  "» Pew    v.     First     Nat.     Bank.     130 

Hart  V.   Hess,  41   Mo.  441 ;   Oatfield  Mass.  391 ;  Wagner  v.  Edison  El.  &c. 

V.  Warring,   14  Johns.    (N.  Y.)    188;  Co.,  177  Mo.  44,  75  S.  W.  966. 
Hart  V.  Boiler,  15  Serg.  &  R.   (Pa.) 


609  IMPLIED   CONTRACTS.  §    1 365 

one  performing  the  service  intended  to  charge  therefor  is  in  itself 
insufficient.  It  must  appear  that  under  all  the  facts  and  circum- 
stances both  he  and  the  beneficiary  understood  or  ought  to  have 
understood  that  compensation  was  to  be  made  for  his  services." 
Moreover,  even  though  services  are  rendered  at  the  request  of 
another,  yet  if  they  are  not  rendered  for  his  benefit  and  there  is 
no  legal  liability  upon  him  to  have  such  labor  performed,  and  the 
request,  in  view  of  the  circumstances,  does  not  necessarily  or  rea- 
sonably imply  an  employment  or  promise  to  pay  by  the  person 
making  the  request,  an  action  cannot  be  predicated  against  him 
upon  the  naked  request.''^  Thus,  an  implied  promise  to  pay  is  not 
ordinarily  raised  against  a  person  who  requests  a  physician  to  per- 
form services  for  a  patient,  unless  the  relation  of  the  person  to 
that  patient  is  such  as  to  raise  a  legal  obligation  on  his  part  to  call 
a  physician  and  pay  for  the  services.  When  a  husband  calls  in  a 
physician  to  attend  upon  his  wife,  or  where  a  father  calls  in  a 
physician  to  attend  upon  his  minor  child,  the  law  implies  a  prom- 
ise on  his  part  to  pay  the  reasonable  value  of  the  services  because 
there  is  a  legal  obligation  on  his  part  to  furnish  necessities  for 
the  patient's  benefit,  but  no  such  implication  arises  where  one  calls 
in  a  physician  to  attend  upon  a  stranger  or  upon  one  to  whom 
he  is  under  no  legal  obligation  to  furnish  such  necessary.'"  It 
has  been  held  that  a  special  request  by  a  father  to  a  physician  to 
attend  upon  his  son,  then  of  full  age  but  lying  sick  at  his  father's 
house,  raised  no  implied  promise  on  the  part  of  the  father  to  pay 

^"Wagner  v.  Edison  El.  &c.  Co.,  gether  of  minds*  is  therefore  ex- 
177  Mo.  44,  75  S.  W.  966;  Potter  v.  eluded  by  the  findings.  And  the  use 
Carpenter,  76  N.  Y.  157;  Harlev  v.  of  the  device  cannot  give  a  right  in- 
United  States,  198  U.  S.  229,  25  Sup.  dependent  of  the  understanding  un- 
Ct.  634.  In  the  above  case  it  is  said :  der  which  it  was  used.  49  L.  ed. 
"In  the  case  at  bar  the  Court  of  1029,  40  Ct.  CI.  525.  The  appellant 
Claims  finds  that  the  appellant  'sup-  should  have  been  explicit  in  his  de- 
posed and  understood  that  he  would  mand.  He  contends  that  he  was.  but 
be  entitled  to  compensation,  and  that  manifestly  he  was  not,  or  the  curious 
it  would  be  allowed  and  paid  by  the  opposition  between  his  expectation 
Secretary  of  the  Treasury;'  but  it  and  that  of  the  Secretary  of  the 
also  finds  that  'on  the  pa'rt  of  the  Treasury  and  Chief  of  Bureau  could 
Secretary  and  Chief  of  Bureau  (En-  not  have  occurred." 
graving  and  Printing)  it  was  sup-  "See  Webster  v.  Drinkwater,  5 
posed  and  understood  that  the  claim-  Greenl.  (Maine)  319,  17  Am.  Dec. 
ant   (appellant)   being  an  employe  of  238n. 

the  Treasury  Department  would  nei-  "  Meisenbach  v.   Southern   Cooper- 

ther    expect    nor    demand    remunera-  age  Co..  45  Mo.  App.  232;  Rankin  v. 

tion.'     That  there  was  'a  coming  to-  Beale,  68  Mo.  App.  325. 

39 — Contracts,  Vol.  2 


§    1366  CONTRACTS.  61O 

for  the  services  rendered."  It  has  also  been  held  that  a  master 
who  requests  a  physician  to  perform  services  for  his  servant 
does  not  unpliedly  promise  to  pay  for  them.''* 

§  1366.  Where  law  will  not  imply  a  promise  owing  to  re- 
lationship of  parties. — One  well  recognized  exception  exists 
to  the  general  rule  that  where  services  are  rendered  and  volun- 
tarily accepted  the  law  will  imply  a  promise  upon  the  part  of  the 
recipient  to  pay  for  them.  It  is  universally  recognized  that  where 
persons  are  living  together  as  one  household,  services  performed 
for  each  other  are  presumed  to  be  gratuitous  and  the  law  will  not 
imply  a  contract  to  pay  for  the  services  from  the  mere  fact  that 
they  have  been  rendered  upon  the  one  hand  and  benefits  received 
upon  the  other,  as  in  the  case  of  strangers. '^^  Nor  is  it  necessary 
that  a  blood  relationship  should  exist  between  the  parties.  The 
rule  applies  when  there  is  no  actual  blood  relationship  existing  be- 
tween the  parties,  provided  they  sustain  to  each  other  the  ordinary 
relation  of  members  of  the  same  family.'*'  In  case  services  are 
rendered  to  each  other  by  members  of  a  family  living  in  one 
household,  the  person  rendering  the  services  must  show  an  ex- 
press promise  on  the  part  of  the  party  served  to  pay  therefor  or 
such  facts  and  circumstances  as  will  authorize  the  jury  to  find 

"Rankin  v.  Beale,  68  Mo.  App.  the  master  authorizes  the  physician 
325;  Crane  v.  Baudoine,  55  N.  Y.  to  attend  to  the  case.  Weinsberg  v. 
256;  Dunbar  v.  Williams,  10  Johns.  St.  Louis  Cordage  Co.,  135  Mo.  App. 
(N.  Y.)  249;  Boyd  v.  Sappington,  4  553,  116  S.  W.  461. 
Watts  (Pa.)  247.  In  Smith  v.  Wat-  '=*  Hardiman's  Admr.  v.  Crick,  131 
son,  14  Vt.  332,  the  defendant  re-  Ky.  358,  115  S.  W.  236,  133  Am.  St. 
quested  the  plaintiff  to  render  medi-  248  and  note.  The  above  case  holds 
cal  services  to  his  brother,  but  it  did  that  the  relation  of  son-in-law  and 
not  appear  that  he  told  the  plaintiff  mother-in-law  is  too  remote  to  create 
that  he  would  pay  him  for  the  serv-  the  presumption  that  services  ren- 
ices,  or  that  he  said  anything  to  him,  dered  were  gratuitous.  Rockowitz 
or  did  anything  from  which  the  v.  Rockowitz  (Tex.  Civ.  App.),  146 
plaintiff  could  fairly  infer  that  he  in-  S.  W.  1070;  Morrissey  v.  Faucett,  28 
tended  to  pay  for  such  services.  The  Wash.  52,  68  Pac.  352;  Hodge  v. 
court  held  that  the  mere  fact  that  Hodge,  47  Wash.  196,  91  Pac.  764, 
the  defendant  calls  upon  the  plain-  11  L.  R.  A.  (N.  S.)  873n.  See  also, 
tiff  to  attend  his  brother  would  not  the  exhaustive  note  on  this  subject 
render  him  liable  to  pay  for  such  in  11  L.  R.  A.  (N.  S.)  873,  in  con- 
attendance,  nection  with  the  last  mentioned  case. 

"Jesserich  v.  Walruff,  61  Mo.  App.  '' Morrissey  v.    Faucett,    28   Wash. 

270.     It  is  otherwise,  however,  where  52,  68  Pac.  352;  Hodge  v.  Hodge,  47 

the   physician  before  he   renders  the  Wash.  196,  91  Pac.  764,  11  L.  R.  A. 

services  makes  it  plain  that  he  will  (N.  S.)  873  and  note.     See  also  note 

look  to  the  master  for  payment  and  in  133  Am.  St.  248. 


6ii 


IMPLIED   CONTRACTS. 


1366 


that  the  services  were  rendered  in  the  expectation  by  one  of  re- 
ceiving, and  by  the  other  of  making,  compensation  therefor." 
Thus,  it  has  been  held  that  the  relation  of  parent  and  child,  step- 
parent and  step-child,  brother  and  sister,  or  the  like,  existing  be- 
tween persons  living  together  in  the  same  household,  creates  a 
strong  presumption  that  no  payment  or  compensation  was  in- 
tended to  be  made  for  services  rendered  by  one  to  the  other,  be- 
yond that  received  at  the  time  they  were  rendered,  and  the  person 
claiming  pay  for  services,  in  such  a  case,  must  overcome  that  pre- 
sumption by  clear,  direct  and  positive  proof  that  the  relation  be- 
tween the  parties  was  that  of  debtor  and  creditor,  or  servant  and 
master."   The  closer  the  family  relation  the  stronger,  ordinarily 


"Cowan  V.  Musgrave,  IZ  Iowa  384, 
,35  N.  W.  496;  Scully  v.  ScuUv's  Exr., 
'28  Iowa  548;  Boiling  v.  Boiling's 
Admr.,  146  Ky.  313,  142  S.  W.  387; 
Covey  V.  Rogers  (Vt.),  81  Atl.  1130 
(holding  that  an  express  agreement 
need  not  be  proved)  ;  Morrissev  v. 
Faucett,  28  Wash.  52,  68  Pac.  352; 
Hodge  V.  Hodge,  47  Wash.  196,  91 
Pac.  764,  11  L.  R.  A.  (X.  S.)  873  and 
note. 

"Davies  v.  Davies,  9  C.  &  P.  87; 
Morris  v.  Simpson,  3  Houst.  (Del.) 
568  (suit  of  a  nephew  against  his 
uncle  for  board)  ;  Cantine  v.  Phil- 
lips' Admr.,  5  Har.  (Del.)  428  (no 
contract  implied  for  payment  of 
board  between  father  and  daughter, 
or  daughter's  husband  living  in  the 
father's  house)  ;  Collar  v.  Patterson, 
137  111.  403,  27  N.  E.  604  (where  a 
claimant  against  an  estate  performed 
household  services  for  the  deceased, 
who  was  the  husband  of  the  claim- 
ant's aunt)  ;  Hays  v.  McConnell,  42 
Ind.  285  (suit  of  a  niece  against  an 
uncle  for  services)  ;  Keegan  v.  Es- 
tate of  Malone,  62  Iowa  208,  17  N. 
W.  461  (brother  and  sister)  ;  Price 
v.  Price,  19  Ky.  L.  211,  39  S.  W. 
429  (brother  and  sister)  ;  Clark  v. 
Sanborn,  68  N.  H.  411,  36  Atl.  14 
(aunt  and  niece)  ;  Bundy  v.  Hyde,  50 
N.  H.  116  (brother-in-law  and  sister- 
in-law).  In  re  Pfohl's  Estate,  20 
Misc.  (N.  Y.)  627,  46  N.  Y.  S.  1086, 
2  Gibbons  230;  Havens  v.  Havens,  50 
Hun  (N.  Y.)  605,  21  N.  Y.  St.  958,  3 


N.  Y.  S.  219;  In  re  Wall's  Appeal,  111 
Pa.  St.  460,  5  Atl.  220,  56  Am.  Rep. 
288  (services  of  niece  for  uncle,  claim 
based  on  parol  promise  of  uncle  to 
provide  for  her  at  his  death)  :  Bliss 
v.  Hoyt's  Estate,  70  Vt.  534,  41  Atl. 
1026  (brother  and  sister)  ;  Fitch  v. 
Peckham,  16  Vt.  150;  Davis  v.  Goode- 
now,  27  Vt.  715  (action  brought  by  a 
grandchild  to  recover  for  services 
rendered  to  her  grandfather)  ;  Will- 
iams v.  Williams,  114  Wis.  79,  89 
N.  W.  835  (brother  and  brother.  In 
this  case  a  recovery  is  permitted)  ; 
Hall  v.  Finch,  29  Wis.  278,  9  Am.  Rep. 
559  (brother  and  sister)  ;  Ellis  v. 
Carv,  74  Wis.  176,  42  X.  W.  252,  4 
L.  R.  A.  55,  17  Am.  St.  125  (serv- 
ices rendered  by  a  step-daughter)  ; 
See  also,  Muldrick  v.  Galbraith,  31 
Ore.  86,  49  Pac.  886.  In  Dishrow  v. 
Durand,  54  N.  J.  L.  343,  24  Atl.  545, 
Zl  Am.  St.  678,  it  was  held  that  the 
family  relation  contemplated  in  the 
exception  is  not  limited  merely  by 
propinquity  of  kindred,  and  that  the 
exception  stands  upon  a  reason  which 
logically  extends  it  to  all  members  of 
a  household,  however  remote  their 
relationship,  and  even  to  those  who, 
though  not  of  kin,  stand  in  the  sit- 
uation of  kindred  in  one  household. 
In  Horner  v.  Webster,  ZZ  N.  J.  L. 
387,  Mr.  Justice  Dupue  referred  to 
the  principle  as  applying  to  all  cases 
where  the  parties  stand,  in  relation 
to  each  other,  of  support  on  one  side 
and  services  on  the  other. 


§    1367  CONTRACTS.  6l2 

is  the  presumption  that  services  are  gratuitous/*  Remoteness  of 
relationship  diminishes  the  force  of  the  presumption.*"  The  rela- 
tion of  step-son-in-law  and  step-mother-in-law  has  been  held  en- 
tirely too  remote  to  create  the  presumption  that  services  rendered 
by  the  step-son-in-law  were  a  mere  gratuity.*^  Membership  in  the 
same  family  rather  than  the  mere  degree  of  relationship  is,  how- 
ever, the  true  and  ultimate  test.*^  A  family  relationship  must  ex- 
ist. Thus,  where  a  party  went  to  live  in  her  brother-in-law's  fam- 
ily, and  was  received  and  entertained  there,  not  as  a  member  of 
the  family,  but  as  a  boarder,  and  the  board  was  furnished  with  the 
hope  of  compensation  on  the  one  hand,  and  the  expectation  to 
award  it  upon  the  other,  a  liability  was  created  for  payment  of 
such  board.*^ 

§  1367.    Parent  and  child — Rule  as  to  services  rendered. — 

If  a  son  renders  service  to  his  father  no  contract  of  hiring  is  in- 
ferred.** The  law  will  not  imply  an  agreement  on  the  part  of  a 
parent  to  pay  a  daughter,  who  is  living  in  the  family,  wages  for 
ordinary  services,  such  as  housekeeping.*^     Where  the  relation  of 

^'Quigly    V.    Harold,    22    111.    App.  367,    7    Atl.    61;    Briggs'    Estate    v. 

269;   Woods   v.   Land,   30   Mo.   App.  Briggs,  46  Vt.  571. 

176;  Lynn  v.  Smith,  35  Hun  (N.  Y.)  ^Huffman  v.  Wyrick,  5  Ind.  App. 

275.  183,  31   N.  E.  823.     In  an  action  to 

^Hill  V.  Hill,   121  Ind.  255,  23  N.  recover     for    services     rendered    as 

E.  87;   Shane  v.  Smith,  2)7  Kans.  55,  nurse  to  an   aunt,   who   was   an   in- 

14  Pac.  477;  Smith  v.  Myers,  19  Mo.  valid    for    several   years    immediately 

433;    Woods   v.    Land,    30   Mo.    App.  preceding  her  death,  and  part  of  the 

176;    Thornton    v.    Grange,    66    Barb,  time  quite  helpless,  it  was  held  that  it 

(N.  Y.)    507;  Gorrell  v.  Taylor,  107  was  not  to  be  inferred,  simply  from 

Tenn.   568,   64   S.   W.  888;    Kessler's  the    relation    which    existed    between 

Estate,  87  Wis.  660,  59  N.  W.  129,  41  the  parties,  that  the  services  were  in- 

Am.    St.   74.  tended    to   be    gratuitous,    and    were 

"  Hardiman's   Admr.   v.   Crick,   131  rendered  with  no  view  of  compensa- 

Ky.    358,    115    S.    W.    236,    133    Am.  tion.     Bouic  v.  Maught,  76  Md.  440, 

St.    248n.      To    same    effect,    In    re  25  Atl.  423. 

Succession    of    Stuart,    48   La.    Ann.  **  Guenther  v.  Birkicht's  Admr.,  22 

1484,   21    So.   29    (step-daughter   and  Mo.  439  (where  a  step-son  continued 

step-father).  to  reside  in  the  family  of  his  step- 

*^  James  v.  Gillen,  3  Ind.  App.  472,  father  after  coming  of  age)  ;   Hert- 

30   N.    E.   7;    Wence  v.   Wykoff,    52  zog    v.    Hertzog,    29    Pa.    St.    465; 

Iowa  644,  3  N.  W.  685 ;  Gill  v.  Stay-  Newell   v.   Lawton,  20  R.   I.   307,  38 

lor,  93  Md.  453,  49  Atl.  650;   Cowell  Atl.    946     (mother    and    daughter); 

V.  Roberts'  Exrs.,  79  Mo.  218;  Calla-  Sprague     v.     Waldo,     38     Vt.     139 

ban   V.    Riggins,    43    Mo.    App.    130;  (where    a    son-in-law    took    up    his 

Moore  v.   Renick,  95   Mo.   App.  202,  abode    with    his    father-in-law). 

68   S.   W.  936;    Disbrow   v.   Durand,  *^  Williams  v.  Resener,  25  Ind.  App. 

54  N.  J.  L.  343,  24  Atl.  545,  2>Z  Am.  132,  56  N.  E.  857  (daughter  continu- 

St.  678;  Curry  v.  Curry,  114  Pa.  St.  ing  to  render  service  after  arriving 


6i3 


IMPLIED   CONTRACTS. 


§    1367 


parent  and  child  is  shown  to  exist  the  law  will  not  presume  any 
other.*"  This  is  true  even  though  the  child  is  an  adult,  and  when 
it  continues  to  live  with  its  parents  as  a  member  of  the  family 
without  any  contract  or  understanding  that  the  parent  shall  pay 
for  its  services,  or  receive  pay  for  the  child's  maintenance,  the 
law  will  not  imply  a  promise  to  pay  on  either  side."  The  pre- 
sumption is  that  the  child  renders  the  services  gratuitously,  or  in 
consideration  of  having  a  home  with  his  parents,  of  being  fur- 
nished with  board  and  clothing,  and  of  receiving  care  and  atten- 
tion in  case  of  sickness.  In  order  to  sustain  an  action  for  com- 
pensation for  services  by  a  child  against  the  father  it  must  be 
shown  by  the  evidence  that  a  contract  existed  between  the  parties 


at  full  age)  ;  Gardner's  Admr.  v. 
Schooley,  25  N.  J.  Eq.  150;  Dye  v. 
Kerr,  15  Barb.  (N.  Y.)  444;  Barrett 
V.  Barrett,  5  Ore.  411. 

*"  Sprague  v.  Nickerson,  1  U.  C. 
Q.  B.  284;  Hudson  v.  Hudson,  90 
Ga.  581,  16  S.  E.  349;  Perry  v.  Perry, 
2  Duv.  (Ky.)  312;  Marple  v.  Morse, 
180  Mass.  508,  62  N.  E.  966;  Erhart 
V.  Dietrich,  118  Mo.  418.  24  S.  W. 
188;  Lawrence  v.  Bailey,  84  Mo.  App. 
107;  Brock  v.  Cox,  38  Mo.  App.  40; 
Prickett  v.  Prickett.  20  N.  J.  Eq. 
478;  Dye  v.  Kerr,  15  Barb.  (N.  Y.) 
444;  In  re  Candor's  Appeal,  5  Watts. 
&  S.  (Pa.)  513.  In  re  Mosteller's 
Appeal,  30  Pa.  St.  473;  Taylor  v. 
Taylor,  1  Lea  (Tenn.)  83;  Stone- 
burner  V.  Motley,  95  Va.  784,  30  S. 
E.  364;  Stansbury  v.  Stanbury's 
Admrs.,  20  W.  Va.  23.  Care  of  an 
aged  and  infirm  father  by  a  daughter 
is  usually  dictated  by  the  better  in- 
stincts of  a  common  humanity,  and  is 
so  rarely  bestowed  upon  contract 
that  no  implied  contract  can  be  predi- 
cated upon  its  bestowal  or  receipt. 
Wright  V.  Senn  Estate,  85  Alich.  191, 
48  N.  W.  545. 

"Faloon  v.  Mclntyre,  118  111.  292, 
8  N.  E.  315 ;  Hays  v.  Seward,  24  Ind. 
352 ;  Hays  v.  McConnell.  42  Ind.  285 ; 
Williams  v.  Resener,  25  Ind.  App. 
132.  56  N.  E.  857;  Spitzmiller  v. 
Fisher,  11  Iowa  289.  42  N.  W.  197; 
Wilson  V.  Wilson,  52  Iowa  44,  2  N. 
W.  615;  Turner's  Admr.  v.  Turner, 
18  Ky.  L.  822.  38  S.  W.  506;  Griggs 
V.   Love,    13   Ky.   L.    (abstract)    175; 


Bantz  V.  Bantz,  52  Md.  686;  Kostuba 
V.  Miller,  137  Mo.  161,  38  S.  W.  946; 
Louder  v.  Hart,  52  Mo.  App.  Ill; 
Moore  v.  Moore,  58  Nebr.  268,  78  N. 
W.  495 ;  Munger  v.  Munger,  2>l  N.  H. 
581;  Smith  v.  Smith,  30  N.  J.  Eq. 
564;  Re  Pfohl,  20  Misc.  (N.  Y.)  627. 
46  N.  Y.  S.  1086,  2  Gibb.  230;  Avitt 
V.  Smith,  120  N.  Car.  392,  27  S.  E. 
91 ;  Leidig  v.  Coover's  Exrs.,  47  Pa. 
534;  Newell  v.  Lawton.  20  R.  I.  307, 
38  Atl.  946;  Gorrell  v.  Tavlor,  107 
Tenn.  568,  64  S.  W.  888;  Harshber- 
ger's  Admr.  v.  Alger,  31  Grat.  (Va.) 
52.  Compare  also.  King  v.  Sow,  1 
B.  &  Aid.  178.  A  son  or  daughter 
residing  with  a  parent  does  not  cease 
to  be  a  member  of  the  family  when 
they  respectively  arrive  at  the  age  of 
twenty-one  or  eighteen  from  that  fact 
alone.  Chicago  &c.  R.  Co.  v.  Chis- 
holm,  79  111.  584;  Donovan  v.  Dris- 
coll,  116  Iowa  339,  90  N.  W.  60;  Put- 
nam v.  Town,  34  Vt.  429.  Where 
the  child,  after  attaining  majority, 
continues  to  reside  in  the  father's 
family  and  work  for  him,  the  law 
will  not  imply  any  change  in  the  re- 
lationship. In  order  to  entitle  the 
son  to  recover  for  such  services  there 
must  be  proof  either  of  an  express 
agreement,  or  that  both  parties  un- 
derstood that  they  were  to  be  paid 
for.  In  re  Mosteller's  .Appeal.  30  Pa. 
St.  473;  Pellage  v.  Pellage,  32  Wis. 
136;  Tyler  v.  Burrington.  39  Wis. 
Zld;  Pritchard  v.  Pritchard.  69  Wis. 
m,  34  N.  W.  506.  Even  when  the 
parent  goes  to  live  with  the  child  the 
law    does     not     ordinarily    imply    a 


'^3^7 


CONTRACTS. 


614 


to  pay  for  such  services. ^^  The  declaration  of  a  parent  that  his 
child  should  be  well  paid  for  services  rendered,  or  that  it  deserved 
pay,  and  that  he  intended  to  provide  for  it,  is  not  to  be  regarded 
as  a  contract  or  sufficient  evidence  that  such  a  contract  existed.®^ 
It  is  not  necessary,  however,  that  the  contract  be  definite  and  spe- 
cific in  all  particulars.  All  that  is  necessary  to  entitle  the  child  to 
recover  is  evidence  that  there  existed  between  the  parent  and  such 
child  a  mutual  understanding  that  the  latter  was  to  be  paid  for 
services  rendered.""     In  other  words,  the  promise  may  be  inferred 


promise  by  the  former  to  pay  the  lat- 
ter for  board  and  services.  Brock  v. 
Cox,  38  Mo.  App.  40;  Marple  v. 
Morse,  180  Mass.  508,  62  N.  E.  966; 
Hallock  V.  Teller,  2  Dem.  Surr.  (N. 
Y.)  206;  Lynn  v.  Lynn,  29  Pa.  369; 
Pritchard  v.  Pritchard,  69  Wis.  373, 
34  N.  W.  506.  See,  however,  Swit- 
zer  V.  Kee,  146  111.  577,  35  N.  E. 
160. 

^O'Kelly  V.  Faulkner,  92  Ga.  521, 
17  S.  E.  847;  Collins  v.  Williams,  21 
Ind.  App.  227,  52  N.  E.  92 ;  McGarvy 
V.  Roods,  73  Iowa  363,  35  N.  W.  488 
(daughter  after  becoming  of  age)  ; 
Spitzmiller  v.  Fisher,  77  Iowa  289, 
42  N.  W.  197  (where  a  young  woman 
performed  services  in  her  father's 
family  without  any  contract)  ;  Ionia 
&c.  Sav.  Bank  v.  McLean,  84  Mich. 
625,  48  N.  W.  159 ;  Coe  v.  Wager,  42 
Mich.  49,  3  N.  W.  248;  Penter  v. 
Roberts,  51  Mo.  App.  222  (a  son 
living  apart  from  his  father  performs 
service,  presumption  that  they  are 
gratuitous)  ;  Bonney  v.  Haydock,  40 
N.  J.  Eq.  513,  4  Atl.  766  (son-in- 
law)  ;  Smith  v.  Smith's  Admr.,  30 
N.  J.  Eq.  564  (daughter  after  becom- 
ing of  age)  ;  Wilkes  v.  Cornelius,  21 
Ore.  348,  28  Pac.  135  (claim  by  a 
child  against  the  estate  of  a  deceased 
parent  for  board  and  lodging  fur- 
nished the  latter)  ;  Zimmerman  v. 
Zimmerman,  129  Pa.  St.  229,  18  Atl. 
129,  15  Am.  St.  720  (son)  ;  Young's 
Estate,  148  Pa.  St.  573,  24  Atl.  124 
(a  son-in-law's  claim  against  the 
estate  of  a  decedent  based  principally 
upon  services  rendered  by  his  wife 
rests  upon  the  same  footing  as  that 
of  any  other  child  or  member  of  the 
family)  ;  Murphy  v.  Murphy,  1  S. 
Dak.  316,  47  N.  W.  142,  9  L.  R.  A. 
820;  Sawyer  Hebard's  Estate,  58  Vt. 
375,   3   Atl.   529    (son-in-law);    Hall 


v.  Finch,  29  Wis.  278,  9  Am.  Rep. 
559.  In  Titman's  Admr.  v.  Titman, 
64  Pa.  St.  480,  the  claim  was  for  serv- 
ices rendered  by  the  plaintiff  to  her 
father  when  she  was  eighteen  years 
of  age.  Judge  Sharswood  said:  "The 
presumption  prima  facie  was  un- 
doubtedly against  the  plaintiff's  claim, 
and  the  onus  was  therefore  on  her  to 
show,  by  clear  and  distinct  evidence, 
a  contract  by  her  father  to  pay  her 
wages."  The  rule  that  as  between 
parent  and  child  there  can  be  no  re- 
covery for  services,  boarding  and  the 
like,  in  the  absence  of  an  express 
contract  to  pay  therefor,  does  not  ap- 
ply to  a  son-in-law  who  boards  his 
father-in-law.  Perkins  v.  Hasbrouck, 
Admr.,  155  Pa.  St.  494,  26  Atl.  695. 
In  Smith  V.  Milligan,  43  Pa.  St.  107, 
it  was  said  by  Strong,  J. :  "Our  ob- 
servation of  common  usage  does  not 
convince  us  that  fathers-in-law  per- 
manently board  with  sons-in-law 
without  any  understanding  that  com- 
pensation shall  be  made.  The  case, 
therefore,  is  not  within  the  excep- 
tion." But  where  he  seeks  to  recover 
for  services  rendered  by  his  wife  he 
has  no  greater  right  than  she.  Patton 
v.  Conn,   114  Pa.   St.   183,  6  Atl.  468. 

"'Dolbeare  v.  Coultas,  94  111.  App. 
55;  Donovan  v.  Driscoll,  116  Iowa 
339,  90  N.  W.  60;  Reynolds  v.  Reyn- 
olds, 92  Ky.  556,  13  Ky.  L.  793,  18 
S.  W.  517.  See  also,  McClure  v. 
Lenz,  40  Ind.  App.  56,  80  N.  E.  988. 
In  Dodson  v.  McAdams,  96  N.  Car. 
149,  2  S.  E.  453,  60  Am.  Rep.  408, 
the  grand-daughter  sued  for  services 
and  it  was  shown  that  the  testator 
said  she  was  a  good  girl  and  should 
be  paid  for  her  work.  The  recovery 
was  denied. 

"**  Friermuth  v.  Friermuth,  46  Cal. 
42;    Miller    v.    Miller,    16    111.    296; 


6i5 


IMPLIED    CONTRACTS. 


§    1367 


from  the  circumstances  of  the  case.®*  These  circumstances  must 
be  of  such  a  nature  and  character  as  to  overcome  the  presumption 
arising  from  the  relationship  of  the  parties,  and  justify  the  infer- 
ence that  compensation  was  intended.""  The  presumption  as  be- 
tween father  and  son  is  only  a  prima  facie  bar  to  a  recovery,  which 
may  be  overcome  by  proof  that  shows  that  the  presumption  does 
not  apply,  and  that  the  parties  mutually  understood  that  payment 
was  to  be  made.°^  Thus,  when  the  parent  requested  the  child 
to  remain  at  home,  stating  that  she  would  be  well  paid  for  all  she 
did  there,  the  child  was  held  entitled  to  recover."^  The  courts 
make  a  distinction  between  cases  where  the  child  has  become  of 
age,  been  away  from  home,  established  a  business  and  supported 
himself,  and  then  returns  upon  the  request  of  the  parent,  and  one 
where  the  child  has  continued  to  live  with  the  parent  after  arriv- 
ing of  age,  and  has  never  had  any  other  horne.^'     Circumstances 


Freeman  v.  Freeman,  65  111.  106; 
Schwachtgen  v.  Schwachtgen,  65  111. 
App.  127;  Neish  v.  Gannon,  98  111. 
App.  248;  Smith  v.  Denman,  48  Ind. 
65;  Hilbish  v.  Hilbish,  71  Ind.  27; 
Story  V.  Story.  1  Ind.  App.  284,  27 
N.  E.  573 ;  McCormick  v.  McCormick, 
1  Ind.  App.  594,  28  N.  E.  122;  Har- 
rison V.  Harrison,  124  Iowa  525,  100 
N.  W.  344;  Saunders  v.  Saunders,  90 
Maine  284,  38  Atl.  172;  Reando  v. 
Misplav,  90  Mo.  251,  2  S.  W.  405.  59 
Am.  Rep.  13;  Hart  v.  Hess,  41  Mo. 
441 ;  Shannon  v.  Carter,  99  Mo.  App. 
134,  72  S.  W.  495;  Ronsiek  v.  Bov- 
er Schmidt,  63  Mo.  App.  421 ;  Wood 
V.  Flanery,  89  AIo.  App.  632 ;  DeCamp 
V.  Wilson,  31  N.  J.  Eq.  656;  Green 
V.  Roberts,  47  Barb.  (N.  Y.)  521;  In 
re  Sworthout.  38  Misc.  (N.  Y.)  56, 
76  N.  Y.  S.  961 ;  White  v.  Almy  (R. 
I.),  82  Atl.  397;  Putnam  v.  Town,  34 
Vt.  429;  Morrissev  v.  Faucett,  28 
Wash.  52,  68  Pac.  352;  Broderick  v. 
Broderick,  28  W.  Va.  378;  Byrnes 
V.  Clark,  57  Wis.  13,  14  N.  W.  815; 
Gearv  v.  Geary,  67  Wis.  248,  30  N, 
W.  601. 

« Hilbish  V.  Hilbish,  71  Ind.  27; 
Storv  V.  Storv,  1  Ind.  App.  284,  27 
N.  E.  573.  See  also,  White  v.  Almy 
(R.  I.),  82  Atl.  397. 

"  Smith  V.  Denman,  48  Ind.  65.  A 
parent  may  make  a  valid  contract 
with  a  child  to  pay  for  support  and 


care,  and  there  is  no  presumption  of 
law  arising  from  the  relationship 
against  the  existence  of  such  a  con- 
tract. Ulrich  V.  Ulrich,  136  N.  Y. 
120,  32  N.  E.  606,  18  L.  R.  A.  TH .  See 
also,  Boiling  v.  Boiling's  Admr.,  146 
Ky.  313,  142  S.  W.  387. 

"Neish  V.  Gannon,  98  111.  App. 
248 ;  Hart  v.  Hess,  41  Mo.  441 ;  Sea- 
vey  V.  Seavey,  Zl  N.  H.  125;  Ridg- 
way  V.  English,  22  N.  J.  L.  409. 

"Hill  V.  Hill,  45  Ind.  App.  99,  90 
N.  E.  331. 

"'Robnett  v.  Robnett,  43  111.  App. 
191;  Marion  v.  Farnan,  68  Hun  (N. 
Y.)  383,  52  N.  Y.  St.  314,  22  N.  Y. 
S.  946;  Robertson  v.  Robertson 
(Tenn.),  46  S.  W.  1029.  As  was 
said  in  Freeman  v.  Freeman,  65  111. 
106:  "After  leaving,  the  presumption 
arises  that  he  henceforth  intended  to 
labor  and  accumulate  property  for 
himself ;  and  when  he  returned,  at 
the  solicitation  of  the  father,  it  is  but 
a  reasonable  presumption  the  father 
intended  to  pay.  and  he  to  receive  pay 
for  his  labor,  either  in  money  or  by 
a  devise  in  his  father's  will."  Wilsev 
V.  Franklin,  57  Hun  (N.  Y.) 
382,  10  N.  Y.  S.  833,  where  a  daugh- 
ter, for  many  years  after  becoming 
of  age,  ceased  to  be  a  member  of  her 
mother's  family,  and  went  back  to 
live  with  her  mother,  at  her  mother's 
solicitation,  to  do  the  work  of  nurse, 


I -.68 


CONTRACTS. 


6l6 


which  show  an  unusual  burden  assumed  by  the  son,  or  special  ad- 
vantages reaped  by  the  father,  are  sometimes  favorably  construed 
in  the  child's  favor.^^  Where  a  son,  after  breaking  up  his  home 
and  removing  himself  and  family  to  the  residence  of  his  infirm 
father,  upon  an  express  promise  by  the  latter  to  will  him  his 
home-place  if  he  would  attend  to  and  take  care  of  him  for  life, 
performed  his  part  of  the  agreement,  but  the  father,  having  be- 
come insane,  failed  to  make  the  promised  will,  it  was  held  that  the 
son  could  recover  of  the  administrator,  upon  a  quantum  meruit, 
the  actual  value  of  his  services.®^ 

§  1368.  Persons  standing  in  loco  parentis. — The  rule  in- 
cludes de  facto  members  of  a  family  irrespective  of  relationship 
by  blood  or  affinity.®^  The  same  rule  applies  to  children  by  adop- 
tion as  to  children  by  blood. ^'^  Where  the  services  are  rendered 
to  one  standing  in  loco  parentis,  there  is  no  implied  promise  to  pay 


housekeeper  and  servant.  Compare 
with  Irwin  v.  Jones,  46  Ind.  App. 
588,  92  N.  E.  787  (child  after  mar- 
riage returned  and  cared  for  his 
foster  father  during  old  age). 

**  Adams  v.  Adams'  Admr.,  23  Ind. 
50,  where  the  son  assumed  entire  con- 
trol and  management  of  the  business, 
worked  the  farm  and  added  largely 
to  the  family  profits  by  his  success- 
ful management.  Brown  v.  Knapp, 
79  N.  Y.  136. 

"  The  amount  must  not  exceed  the 
value  of  the  home  place,  and  he 
must  account  for  and  have  deducted, 
from  the  full  amount  he  was  entitled 
to,  all  he  had  received  from  the  prop- 
erty of  the  father  over  and  above 
what  was  necessary  for  the  support 
and  maintenance  of  the  latter  during 
his  lifetime.  Hudson  v.  Hudson, 
87  Ga.  678,  13  S.  E.  583,  27 
Am.  St.  270.  It  is  impossible  to  lay 
down  precise  or  accurate  rules  to 
govern  all  the  cases  which  may  arise. 
Each  case  will  necessarily  depend 
upon  its  own  special  circumstances. 
Hart  V.  Hess,  41  Mo.  441 ;  Guild  v. 
Guild,  15  Pick.  (Mass.)  129.  Action 
by  a  daughter  against  the  administra- 
tor of  her  father's  estate.  Held  com- 
petent for  the  jury  to  infer  a  prom- 
ise from  all  the  circumstances.  If 
the  services  were  of  such  a  nature 
as  to  lead  to  a  reasonable  belief  that 


it  was  the  understanding  of  the  par- 
ties that  pecuniary  compensation 
should  be  made  for  them,  then  the 
jury  should  find  an  implied  prom- 
ise, and  a  quantum  meruit. 

"'Walker  v.  Taylor,  28  Colo.  233, 
64  Pac.  192 ;  Deppen  v.  Personette, 
93  111.  App.  513;  Dawdy  v.  Nelson, 
12  111.  App.  74;  Martin  v.  Martin, 
101  111.  App.  640;  Hays  v.  McCon- 
nell,  42  Ind.  285;  Waechter  v.  Wal- 
ters, 41  Ind.  App.  408,  84  N.  E.  22; 
Ottoway  V.  Milroy,  144  Iowa  631,  123 
N.  W.  467;  Smith  v.  Johnson,  45 
Iowa  308;  Frailey's  Admr.  v.  Thomp- 
son, 20  Ky.  L.  1179,  49  S.  W.  13; 
Sword  V.  Keith,  31  Mich.  247 ;  Thorp 
V.  Bateman,  Z1  Mich.  68,  26  Am. 
Rep.  497;  Fitzpatrick  v.  Dooley,  112 
Mo.  App.  165,  86  S.  W.  719;  Schrimpf 
V.  Settegast,  36  Tex.  296.  In  Gra- 
ham V.  Stanton,  177  Mass.  321,  58  N. 
E.  1023,  Holmes,  C.  J.,  said:  "It 
would  be  a  strong  thing  to  say  that 
an  actual  contract  to  pay  for  services 
could  be  inferred  from  the  conduct 
of  one  who  takes  a  child  into  his 
household  under  the  name  of  daugh- 
ter. The  fact  of  his  calling  her  so 
implies  that  he  is  not  purporting  to 
enter  into  relations  with  her  on  a 
business  footing." 

"^  Mountain  v.  Fisher,  22  Wis.  93. 
See  also,  ante,   §   1367. 


6l7  IMPLIED    CONTRACTS.  §    1 369 

for  them,  although  such  presumption  may  be  overcome  by  the 
facts  and  circumstances  of  the  case.* 

§  1369.  Same  subject  continued — Further  illustrations. — 
In  an  action  of  assumpsit  by  a  party  for  board  and  attendance  of 
his  wife's  mother  during  sickness,  she  having  been  taken  sick 
while  on  a  visit  to  his  house,  and  furnished  with  board  and  attend- 
ance for  about  four  or  five  weeks,  and  dying  soon  after  her  return 
to  her  son's  house,  where  she  usually  resided,  it  was  held  that  the 
estate  was  not  liable  for  food,  attendance  and  necessaries  fur- 
nished, and  that  if  the  son-in-law  meant  to  charge  her  therefor 
he  ought  to  have  given  her  notice."  Where  a  girl  lived  with  her 
grandfather  for  nine  years  without  any  contract  as  regards  com- 
pensation, and  besides  perfonning  household  duties  rendered 
assistance  in  the  transaction  of  his  business,  claim  for  compensa- 
tion made  against  the  estate  at  her  grandfather's  death  was  disal- 
lowed, although  there  was  evidence  of  declarations  by  the  grand- 
father that  she  should  be  well  paid  for  her  services.^  Where  per- 
sons, having  gone  through  a  form  of  marriage,  live  together  as 
man  and  wife,  and  the  woman,  after  the  man's  death,  leams  for 
the  first  time  that  he  had  a  wife  living  and  not  divorced  from  him, 
she  cannot  recover  from  his  administrator  for  her  services  as 

^  Hurst    V.    Lane,    105    Ga.    506,    31  ness  or  charity,  has  received  an  or- 

S.  E.  135;  Howard  v.  Randolph,  134  phan  child  into  his  family,  and  treats 

Ga.   691,  68   S.    E.   586,  29  L.    R.   A.  it    as    a    member    of    his    family,    he 

(N.  S.)  294  (foster-child)  ;  McClure  stands  toward  it  in  loco  parentis,  so 

V.   Lenz,  40   Ind.   App.   56,  80   N.    E.  long  as  it  remains  in  his  family,  and 

988      (foster-child.       Statements     by  he    is    bound    for    the    maintenance, 

parents   that   they    intended    to   com-  care  and  education  of  such  child,  and 

pensate  child  and  that  she  had  earned  entitled  to  its  services  without  other 

it    held    not    to    show    a    contract)  ;  compensation,    unless    he    has    other- 

Waechter   v.    Walters,   41    Ind.    App.  wise  stipulated.     HoRg  v.   Laster.  56 

408.  84  N.   E.  22    (foster-child);    Ir-  Ark.  382,  19  S.  W.  975;   Schrimpf  v. 

win   v.   Jones,   46   Ind.   App.   588,  92  Settegast,    36    Tex.    296.      See    also, 

N.    E.    787    (foster-child);    Wise    v.  Succession  of  Daste,  125  La.  657.  51 

Outtrim,    139   Iowa    192,    117   N.   W.  So.  677,  29  L.  R.  A.  (N.  S.)  297. 
264,    130   Am.    St.   301n    (no    implied        "  Mariner  v.  Collins.  5  Harr.  (Del.) 

contract  to  pay  for  services  rendered  290.     To    same    effect,    Boughton    v. 

by  a  young  girl  who  went  to  live  with  Francis,   111    Mich.  26,  69  N.  W.  94, 

decedent's  family  at  an  early  age  and  suit  by  daughter-in-law  against  estate 

continued  to  reside  with  such  family  of  father-in-law. 

until  the  time  of  her  marriage  at  the        ^Barhite's  Appeal.  126  Pa.  St.  404, 

age  of  twentv-four)  ;   Fross'  Appeal,  17  Atl.  617.     To  same  effect,  Harris 

105  Pa.  St.  258;  Jackson  v.  Jackson,  v.  Smith,  79  Mich.  54.  44  N    W    169 

96  Va.  165,  31  S.  E.  78.     The  weight  6  L.   R.    A.   702    (step-daughter   and 

of  authority  establishes  the  doctrine  step-father), 
that   when   a   person,   through   kind- 


§    13/0  CONTRACTS.  6l8 

housekeeper  under  an  implied  contract.  The  relations  of  the 
parties,  and  the  circumstances  under  which  the  work  was  per- 
formed, negative  any  implication  of  an  agreement  or  promise  that 
it  should  be  paid  for.*  \\'here  a  man  and  woman  mutually 
agreed  to  live  together  as  husband  and  wife  without  being  mar- 
ried, and  continued  the  unlawful  relation  about  thirteen  years, 
the  woman  cannot  recover  on  an  implied  promise  for  services  ren- 
dered in  keeping  house  in  that  relation,  or  for  money  delivered  to 
the  defendant  to  be  used  toward  paying  their  family  expenses.' 

§  1370.  Same  subject  continued — During  illicit  cohabita- 
tion.— Neither  is  there  a  contract  implied  by  law  to  pay  for 
services  rendered  between  parties  living  together  in  unlawful 
cohabitation.®  This  is  the  general  rule  supported  by  the  weight 
of  authority,  but  there  are  some  cases  which  draw  a  distinction 
where  concubinage  was  not  the  motive  and  the  services  were 
merely  incidental. 

§  1371.  Same  subject  continued — In  expectation  of  mar- 
riage.— It  has  also  been  held  that  one  who  renders  services 
to  another  under  promise  and  in  expectation  of  marriage  with  the 

*  Cooper  V.  Cooper,  147  Mass.  370,  31  App.  Div.   (N.  Y.)  484,  52  K  Y. 

17  N   E  89^  9  Am   St  721.    See  also,  S.  519;  Emmerson  v.  Botkm,  26  Okla. 

Waif  V.' Wail,  69  111.  App.  389.  218,   109   Pac.   531,  29  L.   R.  A.    (N. 

^  Brown  v.  Tuttle,  80  iMaine  162,  13  S.)  786,  138  Am.  St.  953;  Swires 
Atl  583.  To  same  effect,  Schmitt  v.  v.  Parsons,  5  Watts  &  S.  (Pa.)  357 
Schneider  109  Ga.  628,  35  S.  E.  See  also,  Simpson  v.  Normand,  51 
145  If  there  had  been  an  express  La.  Ann.  1355,  26  So.  266,  where  re- 
promise  the  court  would  not  enforce  covery  was  denied  on  the  ground  that 
it  as  the  parties  were  living  together  the  claim  for  services  as  housekeeper 
in  unlawful  relations,  and  the  serv-  was  inseverable  from  and  blended 
ices  rendered  and  the  money  fur-  with  remuneration  as  a  mistress, 
nished  were  in  furtherance  thereof.  See,  however,  Viens  v.  Brickie,  S 
Gilmore  v.  Woodcock,  69  Maine  118.  Mart.  CLa.)  11,  in  which  it  was  held 
31  Am.  Rep.  255;  White  v.  Buss.  3  that  recovery  might  be  had  on  an 
Cush.  (Mass.)  448.  See  also,  fol-  implied  contract  when  it  did  not  ap- 
lowing  sections  on  Services  Rendered  pear  that  cohabitation  was  the  motive 
During  Illicit  Cohabitation,  §  1370  et  of  the  parties  coming  together.  To 
seq  See  also  ch.  21,  Legality  of  Ob-  same  effect,  In  re  Pereuilhet's  Suc- 
ject.  cession,  23  La.  Ann.  294,  8  Am.  Rep. 

'Walraven     v.     Jones,     1     Houst.  595,  holding  that  a  nurse  and  house- 

(Del  )    355 ;    McDonald    v.    Fleming,  keeper,   and    who  also   was   the   niis- 

12   B     Mon.    (Ky.)    285;    Stringer   v.  tress    of    her    charge,    might    recover 

Mathis,  41   La.  Ann.  985,  7  So.  229;  on   an   implied   contract    for    services 

Brown'  v.    Tuttle,   80    Maine    162,    13  rendered  when  it  did  not  appear  that 

Atl.  583;  Robbins  v.  Potter,  11  Allen  cohabitation   was  the  object  of  their 

(Maiss.)' 588;   Vincent   v.   Morriarty,  living  together  in  the  first  instance. 


6i9 


IMPLIED   CONTRACTS. 


§    1372 


latter,  but  without  expectation  of  compensation  in  money  or 
money's  worth,  cannot,  upon  a  breach  of  the  promise  to  marry, 
recover  the  value  of  such  services  on  the  ground  that  there  was 
an  impHed  promise  to  pay  a  money  compensation  for  the  services 
so  rendered/ 

§  1372.  Money  had  and  received. — It  is  a  well  settled  prin- 
ciple that  if  a  party,  through  some  mistake,  misapprehension  or 
forgetfulness  of  the  facts,  or  some  fraud,  receives  money  to  which 
he  is  not  justly  and  legally  entitled,  and  which  he  ought  not  in 
good  conscience  to  retain,  the  law  regards  him  as  the  receiver  and 
holder  of  the  money  for  the  use  of  the  lawful  owner  of  it,  and 
raises  an  implied  promise  on  his  part  to  pay  over  the  amount  to 
such  owner,  and  on  his  failure  to  do  so  an  action  for  money  had 
and  received  may  be  maintained.®     Nor  is  it  necessary  to  show 


^La  Fontaine  v.  Hayhurst,  89 
Maine  388,  36  Atl.  623,  56  Am.  St. 
430. 

*  Newsome  v.  Graham,  10  B.  &  C. 
234;  Milnes  v.  Duncan,  6  B.  &  C. 
671 ;  Chatfield  v.  Paxton,  cited  2  East 
471n;  Walker  v.  Mock's  Admr.,  39 
Ala.  568;  Hunt  v.  iMatthews,  133  Ala. 
662,  31  So.  613;  Rand  v.  Columbian 
Realty  Co..  13  Cal.  App.  444,  110 
Pac.  322;  Fox  v.  I^Ionahan,  8  Cal. 
App.  707,  97  Pac.  765;  Gilson  v. 
Boston  Realty  Co.,  82  Conn.  383,  IZ 
Atl.  765;  Stanley  Rule  &c.  Co.  v. 
Bailey.  45  Conn.  464;  Union  Nat. 
Bank  V.  McKey,  102  Fed.  662,  42  C. 
C.  A.  583;  Leete  v.  Pacific  &c.  Co., 
88  Fed,  957;  Jackson  v.  White,  194 
Fed.  677;  Cullen  v.  Seaboard  Air 
Line  R.  Co.  (Fla.),  58  So_.  182; 
Highway  Comrs.  v.  Bloomington, 
253  111.  164,  97  N.  E.  280; 
Jackson  v.  Creek,  47  Ind.  App.  541. 
94  N.  E.  416;  State  v.  Mutual  "Life 
Ins.  Co.  (Ind.).  93  N.  E.  213;  Wor- 
ley  V.  Moore.  97  Ind.  15  (mistake  in 
the  computation  of  interest)  ;  Peo- 
ple's Nat.  Bank  v.  Mvers.  65  Kans. 
122.  69  Pac.  164;  Lvon  v.  Mason  &c. 
Co.,  102  Kv.  594.  '19  Ky.  L.  1642, 
44  S.  W.  135;  Hotchkiss  v.  Bon  Air 
&c.  Iron  Co.,  108  Maine  34.  78  Atl. 
1108  (action  maintainable  to  recover 
money  paid  through  fraud  or  false 
pretenses)  ;  George's  Creek  S:c.  Co. 
V.    Allegheny    County,    59    Md.    255; 


Citizens'  Bank  v.  Graffin,  31  Md.  507, 
1  Am.  Rep.  66;  State  Sav.  Bank  v. 
Buhl,  129  .Mich.  193,  88  N.  W.  471, 
56  L.  R.  A.  944  (recovery  of  money 
paid  by  bailee  of  property  in  settle- 
ment of  claim  for  property  he  sup- 
posed had  been  lost  while  in  his  pos- 
session, but  which  was  subsequently 
found)  ;  Stoakes  v.  Larson,  108  Minn. 
234,  121  N.  W.  1112;  Jenkins  v. 
Clopton.  141  Mo.  App.  74.  121  S.  W. 
759;  Roberts  v.  Neale.  134  Mo.  App. 
612,  114  S.  W.  1120;  Himmelberger- 
Harrison  Lumber  Co.  v.  Dallas  (Mo. 
App.),  146  S.  W  95;  Shaffer  v  Miller, 
41  Mont.  417,  109  Pac.  970.  137  Am. 
St.  746  (a  prospective  vendee  paid 
vendor's  agent  certain  moneys,  which 
he  had  no  right  to  receive.  Held,  that 
when  the  negotiation  failed  the  ven- 
dee might  recover  the  money  paid  to 
the  vendor's  agent)  ;  Garrison  v. 
Murphv.  2  Nebr.  (Unof.)  696,  89 
N.  W.  766;  McDonald  v.  Metropol- 
itan Life  Ins.  Co.,  68  N.  H.  4,  38 
Atl.  500,  1Z  Am.  St.  548;  Redinaton 
Hub  Co.  V.  Putnam  (N.  H.),  82  Atl. 
715 ;  Sarasohn  v.  Miles.  52  App.  Div. 
(N.  Y.)  628,  65  N.  Y.  S.  108;  Dur- 
kin  V.  Cranston.  7  Johns.  (N.  Y.) 
442;  Waite  v.  Leggett.  8  Cow.  (N. 
Y.)  195.  18  Am.  Dec.  441;  Burr  v. 
Veeder.  3  Wend.  (N.  Y.)  412;  Car- 
negie Trust  Co.  V.  Batterv  Place 
Realty  Co..  67  Misc.  (N.  Y.)'452,  122 
N.   Y.   S.   697;   Montgomery  v.   Fry, 


1372 


CONTRACTS. 


620 


privity  of  contract  between  the  parties  in  order  to  entitle  the 
plaintiff  to  recover.^  The  defendant  may  have  received  the  money 
from  a  third  party.^*^     It  is  also  generally  immaterial  how  the 


127  N.  Car.  258,  Zl  S.  E.  259 ;  Luther 
V.  Hunter,  7  N.  Dak.  544,  75  N.  W. 
P16;  Sandoval  v.  Randolph,  222  U. 
%.  161,  2>l  Sup.  Ct.  48.  56  L.  ed. 
104  (plaintiff  appointed  defendant  as 
/lis  agent  to  buy  certain  mining  prop- 
erty; in  the  transaction  the  agent 
obtained  a  secret  fraudulent  profit 
for  himself.  Held  that  plaintiff 
might  recover  the  amount  so  obtained 
bv  the  agent  in  an  action  for  money 
had  and  received)  ;  Turner  Falls 
Lumber  Co.  v.  Burns,  71  Vt.  354,  45 
Atl.  896;  City  Bank  of  Norfolk  v. 
Peed  (Va.),  32  S.  E.  34;  Milwaukee 
V.  Milwaukee,  114  Wis.  374,  90  N. 
\V.  447;  Marriot  v.  Hampton,  3 
Smith's  Lead.  Cas.  (9th  Am.  ed.) 
1686.  Where  a  municipality  has  ob- 
tained the  money  or  property  of  an- 
other without  authority  of  law,  it 
is  its  duty  to  refund  it,  not  by  reason 
of  any  contract  or  obligation  it  has 
entered  into,  but  from  the  natural 
obligation  to  do  justice,  which  binds 
all  persons,  whether  natural  or  arti- 
ficial. Bart  v.  Pierce  County,  60 
W^ash.  507,  111  Pac.  582.  In  suits 
of  this  character  the  question  to  be 
decided  is:  "Does  the  money  in  just- 
ice belong  to  plaintiff,  and  has  the 
defendant  received  it,  and  should  he, 
in  justice  return  it."  Rosenbaum  v. 
Drumm  Comm.  Co.,  146  III.  App.  229. 
A  demand  need  not  be  alleged.  Reis- 
ter  V.  Bruning,  47  Ind.  App.  570,  94 
N.  E.  1019.  See  also,  Young  v.  Kim- 
ber,  44  Colo.  448,  98  Pac.  1132,  28 
L.  R.  A.  (N.  S.)  626n.  However,  in 
an  action  for  money  had  and  received 
the  law  will  not  imply  a  promise  to 
repay  unless,  ex  aequo  et  bono,  the 
defendant  ought  to  refund.  Daily 
v.  Board  of  Comrs.,  165  Ind.  99,  74 
N.  E.  977  (citing  many  authorities)  ; 
Williams  v.  Shelbourne,  19  Ky.  L. 
1924.  44  S.  W.  110.  See  also,  Charles- 
ton &c.  R.  Co.  v.  Augusta  Stockyard 
Co.,  115  Ga.  70.  41  S.  E.  598,  holding 
that  when  the  defendant  fails  to  dis- 
tinctly allege  the  nonexistence  of  the 
supposed  facts  upon  which  he  relied 


in  making  the  payment  the  petition 
does  not  state  a  cause  of  action. 

"  Board  of  Highway  Comrs.  v. 
Bloomington,  253  111.  164,  97  N.  E. 
280;  McClean  v.  Stansberry,  151 
Iowa  312,  131  N.  W.  15,  35  L.  R.  A. 
(N.  S.)  481;  Dresser  v.  Kronberg, 
108  Maine  423,  81  Atl.  487;  Hoyt  v. 
Paw  Paw  Grape  Juice  Co.,  158  Mich. 
619,  123  N.  W.  529;  Richardson  v. 
Moffit-West  Drug  Co.,  92  Mo.  App. 
515,  69  S.  W.  398;  Bleecker  v.  Balje, 
138  App.  Div.  (N.  Y.)  706,  123  N. 
Y.  S.  809;  Madden  v.  Watts,  59  S. 
Car.  81,  Zl  S.  E.  209.  The  action 
may  be  maintained  by  the  party  who 
has  a  right  to  bring  it,  although  the 
person  who  has  possession  of  the 
property  has  never  seen  nor  heard  of 
the  party  who  has  the  right  of  action. 
Hitchcock  v.  Lukens,  8  Port.  (Ala.) 
ZZZ;  Lewis  v.  Sawyer,  44  Maine  332; 
Calais  v.  Whidden,  64  Maine  249.  It 
may  be  recovered  even  though  the 
party  who  receives  it  objects  to  tak- 
ing the  same,  if  he  does  actually  ac- 
cept it  and  use  it  for  his  own  pur- 
poses, and  accepts  the  benefits  de- 
rived therefrom.  De  Celis  v.  Porter, 
65  Cal.  3,  2  Pac.  257,  3  Pac.  120. 
Where  a  debtor  gives  money  to  his 
agent  to  be  paid  his  creditor  and 
the  agent  fails  to  turn  over  the 
money  so  received  to  the  creditor,  the 
latter  may  bring  an  action  for  money 
had  and  received  against  the  agent. 
Baker  v.  Hughes,  5  Ga,  App.  586,  dZ 
S.  E.  587. 

^^  Beymer  v.  Monarch,  19  Idaho 
304,  113  Pac.  739;  Jackson  v.  Creek, 
47  Ind.  App.  541,  94  N.  E.  416;  St. 
Charles  Sav.  Bank  v.  Orthwein  Inv. 
Co.  (Mo.  App.),  140  S.  W.  921  (re- 
ceived money  embezzled  by  plaintiff's 
cashier)  ;  City  of  Newburyport  v. 
Spear,  204  Mass.  146,  90  N.  E. 
522,  134  Am.  St.  652  (city  held 
entitled  to  recover  funds  belong- 
ing to  it  which  the  city  treas- 
urer paid  to  defendant  in  discharge 
of  his  personal  debt)  ;  Harrington  v. 
Green,  107  N.  Y.  S.  403. 


621 


IMPLIED    CONTRACTS. 


§    137: 


money  came  into  the  hands  of  the  party  who  has  it  in  his  ^sosses- 
sion,  if  the  plaintiff  is  legally  entitled  to  it." 

§  1373.  Rule  illustrated. — Thus  where  the  defendant  pur- 
chased certain  land  from  the  plaintiff,  the  plaintiff  agreeing  as  a 
part  of  the  contract  to  pay  a  ditch  tax  which  was  in  fact  paid  by 
the  defendant  and  the  amount  deducted  from  the  purchase-price, 
it  was  held  that  the  plaintiff  might  bring  her  action  for  money 
had  and  received  against  the  defendant  where  the  tax  was  sub- 
sequently declared  unconstitutional  and  the  amount  paid  by  de- 
fendant refunded  to  him.^"  An  auctioneer  or  clerk  is  liable  for 
the  return  of  money  in  his  hands  to  the  purchaser  where  the  sale 


"  The  following  cases  are  mainly 
illustrative  of  the  above  principle: 
Brinser  v.  Fidelity  Trust  Co.  (Del.) 
75  Atl.  792;  Mayer  v.  McCracken, 
245  111.  551.  92  N.  E.  355;  Montgom- 
ery V.  Wise,  138  Mo.  App.  176,  120 
S.  W.  100;  Clark  v.  Harrisonville 
First  Nat.  Bank.  57  Mo.  App.  277; 
Central  Mfg.  Co.  v.  Montgomery 
(Mo.  App.),  129  S.  W.  460  (defend- 
ant obtained  money  of  the  corpora- 
tion by  creating  a  fictitious  indebted- 
ness) ;  Schaeffer  v.  Miller,  41  Mont. 
417,  109  Pac.  970,  137  Am.  St.  746; 
Rodgers  v.  Baker,  136  App.  Div.  (N. 
Y.)  851,  122  N.  Y.  S.  91.  (Plaintiff 
sent  his  employe  to  defendant's  store 
to  buy  some  nails,  and  gave  him  a 
blank  check  with  which  to  pay  for 
them.  Defendant  knew  that  check 
was  to  be  filled  out  for  only  the 
amount  of  the  purchase,  but  notwith- 
standing this,  filled  it  in  so  as  to  in- 
clude another  debt  due  from  plain- 
tiff to  defendant  and  collected  it.  It 
was  held  plaintiff  could  recover  the 
amount  unlawfully  collected.)  Hvde 
V.  Thompson  (N.  Dak.),  120  N.  "W. 
1095  (plaintiff  holding  a  prior  lien 
was  held  entitled  to  proceeds  re- 
sulting from  a  sale  under  a  subor- 
dinate lien)  ;  Brooks  v.  Hinton  State 
Bank.  26  Okla.  56,  110  Pac.  46  (first 
assignee  recovering  from  second  as- 
signee with  notice  who  collected  the 
claim)  ;  Lieb  v.  Painter,  42  Pa.  Super. 
Ct.  399  (money  paid  under  contract 
to  deliver  stock  in  a  proposed  com- 
pany never  actually  formed).  To 
the  same  effect,   Watson  v.   Donald, 


142  111.  App.  110  (facts  similar  to 
those  in  above  case)  ;  Sherwin  v. 
Sternberg,  11  N.  J.  L.  117,  71  Atl. 
117  (facts  similar  to  two  preceding 
cases).  "Appellee  thus  having  in  his 
possession  money  which  ex  aequo  et 
bono  belonged  and  ought  to  have 
been  returned  to  appellant,  an  action 
for  money  had  and  received  might 
have  been  well  brought  for  its  re- 
covery ;  and  it  was  not  material  how 
the  money  came  into  his  hands,  if 
the  plaintiff  is  justly  entitled  to  re- 
ceive it.  In  such  case  the  law  im- 
plies a  promise  to  pav."  Porter  v. 
Roseman,  165  Ind.  255,  74  N.  E.  1105, 
112  Am.  St.  222.  A  cashier  of  a  bank, 
who  also  acted  as  bookkeeper,  by  a 
mistake  in  bookkeeping  caused  a  cus- 
tomer of  the  bank  to  be  credited  with 
$200  to  which  he  was  not  entitled. 
The  mistake  in  entry  also  caused  a 
shortage  in  cash  to  appear.  The 
cashier,  insisting  that  some  mistake 
had  been  made,  but  being  unable  to 
explain  the  matter  satisfactorily,  paid 
the  bank  $200,  and  the  bank,  on  the 
faith  of  the  false  entry,  delivered  to 
the  customer  two  shares  of  stock,  of 
the  value  of  $200,  and  the  latter  ac- 
cepted them  to  his  own  use.  It  was 
held  that,  in  an  action  in  the  nature 
of  an  action  for  money  had  and  re- 
ceived, the  cashier  may  recover  the 
$200  of  the  customer,  who  took  the 
benefit  of  the  cashier's  payment  of 
that  sum  to  the  bank.  Rudisill  v. 
Handley   (Ga.  App.),  72  S.  E.  189. 

^-Vetter  v.  Sandbo,  114  Minn.  144, 
130  N.  W.  450. 


S    1374  CONTRACTS.  622 

is  not  completed  through  the  fault  of  the  vendor.^^  It  has  been 
held  that  an  innocent  purchaser  of  property  sold  on  execution  may 
maintain  an  action  for  money  had  and  received  against  the  judg- 
ment creditor  for  the  purchase-price  of  the  property  when  it  is 
subsequently  taken  from  him  as  the  property  of  another.^*  The 
person  rightfully  entitled  to  a  reward,  as  a  general  rule,  may  by 
an  action  for  money  had  and  received  recover  the  same  from 
one  to  whom  it  has  been  wrongfully  or  erroneously  paid/^  A 
promissory  note  has  been  held  admissible  in  evidence  in  an  action 
for  money  had  and  received,  brought  by  the  payee  or  indorsee 
against  the  maker  or  indorser/*^  So  a  certificate  of  deposit  has 
been  held  competent  evidence  to  support  a  count  for  money  had 
and  received/^ 

§  1374.  Nature  of  the  action. — The  right  to  maintain  an 
action  for  money  had  and  received  is  general  in  its  nature. 
Where  there  is  a  legal  right  to  demand  a  sum  of  money  and  there 
is  no  other  remedy  the  law  will  for  all  the  purposes  of  a  remedy 
imply  a  promise  of  payment.^®  The  action  is  comprehensive  in 
its  reach  and  scope"  and  is  favored  under  the  law.^°     The  right 

"McClean  v.  Stansberry,  151  Iowa  Y.)    130,  affd.  6  N.   Y.  33;   Poor  v. 

312,  131   N.  W.  15,  35  L.  R.  A.   (N.  Gilford,   10  N.  Y.  273,  61   Am.  Dec. 

S.)  481  and  note.  749. 

"  Dresser  v.   Kronberg,   108  Maine        "  Dresser   v.    Kronberg,  108  Maine 

423.  81  Atl.  487.     Contra,  England  v.  423,  81  Atl.  487. 

Clark,   5    111.    486;    Dunn   v.    Frazier,        ^Stockman   v.    Allen    (Mo.    App.), 

9    Blackf.     (Ind.)     432;    Lewark    v.  142    S.    W.    744;    Houts    v.    Dunham 

Carter,   117   Ind.   206,  20   N.    E.    119,  (Mo.   App.),    142   S.   W.   806.     "The 

3  L.  R.  A.  440,  10  Am.  St.  40.  plaintiff  obtained  from  the  defendant 

"  Claxton  V.  Kay  (Ark.),  142  S.  an  option  to  purchase  within  90  days 
W.  517,  and  cases  cited.  Contra,  a  farm  for  $23,000.  Before  the  op- 
Sergeant  V.  Strvker,  16  N.  J.  L.  464,  tion  had  expired  he  effected  a  sale 
32  Am.  Dec.  404.  of  the   farm   for  $24,000,  but   repre- 

^' Boyle  V.  Carter,  24  111.  49;  Lane  sented  to  the  defendant  that  he  could 

V.    Adams,    19    111.    167;    Titcomb    v.  not    obtain    a    purchaser    who   would 

Powers.   108  Maine  347,  80  Atl.  851;  pay  more  than  $23,000,   and   by  this 

Coursey  v.  Baker,  7  Har.  &  J.  (Md.)  representation    he    induced    the    de- 

28;    Tebbetts    v.    Pickering,    5    Cush.  fendant  to  reduce  the  price  to  $22,000, 

(Mass.)  83,  51  Am.  Dec.  48;  Hughes  and  the  price  named  in   the   written 

V.    Wheeler,    8    Cow.     (N.    Y.)     77;  option   was   changed   to  this  amount. 

Porter  v.  Cumings,  7  Wend.   (N.  Y.)  With    knowledge    of    the    deception 

172;  Page's  Admrs.  v.  Bank  of  Alex-  practiced   on   him,   and   after  he  had 

andria,  7  Wheat.  (U.  S.)  35,  5  L.  ed.  received    a    part    of    the    purchase- 

390.  money  from  the  plaintiff,  the  defend- 

"  Talladega  Ins.  Co.  v.  Landers,  43  ant  carried  out  the  arrangement  the 

Ala.    115;    State   Bank   of    Illinois   v.  plaintiff  had  made  with  the  purchaser 

Corwith,  6  Wis.  551.  to  whom  he  had  assigned  the  option, 

"Norton   v.   Coons,   3   Denio    (N.  made    the    conveyance   to    the    pur- 


62^ 


IMPLIED    CONTRACTS. 


1375 


to  recover  is  equitable  in  its  nature,-^  although  the  action  is  in 
reality  one  at  law."" 

§  1375.    When  action  may  be  maintained. — The  action  can 
be  maintained  only  to  recover  either  money"^  or  the  equivalent  of 


chaser,  and  received  from  him  $24,- 
000.  This  action  was  to  recover  the 
difference  between  the  price  at  which 
the  defendant  agreed  to  sell  to  the 
plaintiff  and  the  amount  received  by 
the  defendant  from  the  purchaser  to 
whom  the  plaintiff  had  assigned  the 
option."  The  court  held  that  the 
plaintiff  could  recover  since  defend- 
ant had  carried  out  the  contract  with 
full  knowledge  that  he  had  been  de- 
ceived. Clark  V.  Kurtz,  220  Pa.  358, 
69  Atl.  811.  See  also.  Merriwether 
V.  Bell,  139  Ky.  402,  58  S.  W.  987, 
139  Am.  St.  488;  La  Forge  v.  Cor- 
nell, 127  N.  Y.  S.  453;  Lawson's 
Exr.  v.  Lawson,  16  Grat.  (Va.)  230, 
80  Am.  Dec.  702. 

^  Closes  v.  IMacf  erlan,  2  Burr.  1005 ; 
Clarke  v.  Shee,  1  Cowper  197 ;  Bris- 
bane V.  Dacres,  5  Taunt.  143 ;  North- 
rop's  Exrs.  v.  Graves,  19  Conn.  548, 
50  Am.  Dec.  264;  Dresser  v.  Kron- 
berg,  108  Maine  423.  81  Atl.  487; 
Clatlin  V.  Godfrey.  21  Pick.  (Mass.) 
1 ;  Todd  V.  Bettingen,  109  Minn.  493, 
124  N.  W.  443;  Stout  v.  Carruthers- 
ville  Hdw.  Co.,  131  Mo.  App.  520, 
110  S.  W.  619;  Houts  v.  Dunham 
(Mo.  App.),  142  S.  W.  806;  Ball  v. 
Shepard,  135  App.  Div.  (N.  Y.)  612, 
120  N.  Y.  S.  830;  Bleeker  v.  Balje, 
138  App.  Div.  (N.  Y.)  706,  123  N.  Y. 
S.  809;  White  v.  Continental  Nat. 
Bank,  64  N.  Y.  316;  Williams  v. 
Smith,  29  R.  I.  562,  72  Atl.  1093.  An 
action  in  assignment  or  for  money 
had  and  received  is  equitable  in  its 
nature,  and  recovery  may  be  had  in 
such  action  whenever  one  person  is 
equitably  entitled  to  money  in  the 
hands  of  another.  Grone  v.  Eco- 
nomic Life  Ins.  Co.  (Del.),  80  Atl. 
809. 

"Rushton  V.  Davis,  127  Ala.  279, 
28  So.  476 ;  Brainard  v.  Colchester, 
31  Conn.  407;  Highwav  Comrs.  v. 
Bloomington,  253  111.  164.  97  N.  E. 
280;  Jackson  v.  Hough.  38  W.  Va. 
236._  18  S.  E.  575.  "The  action  of  in- 
debitatus assumpsit  for  the  recovery 
of  money  had  and  received,  and  for 


money  paid,  etc.,  is  an  action  of  the 
common  law,  but,  to  a  great  extent, 
an  equitable  action,  adopted  for  the 
enforcement  of  many  equitable,  as 
well  as  legal,  rights."  Northrop's 
Exrs.  V.  Graves,  19  Conn.  548,  50  Am. 
Dec.  264.  "An  action  of  assumpsit, 
for  money  had  and  received,  is  a 
remedy  equitable  in  its  nature,  ex- 
isting in  favor  of  one  person  against 
another,  when  that  other  person  has 
received  money,  either  from  the  plain- 
tiff or  a  third  person,  under  such  cir- 
cumstances that,  in  equity  and  good 
conscience,  he  ought  not  to  retain 
the  same,  and  which,  ex  aequo  et 
bona,  belongs  to  plaintiff."  Mer- 
chants' &c.  Bank  v.  Barnes,  18  Mont. 
335.  45  Pac.  218,  47  L.  R.  A.  737n,  56 
Am.  St.  586.  "It  is  a  well  established 
doctrine,  both  by  courts  of  law  and 
of  equity,  that,  where  one  person  has 
received  money  of  another  which  in 
honesty  and  good  conscience  he  can- 
not retain,  an  action  will  lie  by  the 
party  entitled  to  recover  it  back,  and 
whether  the  action  be  in  assumpsit 
or  for  money  had  and  received  under 
our  code  is  immaterial."  Ingram  v. 
Posey  (Tex.  Civ.  App.),  138  S.  W. 
421. 

=^St.  Louis  &  T.  R.  Packet  Co.  v. 
McPeters,  124  Ala.  451.  27  So.  518; 
Palmer  v.  Scott,  68  Ala.  380;  Na- 
tional Trust  Co.  V.  Gleason,  77  N. 
Y.  400,  33  Am.  Rep.  632;  Huganir  v. 
Cotter,  102  Wis.  323.  78  N.  W.  423, 
72  Am.  St.  884.  "The  rule  is  quite 
elementary  that,  to  enable  a  person 
to  maintain  an  action  for  money  had 
and  received,  it  is  necessary  for  him 
to  establish  that  the  persons  sought 
to  be  charged  have  received  money 
belonging  to  him  or  to  which  he  is 
entitled.  That  is  the  fundamental 
fact  upon  which  the  right  of  action 
depends.  Trust  Co.  v.  Gleason,  77  N. 
Y.  400.  The  purpose  of  such  an  ac- 
tion is  not  to  recover  damages,  but 
to  make  the  party  disgorge;  and  the 
recovery  must  necessarily  be  limited 
by   the   party's   enrichment  from  the 


1375 


CONTRACTS. 


624 


money.^*  In  order  to  maintain  an  action  for  money  had  and  re- 
ceived it  is  necessary  to  establish  that  defendants  have  received 
money  belonging  to  the  plaintiff  or  to  which  he  is  in  equity  and 
good  conscience  entitled."^  It  is  not  sufficient  to  show  that  they 
have  by  fraud  or  wrong  caused  the  plaintiff  to  pay  money  to  others 
or  to  sustain  loss  or  damage."'^  Thus,  it  has  been  held  that  an  ac- 
tion for  money  had  and  received  cannot  be  maintained  for  the 
purposes  of  recovering  damages  for  a  breach  of  contract  to  make 
improvements  for  plaintiff's  use,^^  nor  to  recover  damages  from 
a  bailee  for  selling  a  consignment  of  lumber  at  less  than  the 
agreed  price.^^  Nor  can  an  action  be  maintained  against  one  for 
money  had  and  received  unless  money  or  its  equivalent  actually 
comes  in  possession  of  the  one  from  whom  recovery  is  sought, 
or  was  paid  to  him  for  the  use  and  benefit  of  the  one  who  brings 
the  action.  ^^     So  in  an  action  brought  against  a  merchant  for 


alleged  transaction."  Limited  Inv. 
Assn.  V.  Glendale  Inv.  Assn.,  99  Wis. 
54,  74  N.  W.  633,  quoted  in  Johnston 
V.  Abresch  Co.,  109  Wis.  182,  85  N. 
W.  348. 

'*  Snapp  V.  Stanwood,  65  Ark.  222, 
45  S.  W.  546;  Baltimore  &  S.  R.  Co. 
V.  Faunce,  6  Gill.  (Md.)  68,  46  Am. 
Dec.  655 ;  Buckeye  v.  Clark,  90  Mich. 
432,  51  N.  W.  528;  Mathewson  v. 
Eureka  Powder  Works.  44  N.  H. 
289;  Beardsley  v.  Root,  11  Johns.  (N. 
Y.)  464,  6  Am.  Dec.  386.  Where 
property  belonging  to  the  plaintiff 
has  been  reduced  to  money  after  it 
was  received  by  the  defendant  but 
before  the  action  is  brought,  money 
had  and  received  lies.  Devlin  v. 
Houghton,  202  Mass.  75,  88  N.  _  E. 
580.  Some  cases  hold  that  the  action 
will  not  lie  where  no  money  has  been 
received  but  other  courts  adopt  a 
more  liberal  doctrine.  Todd  v.  Bet- 
tingen,  109  Minn.  493,  124  N.  W.  443, 
reviewing  the  question  and  citing  a 
number  of  cases. 

='St.  Louis  &  T.  R.  Packet  Co.  v. 
McPeters,  124  Ala.  451,  27  So.  518; 
McCormick-Ormand  Co.  v.  Nofziger 
Bros.  Lumber  Co.,  10  Cal.  App.  241, 
101  Pac.  688;  Whittier  v.  Home  Sav. 
Bank,  161  Cal.  311,  119  Pac.  92.  The 
plaintiff  must  show  that  there  has 
been  an  actual  receipt  of  money  by 
the   defendant   or    something   equiva- 


lent to  it.  Boroughs  v.  Peterson 
(Utah),  114  Pac.  758  (action  by  wife 
to  recover  money  lost  by  husband  at 
gaming).  The  burden  is  on  the  plain- 
tiff to  show  not  only  that  the  money 
was  received  by  the  defendant,  but 
also  that  it  was  received  to  the  use 
of  the  plaintiff.  Blake  v.  Corcoran 
(Mass.),  97  N.  E.  1002.  Where  one 
receives  money  under  a  claim  of 
right  in  himself,  the  law  will  not  im- 
ply any  contract  or  promise  by  him 
to  hold  the  money  for  the  use  of  the 
other  claimant,  or  to  pay  it  over  to 
him.  Richmond  v.  Read  (R.  L),  82 
Atl.  387. 

-"  National  Trust  Co.  v.  Gleason,  77 
N.  Y.  400,  33  Am.  Rep.  632.  See  also, 
Hilliard  V.  Hilliard  (Mich.),  135  N. 
W.  308 ;  Strahl  v.  Fink,  132  App.  Div. 
(N.  Y.)   12,  116  N.  Y.  S.  352. 

"^Labadie  v.  Detroit  &c.  R.  Co., 
125  Mich.  419,  84  N.  W.  622. 

"^Anderson  v.  Corcoran,  92  Mich. 
628,  52  N.  W.  1025. 

'"See  Craig  v.  Matheson,  32  N.  S. 
452 ;  Mechanics'  Bank  v.  Woodward, 
74  Conn.  689,  51  Atl.  1084.  In  the 
above  case  it  appeared  that  a  man's 
wife  had  forged  his  name  to  a  prom- 
issory note  and  discounted  the  same, 
using  the  proceeds  to  pay  off  a  prior 
note  to  which  she  had  forged  his 
name,  and  also  to  pay  certain  bills 
for    which    the    husband    was    liable. 


625 


IMPLIED    CONTRACTS. 


§  137: 


money  had  and  received  on  the  ground  that  his  agent  bought 
goods  without  authority,  which,  however,  were  dehvered  at  the 
merchant's  store  and  sold  by  him,  it  must  be  made  to  appear  that 
the  merchant  received  the  goods,  sold  them,  and  received  the 
money  for  them  before  he  will  be  liable  therefor.^"  It  has  also 
been  held  that  one  who  boards  the  hands  of  a  subcontractor  can- 
not recover  from  the  contractor  money  retained  by  the  latter  equal 
to  the  amount  due  for  board,  when  the  subcontractor  owed  the 
contractor  a  sum  in  excess  of  the  amount  retained  by  him,  since 
the  contractor  had  received  no  money  from  any  person  for  the 
use  of  the  one  who  furnished  the  board.^^  Where  an  agent 
forged  his  principal's  name  on  stock  certificates  belonging  to  the 
latter,  sold  them  and  deposited  the  money  in  the  principal's  name, 
and  then  embezzled  it,  it  was  held  that  this  was  not  such  a  receipt 
of  the  money  as  would  enable  the  one  to  whom  the  stock  certifi- 
cates were  sold  to  maintain  an  action  against  the  principal  for 
money  had  and  received  when  compelled  to  return  such  certifi- 
cates.^" 


An  action  was  brought  against  the 
husband  for  money  had  and  received. 
It  was  held  that  the  husband  was  not 
hable  for  the  money  expended  in  pay- 
ing off  the  forged  note,  but  was  hable 
for  the  amount  spent  in  paying  his 
valid  debts.  Hassard  v.  Tompkins, 
108  Wis.  186,  84  N.  W.  174 ;  Johnston 
v.  Abresch  Co..  109  Wis.  182,  85  N. 
W.  348  (plaintiff's  remedy  was  action 
for  breach  of  contract).  See  also, 
Brown  v.  Woodward,  75  Conn.  254, 
53  Atl.  112.  The  burden  is  on  the 
plaintiff  to  show  not  only  that  de- 
fendant had  received  money  for  goods 
which  he  failed  to  pay  over,  but  also 
some  amount  thereof  still  unpaid. 
M.  Levy  Dry  Goods  Co.  v.  Jacobson 
(Ark.),  136  S.  W.  990;  Murphy  v. 
Lindstedt,  142  App.  Div.  (N.  Y.) 
m,  127  N.  Y.  S.  609  (holding  that 
an  unpaid  judgment  due  the  defend- 
ant from  a  third  person  will  not  sup- 
port an  action  for  money  had  and 
received)  ;  Jones  v.  Jones,  55  Wash. 
531.  104  Pac.  786  (in  which  a  real 
estate  agent  accepted  a  deposit  on  a 
sale,  placed  the  amount  so  received 
in  the  bank  and  accepted  a  certificate 
of  deposit  therefor.  Subsequently  he 
left  the  city  and  the  certificate  was 

40 — Contracts,  Vol.  2 


found  by  the  defendant  among  the 
agent's  papers  indorsed  in  blank.  De- 
fendant deposited  it  to  his  own  credit 
and  held  it  subject  to  the  order  of 
the  agent.  Held,  that  this  would  not 
subject  the  defendant  to  liability  to 
the  purchaser  for  the  latter's  earnest 
money  or  failure  to  complete  the  sale. 

'"Lesher  v.  Loudon,  85  Mich.  52, 
48  N.  W.  278.  See  also,  Combest  v. 
Glenn  (Tex.  Civ.  App.),  142  S.  W. 
112. 

^  Erickson  v.  McGeehan  Const.  Co., 
107  Wis.  49,  82  N.  W.  694;  distin- 
guishing Sterling  v.  Rvan,  72  Wis.  36, 
n  N.  W.  572,  7  Am.  St.  818. 

^  Fav  V.  Slaughter,  194  111.  157,  62 
N.  E.'592.  56  L.  R.  A.  564.  88  Am. 
St.  148.  To  same  effect,  Newell  v. 
Hadley,  206  Alass.  335.  92  N.  E.  507, 
in  which  case  a  thief  stole  a  check 
and  deposited  it  to  the  defendant's 
credit  merely  in  order  to  enable  the 
thief  to  collect  the  proceeds  on  it, 
and  who  did  draw  out  such  proceeds 
before  the  defendant  acquired  knowl- 
edge of  the  transaction.  The  de- 
fendant was  held  not  to  refund  the 
amount  of  the  check.  Compare  the 
foregoing  cases  with  that  of  National 
Trust  Co.  V.  Gleason,  11  N.  Y.  400, 


176 


CONTRACTS. 


626 


§  1376.  Money  lent. — When  one  applies  to  another  for  a 
loan,  and  the  latter  accedes  to  the  request,  a  promise  on  the  bor- 
rower's part  to  repay  the  money  advanced  in  consequence  of  these 
negotiations  is  to  be  implied  in  fact  as  well  as  in  law.^^  So  a 
promise  to  pay  is  implied  from  an  acknowledgment  of  indebted- 
ness.^* Thus,  a  due  bill  which  read  "Due  A  B  three  hundred 
and  twenty-five  dollars  payable  on  demand"  has  been  held  an 
acknowledgment  of  indebtedness  which  implied  on  its  face  a 
promise  to  pay.^^  Money  loaned  to  be  repaid  "when  convenient 
or  when  business  picked  up"  was  held  to  be  a  loan  for  a  reasonably 
time,  and  the  borrower  could  not  hold  the  money  indefinitely  at 
his  option. ^^ 

§  1377.  Money  lent  to  a  municipal  corporation. — The  prin- 
ciple that  a  loan  of  money  will  support  an  action  for  money  had 
and  received  finds  one  of  its  best  illustrations  in  cases  involving 
a  loan  of  money  to  a  municipal  corporation.     It  is  generally  held 

ceived  with  knowledge  that  it  be- 
longs to  the  bank.  See  Davenport  v. 
Walker,  132  App.  Div.  (N.  Y.)  96, 
116  N.  Y.   S.  411. 

''^Couts  V.  Winston,  153  Cal.  686, 
96  Pac.  357. 

"'Long  V.  Straus,  107  Ind.  94,  6 
N.  E.  123,  7  N.  E.  763,  57  Am.  Rep. 
87;  Chosen  Freeholders  v.  Newark 
City  Nat.  Bank,  48  N.  J.  Eq.  51,  21 
Atl.  185;  Kimball  v.  Huntington,  10 
Wend.  (N.  Y.)  675,  25  Am.  Dec. 
590;  Tassey  v.  Church,  4  Watts.  &  S. 
(Pa.)  141,  39  Am.  Dec.  65.  See  also, 
In  re  Big  Cahaba  Coal  Co.,  183  Fed. 
662  (money  advanced  to  company  to 
be  repaid  by  it  when  on  a  working 
basis)  ;  Musk  v.  Hall  (R.  I.),  82  Atl. 
593. 

''Kimball  v.  Huntington,  10  Wend. 
(N.  Y.)  675,  25  Am.  Dec.  590.  An 
acknowledgment  that  money  vvas  re- 
ceived on  deposit  implies  a  promise 
to  pay  it  to  the  depositor.  Long  v. 
Straus,  107  Ind.  94,  6  N.  E.  123,  7  N. 
E.  123,  57  Am.  Rep.  87. 

'"Samuels  v.  Larrimore,  11  Cal. 
App.  22>7,  104  Pac.  1001.  When  loaned 
without  any  understanding  as  to  time 
of  repayment  it  is  presumed  to  be 
due  on  demand.  Duke  v.  Southern 
&c.  Supply  Co.,  163  Ala.  477,  50  So. 
892. 


2Z  Am.  Rep.  632,  in  which  it  appeared 
that  several  persons  had  conspired  to 
defraud  another  by  means  of  a  forg- 
er}'. It  was  held  that  all  the  con- 
spirators would  be  liable  in  an  action 
for  money  had  and  received,  not- 
withstanding all  the  proceeds  of  the 
unlawful  transaction  had  been  appro- 
priated by  one  of  the  conspirators 
if  the  whole  proceeds  were  received 
by  the  one  so  appropriating  them  as 
a  common  agent;  those  for  whose 
benefit  it  was  thus  received  were 
jointly  liable  for  the  entire  sum,  and 
this  result  would  not  be  varied  by  the 
circumstance  that  the  common  agent 
failed  to  account  and  absconded  vvith 
the  proceeds.  But  where  plaintiff's 
paying  teller,  Chisholm,  represented 
to'  defendants,  who  were  brokers, 
that  he  was  agent  for  one  Webster, 
and  in  tlie  name  of  Webster  lost 
about  $50,000  of  the  plaintiff's  money, 
it  was  held  that  the  plaintiff  could 
not  recover  this  amount  from  the  de- 
fendant, the  latter  having  dealt  with 
Chisholm  in  good  faith.  First  Nat. 
Bank  v.  Gibert  &  Clay,  123  La.  845, 
49  So.  593.  25  L.  R.  A.  (N.  S.)  631n, 
131  Am.  St.  382.  Compare  with  St. 
Charles  Sav.  Bank  v.  Orthwein  Inv. 
Co.  (Mo.  App.),  140  S.  W._  921. 
Otherwise,   where   the   money  is   re- 


Xi2'J  IMPLIED    CONTRACTS.  §    1 378 

that  an  action  for  money  had  and  received  may  be  maintained  by 
one  who  has  loaned  money  to  a  municipal  corporation,  which  has 
been  appHed  beneficially  to  legitimate  corporate  purposes  or  ob- 
jects authorized  by  law,  although  the  contract  under  which  the 
money  was  obtained  may  have  been  unauthorized.^^  There  can 
be  no  recovery  in  such  a  case,  however,  on  the  original  express 
contract  of  loan.^^  It  has  been  held  that  there  can  be  no  recovery 
under  an  implied  contract  for  money  loaned  on  an  unauthorized 
express  agreement  when  the  money  so  borrowed  is  expended  for 
an  unlawful  purpose,^**  or  when  squandered  or  used  extravagantly 
for  buildings  or  enterprises  not  reasonably  necessary  for  munici- 
pal purposes,  beyond  its  actual  benefits."  Nor  can  there  be  any 
recovery  where  either  the  constitution  or  statute  law  of  the  state 
forbids  not  only  the  borrowing  of  money  but  the  incurring  of  any 
debt,  or  provides  that  a  debt  to  be  valid  must  be  created  under 
certain  mandatory  restrictions  or  provisions  which  have  not  been 
complied  with.*^ 

§  1378.  Money  received  and  used  by  borrower. — A  bank 
may  be  liable  in  an  action  for  money  had  and  received  when 
money  is  borrowed  for  it  and  is  used  by  it,  notwithstanding  the 

"Butts  County  v.  Jackson  Banking  a  specific  method  of  making  the  con- 
Co.,  129  Ga.  801,  60  S.  E.  149,  15  tract,  then  a  liability  does  not  arise 
L.  R.  A.    (N.  S.)   567n,  121  Am.  St.  by  implication." 

244 ;  Waitz  v.  Ormsbv  County,  1  Ney.  '^  Butts  County  v.  Jackson  Banking 
370;  Luther  v.  Wheeler,  11  S.  Car.  Co.,  129  Ga.  801.  60  S.  E.  149,  15  L. 
83,  52  S.  E.  874,  4  L.  R.  A.  (N.  S.)  R.  A.  (N.  S.)  567n,  121  Am.  St.  244. 
746.  See  also,  Pardee  v.  Salt  Lake  ™  Dayis  v.  Stokes,  74  N.  Car.  374. 
Co.  (Utah.),  118  Pac.  122,  in  which  it  '"Luther  v.  Wheeler,  1Z  S.  Car.  83, 
is  said:  "The  general  rule  in  this  re-  52  S.  E.  874,  4  L.  R.  A.  (N.  S.)  746. 
gard  is  to  the  effect  that  where  there  "  Anderson  v.  Orient  Fire  Ins.  Co., 
is  a  legal  duty  requiring  a  thing  to  88  Iowa  579,  55  N.  W.  348.  "In  its 
be  done,  or  where  a  person,  or  cor-  last  analysis  the  action  for  money 
poration,  public  or  private,  obtains  had  and  received  stands  on  the  judi- 
the  money  or  property  of  another  cial  conception  that  the  use  by  one 
under  such  circumstances  that  would  person  of  the  money  of  another  cre- 
make  it  unjust  or  inequitable  to  re-  ates  a  debt ;  but  this  judicial  concep- 
tain  the  same,  and  in  case  of  a  pub-  tion  manifestly  could  have  no  appli- 
lic  corporation,  if  the  law  authorizes  cation  to  municipal  corporations  in 
it  to  incur  the  obligation  in  the  first  the  face  of  positive  constitutional  or 
instance  but  the  forms  of  law  were  statute  law  that  no  debt  shall  be  con- 
omitted,  then  the  law  ordinarily  im-  tracted  by  a  municipality  or  that  a 
plies  a  promise  to  pay,  and  an  action  debt  shall  be  contracted  only  in  a 
may  be  maintained  upon  such  a  certain  manner."  Luther  v.  Wheeler, 
promise.  When,  however,  the  power  Ti  S.  Car.  83,  52  S.  E.  874,  4  L.  R. 
to  contract  upon  the  subject-matter  \.  (N.  S.)  746.  See  also,  Tehama 
is  withheld  from  the  public  corpora-  County  v.  Sisson  (Cal.),  92  Pac.  64. 
tion,  or  where  the  statute  expresses 


§    1379  CONTRACTS.  628 

note  given  therefor  was  iinen forcible  because  executed  by  the 
cashier  without  written  authority  from  the  board  of  directors.*^ 
On  the  same  principle,  the  owners  of  a  steamship  have  been  held 
liable  for  moneys  loaned  and  advanced  to  the  ship's  captain  to  en- 
able him  to  load  the  vessel  and  supply  and  prepare  it  for  its  voy- 
age, even  though  a  note  given  by  the  master  for  the  amount  so 
advanced  could  not  be  collected  because  of  the  master's  lack  of 
authority  to  give  it/^ 

§  1379.  Money  paid — Receiving  without  consent  of  owner. 

— Payments  of  money  may  be  classified  broadly  under  two  heads. 
They  are:  first,  payments  by  a  third  person  of  the  money  of 
another  to  one  who  receives  the  same  without  the  consent  of  the 
real  owner  thereof;  second,  payments  made  to  another  by  the  real 
owner  or  by  a  third  person  with  the  real  owner's  consent  either 
for  the  benefit  of  the  real  owner  or  on  behalf  of  a  third  person. 
No  other  elements  entering  in,  the  real  owner  of  money  may  re- 
cover an  unauthorized  payment  thereof,  made  by  a  third  person 
from  the  one  to  whom  such  payment  is  made.**  A  public  official 
who  receives  money  which  he  is  in  duty  bound  to  turn  over  to  the 
proper  authorities  is  liable  in  an  action  for  money  had  and  re- 
ceived.*^ So  a  public  corporation*^  or  other  similar  corporation,*' 
which  receives  money  properly  belonging  to  another  person  or 
corporation,  may  be  required  to  turn  over  such  money  to  the 
proper  person  or  corporation.*^    A  stockholder  who  received 

**  Union   Nat.   Bank  v.   Lyons,   220  held   entitled   to   recover  the  excess. 

Mo.  538,  119  S.  W.  540.  Kansas  City  v.  R.  J.  &  W.  M.  Boyd 

"  Commercial    Nat.    Bank    v.    Slo-  Const.   Co.,   86   Kans.   213,    120   Pac. 

man,  194  N.  Y.  506,  87  N.  E.  811.  347. 

"  Brand  v.  Williams,  29  Minn.  238,  "  Colusa   County  v.   Glenn   County, 

13  N.  W.  42;  Knapp  v.  Hobbs,  50  N.  117  Cal.  434,  49  Pac.  457;  Strough  v. 

H.  476;  Haebler  v.  Myers,  132  N.  Y.  Jefferson   County,   119  N.   Y.  212,  23 

363,   30    N.    E.   963,  15  L.  R.  A.  588, 28  N.  E.  552;  Salem  v.  Marion  County, 

Am.  St.  589 ;  United  States  v.   State  25  Ore.  449,  36  Pac.  163. 

Bank,   96   U.    S.   30,   24   L.    ed.   647;  "*  See  also.   Center    School   Tp.    v. 

Bayne  v.  United  States,  93  U.  S.  642,  State,    150    Ind.    168,    49   N.   E.    961. 

23  L.  ed.  997;  State  v.  St.  Johnsbury,  In   the  above   case  a   school   trustee 

59  Vt.  332,  10  Atl.  531.  expended    money    for   the   benefit    of 

*^  Socorro    Board    of    Education    v.  the  township  schools  which  he  should 

Robinson,  7  N.  M.  231,  34  Pac.  295.  have  paid  over  to  another  township 

*"  Chapman  v.  Douglas  County,  107  school     corporation.      The     township 

U.  S.  348,  27  L.  ed.  378,  2  Sup.  Ct.  62.  for  whose  benefit  the  money  was  ex- 

On    the    other    hand,    a    municipality  pended  was  held  liable  to  the  other 

which  overpaid  a  contractor  has  been  school   corporation    for   the   amount 


629 


IMPLIED    CONTRACTS. 


1379 


dividends  from  an  insolvent  corporation,  knowing  it  to  be  in  such 
condition,  may  be  required  to  refund  the  same  in  an  action 
brought  by  the  receiver  of  the  company/"  It  has  also  been  held 
that  a  husband  may  recover  unauthorized  and  unwarranted  pay- 
ments of  money  made  by  his  wife.^*'  So  a  minor  child  has  been 
held  entitled  to  recover  its  share  of  a  statutory  exemption  paid 
over  to  its  mother  in  an  action  for  money  had  and  received."  One 
who  has  a  lien  on  certain  money  or  property  may,  in  a  proper 
case,  recover  the  amount  of  such  lien  from  a  third  person  who 
converts  or  obtains  possession  of  the  property  subject  to  his  lien." 
A  de  jure  officer  may,  in  an  action  for  money  had  and  received, 
recover  fees  held  by  a  de  facto  official  f^  and  where  one  who  holds 
money,  the  title  to  which  is,  to  his  knowledge,  in  dispute,  vol- 
untarily pays  the  same  to  one  of  the  parties  claiming  it,  he  may 
be  liable  to  the  other  in  an  action  for  money  had  and  received  if 
the  latter  prove  to  be  the  real  owner.^^  One  who  receives  money 
as  agent  is  liable  on  an  implied  promise  to  pay  it  over  to  his  prin- 
cipal.°° 


of  money  thus  expended.  Milwaukee 
V.  Alilwaukee,  114  Wis.  374,  90  N. 
W.  447. 

^"Davenport  v.  Lines,  72  Conn.  118, 
44  Atl.  17;  Warren  v.  King,  108  U. 
S.  389,  27  L.  ed.  769.  2  Sup.  Ct.  789. 

'^Metropolitan  Life  Ins.  Co.  v. 
Trende,  21  Ky.  L.  909,  53  S.  W.  412 
(husband  permitted  to  recover  pre- 
miums paid  on  insurance  policy  taken 
out  by  the  wife  on  her  life). 

"Lanford  v.  Lee,  119  Ala.  248,  24 
So.  578,  72  Am.  St.  914. 

"Haebler  v.  Mvers,  132  N.  Y.  363, 
30  N.  E.  963,  15  L.  R.  A.  588.  28  Am. 
St.  589;  Finch  v.  Park,  12  S.  Dak.  63, 
80  N.  W.  155.  76  Am.  St.  588.  In 
case  A  has  a  lien  on  certain  property 
belonging  to  B.  which  is  seized  by  C 
under  circumstances  which  do  not 
discharge  B's  obligation  to  A,  A  may 
elect  to  proceed  against  B.  Fowler 
V.  Savings  Bank,  113  N.  Y.  450,  21 
N.  E.  172,  4  L.  R.  A.  145,  10  Am. 
St.  479.  Or  see,  Bates-Farley  Sav- 
ings Bank  v.  Dismukes,  107  Ga.  212, 
33  S.  E.  175;  Brand  v.  Williams,  29 
Minn.  238,  13  N.  W.  42  (holding  that 
where  a  sheriff  paid  money  to  A, 
which  he  should  have  paid  to  B,  B 


may  elect  to  proceed  against  either 
the  sheriff  or  A.  But  after  he  has 
made  his  election  and  has  recovered 
judgment  against  one  person  he  can- 
not then  proceed  against  the  other 
party).  See  Fowler  v.  Bowery  Sav- 
ings Bank,  113  N.  Y.  450,  21  N.  E. 
172,  4  L.  R.  A.  145.  10  Am.  St.  479. 

^  Coughlin    V.    McElrov,    74    Conn. 
397,  50  Atl.  1025,  92  Am.  St.  224. 

■^^McDuffee  v.  Collins,  117  .\la.  487, 
23  So.  45;  Osborn  v.  Bell,  5  Denio 
(N.  Y.)  370,  49  Am.  Dec.  275;  Hind- 
march  v.  Hoffman,  127  Pa.  St.  284, 
18  Atl.  14,  4  L.  R.  A.  368,  14  Am.  St. 
842.  Thus  where  one  receives  money 
in  good  faith  which  was  in  fact 
stolen,  and  is  so  notified,  he  will  be 
liable  to  the  real  owner  in  an  action 
for  money  had  and  received  if  after 
such  notice  he  turns  the  money  over 
to  the  one  who  stole  it.  Hindmarch 
V.  Hoffman,  127  Pa.  St.  284,  18  Atl. 
14,  4  L.  R.  A.  368,  14  Am.  St.  842. 
,  ''Benton  v.  Craig,  2  Mo.  198.  But 
when  an  agent  receives  money  on  a 
contract  of  sale  made  with  his  prin- 
cipal, the  purchaser  cannot  recover 
from  the  agent  the  money  so  paid  by 
merely    showing    facts    which    would 


§    1380  CONTRACTS.  63O 

§  1380.  One  to  whom  an  obligation  is  due  may  proceed 
against  one  holding  the  money. — This  but  illustrates  the 
principle  that  if  a  third  person  places  money  in  the  hands  of 
another  with  which  the  latter  is  to  discharge  an  obligation  owed 
by  the  first  party  to  still  another  person,  the  party  to  whom  the 
obligation  is  due  may  proceed  against  the  one  holding  the 
money ,°^  unless  the  party  who  receives  and  holds  the  money  takes 
it  as  the  agent  of  the  party  making  the  payment,^^  in  which  case 
the  principal  may  recover  the  amount  of  an  unauthorized  pay- 
ment made  by  the  agent  from  the  person  to  whom  it  was  paid.°* 
So  when  the  entire  amount  of  a  judgment  was  turned  over  to 
the  attorney  for  the  successful  party,  it  was  held  that  the  sherifiE 
could  maintain  an  action  against  the  attorney  for  fees  due  him 
in  connection  with  the  case  and  which  had  been  collected  as  part 
of  the  cost,  notwithstanding  he  was  unable  to  prove  that  the  attor- 
ney had  received  the  money  under  an  express  agreement  to  pay 
the  sheriff  out  of  the  proceeds.'^''  Where  one  pays  money  belong- 
ing to  another  or  upon  which  the  other  has  a  lien  to  a  third  person, 
the  latter  cannot  retain  the  same  and  apply  it  to  the  discharge  of  a 
debt  due  him  from  the  party  making  the  payment.^" 

entitle  the  purchaser  to  rescind.   Kur-  pal  has  been  wrongfully  paid  by  his 

zawski  V.  Schneider,  179  Pa.  St.  500,  agent  to  a  stranger,  either  the  prin- 

36  Atl.  319.  cipal  or  the  agent  may  maintain  an 

'^^  Logan    V.    Talbot,    59    Cal.    652;  action   for  its  recovery."     Ingram  v. 

Ehrman   v.    Rosenthal,    117   Cal.  491,  Posey    (Tex.   Civ.   App),    138   S.   W. 

49  Pac.  460;   Coppage  v.   Gregg,   127  421,  quotmg  from  Houser  v.  McGm- 

Ind     359,    26    N.    E.   903 ;    Benner   v.  nas,  108  N.  Car.  631,  13  S.  E.  139. 

Weeks    159  Pa.  St.  504,  28  Atl.  355.  '"  Knott  v.  Kirby,  10  S.  Dak.  30,  71 

"Lewis  V.    Sawyer,  44   Maine  332.  N.  W.  138. 

See   also,    Lazard    v.    Merchants'    &c.  ^^  Burtnett  v.    First    Nat.    Bank,   38 

Transportation  Co.,  78  Md.  1,  26  Atl,  Mich.  630;  Alter  v.  Bank  of  Stock- 

897.  ham,   53   Nebr.   223,   73   N.   W.   667; 

■'^Dob  v   Halsey,  16  Johns.  (N.  Y.)  Cady  v.  South  Omaha  Nat.  Bank,  45 

34,  8  Am.  Dec.  293;  Mt.  Verd  Mills  Nebr.   756,  65   N.    W.   906;    Farmers' 

Co    V.   McElwee    (Tenn.   Ch.   App.),  &c.  Nat.  Bank  v.  King,  57  Pa.  St.  202, 

42   S    W.  465;   Rogers  v.    Batchelor,  98  Am.  Dec.  215;  Union  Stock  Yards 

12  Pet.  (U.  S.)  221,  9  L.  ed.  1063.   In  Bank  v.  Gillespie,  137  U.  S.  411.  137 

case  an  agent  by  mistake  pays  money  L.  ed.  724;  Central  National  Bank  v. 

to    a    third    party    which    belongs    to  Connecticut   Mut.   Life   Ins.    Co,    104 

his  principal,  the  agent  may  maintain  U.  S.  54,  26  L.  ed.  693;  Rock  Springs 

an    action    for    money    had    and    re-  Nat.  Bank  v.  Luman,  6  Wyo.  123,  167, 

ceived   in   his   own   name   to   recover  42  Pac.  874,  43  Pac   514,  revg.  5  Wyo. 

the  money  so  paid.     Parks  v.  Fogle-  159,  38  Pac.  678.    When  one  deposits 

man,  97  Minn.   157,    105    N.   W.   560,  money   with    another   for   a   specified 

4  L.'r.  A.  (N.  S.)  363  and  note,  114  purpose  or  person,   the  latter  cannot 

Am.    St.  703.     "It   is   a  general   rule  refuse  to  perform  the  agreement  and 

that,  where  the  money  of  the  princi-  apply  the  money  so  received  to  the 


6.^,1 


IMPLIED    CONTRACTS. 


§    I381 


§  1381.  Money  voluntarily  paid  to  another  with  owner's 
consent. — As  above  mentioned,  the  second  class  of  payments 
consists  of  those  instances  in  which  the  real  owner  or  his  agent 
with  the  owner's  consent  pays  the  money  to  another.  Payments 
of  this  character  may  be  further  subdivided  into  voluntary  and  in- 
voluntary payments.  Voluntary  payments  not  induced  by  fraud, 
misrepresentation,  mistake,  duress  or  undue  influence,  or  other 
inequitable  conduct  on  the  part  of  the  one  receiving  the  same 
cannot  ordinarily  be  recovered.  A  voluntary  payment  of  money 
made  with  intention  that  title  shall  pass  and  with  full  knowledge  of 
all  the  material  facts  will  be  deemed  voluntary,  and  even  though 
the  demand  was  unfounded  cannot  be  recovered  on  the  theory  of 
an  implied  "promise.®^     One  who  voluntarily  pays  money  to  ex- 


discharge  of  a  debt  owed  him  by  the 
one  making  the  payment,  and  if  he 
attempts  so  to  do,  he  is  Hable  in  ac- 
tion for  money  had  and  received  to 
the  person  for  whose  benefit  the 
money  was  deposited.  Bearce  v. 
Fahrnow,  109  Mich.  315,  67  N.  W. 
318.  Compare  with  Erickson  v.  Con- 
struction Co.,  107  Wis.  49,  82  N.  W. 
694.  Thus  where  the  owner  of  cer- 
tain cattle  gave  a  lien  on  them  to 
bank  No.  1  and  it  was  subsequently 
agreed  that  the  cattle  should  be  sold 
and  the  proceeds  turned  over  to  bank 
No.  2,  it  was  held  that  bank  No.  2 
could  not  keep  the  money  and  apply 
it  to  obligations  due  the  bank  from 
the  owner  of  the  cattle,  but  was 
liable  to  the  first  bank  for  the 
amount.  People's  National  Bank  v. 
Myers.  65  Kans.  122.  69  Pac.  164.  See 
also,  Fletcher  v.  Warring,  137  Ind. 
159,  36  N.  E.  896,  in  which  it  is  held 
that  one  who  collects  money  on  re- 
ceivership certificates  to  the  exclu- 
sion of  other  certificates  that  are 
prior  thereto,  is  liable  in  an  action 
by  the  owner  of  the  certificates  which 
constituted  a  prior  lien  for  the  money 
so  collected.  Mavburv  v.  Berkery, 
102  Mich.  126.  60  N.  W.  699,  holding 
that  one  who  has  been  made  the  ben- 
eficiary of  a  life  insurance  policy  in 
consideration  thereof  may  agree  with 
the  insured  to  pay  a  debt  owing  by 
the  latter  to  a  third  person  and  that 
the  beneficiary  must  apply  the  pro- 
ceeds of  the  policy  in  the  manneV 
specified. 


"  Prichard  v.  Sweeney,  109  Ala. 
651,  19  So.  730;  Crenshaw  v.  Collier, 
70  Ark.  5,  65  S.  W.  709;  Harralson 
V.  Barrett,  99  Cal.  607,  34  Pac.  342; 
Bucknall  v.  Storv,  46  Cal.  589,  13  Am. 
Rep.  220;  Skelly  v.  Bank,  63  Conn. 
83,  26  Atl.  474,  19  L.  R.  A.  599.  38 
Am.  St.  340;  The  Agathe,  71  Fed. 
528;  The  Nicanor,  40  Fed.  361;  Jef- 
ferson Countv  V.  Hawkins,  23  Fla. 
223,  2  So.  362;  People  v.  Foster,  133 
111.  496,  23  N.  E.  615;  Burlock  v. 
Cook,  20  111.  App.  154;  Connecticut 
:\Iut.  Life  Ins.  Co.  v.  Stewart,  95 
Ind.  588;  ^^lanning  v.  Poling.  114 
Iowa  20,  83  N.  W.  895,  86  N.  W.  30; 
Bailey  v.  Paullina,  69  Iowa  463,  29 
N.  W.  418;  Cummings  Harvester  Co. 
v.  Sigerson,  63  Kans.  340,  65  Pac. 
639;  Williams  v.  Shelbourne,  102  Ky. 
579,  44  S.  W.  110;  Tvler  v.  Smith. 
18  B.  Mon.  (Ky.)  793;  New  Orleans 
&c.  Co.  V.  Improvement  Co.,  109  La. 
13,  33  So.  51.  94  Am.  St.  393n ;  Regan 
V.  Baldwin,  126  Mass.  485.  30  Am. 
Rep.  689;  Francis  v.  Hurd.  113  Mich. 
250,  71  N.  W.  582 ;  Tompkins  v.  Hol- 
lister,  60  Mich.  485,  34  N.  W. 
551 ;  Carson  v.  Cochran,  52  Minn. 
67,  53  N.  W.  1130;  Morley  v. 
Carlson,  27  Mo.  App.  5 ;  Nebras- 
ka &  L.  Ins.  Co.  V.  Segard, 
29  Nebr.  354,  45  N.  W.  681 ;  Redmond 
v.  New  York,  125  N.  Y.  632,  26  N.  E. 
727;  Flvnn  v.  Hurd,  118  N.  Y.  19,  22 
N.  E.  1109;  Howard  vMutual  &c. 
Life  Association.  125  N^Car.  49,  34 
S.  E..  199.  45  L.  R.  A.  853;  Brum- 
baugh V.  Chapman,  45  Ohio  St.  368, 


§  i38i 


CONTRACTS. 


632 


tingulsh  the  debt  of  another  without  the  latter's  request  or  au- 
thority does  not  impose  a  HabiHty  upon  such  other  to  repay.''^  But 
one  who  pays  the  debt  of  another  at  the  latter's  request,"^  or  who 
expends  money  on  the  faith  of  the  defendant's  promise,^*  or  one 
who  is  under  the  circumstances  compelled  to  discharge  the  debt 
of  another*"'  or  to  have  performed  and  to  pay  for  the  performance 


13  N.  E.  584;  Oil-Well  Supply  Co. 
V.  Exchange  Bank,  131  Pa.  St.  100, 
18  Atl.  935;  Hubbard  v.  Martin,  8 
Yerg.  (Tenn.)  498;  Ladd  v.  South- 
ern Cotton  &c.  Mfg.  Co..  53  Tex. 
172;  United  States  v.  Edmondston, 
181  U.  S.  500,  45  L.  ed.  971 ;  Little  v. 
Bowers,  134  U.  S.  547,  10  Sup.  Ct. 
620,  33  L.  ed.  1016;  Gilson  v.  Bing- 
ham, 43  Vt.  410,  5  Am.  Rep.  289; 
Beard  v.  Beard,  25  W.  Va.  486,  52 
Am.  Rep.  219;  Gage  v.  Allen,  89  Wis. 
98,  61  N.  W.  361.  "The  ultimate 
fact  to  be  reached  in  the  case  is  the 
state  of  mind  under  which  the  pay- 
ments were  made.  If  they  were 
made  voluntarily,  with  a  full  knowl- 
edge of  all  the  facts  and  without 
fraud  and  imposition,  they  are  be- 
yond reclamation.  If,  on  the  other 
hand,  the  money  was  extorted  from 
the  appellee,  *  *  *  or  if  fraud  and 
imposition  was  practiced  upon  him, 
he  is  entitled  to  receive  his  money 
back,  for  the  plain  reason  that  the 
payment  was  involuntary.''  Ligonier 
V.  Ackerman,  46  Ind.  552,  558,  15  Am. 
Rep.  323,  quoted  in  Hollingsworth  v. 
Stone,  90  Ind.  244.  However,  when 
an  insurer  wrongfully  refuses  to  ac- 
cept a  premium  when  it  is  tendered, 
or  wrongfully  declares  a  life  policy 
forfeited  and  refuses  further  to  rec- 
ognize it  as  an  existing  contract, 
such  insurer  is  liable  to  the  insured 
or  the  policy-holder  for  the  full 
amount  of  premiums  paid.  Sum- 
mers v.  Mutual  Life  Ins.  Co.,  12  Wyo. 
369,  75  Pac.  937,  66  L.  R.  A.  812,  109 
Am.  St.  992. 

*' Weakley  v.  Brahan,  2  Stew. 
CAla.)  500;  Stephens  v.  Brodnax,  5 
Ala.  258;  Kenan  v.  Holloway,  16 
Ala.  53,  50  Am.  Dec.  162;  Louisville 
&c.  R.  Co.  v.  Central  Kentucky 
Traction  Co.,  147  Ky.  513,  144  S.  W. 
739;  Huff  v.  Simmers,  114  Md.  548, 
79  Atl.  1003;  Newell  v.  Hadley,  206 
Mass.  335.  92  N.  E.  507;  Cape  Gir- 
ardeau Bell  Tel.  Co.  v.  Hamil's  Es- 


tate, 153  AIo.  App.  404,  134  S.  W. 
1103;  Bailey  v.  Gibbs,  9  Mo.  45; 
Schmidt  V.  Smith,  57  Mo.  135;  Title 
Guarantee  &c.  Co.  v.  Haven,  196  N. 
Y.  487,  89  N.  E.  1082,  25  L.  R.  A. 
(N.  S.)  1308n.  In  re.  Rider's  Estate, 
68  Misc.  (N.  Y.)  270,  124  N.  Y.  S. 
1001;  Beach  v.  Vandenburgh,  10 
Johns.  (N.  Y.)  361;  Overseers  of 
Poor  v.  Overseers  of  Poor,  14  Johns. 
(N.  Y.)  87;  Osborn  v.  Cunningham, 
4  Dev.  &  B.  (N.  Car.)  423;  Turner 
v.  Patridge,  3  P.  &  W.  (Pa.)  172; 
Mings  V.  Griggsby  Const.  Co.  (Tex, 
Civ.  App.),  106  S.  W.  192;  King  v. 
Riddle,  7  Cranch  (U.  S.)  168,  3  L. 
ed.  304;  Briggs  v.  Barnett  (Va.),  61 
S.  E.  797.  See  also,  Stevens  v.  Smith, 
112  N.  Y.  S.  361 ;  Holly  St.  Land  Co. 
V.  Beyer,  48  Wash.  422,  93  Pac.  1065. 
See,  however,  S.  M.  Smith  Ins. 
Agency  v.  Hamilton  Fire  Ins.  Co. 
_(W.  Va.),  71  S.  E.  194,  in  which  it 
is  said :  "A  stranger  who  pays  a  debt 
without  request  by  the  debtor,  when 
his  payment  is  not  ratified  by  the 
debtor,  may  bring  a  suit  in  equity 
praying  relief  in  the  alternative;  that 
is,  that  if  the  debtor  do  not  ratify 
such  payment,  the  debt  may  be  en- 
forced in  his  favor  as  its  equitable 
assignee,  or,  if  so  ratified,  that  he 
be  decreed  re-payment  of  the  amount 
paid  for  the  use  of  the  debtor,"  quot- 
ing from  a  syllabus  of  Crumlish  v. 
Improvement  Co.,  38  W.  Va.  390,  18 
S.  E.  456,  23  L.  R.  A.  120n,  45  Am. 
St.  872.  Compare  with  Teter  v.  Te- 
ter,  65  W.  Va.  167,  63  S.  E.  967. 

"^  Owen  Creek  Presbyterian  Church 
v.  Taggart,  44  Ind.  App.  393,  89  N. 
E.  406. 

*"  Beach  v.  Bryan,  155  Mo.  App.  33, 
133  S.  W.  635. 

"^Finnell  v.  Finnell,  159  Cal.  535, 
114  Pac.  820  (holding  that  one  who 
buys  real  estate  and  in  order  to  pro- 
tect his  rights  is  compelled  to  pay  a 
claim  which  he  did  not  assume  is  en- 
titled to  recover  the  amount  so  paid 


633 


IMPLIED    CONTRACTS 


§    1382 


of  labor  which  another  was  required  under  his  contract  to  do,"'' 
may  recover  from  the  person  properly  liable  the  money  so  paid."^ 

§  1382.  Rule  as  to  voluntary  and  involuntary  payments 
further  illustrated. — A  payment  of  an  illegal  demand  with  a 
full  knowledge  of  all  the  facts  which  render  such  demand  illegal, 
without  an  immediate  and  urgent  necessity  thereof,  or  unless  to 
release  the  person  or  property  from  detention,  or  to  prevent  an 
immediate  seizure  of  tlie  person  or  property,  must  be  deemed  vol- 
untary. And  the  fact  that  the  party,  at  the  time  of  making  the 
payment,  files  a  written  protest,  does  not  make  the  payment  invol- 
untary.®^ Thus  where  one  at  the  time  he  discharged  an  ob- 
ligation claimed  that  he  was  being  required  to  pay  more  than 
was  due  but  that  he  would  pay  the  amount  demanded  and  then 
commence  an  action  to  recover  the  overpayment,  it  was  held  that 
the  amount  so  paid  could  not  be  recovered.*^''  A  payment  may  still 


from  the  real  debtor)  ;  Volker  v. 
Fisk,  75  N.  J.  Ch.  497,  12  Atl.  1011. 

"Dobbins  v.  Graer,  50  Colo.  10,  114 
Pac.  303.  See  also,  Loomis  v.  Le- 
high Valley  R.  Co.,  132  N.  Y.  S. 
138.  147  App.  Div.  (N.  Y.)  195 
(holding  that  a  shipper  may  recover 
the  cost  of  putting  bulkheads  in  grain 
cars  furnished  him)  ;  Bailey  v. 
Bishop,  152  N.  Car.  383,  67  S.  E.  968. 

"  One  who  makes  a  partial  assign- 
ment of  a  lease  which  contains  no 
reference  as  to  the  share  of  the  rent 
reserved  impliedly  agrees  to  pay  a 
proportional  share  of  the  rent  re- 
served. Johnson  v.  Zufeldt,  56  Wash. 
5.  104  Pac.  1132.  One  who  requests 
another  to  discharge  an  obligation 
for  him  cannot  defend  against  the 
one  making  payment  on  the  ground 
that  payment  was  not  yet  due.  Min- 
der &c.  Land  Co.  v.  Brustuen,  26  S. 
Dak.  38,  127  N.  W.  546.  A  creditor 
who  takes  out  insurance  on  his  debt- 
or's life  cannot  recover  from  such 
debtor  the  amount  of  the  premiums 
paid  by  him  in  the  absence  of  an 
agreement  that  the  debtor  should  pay 
or  be  liable  therefor.  Stacv  v.  Parker 
(Tex.  Civ.  App.),  132  S.  W.  532.  But 
where  one  is  induced  to  pay  the  pre- 
miums on  an  insurance  policy  by  rep- 
resentations that  she  is  the  beneficiary 
thereof,    she    may    recover    the    pre- 


miums paid  from  the  beneficiary  who 
accepts  the  proceeds  of  the  policy 
with  knowledge  of  the  facts.  Mon- 
ast  V.  Marchant  (R.  L),  12  Atl.  820. 
See  also.  Sterling  v.  Chelsea  Marble 
Works,  62  Misc.  (N.  Y.)  626,  115 
N.  Y.  S.  1096.  An  action  for  money 
paid  cannot  be  maintained  unless  it 
is  proved  that  the  money  has  actually 
been  paid.  Milliard  v.  Douglas  Oil 
Fields   (Wyo.),  122  Pac.  626. 

°^  Wabaunsee  County  v.  Walker,  8 
Kans.  431 ;  Bowman  v.  Boyd,  21  Nev. 
281,  30  Pac.  823;  Turner  v.  Barker, 
66  N.  J.  L.  496,  49  Atl.  676  (even 
though  paid  under  legal  process  when 
paid  voluntarilv)  ;  L^nion  Pac.  R.  Co. 
V.  Dodge  County,  98  U.  S.  541.  25  L. 
ed.  196  (suit  to  recover  back  taxes 
paid  by  the  Union  Pacific  R.  Co. 
upon  certain  lands  in  Nebraska)  ; 
Lamborn  v.  Dickinson  County,  97  U. 
S.  181,  24  L.  ed.  926. 

^*At  the  time  the  plaintiff  made 
the  payment  he  knew  or  claimed  to 
know  that  more  had  been  paid  than 
he  was  credited  with,  but  did  not 
have  the  means  of  proving  it.  After 
he  had  paid  the  amount  demanded 
he  discovered  tlie  means  by  which  to 
prove  that  there  had  been  an  over- 
charge. The  court  said:  "Ignorance 
of  a  fact  is  one  thing;  ignorance  of 
the  means  of  proving  a   fact  is  an- 


1383 


CONTRACTS. 


634 


be  voluntary  although  made  unwillingly  and  only  as  a  choice  be- 
tween evils  and  risks,  when  made  with  full  knowledge  of  the 
facts.'"  There  must  be  a  pressing  and  controlling  necessity  upon 
the  party  making  the  payment  to  render  it  compulsory  or  involun- 
tar}-."^  A  threat  to  enforce  a  demand  by  suit  does  not  prevent 
payment  from  being  regarded  as  voluntary/^  The  law  considers 
it  not  only  the  right  but  the  duty  of  the  party  threatened  to  meet 
the  issue  of  the  unjust  suit." 


§  1383.  Effect  of  protest. — The  fact  that  formal  protest 
is  made  at  the  time  of  payment  does  not  prevent  it  from  being 
voluntary.'*     A  protest  is  generally  available  only  in  cases  of 


other.  When  money  voluntarily  paid 
is  recovered  back,  it  is  because  there 
was  a  mistake  as  to  some  fact.  But 
here  the  plaintiff  was  not  mistaken 
as  to  the  fact.  Only  at  the  time  he 
did  not  know  how  to  prove  it.  The 
subsequent  discovery  of  evidence  to 
prove  the  fact,  known  to  the  party 
when  he  made  the  payment,  cannot 
authorize  a  recovery  back  of  the 
money."  Windbiel  v.  Carroll,  16 
Hun  (N.  Y.)  101.  To  same  effect, 
Citizens'  Bank  v.  Rudisell,  4  Ga.  App. 
Zl,  60  S.  E   818. 

^"See  Maxwell  v.  San  Luis  Obispo 
County,  71  Cal.  466,  12  Pac.  484. 

'^Vick  v.  Shinn,  49  Ark.  70,  4  S. 
W.  60,  4  Am.  St.  26;  Shirey  v. 
Beard.  (2  Ark.  621,  Zl  S.  W.  309.  See 
Elliott  v.  Swartwout,  10  Pet.  (U.  S.) 
137,  9  L   ed.  Zll. 

"Brown  v.  M'Kinnally,  1  Esp. 
279;  Cahaba  v.  Burnett,  34  Ala.  400; 
Ligonier  v.  Ackerman,  46  Ind.  552, 
15  Am.  Rep.  i22) ;  Muscatine  v.  Keo- 
kuk Northern  Line  Packet  Co..  45 
Iowa  185;  Matthews  v.  Smith,  ()]  N. 
Car.  374. 

""  Cahaba  v.  Burnett,  34  Ala.  400; 
Vick  v.  Shinn,  49  Ark.  70,  4  S.  W. 
60,  4  Am.  St.  26;  Ligonier  v.  Ack- 
erman, 46  Ind.  552,  15  Am.  Rep.  Z27>. 

"Rogers  v.  Garland,  8  Mackey  (19 
D.  C.)  24.  In  this  last  case  money 
was  paid  by  the  one  party  to  another 
for  the  benefit  of  a  third  person  and 
in  the  latter's  presence.  See  also, 
Prichard  v.  Sweeney,  109  Ala.  651,  19 
So.  730;  Rutherford  v.  Mclvor,  21 
Ala.  750;  Cahaba  v.  Burnett,  34  Ala. 


400;  Vick  v.  Shinn,  49  Ark.  70,  4  S. 
W.  60.  4  Am.  St.  26;  Shirey  v.  Beard, 
62  Ark.  621,  Zl  S.  W.  309;  Brumagin 
V.  Tillinghast,  18  Cal.  265,  79  Am. 
Dec.  176;  Garrison  v.  Tillinghast,  18 
Cal.  404;  Phelan  v.  San  Francisco, 
120  Cal.  1,  52  Pac.  38;  Connecticut 
Mut,  Life  Ins.  Co.  v.  Stewart,  95  Ind. 
588;  Wabaunsee  County  v.  Walker, 
8  Kans.  431 ;  Benson  v.  Monroe,  7 
Cush.  (Mass.)  125,  54  Am.  Dec.  716; 
Regan  v.  Baldwin,  126  Mass.  485,  30 
Am.  Rep.  689;  Cook  v.  Boston,  9  Al- 
len (Mass.)  393;  Devereux  v.  Roch- 
ester German  Ins.  Co.,  98  N.  Car. 
6,  3  S.  E.  639;  Harvey  v.  Girard  Nat. 
Bank,  119  Pa.  St.  212,  13  At). 
202 ;  De  la  Cuesta  v.  Insur- 
ance Co.  of  North  America,  136 
Pa.  St.  62,  20  Atl.  505,  9  L.  R.  A. 
631 ;  Ladd  v.  Southern  Cotton  &c. 
Mfg.  Co.,  53  Texas  172;  Oceanic 
Steamship  Co.  v.  Tappan,  16  Blatchf. 
(U.  S.)  296,  Fed.  Cas.  No.  10405; 
Union  Pac.  R.  Co.  v.  Dodge  County, 
98  U.  S.  541,  25  L.  ed  196.  Protest 
can  never  make  that  involuntary 
which  in  its  absence  would  be  volun- 
tary. Wessel  v.  D.  S.  B.  Johnston 
&c.  Co.,  3  N.  Dak.  160,  54  N.  W.  922, 
44  Am.  St.  529.  It  has  been  repeat- 
edly held  that  a  mere  protest,  when 
payment  was  not  made  to  save  arrest, 
or  the  seizure  or  sale  of  goods,  or  in 
submission  to  process  that  might  im- 
mediately have  been  enforced,  would 
not  relieve  the  payment  of  its  pre- 
sumed voluntarv  character.  Peebles 
V.  Pittsburgh,  101  Pa.  St.  304.  47  Am. 
Rep.    714.    Durham    v.    Montgomery 


635 


IMPLIED    CONTRACTS. 


§    1384 


payment  under  duress  or  coercion,  or  when  undue  advantage  is 
taken  of  the  party's  situation.  It  is  merely  notice  to  the  party  re- 
ceiving the  payment,  that,  if  the  demand  is  illegal  in  whole,  or  in 
any  specified  particular,  he  may  he  subjected  to  an  action  for  the 
recovery  of  the  amount  to  which  objection  is  made,  and  if  an 
action  be  brought,  the  protest  is  only  available  as  evidence  of  the 
fact  of  compulsion.''^  Statutes  in  some  of  the  states,  however, 
change  the  rule  to  some  extent,  and  provide  for  a  recovery  of  the 
payment  of  an  illegal  tax,  although  they  usually  require  that  at 
the  time  of  such  payment  a  fomial  protest  shall  have  been  made 
as  prescribed  by  the  statute.'" 

§  1384.  Recovery  of  money  paid  under  duress  or  compul- 
sion.— It  is  well  settled,  however,  that  money  extorted  or 
involuntarily  paid  under  duress  or  unlawful  compulsion  may  be 
recovered.^^     To  enable  the  party  making  the  compulsory  pay- 


County,  95  Ind.  182;  IMuscatine  v. 
Keokuk  Northern  Line  Packet  Co., 
45  Iowa  185. 

"  McMillan  v.^Richards.  9  Cal.  365, 
70  Am.  Dec.  655 ;  Brumagim  v.  Till- 
inghast,  18  Cal.  265.  79  Am.  Dec.  176; 
Patterson  v.  Cox,  25  Ind.  261 ;  Kan- 
sas Pac.  R.  Co.  V.  Wyandotte,  16 
Kans.  587;  Chase  v.  Dwinal,  7  Greenl. 
(Maine)  134,  20  Am.  Dec.  352; 
Await  V.  Eutaw  Building  Assn.,  34 
Md.  435 ;  Benson  v.  Monroe,  7  Cush. 
(Mass.)  125,  54  Am.  Dec.  716;  De- 
troit V.  Martin,  34  Mich.  170,  21  Am. 
Rep.  512;  Shane  v.  St.  Paul,  26  Minn. 
543,  6  N.  W.  349;  Clinton  v.  Strong, 
9  Johns.  (N.  Y.)  370.  In  Fleetwood 
V.  New  York,  2  Sandf.  (N.  Y.)  475, 
Sandford,  J.,  said:  "Where  there  is 
no  legal  compulsion,  a  party  yielding 
to  the  assertion  of  an  adverse  claim, 
cannot  detract  from  the  force  of  his 
concession,  by  saying,  I  object  or  1 
protest,  at  the  same  time  that  he  actu- 
ally pays  the  claim.  The  payment 
nullifies  the  protest  as  effectually  as 
it  obviates  the  previous  denial  and 
contestation  of  the  claim."  "There 
are,  no  doubt,  cases  to  be  found  in 
which  the  language  of  the  court,  if 
separated  from  the  facts  of  the  par- 
ticular case  under  consideration, 
would  seem  to  imply  that  a  protest 
-alone  was  sufficient  to  show  that  the 


payment  was  not  voluntary;  but  on 
examination  it  will  be  found  that  the 
protest  was  used  to  give  effect  to  the 
other  attending  circumstances;"  per 
Waite,  C.  J.,  in  Union  Pac.  R.  Co. 
v.  Dodge  County.  98  U.  S.  541,  25  L. 
ed.  196,  citing  Elliot  v.  Swartwout,  10 
Pet.  (U.  S.)  137,  9  L.  ed.  ZIZ.  Bend 
v.  Hoyt,  13  Pet.  (U.  S.)  263,  10  L. 
ed.  154  (customs  cases,  payments 
made  to  release  goods  held  for  du- 
ties) ;  Philadelphia  v.  Collector,  5 
Wall.  (U.  S.)  720,  18  L.  ed.  614;  Col- 
lector V.  Hubbard,  12  Wall.  (U.  S.) 
1,  20  L.  ed.  272  (internal  rev- 
enue tax  cases,  where  the  pro- 
visions of  the  internal  revenue 
acts  warranted  the  conclusion  that 
congress  intended  to  give  the  tax- 
payer such  remedy)  ;  Erskine  v.  Van- 
Arsdale,  15  Wall.  (U.  S.)  75,  21  L. 
ed.  63.  _  A  pi-otest  made  after  pay- 
ment is  unavailing.  Marriott  v. 
Brune,  9  How.  (U.  S.)  619,  13  L. 
ed.  282. 

^^  See  as  to  protest  under  such  stat- 
utes and  as  stating  grounds  of  pro- 
test the  note  in  36  L.  R.  A.  (N.  S.) 
476. 

"  In  Brisbane  v.  Dacres,  5  Taunt. 
143,  Gibbs,  J.,  mentions  that  extor- 
tion was  one  of  those  cases  in  which 
monev  paid  might  be  recovered  back. 
Ashmole  v.  Wainwright,  2  Q.  B.  837; 


1385 


CONTRACTS. 


636 


ment  to  recover  it,  the  compulsion  must  have  been  illegal,  unjust 
or  oppressive."  To  constitute  the  coercion  or  duress  which  will 
be  regarded  as  sufficient  to  make  a  payment  involuntary,  there 
must  be  some  actual  or  threatened  exercise  of  power  possessed 
or  believed  to  be  possessed  by  the  party  exacting  or  receiving  the 
payment  over  the  person  or  property  of  another,  from  which  the 
latter  has  no  other  means  of  immediate  relief  than  by  making  the 
payment.  As  stated  by  the  Court  of  Appeals  of  Maryland,  the 
doctrine  established  by  the  authorities  is,  that  "A  payment  is  not 
to  be  regarded  as  compulsory,  unless  made  to  emancipate  the 
person  or  property  from  an  actual  and  existing  duress  imposed 
upon  it  by  the  carty  to  whom  the  money  is  paid."'^^ 

§  1385.  The  rule  illustrated. — A  payment  by  a  person  to 
free  his  goods  from  an  attachment  levied  for  the  purpose  of 
extorting  money,  by  one  who  knows  he  has  no  cause  of  action,  is 
not  voluntary,   but  compulsory,   and   may   be   recovered.®"      A 


Atkinson  v.  Denby,  6  IJ.  &  N.  778 
(money  obtained  by  extortion); 
Smith  V.  Coker,  110  Ga.  654,  36  S.  E. 
107  (promise  to  pay  rent  because  of 
threat  of  unlawful  eviction)  ;  Krouse 
V.  Krouse  (Ind.  App.),  95  N.  E.  262; 
Voiers  v.  Stout,  4  Bush.  (Ky.)  572 
(extorting  note  and  coercing  pay- 
ment by  military  duress)  ;  Chase  v. 
Dwinal,  7  Greenl.  (Maine)  134.  20 
Am.  Dec.  352;  Mowatt  v.  Wright.  1 
Wend.  (N.  Y.)  355,  19  Am.  Dec.  508; 
Buckley  v.  New  York,  159  N.  Y.  558, 
54  N.  E.  1089,  affg.  30  App.  Div.  (N. 
Y.)   463,  52  N.  Y.   S.  452. 

'*  First  Nat.  Bank  v.  Sargeant,  65 
Nebr.  594,  91  N.  W.  595.  59  L.  R.  A. 
296.  See  also,  Harrison  Tp.  v.  Ad- 
dison (Ind.),  96  N.  E.  146.  But  com- 
pare Vroom  V.  Litt,  70  Misc.  (N. 
Y.)  375,  128  N.  Y.  S.  758  (holding 
that  threats  of  lawful  arrest  con- 
stitute duress,  the  common-law  rule 
requiring  a  threat  of  unlawful  arrest 
not  obtaining). 

''Radich  v.  Hutchins,  95  U.  S.  210, 
24  L.  ed.  409,  quoting  from  Baltimore 
V.  Lefiferman.  4  Gill  (Md.)  425.  45 
Am.  Dec.  145.  To  the  same  effect, 
Brumagim  v.  Tillinghast,  18  Cal.  265, 
79  Am.  Dec.  176;  Indiana  Natural  &c. 
Gas    Co.   V.    Anthony,   26    Ind.    App. 


307,  58  N.  E.  868;  Heaton  v.  Norton 
County  State  Bank,  59  Kans.  281,  52 
Pac.  876 ;  Wells  v.  Adams,  88  Mo.  App. 
215;  Mays  v.  Cincinnati,  1  Ohio  St. 
268.  "The  action  to  recover  back 
may  be  maintained  if  the  payment  is 
caused,  on  the  one  part,  by  an  illegal 
demand,  and  made,  on  the  other,  re- 
luctantly, and  without  being  able  to 
regain  possession  of  the  property  ex- 
cept by  submitting  to  the  payment." 
In  re  The  John  Francis,  184  Fed.  746, 
and  cases  cited.  "Where  the  money 
was  paid  upon  a  wrongful  demand,  to 
save  the  party  paying  from  some 
great  or  irreparable  mischief  or  dam- 
age, from  which  he  could  not  be 
saved  but  by  the  payment  of  the  sum 
wrongfully  demanded,  it  can  be  re- 
covered back."  Corkle  v.  Maxwell,  3 
Blatchf.  (U.  S.)  413,  Fed.  Cas.  No. 
3231 

«"  Chandler  v.  Sanger,  114  Mass. 
364,  19  Am.  Rep.  367;  Adams  v. 
Reeves,  68  N.  Car.  134,  12  Am.  Rep. 
627;  Shuck  v.  Interstate  Building  & 
Loan  Assn.,  62,  S.  Car.  134,  41  S.  E. 
28  (mere  threat  to  foreclose  a  mort- 
gage not  duress).  What  is  and  what 
is  not  duress  of  goods  fully  dis- 
cussed. Hackley  v.  Headley,  45  Mich. 
569,  8  N.  W.  511. 


637 


IMPLIED    CONTRACTS. 


§    1385 


person  under  sentence  until  a  fine  is  paid  is  under  duress,  and  the 
payment  of  an  illegal  fine,  under  such  circumstances,  is  not 
deemed  voluntary,  and  may  be  recovered.**^  Threats  constitute 
duress  where  they  cause  reasonable  apprehension  of  loss  of  life, 
or  of  some  great  botlily  harm,  or  of  imprisonment.^-  But  mere 
fear  that  one  will  be  sued  does  not  constitute  compulsion,  so  as 
to  enable  the  party  paying  money  to  recover  it  back.^^  A  pay- 
ment of  money  by  a  producer  or  manufacturer  at  the  demand  of  a 
labor  union  in  order  to  avoid  a  boycott  by  the  latter  of  his  goods, 
has  been  held  an  act  of  extortion  which  entitled  the  manufacturer 
to  recover  from  the  union  the  payment  so  made.**  A  shipper  of 
goods  who  pays  excessive  charges  to  a  common  carrier  under  pro- 
test in  order  to  obtain  possession  of  them^°  or  from  business 
necessity^''  is  considered  as  having  been  made  the  payment  under 


■^Pitt  V.  Coomes,  2  A.  &  E.  459. 
Pitt  had  been  arrested,  while  privi- 
leged as  in  attendance  on  the  court, 
and  had,  in  order  to  obtain  his  lib- 
erty, paid  into  court,  under  a  judge's 
order,  the  amount  for  which  he  was 
sued.  The  court  ordered  it  to  be 
restored  to  him.  "The  arrest,"  said 
Lord  Denman,  C.  J.,  "we  think,  was 
illegal.  The  consequence  is,  that  the 
money  was  improperly  extorted." 
See  Delvin  v.  United  States.  12  Ct. 
CI.  (U.  S.)  266,  where  a  citizen  was 
tried  and  convicted  in  1865  by  a  mili- 
tary commission  and  sentenced  to 
ten  vears'  imprisonment  and  a  fine 
of  $10,000.  While  imprisoned  United 
States  bonds  were  received  from  him 
by  the  jailor  and  sold,  and  the  sum 
of  $10,000  was  retained  from  the 
proceeds  as  payment  of  the  fine.  The 
fine  was  illegally  imposed,  and  the 
suit  was  brought  in  the  nature  of  an 
action  of  indebitatus  assumpsit  for 
money  had  and  received. 

°"  Loan  &  Protective  Assn.  v.  Hol- 
land, 63  111.  App.  58 ;  Bane  v.  Detrick, 
52  111.  19;  James  v.  Dalbev,  107  Iowa 
463,  78  N.  W.  51;  Harmon  v.  Har- 
mon. 61  Maine  227.  14  Am.  Rep.  556; 
Feller  v.  Green.  26  iMich.  70;  Baker 
V.  Morton,  12  Wall.  (U.  S.)  150,  20 
L.  ed.  262. 

"  Savannah  Sav.  Bank.  v.  Logan, 
99  Ga.  291,  25  S.  E.  692;  Muscatine 
v.  Keokuk  Northern  Line  Packet  Co., 
45  Iowa  185 ;  Stout  v.  Judd,  10  Kans. 


App.  579,  63  Pac.  662;  Higgins  v. 
Brown,  78  Maine  473,  5  Atl.  269; 
Hilborn  v.  Bucknam,  78  Maine  482, 
7  Atl.  272,  57  Am.  Rep.  816;  Mere- 
dith V.  Meredith,  79  Mo.  App.  636; 
Dunham  v.  Griswold,  100  N.  Y.  224, 
3  N.  E.  76;  Matthews  v.  Smith,  67  N. 
Car.  374;  Taylor  v.  Board  of  Health, 
31  Pa.  St.  IZ,  72  Am.  St.  724;  Shel- 
ton  V.  Jackson,  20  Tex.  Civ.  App.  443, 
49  S.  W.  Rep.  415. 

"March  v.  Bricklayers'  &  Plast- 
ers' Union,  79  Conn.  7.  63  Atl.  291.  4 
L.  R.  A.  (N.  S.)  1198.  118  Am.  St. 
127;  Carew  v.  Rutherford,  106  Mass. 
1,  8  Am.  Rep.  287. 

*^  Ashmole  v.  Wainwright,  2  Q.  B. 
837;  Southern  Ala.  R.  Co.  v.  Mad- 
dox,  146  Ala.  539,  41  So.  9;  Southern 
R.  Co.  V.  Anniston  Foundry  &  Mach. 
Co.,  135  Ala.  315,  ZZ  So.  274;  South- 
ern R.  Co.  V.  Schlittler,  1  Ga.  .App. 
20,  58  S.  E.  59;  Harmony  v-  Bing- 
ham, 12  N.  Y.  99,  62  Am.  Dec.  142; 
Mt.  Pleasant  Mfg.  Co.  v.  Cape  Fear 

6  Y.  Vallev  R.  Co.,  106  X.  Car.  207. 
10  S.  E.  1046;  Root  v.  Oil  Creek  & 
A.  River  R.  Co..  31  Phila.  Leg.  Int. 
(Pa.)  140;  Southern  Kansas  R.  Co. 
v.  J.  W.  Burgess  Co.  (Tex.  Civ. 
App.).  90  S.  W.  189;  Tutt  v.  Ide.  3 
Blatchf.  (U.  S.)  249,  Fed.  Cas.  No. 
14275b. 

^  Parker  v.  Great  Western  R.  Co., 

7  I^Ian.  &  G.  253;  Carton  v.  Bristol 
&c.  R.  Co.,  1  B.  &  S.  112;  Mobile  & 
M.   R.   Co.  V.   Steiner.  61   Ala.   559; 


1386 


CONTRACTS. 


638 


duress  and  may  recover  it.  The  same  has  been  held  true  of  pay- 
ments of  excessive  water  rates  in  order  to  prevent  the  shutting  ofi. 
of  water^'  or  gas.^^^  This  rule  does  not  apply,  however,  when  the 
payment  is  made  after  the  service  has  been  fully  performed  and 
the  property  is  out  of  the  possession  and  beyond  the  control  of  the 
carrier.®^  It  is  true  generally  that  in  order  to  entitle  one  to  re- 
cover the  excessive  rate  he  must  show  not  only  that  the  claim  as- 
serted was  unlawful,  but  also  that  the  payment  was  not  voluntary, 
that  there  was  some  necessity  that  amounted  to  compulsion  and 
that  payment  was  made  under  the  influence  of  such  compulsion.®* 

§  1386.  Voluntary  payment  of  taxes. — In  the  absence  of 
any  statutory  provision  on  the  subject,  a  voluntary  payment  of  an 
assessment  made  under  a  mistake  of  law,  but  with  full  knowledge 
of  the  facts  and  not  induced  by  any  fraud  or  improper  conduct  on 
the  part  of  the  payee,  cannot  be  recovered  back.®^     In  order  to 


Ohio  Coal  Co.  v.  Whitcomb,  123  Fed. 
359,  59  C.  C.  A.  487;  Chicago  &  A. 
R.  Co.  V.  Chicago.  V.  &  W.  Coal 
Co.,  79  111.  121 ;  Galesburg  &c.  R.  Co. 
V.  West,  108  111.  App.  504;  Chicago 
St.  L.  &  P.  R.  Co.  V.  Wolcott,  141 
Ind.  267,  39  N.  E.  451,  SO  Am.  St. 
320. 

"  Chicago  V.  Northwestern  Mut.  L. 
Ins.  Co.,  218  111.  40,  75  N.  E.  803,  1 
L.  R.  A.  (N.  S.)  770;  Panton  v.  Du- 
luth  Gas  &  Water  Co.,  50  Minn.  175, 
52  N.  W.  527,  36  Am.  St.  635 ;  West- 
lake  V.  St.  Louis,  77  Mo.  47,  46  Am. 
Rep.  4;  St.  Louis  Brewing  Assn.  v. 
St.  Louis,  140  Mo.  419,  37  S.  W. 
525.  See  also,  American  Brewing  Co. 
V.  St.  Louis,  187  Mo.  367,  86  S.  W. 
129,  2  Am.  &  Eng.  Ann.  Cas.  821, 
when  neither  protest  nor  threat  to 
turn  off  water  was  made. 

"^  Indiana  Natural  &c.  Gas.  Co.  v. 
Anthony,  26  Ind.  App.  307,  58  N.  E. 
868. 

^  Knudsen-Ferguson  Fruit  Co.  v. 
Chicago  &c.  R.  Co.,  149  Fed.  973,  79 
C.  C.  A.  483;  Thomas  v.  Philadel- 
phia &c.  R.  Co.,  1  Week.  No.  Cas. 
(Pa.)  621.  In  Kenneth  v.  South 
Carolina  R.  Co.,  15  Rich.  L.  284,  98 
Am.  Dec.  382,  it  was  held  that  as- 
sumpsit for  money  had  and  received 
would  not  lie  against  a  railroad  com- 
pany  to   recover    charges    for   trans- 


portation in  excess  of  those  which 
by  law  the  carrier  is  permitted  to 
exact  when  such  charges  are  paid 
voluntarily  without  objection  or  pro- 
test, or  notice  of  discontent,  and 
after  the  service  had  been  fully  per- 
formed and  the  property  was  out  of 
the  possession  of  and  beyond  the 
control  of  the  carrier.  Otherwise, 
however,  where  the  payment  is  made 
in  order  to  secure  future  services. 
Peters  v.  Railroad  Co.,  42  Ohio  St. 
275,  51  Am.  Rep.  814.  See  also, 
Lafayette  &c.  R.  Co.  v.  Pattison,  41 
Ind.  312;  West  Virginia  Transp.  Co. 
V.  Sweetzer,  25  W.  Va.  434. 

""  Illinois  Glass  Co-  v.  Chicago 
Tel.  Co.,  234  111.  535,  85  N.  E.  200, 
18  L.  R.  A.  (N.  S.)  124  and  note; 
Holmes  v.  Riggs,  52  Ore.  334,  97 
Pac.  551.  See  ante,  ch.  7,  Duress  and 
Undue  Influence,  for  more  thorough 
treatment  of  the  subject. 

"  Town  Council  of  Cahaba  v.  Bur- 
nett, 34  Ala.  400;  San  Diego  &c.  Co. 
V.  La  Presa  School  District,  122  Cal. 
981,  54  Pac.  528;  Wilmington  v. 
Wicks,  2  Marvel  (Del.)  297,  43  Atl. 
173;  Williams  v.  Stewart,  115  Ga. 
864,  42  S.  E.  256;  Elston  v.  Chicago, 
40  111.  514,  89  Am.  Dec.  361;  Phillips 
V.  Jefferson,  5  Kans.  412;  Ligonier 
v.  Ackerman,  46  Ind.  552;  Smith  v. 
Readfield,   27   Maine    145;    Lester   v. 


639 


IMPLIED    CONTRACTS. 


§     1386 


justify  a  recovery  by  the  taxpayer,  it  is  not  only  necessary  that 
the  assessment  be  invahd,  and  that  the  corporation  actually  re- 
ceive the  money,  but  it  is  also  necessary  that  the  payment  be  made 
involuntarily  and  under  compulsion."-  Thus  one  who  voluntarily 
pays  an  illegal  tax  in  order  to  obtain  the  rebate  given  for  prompt 
payment  cannot  recover  the  same."^  All  payments  of  taxes  are 
supposed  to  be  voluntary  until  the  contrary  is  made  to  appear."* 
Money  illegally  or  erroneously,  but  voluntarily,  paid  for  license 
taxes  cannot  be  recovered."'^  And  the  mere  fact  that  the  collector 
might  have  enforced  payment  will  not  make  a  payment  involun- 
tary vi^hen  he  was  taking  no  steps  to  collect  and  made  no  threats."" 


Baltimore,  29  Md.  415,  96  Am.  Dec. 
542;  Deshong  v.  New  York,  74  App. 
Div.  (N.  Y.)  234,  n  N.  Y.  S.  563, 
affd.  176  N.  Y.  475,  68  N.  E.  880;  Van- 
derbeck  v.  Rochester,  122  N.  Y.  285; 
Borough  of  Allentown  v.  Sacger,  20 
Pa.  St.  421 ;  Houston  v.  Feizer,  76 
Texas  365,  13  S.  W.  266;  Sowles  v. 
Soule,  59  Vt.   131. 

"'  Bank  of  Kentucky  v.  Stone,  88 
Fed.  383.  An  action  will  not  lie  for 
the  recovery  of  money  voluntarily 
paid,  although  under  protest,  upon  a 
sewer  assessment  which  is  merely 
irregular,  and  because  of  which  ir- 
regularity the  collection  might  have 
been  enjoined.  Newcomb  v.  Daven- 
port, 86  Iowa  291,  53  N.  W.  232.  In 
Winter  v.  City  Council  of  ^lont- 
gomery,  65  Ala.  403,  it  was  held  that, 
to  support  an  action  for  money  had 
and  received  against  a  municipal 
corporation,  to  recover  from  it  the 
amount  of  taxes  illegally  assessed 
and  collected,  two  facts  must  concur, 
namely,  first,  a  want  of  authority  for 
the  imposition  and  collection  of  the 
tax,  rendering  the  proceeding  not 
merely  irregular,  but  void ;  and  sec- 
ond, a  payment  under  compulsion  or 
under  duress  of  person  or  propertv. 

"=' Louisville  V.  Becker,  139  Kv-  17, 
129  S.  W.  311.  28  L.  R.  A.  (N.  S.) 
1045  and  note;  Lee  v.  Templeton,  13 
Gray  (Mass.)  476.  Otherwise,  how- 
ever, when  in  addition  to  paying  in 
order  to  secure  the  discount,  payment 
is  made  to  prevent  the  issuance  of  a 
threatened  warrant.  Stowe  v.  Stowe, 
70  Vt.  609,  41  Atl.  1024. 

"  Helena  v.  Dwyer,  65  Ark.  155,  45 


S.  W.  349.  Where  a  municipality,  in 
good  faith,  but  under  a  misappre- 
hension of  the  law,  demands  a  great- 
er sum  than  it  is  legally  entitled  to, 
for  a  license  to  carry  on  a  particular 
business,  a  person,  who,  with  knowl- 
edge of  the  facts,  pays  the  sum  de- 
manded, cannot  recover  back  the  ex- 
cess. Camden  v.  Green,  54  X.  J.  L. 
591,  25  Atl.  357,  Z2>  Am.  St.  686- 

"^  Grimley  v.  Santa  Clara  Co.,  68 
Cal.  575,  9  Pac.  840 :  Manning  v.  Pol- 
ing, 114  Iowa  20,  83  N.  W.  895,  86 
N.  W.  30;  Cook  v.  Boston,  9  Allen 
(Mass.)  393;  Eslow  v.  Albion,  153 
Mich.  720,  117  N.  W.  328,  22  L.  R. 
A.  (N.  S.)  872  and  note;  Mays  v. 
Cincinnati,  1  Ohio  St.  268.  In  Sharp 
v.  Carthage,  48  Mo.  App.  26,  where 
the  city  voted  against  the  sale  of 
intoxicating  liquors  after  a  license 
had  been  obtained,  it  was  held  that 
the  dramshop  keeper  was  entitled  to 
recover  from  the  city  an  appropri- 
ate part  of  the  money  paid  for  the 
license. 

"« Wilson  v.  Pelton,  40  Ohio  St. 
306.  In  Taylor  v.  Board  of  Health, 
31  Pa.  St.  73,  72  Am.  St.  724,  where 
the  legislature  had  imposed  a  poll- 
tax  on  all  foreign  immigrants  com- 
ing by  sea  into  the  state,  and  after 
the  law  had  been  thirty  years  in 
operation,  it  was  declared  to  be  con- 
trary to  the  Federal  Constitution, 
and  the  plaintiff  sought  to  recover 
back  the  toll  paid  under  it,  it  was 
held  that  a  payment  of  taxes  is  not 
compulsory  because  made  under  a 
threat,  express  or  implied,  that  the 
legal  remedies  for  it  will  be  resorted 


1387 


CONTRACTS. 


640 


§  1387.  Recovery  of  illegal  taxes  paid  under  compulsion. 
— Where  an  illegal  and  void  tax  is  paid  to  prevent  a  seizure  and 
sale  of  the  taxpayer's  property  to  one  having  apparent  colorable  or 
formal  authority  to  make  such  seizure  and  sale,  if  the  danger  is 
imminent  and  the  payment  is  made  under  protest,  the  money  so 
paid  may  be  recovered.®^  If  a  demand  for  the  tax  has  been  made 
under  a  warrant  in  the  officer's  hands,  though  no  threat  to  levy 
has  been  made,  the  payment  will  be  deemed  involuntary.*^     Any 


to.  "There  is  no  pretense  that  the 
defendant's  officers  did  any  more 
than  demand  the  tax  under  a  sup- 
posed authority  of  the  law;  and  this 
is  no  more  a  compulsion  than  when 
an  individual  demands  a  supposed 
right.  The  threat  that  is  supposed 
to  underlie  such  demands  is  a  legally 
harmless  one."  Per  Lowrie,  J.  It 
is  true  generally  that  a  taxpayer  can- 
not maintain  a  suit  against  a  county 
to  recover  taxes  illegally  and  wrong- 
fully exacted  by  the  officers  of  the 
county  after  the  taxes  have  been  paid 
out  by  the  disbursing  officers  of  the 
county.  Commonwealth  v.  Baske, 
124  Ky.  468,  99  S.  W.  316,  11  L.  R. 
A.  (N.  S.)  1104  and  note.  See  also, 
Bart  V.  Pierce  County,  60  Wash.  507, 
111  Pac.  582,  for  a  discussion  of 
when  the  amount  so  paid  may  be  re- 
covered. Nor  can  a  taxpayer  who 
has  paid  taxes  upon  an  erroneous  as- 
sessment maintain  an  action  to  re- 
cover the  same.  The  only  remedy 
he  has  is  to  appeal  to  the  boards  of 
equalization  provided  by  statute. 
First  Nat.  Bank  v.  Hopkinsville,  128 
Ky.  383,  108  S.  W.  311,  16  L.  R.  A. 
(N.  S.)  685  and  note.  This  right 
may,  however,  be  given  by  statute. 
Wilmington  v.  Ricand,  90  Fed.  214, 
32  C.  C.  A.  580,  61  U.  S.  App.  630; 
Indianapolis  v.  Morris,  25  Ind.  App. 
409,   58   N.  E.   510. 

"  Town  Council  of  Cahaba  v.  Bur- 
nett, 34  Ala.  400;  De  Fremery  v. 
Austin,  53  Cal.  380;  Hubbard  v. 
Brainard,  35  Conn.  563;  Kimball  v. 
Corn  Exchange  Nat.  Bank,  1  Brad. 
(111.  App.)  209;  Lauman  v.  Des 
Moines  County,  29  Iowa  310;  Bruner 
V.  Clay  Citv,  100  Kv.  567,  18  Kv.  L. 
1008,  38  S.  W.  1062 ;'  First  Nat.  Bank 
V.  Watkins,  21  Mich.  483;  Grand 
Rapids  V.   Blakclv,  40  Mich.  367,  29 


Am.  Rep.  539;  Tuttle  v.  Everett,  51 
Miss.  27,  24  Am.  Rep.  622.;  Vicks- 
burg  V.  Butler,  56  Miss.  72;  Union 
R.  &  Transit  Co.  v.  Skinner,  9  Mo. 
App.  189.  In  Boston  &c.  Glass  Co. 
V.  Boston,  4  Mete.  (Mass.)  181,  it 
was  held  that  "payment  of  taxes  to 
a  collector,  who  has  a  tax  bill  and 
warrant  in  the  form  prescribed  by 
law,  is  to  be  regarded  as  com- 
pulsory payment;  and  if  such 
taxes  were  assessed  without  au- 
thority, they  may  be  recovered 
back  in  an  action  for  money  had  and 
received,  although  the  party  made  no 
protest  before  payment."  In  Union 
Bank  v.  Mayor  &c.  of  New  York,  51 
Barb.  (N.  Y.)  159,  the  trial  court 
held  that  payment  of  an  illegal  tax, 
under  a  notice  from  the  receiver  of 
taxes  that  unless  paid  a  penalty 
would  be  imposed  by  way  of  interest, 
and  a  warrant  would  be  issued,  was 
a  voluntary  payment.  The  Commis- 
sioner of  Appeals,  in  Union  Nat.  Bank 
v.  Mayor  &c.,  51  N.  Y.  638,  held  that 
such  payment  was  not  voluntary  and 
reversed  the  decision,  following 
Bank  of  Commonwealth  v.  The  May- 
or, 43  N.  Y.  184.  In  Allen  v.  Bur- 
lington, 45  Vt.  202,  the  court :  "If 
the  plaintiff  was  constrained  to  pay 
the  tax,  to  save  his  property  from 
distress,  and  to  avoid  a  penalty  and 
costs,  it  was  not  a  voluntary  pay- 
ment." 

•'Lindsay  v.  Allen,  19  R.  I.  721, 
36  Atl.  840;  Parcher  v.  Marathon, 
52  Wis.  388,  9  N.  W.  23,  38  Am. 
Rep.  745.  A  party  who,  when  threat- 
ened with  distress,  pays  an  illegal 
tax  under  protest  and  notice  of  suit, 
may  maintain  an  action  to  recover  it 
back.  Grim  v.  Weissenberg  School 
District,  57  Pa.  St.  433,  98  Am.  Dec. 
237. 


641  IMPLIED    CONTRACTS.  §    I388 

payment  is  to  be  regarded  as  involuntary  which  is  made  under 
a  claim  involving  the  use  of  force  as  an  alternative."''  The  rule 
was  stated  by  Chief  Justice  Shaw  of  Massachusetts,  as  follows : 
"Where  therefore  a  party  not  liable  to  taxation,  is  called  on  per- 
emtorily  to  pay  upon  such  a  warrant,  and  he  can  save  himself  and 
his  property  in  no  other  way  than  by  paying  the  illegal  demand,  he 
may  give  notice,  that  he  so  pays  it  by  duress  and  not  voluntarily, 
and  by  showing  that  he  is  not  liable,  recover  it  back,  as  money  had 
and  received."^  Upon  this  theory  the  payment  of  a  water  license, 
under  threat  of  turning  off  the  water  in  case  of  continued  re- 
fusal, was  held  payment  under  compulsion.^ 

§  1388.  Money  paid  by  or  under  mistake. — As  has  already 
been  indicated,  the  law  regards  a  party  who  through  mistake, 
misapprehension  or  forgetfulness  of  the  facts  receives  money  to 
which  he  is  not  justly  and  legally  entitled  and  which  he  ought  not 
in  good  conscience  to  retain,  as  a  receiver  and  holder  of  the 
money  for  the  use  of  the  lawful  owner  of  it,  and  raises  an  implied 
promise  on  his  part  to  pay  it  over  to  such  owner.^  An  error  of 
fact  takes  place  when  some  fact  which  really  exists  is  unknown, 
or  some  fact  is  supposed  to  exist  which  really  does  not  exist/ 
Where  there  has  been  an  accounting  and  settlement  between  par- 
ties on  the  basis  of  merchant's  book  entries,  and  afterward  an 
error  is  discovered  in  the  account  by  crediting  a  single  item  twice 
or  wrongly  adding  a  column  of  figures,  an  action  at  law  will 
lie  to  recover  the  balance  paid  by  reason  of  such  mistake.^  So 
an   illiterate   debtor   who   on   account   of    forgetting   one   pay- 

••Atwell  V.  Zeluff,  26  Mich.  118.  Co.,  50  Minn.  175,  52  >j.  W.  527.  36 

^Preston     v.      Boston,      12      Pick.  Am.   St.  635;  Westlake  &  Button  v. 

(Mass.)    7.     When   the  tax   paid   is  St.  Louis,  11  Mo.  47,  46  Am.  St.  4. 

illegally  assessed,   and  is  paid  under  '  See  ante,  §   1372. 

protest,    under    compulsion,    or    with  *  Calkins  v.  Griswold,  11  Hun   (N. 

notice  that   the  party   intends  to   in-  Y.)  208.    But  where  a  person  is  truly 

stitute  suit  to  test  the  validity  of  the  acquainted     with     the     existence     or 

tax,  it  may  be  recovered  back  of   a  nonexistence  of  facts,  but  is  ignorant 

collector  in  an  action  for  money  had  of  the  legal  consequences  he   is  un- 

and  received,  unless  the  statute  pre-  der    an    error    of    law.      Mowatt    v. 

scribes   some   other   remedy,    or   has  Wright,    1    Wend.    (X.    Y.)    355,    19 

annexed  other  conditions  to  the  right  Am.   Dec.   508. 

to  sue.     State   Tonnage   Tax   Cases,  'Davis  v.  Krum.  12  Mo.  App.  279; 

sub    nomine    Cox    v.    Lott,    12    Wall.  Budd  v.  Eyermann,  10  Mo.  App.  437 ; 

.(U.  S.)  204,  20  L.  ed.  370.  Hanson  v.  Jones,  20  Mo.  App-  595. 
^Panton  v.   Duluth    Gas    &   Water 

41 — Contracts.  Vol.  2 


§    1389  CONTRACTS.  642 

ment  made  by  him  and  the  receipt  therefor  pays  more  than 
is  due,  may  recover  the  overpayment."  One  who  through 
ignorance  or  forget  fulness  overpays  an  obhgation  or  pays 
it  a  second  time  may  recover  the  excess  payment.^  An 
indorser  of  a  note  has  been  allowed  to  recover  money  paid 
by  him  under  the  mistaken  belief  that  the  note  had  been  duly 
presented  for  payment;*  but  courts  do  not  relieve  against  every 
mistake  a  party  may  make  in  his  business  transactions.  A  mis- 
take in  a  matter  of  fact  to  be  a  ground  of  relief  must  be  of  a 
material  nature,  inducing  or  influencing  the  agreement,  or  in  some 
matter  to  which  the  contract  is  to  be  applied.^  Money  paid  by 
mistake  of  fact  cannot  be  reclaimed  when  the  defendant  received 
it  in  good  faith  in  satisfaction  of  his  equitable  claim,  nor  when  it 
was  due  in  honor  and  conscience." 

§  1389.  Payments  by  banks — Insurance  companies — Gen- 
eral matters. — In  this  connection  it  is  proper  to  mention  that 
it  is  a  general  rule  sustained  by  almost  universal  authority  that  a 
payment,  in  the  ordinary  course  of  business,  of  a  check  or  other 
paper  by  a  bank  upon  which  it  is  drawn,  under  the  mistaken  belief 
that  the  drawer  has  funds  in  the  bank  sufficient  to  meet  it,  is  not 
such  a  payment  under  a  mistake  of  fact  as  will  permit  the  bank  to 

See     also,     Lucas     v.     Worswick,     1  Int.    (Pa.)    392;   Guild  v.   Baldridge, 

Moody  &  R.  293.  2    Swan.    (Tenn.)    295;    Hummel   v. 

'Simms   V.   Vick,   ISl   N.   Car.   78,  Flores    (Tex.   Civ.   App.),  39  S.  W. 

65   S.   E.  621,  24  L.   R.  A.    (N.   S.)  309. 

517  and  note.                              '  *  Talbot   v.    National   Bank  of   the 

'  McDermott  v.  Hickling,  23  Cana-  Commonwealth,     129    Mass.    67,    Zl 

dian    L.    T.    (Occ.    N.)    40.    1    Ont.  Am.  Rep.  302. 

Week.   Rep.   19,   768;   Citizens'   Bank  *Maxfield  v.  Seabury,  75  Minn.  93, 

V.  Rudisill,  4  Ga.  App.  2>1,  60   S.  E.  V   N.    W.   555;    Southwick   v.    First 

818;    International    Bank    v.    Barta-  Nat.  Bank,  84  N.  Y.  420;  Buffalo  v. 

lott,    11    111.    App.    620;    Chickasaw  O'Malley,  61  Wis.  255,  20  N.  W.  913, 

County  Farmers'  Mut.  Fire  Ins-  Co.  50  Am.  Rep.  137.   (Action  to  recover 

V.    Weller,   98    Iowa   731,   68    N.    W.  the  sum  of  $40,  alleged  to  have  been 

443;    Rhodes  v.   Lambert,   22   Ky.   L.  overpaid    for    the    transportation    of 

691,  58  S.  W.  608;  Reasley  v.  Allen,  tan-bark.     At  the  place  of  shipment 

11    Rob.    (La.)    502;   Baltimore  &   S.  it    measured    sixty-three    cords,    and 

R.   Co.  V.  Faunce,  6  Gill-    (Md.)   68,  three  cords  were  allowed  for  shrink- 

46  Am.   Dec.  655 ;   Garrison  v.   Mur-  age    on    repiling.      On    being    replied 

phy,    2    Nebr.     (Unof.)    696,    89    N.  at   Duluth   in   the   manner  customary 

W.   1(£;    Pool  V.   Allen,  29   N.   Car.  there,  it  measured  but  forty  cords.) 

120;  Mitchell  v.  Walker,  30  N.  Car.  "Moore  v.  Eddowes,  2  Ad.  &  El. 

243;    Norman  v.   Will,   1    Ohio   Dec.  133;  Farmer  v.  Arundel,  2  Wm.  Bl. 

261;    Kerr  v.  Ames,  39  Phila.   Leg.  824. 


643  IMPLIED   CONTRACTS.  §    I390 

recover  the  money  so  paid."  The  same  rule  applies  where  a  l)ank 
pays  a  check  in  ignorance  of  the  insolvency  of  the  drawer,  who  is 
indebted  to  it/"  The  reason  for  this  rule  is  found  in  commercial 
necessity  and  usage."  If  it  appear  that  the  party  paying  has  re- 
ceived and  enjoyed  a  benefit  or  consideration,  he  will  not  be  aided 
by  a  court  of  equity  in  recovering  back  that  which  he  has  paid,  but 
which  he  could  have  been  compelled  to  pay  had  lie  resisted  in  the 
outset."  It  has  also  been  held  that  an  insurance  company  cannot 
recover  money  paid  in  settlement  of  a  life  insurance  policy  on  the 
life  of  one  erroneously  supposed  to  be  dead  for  the  reason  that 
there  had  been  a  voluntary  payment  in  extinguishment  of  a  claim 
under  an  assumption  of  fact  known  to  both  parties  to  be  doubt- 
ful.^°  Moreover,  it  is  said  that  the  mistake  which  is  relied  upon 
as  the  basis  of  recovery  must  arise  in  the  transaction  between  the 
parties  to  the  action  and  even  then  there  can  be  no  recovery  if  the 
party  who  receives  the  payment  has  no  knowledge  of  the  mistake 
under  which  it  is  made  and  has  by  reason  of  it  so  changed  his  po- 
sition to  his  prejudice  that  it  would  be  unjust  to  require  him  to  re- 
fund.^« 

§  1390.  Effect  of  negligence  upon  the  right  of  recovery. — 
If  the  money  be  paid  under  the  impression  of  the  truth  of  a  fact 
which  is  untrue,  it  may,  generally  speaking,  be  recovered,  however 
careless  the  party  may  have  been  in  omitting  to  use  due  diligence 

"*  Citizens'    Bank   v.    Schwarzschild  R.  A.  (N.  S.)  233n.  120  Am.  St.  444. 

Sulzberger    Co.,    109   Va.    539,   64    S.  See  also.  Sears  v.  Grand  Lodge  &c.. 

E.   954,   23   L.    R.   A.    (N.    S.)    1092  163  X.  Y.  374,  57  N.  E.  618,  50  L.  R. 

and  note;   Spokane  &c.  Trust  Co.  v.  A.  204.     Compare  with  Masonic  Life 

Huff,  63  Wash.  225,  115  Pac.  80,  33  Assn.   v.   Crandall,  9  App.   Div.    (X. 

L.  R.  A.  (N.  S.)   1023  and  note.  Y.)  400,  75  N.  Y.  St.  890,  41   X.  Y. 

^American    Nat.    Bank    v.    Miller,  S.  497;  Riegel  v.  American  Life  Ins. 

185  Fed.  338;    National  Exch.  Bankv.  Co.,  140  Pa.   St.   193,  21   Atl.  392.  25 

Ginn,   114  Md.   181,  78  Atl.   1026,  33  Atl.   1070,   11    L.   R.   A.  857,  23  Am. 

L.  R.  A.  (N.  S.)  963.  St.  225,  affd.  153  Pa.  St.  134,  25  Atl. 

"  It    may    be    otherwise,    however,  1070,  19  L.  R.  A.  166. 
when    the   drawee    or   payee    induces        "  "When  money  has  been  received 

the   bank   to    make    the   payment   by  by  a  person  in  good  faith,  in  the  usu- 

fraudulent    and    false    misrepresenta-  al  course  of  business  and  for  a  valu- 

tions.      James    River    X^at.    Bank    v.  able    consideration,     it     can     not     be 

Weber,    19  N.   Dak.   702,   124   N.  W.  pursued  into  his  hands  by  one  from 

952.  whom   it   has   been   obtained  through 

"Louisville    v.     Zanone,     1     Mete,  the   fraud   of   a  third   person."     Ball 

(Ky.)    151.  V.  Shepard,  202  N.  Y.  247,  95  X.  E. 

"  Xew  York  Ins.  Co.  v.  Chittenden,  719,    quoting    from    Nassau    Bank  v. 

134  Iowa  613,  112  N.  W.  96,   11  L.  National  Bank,  159  N.  Y.  456,  54  N. 


1390 


CONTRACTS. 


644 


to  inquire  into  the  facts/^  Some  authorities  seem  to  countenance 
the  doctrine  that  a  recovery  cannot  be  had  where  the  party  paying 
has  access  to  information  which  he,  by  his  own  laches,  neglects 
to  acquire.^^  But  it  is  generally  held  that  the  fact  of  the  plain- 
tiff's mistake  having  been  caused  by  his  own  negligence  will  not 
necessarily,  in  the  absence  of  other  facts,  bar  a  recovery/^  And 
the  general  rule  is  that  negligence  will  not  bar  a  recovery  where 
the  defendant  can  be  put  in  statu  quo.-"^  When,  however,  the  sit- 
uation of  the  party  receiving  the  money  has  been  changed  in  con- 
sequence of  the  payment,  and  it  would  be  inequitable  to  allow  a 


E.  66.  See  also,  Citizens'  Bank  v. 
Rudisill,  4  Ga.  App.  Z7,  60  S.  E.  818. 

"Kelly  V.  Solari,  9  M.  &.  W.  54; 
McDermott  v.  Hickling,  23  Can.  L. 
T.  (Occ.  N.)  40,  1  Ont.  Week.  Rep. 
19,  768;  Fraker  v.  Little,  24  Kans. 
598,  36  Am.  Rep.  262;  Baltimore  & 
S.  R.  Co.  V.  Faunce,  6  Gill.  (Md.) 
68,  46  Am.  Dec.  655;  Koontz  v.  Cen- 
tral Nat.  Bank,  51  Mo.  275;  Alston 
V.  Richardson,  51  Tex.  1.  See  also. 
Guild  V.  Baldridge,  2  Swan.  (Tenn.) 
295. 

"'West  V.  Houston,  4  Har.  (Del.) 
170;  Wheeler  v.  Hatheway,  58  Mich. 
77,  24  N.  W.  780;  Peterborough  v. 
Lancaster,  14  N.  H.  382;  Brummitt 
V.  McQuire,  107  N.  Car.  351,  12  S.  E. 
191;  Buffalo  v.  O'Malley,  61  Wis. 
255,  20  N.  W.  913,  50  Am.  Rep.  137. 
See  also,  McClure  v.  Trask,  161  N. 
Y.  82,  55  N.  E.  407,  affg-  20  App. 
Div.   (N.  Y.)   466. 

^^  Money  paid  under  a  mistake  of 
the  payor,  as  to  a  material  fact,  may 
be  recovered  by  him,  though  at  the 
time  of  making  such  payment  he 
possessed,  but  neglected  to  use,  the 
means  of  ascertaining  the  actual 
fact.  Brown  v.  College  Corner  &c. 
Road  Co.,  56  Ind.  110.  "If,  in  con- 
sequence of  such  mutual  mistake, 
one  party  has  received  the  property 
of  the  other,  he  must  refund,  and 
this,  without  reference  to  vigilance 
and  negligence.  *  *  *  In  cases  of 
bargains  and  sales,  the  rule  is  ap- 
plicable, vigilantibus  non  dormient- 
ibus  leges  subvenient,"  per  Hunt, 
Ch.  J.,  in  Kingston  Bank  v.  Eltinge, 
40  N.  Y.  391,  100  Am.  Dec.  516.  _  "It 
is  well  settled  by  recent  decisions 
that  money  paid  to  the  holder  of  a 


check  or  draft  drawn  without  funds 
may  be  recovered  back,  if  paid  by 
the  drawee  under  a  mistake  of  fact. 
And  though  the  rule  was  orig- 
inally subject  to  the  limitation  that 
it  must  be  shown  that  the  party 
seeking  to  recover  back  if  paid  by 
the  drawee  by  a  mistake  of  fact  had 
been  guilty  of  no  negligence,  it  is 
now  held  that  the  plaintiff  in  such 
cases  is  not  precluded  from  recovery 
by  laches  in  not  availing  himself  of 
the  means  of  knowledge  in  his 
power"  per  Colt,  J.,  in  Merchant's 
Nat.  Bank  v.  National  Eagle  Bank, 
101  Mass.  281,  100  Am.  Dec.  120. 
Where  the  teller  of  a  bank  saw  fit 
to  check  without  taking  the  pre- 
caution to  inform  himself  of  the 
state  of  the  account  of  the  drawer 
whose  balance  on  deposit  was  not 
sufficient  to  meet  it,  it  was  held  that 
there  was  nothing  in  the  transaction 
which  bore  the  character  of  a  mis- 
take of  facts,  in  a  legal  sense,  but 
only  that  of  laches,  and  the  plaintiff 
was  not  entitled  to  recover  the 
money  back.  Boylston  Nat.  Bank  v. 
Richardson,  101  Mass.  287.  In  Mil- 
nes  V.  Duncan,  6  B.  &  C.  671,  Bay- 
ley,  J.,  said :  "If  a  party  pay  money 
under  a  mistake  of  the  real  facts, 
and  no  laches  are  imputable  to  him 
(in  respect  of  his  omitting  to  avail 
himself  of  the  means  of  knowledge 
within  his  power),  he  may  recover 
back  such  money."  But  the  rule  on 
this  subject  has  ceased  to  be  thus 
limited. 

="Devine  v.  Edwards,  101  111.  138; 
Wilson  V.  Barker,  50  Maine  447; 
Applcton  Bank  v.  McGilvray,  4 
Gray   (Mass.)   518,  64  Am.  Dec.  92; 


645 


IMPLIED   CONTRACTS. 


§    I39I 


recover}'-,  the  payment  cannot  be  recalled.  In  such  a  case,  the 
person  making  the  payment  must  bear  the  loss  occasioned  by 
his  own  negligence.^^ 

§  1391.  Recovery  of  money  paid  under  mistake  of  law. — 
Generally,  money  paid  under  a  mere  mistake  of  law  cannot  be  re- 
covered, although  it  is  against  conscience  for  the  defendant  to 
retain  it.""  The  general  principle  is  that  where  the  party  with 
full  knowledge,  actual  or  imputed,  of  the  facts,  there  being  no 
duress,  fraud  or  extortion,  voluntarily  pays  money  on  a  demand, 
although  not  enforcible  against  him,  he  cannot  recover  it  back." 
Accordingly,  a  party  who  overpaid  to  a  building  association  in 
dues,  premium  and  interest  cannot  recover  it  back  in  action,  where 
it  was  a  voluntary  payment,  in  ignorance  of  the  law,  and  received 
in  good  faith."*  And  where  an  administrator  paid  money  to  a 
distributee  of  his  intestate,  with  full  knowledge  of  the  facts,  but 
under  a  mistake  of  law,  it  was  held  that  he  could  not  recover  it, 
unless  it  was  necessary  to  pay  the  debts  of  the  intestate.^^ 


Koontz  V.  Central  Nat.  Bank,  51 
]\Io.  275 ;  Lawrence  v.  American  Nat. 
Bank,  54  N.  Y.  432. 

^Walker  v.  Conant,  65  Mich.  194; 
Maver  v.  Mavor,  63  N.  Y.  455 ;  Fegan 
V.  Great  Northern  R.  Co.,  9  N.  Dak. 
30.  81   N.   W.  39. 

"Bilbie  v.  Lumley,  2  East  469; 
Rogers  v.  Ingham,  L.  R.  3  Ch.  Div. 
351 ;  Lowry  v.  Bourdieu,  2  Dougl. 
468;  Brisbane  v.  Dacres,  5  Taunt. 
143  (a  leading  case  on  the  subject)  ; 
Beene's  Admr.  v-  Collenberger,  38 
Ala.  647;  Wingcrter  v.  San  Fran- 
cisco, 134  Cal.  547,  66  Pac.  730.  86 
Am.  St.  294;  Gregory  v.  Clabrough's 
Exr.,  129  Cal.  475.  62  Pac.  72;  Hall 
V.  Farmers'  Bank,  23  Ky.  L.  1450,  65 
S.  W.  365;  Norris  v.  Blcthen,  19 
Maine  348;  Parker  v.  Lancaster,  84 
Maine  512,  24  Atl.  952;  Regan  v. 
Baldwin,  126  Mass.  485.  30  Am. 
Rep.  689;  Claflin  v.  McDonough.  33 
Mo.  412.  84  Am.  Dec.  54;  Campbell 
V.  Clark,  44  Mo.  App.  249;  Phoenix 
Ins.  Co.  V.  Hovt.  3  Nebr.  (Unof.) 
94.  91  N.  W.  186;  Eaton  v.  Eaton,  35 
N.  J.  L.  290;  Third  Ave.  R.  Co.  v. 
Klinker.  29  Civ.  Pro.  (N.  Y.)  51,92 
N.   Y.   St.   136,58N.Y.  S.  136;   New- 


burgh  Sav.  Bank  v.  Woodbury,  64 
App.  Div.  (N.  Y.)  305.  72  N.  Y. 
S.  222,  affd.  173  N.  Y.  55.  65  N.  E. 
858;  Flower  v.  Lance,  59  N.  Y.  603 
(no  legal  right  on  the  part  of  the 
creditor  to  demand  payment  in 
gold)  ;  Real  Estate  Savings'  Institu- 
tion V.  Linder,  74  Pa.  St.  371 ; 
Natchcr  v.  Natcher,  47  Pa.  St.  496: 
Markley  v.  Stevens,  89  Pa.  St.  279; 
Galveston  v.  Gorham,  49  Texas  279 

="  Merrill  v.  Brantlev,  133  Ala.  537. 
31  So.  847;  Heath  &c.  Mfg.  Co.  v. 
National  Linseed  Oil  Co..  93  111.  App. 
13,  197  111.  632,  64  N.  E.  732;  Schwar- 
zenbach  v.  Odorless  Excavating  Ap- 
paratus Co.,  65  Md.  34,  3  Atl.  676, 
57  Am.  Rep.  301  ;  Potomac  Coal  v. 
Cumberland  &  P.  R.  Co..  38  Md.  226 
(to  recover  back  freights  paid  in 
excess  of  proper  rates)  ;  Taber  v. 
New  Bedford,  177  Mass.  197,  58  N. 
E.  640;  United  States  v.  Wilson,  168 
U.  S.  273,  42  L.  ed.  464,  18  Sup.  Ct. 
85. 

**Dilzer  v.  Building  Assn.,  39  Leg. 
Int.  (Pa.)  383. 

"'  Shriver  v.  Garrisoa,  30  W.  Va. 
456. 


§    1392  CONTRACTS.  646 

§  1392.  Ignorantia  juris  neminem  excusat — Exception  in 
the  case  of  ignorance  of  a  foreign  law. — When  the  party  al- 
leges merely  a  mistake  of  law,  the  maxim  applies,  ignorantia 
juris  neminem  excusat.^*'  It  is  a  rule  of  law  as  well  as  of  good 
faith,  and  precludes  the  court  being  occupied  in  undoing  the  ar- 
rangements of  parties,  which  they  have  voluntarily  made,  and 
into  which  they  have  not  been  drawn  by  fraud  or  accident,  or  by 
any  excusable  ignorance  of  their  legal  rights  and  liabilities."  But 
an  exception  or  qualification  has  been  made  to  this  rule  where  a 
mistake  was  made  as  to  law  of  the  jurisdiction  foreign  to  the 
plaintiff  and  to  the  jurisdiction  in  which  the  action  was  brought.^^ 

§  1393.  Contribution. — Where  two  or  more  persons  are 
jointly  liable  to  pay  a  claim  and  one  or  more  of  them  pays  the 
whole  of  it,  or  more  than  his  or  her  share,  the  one  so  paying  may 
generally  recover  from  the  others  the  ratable  proportion  of  the 
claim  that  each  ought  to  pay.^''  The  right  to  contribution  does  not 
arise  out  of  any  express  contract  or  agreement  between  the  parties 
to  indemnify  each  other,  but  on  the  broad  principles  of  equity 
which  courts  of  law  enforce  that  where  two  persons  are  subject 
to  a  common  burden  it  shall  be  borne  equally  between  them.  The 
law  implies  a  contract  between  the  parties  to  contribute  ratably 
toward  the  discharge  of  the  obligation.^"  It  is  immaterial  whether 

^'This    maxim    is    a    fundamental  v.   Sacchi,  57  N.  Y.  331;    Harbach's 

one,   and   has   always   been   received,  Admrs.  v.  Elder,  18  Pa.  St.  33-  The 

with  some  few  exceptions,  as  an  ele-  right    to    enforce    a    contribution    is 

mentary  principle  of  the  common  law  not  complete  until  there  has  been  an 

for    many    years.      Peterborough    v.  actual      payment.        Yore      v.      Yore 

Lancaster.  14  N.  H.  382.    Royston  v.  (Mo.),   144  S.  W.  847. 

Miller,  76  Fed.  50;  Ege  v.  Koontz,  3  ="  Bering    v-    Winchelsea,    1     Cox. 

Pa.    St.   109.  318,  2   B.   &   P.  270;    Cowell   v.   Ed- 

"  Chicago  V.  Sperbeck,  69  111.  App.  wards,  2  Bos.  &  Pul.  268;  Stirling  v. 

562.  Forester,  3  Bligh  575 ;  Craythorne  v. 

'^See    Haven    v.    Foster,    9    Pick.  Swinburne,  14  Ves.  Jr.  160;  Lingard 

(Mass.)  112,  19  Am.  Dec.  353,  where  v.  Bromley,   1  Ves.  &  B.   114;   Hart- 

the  plaintiff  had   money  paid  to  the  ly  v.  O'Flaherty,  Beatty  61,  77;  White 

defendant  under  a  mistake  as  to  the  v.   Banks,  21   Ala.  705,   56  Am.   Dec. 

law    of    New    York.      Foreign    laws  283;  Owen  v.  McGehee,  61  Ala.  440; 

are  generally   regarded   as    facts.     1  Broughton     v.     Wimberly.     65     Ala. 

Elliott    Ev.,    §    46;    1    Elliott's    Gen.  549;  Handley  v.  Heflin,  84  Ala.  600, 

Pr-.  §  436.  4    So.    725;    Bragg   v.    Patterson,    85 

Harbert's     Case,    3     Coke,     lib;  Ala.  233,  4  So.  716;  Chipman  v.  Mor- 

Stirling   v.    Forester,    3     Bligh    575;  rill,  20  Cal.   130;  Bulkeley  v.  House, 

Bailey    v.    Bussing,    28     Conn.     455 ;  62  Conn.  459,  26  Atl.  352,  21  L.  R.  A. 

Booth     V.     Farmers'     &     Mechanics'  247;  Havden  v.  Thrasher,  28  Fla.  162, 

Nat.  Bank,  74  N.  Y.  228;  Aspinwall  9  So.  855;  West  v.  Chasten,  12  Fla. 


647 


IMPLIED    CONTRACTS. 


1393 


the  parties  are  jointly  or  jointly  and  severally  liable  as  principal 
debtors.^^     In  order  to  enforce  contribution  the  payment  must 


315;  Sledge  v.  Dobbs,  254  111.  130. 
98  N.  E.  243;  Golsen  v.  Brand.  75 
111.  148;  Falley  v.  Gribling,  128  Ind. 
110.  26  N.  E.  794;  Thomas  v. 
Thomas.  2  J.  J.  Marsh.  (Ky.) 
60;  Mitchell's  Admr.  v.  Sproul, 
5  J.  J.  Marsh.  (Ky.)  264;  Lans- 
dale's  Admr.  v.  Cox,  7  T.  B. 
Mon.  (Ky.)  401;  Breckenridge  v. 
Taylor,  5  Dana  (Ky.)  110;  Smith's 
Exrs.  V.  Anderson,  18  Md.  520; 
Chaffee  v.  Jones,  19  Pick.  (Mass.) 
260;  Mason  v.  Lord,  20  Pick. 
(iMass.)  447;  Van  Patten  v.  Rich- 
ardson, 68  Mo.  379;  Fletcher  v. 
Grover,  11  N.  H.  368,  35  Am.  Dec. 
497;  Campbell  v.  Mesier,  4  Johns. 
Ch.  (N.  Y.)  334,  8  Am.  Dec.  570; 
Cuylor  V.  Ensvvorth,  6  Paige  (N.  Y.) 
32;  Norton  v.  Coons,  3  Den.  (N. 
Y.)  130;  Aspinwall  v.  Sacchi,  57  N. 
Y.  331;  Rindge  v.  Baker,  57  N.  Y. 
209,  15  Am.  Rep.  475;  Wells  v.  Mil- 
ler, 66  N.  Y.  255;  Moore  v.  Moore, 
11  N.  Car.  358,  15  Am.  Dec  523; 
Sherrod  v.  Woodard,  4  Dev.  L. 
(N.  Car.)  360,  25  Am.  Dec.  714; 
Moore  v.  Isley,  22  N.  Car.  72;  Rus- 
sell V.  Failor,  1  Ohio  St.  327,  59 
Am.  Dec.  631 ;  Camp  v.  Bostwick, 
20  Ohio  St.  337,  5  Am.  Rep.  669; 
Oldham  v.  Broom,  28  Ohio  St.  41; 
Corrigan  v.  Foster,  51  Ohio  St.  225, 
37  N.  E.  263,  citing  4  Am.  &  Eng. 
Encyc.  of  Law  (1st  ed.)  1;  Durbin 
V.  Kuney,  19  Oregon  71,  23  Pac.  661, 
citing  4  Am.  &  Eng.  Encyc.  of  Law 
(1st  ed.)  1;  Harris  v.  Ferguson,  2 
Bail.  L.  (S.  Car.)  397;  Screven  v. 
Joyner.  1  Hill  Ch.  (S.  Car.)  252.  26 
Am.  Dec.  199;  McKenna  v.  George, 
2  Rich.  Eq.  (S.  Car.)  15;  Wavland 
V.  Tucker.  4  Grat.  (Va.)  267,  50 
Am.    Dec.   76. 

^  Lanchester  v.  Tricker,  1  Bing. 
201,  8  E.  C.  L.  472:  Holmes  v.  Will- 
iamson, 6  M.  &  S.  158;  Edgar  v. 
Knapp.  5  M.  &  G.  753,  44  E.  C.  L. 
393:  Burnell  v.  Minot.  4  Moore  340, 
16  E.  C.  L.  375:  Batard  v.  Hawes,  2 
El.  &  Bl.  287,  75  E.  C.  L.  287;  Boul- 
ter V.  Peplow,  9  C.  B.  493.  67  E. 
C.  L.  493;  Woodruff  v.  Glassford, 
4  U.  C.  Q.  B.  (O.  S.)  155:  Allen  v. 
Coy,  7  U.  C.  Q.  B.  419;  Thomas  v. 


Hearn,  2  Port.  (Ala.)  262;  Bragg  v. 
Patterson,  85  Ala.  233,  4  So.  716; 
Crayton  v.  Johnson,  27  Ala.  503 ; 
Green  v.  Mann,  76  Ga.  246;  Gillilan 
V.  Nixon,  26  111.  50;  Hoyt  v.  Lock. 
41  III.  119;  Hodgson  v.  Baldwin,  65 
111.  532;  Harvey  v.  Drew,  82  111.  606; 
Judd  V.  Small,  107  Ind.  398,  8  N.  E 
284;  Minnis  v.  Johnson,  1  Duv. 
(Ky.)  171;  Dupuy  v.  Johnson,  1 
Bibb  (Ky.)  562;  Owens  v.  Collin- 
son,  3  Gill  &  J.  (Md.)  25;  Packard 
V.  Nye.  2  Met.  (Mass.)  47;  Snyder 
v.  Kirtley,  35  Mo.  423 :  Van  Petten  v- 
Richardson,  68  Mo.  379;  Labeaume 
V.  Sweeney,  7  Mo.  153 ;  Parker  v. 
Ellis.  2  Sandf.  (N.  Y.)  223;  Ransom 
V.  Keyes,  9  Cow.  (N.  Y.)  128;  Mc- 
Cready  v.  Van  Antwerp,  24  Hun  (N. 
Y.)  322;  Weed  v-  Calkins.  24  Hun 
(N.  Y.)  582;  Coburn  v.  Wheelock, 
34  N.  Y.  440;  Finlay  v.  Stewart,  56 
Pa.  St.  183;  Morris  v.  Davis  (Tex. 
Civ.  App.),  31  S.  W.  850;  Graves  v. 
Smith,  4  Tex.  Civ.  App.  537,  23  S. 
W.  603.  "When  several  persons  de- 
sire to  bring  about  the  same  result, 
one  which  will  be  of  pecuniary  ad- 
vantage to  each,  and  agree  to  unite 
and  make  common  cause  each  with 
all  others  in  the  undertaking,  and 
join  in  the  appointment  of  the  same 
agent  for  tho  accomplishment  of 
their  purpose,  as  between  themselves 
each  is  bound  to  contribute  his  pro- 
portion to  the  consequent  expense ; 
that  proportion  to  be  determined  by 
the  number  uniting,  or  by  a  rule 
established  by  themselves,  or  by  such 
equities  as  may  arise  from  the  cir- 
cumstances attending  the  transaction. 
And,  if  one  of  them  pays,  either  upon 
the  judgment  of  a  court  or  voluntar- 
ily, a  claim  justly  due  from  all,  each 
of  the  others  is  under  obligation  so 
to  contribute  to  his  repayment  as 
that  the  final  result  shall  be  that 
each  solvent  person  has  paid  his  pro- 
portion." Security  Ins.  Co.  v.  St. 
Paul  &c.  Ins.  Co.,  50  Conn.  233.  See 
also,  Norris  v.  Churchill,  20  Ind. 
App.  668,  51  N.  E.  104.  In  the 
above  case  there  were  five  joint 
debtors.  One  of  the  five  paid  his 
one-tifth  share  at  the  time  the  obliga- 


§  1394 


CONTRACTS. 


648 


have  been  made  by  one  obligated  to  pay  the  whole,  as  between 
himself  and  the  payee,  but  only  bound  to  pay  a  proportionate  part 
as  between  himself  and  his  co-obligors.^- 

§  1394.  When  contribution  may  be  enforced. — Co-sure- 
ties,^^ co-owners  of  property  and  others  of  like  character  who  are 
subject  to  common  liabilities,^"'  partners  after  the  partnership  has 


tion  was  incurred.  Subsequently 
two  of  the  five  became  insolvent  and 
appellee,  Churchill,  was  compelled 
to  pay  in  addition  to  his  own  share 
the  shares  of  these  two  insolvents. 
It  was  held  that  he  might  enforce 
contribution  for  appellant  Norris, 
notwithstanding  the  latter  had  paid 
his  one-fifth  share  at  the  time  the 
obligation  was  incurred  and  had 
been  discharged  by  the  original  cred- 
itor. To  same  effect,  Twichell  v. 
Askew  (Tex.  Civ.  App.),  141  S. 
W.    1072. 

""Yore  V.  Yore  (Mo.),  144  S.  W. 
847.  See  also,  Twichell  v.  Askew 
(Tex.  Civ.  App.),  141   S.  W.  1072. 

""Chipman  v.  Morrill,  20  Cal.  130; 
Golsen  V.  Brand,  75  111.  148;  Bradley 
V.  Burwell,  3  Denio  (N.  Y.)  261; 
Johnson  v.  Harvey,  84  N.  Y.  363,  38 
Am.  Rep.  515.  One  co-partner  or  co- 
purchaser  can  in  no  case  recover,  in 
an  action  for  money  paid,  against  his 
co-partner  or  co-purchaser,  until  the 
money  has  actually  been  paid,  nor 
then  until  the  time  of  payment  has  ar- 
rived. Dedman  v.  Williams,  1  Scam. 
(111.)  154.  Likewise,  a  surety  who 
pays  the  debt  before  maturity  can 
recover  indemnity  or  enforce  contri- 
bution at  maturity  but  not  before. 
Jackson  v.  Adamson,  7  Blackf.  (Ind.) 
597;  Ross  v.  Menefee,  125  Ind.  432, 
25  N.  E.  545;  Tillotson  v.  Rose,  11 
Mete.  (Mass.)  299;  Armstrong  v. 
Gilchrist,  2  Johns.  Cas.  (N.  Y.)  424; 
Craig  V.  Craig,  5  Rawle  (Pa.)  91. 
So,  at  common  law,  sureties  who  pay 
the  debt  of  their  principal  may  main- 
tain an  action  in  assumpsit  in  exon- 
eration or  for  reimbursement.  Hud- 
son V.  Amon  (N.  Car.),  74  S.  E.  97, 
and  cases  there  cited. 

**  Following  cases  relate  to  pay- 
ment of  mortgage;  Young  v.  Will- 
iams, 17  Conn.  393;  Titsworth  v. 
Stout,  49  III.  78,  95  Am.   Dec.  577; 


Fischer  v.  Eslaman,  68  111.  78;  Bris- 
coe V.   Power,  85  111.  420;   Carter  v. 
Penn.  99   111.   390;   Vogle   v.    Brown, 
120  111.  338,   11   N.   E.  327,  12  N.  E. 
252;  Jones  v.  Gilbert,   135  111.  27,  25 
N.   E.  566;   Allen  v.   Clark,   17   Pick. 
(Mass.)    47;     Taylor     v.     Porter,     7 
Mass.  355 ;   Cheesebrough  v.   Millard, 
1    Johns.    Ch.    (N.    Y.)    409,    7   Am. 
Dec.  494;  Sawyer  v.  Lyon,  10  Johns. 
(N.   Y.)    32.     The  following  to  pur- 
chase-money     liens :        Newbold      v. 
Smart,  67  Ala.  326;  Brown  v.  Budd,  2 
Ind.   442;    Soule  v.    Frost.   76   Maine 
119;  Leitch  v.  Little.  14  Pa.  St.  250; 
Wall's    Admrs.    v.    Fife,    2>1    Pa.    St. 
394;    Furman    v.    McMillian,    2    Lea 
(Tenn.)     121;    Rankin    v.    Black,    1 
Head    (Tenn.)    650;    Gee    v.    Gee.    2 
Sneed    (Tenn.)    395.     The    following 
to    the    payment    of    taxes    assessed 
against  the  land :    Moore  v.   Woodall, 
40   Ark.    42;    Cocks   v.    Simmons,    55 
Ark.   104,   17  S.  W.  594,  29  Am.   St. 
28;  Eads  v.  Retherford,  114  Ind.  273, 
16  N.  E.  587,  5  Am.  St.  611;  Oliver 
v.  Montgomery,  39  Iowa  601,  42  Iowa 
Z6\    Weare   v.    Van    Meter,   42   Iowa 
128,    20    Am.     Rep.    616;     Kites    v. 
Church,  142  Mass.  586,  8  N.  E.  743; 
Hurley  v.   Hurley,   148  Mass.  444,   19 
N.  E.  545,  2  L.  R.  A.  172;  Davidson 
v.    Wallace,    53    Miss.    475;    Allen    v. 
Poole,    54    Miss.    2,2Z;    Harrison    v. 
Harrison,    56    Miss.     174;     Clark    v. 
Lindsey,  47  Ohio   St.   437,  25   N.   E. 
422,  9  L.   R.   A.  740.     See,  however, 
Kean  v.   Connelly,  25   Minn.  228,   ZZ 
Am.    Rep.    458.     The    same   principle 
applies  to  ground  rent.     Donagan  v. 
McKee,    13    Phila.    (Pa.)    48.     When 
one  of  several  joint  tenants  or  ten- 
ants  in  common  buys  up  a  superior 
title  the  other  tenants   have  a    right 
to  share   in   the   interest  so  acquired 
upon   contributing  their   ratable   pro- 
portion of  the  amount  paid ;  but  they 
cannot    share   in   the    benefits   unless 


649 


IMPLIED    CONTRACTS. 


§    1394 


been  closed"  or  where  there  is  an  agreement  between  such  part- 
ners to  adjust  a  single  item  without  a  general  accounting,^"  joint 
tort  feasors  liable  for  the  tort  when  the  act  was  committed  with- 
out guilty  knowledge  or  intent"  or  when  the  plaintiff  does  not 
join  in  the  commission  of  the  wrongful  act  but  is  nevertheless  ex- 
posed to  liability  and  suffers  damage  by  reason  of  the  negligence 
or  wrongful  act  of  another,^"''  may  enforce  contributions  when 
the  parties  are  in  equity,  and  one  of  them  has  been  compelled  to 
pay  the  whole  or  more  than  his  share  on  the  obligation. "•^ 


they  so  contribute.  Rothwell  v.  De- 
wees.  2  Black.  (U.  S.)  613,  17  L.  ed. 
309.  To  same  effect,  Titsworth  v. 
Stout,  49  111.  78,  95  Am.  Dec.  577; 
Sneed's  Heir  v.  Atherton.  6  Dana 
(Ky.)  276,  32  Am.  Dec.  70;  Lee  v. 
Fo.x,  6  Dana  (Ky.)  171;  Farmer  v. 
Samuel,  4  Litt.  (Ky.)  187,  14  Am. 
Dec.  106;  Van  Horn  v.  Fonda,  5 
John.   Ch.    (N.   Y.)   388. 

"Johnson  v.  Peck,  58  Ark.  580,  25 
S.  W.  865 ;  Mussetter  v.  Timmerman, 
11  Colo.  201.  17  Pac.  504;  Wendlandt 
V.  Sohre,  Zl  ]Minn.  162;  Brown  v. 
Agnew,  6  Watts  &  S.  (Pa.)  235. 

'"Foster  v.  Allanson,  2  T.  R.  479; 
Blakely  v.  Graham,  HI  Mass.  8;  Gib- 
son V.  Moore,  6  N.  H.  547. 

"  Battersey's  Case,  Winch  48 ;  Betts 
V.  Gibbin.s,  2  Ad.  &  El.  57,  29  E.  C 
L.  47;  Moore  v.  Appleton,  26  Ala. 
633 ;  Coit  v.  Tracy,  9  Conn  1 ;  Bailey 
V.  Bussing,  28  Conn.  455 ;  Herr  v. 
Barber,  2  Mackey  (D.  C.)  545; 
Gower  v.  Emcrv,  18  Maine  79;  Jacobs 
V.  Pollard,  10  Cush.  (Mass.)  287,  57 
Am.  Dec.  105;  Smith  v.  Ayrault,  71 
Mich.  475;  Ankenv  v.  Moffett,  Zl 
Minn.  109,  Zl  N.  W.  320;  Johnson 
V.  Torpy,  35  Nebr.  604.  53  N.  W. 
575,  Z1  Am.  St.  447 ;  Acheson  v.  Mil- 
ler, 2  Ohio  St.  203,  59  Am.  Dec.  663; 
Horbach's  Admr.  v.  Elder,  18  Pa.  St. 
ZZ ;  Armstrong  County  v.  Clarion 
Countv.  66  Pa.  St.  218,  5  Am.  Rep. 
368;  Gulf  &c.  R.  Co.  v.  Galveston  &c. 
R.  Co.,  83  Texas  509,  18  S.  W.  956; 
Thweatt  v.  Jones,  1  Rand.  (Va.) 
328,  10  Am.  Dec.  538.  See  also.  Bus- 
kirk  V.  Sanders  (W.  Va.),  IZ  S.  E. 
937.  Contribution  will  not  be  en- 
forced between  joint  tort  feasors 
who  are  in  pari  delicto.  Burke  v. 
Hodge   (Mass.),  97  N.  E.  920.     See 


also,  Dow  V.  Sunset  Tel.  &c.  Co. 
(Cal.),  121  Pac.  379;  Longworth  v. 
Stevens  (Tex.  Civ.  App.),  145  S.  W. 
257. 

"a  Pearson  v.  Skelton,  1  M.  &  W. 
504;  Wooley  v.  Batte,  2  C  &  P.  417, 
12  E.  C.  L.  649;  Bailey  v.  Bussing, 
28  Conn.  455;  Smith  v.  Foran,  43 
Conn.  244,  21  Am.  Rep.  647;  Penn- 
sylvania Steel  Co.  V.  Washington  &c. 
Bridge  Co.,  194  Fed.  1011;  Horbach's 
Admrs.  v.  Elder,  18  Pa.  St.  ZZ ;  Union 
Stock  Yards  Co.  v.  Chicago  &c.  R. 
Co.,  196  U.  S.  217,  49  L.  ed.  453,  25 
Sup.  Ct.  226;  Robbins  v.  Chicago,  4 
Wall.  (U.  S.)  657,  18  L.  ed.  427.  It 
is,  of  course,  true,  as  a  general  rule, 
that  one  of  several  wrongdoers  can- 
not recover  against  another  wrong- 
doer, although  he  may  have  been  com- 
pelled to  pay  all  the  damages  for 
the  wrong  done,  for  the  reason  that 
the  parties  are  in  pari  delicto.  See 
Merryweather  v.  Nixan,  8  T.  R.  186, 
which  is  the  leading  case  on  the  sub- 
ject. See  also  cases  cited  ante,  this 
note,  and  chaps.  21,  28. 

''b"The  right  to  contributions 
being  founded  in  natural  justice,  is 
not  restricted  to  any  special  relation, 
but  applies  to  original  contractors,  or 
any  other  relation,  where  equity  be- 
tween the  parties  is  equality  of  bur- 
den, and  one  discharges  more  than 
his  share  of  the  common  obligation." 
Bragg  V.  Patterson,  85  Ala.  233,  4 
So.  716;  Aspinwall  v.  Sacchi,  57  N. 
Y.  331.  See  also,  Baltimore  &c.  R. 
Co.  v.  Walker,  45  Ohio  St.  577,  16  N. 
E.  475  (railroad  companies  bound  to 
repair  a  crossing).  See  also,  the  fol- 
lowing cases  which  relate  to  contribu- 
tions among  fraudulent  grantees  of 
land:     Janvrin   v.   Curtis,   63   N.   H. 


§    1395  CONTRACTS.  65O 

§  1395.  Goods  sold  and  delivered. — When  goods  are  sold 
and  delivered  to  another  without  any  agreement  as  to  the  price 
to  be  paid  therefor  the  law  implies  that  the  buyer  will  pay  a  rea- 
sonable price  for  them.^®  Ordinarily  the  market  price  at  the  time 
and  place  of  delivery  is  considered  as  the  reasonable  worth  of  the 
goods/"  But  this  is  untrue  when  the  market  is  unnaturally  in- 
flated.*" Thus,  where  the  seller  and  all  the  other  makers  have 
combined  for  the  purpose  of  controlling  the  price,  the  price  so 
fixed  is  not  necessarily  the  amount  to  be  paid  for  it,  but  the  price 
is  only  what  the  article  is  reasonably  worth."  It  has  been  held 
that  there  can  be  no  recovery  on  an  implied  contract  for  the  price 
of  goods  sold  and  delivered  if  the  vendor  can  maintain  an  action 
on  a  special  contract  which  relates  to  that  price.*^ 

§  1396.  Board  and  lodging. — It  has  already  been  pointed 
out  that  as  between  members  of  the  same  family  services  rendered 
by  each  to  the  other  are  considered  as  having  been  gratuitously 
performed,  and  there  is  no  implied  liability  to  pay  therefor.*^ 
But  as  between  strangers  or  parties  not  members  of  the  same  fam- 
ily the  law  implies  a  promise,  on  the  part  of  the  recipient  of  board 
and  lodging  to  pay  therefor  the  reasonable  value  in  the  absence 
of  any  agreement  as  to  price,  or  an  express  understanding  to 
the  contrary.  Thus,  where  an  invalid  woman,  not  a  relative,  was 
received  into  a  family  and  furnished  a  room  with  board  and  nurs- 
ing, the  law  raised  an  implied  contract  that  she  was  to  pay  the 
reasonable  value  of  the  boarding  and  nursing.**  Moreover,  when 
necessities  are  supplied  to  a  person  who  by  reason  of  disability 

312 ;    Brice   v.    Myers,    5    Ohio    121 ;  *"  Kountz  v.  Kirkpatrick,  72  Pa.  St. 

Chamberlayne    v.    Temple,    2    Rand.  376,  13  Am.  Rep.  687. 

(Va.)    384,    14   Am.    Dec.    786.     See  "Lovejoy  v.  Michels,  88  Mich.  15, 

Cornish  V.   Clark,  L.  R.   14  Eq.   184.  49  N.  W.  901,  13  L.  R.  A.  770. 

'"  Hoadly  v.  M'Laine,  10  Bing.  482 ;  "  Carter    v.    McNeeley,    1    Ired.    L. 

Valpy  V.  Gibson,  4  C.  P.  837;  Shealy  CN.  Car.)  448.     See,  generally,  3  El- 

V.  Edwards,  12>  Ala.  175,  49  Am.  Rep.  liott  Ev.,  §  1732;   St.  Louis  Hay  &c. 

43-    McEwen   v.    Morey,   60    111.    32;  Co.  v.  United  States,  191   U.  S.  159, 

Taft  V.  Travis,  136  Mass.  95;  James  48  L.  ed.  130,  24  Sup.  Ct.  47. 

V.  Muir,  ZZ  Mich.  223.  "  See  ante,  §  1366  et  seq. 

"*  McEwen    v.    Morey,    60    111.    32;  **  McQueen  v.  Wilson,  51  Mo.  App. 

Fenton  v.  Braden,  2  Cranch  (U.  S.)  138.     See  also,  to  same  effect,  Hardi- 

550,  Fed.  Cas.  No.  4730.  man's  Admr.  v.   Crick,   131   Ky.  358, 

115  S.  W.  236,  133  Am.  St.  248n. 


651  IMPLIED    CONTRACTS.  §    1 397 

cannot  himself  contract,  as  in  case  of  a  lunatic,  tlie  law  implies  an 
obligation  on  the  part  of  such  imbecile  to  pay  for  such  necessities 
out  of  his  own  pocket.*"^  An  infant  is  held  liable  for  necessities 
furnished  in  the  absence  of  an  express  contract.  The  law  implies 
a  promise  to  pay  for  the  necessities  of  his  situation  just  as  in  the 
case  of  a  lunatic."  So,  if  a  person  furnishes  necessities  to  a  wife 
which  the  husband  was  under  a  duty  to  supply,  the  law  implies  a 
promise  on  the  part  of  the  husband  to  pay  therefor.*^ 

§  1397.  Use  and  occupation. — The  possession  and  bene- 
ficial enjoyment  of  real  property  with  the  permission  of  the  owner 
is  ordinarily  sufficient  to  sustain  an  action  upon  an  implied  agree- 
ment for  use  and  occupation.*^  In  such  cases  the  law  will  imply 
that  the  relation  of  landlord  and  tenant  exists  in  the  absence  of 
any  evidence  to  the  contrary,*^  and  this  is  true  even  though  there 
should  exist  between  the  parties  no  express  and  definite  agreement 
to  pay  rent.*^"  The  law  will  in  a  proper  case  imply  a  promise  to 
pay  rent."  There  can,  however,  be  no  recovery  for  the  use  and 
occupation  of  real  estate  unless  the  relation  of  landlord  and  tenant 
exist  between  the  parties  expressly  or  by  implication."     Conse- 

"See  ante,  §  373,  Insane  Persons,  (N.    S.)     (N.    Y.)     140;    Baxter    v. 

Contracts  for  Necessities.  West,  5  Daily   (N.  Y.)   460;  Collyer 

"Dumser    v.    Underwood,    68    111.  v.   Collyer,  113  N.  Y.  442,  21   N.  E. 

App.    121;   Trainer   v.   Trumbull,    141  114.     See  also,  Chattanooga  Brewing 

Mass.  527,  6  N.  E.  761;  Epperson  v.  Co.  v.  Smith  (Ala.),  58  So.  63. 
Nugent,    57    Miss.    45,    34    Am.    Rep.        "Skinner  v.  Skinner,  38  Nebr.  756, 

434;  Gay  v.  Ballou,  4  Wend.  (N.  Y.)  57  N.  W.  534. 

403,    21    Am.    Dec.    158;    Parsons   v.        '"Wilkinson  v.   Wilkinson,  62   Mo. 

Keys,  43  Texas  557.     See  also,  ante,  App.  249. 
§  295  et  seq..  Infants  Necessities.  "United    States   v.    Whipple   Hdw. 

^'Eiler  V.  Crull.  99  Ind.  375;  Wat-  Co..  191  Fed.  945,  112  C  C.  A.  357; 
kins  V.  De  Armond,  89  Ind.  553  (In  Devereux  v.  Fleming,  53  Fed.  401; 
this  case  the  husband  gave  notice  Dickson  v.  Moffat,  5  Colo.  114;  Gunn 
that  he  would  not  be  responsible  for  v.  Scovil,  4  Day  (Conn.)  228,  4  Am. 
necessities  furnished  his  wife  after  Dec.  208;  Wills  v.  Wills,  34  Ind.  106; 
he  had  driven  her  from  his  home.)  ;  Logan  v.  Lewis.  7  J.  J.  Marsh  (Ky.) 
Cunningham  v.  Rearden,  98  Mass.  3;  Skinner  v.  Skinner,  38  Nebr.  756. 
538,  96  Am.  Dec.  670.  See  also,  ante,  57  N.  W.  534 ;  Hayes  v.  Acre,  Con- 
ch. 13,  Married  Women.  And  see,  ference  (N.  Car.)  19;  Sutton  v. 
as  to  implied  promise  of  father  to  Mandeville,  1  Munf.  (Va.)  407,  4 
pav  for  board  and  lodging  of  child,  Am.  Dec.  549;  Eppes'  Exrs.  v.  Cole. 
Nichole  V.  Allen,  3  Car.  &  P.  36.  But  4  Hen.  &  M.  (Va.)  161,  4  Am.  Dec. 
compare     as     to     illegitimate     child,  512. 

Moncrief  v.   Ely,  19  Wend.    (N.  Y.)         "In  a  case  where  a  wife  was  per- 

405.  mitted  to  recover  from  her  husband 

"Newport  v.  Saunders,  3  B.  &  Ad.  a    fair   and    reasonable   compensation 

411 ;  Osgood  v.  Dewey,  13  Johns.  (N.  for  his  -use  and  occupation  of  her  real 

Y.)   240;  Coit  v.  Planer,  4  Abb.   Pr.  estate,    the   court   said:     "From   the 


1398 


CONTRACTS. 


652 


quently,  the  action  cannot  be  maintained  when  an  express  contract 
between  the  parties  shows  that  it  was  not  intended  by  them  to 
give  rise  to  the  relation  of  landlord  and  tenant,  as  where  one  takes 
possession  under  a  contract  of  sale,*^^  or  where  the  one  sought  to 
be  charged  entered  as  a  mere  trespasser  and  remained  such  during 
the  term  of  his  occupancy.^* 

§  1398.    Waiver  of  torts  and  suing  on  implied  contracts. — 

In  a  proper  case  the  law  permits  a  party  to  treat  that  which  is  a 
tort  as  having  created  a  contract  between  himself  and  the  tort 
feasor,  and  allows  the  party  wronged  to  choose  between  an  action 
in  tort  or  one  for  a  breach  of  an  implied  contract,  and  in  case  he 
pursues  the  latter  remedy,  he  is  said  to  have  waived  the  tort 
and  sued  in  assumpsit.^^     The  most  conspicuous  example  of  this 


foregoing  authorities  we  deduce  the 
following  principles:  (1)  To  sustain 
an  action  for  use  and  occupation  of 
real  estate  the  relation  of  landlord 
and  tenant  must  exist  between  the 
parties,  based  on  an  agreement,  ex- 
pressed or  implied.  (2)  One  in  the 
exclusive  possession  of  real  estate  of 
another  with  the  latter's  knowledge, 
in  the  absence  of  all  evidence  on  the 
subject,  will  be  presumed  in  the  pos- 
session by  the  owner's  permission. 
(3)  That  the  law,  in  the  absence  of 
all  evidence  to  the  contrary,  will  im- 
ply the  existence  of  the  relation  of 
landlord  and  tenant  between  two  par- 
ties, where  one  owns  land,  and  by 
his  permission  it  is  used  and  occupied 
by  the  other.  (4)  That,  if  the  ten- 
ant's use  and  occupation  has  been 
beneficial  to  him,  that  is  sufficient 
ground  from  which  to  imply  a  prom- 
ise on  his  part  to  pay  a  reasonable 
compensation  for  such  use  and  oc- 
cupation, in  the  absence  of  any  evi- 
dence negativing  such  promise. 
Skinner  v.  Skinner,  38  Nebr.  756,  57 
N.  W.  534.  See  also,  Winterbottom 
V.  Ingham,  L.  R.  7  Q.  B.  611;  Belger 
v.  Sanchez,  137  Cal.  614,  70  Pac.  738; 
Johnson  v.  Hibbert  (Del.),  82  Atl. 
86;  Janouch  v.  Pence,  68  Nebr.  867, 
93  N.  W.  217;  Carpenter  v.  United 
States,  17  Wall.  (U.  S.)  489,  21  L. 
ed.  680,  9  Ct.  CI.   (U.  S.)   18. 

"Kirtland    v.    Pounsett,    2    Taunt. 
145;  Smith  v.  Stewart,  6  Johns.   (N. 


Y.)  46,  5  Am.  Dec.  186  (defendant 
entered  under  a  contract  for  a  deed)  ; 
Carpenter  v.  United  States,  17  Wall. 
(U.  S.)  489,  21  L.  ed.  680,  9  Ct.  CI. 
(U.  S.)  18.  (Parol  contract  to  buy 
on  behalf  of  the  United  States  cer- 
tain real  estate.  Officers  of  the  gov- 
ernment entered  into  possession,  and 
retained  possession  until  some  three 
years  later  when  the  deal  was  closed 
and  the  money  paid.  The  plaintiff 
then  brought  this  action  to  recover 
for  use  and  occupation  during  the 
three  years  the  government  had  been 
in  possession,  the  legal  title,  how- 
ever, during  the  three-year  period 
rested  in  the  plaintiff  and  it  was  held 
he  could  not  recover.) 

"Dixon  v.  Ahern,  19  Nev.  422,  14 
Pac.  598;  National  Oil  Refining  Co. 
v.  Bush,  88  Pa.  St.  335 ;  Ackerman  v. 
Lyman,  20  Wis.  454.  See  also.  United 
States  V.  Whipple  Hdw.  Co.,  191 
Fed.  945,  112  C.  C.  A.  357.  See 
also,  post,  §  1398,  Waiving  Torts  and 
Suing  on  Contracts,  and  3  Elliott  Ev., 
§  1735. 

"Keating  v.  Marsh,  1  Montagu 
Ayrton  582;  Missouri  Savings  &c. 
Co.  V.  Rice,  84  Fed.  131,  28  C.  C.  A. 
305;  Whittenten  Mfg.  Co.  v.  M.  & 
O.  Packet  Co.,  21  Fed.  896;  A.  G. 
Rhodes  &c.  Co.  v.  Jenkins,  2  Ga.  App. 
475,  58  S.  E.  897  (holding  that  where 
one's  money  is  wrongfully  obtained 
the  damage  may  be  waived  and  an 
action   brought    for   money   had   and 


0S3  IMPLIED    CONTRACTS. 


1399 


principle  is  found  in  those  cases  in  which  one's  goods  have  been 
taken  from  him  or  detained  unlawfully  under  such  circumstances 
as  would  entitle  him  to  bring-  an  action  in  trover.  Suits  involv- 
ing the  duty  to  compensate  for  chattels  wrongfully  appropriated 
have  given  rise  to  a  conflict  of  authorities.  The  early  cases  and 
many  modern  ones  lay  down  the  rule  that  if  the  wrongdoer  sells 
the  goods  and  receives  the  money  the  one  whose  goods  are  taken 
may  waive  the  tort,  affirm  the  sale  and  bring  an  action  for  money 
had  and  received  for  the  proceeds,  but  that  an  action  on  the  im- 
plied contract  cannot  be  maintained  unless  the  property  of  which 
the  plaintiff  has  been  deprived  has  been  converted  into  money  or 
an  equivalent  thereto.^® 

§  1399.  Rule  further  considered. — Under  the  rule  as  thus 
stated  if  the  defendant  merely  converted  the  property  to  his  own 
use,^^  or  if  he  merely  barters  or  exchanges  the  property  for  other 
property  not  the  equivalent  of  money,^^  the  conversion  could  not 
be  treated  as  a  sale  and  an  action  brought  on  the  implied  promise 
to  pay  therefor.  Subsequently,  it  was  recognized  that  the  general 
rule  as  stated  was  not  without  exception,^''  and  the  rule  has  in 

received);  Cooper  v.  Cooper,  147  Am.  Dec.  555;  Moore  v.  Richardson, 
Mass.  370,  17  N.  E.  892,  9  Am.  St.  68  N.  J.  L.  305.  53  Atl.  1032;  Hinds 
721,  2  Keener's  Cas.  358;  Mississippi  v.  Tweddle,  7  How.  Pr.  (N.  Y.)  278; 
Central  R.  Co.  v.  Fort,  44  Miss.  Terrv  v.  Munger,  121  N.  Y.  161,  24 
423;  People  v.  Speir,  77  N.  Y.  N.  E.  272,  8  L.  R.  A.  216n,  18  Am.  St. 
144;  1  Elliott  Gen.  Pr.,  §  300.  803;  Brush  v.  Batten.  15  N.  Y.  St. 
It  seems  to  have  been  true  originally  548;  McCullough  v.  McCullough,  14 
that  one  who  had  been  injured  by  the  Pa.  St.  295;  Bethlehem  v.  Persever- 
commission  of  a  tort  had  no  remedy  ance  Fire  Co.,  81  Pa.  St.  445. 
other  than  an  action  in  tort.  Philips  "Woodruff  v.  Zaban.  133  Ga.  24, 
V.  Thompson,  3  Lev.  191;  Jones  v.  65  S.  E.  123,  134  Am.  St.  186n;  Bar- 
Hoar,  5   Pick   (Mass.)   285.  low  v.  Stalworth,  27  Ga-  517. 

"'Potts  v.  First  Nat.  Bank,  102  Ala.         '"Fuller  v.    Duren,   36   Ala.   73.    76 

286,  14  So.  663;   Bradfield  v.  Patter-  Am.  Dec.  318;  Kidnev  v.  Persons,  41 

son,  106  Ala.  397,   17  So.  536;   Hud-  Vt.    386,    98   Am.    Dec.    595.      In   the 

son  V.   Gilliland,  25   Ark.   100;   Fratt  case    of    Spencer   v.    Hcwett,   20    Ga. 

v.    Clark,    12    Cal.    89;    Lataillade    v.  426,  it  is  said  in  the  head-note:    "The 

Orena,  91    Cal.   565,  27    Pac.  924,   25  defendant  took  the  plaintiff's  wagon. 

Am.  St.  219;  Jester  v.  Knotts  (Del.),  without    the    plaintiff's    consent,    and 

57  Atl.  1094;  Cragg  v.  Arendale,  113  exchanged     it     for     another     wagon 

Ga.  181.  38  S.  E.  399;  Barlow  v.  Stal-  which  he  brought  to  plaintiff  in  place 

worth.  27  Ga.  517;  Dickinson  v.  Whit-  of  his.     This  the  plaintiff  would  not 

ney,    4    Gilm.     (111.)    406;    Ward    v.  receive,    but    sued    the    defendant    in 

Montgomery,  67  111.  .App.  346;  Cooper  the  form  of  'an  action  upon  account' 

V.    Helsabeck,    5    Blackf.    (Ind.)    14;  *   *   *    Held,    that    in    an    action    in 

Isaacs    V.    Hermann,    49    :\Iiss.    449;  that  form  would  not  lie." 
Floyde  v.  Wiley,  1    Mo.  643;  Wood-        "*  Stockett  v.  Watkins,  2  Gill    &  J 

bury  v.  Woodbury,  47  N.   II.   11,  90  (Md.)   326,  20  Am.  Dec  438-  Tuttle 


§  I400 


CONTRACTS. 


654 


most  states  been  gradually  extended  until  now  it  is  held  by  the 
weight  of  authority  that  the  tort  may  be  waived  and  assumpsit 
maintained  whenever  the  property  taken  has  been  converted  either 
into  money  or  into  any  other  beneficial  use  by  the  wrongdoer  and 
especially  when  it  has  been  so  applied  to  his  use  as  to  lose  its 
identity.  Under  the  rule  as  thus  announced  one  who  has  in  any 
manner  thus  converted  the  property  of  another  to  his  use  may 
be  liable  for  the  value  to  such  other  in  an  action  for  goods  sold 
and  delivered.''" 

§  1400.  Other  instances  in  which  the  tort  may  be  waived 
and  suit  brought  on  the  implied  contract. — A  carrier's  breach 
of  duties  relative  to  the  carrying  of  passengers''^  or  freight''"  may 
be  treated  as  a  violation  of  contract  and  declared  on  in  assumpsit, 
or  may  be  considered  a  tort.  An  election  may  be  made  to  sue 
either  in  tort  or  on  assumpsit  where  a  bailee  refuses  to  return  the 


V.  Campbell,  74  Mich.  652,  42  N.  W. 
384.  16  Am.  St.  652n. 

""Lehmann  v.  Schmidt,  87  Cal.  15, 
25  Pac.  161 ;  Roberts  v.  Evans,  43  Cal. 
380;  Newton  Mfg.  Co.  v.  White,  52 
Ga.  395 ;  Janes  v.  Buzzard,  Hempst. 
(U.  S.)  240,  Fed.  Cas.  No.  7206a.  The 
contrary  rule  formerly  prevailed  in 
this  state.  Barlow  v.  Stalworth,  27 
Ga.  517;  Toledo  &c.  R.  Co.  v.  Chew, 
67  111.  378.  The  rule  was  formerly 
otherwise  in  Illinois.  O'Reer  v. 
Strong,  13  111.  688;  Morrison  v.  Rog- 
ers, 2  Scam.  (111.)  317;  Morford  v. 
White,  53  Ind.  547 ;  Jones  v.  Gregg, 
17  Ind.  84;  Cooper  v-  Helsabeck,  5 
Blackf.  (Ind.)  14;  Fanson  v.  Lins- 
ley,  20  Kans.  235 ;  Stewart  v.  Balder- 
ston,  10  Kans.  131;  AldineMfg.  Co.  V. 
Barnard,  84  Mich.  632,  48  N.  W.  280; 
Tuttle  v.  Campbell,  74  Mich.  652,  42 
N.  W.  384,  16  Am.  St.  652n ;  Fiquet 
V.  Allison,  12  Mich.  328,  86  Am.  Dec. 
54;  Evans  v.  Miller,  58  Miss.  128.  38 
Am.  Rep.  313.  Disapproving  intima- 
tions to  the  contrary  in  O'Conley  v. 
Natchez,  1  Sm.  &  M.  (Miss.)  31,  40 
Am.  Dec.  87,  and  Mhoon  v.  Green- 
field, 52  Miss.  434;  Miller  v.  Wesson, 
58  Miss.  831;  New  York  Market 
Gardners'  Assn.  v.  O'Neill-Adams 
Co.,  J 15  App.  Div.  (N.  Y.)  42,  100 
N.  Y.  S.  596.  190  N.  Y.  514,  83  N. 
E.  1128;  Goodwin  v.  Griffis,  88  N.  Y. 


629;  Terry  v.  Munger,  121  N.  Y. 
161,  24  N.  E.  272,  8  L.  R.  A.  216n, 
18  Am.  St.  803 ;  McGoldrick  v.  Wil- 
lits,  52  N.  Y.  612;  Osborn  v.  Bell,  5 
Denio  (N.  Y.)  370,  49  Am.  Dec.  275; 
Wigand  v.  Sichel,  3  Keyes  (N.  Y.) 
120;  Butts  v.  Collins,  13  Wend.  (N. 
Y.)  139;  Abbott  v.  Blossom,  66  Barb. 
(N.  Y.)  353;  Logan  v.  Wallis,  76  N. 
Car.  416;  Barker  v.  Cory,  15  Ohio  9; 
Kirkman  v.  Philips'  Heirs,  7  Heisk. 
(Tenn.)  222;  Alsbrook  v.  Hathaway. 
3  Sneed  (Tenn.)  454;  Ferr ill's  Admx. 
v.  Mooney's  Exrs.,  33  Tex.  219;  Mc- 
Donald V.  Peacemaker.  5  W.  Va.  439; 
Walker  v.  Duncan,  68  Wis.  624,  32 
N.  W.  689;  Norden  v.  Jones,  33  Wis. 
600.  14  Am.  Rep.  782.  The  earlier 
decisions  in  this  state  are  to  the  con- 
trary. Kelty  V.  Owens.  3  Pin.  (Wis.) 
372.  4  Chand.  166;  Elliott  v.  Jackson, 
3  Wis.  649.  See  also,  note  in  134 
Am.  St.  191. 

"'-  Bank  of  Orange  v.  Brown,  3 
Wend.  (N.  Y.)  158;  Boster  v.  Chesa- 
peake &  O.  R.  Co.,  36  W.  Va.  318,  15 
S.  E.  158. 

*"  Jenkins  v.  Seaboard  Air  Line  Ry., 
3  Ga.  App.  381,  59  S.  E.  1120;  Owens 
V.  Chicago  &c.  R.'  Co.,  139  Iowa  538, 
117  N.  W.  762,  citing  many  cases; 
Waters  v.  Mobile  &c.  R.  Co.,  74  Miss. 
534,  21  So.  240. 


655 


IMPLIED    CONTRACTS. 


1400 


goods  in  accordance  with  the  terms  of  the  contract  or  when  they 
are  destroyed  while  in  his  possession."^     Brokers  who  dispose  of 
their  cHent's  securities  without  authority  may  be  sued  either  in 
assumpsit  or  tort  at  the  election  of  the  injured  party.*'*     In  gen- 
eral, fraudulent  acts  often  give  rise  to  an  action  in  assumpsit,'^' 
especially  when  practiced  by  agents.""     When  the  same  act  is  an 
infringement  of  a  patent  and  also  the  breach  of  some  contract  the 
injured  party  may  waive  the  infringement  and  bring  his  action 
for  breach  of  contract."     An  action  in  assumpsit  may  be  main- 
Ill.  App.  439,  affd.  163  111.  445,  45  N. 
E.  297;  Berkshire  Glass  Co.  v.  Wol- 
cott,   2   Allen    (Mass.)    227,   79   Am. 
Dec.  781 ;   Courier  v.  Pierson,  72  N. 
J.    L.    393.    61    Atl.    81;    Doherty    v. 
Shields,  86  Hun   (N.  Y.)   303,  67  N. 
Y.  St.  211,  33  N.  Y.  S.  497;  Jones  v. 
Smith.    65    Misc.    (N.    Y.)    528,    120 
N.  Y.  S.  865 ;  Stroud  v.  Life  Ins.  Co. 
of  Virginia,  148  N.  Car.  54,  61  S.  E. 
626;  Hornefius  v.  Wilkinson,  51  Ore. 
45,    93    Pac.    474;    Kimble    v.  Caro- 
thers,     81      Pa.      St.      494;      Vance 
V.   Mottley,  92  Tenn.  310,  21    S.   W. 
593 ;  In  re  Heber's  Will,  139  Wis.  472. 
121  N.  W.  328.     One  who  assumes  to 
contract  on  behalf  of  another  with- 
out authority  is  liable  on  the  express 
or    implied    contract     made    by    the 
assumed  agent  that  he  has  authority 
to  enter  into  the  agreement   for  the 
other ;  Meek  v.  Wendt,  L.  R.  21  Q.  B. 
Div.  126,  59  L.  T.  (N.  S.)  558.  6  Asp. 
Mar.   Cas.   331;    Simons   v.    Patchett, 
7  El.  &  Bl.  568.  26  L.  Q.  B.  195,  3 
Jur.    (N.   S.)    742,   5  Week.   R.   500; 
Kent  V.  Addicks,  126  Fed.  112,  60  C. 
C.  A.  660;  White  v.  Madison.  26  N. 
Y.  117;  Baltzen  v.  Nicolav,  53  N.  Y. 
467;   Tavlor  v.   Nostrand.   134  N.  Y. 
108,  31   N.   E.  246;   Noe  v.  Gregory, 
7  Daly   (N.  Y.)  283;  Haupt  v.  Vint, 
68  W.  Va.  657,  70  S.  E.  702,  34  L. 
R.  A.  (N.  S.)  518n. 

*'B.  F.  Averv  &  Sons  v.  McClure, 
94  Miss.  172.  47  So.  901,  22  L.  R.  A. 
(N.  S.)  256n;  Excelsior  Wooden- 
Pipe  Co.  V.  Pacific  Bridge  Co..  185 
U.  S.  282,  46  L.  ed.  910,  22  Sup.  Ct. 
681 ;  Steam  Stone  Cutter  Co.  v. 
Sheldons,  21  Blackf.  (U.  S.)  260.  15 
Fed.  608;  Manning  v.  Galland-Hen- 
ning  P.  M.  Drum  Mfg.  Co.,  141  Wis. 
199,  124  N.  W.  291. 


"A.  G.  Rhodes  &c.  Co.  v.  Freeman, 
2  Ga.  App.  473,  58  S.  E.  696;  Redel 
V.  Missouri  Vallev  Stone  Co.,  126  Mo. 
App.  163.  103  S.  W.  568. 

"Barber  v.  Ellingwood,  122  N.  Y. 
S.  369,  137  App.  Div.  (N.  Y.)  704. 

•"  Steiner  v.  Clisby,  103  Ala.  181,  15 
So.  612;  Missouri  Sav.  &c.  Co.  v.  Rice, 
84  Fed.  131,  28  C  C.  A.  305;  Love  v. 
^IcElroy,  106  111.  App.  294 ;  ^lorgan's 
Louisiana  &c.  Co.  v.  Stewart,  119  La. 
392,  44  So.  138;  Penobscot  R.  Co.  v. 
Mayo,  67  Maine  470,  24  Am.  Rep. 
45 ;  Himmelberger-Harrison  Lumber 
Co.  V.  Dallas  (Mo.  App.).  146  S.  W. 
95  (logs  over  scaled)  ;  Martin  v.  Hut- 
ton,  90  Nebr.  34,  132  N.  W.  727,  36 
L.  R.  A.  (N.  S.)  602  and  note;  West- 
cott  V.  Sharp,  50  N.  J.  L.  392.  13  Atl. 
243;  Dresser  v.  Mercantile  Trust  Co., 
124  App.  Div.  (N.  Y.)  891,  108  N.  Y. 
S.  577;  Fenemore  v.  United  States, 
3  Dall.  (U.  S.)  357,  1  L.  ed.  634; 
Huganir  v.  Cotter,  102  Wis.  323,  78 
N.  W.  423.  72  Am.  St.  884.  Thus, 
where  the  defendant  represented  that 
certain  public  land  was  not  open  to 
entry,  but  that  its  relinquishment 
would  have  to  be  purchased,  and 
plaintiff  relying  on  such  representa- 
tions paid  the  defendant  money  with 
which  to  obtain  the  relinquishment,  it 
was  held  that  he  might  recover  the 
money  so  paid  in  an  action  for  money 
had  and  received  when  the  land  was 
in  fact  open  to  entr>'  at  the  time  the 
representation  was  made.  Martin  v. 
Hutton,  90  Nebr.  34,  132  N.  W.  727, 
36  L.  R.  A.  (N.  S.)  602. 

""First  Nat.  Bank  v.  Henrv.  159 
Ala.  367.  49  So.  97;  State  Bank  of 
Chicago  v.  Cox,  143  Fed.  91,  74  C. 
C.  A.  285 :  Dittemore  v.  Cable  Milling 
Co.,  16  Idaho  2^8.  101  Pac.  593,  133 
Am.  St.  98n;  Farson  v.  Hutchins,  62 


§   I400 


CONTRACTS 


656 


tained  against  a  thief  for  goods  stolen,^^  against  an  embezzler  for 
money  embezzled/^  or  against  physicians  and  surgeons  for  mal- 
practice/*^ or  for  the  conversion  of  standing  timber  when  title  to 
the  real  estate  is  not  involved.^^  And  it  has  been  held  that  ten- 
ants in  common  whose  common  property  has  been  converted  may 
all  waive  the  tort  and  join,  if  they  like,  in  an  action  of  assumpsit 
or  any  number  less  than  all,  or  any  separate  one  may  bring  as- 
sumpsit for  his  or  their  share  of  the  interest  without  joining  the 
rest.'^^  As  has  already  been  stated  in  the  section  in  this  chapter 
on  the  use  and  occupation  of  real  estate,^"^  no  action  for  use  and 
occupation  can  be  maintained  against  one  guilty  of  a  mere  naked 
trespass.^^    The  only  action  maintained  is  one  in  tort  for  dam- 


^  Gould  V.  Baker,  12  Tex.  Civ.  App. 
669,  35  S.  W.  708.  See  also,  Howe  v. 
Clancey,  53  Maine  130.  See  also, 
Leonard  v.  State,  56  Tex.  Cr.  307,  120 
S.  W.  183,  in  which  it  is  said :  "Where 
money  has  been  obtained  from  an- 
other, even  where  it  has  been  done 
through  fraud,  misrepresentation,  de- 
ceit, etc.,  that  there  is  bailment.  This, 
as  stated,  arises  from  the  reason  and 
justice  of  the  matter.  Three  propo- 
sitions may  arise:  (1)  Where  force 
is  used,  as  in  the  Tones  case  (Tones 
V.  State,  48  Tex.  Cr.  363,  88  S.  W. 
217,  1  L.  R.  A.  (N.  S.)  1024,  122  Am. 
St.  759)  there  could  be  a  case  of 
robbery.  (2)  Where  the  goods  were 
taken  fraudulently,  or  with  a  fraudu- 
lent purpose,  without  the  necessary 
force  to  constitute  robbery,  with  a 
fraudulent  intent  at  the  time  that  it 
is  taken,  it  would  be  ordinary  theft. 
(3)  If  rightfully  taken,  or  what  the 
taker  believed  to  be  rightful,  or  taken 
without  the  then  purpose  of  fraudu- 
lently appropriating  the  property  to 
his  own  use,  and  subsequently  the 
taker  does  conceive  the  fraudulent 
intent,  and  does  then  appropriate  it, 
it  would  be  theft  by  conversion.  Un- 
der the  facts  of  this  case  the  first 
proposition  —  that  is,  robbery  —  we 
think  is  not  suggested.  The  facts  in 
the  case  might  constitute  ordinary 
theft ;  but  no  question  is  raised  in 
regard  to  that  matter.  No  charges 
were  asked,  and  no  point  made  in  the 
court  below,  and,  therefore,  under 
article  723.  Code  Cr.  Proc.  1895.  that 
question  will  not  be  discussed.  If 
appellant  had  the  fraudulent  design, 


at  the  time  he  took  the  money  from 
the  prisoner's  pocket,  to  then  appro- 
priate it,  it  might  be,  and  doubtless 
would  be,  ordinary  theft ;  but  the 
facts,  we  think,  are  ample  to  show  a 
conversion  or  theft  by  bailment." 
Leonard  v.  State,  56  Tex.  Cr.  307,  120 
S.  W.  183.  See,  however.  Foster  v. 
•^Tucker,  3  Greenl.  (Maine)  458,  14 
Am.  Dec.  243. 

«"  Williams  V.  Smith,  29  R.  I.  562, 
72  Atl.  1093. 

™  Lane  v.  Borcourt,  128  Ind.  420,  27 
N.  E.  1111,  25  Am.  St.  442. 

'^Asher  v.  Cornett  (Ky.),  113  S. 
W.  131 ;  Evans  v.  Miller,  58  Miss.  120, 
38  Am.  Rep.  313 ;  Whitaker  v.  Boston, 
120  Tenn.  207.  110  S.  W.  1019;  Parks 
V.  Morris,  Lafield  &  Co.,  63  W.  Va. 
51,  59  S.  E.  753.  It  is  otherwise 
where  the  title  to  realty  is  involved. 
King  v.  Mason,  42  111.  223,  89  Am. 
Dec.  426 ;  Gates  v.  Rifle  Boom  Co.,  70 
Mich.  309,  38  N.  W.  245.  The  prin- 
ciple which  governs  in  the  case  of 
trees  severed  by  a  trespasser  also  ap- 
plies to  stones  wrongfully  quarried 
and  converted  to  the  use  of  the  tort 
feasor.  Phelps  v.  Church  of  Our 
Lady,  Help  of  Christians,  99  Fed.  683, 
40  C.  C.  A.  72 ;  Downs  v.  Finnegan, 
58  Minn.  112,  59  N.  W.  981,  49  Am. 
St.  488. 

"Tankersley  v.  Childers,  23  Ala. 
781. 

"a  See  ante,  §  1397. 

"Smith  V.  Houston,  16  Ala.  Ill; 
Weaver  v.  Jones.  24  Ala.  420 ;  Downs 
V.  Finnegan,  58  Minn.  112,  59  N.  W. 
981,  49  Am.  St.  488;  Lloyd  v.  Hough, 


657 


IMPLIED    CONTRACTS. 


§    1400 


ages/*  It  is  obvious  that  when  there  is  no  tort  to  waive  there 
can  be  no  waiver."  Neither  can  the  tort  be  waived  and  suit 
brought  on  the  implied  contract  in  the  absence  of  any  benefit 
accruing  to  the  tort  feasor  or  his  estate.'"  And  since  the  action 
is  equitable  in  its  nature  only  so  much  can  be  recovered  in  gen- 
eral as  the  plaintiff  is  in  good  conscience  entitled  to  recover." 


1  How.  (U.  S.)  153,  11  L.  ed.  83; 
Watson  V.  Brainard,  33  Vt.  88. 

"  See  cases  cited  ante,  preceding 
note,  and  §   1396. 

''-  See  Bechtel  v.  Chase,  156  Cal.  707, 
106  Pac.  81,  recognizing  the  rule  that 
one  whose  goods  are  wrongfully- 
taken  and  used  by  another  may  sue  in 
assumpsit  for  their  value  as  for  goods 
sold  and  delivered,  but  holding  that 
this  rule  does  not  apply  where  one 
has  voluntarily  parted  with  his  prop- 
erty in  exchange  for  something  re- 
ceived bv  him. 

"  Phillips  v.  Homfray,  24  Ch.  Div. 
439;  Patterson  v.  Prior,  18  Ind.  440, 
81  Am.  Dec.  367.  In  the  above  case 
suit  was  brought  against  two  persons, 


only  one  of  whom  had  received  a 
benefit  from  the  commission  of  the 
tort.  It  was  held  that  recovery  in 
assumpsit  must  be  confined  to  the  one 
who  had  been  benefited.  Compare  the 
foregoing  case  with  that  of  Thomp- 
son V.  Bronk,  126  .Mich.  455,  85  N. 
W.  1084.  Both  cases  have  to  do  with 
recovery  for  wrongful  imprisonment. 
Webster  v.  Drinkwater,  5  Greenl. 
(Maine)  319;  Ford  v.  Caldwell,  3 
Hill  (S.  Car.)  248,  Riley  282.  See 
also,  Schillinger  v.  United  States,  155 
U.  S.  163,  39  L.  ed.  108,  15  Sup.  Ct. 
85. 

"  Western  Assur.  Co.  v.  Towle,  65 
Wis.  247,  26  N.  W.  104. 


42 — CONTR.\CTS.  \^0L.  2 


CHAPTER  XXXII. 

LIMITS  OF  OBLIGATION CONTRACTS  AFFECTING   THIRD   PERSONS. 

§  1405.  Obligation  of  contract  as  be-     §  1414.  Acceptance  necessary  for  and 
tween  the  parties.  sufficiency  of. 

1406.  Privity  of  contracts.  1415.  Delivery— Rights  of  parties  in 

1407.  Further     exceptions     to  the  general. 

English  rule.  1416.  Particular   cases — Insurance. 

1408.  Obligation    of    contract   as   to       1417.  Particular     cases  —  Telegraph 

third  person.  company  cases. 

1409.  Obligation    as    to    liability    of        1418.  Particular      cases  —  Building 

third    person.  contract  cases. 

1410.  Obligation  as  to  duty  of  third       1419.  Particular      cases  —  Contracts 

person  —   Interference     by  with  carriers, 

third  persons.  1420.  Miscellaneous  cases. 

1411.  Obligation     as     to     rights    of        1421.  When  third  persons  may  not 

third  persons.  enforce  contract. 

1412.  When  third  persons  may  en-        1422.  Question      of      construction- 

force     contracts     for     their  Contracts   with   water   corn- 

benefit,  pany  and  the  like. 

1413.  Must  be  a  clear  intent  to  bene-        1423.  Rule  further  illustrated. 

fit  the  third  party.  1424.  Rule  further  illustrated— Right 

to  enforce  sealed  instrument. 

§  1405.    Obligation  of  contract  as  between  the  parties. — 

The  word  "obHgation"  is  used  in  many  varying  senses  and  has 
been  given  a  construction  sufficiently  broad  to  include  any  legal 
or  moral  duty.  In  a  strict  legal  sense,  however,  the  words  "duty" 
and  "obligation"  are  not  synonymous.  The  word  "duty"  is  more 
general  in  its  application.  It  includes  not  only  obligations  recog- 
nized and  sanctioned  by  positive  law  and  enforcible  by  aid  of  the 
law,  but  also  covers  duties  which  operate  only  on  the  moral  sense 
and  which  do  not  constitute  a  legal  obligation  at  all.^  The  word 
"obligation"  as  used  in  the  term  "obligation  of  a  contract  as  be- 
tween the  parties"  signifies  the  legal  tie  whereby  one  party  binds 
himself  or  becomes  bound,  expressly  or  impliedly,  to  pay  the  other 
a  sum  of  money  or  to  do  or  refrain  from  doing  a  certain  act. 
It  is  the  coercive  principle  that  obliges  a  party  to  perform  his 
express  or  implied  contract,  or  respond  in  damages  for  its  breach. 

^  See  ante,  §  21. 

658 


659  LIMITS   OF   OBLIGATION — THIRD   PERSONS.  §    I406 

The  creation  of  this  obligation  is  the  purpose  which  underlies 
every  contract.  In  the  absence  of  an  obligation  enforcible  at  law 
no  contract  exists.  Moreover,  there  is  an  implied  legal  obligation 
or  duty  to  do  the  act  contracted  to  be  performed  with  reasonable 
care  in  order  that  the  person  or  property  of  others  may  not  be 
injured  by  any  force  which  he  sets  in  motion  or  by  any  agent  or 
agency  for  which  he  is  responsible.^ 

§  1406.  Privity  of  contract. — The  common-law  -authorities 
hold  that  the  rigiit  to  maintain  an  action  of  assumpsit  for  breach 
of  a  simple  contract  rests  only  in  the  person  from  whom  the  con- 
sideration moved. ^  This  doctrine  gave  rise  to  the  familiar  rule 
that  no  one  but  the  parties  to  a  contract  can  be  bound  by  it  or 
obtain  rights  under  it,  or,  as  commonly  expressed,  privity  of 
contract  must  exist  between  the  parties.*  By  privity  of  contract 
was  understood  the  relation  which  subsists  between  the  immediate 
parties  to  the  agreement.'^  To  the  general  rule  above  stated,  how- 
ever, there  existed  certain  exceptions  or  qualifications  even  at 
common  law.  Thus,  it  is  true  generally  that  if  the  promisee  is  in 
fact  acting  as  agent  for  another,  although  this  fact  is  undisclosed 
to  the  promisor,  the  undisclosed  principal  is  considered  as  the 
real  party  to  the  contract  and  may  bring  an  action  to  enforce  it 
in  his  own  name.® 

•  Flint  &  Walling  Mfg.  Co.  v.  Beck-  Knights  of  Modern  Macabees  v. 
ett,  167  Ind.  491,  79  N.  E.  503,  12  L.  Sharp,  163  Mich.  449,  128  N.  W.  786; 
R.  A.  (N.  S.)  924  and  note.  See  also,  Webb's  Academy  &  Home  for  Ship- 
vol.  I,  ch.   1.  §  5.  builders   v.    Hidden.  118  .^pp.  Div.  (N. 

'See    2     Street's     Foundations    of  Y.)    711,    103  N.  Y.  S.  659.  affd.  194  X. 

Legal  Liabilities,  p.  152.  Y.  547,  87  N.  E.  1129.    As  a  general 

*  St.  Louis  V.  G.  H.  Wright  Con-  rule,  only  parties  to  a  contract  have  a 
tracting  Co.,  202  Mo.  451,  101  S.  W.  right  of  action  on  it  for  its  breach. 
6,  119  Am.  St.  810.  Matheny  v.  Chester,  141  Ky.  790,  133 

"  See  Black's  Law  Dictionary  under  S.  W.  754.    A  stranger  to  a  contract 

the  title  "Privity."    From  a  somewhat  cannot  become  a  party  to  it  without 

different    point   of    view    it    has    also  the  consent  of  both  parties.  Kruschke 

been  said  to  be  "something  on  which  v.    Quatsoe,    49    Colo.    312,    112    Pac. 

an  obligation,  an  engagement,  a  prom-  769. 

ise  can  be  implied."    Anderson's  Law        '  See  also,  a  fuller  statement  of  the 

Diet.  Tit.   Privity.     See  also,  George  principle  in  a  subsequent  volume  of 

H.    Sampson    Co.   v.    Commonwealth,  this  work.    See  post,  chaps.  59  et  seq. 

202  Mass.  326,  88  N.  E.  911 ;  Woods  It  is  otherwise,   however,   where  the 

V.  .^yres,  39  Mich.  345,  33  Am.  Rep.  party  contracting  with  the  agent  and 

396;  Toledo  &  S.  H.  R.  Co.  v.  Lam-  who  had  no  knowledge  of  the  agency 

phear,  54  Mich.  575,  20  N.   W.  590;  may  reasonably  be  supposed  to  have 

Monaghan   v.    Agricultural    Fire   Ins.  entered  into  such  contract  in  consid- 
Co.,  53   Mich.  238,   18  N.   W.   797; 


§  1407 


CONTRACTS.  660 


Neither  is  it  essential  to  the  maintenance  of  an  action  by  one  of 
the  parties  that  there  should  be  an  express  promise  existing  be- 
tween the  parties.  The  law  implies  a  promise  where  justice  im- 
poses a  duty;  and  in  such  case  no  privity  of  contract  need  be  al- 
leged or  proved  and  its  existence  is  unnecessary.' 

§  1407.     Further   exceptions   to   the   English   rule. — ^The 

courts  of  England  and  Massachusetts  at  one  time  recognized 
another  exception  to  the  general  rule  which  was  that  the  bene- 
ficiaries might  maintain  an  action  when  closely  related  to  the 
promisee.®  Thus,  it  was  held  that  a  child  might. maintain  an 
action  on  a  promise  made  to  the  parent  for  the  child's  benefit.* 
This  doctrine  no  longer  obtains,  however,  either  in  England^**  or 
Massachusetts."  It  now  seems  that  in  England  and  in  the  states 
of  the  Union  which  follow  the  English  doctrine,  apart  from  the 
qualifications  or  limitations  in  regard  to  agency  and  implied  con- 
tracts, the  only  exception  to  the  general  rule  that  no  one  but  a 
party  to  a  contract  is  entitled  to  enforce  rights  thereunder  is 
a  provision  contained  in  a  settlement  made  upon  and  in  consider- 
ation of  marriage  for  the  benefit  of  children  to  be  born  of  the 
marriage."     A  majority  of  the  jurisdictions  in  the  United  States, 

eration  of  some  element  of  personal  which  it  is  delivered  to  him,  to  pay 

trust    and    confidence    in    the    agent,  such    creditor.      Exchange    Bank    y. 

and  the  contract  remains  wholly  ex-  Rice,    107    Mass.   TH ,  9   Am.   Rep.    1. 

ecutory.     The    undisclosed    principal  This  is  in   fact  no  exception   to  the 

cannot    enforce    the    contract    in    his  general  rule.     vSuit  is  merely  brought 

own    name    and    right.      Shileds    v.  on   the   implied   promise.     See   ante, 

Coyne,  148  Iowa  313,  127  N.  W.  63,  ch.  31.                                     ,   ,r         ^ 

29  L    R    A    (N.  S.)   472.     See  also,  'See  Bourne  v.  Mason,  1  Vent.  6; 

ante,'ch"l5.  Sprat  v.  Acher,  1658  K.  B.  referred 

'McCiean    v.     Stansberry     (Iowa),  to  in  Bourne  v.  Mason,  1  Vent.  6 

131   N    W.  15,  35  L.  R.  A.   (N.  S.)  "Button    v.    Poole,   2    Lev.    210,    1 

481-    Beardslee    v.    Horton,    3    Mich.  Vent.    318;    Felton    v.    Dickinson     10 

560-  Walker  v.  Conant,  65  Mich.  194,  Mass.  287;  Mellen  v.  Whipple,  1  Gray 

31   'n.    Y.    786.  Notwithstanding    the  (Mass.)    317.     See   also,    Schmerhorn 

absence  of  an  expressed  promise,  an  v.  Vanderheyden,    1    Johns.    (N.  Y.) 

action  may  be  maintained  where  the  140.                                            1    ti     e    c 

defendant    has    in    his    hands    money  "Tweedle  v.   Atkinson,   1    B.  &   ^. 

which  in  equity  and  good  conscience  303,  101  E.  C.  L.  393. 

belongs  to  the  plaintiff,  as  where  one  "  Marston  v.  Bigelow,  150  Mass.  45, 

person  receives  from  another  money  22  N.  E.  71,  5  L.  R.  A.  43;  Saunders 

or   property   as    a    fund    from   which  v.  Saunders,  154  Mass.  33/,  Zb  JN.  li. 

certain  creditors  of  the  depositor  are  270.                                ..... 

to  be  paid,  and  promises  either  ex-  ^^^ "Whether  there  is,  in  that  juns- 
pressly    or   by    implication    from    his  diction    (England)   any  other  or  fur- 
acceptance  of  the  money  or  property  ther    exception,     may    be    doubted, 
without   objecting    to    the    terms    on  Knights  of  the  Modern  Macabees  v. 


66 1 


LIMITS    OF    OBLIGATIOX THIRD    PERSONS.  §    I408 


however,  recognize  a  further  exception  in  contracts  made  for  the 
benefit  of  a  third  party,  and  the  beneficiary  is  entitled,  in  a  proper 
case,  to  bring  suit  to  enforce  a  contract  made  for  his  benefit  or 
to  sue  for  its  breach. ^^  The  rights  of  third  parties  will  be  treated 
more  fully  in  a  subsequent  section  on  When  Third  Persons  May 
Enforce  Contracts  for  Their  Benefit.^^^ 

§  1408.  Obligation  of  contract  as  to  third  person. — It  is 
elementary  law  that  a  party  has  a  right  to  select  and  determine 
with  whom  he  will  contract  and  cannot  have  another  person  thrust 
upon  him  without  his  consent.^*  Consequently,  as  a  general  rule, 
no  obligation  is  imposed  on  a  party  by  a  contract  to  which  he  is 
a  stranger,^°  unless  he  assents  to  or  acquiesces  in  the  agreement." 


Sharp  (^lich.),  128  N.  W.  786; 
Wald's  Pollock  on  Contracts,  pp.  222, 
231   234 

"Mathenv  v.  Chester,  141  Kv.  790, 
133  S.  W.  754;  Lawrence  v.  Fox,  20 
N.  Y.  268  (the  leading  case  on  this 
subject  in  the  United  States).  "A 
contract  between  two  parties  based 
upon  a  valid  consideration  may  be 
enforced  by  third  parties  when 
entered  into  for  their  benefit,  and  that 
is  true  though  such  parties  are  not 
named  in  the  contract  nor  are  privy  to 
the  consideration."  St.  Louis  v.  G. 
H.  Wright  Contracting  Co.,  202  IMo. 
451,  101  S.  W.  6,  119  Am.  St.  810.  See 
also,  Hendrick  v.  Lindsay,  93  U.  S. 
143,  23  L.  ed.  855.  Courts  of  equity 
have  on  occasion  granted  a  third 
party  to  the  contract  a  remedy.  See 
Lloyd's  V.  Harper,  16  Ch.  Div.  290; 
Candy  v.  Candy,  30  Ch.  Div.  67.  But 
the  rule  both  in  law  and  equity  seem 
practically  the  same. 

"a  See  i)ost,  §  1412. 

"Boston  Ice  Co.  v.  Potter,  123 
Mass.  28,  25  Am.  Rep.  9;  Wooster 
v.  Crane  &  Co.,  11  N.  J.  Eq.  22,  66 
Atl.  1093.  See  also,  Shubert  Theatri- 
cal Co.  v.  Ziegfeld,  109  N.  Y.  S.  46. 
holding  that  a  corporation  could  not 
maintain  an  action  on  a  contract  to 
which  it  was  not  a  party,  and  to 
which  the  cause  of  action  had  not 
been  assigned. 

'^  Springer  v.  Ford.  189  111.  430.  59 
N.  E.  953.  52  L.  R.  A.  930.  82  Am. 
St.  464,  afifg.  88  111.  App.  529;  Griffen 
V.  Manice,  166  N.  Y.  188,  59  N.  E.  925, 
52  L.  R.  A.  922,  82  Am.  St.  630.   See 


also,  Evans  v.  United  States,  42  Ct. 
CI.    (U.  S.)  287. 

^'The  obligations  of  a  contract  are 
ordinarily  limited  to  the  parties  by 
whom  they  are  made,  and  those  who 
stand  in  privity  with  them,  either  in 
estate  or  contract.  Evansville  &c. 
Tract.  Co.  v.  Evansville  Belt  R.  Co., 
44  Ind.  App.  155,  87  N.  E.  21.  The 
following  cases  hold  that  an  employe 
of  one  railroad  company  who  sus- 
tains an  injury  by  reason  of  the  negli- 
gence of  another  railway  is  not  bound 
by  any  contract  between  the  com- 
panies by  which  they  free  each  other 
from  the  liability  for  negligence  when 
he  does  not  assent  thereto.  Zicgler 
V.  Danbury  &c.  R.  Co.,  52  Conn.  543 ; 
Philadelphia  W.  &  B.  R.  Co.  v.  State, 
58  Md.  Z12;  Brewer  v.  New  York,  L. 
E.  &  W.  R.  Co.,  124  N.  Y.  59,  26  N. 
E.  324,  11  L.  R.  A.  483.  21  Am.  St. 
647;  Kennv  v.  R.  Co..  125  N.  Y.  422. 
26  N.  E.  626.  affg.  54  Hun  (N.  Y.) 
143,  7  N.  Y.  S.  255 ;  Ominger  v.  New 
York  Cent.  &  H.  R.  Co..  4  Hun. 
(N.  Y.)  159,  6  Thomp.  &  C.  498; 
Sawyer  v.  Rutland  &  Burlington  R. 
Co.,  27  Vt.  370.  See  Chicago  &c.  R. 
Co.  V.  Lee,  92  Fed.  318,  34  C.  C.  A. 
365,  holding  that  a  contract  between 
a  shipper  of  live  stock  and  a  carrier 
providing  that  the  carrier  shall  not 
be  liable  for  the  negligent  injury  of 
the  caretaker  in  charge  of  the  live 
stock  does  not  bind  such  caretaker 
unless  he  acquiesces  therein.  Scvbolt 
V.  X.  Y..  Lake  Erie  &c.  R.  Co.,  95  N. 
Y.  562,  47  Am.  Rep.  75,  holding  that 


§  1409 


CONTRACTS. 


662 


§  1409.  Obligation  as  to  liability  of  third  person. — It  fol- 
lows as  a  natural  sequence  of  what  has  already  been  said  that  a 
third  person  is  not  liable,  as  a  rule,  on  a  contract,  express  or  im- 
plied, unless  he  was  one  of  the  immediate  parties  to  the  agreement 
or  has  become  a  party  to  it  by  subsequent  agreement  with  the 
original  parties."  Two  persons  cannot,  by  mutual  agreement, 
impose  contractual  liabilities  upon  one  who  does  not  assent  there- 
to.^^  Thus,  an  independent  contractor  and  his  employe  cannot 
enter  into  a  contract  which  will  impose  a  liability  upon  the  em- 
ployer of  the  contractor  and  toward  whom  he  sustains  the  relation 
of  an  independent  contractor.^''  Nor  is  the  lessor  of  premises 
liable  to  pay  the  employe  of  the  lessee  for  services  rendered  by 
him  imder  his  contract  with  the  lessee  when  the  contract  of  em- 
ployment was  not  entered  into  for  the  lessor's  benefit.^"  An 
agent  cannot  render  his  principal  liable  to  a  subagent  or  vice 
versa  unless  the  principal  has  given  the  agent  express  or  implied 
authority  to  appoint  the  subagent.^^     Neither  is  a  corporation  lia- 


a  postal  clerk  who  does  not  waive  his 
claim  for  damages  may  hold  the  rail- 
road liable  for  injury  sustained  by 
reason  of  its  negligence. 

"  See  §  26,  and  ch.  9.  "A  party  may, 
under  certain  circumstances,  bind 
himself  to  the  performance  of  the 
obligations  of  a  contract,  even  though 
he  may  not  be  mentioned  in  it. 
*  *  *  But  where  there  is  nothing  in 
the  agreement  showing  any  considera- 
tion affecting  such  a  party,  or  induc- 
ing him  to  become  a  party,  or  showing 
such  relations  to  either  of  the  actual 
parties  as  woidd  lead  to  the  inference 
that  he  intended  to  become  surety  for, 
or  joint  promisor  with,  one  rather 
than  the  other,  he  is  prima  facie  not 
hound.  Nor  may  parol  evidence  be 
resorted  to  to  furnish  the  basis  of 
an  inference  one  way  or  the  other." 
Henry  O.  .Shepard  Co.  v.  Freeman, 
40  Mont.  144.   105  Pac.  484,  488. 

"Bolles  V.  Carli,  12  Gil.  (Minn.) 
62 ;  Rossman  v.  Townesend,  17  Wis. 
95,  84  Am.  Dec.  733.  However,  priv- 
ity of  estate  may  render  parties  lia- 
ble on  contracts  not  of  their  own 
making  which  relate  solely  ^to  cove- 
nants that  run  with  real  estate,  or 
some  interest  therein.    Evansville  &c. 


Tract.  Co.  v.  Evansville  Belt.  R.  Co., 
44  Ind.  App.  155,  87  N.  E.  21. 

"  Schmaling  v.  Tomlinson,  6  Taunt. 
147.  See  also,  McNulty  v.  Keyser 
Office  Bldg.  Co.,  112  Md.  638.  76  Atl. 
1113;  Campbell  v.  Kimball,  87  Nebr. 
309,  127  N.  W.  142 ;  Lonergan  v.  San 
Antonia  Loan  &c.  Co.,  101  Tex.  63, 
104  S.  W.  1061,  106  S.  W.  876,  22 
L.  R.  A.  (N.  S.)  364,  130  Am.  St. 
803.  Where  the  defendant  took  paint- 
ing contracts  in  his  own  name  and 
employed  the  plaintiffs  to  do  the 
work,  the  defendant  and  not  his  cus- 
tomers was  liable  to  plaintiff  for  their 
pay.  Tomlinson  v.  Timmons  (Mo. 
App.),  135  S.  W.  980.  See  also, 
Thompson's  Negligence,  §  680; 
White's  Supplement  to  Thompson's 
Negligence,  §  680. 

""Russell  V.  Banks.  11  Cal.  App. 
450,  105  Pac.  261.  On  the  other  hand 
the  lessees  are  not  liable  to  plaintiffs 
on  a  contract  entered  between  the 
plaintiffs  and  lessors  when  the  lease 
was  not  made  for  the  benefit  of  the 
plaintiffs  and  when  they  had  no  inter- 
est in  the  consideration.  Cooper  v. 
Walther.  44  Pa.  Super.  Ct.  298. 

-^  Fairchild  v.  King,  102  Cal.  320,  36 
Pac.  649 ;  Davis  v.  King,  66  Conn.  465, 


663  LIMITS   OF    OBLIGATION THIRD    PERSONS.  §    I4IO 

ble  on  a  contract  made  by  its  promoters  prior  to  the  time  of  its 
incorporation,  unless  liability  therefor  is  imposed  on  the  corpora- 
tion by  its  charter  or  unless  it  ratifies  the  contract  after  cominj,^ 
into  existence,  notwithstanding  the  contract  of  the  promoter 
was  made  in  its  name  and  with  the  understanding  that  the  con- 
tract would  be  performed  by  the  corporation."  Nor  is  the  rule 
changed  by  the  mere  fact  that  the  promoters  who  made  the  con- 
tract are  the  sole  members  of  the  corporation.^' 

§  1410.  Obligation  as  to  duty  of  third  person — Interference 
by  third  persons. — But  while  a  contract  between  two  par- 
ties cannot  impose  on  a  stranger,  without  his  assent,  a  liability  in 
accordance  with  the  terms  of  the  contract,  it  is  nevertheless  true 
that  a  stranger  does  owe  to  the  parties  to  the  agreement  a  duty 
not  to  interfere  with  its  due  performance.  All  persons  are  under 
a  duty  to  respect  the  rights  of  others.  The  law  recognizes  that  a 
contract  confers  certain  rights  on  the  person  with  whom  it  is 
made,  and  not  only  binds  the  parties  to  it  by  the  obligation  entered 
into,  but  also  imposes  on  all  the  world,  in  a  sense  at  least,  the  duty 
of  respecting  the  contractual  obligation.-*  Thus,  it  is  a  well 
established  doctrine  of  law  applicable  to  the  relation  of  the 
master  and  servant  that  one  who  entices  away  a  servant  or 
induces  him  to  leave  his  master  may  be  held  liable  in  damages 
therefor,    provided   there    exists   a   valid    contract    for   contin- 

34  Atl.  107,  50  Am.  St.  104;  Dunn  v.  248,  22  N.  E.  907,  5  L.  R.  A.  586,  15 

Citv    Nat.    Bank   of    Birmingham,   58  Am.  St.  193;  ?^Iunson  v.  Syracuse,  G. 

Fed.  174,  7  C.  C.  A.  152,  23  L.  R.  A.  &  C.  R.  Co.,  103  N.  Y.  58,  8  N.  E. 

687-  Bailie  v.  Augusta  Sav.  Bank,  95  355.     See  also,  Turnham  v.   Calumet 

Ga.'277,  21  S.  E.  717,  51  Am.  St.  74;  &  Oregon  Min.  Co.,  58  Ore.  453,  112 

Guelich    v.    National    State    Bank    of  Pac.  711,  judgment  modified  115  Pac. 

Burlington.    56    Iowa    434,    9    N.    W.  157.     See  ante,  ch.  18. 

328,  41  Am.  Rep.  110;  Exchange  Nat.  "^  Battelle  v.   Northwestern  Cement 

Bank  v.  Third  Nat.  Bank,  112  U.  S.  &c.    Pavement    Co.,   Z7    Mmn.   89,   66 

276,  28  L.  ed.  722,  5  Sup.  Ct.  141.   See  N.  W.  327. 

also    ch    15  '^Temperton  v.   Russell    (1893),  L. 

-  Payne  v.  New  South  Wales  Coal  R.    1    Q.    B.   Div.    715 ;    Raymond   v. 

&  I.  S.  Nav.  Co.,  10  Exch.  283 ;  Moore  Yarrington.   96   Tex.   443,   72    S.   W. 

&    Handley    Hardw.    Co.    v.    Towers  580.  72,  S.  W.  800,  62  L.  R.  A.  962,  97 

Hardw.  Co.,  87  Ala.  206,  6  So.  41,  13  Am.   St.  914.     See  also.   Dunshee  v. 

Am.  St.  23;  Scadden  Flat  Gold  Min.  Standard  Oil  Co..   152  Iowa  618,  132 

Co.  V.  Scadden,  121  Cal.  32,  S3  Pac.  N.  W.  371,  36  L.  R.  A.   (N.  S)  263 

440-    Winters    v.    Hub    Min.    Co.,    57  and  note,   and  notes  in   16  L.  R.   A. 

Fed.  287-  Park  v.  Modern  Woodmen  (N.  S.)  746,  and  28  L.  R.  A.  (N.  S.) 

of   America,    181    111.   214,   54   N.   E.  615. 
932;  Abbott  v.  Hapgood,   150  Mass. 


S   1410 


CONTRACTS. 


664 


ued  service  known  to  the  defendant.^^  This  doctrine  is  not 
confined  to  contracts  of  service.  It  covers  every  case  where  one 
person  maHciously  persuades  another  to  break  any  contract  with 
a  third  person.""  When  loss  ensues,  mahce  is  the  gist  of  the 
action  for  wantonly  or  maliciously  inducing  one  to  break  his 
contract  with  intent  to  injure  another.'^  This  does  not  mean  that 
acts  done  under  the  right  of  competition  or  under  cover  of 
friendly  neighborly  counsel  or  mere  persuasion  are,  generally 
speaking,  wrongful  in  law  or  in  fact.^^     Still  if  the  persuasion  be 


^  Old  Dominion  Steamship  Co.  v. 
McKenna,  30  Fed.  48,  18  Abb.  N.  Cas. 
(N.  Y.)  262;  Hightower  v.  State,  12 
Ga.  482;  Jones  v.  Blocker,  43  Ga.  331 ; 
Walker  v.  Cronin,  107  Mass.  555 ; 
Webber  v.  Barry,  66  Mich.  127,  ZZ  N. 
W.  289,  11  Am.  St.  466n;  Bixby  v. 
Dunlap,  56  N.  H.  456,  22  Am.  Rep. 
475;  Noice  v.  Brown,  39  N.  J.  L.  569; 
Haskins  v.  Royster,  70  N.  Car.  601,  16 
Am.  Rep.  780 ;  Huff  v.  Watkins,  15  S. 
Car.  82,  40  Am.  Rep.  680.  But  the 
termination  of  the  relation  in  a  law- 
ful manner  cannot  be  prevented  by 
injunction.  Toledo  &c.  R.  Co.  v.  Penn- 
sylvania Co.,  54  Fed.  730,  19  L.  R.  A. 
387.  So  there  may  be  a  civil  liability 
for  maliciously  procuring  the  dis- 
charge of  an  employe  or  preventing 
employment.  Huskie  v.  Griffin,  75 
N.  H.  345,  74  Atl.  595,  27  L.  R.  A. 
(N.  S.)  966  and  note,  139  Am.  St. 
718.  See  also,  notes  in  62  L.  R.  A. 
714,  5  L.  R.  A.  (N.  S.)  899,  and  19 
L.  R.  A.  (N.  S.)  561. 

'^  See  Dunshee  v.  Standard  Oil  Co., 
152  Iowa  618,  132  N.  W.  371,  36 
L.  R.  A.  (N.  S.)  263.  See  Walker 
V.  Cronin,  107  Mass.  555 ;  Jones  v. 
Stanly,  Id  N.  Car.  355;  Schonwald  v. 
Ragains  (Okla.),  122  Pac.  203.  See 
also,  note  to  Sparks  v.  McCrary,  22 
L.  R.  A.  (N.  S.)   1224. 

^Lumely  v.  Gve,  2  EI.  &  B.  216; 
Bowen  v.  Hall,  L.  R.  6  Q.  B.  Div. 
ZiZ ;  Glamorgan  Coal  Co.  v.  South 
Wales  Miners'  Federation  (1903),  2 
K.  B.  545;  Perkins  v.  Pendleton,  90 
Maine  166,  38  Atl.  96.  60  Am.  St. 
252;  Walker  v.  Cronin,  107  Mass. 
555 ;  Morgan  v.  Andrews,  107  Mich. 
Z2>,  64  N.  W.  869;  Lally  v.  Cantwell, 
30  Mo.  App.  524;  Haskins  v.  Royster, 
70  N.  Car.  601,  16  Am.  Rep.  780; 
Jones  V.  Stanly,  76  N.  Car.  355 ;  Angle 


V.  Chicago,  St.  P.  M.  &  O.  R.  Co., 
151  U.  S.  1,  14  Sup.  Ct.  240;  West 
Virginia  Transp.  Co.  v.  Standard  Oil 
Co.,  50  W.  Va.  611,  40  S.  E.  591,  88 
Am.  St.  895.  A  landlord  has  been 
held  entitled  to  maintain  an  action 
against  one  who  wrongfully  and  ma- 
liciously disturbs  his  tenant,  thereby 
causing  him  to  abandon  the  premises. 
Aldridge  v.  Stuyvesant,  1  Hall  (N. 
Y.)  235.  So  where  one  induces  an- 
other to  breach  his  contract  to  per- 
form certain  farm  work  (Haskins  v. 
Royster,  70  N.  Car.  601,  16  Am.  Rep. 
780)  ;  or  maliciously  induces  one  to 
reject  a  machine  (Morgan  v.  An- 
drews, 107  Mich.  ZZ,  64  N.  W.  869). 
It  has  even  been  held  that  one  may  be 
liable  for  inducing  another  to  break 
a  contract  which  was  in  fact  within 
the  statute  of  frauds.  Rice  v.  Man- 
ley,  66  N.  Y.  82,  23  Am.  Rep.  30. 
To  same  effect,  Lucke  v.  Clothing 
Cutters,  n  Md.  396,  26  Atl.  505,  19 
L.  R.  A.  408,  39  Am.  St.  421 ;  Benton 
V.  Pratt,  2  Wend.  (N.  Y.)  385,  20 
Am.  Dec.  623.  False  statements  in 
regard  to  certain  manufactured 
goods  made  with  the  intention  of  pre- 
venting their  sale  and  as  an  induce- 
ment to  breach  a  subsisting  con- 
tract have  been  held  to  create  a 
cause  of  action.  Snow  v.  Judson, 
38  Barb.  (N.  Y.)  210.  The  same 
has  been  held  true  where  one  induces 
a  singer  to  break  her  contract  with 
the  lessee  of  a  theater.  Lumley  v. 
Gye,  2  El.  &  B.  216. 

''Bowen  v.  Hall,  L.  R.  6  Q.  B.  D. 
ZZZ;  West  Virginia  Transp.  Co.  v. 
Standard  Oil  Co.,  50  W.  Va.  611,  40 
S.  E.  591,  88  Am.  St.  895.  See  Chip- 
ley  v.  Atkinson,  23  Fla.  206,  1  So.  934, 
11  Am.  St.  367. 


665  LIMITS    OF    OBLIGATION THIRD    PERSONS.  §    I4IO 

used  for  the  indirect  purpose  of  injuring  the  plaintiff,  or  benefit- 
ing the  defendant,  at  the  expense  of  the  plaintiff,  it  is  a  malicious 
act,  which,  in  law  and  in  fact,  is  a  wrongful  act  and  therefore  an 
actionable  act  of  injury  issued  from  it.^°  But  with  this  explana- 
tion it  may  be  said  that  in  order  to  recover  in  such  an  action 
malice  must  be  shown  to  exist.^"  It  is  also  true  that  no  liability 
ordinarily  attaches  where  the  party  sought  to  be  charged  in  dam- 
ages was  acting  in  the  lawful  exercise  of  some  distinct  right.^^ 
Moreover,  if  none  of  the  legal  rights  of  the  plaintiff  are  inter- 
fered with,  an  action  for  damages  cannot  be  maintained.^-  An 
action  for  damages  is  not,  however,  the  sole  remedy.  In  a 
proper  case  one  may  properly  be  enjoined  from  in  any  way  pro- 
curing the  violation  of  a  lawful  and  valid  contract.^^  While 
the  one  who  violates  his  contract  may  be  personally  liable  to 
the  other  party  thereto  for  its  breach,  the  party  guilty  of  such 
breach  may,  nevertheless,  recover  against  the  one  who  induces 
him  to  violate  his  contract  when  the  latter,  by  such  acts  and  per- 
suasion, intended  to  injure  the  other  contracting  party  or  to 
coerce  him  into  adopting  a  line  of  business  against  his  will  and 
judgment.^* 

Some  cases,  however,  do  not  give  assent  to  the  doctrine  that 
an  action  will  lie  against  a  third  person  who  interferes  wuth  the 
due  performance  of  a  contract.  They  lay  down  the  rule  that 
merely  to  induce  or  procure  a  free  contracting  party  to  break  his 

^  Bowen  v.  Hall,  L.  R.  6  Q.  B.  D.  a   will   by  which   he   devised    certain 

333;    Chiplev    v.    Atkinson.    23    Fla.  real  estate  to  a  third  person). 
206.  1  So.  934,  11  Am.  St.  367.  ="  Dr.  Miles  Med.  Co.  v.  Piatt,  142 

'"Glamorgan     Coal    Co.    v.     South  Fed.    606;    Dr.    Miles    Med.    Co.    v. 

Wales    Miners'    Federation,    1903,    1  Jaynes  Drug  Co.,  149  Fed.  838.  Com- 

K.  B.  118,  87  L.  T.  232;  McCann  v.  pare    the    foregoing    cases    with    Dr. 

Wolff,  28  Mo.  App.  447.     The  word  Miles   Med.   Co.   v.   John   D.    Park  & 

"malicious"      does      not      necessarily  Sons  Co.,   164  Fed.  803,  90  C.   C.  A. 

mean  that  the  party  who  induced  the  579,  and  Dr.  Miles  Med.  Co.  v.  John 

breach    was    actuated    by   motives    of  D.  Park  &  Sons  Co.,  220  U.  S.  373, 

personal  ill  will  but  by  it  is  meant  an  55  L.  ed.  502,  31  Sup.  Ct.  376,  which 

unreasonable  and  wrongful  act  done  disapproves    of    the    first    two    cases 

intentionally    without    just    cause    or  cited;    not,   however,    on   the  ground 

excuse.       Schonwald       v.       Ragains  that  an  injunction  might  not  issue  in  a 

(Okla.),  122  Pac.  203.  proper  case,  but   for  the  reason  that 

"  Morgan    v.    Andrews,    107    Mich,  the  contracts  themselves  were  illegal 

33,  64  N.  W.  869.     But  see  Dunshee  and  consequently  their  breach  would 

v.    Standard   Oil   Co.,    152   Iowa  618,  not  ]ic  enjoined.     See  ante,  ch.  22. 
132  N.  W\  263.  "Doremus    v.    Hennessv,     176    111. 

'=Hutchins  v.  Hutchins.  7  Hill  (N.  608.  52  N.   E.  924.  54  N.'E.  524,  43 

Y.)   104  (inducing  testator  to  revoke  L.  R.  A.  797,  68  Am.  St.  203. 


§    141 1  CONTRACTS.  666 

covenant,  whether  done  maliciously  or  not,  to  the  damage  of  an- 
other, is  not  actionable,  and  base  their  decisions  on  the  erroneous 
ground  that  the  act  of  one  in  inducing  another  to  break  his 
contract  to  the  injury  of  the  other  party  thereto  does  not  consti- 
tute a  legal  wrong.^^  This  subject  will  be  more  fully  treated 
in  the  third  volume  of  this  work,  in  the  chapter  on  Remedies  for 
Interference  by  Third  Persons.^'*^ 

§  1411.  Obligation  as  to  rights  of  third  persons. — It  has  al- 
ready been  mentioned  that  at  common  law  the  only  party  entitled 
to  maintain  an  action  on  a  contract  is  the  one  from  whom  the 
consideration  therefor  moved.  Under  the  common  law  and  in 
those  jurisdictions  adhering  to  its  principles  on  this  point  a  man 
cannot  acquire  rights  under  a  contract  to  which  he  is  a  stranger. 
That  is  to  say,  two  persons  cannot  enter  into  an  agreement  and 
thereby  confer  certain  contractual  rights  upon  a  third  person  even 
though  the  contract  is  made  for  such  third  person's  special  bene- 
fit.^® The  consideration  may  draw  the  promise  to  it  but  a  mere 
promise  does  not  create  a  right  of  action  in  the  promisee,  when  the 
consideration  moves  from  another.^^  This  rule  apparently  had  its 
origin  in  the  primal  conception  underlying  assumpsit.  At  first,  ac- 
tion on  a  promise  was  permitted  on  the  theory  of  giving  a  remedy 
for  damages  sustained  by  reason  of  the  nonperformance  of  a  de- 
ceitful promise.^®  This  theory  of  the  remedy  would  clearly  limit 

"Boyson  v.  Thorn,  98  Cal.  578,  33  848.      The   courts    of   California   and 

Pac.  492,  21  L.  R.  A.  233   (not  liable  Kentucky     recognize     contracts     for 

in  the  absence  of  a  threat,  violence,  personal  services  as  exceptions  to  the 

fraud,    falsehood,   or  benefit  to  him-  general    rule    which    they    announce, 

self)  ;   Chambers  v.  Baldwin,  91   Ky.  See  cases  above  cited. 

121,  15  S.  W.  57,  12  Ky.  L.  699,  11  L.  '=a  See  post,  ch.  56. 

R.  A.  545,  34  Am.  St.  165  (not  liable  '"Price  v.  Easton,  4  B.  &  Ad.  433; 

when  fraud  and  force  is  not  resorted  Crow  v.  Rogers,   1   Strange  592.   See 

to   to   induce   a  breach    of    the    con-  also,  Evans  v.  United   States,  42  Ct. 

tract)  :   Boulier   v.   Macauley,  91  Ky.  CI.   (U.  S.)   287. 

135,  15  S.  W.  60,  12  Ky.L.  737,  11  L.  ""The  plaintiff  must  unite  in  his 
R.  A.  550,  34  Am.  St.  171  (Hableonly  person  both  the  promise  and  the  con- 
when  breach  procured  by  coercion  or  sideration  of  it;  and  if  the  action, 
deception)  ;  Glencoe  Land  &  Gravel  in  such  case,  cannot  be  sustained  on 
Co.  V.  Hudson  Bros.  Commission  the  foundation  of  the  consideration 
Co..  138  Mo.  439,  40  S.  W.  93,  36  by  drawing  the  promise  to  it,  it  can- 
L.  R.  A.  804,  60  Am.  St.  560.  See  not  be  sustained  at  all."  Edmund- 
Ashlev  V.  Dixon,  48  N.  Y.  430,  8  Am.  son  v.  Penny.  1  Pa.  St.  334.  44  Am. 
Rep.  '559;  Payne  v.  Western  &  At-  Dec.  137.  See  also,  Warren  v. 
lantic  R.  Co.,  13  Lea  (Tenn.)  507,  49  Batchelder,  15  N.  H.  129. 
Am.  Rep.  66,  See  also,  Gallup  Elec-  "  See  2  Streets  Foundation  of  Le- 
tric  Light  Co.  v.  Pacific  Imnrove-  gal  Liabilities,  pages  31,  32,  33,  156. 
ment   Co.,   16  N.   Mex.   86,   113   Pac. 


66/  LIMITS    OF    OBLIGATION THIRD    PERSONS.  §    I412 

the  right  of  action  for  breach  of  a  simple  promise  to  the  person 
from  whom  the  consideration  moved ;  but,  however  this  may  be, 
it  nevertheless  remains  true  that  when  two  parties  enter  into  a  con- 
tract for  the  benefit  of  a  third  person,  the  promisor  owes  a  duty 
to  such  third  person  to  perform  his  obligation.  Yet  while  this 
duty  might  rest  upon  the  promisor  the  third  person  had  no  remedy 
by  which  to  enforce  it.  In  other  words,  the  contractual  duty  was 
broader  than  the  remedy.  In  the  development  of  the  law  of  con- 
tracts, the  remedy  did  not  keep  pace  with  the  development  of  the 
law  of  contracts  generally,  but  was  still  confined  largely  within 
its  original  limits.^"  But  even  the  English  judges  have  upon 
several  occasions  shown  a  tendency  to  disregard  the  ancient  com- 
mon-law form  of  action  and  to  recognize  the  right  of  a  third  per- 
son to  sue  on  a  contract  made  for  his  benefit.*"  And  in  this 
country,  where  forms  of  action  have  in  the  main  been  abolished 
and  where  the  courts  have  never  been  so  completely  dominated 
by  common-law  theories  of  action  as  in  England,  the  right  of  a 
stranger  to  sue  on  a  contract  made  for  his  benefit  is  generally 
recognized.  The  remedy  is  made  as  broad  as  the  contractual 
obligation.  If,  under  the  facts  of  the  case,  a  legal  liability  is 
shown  to  exist,  the  one  in  whose  favor  it  runs  is  given  the  right 
to  enforce  it. 

§  1412.  When  third  persons  may  enforce  contracts  for  their 
benefit. — The  foregoing  discussion  makes  unnecessary  any 
extended  statement  concerning  the  rights  of  third  persons  to  en- 
force contracts  made  for  their  benefit.  The  New  York  Court  of 
Appeals  was  the  pioneer  tribunal  in  declaring  that  where  a  prom- 
ise is  "made  to  one  for  the  benefit  of  another,  he  for  whose  benefit 
it  is  made  may  bring  an  action  for  its  breach."**  A  majority  of 
the  courts  of  this  country  now  adhere  to  the  doctrine  that  the 

^See,   however,    In   re   Rotherham  (jVIass.)     3^7.      Since    overruled    by 

Alum  &c.  Co.,  25  Ch.  Div.  103,  111,  in  IMarston  v.  Bigelow,  150  Mass.  45,  22 

which  Lindley,  J.,  states  that  the  in-  N.  E.  71.  5  L.  R.  A.  43. 

ability    of    the    third    person    to    sue  "Lawrence  v.   Fox,  20   N.   Y.  268. 

is  not  due  to  any  defect  of   remedy  holding    that    where    one    party    ad- 

but  is   a   mere  question   of   contract,  vanced  a  sum  of  money  to  another, 

'"See  Starkey  v.  Mill,  Style  296;  he  agreeing  to  pay  it  to  a  creditor 
Yard  v.  Eland,  1  Ld.  Raym.  368;  of  the  first  party  the  next  day.  such 
Martyn  v.  Hind,  2  Cowp.  437,  443.  creditor  could  recover  on  the  prom- 
See   also,   Brewer   v.   Dyer,   7   Cush.  ise. 


§    1 41 2                                             CONTRACTS.  66& 

beneficiary,  though  not  a  party  to  the  contract,  may  maintain  an 

action  directly  in  his  own  name  against  the  promisor,  when  such 

promise  between  the  promisor  and  promisee  is  supported  by  a 
sufficient  consideration  and  was  made  for  the  benefit  of  such  third 

party/'     The  contract  between  the  original  parties  must  be  sup- 

^^  Lovely  v.   Caldwell,  4  Ala.  684;  McCoy,  32  Ind.  App.  38,  69  N.  E.  193, 

Shotwell  V.  Gilkey's  Admrs.,  31  Ala.  102   Am.    St.   223;   Edwards   v.    Van 

724;    Potts   V.   First   Nat.   Bank,    102  Cleave,  47   Ind.   App.  347,  94  N.   E. 

Ala.   286,    14    So.   663;    Chamblee   v.  596;    Ochs   v.    M.   J,    Carnahan   Co., 

McKenzie,    31    Ark.    155;    Talbot    v.  42    Ind.    App.    157,    76    N.    E.    788; 

Wilkins,     31     Ark.     411;     Hecht    v.  Knight   &  Jillson   Co.   v.   Castle,    172 

Caughron,    46    Ark.     132;    Lewis    v.  Ind.  97,  87   N.    E.  976,  27   L.   R.   A. 

Covillaud,  21  Cal.   178   (which  recog-  (N.    S.)    573    and    note;    Nelson    v. 

nizes  the  general  American  rule  and  Hardy,  7  Ind.  364;  Day  v.  Patterson, 

since   this   decision,   the  general   rule  18  Ind.  114;  Weiser  v.  Ross,  150  Iowa 

has  been  well  established.     The  rule,  353,  130  N.  W.  387;  Johnson  v.  Col- 

however,  has  not  been  given  a  very  lins,  14  Iowa  63;  Rice  v.  Savery,  22 

broad  application  even  under  the  pro-  Iowa    470;    Johnson    v.    Knapp,    36 

vision  of   §    1559  of  the   Civil   Code,  Iowa   616;    Phillips    v.    Van    Schaick 

authorizing  third  parties  to  sue  upon  &    Wilcox,    37    Iowa    229;    German 

a    contract    made    for    his    benefit.)  ;  State    Bank   v.    Northwestern    Water 

Lisenby  v.  Newton,  120  Cal.  571.  52  &  Light  Co.,  104  Iowa  717,  74  N.  W. 

Pac.    813,    65    Am.     St.    203;     Sav-  685;   Anthony  v.   Herman,    14   Kans. 

ings     Bank    v.     Thornton,     112    Cal.  494.    The  limitations  of  the  doctrine 

255,      44      Pac.      466;      Buckley      v.  were  stated  in  Burton  v.  Larkin,  36 

Grey,     110    Cal.    339,    42     Pac.   900,  Kans.    246,     13    Pac.    398,    59    Am. 

31     L.     R.     A.     862,     52     Am.     St.  Rep.    541    (stating    limitations)  ;  Ma- 

88;     Green    v.    Richardson,    4    Colo,  theny  v.  Chester,  141  Ky.  790,  133  S. 

584;    Lehow    v.    Simonton,    3    Colo.  W.  754;  Winn  v.    Schenck,    33    Ky. 

346;  Green  v.  Morrison,  5  Colo.  18;  L.     615,     110     S.     W.     827,     Albin 

Farmers'    Bank    v.    Brown,    1    Har.  Co.    v.    Commonwealth,    33    Ky.    L. 

(Del.)  330;  Fish  v.  First  Nat.  Bank,  367,  108  S.  W.  299;  Ballard  v.  Ameri- 

150  Fed.  524,  80  C  C.  A.  266,  judg-  can  Hemp  Co.,  30  Ky.  L.  1080,  100  S. 

ment  reversed  on  rehearing,  157  Fed.  W.  271 ;   Smith  v.  Lewis,  3   B.  Mon. 

87,  84  C.  C.  A.  502.     The  rule  seems  (Ky.)  229.    And  in  Allen  v.  Thomas, 

slightly   limited   in   its  application   in  3  Mete.  (Ky.)   198,  77  Am.  Dec.  169; 

Florida.      Wright   v.    Terry,    23    Fla.  Lucas    v.    Chamberlain,    8    B.    Mon. 

160,  2   So.  6;   Hunter  v.  Wilson,  21  (Ky.)   276;   Mize  v.   Barnes,  78  Ky. 

Fla.    250;    Eddy   v.    Roberts,    17    111.  506;    Paducah    Lumber    Co.    v.    Pa- 

505;  Brown  V.  Strait,  19  111.  88;  Bris-  ducah    Water    Supply    Co.,    89    Ky. 

tow  V.  Lane,  21  111.  194;  Ball  v.  Ben-  340,  11  Ky.  L.  738,  12  S.  W.  554,  13 

jamin,  56  111.  105;  Snydacker  v.  Ma-  S.  W.  249,  7  L.  R.  A.  77,  25  Am.  St. 

gill,  24   111.    138;    Steele  v.   Clark,  77  536;    Mayor   &c.    v.    Bailey,    5    Mart. 

111.  471;  Thompson  v.  Dearborn,  107  (La.)     (O.     S.)     321;    Duchamp    v. 

111.  87;  Dean  v.  Walker,  107  111.  540,  Nicholson,    2    Mart.    (La.)     (N.    S.) 

47    Am.    Rep.    467;    Boals   v.    Nixon,  672 ;  Marigny  v.  Remy,  3  Mart.  (La.) 

26  111.  App.  517;  Cobb  v.  Heron,  180  (N.    S.)    607,    15   Am.   Dec.    172;    St. 

111.    49,    54    N.    E.    189;    Hartman    v.  Joseph's    Assn.    v.    Magnier,    16    La. 

Pistorius,  248  111.  568,  94  N.  E.  131.  Ann.    338;     Dearborn    v.     Parks,    5 

The    rule   is    not    without   limitation,  Greenl.     (Maine)    81,    17    Am.    Dec. 

however,  and  where  a  partnership  is  206;    Hinkley    v.    Fowler,    15    Maine, 

formed,  and  the  firm  agrees  to  per-  285 ;  Warren  Academy  v.  Starrett,  15 

form  a  contract  of  one  of  its  mem-  Maine  443;    Maxwell   v.    Haynes,   41 

bers,  the  firm  has  been  held  not  liable  Maine    559;    Coffin    v.    Bradbury,    89 

to  the  third  party  interested.    Goode-  Maine   476,    36    Atl.    988.      Maryland 

now  V.  Jones,  75  111.  48;   McCoy  v.  recognizes  the  general  rule  with  lim- 


669  LIMITS    OF    OBLIGATION THIRD    PERSONS.  §    I412 

ported  by  a  sufficient  consideration."     In  a  number  of  jurisdic- 


itations.     Owings'    Exrs.   v.    Owings, 

1  Har.  &  G.  (Md.)  484;  Eichelbergcr 
V.  Murdock,  10  Md.  27 i,  69  Am. 
Dec.  140;  McNamee  v.  Withers,  27 
Md.  171;  Seignian  v.  Hoffacker,  57 
Md.  321 ;  Sanders  v.  Clason,  13  Minn. 
379;  Hawley  v.  Wilkinson,  18  Gil. 
(Minn.)  468;  Follansbee  v.  Johnson, 
28  Minn.  311,  9  N.  W.  882;  Jefferson 
V.  Asch,  53  Minn.  446,  55  N.  W. 
604,  25  L.  R.  A.  257,  39  Am.  St.  618 
(stating  limits  of  doctrine)  ;  Kramer 
V.  Gardner,  104  Minn.  370,  116  N. 
W.  925  (stating  limits  of  doctrine)  ; 
Sweatman  v.  Parker,  49  Miss.*  19; 
Lee  V.  Newman,  55  Aliss.  365 ;  Rob- 
bins  V.  Ayres,  10  Mo.  538,  47  Am. 
Dec.  125;  Heim  v.  Vogel,  69  Mo. 
529;  Fitzgerald  v.  Barker,  70  Mo. 
685.  There  must  be  a  valuable  con- 
sideration pass  between  the  original 
parties  to  the  contract.  Jones  v. 
Miller,  12  Mo.  408.  The  promise 
may  be  implied.  Gibson  v.  St.  Louis, 
K.  C.  &  N.  R.  Co.,  76  Mo.  549; 
Shamp  V.  Meyer,  20  Nebr.  223,  29 
N.  W.  379,  Ruhling  v.  Hackett,  1 
Nev.  360;  Bishop  v.  Stewart,  13 
Nev.  25 ;  Miliani  v.  Tognini,  19  Nev. 
133.  7  Pac.  279;  Painter  v.  Kaiser, 
27  Nev.  421,  76  Pac.  747,  65  L.  R.  A. 
672,  103  Am.  St.  772;  Van  Dyne  v. 
Vreeland.  11  N.  J.  Eq.  370;  Joslin 
V.  New  Jersey  Car  &c.  Co.,  36  N.  J. 
L.  141 ;  Deseumcur  v.  Rondel,  76  N. 
J.  Ch.  394,  74  Atl.  703;  Edwards  v. 
National  Window  Glass  Jobbers' 
Assn.  (N.  J.),  68  Atl.  800  (action 
maintainable  either  in  law  or  equity)  ; 
Lawrence  v.  Fox,  20  N.  Y.  268; 
Spiegelberg  v.  Schoenberg,  107  N. 
Y.  S.  718;  Wheat  v.  Rice,  97  N.  Y. 
296;  Vrooman  v.  Turner,  69  N.  Y. 
280,  25  Am.  Rep.  195 ;  Parlin  v.  Hall, 

2  N.  Dak.  473,  52  N.  W.  405 ;  Thomp- 
son v.  Thompson,  4  Ohio  St.  222 ; 
Society  of  Friends  v.  Haines,  47  Ohio 
St.  423,  25  N.  E.  119;  Cincinnati  &c. 
R.  Co.  V.  Bank.  54  Ohio  St.  60,  56 
Am.  St.  700.  The  right  of  a  third 
party  to  sue  is  recognized  in  Oregon 
although  limited  in  its  application. 
Baker  v.  Eglin,  11  Ore.  222,  8  Pac. 
280;  Chrisman  v.  State  Ins.  Co.,  16 
Ore.  283,  18  Pac.  466;  Washburn  v. 
Interstate  Inv.  Co.,  26  Ore.  436,  26 
Pac.  S22,  38  Pac.  620;  Brower  Lum- 
ber  Co.    V.    Miller,   28   Ore.    565,   43 


Pac.  659,  52  Am.  St.  807;  Hind  v. 
Holdship,  2  Watts  (Pa.)  104,  26  Am. 
Dec.  107  (defendant  promised  to  pay 
a  debt  in  consideration  of  an  assign- 
ment for  the  benefit  of  creditors)  ; 
Morrison  v.  Beckey,  6  Watts  (Pa.) 
349;  Edmundson  v.  Penny,  1  Pa.  St. 
334,  44  Am.  Dec.  137;  Hostettcr  v. 
Hollinger,  117  Pa.  St.  606,  12  Atl. 
741;  Kcim  v.  Taylor,  11  Pa.  St.  163; 
Urquhart  v.  Brayton,  12  R.  I.  169; 
Wood  V.  Moriarty,  15  R.  I.  518,  9 
Atl.  427;  Wilbur  v.  Wilbur,  17  R.  L 
295,  21  Atl.  497;  Duncan  v.  Moon, 
Dudley  (S.  Car.)  222;  Brown  v. 
O'Brien,  1  Rich.  (S.  Car.)  268,  44 
Am.  Dec.  254;  Thompson  v.  Gordon, 
3  Stob.  (S.  Car.)  196;  Ruohs  v. 
Traders'  Fire  Ins.  Co.,  Ill  Tenn.  405, 
78  S.  W.  85,  102  Am.  St.  790;  Mc- 
Carty  v.  Blevins,  5  Yerg.  (Tenn.) 
195,  26  Am.  Dec.  262;  Robinson  v. 
Denson,  3  Head  (Tenn.)  395;  Mc- 
Cown  v.  Schrimpf,  21  Tex.  22,  72  Am. 
Dec.  221;  Urquhart  v.  Ury,  27  Tex. 
7;  Mathonican  v.  Scott,  87  Tex.  396, 
28  S.  W.  1063;  Stadler  v.  Talley 
Bros.,  3  Tex.  App.  Civ.  Cas., 
§  472;  Heath  v.  Coreth,  11  Tex.  Civ. 
App.  91,  22  S.  W.  56.  The  rule  and 
its  limitations  as  recognized  in  Utah 
stated  in  Montgomerv  v.  Rief,  15 
Utah  495,  50  Pac.  623.  Johnson  v. 
McClung,  26  W.  Va.  659;  Hodson 
v.  Carter,  3  Pin.  (Wis.)  212,  3 
Chand.  234;  Bassett  v.  Hughes,  43 
W^is.  319;  Hollock  v.  Parcher,  52 
Wis.  393;  Grant  v.  Diebold  Safe  &c. 
Co.,  77  Wis.  72,  45  N.  W.  951;  Lar- 
son v.  Cook,  85  Wis.  564.  55  N.  W. 
703;  Smith  v.  Pfluger,  126  Wis.  253, 
105  N.  W.  476.  110  Am.  St.  911; 
Tweeddale  v.  Tweeddale,  116  Wis. 
517,  93  N.  W.  440,  61  L.  R.  A.  509, 
96  Am.  St.  1003. 

"Jones  V.  Miller,  12  Mo.  408;  Mc- 
Arthur  v.  Dryden,  6  N.  Dak.  438,  71 
N.  W.  125 ;  Staver  Carriage  Co.  v. 
Jones  (Okla.),  123  Pac.  148.  "It 
does  not  follow  that  the  third  party 
can  enforce  a  promise,  unless  the 
promise  itself  is  based  upon  a  con- 
sideration. In  other  words,  it  must 
be  a  contract  as  stated  in  the  statute, 
and  unless  there  is  a  consideration 
there  is  no  contract."  Eastman  Land 
&  Investment  Co.  v.  Long-Bell  Lum- 
ber Co.,  30  Okla.  555,  120  Pac.  276. 


I4I3 


CONTRACTS. 


670 


tions  it  is  provided  by  statute  that  a  contract  made  expressly  for 
the  benefit  of  a  third  person  may  be  enforced  by  him  at  any  time 
before  the  party  thereto  rescinds  it."  The  codes  of  a  number  of 
the  states  provide  that  every  action  must  be  prosecuted  in  the 
name  of  the  real  party  in  interest,  except  in  certain  specified 
cases.  Under  a  provision  of  this  character  the  person  for  vi^hose 
benefit  a  contract  is  made  may  bring  suit  thereon  unless  it  comes 
within  one  of  the  exceptions  stated  in  the  code.^^ 

§  1413.    Must  be  a  clear  intent  to  benefit  the  third  party. — 

It  is  a  rule  of  practically  universal  application  that  there  must  exist 
on  the  part  of  the  original  parties  to  the  contract  a  clear  intent  to 
benefit  the  third  party,  although  a  majority  of  the  courts  do  not 
go  so  far  as  to  hold  with  Connecticut  that  the  contract  must  be 
for  the  sole  and  exclusive  benefit  of  the  third  party.*''  Many  of 
the  cases  in  addition  to  holding  that  there  must  be  an  intent  to 


"J.  F.  Hall-Martin  Co.  v.  Hughes 
(Cal.),  123  Pac.  617;  Tatem  v.  Eg- 
lanol  Min.  Co.  (Mont.),  123  Pac.  28; 
Eastman  Land  &  Imp.  Co.  v.  Long- 
Bell  Lumber  Co.,  30  Okla.  555,  120 
Pac.  276;  Staver  Carriage  Co.  v. 
Jones  (Okla.),  123  Pac.  148;  Dakota 
Comp.  Laws  1887,  §  3499;  Schneider's 
Oklahoma  Stat.,  §   1044. 

^  Starbird  v.  Cranston,  24  Colo. 
20.  48  Pac.  652;  Vandalia  R.  Co.  v. 
Keys,  46  Ind.  App.  353,  91  N.  E. 
173;  Stevens  v.  Flanagan,  131  Ind. 
122,  30  N.  E.  898;  Paducah  Lumber 
Co.  V.  Water  Supply  Co.,  89  Ky. 
340,  11  Ky.  L.  738.  12  S.  W.  554,  13 
S.  W.  249,  7  L.  R.  A.  11,  25  Am.  St. 
536;  Ellis  v.  Harrison,  104  Mo.  270, 
16  S.  W.  198.  See  Bliss  on  Code 
Pleading,   §   241. 

**  See.  generally,  Thomas  Mfg.  Co. 
V.  Prather,  65  Ark.  27,  44  S.  W.  218; 
Chung  Kee  v.  Davidson,  IZ  Cal.  522, 
15  Pac.  100;  Savings  Bank  v.  Thorn- 
ton, 112  Cal.  255,  44  Pac.  466;  Bur- 
ton V.  Larkin,  36  Kans.  246,  13  Pac. 
398,  59  Am.  Rep.  541;  Holderman 
V.  Tedford,  7  Kans.  App.  657,  53 
Pac.  887;  Paducah  Lumber  Co.  v. 
Paducah  &c.  Co.,  89  Ky.  340,  11  Ky. 
L.  738,  12  S.  W.  554,  13  S.  W.  249, 
7  L.  R.  A.  n,  25  Am.  St.  536;  Hows- 
mon  v.  Trenton  Water  Co.,  119  Mo. 
304.  24  S.  W.  784,  23  L.  R.  A.  146, 
41   Am.   St.  654;  Jefferson  v.  Asch, 


53  Minn.  446.  55  N.  W.  604,  25  L. 
R.  A.  257,  39  Am.  St.  618;  Chicago 
&c.  R.  Co.  v.  Bell,  44  Nebr.  44,  62 
N.  W.  314;  Joslin  v.  New  Jersey 
Car  &c.  Co.,  36  N.  J.  L.  141;  Cin- 
cinnati &c.  R.  Co.  V.  Bank,  54  Ohio 
St.  60,  56  Am.  St.  700;  Parker  v. 
Jeffery,  26  Ore.  186,  Zl  Pac.  712;  In 
re  Ayer's  Appeal,  28  Pa.  St.  179; 
Urquhart  v.  Brayton,  12  R.  I.  169; 
Thompson  v.  Gordon,  3  Strob.  (S. 
Car.)  196;  Urquhart  v.  Ury,  27  Tex. 
7 ;  Montgomery  v.  Rief,  15  Utah  495, 
50  Pac.  623;  Brown  v.  Markland,  16 
Utah  360,  52  Pac.  597,  67  Am.  St. 
629;  Grant  v.  Diebold  Safe  &c.  Co., 
n  Wis.  72,  45  N.  W.  951.  See  also. 
Treat  v.  Stanton,  14  Conn.  445; 
Crocker  v.  Higgins,  7  Conn.  342; 
German  State  Bank  v.  Northwestern 
Water  &  Light  Co.,  104  Iowa  717,  74 
N.  W.  685,  as  favoring  a  strict  rule. 
"It  is  not  sufficient  that  the  perform- 
ance of  the  covenant  may  benefit  the 
third  person.  It  must  have  been  en- 
tered into  for  his  benefit,  or,  at 
least,  such  benefit  must  be  the  direct 
result  of  the  performance,  and  so 
within  the  contemplation  of  the  party, 
and  in  addition  the  grantor  must  have 
a  legal  interest  that  the  covenant  be 
performed  in  favor  of  the  party 
claiming  performance."  Durnherr  v. 
Rau,  135  N.  Y.  219,  Z2  N.  E.  49. 


671 


LIMITS    OF    OBLIGATION THIRD    PERSONS. 


I413 


benefit  the  third  party,  place  a  further  Hmitation  on  the  rule  to  the 
effect  that  the  promisee  must  owe  some  obligation  to  the  third 
party.  Some  privity  between  the  two,  the  promisor  and  the  party 
to  be  benefited,  and  some  obligation  or  duty  owing  from  the  for- 
mer to  the  latter  must  exist  which  would  give  the  l>eneficiary 
a  legal  or  equitable  claim  to  the  benefits  of  the  promise,  or  an 
equivalent  from  the  promisor  personally."^  Other  courts,  how- 
ever, apparently  deny  the  necessity  for  the  existence  of  any  obli- 
gation on  the  part  of  the  promisee  to  the  third  party."  While  it 
must  clearly  appear  that  the  contract  was  intended  for  the  bene- 
fit of  a  third  person  it  is  unnecessary  that  such  third  person  be 
named  in  the  contract."" 


"Vrooman  v.  Turner,  69  N.  Y. 
280,  25  Am.  Rep.  195;  Townsend  v. 
Rackham,  143  N.  Y.  516,  38  N.  E. 
731;  Coleman  v.  Hiller,  85  Ilun  (N. 
Y.)  547,  33  N.  Y.  S.  357.  67  N.  Y. 
St.  41;  Embler  v.  Hartford  Steam 
&c.  Ins.  Co.,  158  N.  Y.  431.  53  N. 
E.  212,  44  L.  R.  A.  512;  Durnherr  v. 
Rau,  135  N.  Y.  219,  32  N.  E.  49; 
Litchfield  V.  Flint,  104  N.  Y.  543,  11 
N.  E.  58.  See  also,  Thomas  Mfg. 
Co.  V.  Prather,  65  Ark.  27,  44  S.  W. 
218;  German  State  Bank  v.  North- 
western Water  &  Light  Co.,  104 
Iowa  717,  74  N.  W.  685 ;  Union  Rail- 
way Storage  Co.  v.  McDermott,  53 
Minn.  407.  55  N.  W.  606;  Jefferson 
V.  Asch,  53  Minn.  446.  55  N.  W. 
604,  25  L.  R.  A.  257,  39  Am.  St.  618 ; 
Howsmon  v.  Trenton  Water  Co.,  119 
Mo.  304,  24  S.  W.  784,  23  L.  R.  A. 
146,  41  Am.  St.  654;  St.  Louis  v. 
Von  Phul,  133  Mo.  561,  34  S.  W. 
843,  54  Am.  St.  695 ;  Street  v.  Good- 
ale,  77  Mo.  App.  318;  Devers  v. 
Howard.  144  Mo.  671,  46  S.  W.  625; 
McDonald  v.  American  Nat.  Bank, 
25  Mont.  456,  65  Pac.  896;  Tatem 
V.  Eglanol  Min.  Co.  (Mont.),  123 
Pac.  28;  Ferris  v.  Carson  Water  Co., 
16  Nev.  44.  40  Am.  Rep.  485 ;  Collins 
V.  Kaw  Citv  Mill  &c.  Co.,  26  Okla. 
641.  110  Pac.  734;  Washburn  v.  In- 
terstate Investment  Co.,  26  Ore.  436, 
36  Pac.  5.33,  38  Pac.  620;  Fish  & 
Hunter  Co.  v.  New  England  Home- 
stake  Co.  (S.  Dak.\  130  N.  W.  841; 
Montgomery  v.  Rief.  15  Utah  495,  50 
Pac.  623.  "So  it  may  be  said  to  be 
definitely    settled    law    in    this    state 


that  a  third  person  for  whose  benefit 
a  contract  is  made  does  not  in  all 
cases  have  a  right  of  action  thereon. 
To  entitle  him  to  enforce  the  prom- 
ise there  must  appear  to  have  been 
some  privity,  by  contract  or  other- 
wise, between  the  promisee  and  the 
beneficiary,  some  obligation  or  duty 
owing  from  the  former  to  a  third 
person,  giving  the  latter  a  legal  or 
equitable  claim  to  the  benefit  of  the 
promise.  No  such  privity  or  obliga- 
tion existed  in  this  case."  Kramer 
V.  Gardner,  104  Minn.  370,  116  N. 
W.  925. 

« See  Dean  v.  Walker.  107  111.  540, 
47  Am.  Rep.  467;  Gwaltney  v. 
Wheeler,  26  Ind.  415;  Lam  v.  Don- 
ovan, 19  Ind.  40;  W^alz  v.  Walz,  84 
Ind.  403;  Paducah  Lumber  Co.  v. 
Paducah  Water  Supply  Co..  89  Ky. 
340,  11  Ky.  L.  738.  12 'S.  W.  554,  13 
S.  W.  249,  7  L.  R.  A.  77,  25  Am.  St. 
536;  Brewer  v.  Maurer,  38  Ohio  St. 
543,  43  Am.  Rep.  436;  McCartv  v. 
Blevins.  5  Yerg.  (Tenn.)  195,  26  Am. 
Dec.  262;  Tweeddale  v.  Tweeddale, 
116  Wis.  517,  93  N.  W.  440,  61  L.  R. 
A.  509.  96  Am.  St.  1003.  See  also, 
Merriman  v.  Moore.  90  Pa.  St.  78, 
with  which  compare  Edmundson  v. 
Penny,  1  Pa.  St.  334,  44  Am.  Dec. 
137. 

'"Chung  Kee  v.  Davidson,  73  Cal. 
522,  IS  Pac.  100:  Bacon  v.  Davis, 
9  Cal.  App.  83.  98  Pac.  71;  Bristow 
V.  Lane.  21  111.  194;  Livingston  v.  Chi- 
cago &  N.  W.  R.  Co.,  142  Iowa  404, 
120  N.  W.  1040;  Knott  v.  Dubuque 
&  S.  C.  Rv.  Co..  84  Iowa  462,  51  N. 


I4I4 


CONTRACTS. 


672 


§  1414.    Acceptance,  necessity  for  and  sufficiency  of. — In 

some  jurisdictions  it  is  held  that  there  must  be  such  an  acceptance 
on  the  part  of  the  stranger  or  third  party  as  will  release  the  prom- 
isee from  any  legal  obligation  he  may  be  under  to  the  third  party 
and  which  the  contract  was  intended  to  cancel. ^^  It  is  not  neces- 
sary, however,  as  a  general  rule,  for  the  third  party  to  make  any 
formal  acceptance  prior  to  the  bringing  of  the  suit.^^  The  assent 
of  a  beneficiary  will  be  presumed.^^  The  commencement  of  an 
action  to  enforce  the  promise  is  sufficient  as  an  acceptance.^^  The 
naming  of  a  child  in  accordance  with  the  terms  of  an  agreement 
and  the  continued  bearing  of  that  name  by  the  child  and  the  child 
bringing  suit  on  the  agreement  will  amount  to  a  ratification  of 


W.  57;  Burton  v.  Larkin,  36  Kans. 
246,  13  Pac.  398,  59  Am.  Rep.  541; 
Duchamp  v.  Nicholson,  2  Mart.  (La.) 
(N.  S.)  672;  Flower  v.  Lane,  6  Mart. 
(La.)  (N.  S.)  151;  Maxfield  v. 
Schwartz,  43  Minn.  221,  45  N.  W. 
429;  Lovejoy  v.  Howe,  55  Minn.  353, 
57  N.  W.  57;  Eau  Claire-St.  Louis 
Lumber  Co.  v.  Banks,  136  Mo.  App. 
44,  117  S.  W.  611;  Bank  of  Lacidonia 
V.  Bright-Coy  Commission  Co.,  139 
Mo.  App.  110,  120  S.  W.  648;  State 
V.  Laclede  Gaslight  Co.,  102  Mo.  472, 
14  S.  W.  974,  15  S.  W.  383,  22  Am. 
St.  789;  State  v.  St.  Louis  &  S.  F. 
R.  Co.,  125  Mo.  596,  28  S.  W.  1074; 
St.  Louis  V.  Von  Phul,  133  Mo.  561, 
34  S.  W.  843,  54  Am.  St.  695 ;  Street 
V.  Goodale,  77  Mo.  App.  318;  Joslin 
V.  New  Jersey  Car  &c.  Co.,  36  N.  J. 
L.  141 ;  Whitehead  v.  Burgess,  61  N. 
J.  L.  75,  38  Atl.  802 ;  Coster  v.  Mayor, 
43  N.  Y.  399;  Simson  v.  Brown,  68 
N.  Y.  355 ;  Wheat  v.  Rice,  97  N.  Y. 
296;  Martin  v.  Peet,  92  Hun  (N.  Y.) 
133,  71  N.  Y.  St.  725,  36  N.  Y.  S. 
554 ;  Cincinnati  &c.  R.  Co.  v.  Bank, 
54  Ohio  St.  60,  56  Am.  St.  700 ;  Mc- 
Cown  V.  Schrimpf,  21  Tex.  22,  73 
Am.  Dec.  221 ;  Smith  v.  Bowman,  32 
Utah  21,  88  Pac.  687.  A  contract 
may  be  enforced  by  the  party  for 
whose  benefit  it  is  made,  if  he  adopts 
it  after  it  is  made  though  he  is  not 
named  in  the  contract  or  may  not 
have  known  of  it  at  the  time.  Beat- 
tie  Mfg.  Co.  V.  Clark,  208  Mo.  89, 
106  S.  W.  29.  It  has  been  held  in 
Maine,  however,  that  in  case  of  a 
promise  to  pay  the  debt  of  another, 


if  the  promise  is  general  to  pay  all 
the  debts,  no  particular  obligation  be- 
ing designated,  an  individual  creditor 
cannot  sue  at  law  upon  the  promise. 
Harvey  v.  Maine  Condensed  Milk 
Co.,  92  Maine  115,  42  Atl.  342.  A 
promise  to  pay  a  third  person  may 
he  implied  from  the  circumstances. 
Gibson  v.  St.  Louis,  K.  C.  &  N.  R. 
Co.,  76  Mo.  549. 

""  See  Ramsdale  v.  Horton,  3  Pa. 
St.  330;  Stone  v.  Justice,  9  Phila.  22. 

"Bay  V.  Williams,  112  111.  91,  1 
N.  E.  340,  54  Am.  Rep.  209;  Seaman 
V.  Hasbrouck,  35  Barb.  (N.  Y.)  151; 
Smith  V.  Pfluger,  126  Wis.  253,  105 
N.  W.  476,  110  Am.  St.  911. 

"Rogers  v.  Gosnell,  58  Mo.  589; 
Lawrence  v.  Fox,  20  N.  Y.  268; 
Baker  v.  Eghn,  11  Ore.  333,- 8  Pac. 
280.  See  also,  Brown  v.  Markland, 
63  Utah  360,  52  Pac.  597,  67  Am.  St. 
629;  Tweeddale  v.  Tweeddale,  116 
Wis.  517,  93  N.  W.  440,  61  L.  R.  A. 
509,  96  Am.  St.  1003. 

"  North  Alabama  Development  Co. 
v.  Orman,  55  Fed.  18,  5  C.  C.  A.  22; 
McCoy  V.  McCoy,  32  Ind.  App.  38, 
69  N.  E.  193,  102  Am.  St.  223;  Cop- 
page  V.  Gregg,  127  Ind.  359,  26  N. 
E.  903 ;  Copeland  v.  Summers,  138 
Ind.  219,  35  N.  E.  514,  37  N.  E.  971 ; 
Motley  V.  Manufacturers'  Ins.  Co., 
29  Maine  337,  50  Am.  Dec.  591; 
Stariha  v.  Greenwood,  28  Minn.  521, 
11  N.  W.  76;  Campbell  v.  Smith,  71 
N.  Y.  26,  27  Am.  Rep.  S.  See  also, 
Blake  v.  Atlantic  Nat.  Bank,  33  R. 
I.  464,  82  Atl.  225. 


^7Z 


LIMITS    OF    OBLIGATION THIRD    PERSONS. 


§    I415 


the  contract  made  by  the  parents."  An  infant  may  accept  the 
terms  of  a  contract  made  for  his  benefit  and  bring  an  action  to  en- 
force the  same.'^^ 

§  1415.  Delivery — Rights  of  parties  in  general. — Since  the 
making  of  the  contract  is  the  essential  feature  which  enables  a 
third  party  to  enforce  the  same,  it  is  unnecessary  that  a  contract 
in  writing  be  delivered  to  the  beneficiary  in  order  to  enable  such 
stranger  to  enforce  it.^"  It  has  been  held,  however,  that  one  is 
not  entitled  to  the  benefits  of  a  contract  made  in  his  behalf  with- 
out complying  with  the  conditions  and  assuming  the  liability 
that  the  original  parties  have  attached  thereto."  The  rights  of 
a  party  for  whose  benefit  a  promise  is  made  must  be  measured  by 
the  terms  of  the  agreement  between  the  principal  parties.''^  The 
original  parties  to  the  agreement  may  rescind  their  contract  at  any 
time  prior  to  acceptance  by  the  one  for  whose  benefit  it  was 
made.^^  It  is  generally  beyond  the  power  of  the  original  party 
to  rescind,  however,  after  the  beneficiary  accepts  the  agreement 


"Daily  v.  Minnick,  117  Iowa  653, 
91  N.  W.  913.  60  L.  R.  A.  840.  To 
same  effect.  Freeman  v.  jNIorris,  131 
Wis.  216,  109  N.  W.  983,  120  Am. 
St.   1038. 

»»Gooden  v.  Rayl,  85  Iowa  592,  52 
N.  W.  506;  Strong  v.  Marcy,  ZZ 
Kans.  109,  5  Pac.  366;  Benge  v. 
Hiatt's  Admr.,  82  Ky.  666,  6  Ky.  L. 
714,  56  Am.  Rep.  912;  McCarty  v. 
Elevens,  5  Yerg.  (Tenn.)  195,  26 
Am.  Dec.  262.  See  also.  Griffin  v. 
Schlenk,   31    Ky.   L.   422,    102   S.   W. 

"'Copeland  v.  Summers,  138  Ind. 
219,  35  N.  E.  514,  2>1  N.  E.  971; 
Stevens  v.  Flannagan,  131  Ind.  122, 
30  N.  E.  898. 

"Meridian  Life  &  Trust  Co.  of 
Indiana  v.  Eaton,  41  Ind.  App.  118, 
81  N.  E.  667,  82  N.  E.  480;  Schneider 
V.  United  States  Life  Ins.  Co.,  123 
N.  Y.  109,  25  N.  E.  321,  20  Am.  St. 
727.  See  also,  Hoffman  v.  Habig- 
horst.  49  Ore.  379,  89  Pac.  952,  re- 
hearing denied  91  Pac.  20.  "The 
third  person  acquires  no  rights  un- 
der the  promise  made  for  his  benefit 
until  he  accedes  to  it.  *  *  *  Before 
such  accession  on  his  part,  his  right 
to   insist   upon   the   performance    of 

43— Contracts,  Vol.  2 


the  promise  in  his  favor  may  be  lost 
by  revocation  or  release  between  the 
parties  to  the  agreement,  or  by  in- 
tervention of  the  rights  of  others." 
Blake  v.  Atlantic  Nat.  Bank,  2)1  R. 
I.  464,  82  Atl.  225.  One  who  sues 
upon  a  contract  executed  by  another 
for  his  benefit  must  accept  the  con- 
tract as  it  was  made.  Western  Union 
Tel.  Co.  v.  Douglass  (Tex.),  133  S. 
W.  877.  He  must  prove  the  contract, 
show  that  it  was  made  for  his  benefit 
and  be  bound  by  all  its  terms.  Tuck- 
er V.  Gaines,  86  S.  Car.  500,  68  S.  E. 
670. 

■^Malanaphv  v.  Fuller  &  Johnson 
Mfg.  Co.,  125  Iowa  719,  101  N.  W. 
640,  106  Am.  St.  332. 

'°  Commercial  National  Bank  v. 
Kirkwood,  172  111.  563,  50  N.  E.  219; 
Davis  V.  Calloway.  30  Ind.  112.  95 
Am.  Dec.  671 ;  Crowe  v.  Lewin, 
95  N.  Y.  423;  McArthur  v. 
Drvden,  6  N.  Dak.  438.  71  N. 
W\'  125:  Brewer  v.  Maurer.  38 
Ohio  St.  543,  43  Am.  Rep.  436; 
Trimble  v.  Strother,  25  Ohio  St.  378. 
See  also.  Bacon  v.  Davis,  9  Cal.  .\pp. 
83  98  Pac.  71 ;  Hartman  v.  Pistorius, 
248  111.  568,  94  N.  E.  131.  See  post, 
§  1421. 


§    141 5  CONTRACTS.  674 

and  consents  to  avail  himself  of  its  terms. °°  Likewise  when  the 
party  for  whose  benefit  the  contract  is  made,  is  acting  in  reliance 
upon  the  agreement  with  the  knowledge  of  the  parties  thereto 
they  cannot  rescind  the  same."^  But  the  liability  of  the  promisor 
is  measured  by  his  contract  with  the  promisee  and  he  can  usually 
set  up  any  defense  to  an  action  brought  by  the  beneficiary  which 
would  be  good  against  the  promisee®^  such  as  failure  of  consid- 
eration.*'^ And  it  has  been  held  that  if  the  promisor  has  agreed 
to  pay  the  promisee's  debt  up  to  a  certain  amount  and  the  total 
indebtedness  of  the  promisee  has  not  been  ascertained,  one  of  the 
promisee's  creditors  may  sue  the  promisor,  but  the  promisor  may 
compel  the  action  to  be  brought  for  the  benefit  of  all  the  promis- 
ee's creditors,  so  that  the  decree  rendered  will  bind  all  and  free  the 
promisor  from  further  liability. *'•'  However  where  a  surety  pays 
the  entire  amount  of  his  liability  to  one  of  the  creditors  without 
the  assent  of  others  entitled  to  a  distributive  share,  he  may  be 
compelled  to  pay  the  latter  such  sum  as  they  would  have  been 
entitled  to  receive  if  they  had  been  made  parties  and  a  pro  rata 
distribution  had.  Of  this  the  surety  cannot  complain;  for,  al- 
though he  will  in  fact  pay  more  than  the  amount  of  the  bond,  it 
results  from  his  own  wrong  in  paying  the  entire  amount  of  the 

^Pugh  V.  Barnes,  108  Ala.  167,  19  Smith  Grocery  Co.  (Tex.  Civ.  App.), 

So.  370;  Cedar  Rapids  &c.  Light  Co.  127  S.  W.  1118. 

V.  Chicago  &c.  R.  Co.,  145  Iowa  528,  "  Crowell  v.  Currier,  27  N.  J.  Eq. 

124  N.  W.  323  (holding  that  when  an  152,  affd.  27  N.  J.  Eq.  650. 

electric  light  company  had  done  the  °^  Ellis   v.    Harrison,    104    Mo.   270, 

grading  and  furnished  the  necessary  16  S.  W.  198;  Dunning  v.  Leavitt,  85 

right  of   way   for  a  switch   track  in  N.    Y.    30,    39    Am.    Rep.    617.      See 

accordance  with  the  terms  of  a  con-  also,    Taylor    v.    Harvey,    30    Ky.    L. 

tract  between  the   defendant  railway  1045,  100  S.  W.  258;  Davis  v.  Dunn, 

companies,     the     railway     companies  121    Mo.    App.    490,    97    S.    W.    226; 

could    not    cancel    their    agreement  Redditt     v.     Wall     (Miss.).     55     So. 

without  taking  into  consideration  the  45.  34   L.   R.   A.    (N.    S.)    152.     One 

rights  of  the  electric  light  company)  ;  who  agrees  to  pay  the  costs  incurred 

Dodge's  Admr.  v.  Moss,  82  Ky.  441,  by  the  defendant  in  a  particular  suit 

6   Ky.   L.   707;    Pecquet  v.    Pecquet's  is  not  liable   for  the  costs  of  a  sec- 

Exr.,    17   La.   Ann.   204;    Knowles   v.  ond   suit   in    which    the   attorneys    in 

Erwin,   43    Hun    (N.    Y.)    150,    5    N.  the    first    suit    sued    for    their    fees. 

Y     St    421,   affd.    124   N.   Y.   633,   26  Joseph    Mazzini    Society    v.    Corgiat, 

N.   E.  759;   Gifford  v.   Corrigan,   117  63  Wash.  273,  115  Pac.  93. 

N.  Y.  257,  22  N.  E.  756.  6  L.  R.  A.  °^Clay  v.  Woodrum,  45  Kans.   116, 

610.    15   Am.    St.   508;    Thompson   v.  25   Pac.   619;   Osborne   v.    Cabell,   11 

Gordon.  3  Strob.  (S.  Car.)  196;  Put-  Va.  462. 

ney  v    Farnham,  27  Wis.  187,  9  Am.  «*Bell  v.  Mendenhall,  71  Minn.  331, 

Rep.  459;  Bassett  v.  Hughes,  43  Wis.  1Z  N.  W.  1086.     See  also,  Harvey  v. 

319,    Compare  with  Meyer  v.  Walker-  Maine  Condensed  Milk  Co.,  92  Maine 

115,  42  Atl.  342. 


6/5  LIMITS   OF    OBLIGATION THIRD    PERSONS.  §    I416 

bond  to  a  part  of  the  beneficiaries  in  disregard  of  the  rights  of 
Others."'' 

§  1416.  Particular  cases — Insurance. — The  terms  of  a  paid- 
up  pohcy  of  insurance  decide  the  question  of  the  title  to  its  pro- 
ceeds."" The  general  rule  is  that  a  policy,  and  the  money  to  be- 
come due  under  it,  belong,  the  moment  it  is  issued,  to  the  person 
or  persons  named  in  it  as  the  beneficiary."^  The  beneficiary  even 
though  not  a  party  to  the  original  contract  of  insurance  is  given 
the  right  to  enforce  such  policy,  and  this,  generally,  by  a  direct 
action."^  The  rights  of  a  beneficiary  to  an  insurance  policy  are 
in  many  instances  controlled  by  the  statutes  of  the  various  states 
and  reference  must  be  had  to  these  statutes  in  order  to  determine 
the  rights  of  such  beneficiaries.  It  is  held  by  the  weight  of 
authority  that  the  beneficiary  may  maintain  an  action  against 
the  insurer  for  breach  of  contract  other  than  failure  to  pay  the 
indemnity,  such  as  an  action  for  damages  for  the  wrongful  can- 
celation or  forfeiture  of  the  policy.""  But  where  an  absolute 
right  is  not  vested  in  the  beneficiary  by  the  contract  of  insurance 
and  the  insured  has  the  right  to  dispose  of  the  policy  by  assign- 
ment, will  or  gift,  without  the  consent  of  the  beneficiary,  the  un- 
certainty of  the  beneficiary's  interest  growing  out  of  the  contin- 
gencies incident  to  the  power  of  the  insured  to  thus  deal  with  the 

«  Curry  V.  Homer,  62  Ohio  St.  233,        °» See    Brooklyn    Life    Ins.    Co.    v. 

56  N    E    870.  Week,  9  111.   App.   358;   Clemmitt   v. 

'"'  See,    In    re,    Peckham,    29    R.    I.  New  York  Life  Ins.  Co.,  Id  Va.  355 ; 

250    69  Atl.  1002,   132  Am.   St.  813.  Merrick    v.     Northwestern     National 

"  Burdett  v.  Burdett,  26  Okla.  416,  Life  Ins.  Co.,   124  Wis.  221.   102   N. 

109   Pac.  922,   35   L.   R.   A.    (N.   S.)  W.  593.  109  Am.  St.  931.  It  has  been 

964n:     Central     National     Bank     v.  held  however,  that  the  beneficiary  of 

Hume,   128  U.  S.  195,  32  L.  ed.  370,  a  life   insurance  poHcy  has  no  right 

9  Sup.  Ct.  41.  of   action   because  of   the   breach   by 

"*  Cleaver  v.  Mutual  Reserve  Fund  the  insurer  of  its  contract  with  the 
Life  Assn.  (1892),  1  Q.  B.  147;  insured  with  reference  to  assess- 
Grant  v.  Bradstreet,  87  Maine  583,  ments.  reserve  funds,  classification, 
33  Atl  165;  Nims  v.  Ford,  159  Mass.  etc.  Price  v.  Mutual  Reser^-e  Life  Ins. 
575  35  N.  E.  100;  Wright  v.  Ver-  Co.,  102  Md.  683,  62  Atl.  1040.  4  L. 
mont  Life  Ins.  Co.,  164  Mass.  302,  R.  A.  (N.  S.)  870.  Upon  the  re- 
41  N.  E.  303;  Ruohs  v.  Trader's  Fire  scission  of  a  policy,  the  beneficiary 
Ins.  Co.,  Ill  Tenn.  405.  78  S.  W.  85,  cannot  maintain  an  action  to  recover 
102  Am.  St.  790.  For  numerous  the  premium  paid.  .'Ml  rights  to  the 
cases  on  this  subject  see  3  .A.m.  premium  paid  by  the  insured  are 
&  Eng.  Ency.  of  Law  980.  See  also  vested  in  him.  Slocum  v.  North- 
further  on  this  subject  under  the  western  National  Life  Ins.  Co..  135 
title  Insurance  in  Vol.  V  of  this  Wis.  288.  115  N.  W.  796,  14  L.  R. 
work.  A.    (N.    S.)    lllOn. 


§    1 41 7  CONTRACTS.  676 

policy  defeats  the  right  of  the  beneficiary  to  maintain  an  action 
for  damages  for  a  breach  of  the  contract/"  However,  where  the 
insured  has  the  power  to  change  the  beneficiary  and  is  dissuaded 
from  making  an  intended  change  by  reason  of  the  sole  benefici- 
ary's promise  to  pay  a  portion  of  the  proceeds  of  the  policy  to  a 
designated  person  it  has  been  held  that  such  person  may  maintain 
an  action  on  the  promise  against  the  beneficiary.'^  It  has  been 
held  that  a  husband  and  wife  cannot  insure  a  homestead,  the  title 
to  which  is  in  the  wife,  and  the  husband  represent  that  he  is 
the  sole  and  unconditional  owner  at  the  time  he  procures  the  in- 
surance and  when  the  risk  is  destroyed  abandon  the  insurance  con- 
tract and  its  conditions  as  to  sole  ownership  and  collect  the  value 
of  the  policy  on  the  theory  that  he,  though  not  the  sole  owner 
as  represented,  yet  has  an  insurable  interest  in  the  property." 

§  1417.  Particular  cases — Telegraph  company  cases. — The 
rule  in  England  has  always  been  that  the  right  of  action  against 
the  telegraph  company  for  delay  in  delivery  or  incorrect  transmis- 
sion is  founded  upon  the  contract  of  sending  and  that  in  the 
absence  of  such  facts  as  make  the  addressee  a  party  or  privy  to  the 
contract,  the  latter  has  no  right  of  action  against  the  telegraph 
company."     This  is  not  the  accepted  doctrine   in  the  United 

™  Knights  Templar  &c.    Indemnity  recover  the  residue  left  after  paying 

Co.  V.  Gravett,  49  111.  App.  252;  Slo-  the    assignee    the    amount    advanced 

cum   V.    Northwestern   National   Life  by  him  as  premiums.     See,  however, 

Ins.    Co.,    135    Wis.   288,    115   N.    W.  MetropoHtan    Life    Ins.    Co.    v.    Eli- 

796    14  L   R.  A.   (N.  S.)   lllOn.  son,  72  Kans.  199,  83  Pac.  410,  3  L. 

^'Scheele    v.    Lafayette    Bank,    120  R.  A.   (N.  S.)  934,  115  Am.  St.  189, 

Mo.  App.  611,  97  S.  W.  621;  Water-  holding    that    neither   the   beneficiary 

house  v.  Waterhouse,  29  R.  I.  485,  72  named  in  the  policy  nor  one  with  no 

Atl.  642,  22  L.  R.  A.    (N.   S.)    639n.  insurable  interest  to  whom  a  part  of 

"Bacot    V.    Phoenix    Ins.    Co.,    96  the  proceeds  are  assigned  in  consid- 

Miss.   223,   50   So.   729,   25   L.    R.   A.  eration   of    his   keeping   up    the   pre- 

(N.    S.)    1226n.     As  to  whether  one  miums  can  recover  on  the  policy.  For 

who  has  no  insurable  interest  in  the  an  extensive  note  on  the  validity  of 

life  of  another  may  take  an  assign-  an    assignment    of    an    interest    on   a 

ment   of    a   life    insurance   policy   on  life    insurance   policy   to   one    paying 

the    life    of    such     other    under    an  premiums    see   3    L.    R.   A.    (N.    S.) 

agreement  that  the  former  shall  pay  935n. 

the   premiums    and    receive    the    pro-  ''' Winterbottom      v.      Wright,      10 

ceeds  or  only  so  much  as  will  repay  Mees.  &  W    109;  Playford  v.  United 

the  amount  advanced,  see  Bendet  v.  Kingdom   Electric   Telegraph  Co.,  L. 

Ellis     120    Tenn.277,  111S.W.795, 18  R.  4  Q.  B.  706;  Feaver  v.  Montreal 

L.   R.   A.    (N.   S.)    114,   127  Am.   St.  Telegraph   Co.,  23   U.   C  C.  P.   150. 

icioo,  and  cases  cited  holding  that  the  The    Georgia    courts    hold    that    the 

administrator    of    the    deceased    may  telegraph   company   is    the   agent   of 


G77 


LIMITS   OF    OBLIGATION THIRD    PERSONS. 


I417 


States,  however.  In  most  jurisdictions  in  this  country  the  re- 
ceiver or  addressee  of  the  message  who  is  named  thereon  or  of 
whose  interest  notice  is  given  the  company  at  the  time,  may  main- 
tain an  action  either  ex  contractu  or  ex  dehcto  and  recover  such 
damages  as  he  may  have  sustained  by  reason  of  delay  or  incorrect 
transmission.'^     The  cases,  as  a  general  rule,  hold  that  in  order  to 


the  sender  of  the  telegram  and  that 
the  addressee  must  look  to  the  send- 
er of  the  message  and  not  to  the 
company  for  any  damages  which  he 
may  have  sustained  by  reason  of 
delay  or  error  in  transmitting  the 
despatch.  Western  Union  Tel.  Co. 
V.  Shotter,  71  Ga.  7oO ;  Western 
Union  Tel.  Co.  v.  Flint  River  Lum- 
ber Co.,  114  Ga.  576,  40  S.  E.  815, 
88  Am.  St.  36;  Brooke  v.  Western 
Union  Tel.  Co.,  119  Ga.  694,  46  S. 
E.  826,  adhering  to  the  rule  and  dis- 
tinguishing Western  Union  Tel.  Co. 
V.  James,  90  Ga.  254,  16  S.  E.  83; 
Western  Union  Tel.  Co.  v.  Waxel- 
baum,  113  Ga.  1017,  39  S.  E.  443,  56 
L.  R.  A.  741.  See  also.  Ogles  v. 
Nashville  C.  &  S.  L.  R.  Co..  130  Ga. 
430,  60  S.  E.  1048,  holding  that  where 
the  father  of  the  plaintiff  entered 
into  a  contract  with  defendant's 
agent  in  Rome,  Georgia,  by  which 
the  agent  undertook  to  issue  a  ticket 
for  transportation  and  cause  the 
same  to  be  delivered  to  the  plain- 
tiff in  Cariton,  the  plaintiff  could 
not  maintain  an  action  for  breach  of 
the  contract.  See  also,  Lavelle  v. 
Western  Union  Tel.  Co.  (Ark.),  145 
S.  W.  205.  It  is  obvious  that  if  the 
sender  is  the  agent  of  the  addressee, 
the  latter  is  the  party  with  whom  the 
contract  is  in  fact  made  and  may  as 
principal  maintain  an  action  against 
the  company  for  damages  sustained 
by  its  breach  of  the  contract  to  trans- 
mit and  deliver  the  message.  Ken- 
non  v.  Western  Union  Tel.  Co.,  92 
Ala.  399,  9  So.  200.  Western  Union 
Tel.  Co.  V.  W^ilson,  93  Ala.  32.  9 
So.  414,  30  Am.  St.  23;  Western 
Union  Tel.  Co.  v.  Cleveland,  169 
Ala.  131,  53  So.  80;  Western  Union 
Tel.  Co.  V.  Rowell,  153  Ala.  295.  45 
So.  12> ;  Manker  v.  W^estern  Union 
Tel.  Co.,  137  Ala.  292,  34  So.  839 
(undisclosed  principal),  overruling 
Western  Union  Tel.  Co.  v.  Allgood, 


125  Ala.  712,  27  So.  1024  and  Lucas 
v.  Southern  R.  Co.,  122  Ala.  529,  25 
So.  219;  Harkncss  v.  Western  Union 
Tel.  Co.,  12>  Iowa  190,  34  X.  W.  811, 
5  Am.  St.  672  (suit  by  undisclosed 
principal  of  both  the  sender  and  ad- 
dressee) ;  Milliken  v.  Western  Union 
Tel.  Co.,  110  X.  Y.  403,  18  X.  E.  251, 

11  L.  R.  A.  281  (undisclosed  princi- 
pal) ;  Loper  v.  Western  Union  Tel. 
Co.,  70  Texas  689,  8  S.  W.  600. 
But  even  though  the  circumstances 
are  such  that  the  sendee  cannot  sue 
ex  contractu  he  may  sue  ex  delicto 
for  breach  of  the  public  duty.  Mc- 
Gehee  v.  Western  Union  Tel.  Co., 
169  Ala.  109,  53  So.  205,  Ann.  Cas. 
1912B.  205. 

"Western  Union  Tel.  Co.  v.  Bur- 
ris.  179  Fed.  92,  102  C.  C.  A.  386; 
Whitchill  v.  Western  Union  Tel  Co., 
136  Fed.  499;  Hadley  v.  Western 
Union  Tel.  Company,  115  Ind.  191, 
15  N.  E.  845  (statutory)  ;  Western 
Union  Tel.  Co.  v.  Fenton.  52  Ind.  3 
(statutorv)  ;  West  v.  Western  Union 
Tel.  Co.,' 39  Kans.  93,  17  Pac.  807.  7 
Am.  St.  530n;  Western  U.  Tel.  Co. 
V.  Woods,  56  Kans.  111.  44  Pac. 
989;  Chapman  v.  Western  Union  Tel. 
Co.,  90  Kv.  265,  12  Kv.  L.  265,  13  S. 
W.  880;  Western  Union  Tel.  Co.  v. 
Jump,  8  Ky.  L.  531  (telegram  an- 
nouncing death  of  addressee's  son)  ; 
jMarkel  v.  Western  Union  Tel.  Co., 
19  ]\Io.  App.  80  (statutory);  Wolf- 
skehl  V.  Western  Union  Tel.  Co..  46 
Hun  (N.  Y.)  542  (holding  that 
either  sender  or  addressee  may  main- 
tain an  action  for  damage  sus- 
tained) ;   Barrack  v.  Postal  Tel.  Co., 

12  Ohio  S.  &  C.  P.  Dec.  78:  But- 
ler V.  Western  Union  Tel.  Co.,  62 
S.  Car.  222,  40  S.  E.  162.  89  Am.  St. 
893  (telegram  announcing  serious 
illness  of  addressee's  daughter)  ; 
Western  Union  Tel.  Co.  v.  Cook, 
45  Tex.  Civ.  App.  87.  99  S.  W.  1131; 
Western   Union    Tel.    Co.    v.    Sweet- 


§   I4i8 


CONTRACTS. 


678 


entitle  the  addressee  to  maintain  an  action  it  must  appear  that  the 
company  at  the  time  it  received  the  message  for  transmission  was 
given  information  that  it  was  for  the  benefit  of  the  sendee  or  that 
the  language  of  the  message  is  sufficient  to  convey  such  informa- 
tion.'^ It  has  been  held,  however,  that  the  telegraph  company 
is  liable  where  the  face  of  the  message  clearly  shows  that  a  busi- 
ness transaction  is  contemplated  and  that  negligence  in  its  trans- 
mission may  reasonably  be  attended  with  pecuniary  loss.'^'^  It  has 
also  been  held  that  an  action  for  damages  ex  contractu  cannot  be 
maintained  where  the  message  is  not  sent  for  the  benefit  of  the 
addressee.^' 

§  1418.    Particular  cases — Building  contract  cases. — Un- 
paid subcontractors,  material-men  or  laborers  may  bring  an  action 


man,  19  Tex.  Civ.  App.  435,  47  S. 
W.  676;  Western  Union  Tel.  Co.  v. 
Hale,  11  Tex.  Civ.  App.  79,  32  S. 
W.  814  (announcing  fatal  illness  of 
brother)  ;  Western  Union  Tel.  Co. 
V.  Clark,  14  Tex.  Civ.  App.  563,  38 
S.  W.  225  (telegram  to  mother  in- 
forming her  of  daughter's  illness)  ; 
Western  Union  Tel.  Co.  v.  Doug- 
lass (Texas),  133  S.  W.  877,  affg. 
124  S.  W.  488  (announcing  death  of 
mother).  See  also,  Alexander  v. 
Western  Union  Tel.  Co.  (N.  Car.), 
74  S.  E.  449;  McLeod  v.  Pacific  Tel. 
Co.,  52  Ore.  22,  94  Pac.  568,  15  L. 
R.  A.  (N.  S.)  810,  16  Am.  &  Eng. 
Ann.  Cas.  1239,  rehearing  denied 
52  Ore.  28,  95  Pac.  1009,  18  L.  R. 
A.  (N.  S.)  954,  16  Am.  &  Eng.  Ann. 
Cas.  1241  (an  action  ex  delicto  ap- 
plying the  same  principles  applicable 
to  telegraph  companies  to  telephone 
companies  and  holding  a  telephone 
company  liable  for  negligent  failure 
to  summons  an  addressee  to  re- 
ceive a  long  distance  message.  See 
also,  note  in  15  L.  R.  A.  (N.  S.)  810. 
"  Anniston  Cordage  Co.  v.  West- 
ern Union  Tel.  Co.,  161  Ala.  216, 
49  So.  770,  30  L.  R.  A.  (N.  S.)  1166, 
135  Am.  St.  124;  Western  Union  Tel. 
Co.  V.  Weniski,  84  Ark.  457,  106  S. 
W.  486;  Frazier  v.  Western  Union 
Tel.  Co.,  45  Ore.  414,  78  Pac.  330, 
(iJ  L.  R.  A.  319,  2  Am.  &  Eng.  Ann. 
Cas.  396.  See  also,  Butner  v. 
Western    Union    Tel.    Co.,    2    Okla. 


234,  Z1  Pac.  1087.  See  also,  cases 
cited   in  preceding  note. 

"  Fererro  v.  Western  Union  Tel. 
Co.,  9  App.  (D.  C.)  455,  35  L.  R. 
A.  548;  Western  Union  Tel.  Co.  v. 
Federolf  (Tex.  Civ.  App.),  145  S. 
W.  314.  To  same  effect.  Western 
Union  Tel.  Co.  v.  Biggerstaff  (Ind.), 
97  N.  E.  531  (message  summoning 
physician).  See  also,  Vermilye  v. 
Postal  Tel.  Cable  Co.,  205  Mass. 
598,  91  N.  E.  904,  30  L.  R.  A.  (N. 
S.)  472.  A  telegram  announcing  the 
death  of  a  brother  has  been  held  suf- 
ficient on  its  face  to  charge  the  com- 
pany with  notice  that  damages  may 
be  reasonably  expected  to  result  to 
the  sender  from  a  negligent  failure 
to  deliver  it.  Western  Union  Tel. 
Co.  V.  Garlington  (Ark.),  142  S.  W. 
854.  Compare  with  Western  Union 
Tel.  Co.  V.  Edmonds  (Tex.  Civ. 
App.),  146  S.  W.  322. 

"Postal  Tel.  Cable  Co.  v.  Ford, 
117  Ala.  672,  23  So.  684  (sender  tes- 
tified that  he  sent  the  telegram  for 
the  benefit  of  the  addressee.  The 
court  held  that  it  must  have  been 
sent  for  the  sole  benefit  of  the  ad- 
dressee, and  that  this  was  not  the 
case  and  denied  recovery.)  ;  Curd  v. 
Cumberland  Tel.  &  Tel.  Co.,  (Ky. 
App.),  119  S.  W.  746.  The  Alabama 
court  holds  that  the  sendee  cannot 
sue  ex  contractu  unless  he  is  direct- 
ly a  party  to  the  contract  or  is  the 
principal   of   the   sendee   or   contem- 


679 


LIMITS    OF    OBLIGATION THIRD    PERSONS.  §     I418 


in  most  jurisdictions  directly  on  the  contractor's  bond  when  he  is 
required  thereby  to  pay  for  all  labor  and  materials  furnished  in 
connection  with  the  work.  The  contract  of  surety  is  deemed  to 
have  been  made  for  the  benefit  of  material-men  and  laborers."'^ 
This  is  especially  true  when  the  work  contracted  for  is  to  be  per- 
formed in  the  erection  of  a  public  building  or  other  public  struc- 
ture upon  which  the  laborer  or  material-men  cannot  acquire  a 
lien.^®  The  right  of  laborers  and  material-men  to  sue  the  sureties 
may  be  gathered  from  the  bond  when  read  in  connection  with  the 


plates  the  benefit  solely  of  the  per- 
son to  whom  the  message  is  ad- 
dressed. MeGehee  v.  Western  Union 
Tel.  Co.,  169  Ala.  109,  53  So.  205, 
Ann.  Cas.  1912B.  512. 

"Knight  &  Jillson  Co.  v.  Castle, 
172  Ind.  97,  87  N.  E.  976,  27  L.  R. 
A.  (X.  S.)  573n;  Ochs  v.  M.  J. 
Carnahan  Co.,  42  Ind.  App.  157,  76 
N.  E.  788,  80  N.  E.  163;  Getchell  & 
Martin  Lumber  &  Mfg.  Co.  v.  Peter- 
son, 124  Iowa  599,  100  N.  W.  550 
(holding  that  such  contractor  may 
maintain  the  action).  It  has  been 
said  that  the  laborers  and  material- 
men can  maintain  an  action  on  such 
bond  only  when  the  work  is  of 
such  a  character  that  no  lien  can  be 
acquired  thereon  for  the  reason 
that  when  a  provision  of  this  char- 
acter is  inserted  in  a  contract  for 
the  building  of  a  structure  on  which 
a  lien  may  be  obtained  it  will  be 
inferred  that  its  object  is  to  pro- 
tect the  owner  and  not  to  benefit 
third  persons.  See  Wald's  Pollock 
on  Contracts  (3d  ed.)  253.  But  the 
foregoing  cases  dissent  from  this 
view.  For  instance,  in  the  case  last 
cited  it  is  said  that  the  primary  ob- 
ject may  have  been  to  protect  the 
owner  but  that  it  was  also  unques- 
tionably inserted  for  the  benefit  of 
subcontractors,  and  in  the  case  of 
Ochs  V.  M.  J.  Carnahan  Co.,  42  Ind. 
App.  157,  76  N.  E.  788,  it  is  said: 
"It  is  true  that  in  these  cases  (re- 
ferring to  cases  just  cited  by  the 
court)  the  bond  had  been  given  to 
secure  payment  for  materials  used 
in  a  public  building,  upon  which  a 
mechanic's  lien  could  not  be  ac- 
quired, and  that  such  fact  has  a  more 
or  less  prominent  part  in  the  opin- 


ions; but  while  the  ability  of  the 
material-man  and  mechanic  to  com- 
pel payment  of  their  claims  by  filing 
a  lien,  would  be  influential  in  caus- 
ing them  to  resort  to  the  bond,  it 
cannot  affect  the  obligation  of  the 
bond.  If  an  agreement  to  pay  for 
material,  if  the  contractor  does  not, 
is  an  undertaking  for  the  benefit  of 
the  material-man  in  one  instance,  it 
is  in  the  other.  Its  terms  are  not 
affected  by  the  possibility  or  im- 
possibility of  otherwise  procuring 
payment.  If  the  material-man  pro- 
duced payment  by  means  of  a  lien, 
the  appellants  would  be  liable  to  the 
owner  upon  the  bond,  so  that  there 
can  be  no  harshness  in  avoiding  cir- 
cuity of  action,  and  permitting  direct 
recovery  by  the  party  who  furnishes 
the  material." 

■'*  Williams  v.  Markland,  15  Ind. 
App.  669,  44  N.  E.  562  (school- 
house)  ;  Young  v.  Young,  21  Ind. 
App.  509,  52  N.  E.  776  (school- 
house)  ;  American  Surety  Co.  v. 
Lauber,  22  Ind.  App.  326.  53  N.  E. 
793  (schoolhouse)  ;  King  v.  Dow- 
ney, 24  Ind.  App.  262,  56  N.  E.  680 
(schoolhouse)  ;  National  Surety  Co. 
v.  Foster  Lumber  Co.,  42  Ind.  App. 
671,  85  N.  E.  489  (public  buildings)  ; 
Baker  v.  Bryan,  64  Iowa  561,  21  N. 
W.  83  (schoolhouse)  ;  American 
Surety  Co.  v.  Thorn-Halliwell  Ce- 
ment Co.,  9  Kans.  App.  8,  57  Pac.  237 
(municipal  water-works  svstem)  ; 
St.  Louis  v.  Von  Phul,  133  Mo.  561, 
34  S.  W.  843,  54  Am.  St.  695  (street 
improvement)  ;  La  Crosse  Lumber 
Co.  v.  Schwartz  (Mo.  App.),  147 
S.  W.  501  (soldiers'  home)  ;  King 
v.  Murphy,  49  Xebr.  670,  68  N.  W. 
1029   (public  buildings)  ;   Gastonia  v. 


§    1 41 8  CONTRACTS.  68o 

building  contract  proper.  Thus,  in  the  erection  of  pubHc  build- 
ings they  have  been  permitted  to  maintain  an  action  of  this  char- 
acter when  the  bond  was  merely  conditioned  upon  the  faithful 
performance  of  the  contract  and  the  contract  contained  language 
sufficient  to  require  the  contractor  to  pay  the  laborers  and  ma- 
terial-men for  work  perfonned  and  material  furnished.^"  A 
bond  given  to  secure  one  in  the  performance  of  covenants,  condi- 
tions and  agreements  contained  in  a  contract  for  the  erection  of 
a  dwelling,  which  bond  is  also  given  for  the  benefit  of  all  persons 
who  may  become  entitled  to  liens  under  the  contract,  has  been  con- 
strued in  the  light  of  the  context  of  the  building  contract  to 
mean  that  all  persons  who  have  the  right  to  acc|uire  liens  upon  the 
property  are  entitled  to  its  benefit  and  may  sue  thereon  notwith- 
standing they  failed  to  perfect  their  lien  on  the  property.^^  La- 
borers and  material-men  cannot,  however,  bring  a  direct  action 
against  the  surety  when  there  is  no  express  provision  for  a  pay- 
ment for  labor  or  materials  either  in  the  contract  or  bond,  and  it 
does  not  purport  to  be  for  their  benefit.  A  general  undertaking 
that  the  contractor  will  perform  the  contract  is  held  not  to  run  to 
third  persons  when  there  is  no  provision  for  the  payment  of  labor 
and  materials.^^     It  has  been  held,  however,  that  laborers  and 

McEntee-Peterson    Engineering    Co.,  74  N.  W.   1062    f  court-house)  :  Mor- 

131    N.    Car.    363,42  S.  E.  858  (public  ton  v.  Harvey,  57   Nel)r.  304,  11  N. 

water-works     and     sewer     system)  ;  W.     808     (court-house).      See    also, 

R.  Connor  Co.  v.  Olson,  136  Wis.  13,  Union  Sheet  Metal  Works  v.  Dodge, 

115      N.     W.      811      (schoolhouse)  ;  129  Cal.  390,  62  Pac.  41;  La -Crosse 

United    States   Gypsum   Co.   v.    Glea-  Lumber  Co.  v.  Schwartz  (Mo.  App.), 

son,  135  Wis.  539,  116  N.  W.  238,  17  147  S.  W.  501;  Philadelphia  v.  Harry 

L.    R.    A.    (N.    S.)    906    (county   in-  C.  Nichols  Co.,  214  Pa.  265,  63  Atl. 

sane    asylum).  886;    Bowditch    v.    Gourley,    24    Pa. 

""  Brown  v.  Markland,  22  Ind.  App.  Super.  Ct.  342. 

652,    53    N.    E.    295     (schoolhouse);  '^  Gwinn   v.   Wright,   42    Ind.   App. 

Hipwell  V.  National  Surety  Co.,   130  597,  86  N.  E.  453. 

Iowa    656,    105    N.    W.    318    (public  "^Spalding  Lumber   Co.    v.    Brown, 

library  building)  ;    Deavers  v.    How-  171    111.   487.  49  N.   E.  725 ;    Sterling 

ard,  144  Mo.  671,  46  S.  W.  625  (pub-  v.  Wolf,   163  111.  467,  45  N.  E.  218; 

lie  well)  ;   Sample  v.  Hale,  34  Nebr.  Searles  v.   Flora,  225   111.   167,  80  N. 

220,  51  N.  W.  837  (public  building)  ;  E.    98,    revg.    Flora    v.    Searles,    127 

Fitzgerald   v.    McClav,  47   Nebr.  816,  111.   App.  465;    Knight   &  Jillson   Co. 

66    N.    W.    828    (public    buildings)  ;  v.  Castle,  172  Ind.  97,  87  N.  E.  976, 

Lyman  v.   Lincoln,   38  Nebr.   794,   57  27   L.    R.    A.    (N.  S.)  573n ;  Dunlap  v. 

N.  W.  531    (public  building)  ;   Kors-  Eden,    15    Ind.    App.    575,    44    N.    E. 

meyer    Plumbing    &    Heating    Co.    v.  560;  Greenfield  Lumber  &  Ice  Co.  v. 

McClav,  43   Nebr.  649,  62  N.  W.  50  Parker,   159  Ind.  571,  65  N.  E.  747: 

(court-house)  ;     Pickle,      Marble     &  Hart  v.   State,  120  Ind.  83,  21   N.  E. 

Granite  Co.  v.  McClay,  54  Nebr.  661,  C54,  24  N.  E.  151 ;  Townsend  v.  Cleve- 


68 1 


LIMITS    OF    OBLIGATION THIRD    PERSONS.  §    I419 


material-men  may  bring  an  action  directly  against  the  owner  when 

lie  has  agreed  with  the  builder  to  pay  for  work  performed  and 
materials  furnished.-^ 


§  1419.    Particular   cases — Contracts  with  carriers. — The 

consignee  of  a  shipment  of  goods  has  been  held  entitled  to  main- 
tain an  action  for  damages  for  losses  resulting  from  an  unreason- 
able delay  in  their  transportation,  notwithstanding  title  was  re- 
tained by  the  consignor.®*  But  where  title  is  retained  by  the  con- 
signor a  consignee  of  goods  who  has  refused  to  receive  the  same 
cannot  maintain  an  action  for  their  loss  while  they  are  being  re- 
turned to  the  consignor. ®°  It  has  also  been  held  that  where  a 
father  entered  into  a  contract  with  the  defendant  railroad  com- 
pany by  which  it  agreed  to  compensate  the  father  for  all  stock 
killed  or  injured,  owned  by  him,  his  heirs  or  assigns,  on  a  desig- 
nated farm-crossing  by  the  cars  or  engines  of  said  company  or 
either  of  them,  the  plaintiff,  who  was  his  father's  son  and  heir 


land  Fire-Proofing  Co.,  18  Ind.  App. 
568,  47  N.  E.  707 ;  Green  Bay  Lumber 
Co.  V.  Independent  School  Dist.,  121 
Iowa  663.  97  X.  W.  72;  Herpolshei- 
mer  v.  Hansell-Elcock  Co.,  141  Mich. 
367.  104  N.  W.  671;  Eau  C!aire-St. 
Louis  Lumber  Co.  v.  Banks,  136  Mo. 
App.  44,  117  S.  W.  611;  M.  T.  Jones 
Lumber  Co.  v.  Villegas,  8  Tex.  Civ. 
App.  669,  28  S.  W.  558;  Montgomery 
V.  Rief,  15  Utah  495.  50  Pac.  623: 
Smith  V.  Bowman,  32  Utah  33,  88 
Pac.  687,  9  L.  R.  A.  (N.  S.)  889n. 
Laborers  and  material-men  have 
been  denied  the  right  to  maintain 
an  action  against  the  surety  where 
the  covenant  in  the  bond  was  readily 
capable  of  being  construed  as  for 
the  benefit  of  such  laborer  and  ma- 
terial-men. See  Searles  v.  Flora, 
225  111.  167,  80  N.  E.  98.  revg.  127 
111.  App.  465  ;  Hunt  v.  King.  97  Iowa 
88. 66  N.  W.  71 ;  Macatee  v.  Hamilton, 
15  Tex.  Civ.  App.  108,  38  S.  W. 
530;  Puget  Sound  Brick  Tile  &  Ter- 
ra Cotta  Co.  v.  School  District  No. 
73,  12  Wash.  118,  40  Pac.  608:  Ar- 
mour &  Co.  V.  Western  Construc- 
tion Co.,  36  Wash.  529.  78  Pac.  1106; 
Electric  Appliance  Co  v.  United 
States  Fidelity  &  Guaranty  Co.,  110 
Wis.  434,   85   X.   W.  648,   53   L.   R. 


A.  609.  A  provision  in  a  contract 
which  gave  the  defendant  company 
the  right  to  protect  itself  against 
claims  that  might  be  regarded  as 
liens  by  the  application  of  funds  due 
to  the  discharge  of  such  claims  has 
been  held  wholly  for  the  benefit  of 
the  company.  Shaw  v.  Cleveland 
&c.  R.  Co.,  173  Fed.  746,  97  C.  C.  A. 
520. 

"Morrison  v.  Payton,  31  Ky.  L. 
992,   104  S.  W.  685. 

"Clute  v.  Chicago  &c.  R.  Co.,  83 
Kans.  333,  111  Pac.  431,  30  L.  R.  A. 
(X.  S.)  1071  and  note.  See  also, 
Bacharach  v.  Chester  Freight  Line, 
133  Pa.  St.  414,  19  Atl.  409  (title  in 
consignee). 

*^Xathan  v.  Missouri  Pac.  R.  Co., 
135  Mo.  App.  46,  115  S.  W.  496:  Gur- 
witz  V.  Weir,  127  App.  Div.  (X.  Y.) 
352,  111  N.  Y.  S.  557.  See  also, 
Stafsky  v.  Southern  R.  Co.,  143  Ala. 
272,  39  So.  132  (goods  reshipped  by 
order  of  consignor)  ;  Chicago  &c.  R. 
Co.,  V.  Boggs,  134  111.  App.  348 
(holding  that  consignor  may  recover 
when  consignee  refused  to  receive 
the  goods  because  of  damage  re- 
sulting from  the  carrier's  negli- 
gence). 


§    I420  CONTRACTS.  682 

and  who  had  become  owner  of  the  property,  might  maintain 
an  action  on  the  contract  since  it  had  been  made  for  his  benefit.®'' 
And  where  plaintiff's  wife  paid  money  to  the  defendants'  agent 
for  his  transportation,  the  agent  agreeing  to  give  the  plaintiff 
notice  as  soon  as  possible  that  a  ticket  was  waiting  him,  it  has 
been  held  that  the  husband  had  the  right  to  maintain  a  suit  for 
breach  of  the  contract  in  his  own  name.*^  Where  a  municipality 
entered  into  a  contract  with  a  water  company  for  the  benefit  of  its 
inhabitants  who  were  at  the  time  of  the  execution  of  the  contract 
consumers  of  water  and  those  who  might  thereafter  become  so,  it 
was  held  that  the  consumer  might  maintain  a  suit  to  compel  the 
successor  of  the  one  with  whom  the  contract  was  made  to  furnish 
water  at  the  rate  stipulated  in  the  contract  between  the  company 
and  the  municipality.®^ 

§  1420.  Miscellaneous  cases. — The  third  party  need  not  in 
all  cases  be  ascertained  or  known  at  the  inception  of  the  contract 
to  entitle  him  to  the  benefits  thereof.®^  Thus,  where  a  defendant 
contracted  to  pay  seven  hundred  and  fifty  dollars  to  the  owner  of 
a  foal  (by  the  defendant's  stallion)  that  first  trotted  a  mile  in  two 
minutes  and  thirty  seconds,  the  plaintiff  was  permitted  to  recover 
thereon  upon  meeting  the  conditions  of  the  promise,  although  not 
a  party  to  it.^"  And  where  a  landlord  leased  certain  property  un- 
der a  contract  which  provided  that  the  lessee  should  sell  no  other 
beer  on  the  premises  except  that  manufactured  by  a  designated 
brewing  company,  which  company  was  not  a  party  to  the  lease,  it 
was  held  that  since  this  provision  was  inserted  in  the  lease  for  the 
benefit  of  the  brewing  company,  it  might  bring  an  action  to  en- 
force the  same.*"^  The  defendant  sold  his  stock  in  a  livery  stable 
company  and  contracted  with  the  purchaser  never  again  to  engage 
in  the  livery  business  within  the  corporate  limits  of  the  town 

^  Livingston  v.  Chicago  &c.  R.  Co.,  ''  R.  Connor  Co.  v.  Olson,  136  Wis. 

142  Iowa  404,  120  N.  W.  1040.  13,   115  N.  W.  811.     See  also,  Blake 

"^  Canada    v.    Yazoo    &c.     R.    Co.  v.  Atlantic  Nat.  Bank,  33  R.  I.  464, 

(Miss.),  57   So.  913.  82  Atl.  225. 

"^Pond    V.    New    Rochelle    Water  *°  Whitehead  v.   Burgess,  61   N.  J. 

Co.,   183  N.  Y.  330,  76  N.  E.  211,  1  L.  75,  38  Atl.  802. 

L.  R.  A.  (N.  S.)  958.     See  also,  Mc-  *' Ferris  v.  American  Brewing  Co., 

Claugherty   v.    Bluefield    Waterworks  155  Ind.  539,  58  N.  E.  701,  52  L.  R. 

&   Imp.   Co.,  67   W.  Va.  285,  68   S.  A.   305. 
E.  28,  32  L.  R.  A.    (N.   S.)   229n. 


683 


LIMITS   OF   OBLIGATION — THIRD    PERSONS. 


1420 


where  the  business  was  located  nor  work  as  an  employe  in  such 
business  therein  unless  with  the  company  whose  stock  he  sold. 
The  court  held  that  if  this  contract  was  made  for  the  benefit  of 
the  livery  stable  corporation  as  well  as  for  the  vendee,  the  other 
stockholders  as  beneficiaries  of  such  contract  could  maintain  an 
action  without  any  assignment  thereof."^  So  where  plaintiffs' 
grandfather  agreed  with  their  mother  that  if  she  would  convey  to 
the  plaintiffs  her  interest  in  a  certain  real  estate  he  would  transfer 
to  them  a  note  he  held  against  their  father,  it  was  held  that  after 
the  mother  had  carried  out  her  part  of  the  agreement  the  plaintiff 
might  bring  an  action  to  enforce  the  contract  against  the  grand- 
father or  his  representatives."^  The  beneficiary  of  a  contract 
with  an  executrix  may  bring  an  action  to  enforce  it.®*  And  cred- 
itors of  a  debtor  who  conveys  property  or  funds  to  a  third  party 
in  consideration  of  the  latter's  promise  to  pay  all  or  part  of  the 
debtor's  liability  may  maintain  an  action  against  the  third  party 
on  his  promise.®' 


"Anders  v.  Gardner,  151  N.  Car. 
604,  66  S.  E.  665.    See  ante,  ch.  22. 

"'Atkinson  v.  Hardy  (Mo.  App.), 
107  S.  W.  466.  See  also,  Hamilton 
V.  Hamilton,  127  App.  Div.  (X.  Y.) 
871,  112  N.  Y.  S.  10  (agreement  by 
son  who  had  received  large  advance- 
ments from  his  father  to  pay  mother 
and  sister  an  annuity)  ;  Faust  v. 
Faust,  144  N.  Car.  383,  57  S.  E.  22, 
(conveyance  made  in  consideration 
of  the  grantee's  promise  to  pay  the 
grantor's  daughter  a  specified  sum 
of  monev)  ;  Hoffa  v.  Hoffa,  38  Pa. 
Super.  Ct.  356;  Miller  v.  Hoffa,  38 
Pa.  Super.  Ct.  364  (property  con- 
veyed by  one  brother  to  another  in 
consideration  of  grantee's  promise  to 
pay  plaintiffs  each  $1,000.00)  ; 
Tweeddale  v.  Tweeddale,  116  Wis. 
517,  93  N.  W.  440,  61  L.  R.  A.  509, 96 
Am.  St.  1003  (grantee  gave  grantor 
a  mortgage  by  which  he  bound  him- 
self upon  a  resale  of  the  property 
to  pay  a  designated  sum  of  money  to 
his  brother  and  sister). 

**  Painter  v.  Kaiser,  27  Nev.  421, 
76  Pac.  747,  65  L.  R.  A.  672,  103  Am. 
St.   112. 

"•  Spear  Min.  Co.  v.  Shinn,  93  Ark. 
346.  124  S.  W.  1045  (debtor  corpo- 
ration transferred   assets   to  another 


corporation  in  consideration  of  the 
latter's  promise  to  pay  a  part  of  the 
former's  liability)  ;  Northup  v.  Alta- 
dena  Min.  &  In  v.  Syndicate,  6  Cal. 
App.  101,  91  Pac.  422  (conveyance 
by  one  corporation  of  its  assets  to 
another  in  consideration  of  the  lat- 
ter paying  the  former's  debts)  ;  Bur- 
son  V.  Bogart,  49  Colo.  410,  113  Pac. 
516  (either  debtor  or  creditor  may 
sue)  ;  Vandalia  R.  Co.  v.  Keys,  46 
Ind.  App.  353,  91  N.  E.  173  (action 
for  damages  against  the  defendant 
railroad,  the  injury  having  been  sus- 
tained while  the  road  was  in  the 
hands  of  a  receiver)  ;  McCoy  v.  Mc- 
Coy, 32  Ind.  App.  38,  69  N.  E.  193. 
102  Am.  St.  223  (grantee  agreed 
with  grantor  to  pav  the  plaintiff 
$1,000.00)  ;  Malanaphv  v.  Fuller  & 
Johnson  Mfg.  Co.,  125  Iowa  719,  101 
N.  W.  640,  106  Am.  St.  Ill  (vendee 
agreeing  to  pav  debt  of  vendor)  ; 
Weiser  v.  Ross,' 150  Iowa  353,  130  N. 
W.  387  (contract  between  plaintiff 
and  defendant  whereby  the  latter 
agreed  to  pay  their  co-obligation). 
See  in  connection  with  this  last  case 
Dilcher  v.  Xellanv.  52  Misc.  (N.  Y.) 
364,  102  X.  Y.  S.  264.  See  also 
Barry  v.  Jordan,  116  Minn.  34,  133 
N.   W.   78    (defendants   taking   over 


I42I 


CONTRACTS. 


684 


§  1421.    When  third  persons  may  not  enforce  contract. — 

Some  of  the  states  in  this  country,  however,  have  adopted  the 
Enghsh  doctrine  and  hold  that  an  action  at  law  cannot  be  main- 
tained in  his  own  name  by  one  who  is  not  a  party  to  a  contract 
given  to  another  person  for  his  benefit'**'  except  as  to  the  provisions 
contained  in  a  settlement  made  upon  and  in  consideration  of  mar- 
riage for  the  benefit  of  children  to  be  born  of  the  marriage,"^  or 


business  of  a  corporation  agreeing 
to  pay  its  debts)  :  Leckie  v.  Bennett, 
160  AIo.  App.  145,  141  S.  W.  706 
(corporation  succeeding  partnership 
and  assuming  it  debts)  ;  Hannon  v. 
Rihner,  80  Xebr.  521,  114  N.  W.  605 
(compromise  and  settlement  by 
which  defendants  agreed  with  a 
third  party  that  they  would  pay  a 
mortgage  held  by  plaintiffs)  ;  Collier 
V.  DeBrigard,  80  N.  J.  L.  94,  1]  Atl. 
513  (assignment  for  benefit  of 
creditors)  ;  Chambers  v.  Philadelphia 
Pickling  Co.,  79  N.  J.  L.  1,  75  Atl. 
159  (judgment  creditor).  Compare 
this  last  case  with  King  v.  Siedler, 
137  App.  Div.  (N.  Y.)  523,  121  N. 
Y.  S.  694;  Collins  v.  Kaw  City  Mill 
&c.  Co.,  26  Okla.  641,  110  Pac.  734 
(two  stockholders  of  a  corporation 
on  selling  their  stock  therein  as- 
sumed its  liabilities.  One  of  the 
vendors  paid  his  share  of  the  debt. 
It  was  held  that  the  creditor  might 
sue  the  other  vendor  on  the  con- 
tract) ;  Howes  v.  Scott,  224  Pa.  7, 
12i  Atl.  186  (interest  in  contract  for 
purchase  of  real  estate  conveyed  to 
the  defendant  in  consideration  of 
his  promise  to  repay  to  the  plaintiff 
$200.00  which  the  transferee  had 
borrowed  from  him)  ;  Peters  v. 
Lindsey  (Tex.  Civ.  App.),  144  S.  W. 
694  (agreement  by  purchaser  from  an 
administrator  to  pay  one-half  the 
purchase-price  to  plaintiffs)  ;  Smith 
V.  Pfluger,  126  Wis.  253,  105  N.  W. 
476,  110  Am.  St.  911  (property 
transferred  to  defendant  in  consid- 
eration of  his  agreement  to  pay  debts 
of  vendor).  See  also,  Sheppard  v. 
Bridges.  137  Ga.  615,  74  S.  E.  245 
(new  firm  assuming  obligations  of 
the  old  partnership)  ;  Harvey  v. 
Maine     Condensed     Milk     Co.,     92 


Maine  115,  42  Atl.  342;  Bell  v. 
Mendenhall,  71  Minn.  331,  12>  N.  W. 
1086;  Hoffman  v.  Hagbighorst,  49 
Ore.  379,  89  Pac.  952;  Brown  v. 
Markland,  16  Utah  360,  52  Pac.  597, 
67  Am.  St.  629;  Fanning  v.  Murphy, 
126  Wis.  538,  105  N.  W.  1056,  4  L. 
R.  A.  (N.  S.)  666,  110  Am.  St.  946. 
But  where  the  transferee  or  seller 
could  not  enforce  the  contract  the 
seller's  creditor  cannot  enforce  it. 
Davis  V.  Dunn,  121  Mo.  App.  490, 
97  S.  W.  226. 

"^  Austell  V.  Humphries,  99  Ga. 
408,  27  S.  E.  736;  Field  v.  Crawford, 
6  Gray  (Mass.)  116;  Dow  v.  Clark,  7 
Gray  (Mass.)  198;  Colburn  v.  Phil- 
lips, 13  Gray  (Mass.)  64;  Flint  v. 
Pierce,  99  Mass.  68,  96  Am.  Dec. 
691 ;  Exchange  Bank  v.  Rice,  107 
Mass.  Zl,  9  Am.  Rep.  1;  Marston  v. 
Bigelow,  150  Mass.  45,  22  N.  E.  71, 
5  L.  R.  A.  43;  Pipp  v.  Reynolds,  20 
Mich.  88;  Turner  v.  McCarty,  22 
Mich.  265;  Hicks  v.  McGarry,  38 
Mich.  667;  Wheeler  v.  Stewart,  94 
Mich.  445,  54  N.  W.  172;  Edwards 
V.  Clement,  81  Mich.  513,  45  N. 
W.  1107;  Hidden  v.  Chappel,  48 
Mich.  527,  12  N.  W.  687;  Fugure  v. 
Mutual  Society  of  St.i  Joseph,  46  Vt. 
362;  Hall  v.  Huntoon,  17  Vt.  244,  44 
Am.  Dec.  332.  It  is  also  possible 
that  the  English  doctrine  is  enforced 
in  a  modified  form  in  North  Car- 
olina. See  Haun  v.  Burrell,  119  N. 
Car.  544,  26  S.  E.  Ill ;  Sams  v.  Price, 
119  N.  Car.  572,  26  S.  E.  170.  Com- 
pare with  Gorrell  v.  Greensborough 
Water  Supply  Co.,  124  N.  Car.  328. 
32  S.  E.  720,  46  L.  R.  A.  513,  70 
Am.  St.  598.  See  also,  McCarteney 
V.  Wyoming  Nat.  Bank,  1  Wyo.  382. 

"  Knights  of  Modern  Macabees  v. 
Sharp,  163  Mich.  449,  128  N.  W.  786. 


685  LIMITS    OF    OBLIGATION THIRD    PERSONS.  §    1 42 1 

when  suit  is  authorized  by  the  statute."''  The  courts  of  Connecticut 
hold  that  a  third  person  may  maintain  an  action  upon  a  contract 
made  for  his  direct,  sole  and  exclusive  benefit,  where  it  was  part  of 
the  agreement  that  its  object  should  be  communicated  to  him."®  As 
thus  stated  the  mle  is,  in  its  operation  and  effect,  practically  the 
same  as  the  English  rule.  Where  the  English  doctrine  obtains  it 
has  been  held  that  when  an  applicant  for  a  loan  on  real  estate 
agreed  to  pay  the  counsel  of  the  lender  his  charges  for  the  exam- 
ination of  the  title  the  counsel  could  not  sue  the  applicant  thereon 
for  his  services.^  Nor  can  a  promise  by  a  debtor  to  his  creditor 
to  pay  the  amount  due  the  latter  to  a  third  person  be  enforced 
by  such  third  person."  Nor  can  a  contract  by  a  father  with  his 
son  for  the  benefit  of  the  former's  daughter  who  is  a  stranger  to 
the  contract  be  enforced  by  the  daughter.^  An  agreement  by  a 
corporation  to  take  over  the  business  and  pay  the  debts  of  a  co- 
partnership cannot  be  enforced  by  creditors  of  the  copartner- 
ship not  parties  to  the  transaction.*  Even  in  those  jurisdictions 
which  hold  that  a  party  may  maintain  an  action  on  a  promise 
made  for  his  benefit,  although  the  consideration  moved  from  an- 
other to  whom  the  promise  was  made,  a  somewhat  limited  and 
narrow  construction  is  placed  on  the  rule ;  the  contract  must  be 
intended  to  benefit  the  third  party,  and  the  fact  that  he  will  be  in- 
cidentally or  indirectly  benefited  is  generally  held  not  to  entitle 

°'See  Georgia  H.   Sampson  Co.  v.  41  Atl.  803,  42  L.  R.  A.  514.  71  Am. 

Commonwealth,    202    Mass.    326,    88  St.   169    (promise  by  husband  to  his 

N.  E.  911.  wife  to  pay  his  wife's  son  a  certain 

**MorKan  v.  Randolph  &  Clowes  sum  of  money)  ;  Austell  v.  Humph- 
Co.,  73  Conn.  396,  47  Atl.  658.  51  ries.  99  Ga.  408,  27  S.  E.  736;  Borden 
L.  R.  A.  396;  Lamkin  v.  Baldwin  &  v.  Boardman,  157  Mass.  410,  32  N. 
Lamkin  Mfg.  Co.,  72  Conn.  57.  43  E.  469;  Sullivan  v  Sullivan,  161  N. 
Atl.  593.  44  L.  R.  A.  786;  Baxter  v.  Y.  554  56  n.  E.  16;  Keller  v  Ash- 
Camp,  71  Conn.  245,  41  Atl.  803,  42  ford  133  U.S  610,  33  L.  ed.  667, 
L.  R.  A.  514,  71  Am.  St.  169;  Meech  ?  SuP  Ct^  494;  Shepherd  v  May. 
V.  Ensign,  49  Conn.  191,  44  Am.  Rep.  US  U.  S.  505,  6  Sup.  Ct.  119. 
225;  Ciapp  v.  Lawton.  31  Conn.  95;  Lmneman  v  ^  prross  Estate,  98 
Treat  v.  Stanton,  14  Conn.  445.  ^Iich.  178,  57  N.  W.  103,  39  Am.  St. 

^Williamson      v.      McGrath,      180  528. 

Mass.  55,  61  N.  E.  636.  *  Morgan    v.    Randolph    &    Clowes 

•  Saunders  v.   Saunders.   154  Mass.  Co.,  73  Conn    396.  47  Atl.  658,  51  L. 

337,  28  N.  E.  270   (income  from  an  R.  A.  396.     See,  however,  Leckie  v. 

estate)  •     Wheeler     v.     Stewart,     94  Bennett,  160  Mo.  App.  14:).  141  S.  W. 

Mich   445    54  N.  W.  172  (money  due  706.     It  must  be  borne  m  mmd  that 

on  a  contract  of  emplovmcnt).     See  the    foregomg    cases    illustrate    the 

also,  Baxter  v.  Camp,  71  Conn.  245,  English  rule. 


§  I42I 


CONTRACTS. 


686 


him  to  sue/  And  some  cases  go  farther  and  hold  that  the  con- 
tract must  not  only  have  been  intended  to  benefit  the  third  party 
but  that  he  must  be  the  sole  beneficiary.®     Moreover,  the  benefi- 


'Gulf    Compress    Co.    v.     Harris 
Cortner  &  Co.,   158  Ala.  343,  48  So. 
477,  24  L.  R.  A.  (N.  S.)  399n  (hold- 
ing that  a  patron  of  a  cotton  compress 
could  not  maintain  an  action  against 
the  vendee  of  such  press,  who  violated 
a   provision   in   the   contract   of    sale 
prohibiting   him    from    making   more 
than    a    specified    charge)  ;    Thomas 
Mfg.  Co.  V.   Prather,  65  Ark.  27,  44 
S.  W.  218;  Chung  Kee  v.  Davidson, 
12>  Cal.  522,  15  Pac.   100;  Buckley  v. 
Grav,   110   Cal.  339,  42   Pac.  900,  31 
L.  R.  A.  862,  52  Am.  St.  88;  Treat 
V.   Stanton,   14  Conn.  445j  American 
Exch.    Nat.    Bank   v.    Northern    Pac. 
R.  Co.,  76  Fed.  130;  Sayward  v.  Dex- 
ter,  Horton   &   Co.,  72   Fed.   758,    19 
C.  C  A.  176;  Austin  v.  Seligman,  21 
Blatchf.    (U.    S.)    506,  66   How.    Pr. 
(N.   Y.)    87,    18   Fed.    519;    Freeman 
v.  Louisville  &  N.   Ry.,  32  Fla.  420, 
13  So.  892;  Wright  v.  Terry,  23  Fla. 
160,   2    So.   6;    Sheppard   v.    Bridges, 
137  Ga.  615,  74  S.   E.  245;   Crandall 
V.  Payne,  154  111.  627,  39  N.  E.  601, 
afifg.   54   111.   App.   644;    Reynolds  v. 
Louisville,   N.   A.   &   C.   R.   Co.,   143 
Ind.   579.  40   N.    E.   410;    Farlow   v. 
Kemp,  7  Blackf.  (Ind.)  544;  German 
State   Bank   v.    Northwestern    Water 
&  Light  Co.,  104  Iowa  717,  74  N.  W. 
685;  Burton  v.  Larkin,  36  Kans.  246, 
13  Pac.  398,  59  Am.  Rep.  541;   Gib- 
son  v.   Johnson,  23   Ky.   L.    1322,  65 
S.   W.    116;    Greenwood   v.    Sheldon, 
31    Minn.    254,    17    N.    W.    478;    St. 
Louis  v.   G.    H.   Wright   Contracting 
Co.,  202  Mo.  451,   101   S.  W.  6,  119 
Am.  St.  810;  Tatem  v.  Eglanol  Min. 
Co.    (Mont.),    123     Pac.     28;    Frer- 
king    V.    Thomas,    64    Nebr.    193,  89 
N.     W.     1005;     Eaton     v.     Fairbury 
Water  Works  Co.,  Zl  Nebr.  546,  56 
N.  W.  201.  21  L.  R.  A.  653,  40  Am. 
St.   510;    Styles   v.    F.    R.   Long   Co., 
70  N.  J.  L.'  301,  57  Atl.  448 ;  Berry 
Harvester    Co.   v.    Walter    A.    Wood 
Machine  Co.,  152  N.  Y.  540,  46  N.  E. 
952;    Rochester    Dry    Goods    Co.    v. 
Fahy,    111    App.    Div.    (N.    Y.)    748, 
97   N.   Y.    S.    1013,   affd.    188   N.   Y. 
629,  81  N.  E.  1174;  Durnherr  v.  Rau, 

135  N.  Y.  219,  32  N.  E.  49;  Lorillard 
V.  Clyde,  122  N.  Y.  498,  25  N.  E.  917, 


10  L.  R.  A.  113;  Vrooman  v.  Turner, 
69  N.  Y.  280,  25  Am.  Rep.  195 ;  Sim- 
son  V.  Brown,  68  N.  Y.  355;  Parlin 
V.  Hall,  2  N.  Dak.  473,  52  N.  W.  405 ; 
Vought  V.  Columbus  H.  V.  &  A.  R. 
Co.,  58  Ohio  St.  123,  50  N.  E.  442; 
Brower  &  Thompson  Lumber  Co.  v. 
Miller,  28  Ore.  565,  43  Pac.  659,  52 
Am.  St.  807;  Washburn  v.  Interstate 
Investment  Co.,  26  Ore.  436,  36  Pac. 
533,  38  Pac.  620;  Parker  v.  Jeffery, 
26  Ore.  186,  2>1  Pac.  712;  Blymire  v. 
Boistle,  6  Watts  (Pa.)  182,  31  Am. 
Dec.  458;  Constable  v.  National 
Steamship  Co.,  154  U.  S.  51,  38  L. 
ed.  903,  14  Sup.  Ct.  1062;  National 
Bank  V.  Grand  Lodge,  98  U.  S.  123, 
25  L.  ed.  75;  Montgomery  v.  Rief,  15 
Utah  495.  50  Pac.  623 ;  Electric  A.p- 
pliance  Co.  v.  United  States  Fidelity 
&  Guaranty  Co.,  110  Wis.  434,  85  N. 
W.  648,  53  L.  R.  A.  609;  Campbell 
&  Cameron  Co.  v.  Carnegie's  Estate, 
98  Wis.  99,  1Z  N.  W.  572.  "To  en- 
title him  to  an  action,  the  contract 
must  have  been  made  for  his  benefit. 
He  must  be  the  party  intended  to 
be  benefited."  Garnsey  v.  Rogers,  47 
N.  Y.  233,  7  Am.  Rep.  440,  quoted 
in  Montgomery  v.  Rief,  15  Utah  495, 
50  Pac.  623.  The  "benefit  must  be 
the  direct  result  of  performance." 
Durnherr  v.  Rau,  135  N.  Y.  219,  32 
N.  E.  49.  "Any  breach  of  the  con- 
tract of  copartnership  creates  a  cause 
of  action  in  favor  of  the  copartner 
who  is  injured — not  in  favor  of  one 
whom  such  partner  may  have  em- 
ployed as  a  representative."  Lane  v. 
Williams,  156  Cal.  269,  104  Pac.  301. 
See  also.  Old  Colony  Trust  Co.  v. 
Standard  Beet  Sugar  Co.,  150  Fed. 
677. 

°  See  German  State  Bank  v.  North- 
western Water  &  Light  Co.,  104  Iowa 
717,  74  N.  W.  685,  in  which  it  is 
said  the  rule  is :  "Confined  to  cases 
where  the  person  for  whose  benefit 
the  promise  is  made  has  the  sole,  ex- 
clusive interest  in  its  performance." 
The  foregoing  statement  is  quoted 
in  Chicago,  R.  I.  &  P.  R.  Co.  v.  Ot- 
tumwa,  112  Iowa  300,  83  N.  W.  1074, 
51  L.  R.  A.  763;  Messenger  v.  Votaw, 
75  Iowa  225,  39  N.  W.  280;  Davis  v. 


68/  LIMITS    OF    OBLIGATION THIRD    PERSONS.  §    I422 

ciary  acquires  no  rights  under  the  contract  unless  he  accedes  to  it 
before  it  is  revoked  or  released  by  the  immediate  parties  to  the 
agreement,  or  before  the  rights  of  others  have  intervened.' 

§  1422.  Question  of  construction — Contracts  with  water 
company  and  the  like. — The  question  as  to  whether  a  con- 
tract was  intended  primarily  to  benefit  a  third  party  is  one  of  con- 
struction, and  the  courts  vary  in  their  interpretation  of  contracts 
which  benefit  third  parties.  Consequently,  the  adjudicated  cases 
of  each  jurisdiction  must  be  consulted  in  order  to  determine 
whether  a  construction  may  be  placed  upon  any  particular  con- 
tract which  will  entitle  one  who  may  be  benefited  thereby  to  sue. 
A  few  illustrative  cases,  however,  will  be  given.  It  is  held  by 
the  great  weight  of  authority  that  a  water  company  which  con- 
tracts with  a  municipality  to  furnish  water  for  the  extinction  of 
fires  is  not  liable  on  an  action  by  a  citizen  to  recover  losses  sus- 
tained by  such  citizen  from  fire  which  would  have  been  extin- 
guished if  the  company  had  not  neglected  to  comply  with  its  con- 
tract with  the  municipality.^     In  those  jurisdictions  which  hold 

Water-Works  Co..  54  Iowa  59,  6  N.  E.   982,   47   Am.    St.   258;   Becker  v. 

W.  126,  Z7  Am.  Rep.  185.     To  same  Keokuk  Water-Works.  79  Iowa  419, 

effect,  Baxter  v.  Camp,  71  Conn.  245,  44  N.  W.  694,  18  Am.  St.  2,77 ;  Davis 

41  Atl.  803,  42  L.  R.  A.  514,  71  Am.  v.  Clinton  Water-Works  Co.,  54  Iowa 

St.    169.     See  also,   Kountz  v.   Holt-  59.  6  N.  W.   126.  27  Am.  Rep.   185; 

house,  85  Pa.  St.  235.  Mott  v.  Cherrvval  Water  &  Mfg.  Co., 

'  Blake   V.   Atlantic   Nat.   Bank,  2,^  48  Kans.  12,  28  Pac.  989,  15  L.  R.  A. 

R.  I.  464,  82  Atl.  225.  375,  30  Am.  St.  267;  Allen  &  Currie 

*Lovejoy  v.  Bessemer  Waterworks  Co.   v.    Shreveport    Waterworks    Co., 

Co.,  146  Ala.  374.  41  So.  76,  6  L.  R.  113  La.  1091,  27  So.  980,  68  L.  R.  A. 

A.   (N.  S.)  429.  9  Am.  &  Eng.  Ann.  650.  104  Am.  St.  525,  2  Am.  &  Eng. 

Cas.    1068;    Nickerson   v.    Bridgeport  Ann.    Cas.   471,    overruling    Planters' 

Hydraulic  Co.,  46  Conn.  24.  23  Am.  6il  Mill  v.  Monroe,  52  La.  Ann.  1243, 

Rep.  1 ;  Morgan  V.  Randolph  &  Clowes  27    So.    684;    Hone    v.    Presque    Isle 

Co.,  72  Conn.  396.  47  Atl.  658,  51  L.  Water    Co.,    104   Maine   217,   71    Atl. 

R.    A.    396;    Boston    Safe-Deposit    &  769.  21    L.   R.   A.    (N.   S.)    1021   and 

Trust    Co.    V.    Salem    Water    Co.,   94  note;*  Howsmon    v.    Trenton    Water 

Fed.  238}  IMetropolitan  Trust  Co.  v.  Co.,   119  Mo.   304,  24   S.   W.   784,  23 

Topeka    Water    Co..    132    Fad.    702;  L.  R.  A.  146.  41  Am.   St.  654;  Metz 

Fowler  v.  Athens  Water-Works  Co.,  v.    Cape    Girardeau    Waterworks    & 

83  Ga.  219,  9  S.  E.  673,  20  Am.   St.  Electric  Light  Co..  202  Mo.  324.   100 

313;   Hollowav  v.   Macon   Gaslight  &  S.  W.  651;  Phoenix  Ins.  Co.  v.  Tren- 

Water    Co.,    132    Ga.    387.    64    S.    E.  ton    Water    Co.,    42    Mo.    App.    118; 

330:    Bush   v.    Artesian   Hot   &   Cold  Eaton  v.  Fairburv  Water-Works  Co., 

Water  Co.,  4  Idaho  618,  43  Pac.   69,  27  Nebr.  546,  56  N.  W.  201.  21  L.  R. 

95    Am.    St.    161;    Galena    v.    Galena  A.    653.    40    Am.    St.    510;    Ferris    v. 

Water    Co..    229    111.    128,    ^2    N.    E.  Carson    Water    Co..    16    Xev.    44.    40 

421   (obif^r)  ;  Peck  v.  Sterling  Water  Am.  Rep.  485;  Smith  v.  Great  South 

Co..  118  111.  App.  533;  Fitct  v.  Sev-  Bav  Co..  82  App.  Div.  .(N.  Y.)   427, 

mour  Water  Co.,  139  Ind.  214,  27  N.  81'  N.    Y.    S.    812;    Wainwright    v. 


§    14^2 


CONTRACTS. 


688 


that  a  third  person  may  sue  upon  a  promise  made  for  his  benefit, 
there  appears  to  be  no  reason  why  a  municipahty  could  not  enter 
into  a  contract  with  a  water  company  which  would  render  it  liable 
to  the  inhabitants  o£  the  municipality  as  individuals  for  fire  losses 
due  to  the  company's  failure  to  comply  with  its  contract.  The  lia- 
bility of  the  company  would  seem  to  depend  entirely  upon  the  con- 
struction of  its  contract  with  the  municipality.^  The  courts  of  a 
small  minority  of  the  states  permit  an  individual  inhabitant  to  sue 
a  water  company  for  damages  sustained  by  reason  of  a  breach  by 
the  latter  of  its  contract  to  furnish  water  with  which  to  extinguish 
fires,  notwithstanding  the  contract  with  the  municipality  contains 
no  express  provision  to  the  effect  that  the  company  shall  be  liable 
to  such  inhabitant  on  the  theory  that  the  contract  is  made  for  the 
benefit  of  the  one  so  damaged."     On  the  other  hand,  the  city  has, 

and  the  water  company,  or  that  the 
municipahty  did  not  act  as  the  agent 
of  the  owner  in  making  the  contract 
for  the  water  company,  or  that  the 
municipality  did  not  enter  into  the 
contract  with  the  water  company  for 
the  benefit  of  those  persons  that 
might  have  their  buildings  destroyed 
from  lack  of  water  but  entered  into 
it  for  the  benefit  of  the  municipal 
public  as  a  whole  and  not  for  the 
benefit  of  its  inhabitants  as  indi- 
viduals. 

°  Ancrum  v.  Camden  Water  &c.  Co. 
(S.  Car.),  64  S.  E.  151,  21  L.  R.  A. 
(N.  S.)  1029  (contract  construed  as 
not  permitting  an  individual  inhab- 
itant to  sue).  See  also,  Wilkinson 
V.  Light,  Heat  &  Water  Co.,  78  Miss. 
389,  28  So.  877;  Wainwright  v. 
Queen?  County  Water  Co.,  78  Hun 
(N.  Y.)  146,  28  N.  Y-  S.  987.  Com- 
pare with  Pond  v-  New  Rochelle 
Water  Co.,  183  N.  Y.  330,  76  N.  E. 
211,  1  L.  R.  A.  (N.  S.)  958. 

^"Woodbury  v.  Tampa  Waterworks 
Co.,  57  Fla.  243,  49  So.  556,  21  L.  R. 
A.  (N.  S.)  1034  (se6  particularly 
opinion  handed  down  on  petition  for 
rehearing.  State  has  code  provision 
providing  that  suit  shall  be  brought 
by  the  real  party  in  interest)  ;  Lex- 
ington Hydraulic  &  Mfg.  Co.  v.  Oots, 
119  Ky.  598,  27  Kv.  L.  233,  84  S. 
W.  774,  86  S.  W.  684 ;  Graves  County 
Water  Co.  v.  Ligon,  112  Ky.  775.  23 
Ky.  L.  2149,  66  S.  W.  725;  Paducah 


Queens  County  Water  Co.,  78  Hun 
(N.  Y.)  146,  28  N.  Y.  S.  987  (rule 
applied  to  an  action  founded  upon  a 
violation  of  contract  between  a  water 
company  and  a  fire  district  estab- 
lished by  the  supervisors  of  a 
county)  ;  Lutz  v.  Tablequah  Water 
Co.,  29  Okla.  171,  118  Pac.  128,  36 
L.  R.  A.  (N.  S.)  568;  Akron  Water- 
works Co.  V.  Brownless,  10  Ohio  C. 
C.  620,  5  Ohio  C.  D.  1;  Blunk  y. 
Dennison  Water  Supply  Co.,  71  Ohio 
St.  250,  1Z  N.  E.  210,  2  Am.  &  Eng. 
Ann.  Cas.  852;  Beck  v.  Kittanning 
Water  Co.  (Pa.),  11  Atl.  300;  Cooke 
V  Paris  Mountain  Water  Co.,  82  S. 
Car.  235,  64  S.  E.  157;  Foster  v.  Look- 
out Water  Co.,  3  Lea  (Tenn.)  42; 
House  V.  Houston  Waterworks  Co., 
88  Tex.  233,  31  S.  W.  179,  28  L.  R.  A. 
532;  Greenville  Water  Co.  v.  Beck- 
ham, 55  Tex.  Civ.  App.  87,  118  S.  W. 
889;  Britton  v.  Green  Bay  &  Ft.  H. 
Waterworks  Co.,  81  Wis.  48,  51  "N. 
W.  84,  29  Am.  St.  856;  Hayes  v,  Osh- 
kosh,  Zl  Wis.  314,  14  Am.  Rep.  760. 
See  also,  Niehaus  Bros.  Co.  v.  Contra 
Costa  Water  Co.,  159  Cal.  305,  113 
Pac.  375,  36  L.  R.  A.  (N.  S.)  1045 
(liability  of  a  water  company  on  an 
express  or  implied  contract  with  the 
consumer)  ;  Ancrum  v.  Camden 
Water  &c.  Co.  (S.  Car.),  64  S.  E. 
151,  21  L.  R.  A.  (N.  S.)  1029.  Sev- 
eral reasons  are  given  oy  the  fore- 
going cases  for  so  holding,  such  as 
want  of   privity  between   the  owner 


689  LIMITS    OF    OBLIGATION THIRD    PERSOXS.  §     i4-Z 

in  a  case  similar  in  principle  to  those  concerning  fire  losses,  been 
denied  the  right  to  maintain  an  action  and  recover  the  damages 
sustained  by  certain  of  its  citizens  for  their  use  and  benefit.  Thus 
where  a  street  contractor  breached  his  contract  to  improve  certain 
streets  and  the  city  was  compelled  to  relet  the  contract  at  an  ad- 
vanced figure,  the  city  was  denied  the  right  to  maintain  an  action 
under  the  contract  against  the  contractor  guilty  of  the  breach  for 
the  use  and  benefit  of  the  property  owners  of  the  adjoining  lots 
to  the  streets  and  alleys  proposed  to  be  improved  by  the  city." 

§  1423.  Rule  further  illustrated. — It  has  also  been  held  that 
the  bond  of  a  road  contractor  conditioned  on  the  "prompt,  proper 
and  efficient  performance  of  the  contract"  by  the  contractor  does 
not  render  the  surety  liable  to  any  individual  for  the  negligence  or 
want  of  skill  exercised  by  him  in  his  work.^-  And  where  the 
plaintiffs  were  not  parties  to  a  contract  between  a  bank  and  the 
buyer  for  the  payment  of  the  latter's  checks  for  cotton  bought  by 
them,  it  was  held  that  they  were  not  entitled  to  recover  on  the 
checks  as  an  obligation  binding  on  the  bank.^^  The  mere  fact 
that  an  entire  stranger  to  a  contract  performs  the  services  owing 
to  the  promisee  upon  the  failure  of  the  promisor  so  to  do  does  not 
entitle  such  stranger  to  sue  such  promisor  for  the  value  of  the 
services  rendered,  he  having  neither  requested  their  performance 
nor  promised  to  pay  therefor."     There  must  be  some  duty  or  ob- 

Lumber  Co.  v.  Paducah  Water  Sup-  "Redditt  v.   Wall    (Miss.),  55   So. 

ply    Co.,    89    Ky.    340,     11     Ky.    L  45.  34  L.  R.  A.    (N.   S.)    152. 

738,     12     S.     W.     554,     13     S.     W.  "Continental  Bank  &  Trust  Co.  v. 

249.  7  L.   R.  A.  77,  25  Am.   St.  536  Hartman    (Tex.    Civ.   App.),    129   S. 

(cited  in  the  earlier  note)  ;  Jones  v.  W.   179. 

Durham  Water  Co.,  135  N.  Car.  553,  "  Matheny  v.  Chester,  141  Ky.  790, 
47  S.  E.  615.  One  not  a  party  or  133  S.  W.  754.  In  the  above  case 
privy  to  the  contract,  but  who  is  a  property  was  conveyed  to  the  de- 
beneficiary  thereof,  is  entitled  to  fendant  in  consideration  of  his  prom- 
maintain  an  action  for  its  breach,  ise  to  care  for  a  designated  person 
even  when  the  beneficiary  is  only  one  during  the  remainder  of  her  life, 
of  a  class  of  persons,  if  the  class  is  The  defendant  failed  to  do  so.  The 
sufficiently  designated.  Gorrell  v.  plaintiff  performed  the  provisions  of 
Greensborough  Water  Supply  Co.,  the  defendant's  contract  and  then 
124  N.  Car.  328,  32  S.  E.  720,  46  L.  sued  for  the  value  of  his  services. 
R.  A.  513,  70  Am.  St.  598  (also  code  Recovery  was  denied.  Case  v.  Case, 
provision  to  the  eflfect  that  suit  is  to  137  App.  Div.  (N.  Y.)  393,  121  N.  Y. 
be  brought  by  the  real  party  in  in-  S.  746.  To  same  eflfect.  Case  v.  Case, 
terest).  203  N.  Y.  263,  96  N.  E.  440,  revg.  137 
"St.  Louis  V.  G.  H.  Wright  Con-  App.  Div.  (N.  Y.)  393,  121  N.  Y. 
tracting  Co.,  202  Mo.  451,  101  S.  S.  746. 
W.  6,  119  Am.  St.  810. 

44 — Contracts,  Vol.  2 


1424 


CONTRACTS. 


690 


ligation  in  order  for  the  promisor  to  be  bound  to  a  third  party^' 
who  in  contemplation  of  law  is  a  party  to  the  contract  or  to  the 
consideration.^^ 

§  1424.  Rule  further  illustrated — Right  to  enforce  sealed 
instrument. — Originally  under  the  common-law  rule  only  the 
parties  to  sealed  instruments  could  maintain  an  action  thereon.''' 
The  distinctions  between  sealed  and  unsealed  instruments  have 
now  been  generally  abolished,  however,  and  it  is  now  usually  true 
that  third  persons  may  sue  on  sealed  contracts  in  those  jurisdic- 
tions in  which  they  have  a  right  to  sue  on  simple  contracts.'^  It 
is  hardly  necessary  to  state  that  in  those  jurisdictions  in  which  a 
third  party  cannot  bring  an  action  on  a  simple  contract  made  for 
his  benefit  he  cannot  maintain  one  on  a  sealed  instrument.'^ 


"Fish  &  Hunter  Co.  v.  New  Eng- 
land Homestake  Co.  (S.  Dak.),  130 
N.  W.  841. 

'°  Webb's  Academy  &  Home  for 
Shipbuilders  v.  Hidden,  194  N.  Y. 
547,  87  N.  E.  1129,  118  App.  Div. 
(X.  Y.)  711,  103  N.  Y.  S.  659,  affd. 
Jarmulowsky  v.  Susskind,  53  Misc. 
(N.  Y.)  603,  103  N.  Y.  S.  763;  In  re 
Mallalieu's  Estate,  42  Pa.  Super.  Ct. 
101.  See  also  ante,  §  1412.  It  is  not 
under  the  modern  theory  necessary 
for  the  consideration  to  move  from 
the  third  party.  McCoy  v.  McCoy,  32 
Ind.  App.  38,  69  N.  E.  193,  102  Am. 
St.  223;  Hamilton  v.  Hamilton,  127 
App.  Div.  (N.  Y.)  871,  112  N.  Y.  S. 
10;  Dilcher  v.  Nellany,  52  Misc.  (N. 
Y.)  364,  102  N.  Y.  S.  264;  Mont- 
gomery V.  Rief,  15  Utah  495,  50  Pac. 
623-  P,rown  v.  Markland,  16  Utah 
360,  52  Pac.  597,  67  Am.  St.  629. 

"Huckabee  v.  May,  14  Ala.  263; 
Home  Library  Assn.  v.  Witherow, 
50  111.  App.  117;  Gridley  v.  Bayless, 
43  111.  App.  503;  Harms  v.  McCor- 
mick,  132  111.  104,  22  N.  E.  511.  See, 
however,  in  connection  with  the  fore- 
going cases,  Webster  v.  Fleming,  178 
111.  140,  52  N.  E.  975;  Haskett  v. 
Flint,  5  Blackf.  (Ind.)  69,  33  Am. 
Dec.  452;  Farmington  v.  Hobert,  74 
Maine  416;  How  v.  How,  1  N.  H.  49; 
Loeb  v.  Barris,  50  N.  J.  L.  382,  13 
Atl.  602;  Henricus  v.  Englert,  137 
N.  Y.  488,  33  N.  E.  550;  Case  v. 
Case,  203  N.  Y.  263,  96  N.  E.  440; 
De  Bolle  v.  Pennsylvania  Ins.  Co.,  4 


Whart.  (Pa.)  68,  33  Am.  Dec.  38; 
Woonsocket  Rubber  Co.  v.  Banigan, 
21  R.  I.  146,  42  Atl.  512;  Fairchild 
V.  Northeastern  Mut.  Life  Ins.  Assn., 

51  Vt.  613.  See,  however.  Fellows  v. 
Oilman,  4  Wend.    (N.  Y.)   414. 

"Webster  v.  Fleming,   178  111.  140, 

52  N.  E.  975;  Rogers  v.  Gosnell.  51 
Mo.  466;  Emmitt  v.  Brophy,  42  Ohio 
St.  82;  Coster  v.  Albany,  43  N.  Y. 
399;  Hughes  v.  Oregon  R.  &  Nav. 
Co.,  11  Ore.  437,  5  Pac.  206;  Stites 
V.  Thompson,  98  Wis.  329,  73  N.  W. 
774;  Bassett  v.  Hughes.  43  Wis.  319; 
McDowell  V.  Laev,  35  Wis.  171.  "The 
cases  in  which  one  not  a  party  to 
a  contract  may  sue  upon  a  promise 
in  it  for  his  benefit  were  at  one  time 
limited  to  contracts  not  under  seal, 
and  this  court  in  stating  the  law  on 
the  subject,  in  Follansbee  v.  Johnson, 
28  Minn.  311,  9  N.  W.  882,  expressed 
that  limitation;  but  the  distinction 
in  this  respect  between  contracts  by 
specialty  and  simple  contracts  has  not 
in  the  later  authorities  been  adhered 
to  and  may  now  be  regarded  as  aban- 
doned." Jefferson  v.  Asch.  53  Minn. 
446,  55  N.  W.  604.  25  L.  R.  A.  257, 
39  Am.  St.  618.  See,  however.  Case 
V.  Case,  203  N.  Y.  263,  96  N.  E. 
440. 

"See  Flynn  v.  North  American 
Life  Ins.  Co.,  115  Mass.  449;  Hunt- 
ington V.  Knox,  7  Cush.  (Mass.)  371. 
See  also,  Baxter  v.  Camp,  71  Am.  St. 
169  and  note. 


CHAPTER  XXXIII. 


ASSIGNMENTS. 


i  1430.  Definition— Different    rule    at     §  1448. 
common   law  and  in  equity 
under  modern  law. 

1431.  Chose   in   action   unassignable       1449. 

at  common  law. 

1432.  The  rule  in  equity. 

1433.  What  may  be  assigned — Gen-       1450. 

erally. 

1434.  Assignment     of     public     con-        1451. 

tracts — Wages  and  the  like.        1452. 

1435.  Assignment    of    contracts    in- 

volving personal  liability. 

1436.  Examples  of  unassignable  con-        1453. 

tracts.  1454. 

1437.  Parties   may  stipulate  against       1455. 

assignment. 

1438.  Assignment  may  be  forbidden       1456. 

by  statute. 

1439.  Assignment    of    liabilities    by 

act  of  parties. 

1440.  Assignment  of  rights  by  acts       1457. 

of  parties.  1458. 

1441.  Form  and  elements  of  assign-       1459. 

ments. 

1442.  Informal  assignments. 

1443.  Partial   assignments.  1460. 

1444.  Partial  assignments  in  equity. 

1445.  Notice   of   assignment   as   be-        1461. 

tween   the  assignor  and  as- 
signee and  the  party  liable.        1462. 

1446.  Effect  of  notice  to  debtor  or 

person     liable  —  Rights     of 
parties  generally. 

1447.  Assignments  by  operation  of       1463. 

law — Generally.  1464. 

1465. 
1466. 


Assignments  by  operation  of 
law — Effect  of  transfer  of 
interest  in  land. 

Nature  and  purpose  of  cove- 
nant contracts — Restrictions 
as  to  use  of  real   property. 

Valid  covenants  running  with 
the  land. 

Effect  of  marriage. 

Effect  of  death  of  one  of  the 
parties — Actions  that  sur- 
vive. 

Actions   that    do   not   survive. 

Effect  of  assignment. 

Rights  of  assignee — Qualified 
assignments. 

Implied  warranties  in  assign- 
ments— Rights  and  liabil- 
ities of  assignor  and  as- 
signee. 

Title  of  assignee. 

Equities   of   third   persons. 

Rights  of  assignees  as  be- 
tween themselves — Priority 
of  notice. 

Priority  in  point  of  time — 
Rule  criticized. 

Successive  assignees — Exist- 
ing equities. 

Evidence  of  assignment  and 
of  assignee's  rights — Right 
of  assignee  to  sue — Burden 
of  proof. 

Evidence   of   assignee's   right. 

Proof  of  the  assignment. 

Assignee  of  corporation. 

Delivery  and  acceptance. 


§  1430.  Definition — Different  rule  at  common  law  and  in 
equity  under  modem  law. — In  the  preceding  chapter  it  was 
seen  that,  generally  speaking,  a  contract  cannot  impose  liability 
or  confer  rights  upon  a  stranger  to  the  agreement.  In  certain  in- 
stances, however,  one  of  the  parties  may  substitute  a  stranger  for 

691 


§     1 43 1  CONTRACTS.  692 

himself  as  a  party  to  the  contract.  In  other  words,  he  may  assign 
the  contract  to  such  stranger  or  third  person.  As  the  term  ''assign- 
ment" is  here  used  it  signifies  the  means  whereby  the  interest  of 
one  party  in  a  contract  is  caused  to  vest  in  another  person  who 
was  not  an  original  party  thereto.^  Assignments  differ  from  no- 
vations in  that  in  the  former  the  assignor  may  transfer  his  rights 
and  liabilities  under  the  contract  to  the  assignee  without  the  as- 
sent of  the  other  party  to  the  contract,  while  in  the  case  of  nova- 
tion both  parties  assent  to  a  transaction  by  which  one  party  con- 
sents to  extinguish  the  existing  liability  of  the  other  party  in 
consideration  of  the  latter  transferring  such  right  and  liability 
to  a  third  person.  In  effect  an  existing  obligation  is  extinguished 
and  a  new  one  substituted  in  its  place.  An  assignment  must  also 
be  distinguished  from  a  subcontract.  In  the  case  of  a  subcon- 
tract one  party  to  an  agreement  merely  enters  into  a  contract  with 
another  to  assist  him  in  performing  his  first  agreement,  but  does 
not  ordinarily  surrender  any  of  his  rights  thereunder.^ 

§  1431.    Chose  in  action  unassignable  at  common  lav^. — At 
common  law  choses  or  things  in  action  could  not  be  assigned.^ 

^"The  word  'assignment'  has  sev-  ketts,  1  Iowa  582.  It  has  been  held  that 
eral  meanings.  In  a  broad  sense  it  the  pledge  of  an  insurance  policy  as 
is  used  to  signify  the  act  by  which  collateral  security  is  not  an  assign- 
one  person  transfers  to  another,  or  ment  of  such  policy  within  the  pro- 
causes  to  vest  in  such  other,  the  en-  hibition  of  the  policy.  The  court 
tire  right,  interest,  or  property  which  said :  "An  assignment  is  a  transfer 
he  has  in  any  realty  or  personalty,  in  or  setting  over  of  property,  or  of 
possession  or  in  action,  or  some  some  right  or  interest  therein,  from 
share,  interest,  or  subsidiary  estate  one  person  to  another,  and,  unless  in 
therein.  It  is  more  particularly  ap-  some  way  qualified,  it  is  properly  the 
plied  to  a  written  transfer,  as  dis-  transfer  of  one's  whole  interest  in 
tinguished  from  a  transfer  by  mere  an  estate,  or  chattel,  or  other  thing, 
deliverv."  Johnson  v.  Brewer,  134  In  that  sense,  the  policy  in  question 
Ga.  828,  68  S.  E.  590,  591,  31  L.  R.  has  not  been  'assigned.'"  Griffey  v. 
A.  (N.  S.)  332n.  See  as  to  nego-  New  York  Central  Ins.  Co.,  100  N. 
tiable  instruments,  Townsend  v.  Car-  Y.  417,  3  N.  E.  309,  53  Am.  Rep.  202. 
penter,  11  Ohio  21,  and  compare  En-  An  assignment  is,  properly  speaking, 
loe  V.  Reike,  56  Ala.  500,  and  Bump  the  act  of  a  living  person,  and  can- 
v.  Van  Orsdale,  11  Barb.  (N.  Y.)  not  be  said  to  have  been  made  by  a 
634.                                                _  dead    person.      Hight   v.    Sackett,    34 

^At  common  law  an  assignment  N.  Y.  447.  As  distinguishing  an  as- 
was  defined  as  "the  transferring  and  signment  from  a  lease,  see  Passaic 
setting  over  to  another  of  some  right,  &c.  Bridge  Proprietors  v.  State,  21 
title,  or  interest  in  things,  in  which  a  N.  J.  L.  384;  2  Bl.  Com.  326.  Corn- 
third  person,  not  a  party  to  the  as-  pare,  however,  with  Potts  v.  Trenton 
signment,  has  a  concern  and  inter-  Water  Power  Co.,  9  N.  J.  Eq.  592. 
est."  1  Bacon  Abridgment  under  title  ^  McNutt  v.  King,  59  Ala.  597; 
of    Assignment   379.     Cowles  v.  Ric-  Johnson  v.  Martin,  54  Ala.  271;  Brush 


693 


ASSIGNMENTS. 


§    M3I 


Lord  Coke  attributed  this  rule  to  the  "great  wisdom  and  poHcy 
of  the  sages  and  founders  of  our  law"  in  discouraging  mainte- 
nance and  litigation.'*  Blackstone  stated  that  it  was  to  prevent 
the  transfer  of  rights  of  action  to  great  men  in  order  to  obtain 
support  and  favor  in  suits  brought  to  assert  those  rights,  and  jus- 
tice be  thereby  broken  down  and  the  weak  oppressed.^  In  all 
probability,  however,  the  only  reason  underlying  the  rule  is  that  it 
was  enunciated  during  the  early  formative  period  of  the  law  at 
which  time  it  was  thought  impossible  to  transfer  a  mere  right." 
The  right  to  enforce  a  contract  is  a  chose  in  action ;  consequently 
at  common  law  the  rights  and  benefits  of  a  contract  could  not  be 
transferred  by  assigmiient^  with  the   following  exceptions :  in- 


V.  Curtis,  4  Conn.  312;  Porter  v. 
Morris'  Exrs.,  2  Har.  (Del.)  509; 
Chicago  &  A.  R.  Co.  v.  Maher.  91  111. 
312;  Hale  v.  Andrews,  75  111.  252; 
Kennedy  v.  Kennedy,  66  111.  190; 
Safford  v.  Miller,  59  111.  205;  Mc- 
Kinney  v.  Alvis,  14  111.  33;  Moore  v. 
Ireland,  1  Ind.  531.  The  doctrine  of 
the  common  law — that  choses  in 
action  are  not  assignable — does  not 
obtain  in  Iowa.  Watson  v.  Hunkins, 
13  Iowa  547;  Trimble  v.  Ford,  5 
Dana  (Ky.)  517;  Jarman  v.  Howard, 
3  A.  K.  Marsh.  (Ky.)  383;  Trades- 
men's Nat.  Bank  v.  Green,  57  Aid. 
602;  Coulter  v.  Havnes.  146  Mass. 
458,  16  N.  E.  19;  Moore  v.  Spiegel, 
143  Mass.  413,  9  N.  E.  827;  Tucker 
V.  Tucker,  119  Mass.  79;  Connor  v. 
Parker,  114  Mass.  331;  Foss  v.  Low- 
ell Five  Cents  Sav.  Bank,  111  Mass. 
285;  Moore  v.  Coughlin,  4  Allen 
(Mass.)  335;  Foss  v.  Nutting,  14 
Gray  (Mass.)  484;  Sigourney  v.  Sev- 
erv,  4  Cush.  (Mass.)  176;  Hodges  v. 
Holland,  19  Pick.  (Mass.)  43;  Arms- 
by  V.  Farnam,  16  Pick.  (Mass.)  318; 
Coolidge  V.  Ruggles,  15  Mass.  387; 
Skinner  v.  Somes,  14  Mass.  107; 
Cutts  V.  Perkins,  12  Mass.  206;  Orr 
V.  Amory,  11  Alass.  25;  Spencer  v. 
Woodbury.  1  Minn.  105 ;  Edson  v. 
Fuller,  22  N.  H.  183;  Morrow  v.  Ver- 
non, 35  N.  J.  L.  490;  Sergeant  v. 
Strvker.  16  N.  J.  L.  464,  32  Am.  Dec. 
404;  Garrison  v.  Sandford.  12  N.  J. 
L.  261 ;  Lacev  v.  Collins,  5  N.  J.  L. 
489;  Reed  v.  Bainbridge,  4  N.  J.  L. 


351;  Smock  v.  Taylor,  1  N.  J.  L.206; 
Mann  v.  Herkimer  County  Mut.  Ins. 
Co..  4  Hill  (N.  Y.)  187;  Jessel  v. 
Williamsburgh  Ins.  Co.,  3  Hill  (N. 
Y.)  88;  Demarest  v.  Willard,  8  Cow. 
(N.  Y.)  206;  Greenby  v.  Wilcocks, 
2  Johns.  (N.  Y.)  1,  3  Am.  Dec.  379; 
Sims  V.  Radcliffe,  3  Rich.  (S.  Car.) 
287;  Ware  v.  Key,  2  McCord  (S. 
Car.)  373.  The  doctrine  of  the  com- 
mon law — that  choses  in  action  are 
not  assignable — is  said  not  to  pre- 
vail in  Texas.  Winn  v.  Fort  Worth 
&c.  R.  Co.,  12  Tex.  Civ.  App.  198,  33 
S.  W.  593 ;  Read  v.  Young,  1  D.  Chip. 
(Vt.)  244;  Hogue  v.  Bierne,  4  W. 
Va.  658;  Pillsbury  v.  Mitchell.  5  Wis. 
17.  See  also.  Master  v.  Miller,  4  T. 
R.  320;  Eakins  v.  Gawlev,  33  U.  C. 
Q.  B.  178;  Sterling  v.  McEwan,  18 
U.  C.  Q.  B.  466. 

*  In  re  Lampet's  Case,  10  Coke  48. 
"2  Bl.  Com.  290.    See  also,  Thall- 

himer  v.  Brinckerhoff,  3  Cow.  (N. 
Y.)  623,  15  Am.  Dec.  308. 

*  Sir  Frederick  Pollock  states  that 
it  is  "better  explained  as  a  logical 
consequence  of  the  archaic  view  of 
a  contract  as  creating  a  strictly  per- 
sonal obligation  between  the  cred- 
itor and  debtor."  Wald's  Pollock  on 
Contracts  278. 

^Atlantic  &c.  R.  Co.  v.  Atlantic  &c. 
Co.,  147  N.  Car.  368,  61  S.  E.  185.  23 
L.  R.  A.  (N.  S.)  223,  125  Am.  St. 
510;  Glenn  v.  Marbury.  145  U.  S. 
499,  36  L.  ed.  790,  12  Sup.  Ct.  914. 


1432 


CONTRACTS. 


G94 


struments  negotiable  by  the  law  merchant,®  cases  in  which  the 
crown  had  an  interest/  and,  it  seems,  annuities.  ^° 

§  1432.  The  rule  in  equity. — Equity,  however,  has  always 
recognized  as  valid,  in  a  proper  case,  the  assignments  of  choses 
in  action,  or  things  not  in  esse  or  mere  contingencies,  possibilities 
and  expectancies."  Courts  of  equity  greatly  modified  in  its  prac- 
tical application  the  rule  against  the  assignment  of  contracts,  and 
in  most  jurisdictions  it  is  now  held  that  a  contract  may  also  be 
assigned  at  law  as  well  as  in  equity."  This  change  has  been 
brought  about  mainly  by  legislative  enactment.  Some  stat- 
utes expressly  provide  that  the  assignee  may  sue  in  his  own 
name.^^    Others  enable  the  assignee  to  sue  in  his  own  name  by 


®  See  Blanckenhagen  v.  Blundell,  2 
B.  &  Aid.  417;  Keene  v.  Beard,  8  C. 
B.  (N.  S.)  372;  Gierke  v.  Martin,  2 
Ld.  Raym.  757;  Brown  v.  Harraden, 
4  T.  R.  148.  Promissory  notes  were 
declared  negotiable  by  the  statute  of 
3  and  4  Anne,  ch.  9. 

•Lambert  v.  Taylor,  4  B.  &  C  138, 
10  E.  C.  L.  515.  Assignments  to  or 
by  the  United  States  or  to  any  states 
were  valid.  United  States  v.  Buford, 
3  Pet.  (U.  S.)  12,  7  L.  ed.  585.  See 
also,  United  States  v.  White,  2  Hill 
(N.  Y.)  59,  Zl  Am.  Dec.  374. 

"Davis  V.  Marlborough,  1  Swanst. 
74. 

**  Brown  v.  Heathcote,  1  Atk.  160; 
Chandos  v.  Talbot,  2  P.  Wms.  601; 
Crouch  v.  Credit  Foncier  of  England, 
L.  R.  8  Q.  B.  374;  Brownell  Imp.  Co. 
v.  Critchfield,  197  111.  61,  64  N.  E. 
332;  Henderson  v.  Welch,  3  Gilm. 
(III.)  340;  Dix  V.  Cobb,  4  Mass.  508; 
Up  River  Ice  Co.  v.  Denier,  114 
Mich.  296,  72  N.  W.  157,  68  Am.  St. 
480;  Bleakley  v.  Nelson,  56  N.  J.  Eq. 
674,  39  Atl.  912;  Brindze  v.  Atlantic 
City  &c.  Beneficial  Assn.,  75  N.  J.  Eq. 
405,  72  Atl.  435;  Black  v.  Sully, 
138  App.  Div.  rN.  Y.)  562,  123  N. 
Y.  S.  371;  Stott  V.  Franey,  20  Ore. 
410,  26  Pac.  271,  23  Am.  St.  132; 
Morrison  v.  Deaderick,  10  Humph. 
CTenn.)  342;  Chicago.  R.  I.  &  P.  R. 
Co.  V.  Denver  &  R.  G.  R.  Co.,  143 
U.  S.  596,  36  L.  ed.  277,  12  Sup.  Ct. 
479.  See  also,  Barnes  v.  Shattuck, 
13  Ariz.  338,  114  Pac.  952;  Godwin 
V.  Murchison  Nat.  Bank,  145  N.  Car. 


320,  59  S.  E.  154,  17  L.  R.  A.  (N. 
S.)  935n.  Under  an  equitable  as- 
signment the  assignee  is  entitled  to 
have  immediate  specific  performance 
of  the  assignment  as  soon  as  the 
proceeds  come  into  existence  in  the 
hands  of  the  assignor.  Such  equi- 
table assignments  create  a  present 
title  nonexistent  at  law  which  equity 
stands  ready  to  enforce  when  the 
property  comes  into  being.  Wheless 
V.  Meyer  &c.  Grocer  Co.,  140  Mo. 
App.  572,  120  S.  W.  708.  See  also, 
post,  §  1433  et  seq. 

"Atlantic  &c.  R.  Co.  v.  Atlantic 
&c.  Co.,  147  N.  Car.  368,  61  S.  E. 
185,  23  L.  R.  A.  (N.  S.)  223,  125 
Am.  St.  550;  Dickerson  v.  Spokane, 
26  Wash.  292,  66  Pac.  381. 

"Wells  V.  Cody,  112  Ala.  278,  20 
So.  381.  For  a  construction  of  the 
Alabama  statute  see,  Bohanan  v. 
Thomas,  159  Ala.  410,  49  So.  308; 
Neyens  v.  Hossack,  142  111.  App.  2>21  \ 
Rogers  v.  Harvey,  143  Ky.  88,  136  S. 
W.  128  (statute  makes  a  bond  or 
guaranty  assignable)  ;  Wright  v. 
Hardy, *^ 76  Miss.  524,  24  So.  697; 
Cleveland  v.  Heidenheimer,  92  Tex. 
108,  46  S.  W.  30;  Conaway  v.  Co- 
operative Home  Builders,  65  Wash. 
39,  117  Pac.  716.  Such  an  act  does 
not  make  assignable  a  part  of  a  chose 
in  action  so  as  to  entitle  the  assignee 
of  such  part  to  sue  in  his  own  name. 
Sternberg  &  Co.  v.  Lehigh  Valley  R. 
Co.,  78  N.  J.  L.  277,  11  Atl.  39.  In 
connection  with  this  last  case  see 
post,  §  1443. 


695 


ASSIGNMENTS. 


§    1433 


providing  that  actions  shall  be  brought  by  the  real  party  in  inter- 
est." But  even  in  the  absence  of  a  statute  it  is  recognized  that 
contracts  assignable  in  equity  may  be  sued  upon  at  law  in  the 
name  of  the  assignor."  As  a  result  of  this  development  in  the 
law  it  is  now  true,  as  a  general  rule,  that,  unless  expressly  prohib- 
ited by  statute  or  in  contravention  of  some  principle  of  public 
policy,  all  ordinary  business  contracts  are  assignable,  and  that 
action  for  breach  of  the  same  can  usually  be  maintained  by  the 
assignee  in  his  own  name.^^ 

§  1433.  What  may  be  assigned — Generally. — In  accord- 
ance with  the  foregoing  principles  it  is  well  settled  that  contracts 
between  private  individuals  and  the  rights  growing  out  of  them 
may  usually  be  assigned."     Thus  it  has  been  held  that  a  contract 


"Love  V.  Cahn,  93  Ark.  215,  124 
S.  W.  259  (holding  that  an  assignee 
of  a  claim  under  a  supersedeas  bond 
is  the  real  part}'  in  interest)  ;  Rambo 
V.  Armstrong,  45  Colo.  124.  100  Pac. 
586;  Dovle  v.  Nesting,  Zl  Colo.  522, 
88  Pac.  862;  Pullman  v.  Pullman,  81 
Kans.  521,  106  Pac.  52  (holding  that 
one  may  be  the  real  party  in  interest 
without  having  the  beneficial  interest 
in  the  claim  or  the  ownership  of  the 
thing  in  suit)  ;  Rirdsall  v.  Coon,  157 
Mo.  App.  439,  139  S.  W.  243,  50  L. 
R.  A.  847;  Close  v.  Independent 
Gravel  Co.  (Mo.  App.),  138  S.  W. 
81;  Tennent  v.  Union  Cent.  Life  Ins. 
Co.,  133  Mo.  App.  345,  112  S.  W. 
754;  Haupt  v.  Burton,  21  Mont.  572, 
55  Pac.  110,  69  Am.  St.  698;  King  v. 
Miller,  53  Ore.  53,  97  Pac.  642; 
Hankwitz  v.  Barrett,  143  Wis.  639, 
128  N.  W.  430.  See  also,  Osborne 
V.  Hughes,  128  App.  Div.  (N.  Y.) 
128.  112  N.  Y.  S.  572.  The  :Missouri 
statute  makes  assignable  everything 
in  action  arising  out  of  contract. 
Steele  v.  Brazier,  139  Mo.  App.  319, 
123  S.  W.  477.  The  Florida  statute 
is  similar  to  that  of  Missouri.  Joseph 
Dixon  Crucible  Co.  v.  Paul,  167  Fed. 
784,  93  C.  C.  A.  204  (construing 
Florida  statute).  Where  the  assign- 
ment is  not  authorized  by  statute  the 
assignee  has  recourse  to  the  common- 
law  rule  and  may  use  the  name  of 
the  assignor  to  enforce  the  assign- 
ment.    Boqua   v.    IMarshall,   88   Ark. 


Zn,  114  S.  W.  714.  See  also,  codes 
of  various  states. 

"Master  v.  Miller,  4  T.  R.  320; 
Congress  Const.  Co.  v.  Farson  &  Lib- 
bey  Co..  199  111.  398,  65  N.  E.  357, 
affg.  101  111.  App.  279;  Wey  v. 
Dooley.  134  111.  App.  244;  Briquette 
Fuel  Co.  v.  Davis.  134  111.  App.  343; 
Marshall  v.  Craig,  3  Bibb  (Kv.) 
291;  Leach  v.  Greene.  116  Mass.  534; 
Townsend  v.  Carpenter,  11  Ohio  21 ; 
New  York  Guaranty  Co.  v.  Memphis 
Water  Co.,  107  U.  S.  205,  27  L.  ed. 
484,  2  Sup.  Ct.  279.  See  also,  Baum- 
ert  V.  Daeschler,  65  Misc.  (N.  Y.) 
526,  120  N.  Y.  S.  957.  The  assignor 
may  require  indemnity  against  costs. 
Southwick  V.  Hopkins.  47  Maine  362 ; 
Fay  V.  Guynon,  131  Mass.  31 ;  Gordon 
V.  Drury,  20  N.  H.  353.  The  assignor 
has  no  right  to  dismiss  the  action. 
Marr  v.  Hanna,  7  J.  J.  Marsh.  (Ky.) 
642,  23  Am.  Dec.  449.  Nor  is  a  re- 
ceipt given  by  him  to  the  defendant 
(Marr  v.  Hanna,  7  J.  J.  Marsh. 
(Ky.)  642,  23  Am.  Dec.  449)  ;  nor  a 
declaration  against  interest  (Hough 
V.  Barton.  20  Vt.  455).  when  given 
or  made  after  the  assignment,  evi- 
dence against  the  assignee. 

''Atlantic  &c.  R.  Co.  v.  Atlantic 
&c.  Co.,  147  N.  Car.  368,  61  S.  E. 
185.  23  L.  R.  A.  (N.  S.)  223,  125 
Am.  St.  550. 

"Doll  V.  Anderson,  27  Cal.  248; 
Swanson  v.  Kirhv.  98  Ga.  586.  26  S. 
E.  71;   Carr  v.  Waugh,  28  111.  418; 


1433 


CONTRACTS. 


696 


to  furnish  wood  to  a  railway  company  for  use  in  its  engines  is 
assignable  by  that  company  to  its  lessee/^  Money  due  under  a 
contract  partly  performed^^  and  agreements  to  sell  and  deliver 


Pacev  V.  Troxel.  68  111.  App.  367; 
Brassel  v.  Troxel,  68  111.  App.  131; 
Blair  v.  Hamilton,  48  Ind.  32;  ]\Iis- 
souri  Valley  Life  Ins.  Co.  v.  Kelso, 
16  Kans.  481 ;  Missouri  Pac.  R.  Co.  v. 
Phelps,  10  Kans.  App.  1,  61  Pac.  672; 
AIcKee  V.  Hoover,  1  T.  B.  Mon. 
(Kv.)  32;  Haskell  v.  Blair,  3  Cusli. 
(Mass.)  534;  Blakeley  v.  Le  Due,  22 
Minn.  476;  Bvars'  Garnishees  v.  Grif- 
fin, 31  Miss.  "603;  Early  v.  Reed,  60 
Mo.  528;  Leahy  v.  Dugdale's  Admr., 
27  :\Io.  437;  Empire  Pav.  &c.  Co.  v. 
Prather's  Admr.,  58  Mo.  App.  487; 
Peabody  v,  Warner,  16  Mo.  App.  556 ; 
Daugherty  v.  Gouff,  23  Nebr.  105, 
36  N.  W.  351 ;  Howe  v.  Smeeth  Cop- 
per &  Bronze  Co.  (N.  J.),  48  Atl. 
24;  Evansville  Nat.  Bank  v.  Kauf- 
mann,  93  N.  Y.  273,  45  Am.  Rep. 
204;  Van  Santen  v.  Standard  Oil  Co., 
81  N.  Y.  171;  Devlin  v.  New  York, 
63  N.  Y.  8,  50  How.  Pr.  (N.  Y.)  1; 
Bordwell  v.  Collie,  45  N.  Y.  494; 
Fulton  Fire  Ins.  Co.  v.  Baldwin,  37 
N.  Y.  648;  McBride  v.  Farmers' 
Bank,  26  N.  Y.  450;  Stoutenberg  v. 
Freese,  2  Ohio  Dec.  (Reprint)  463; 
Mitchell  V.  Taylor,  27  Ore.  377,  41 
Pac.  119.  But  see  Breen  v.  Ingram, 
1  Bay  (S.  Car.)  173;  Smith  v.  Hub- 
bard, 85  Tenn.  306,  2  S.  W.  569; 
Peevy  v.  Hurt.  32  Tex.  146.  But  see 
Holliman  v.  Rogers,  6  Tex.  91 ;  Dela- 
ware County  Comrs.  v.  Diebold  Safe 
&c.  Co.,  133  U.  S.  473,  33  L.  ed.  674, 
10  Sup.  Ct.  399.  "It  seems  to  be  well 
settled  that  a  contract  is  generally  as- 
signable, unless  forbidden  by  public 
policy  or  the  contract  itself,  or  its 
provisions  are  such  as  to  show  that 
one  of  the  parties  reposes  a  personal 
confidence  in  the  other,  which  he 
would  have  been  unwilling  to  repose 
in  any  other  person."  Pulaski  Stave 
Co.  V.  Miller  Creek  Lumber  Co. 
(Ky.),  128  S.  W.  96.  Usually  a  cause 
of  action  which  survives  to  the  per- 
sonal representatives  is  assignable. 
Grand  Rapids  &c.  R.  Co.  v.  Cheboy- 


gan Circuit  Judge,  161  Mich.  181, 
126  N.  W.  56,  137  Am.  St.  495;  Con- 
awav  V.  Co-operative  Home  Builders, 
65  Wash.  39,  117  Pac.  716.  An  actual 
bona  fide  assignment  of  a  claim  need 
not  be  supported  by  a  consideration 
at  least  as  between  the  debtor  and 
assignee,  although  the  failure  to  pay 
a  consideration  may  constitute  an  im- 
portant circumstance  bearing  upon 
the  good  faith  of  the  transaction. 
Hickman  v.  Chanev,  155  ]Mich.  217, 
118  N.  W.  993;  King  v.  Miller,  53 
Ore.  53,  97  Pac.  542 ;  Levins  v.  Stark, 
57  Ore.  189,  110  Pac.  980;  Kenedy 
Town  &  Imp.  Co.  v.  First  Nat.  Bank 
(Tex.  Civ.  App.),  136  S.  W.  558; 
Pearce  v.  Wallis,  Landes  &  Co.  (Tex. 
Civ.  App.),  124  S.  W.  496.  A  pre- 
existing debt  is  sufficient  considera- 
tion for  an  assignment  of  commis- 
sions or  profits  to  be  derived  from  a 
shipment  of  grain.  Bank  of  Yolo  v. 
Bank  of  Woodland.  3  Cal.  App.  561, 
86  Pac.  820.  See  also,  Jahn  v.  Cham- 
pagne Lumber  Co.,  147  Fed.  631,  on 
the  sufficiency  of  the  consideration. 
A  promise  of  immediate  marriage  is 
sufficient  consideration  for  the  prom- 
isee's assignment  to  the  promisor  of 
his  interest  in  an  estate.  Huntress 
V.  Hanley,  195  Mass.  236,  80  N.  E. 
946. 

"Atlantic  &c.  R.  Co.  v.  Atlantic 
&c.  Co.,  147  N.  Car.  368,  61  S.  E. 
185,  23  L.  R.  A.  (N.  S.)  223,  125 
Am.  St.  550.  The  same  has  been 
held  true  of  a  contract  to  furnish 
steam  heat.  Voigt  v.  Murphy  Heat- 
ing Co.,  164  Mich.  539,  129  N.  W. 
701. 

"Rodgers  v.  Torrent,  111  Mich. 
680,  70  N.  W.  335;  Alden  v.  George 
W.  Frank  Imp.  Co.,  57  Nebr.  67,  77 
N.  W.  369;  Anniston  Nat.  Bank  v. 
School  Committee  of  Durham,  121 
N.  Car.  107,  28  S.  E.  134;  Parsons 
v.  Baltimore  Bldg.  &c.  Assn.,  44  W. 
Va.  335,  29  S.  E.  999,  67  Am.  St. 
769. 


697 


ASSIGNMENTS. 


§    1434 


goods/"  a  contract  for  drilling  an  oil  well,-^  claims  for  rent,-'' 
unpaid  subscriptions  to  the  capital  stock  of  a  corporation  after  a 
call  has  been  made,"^  contracts  to  convey  property,"  and  valid 
contracts  in  restraint  of  trade"  have  been  declared  assignable. 
It  has  also  been  held  thai  a  club  may  assign  a  claim  for  unpaid 
dues  and  that  the  assignee  may  maintain  an  action  to  recover  the 
same.^" 

§  1434.  Assignment  of  public  contracts — Wages  and  the 
like. — Public  contracts  may  in  the  absence  of  any  statutory 
or  other  provision  or  rule  of  public  policy  restricting  the  right. 


^In  re  Niagara  Radiator  Co.,  164 
Fed.  102;  Roberts  Cotton  Oil  Co.  v. 
F.  E.  Morse  &  Co.,  97  Ark.  513,  135 
S.  W.  334  (contract  for  purchase  of 
cotton  seed  meal)  ;  Sears  v.  Conover, 
3  Key.  (N.  Y.)  113;  Tvler  v.  Bar- 
rows, 6  Robt.  (N.  Y.)  104;  Groot  v. 
Story,  41  Vt.  533  (contract  to  buy 
piano  assigned  by  purchaser).  Jvloney 
due  for  goods  sold  has  been  held 
within  the  terms  of  an  assignment  by 
the  seller  of  his  "bills  receivable." 
Rogers  v.  Abbott,  206  Mass.  270,  92 
N.  E.  472,  138  Am.  St.  394.  "An 
instrument  acknowledging  receipt  of 
certain  personal  property,  and  con- 
taining a  promise  by  the  maker  there- 
of to  pay  a  certain  sum  in  stated  in- 
stalments, but  reserving  the  title  in 
the  vendor  as  to  the  property^  until 
the  payments  were  fully  made,  is,  al- 
though it  contains  no  words  of  nego- 
tiabilitv,  assignable  under  section 
3682  6f  the  Civil  Code  of  1895." 
Walker  v.  Carpenter.  5  Ga.  App.  427, 
63  S.  E.  576. 

^  Galev  V.  Mellon,  172  Pa.  St.  443, 
33  Atl.  560.  See  also.  Anse  &c.  Min- 
eral Co.  V.  Babb,  122  La.  415,  47  So. 
754. 

~  Sweeney  v.  Farmers'  Rice  Milling 
&c.  Co.  (Tex.  Civ.  App.),  137  S.  W. 
1147. 

^Lynah  v.  Citizens'  &c.  Bank,  136 
Ga.  344,  71   S.  E.  469. 

^  Moore  v.  Gariglietti.  228  111.  143, 
81  N.  E.  826;  Rice  v.  Gibbs,  33  Nebr. 
460,  50  N.  W.  436;  Royce  v.  Car- 
penter, 80  Vt.  37,  66  Atl.  888. 

"  California  Steam  Xav.  Co.  v. 
Wright,  6  Cal.  258.  65  Am.  Dec.  511; 
Johnston  v.  Blanchard,   16  Cal.  App. 


321,  116  Pac.  973  (sale  of  good  will 
of  business  with  agreement  not  to 
re-engage  therein)  ;  Hedge  v.  Lowe, 
47  Iowa  137;  Up  River  Ice  Co.  v. 
Denier,  114  Mich.  296,  72  N.  W^  157, 
68  Am.  St.  480;  Hickey  v.  Brinkley, 
88  Nebr.  356,  129  N.  W.  553;  Fran- 
cisco V.  Smith,  143  N.  Y.  488,  38  N. 
E.  980,  62  N.  Y.  St.  803;  Diamond 
Match  Co.  V.  Roeber,  106  N.  Y.  473, 
13  N.  E.  419,  60  Am.  Rep.  464;  Greite 
V.  Hendricks,  71  Ilun  (X.  Y.)  7,  53 
N.  Y.  St.  851,  24  N.  Y.  S.  545;  Bar- 
ber Asphalt  Pav.  Co.  v.  Brand,  55 
Hun  (X.  Y.)  606.  27  N.  Y.  St.  883, 
4  Silvcrnail  (N.  Y.)  519,  7  N.  Y.  S. 
744.  See  contra.  Hillman  v.  Shan- 
nahan,  4  Ore.  163,  18  Am.  Rep.  281. 
See  also,  ante,  ch.  22. 

^Anderson  v.  Amidon,  114  Minn. 
202,  130  N.  W.  1002,  34  L.  R.  A.  (N. 
S.)  647.  Contracts  for  the  sale  and 
delivery  of  saw  logs  have  also  been 
held  assignable.  Pulaski  Stave  Co.  v. 
Miller's  Creek  Lumber  Co.  (Ky.), 
128  S.  W.  96;  Poling  v.  Condon-Lane 
Boom  &  Lumber  Co.,  55  W.  Va.  529, 
47  S.  E.  279.  But  it  has  been  held 
otherwise  where  credit  is  extended 
the  purchaser,  such  purchaser  being 
denied  the  right  to  assign  the  con- 
tract. Demarest  v.  Duton  Lumber 
Co.,  161  Fed.  264.  88  C.  C.  A.  310. 
See  also.  \\'entworth  v.  Cock,  10  Ad. 
&  El.  42,  holding  that  a  contract  to 
supply  slate  was  binding  on  the  ad- 
ministrator of  the  deceased  contrac- 
tor's estate.  A  contract  to  make  and 
deliver  steel  dies  has  also  been  held 
assignable  by  the  party  to  whom  they 
were  to  be  delivered  when  his  only 
obligation   was  to   pay    for   them   on 


1434 


CONTRACTS. 


698 


be  assigned  the  same  as  a  contract  between  private  individuals.-^ 
An  assignment  of  unearned  wages  under  an  existing  contract 
of  employment  is  valid  when  not  made  to  defraud  creditors 
and  not  prohibited  by  statutory  enactment,^^  although  the  term 


delivery,  since  this  was  a  duty  which 
could  be  discharged  by  any  one. 
Rochester  Lantern  Co.  v.  Stiles  &c. 
Glass  Co.,  135  N.  Y.  209,  31  N.  E. 
1018,  aflfg.  40  N.  Y.  St.  851,  16  N.  Y. 
S.  781. 

"Anderson  v.  De  Urioste,  96  Cal. 
404,  31  Pac.  266;  Taylor  v.  Palmer, 
31  Cal.  240;  Cochran  v.  Collins,  29 
Cal.  129;  Carlyle  v.  Carlyle  Water 
&c.  Co.,  140  111.  445,  29  N.  E.  556. 
But  see  contra.  Pike  v.  Waltham, 
168  Mass.  581,  47  N.  E.  437;  St. 
Louis  V.  Clemens,  42  Mo.  69;  Dev- 
lin V.  New  York,  63  N.  Y.  8,  50  How. 
Pr.  (N.  Y.)  1;  Corry  v.  Gay- 
nor,  22  Ohio  St.  584  ^  Ernst  v.  Kun- 
kle,  5  Ohio  St.  520;  Philadelphia  v. 
Lockhardt,  1Z  Pa.  St.  211;  Columbia 
Water  Power  Co.  v.  Columbia,  5  S. 
Car.  225;  Carter  v.  State,  8  S.  Dak. 
153,  65  N.  W.  422.  As  to  contracts 
to  which  the  United  States  is  a  party, 
see  U.  S.  Rev.  Stat.  (1878),  §§  3477, 
2mi;  Flint  &  P.  M.  R.  Co.  v.  United 
States,  112  U.  S.  1Z1 ,  28  L.  ed.  862, 
5  Sup.  Ct.  368;  United  States  v.  Gil- 
lis,  95  U.  S.  407,  24  L.  ed.  503. 

'^  Chicago  &c.  R.  Co.  v.  Provolt,  42 
Colo.  103,  93  Pac.  1126,  16  L.  R.  A. 
(N.  S.)  587;  Wabash  R.  Co.  v.  Smith, 
134  111.  App.  574;  Kane  v.  Clough, 
36  Mich.  436,  24  Am.  Rep.  599; 
Weinberg  v.  Stratton,  163  Mich.  408, 
128  N.  W.  926;  Leitch  v.  Northern 
Pac.  R.  Co.,  95  Minn.  35,  103  N.^W. 
704 ;  Quigley  v.  Welter,  95  Minn.  383, 
104  N.  W.  236;  Bell  v.  Mulholland, 
90  Mo.  App.  612;  Hax  v.  Acme  Ce- 
ment Plaster  Co.,  82  Mo.  App.  447; 
Runnells  v.  Bosquet,  N.  I.  &  S.  Co., 
60  N.  H.  38;  Provenchcr  v.  Brooks, 
64  N.  H.  479,  13  Atl.  641 ;  Rodijkeit 
V.  Andrews,  74  Ohio  104,  11  N.  E. 
747,  5  L.  R.  A.  (N.  S.)  564n;  Ber- 
resford  v.  Susquehanna  Coal  Co., 
24  Pa.  Co.  Ct.  557.  An  action  at 
law  may  be  brought  to  enforce  one's 
assignment  of  his  entire  salary 
earned  and  to  be  earned  for  a  named 
period.  Western  Union  Tel.  Co.  v. 
Ryan,  126  Ga.  191,  55  S.  E.  21.  See 
also,   Runnells   v.   Bosquet,   N.   I.   & 


S.  Co.,  60  N.  H.  38  (made  to  defeat 
creditors)  ;  Robinson  v.  McKenna, 
21  R.  I.  117,  42  Atl.  510,  79  Am.  St. 
793.  In  answer  to  the  contention 
that  the  plaintiff  showed  only  an 
equitable  as  distinguished  from  a 
legal  assignment  of  the  laborer's 
wages  the  court  said :  "While  the 
original  agreement,  made  at  the  time 
the  laborers  were  employed,  may 
have  amounted  only  to  an  agree- 
ment to  assign,  the  act  of  the  labor- 
ers after  the  wages  were  earned  in 
going  over  the  accounts  and  in  ap- 
proving the  deductions  was  sufficient 
in  connection  with  the  original  agree- 
ment, to  amount  to  a  legal  assign- 
ment." United  States  Fidelity  &c.  Co. 
V.  United  States,  189  Fed.  339.  The 
assignment  of  unearned  wages  does 
not  create  a  lien  thereon  and  is 
merely  an  executory  contract  to 
transfer  them  when  earned.  Hirsch- 
berg  V.  Chic  Dress  Co.,  130  N.  Y. 
S.  134.  See  also,  Schreiber  v.  Kel- 
ler Mechanical  Engraving  Co.,  57 
Misc.  (N.  Y.)  644,  108  N.  Y.  S. 
658,  holding  that  the  assignment  is  a 
mere  direction  and  may  be  revoked 
by  the  employe  at  will.  The  statute 
may  require  that  the  employer  be 
given  notice  of  the  assignment 
(Hall  V.  Boston  Plate  &  Window 
Glass  Co.,  207  Mass.  328,  93  N.  E. 
640),  within  a  specified  time. 
Thompson  v.  Gimbel  Bros.,  71  Misc. 
(N.  Y.)  126,  128N.Y.  S.210;  Bowley 
V.  Erie  R.  Co.,  70  Misc.  (N.Y.)  168, 
128  N.  Y.  S.  468.  See  also,  Brindze 
V.  Atlantic  City  &c.  Beneficial 
Assn.,  75  N.  J.  Eq.  405,  12  Atl.  435 
(upholding  an  assignment  of  money 
to  be  made  under  a  contract  to  con- 
duct a  circus  for  four  days).  The 
assignment  of  future  wages  may  be 
prohibited  by  statute.  Chicago  &c. 
R.  Co.  V.  Ebersole  (Ind.),  87  N.  E. 
1090:  Central  of  Georgia  R.  Co.  v. 
Dover,  1  Ga.  App.  240,  57  S.  E.  1002. 
See  also,  McCallum  v.  Simplex  Elec- 
trical Co.,  197  Mass.  388,  83  N.  E. 
1108  (prescribing  conditions  under 
which   assignment   must   be   made). 


699 


ASSIGNMENTS. 


§    1434 


of  employment  may  be  indefinite  and  uncertain.^®  However,  an 
assignment  of  wages  unlimited  as  to  time  or  amount  is  held  unen- 
forcible.^"  It  is  also  well  settled,  that  there  can  be  no  assignment 
of  money  to  be  earned  under  a  new  or  different  contract  or  where 
there  was  no  existing  contract  of  employment.^^  And  the  assign- 
ment by  a  public  official  of  the  unearned  fees  or  salary  of  his 
office  is  against  public  policy.^^  It  has  been  held,  however,  that 
such  an  assignment  by  a  public  official  may  become  effective  as 
the  salary  is  earned  or  the  fees  accrue,  as  against  third  persons, 


^Welborn  v.  Buck,  114  Ala.  277, 
21  So.  786;  Cox  v.  Hughes.  10  Cal. 
App.  553,  102  Pac.  956;  Harrop  v. 
Landers  &c.  Co.,  45  Conn.  561  ;  Lan- 
nan  v.  Smith,  7  Gray  (Mass.)  150; 
O'Connor  v.  Mehan,  47  Minn.  247, 
49  N.  W.  982;  Bell  v.  Mulholland, 
90  Mo.   App.   612. 

'"Leitch  V.  Northern  Pac.  R.  Co., 
95  Minn.  35.  103  N.  W.  704;  Stein- 
bach  V.  Brant.  79  Minn.  383,  82  N. 
W.  651,  79  Am.  St.  494.  Compare, 
however,  with  Weinberg  v.  Stratton, 
163  Mich.  408,  128  N.  W.  926. 

"'Cox  V.  Hughes,  10  Cal.  App. 
553,  102  Pac.  956;  National  Biscuit 
Co.  V.  Consolidated  Agencies  Co., 
153  111.  App.  214;  Herbert  v.  Bron- 
son,  125  Mass.  475 ;  Twiss  v.  Cheev- 
er,  2  Allen  (Mass.)  40;  Eagan  v. 
Luby,  133  Mass.  543 :  Bell  v.  Mulhol- 
land, 90  Mo.  App.  612;  Close  v.  In- 
dependent Gravel  Co.,  156  Mo.  App. 
411,  138  S.  W.  81;  Thompson  v. 
Gimbel  Bros.,  71  Misc.  (N.  Y.)  126, 
128  N.  Y.  S.  210;  Billings  v.  O'Brien, 
14  Abb.  Prac.  (N.  S.)  (N.  Y.)  238, 
4  Daly  (N.  Y.)  556,  45  How.  Pr.  (N. 
Y.)  392.  Compare  with  Wallace  v. 
Walter  Hevwood  Chair  Co.,  16  Gray 
(Mass.)   209. 

"Stewart  v.  Sample,  168  Ala.  270, 
53  So.  182  (assessor's  commissions)  ; 
King  V.  Hawkins,  2  Ariz.  358,  16 
Pac.  434  (commissioner  of  immi- 
gration) ;  Bangs  v.  Dunn,  66  Cal.  12, 
4  Pac.  963  (deputies  and  copyists 
employed  in  office  of  county  clerk)  ; 
Wilkes  V.  Sicvers,  8  Cal.  App.  659, 
97  Pac.  677;  Shannon  v.  Bruner,  36 
Fed.  147  (assignment  of  fees  by  a 
master  before  they  were  earned)  ; 
Schmitt  V.  Dooling.  145  Kv.  240.  140 
S.  W.  197,  36  L.  R.  A.  (N.  S.)  881 


(assignment  of  salary  by  fireman)  ; 
Field  V.  Chipley,  79  Ky.  260,  2  Ky. 
L.  269,  42  Am.  Rep.  215  (clerk  of 
a  chancery  court  assigned  his  earn- 
ings until  a  debt  should  be  paid)  ; 
Holt  V.  Thurman,  111  Ky.  84,  23 
Ky.  L.  92,  63  S.  W.  280,  98  Am.  St. 
399  (prosecuting  attorney  assigning 
future  earnings  of  his  office)  ;  Dick- 
inson v.  Johnson,  110  Ky.  236,  61  S. 
W.  267,  22  Ky.  L.  1686,  54  L.  R.  A. 
566,  96  Am.  St.  434  (county  clerk); 
Granger  v.  French,  152  Mich.  356, 
116  N.  W.  181.  125  Am.  St.  416: 
Dunkley  v.  Marquette,  157  Mich.  339, 
122  N.  W.  126  (city  official)  ;  State 
V.  Williamson,  118  Mo.  146,  23  S. 
W.  1054,  21  L.  R.  A.  827,  40  Am.  St. 
358  (order  by  mail  carrier  on  a 
postmaster)  ;  Nelson  v.  Townsend, 
132  Mo.  App.  390,  111  S.  W.  894; 
First  Nat.  Bank  v.  State,  68  Nebr. 
482,  94  N.  W.  633  (prosecuting  at- 
torney) ;  Schwenk  v.  Wvckoff,  46  N. 
J.  Eq.  560,  20  Atl.  259,'  9  L.  R.  A. 
221,  19  Am.  St.  438  (retired  United 
States  army  officer)  ;  Bliss  v.  Law- 
rence, 58  N.  Y.  442,  48  How.  Pr. 
(N.  Y.)  21,  17  Am.  Rep.  273  (as- 
signment by  a  United  States  treasury 
department  clerk)  ;  Bowery  Nat. 
Bank  v.  Wilson.  122  N.  Y.  478,  25 
N.  E.  855,  9  L.  R.  A.  706,  19  Am.  St. 
507  (assignment  bv  sheriff)  ;  Wal- 
ker V.  New  York,  72  Misc.  (N.  Y.) 
97,  129  N.  Y.  S.  1059;  State  v. 
Barnes,  10  S.  Dak.  306,  12>  X.  W. 
80  (prosecuting  attornev)  ;  National 
Bank  v.  Fink.  86  Texas  303,  24  S. 
W.  256,  40  Am.  St.  833;  Stevenson 
V.  Kyle,  42  W.  Va.  229,  24  S.  E.  886, 
57  Am.  St.  854  (order  given  by  as- 
sessor). See,  however.  Brackett  v. 
Blake,  7  Mete.   (Mass.)  335,  41  Am. 


^  1435 


CONTRACTS. 


700 


the  assignor  not  objecting.^^  It  has  even  been  held  that  the 
assignment  may  be  enforced  after  the  assignor  has  been  dis- 
charged in  bankruptcy^*  although  other  cases  hold  to  the  con- 
tra ry.^° 

§  1435.  Assignment  of  contracts  involving  personal  liabil- 
ity.— Even  equity,  however,  does  not  permit  the  assignment 
of  every  contract.  It  is  well  settled  that  contracts  are  not  as- 
signable which  involve  a  personal  liability,  or  relation  of  special 
trust  and  confidence  or  where  the  skill  or  experience  of  one  of  the 
parties  is  of  the  essence  of  the  contract. ^^  The  real  difficulty 
consists  in  determining  whether  a  given  contract  involves  a  per- 
sonal liability,  establishes  a  relation  of  personal  trust  and  con- 
fidence or  requires  the  skill  or  experience  of  one  of  the  parties 
to  the  contract  for  its  performance.  Thus,  a  building  or  con- 
struction contract  which  contains  no  provision  in  regard  to  as- 
signments may  be  assigned  when  there  is  nothing  in  the  contract 
to  indicate  that  it  Vv^as  limited  to  the  parties  making  it  either  by  its 


Dec.  442;  Allen  v.  Chicago  Pneu- 
matic Tool  Co.,  205  Mass.  569,  91  N. 
E.  887;  McGregor  v.  McGregor,  130 
Mich.  505,  90  N.  W.  284,  97  Am. 
St  492;  State  v.  Hastings,  15  Wis. 
75. 

^Roesch  V.  W.  B.  Worthon  Co. 
(Ark.),  130  S.  W.  551,  31  L.  R.  A. 
(N.  S.)  374  (assignment  given  prec- 
edence over  garnishment  subsequent- 
ly levied).  See  also,  Johnson  v.  Pace, 
78  111.  143;  Ireland  v.  Smith,  1  Barb. 
(N.  Y.)  419,  3  How.  Pr.  (N.  Y.) 
244.  See,  however,  Shannon  v.  Bru- 
ner,  36  Fed.  147.  A  public  official  may 
assign  compensation  already  due 
him.  Carnegie  Trust  Co.  v.  Bat- 
tery Place  Realty  Co..  67  Misc.  (N. 
Y.)  452,  122  N.  Y.  S.  697. 

^Citizens'  Loan  Assn.  v.  Boston 
&  M.  R.  Co.,  196  Mass.  91,  82  N.  E. 
696.  See  also.  Western  Union  Tel. 
Co.  V.  Ryan,  126  Ga.  191,  55  S.  E. 
21. 

^^In  re  West,  128  Fed.  205.  In  re 
Home  Discount  Co.,  147  Fed.  538; 
Leitch  V.  Northern  Pac.  R.  Co.,  95 
Minn.  35,  103  N.  W.  704. 

^  Fitch  V.  Brockmon,  3  Cal.  348; 
Sloan  V.  Williams,  138  111.  43,  27  N. 


E.  531,  12  L.  R.  A.  496;  Davenport 
V.  Gentry's  Admr.,  9  B.  Mon.  (Ky.) 
427 ;  Henry  v.  Hughes,  1  J.  J.  Marsh. 
(Ky.)  453;  Force's  Admr.  v.  Thom- 
aso'n,  2  Litt.  (Kv.)  166.  Compare 
Bancroft  v.  Scribner,  72  Fed.  988,  21 
C.  C.  A.352,44U.  S.App.480;Hazel 
v.  McCloskey,  6  Ky.  L.  736;  Redhef- 
fer  v.  Learthe,  15  Mo.  App.  12;  Hil- 
ton v.  Crooker,  30  Nebr.  707,  47  N. 
W.  3 ;  Chapin  v.  Longworth,  31 
Ohio  St.  421.  This  rule  is  inappli- 
cable to  involuntary  servitudes,  pau- 
pers, criminals,  etc.  Wilson  v. 
Church,  1  Pick.  (Mass.)  23;  Hor- 
ner V.  Wood,  23  N.  Y.  350;  Sum- 
ner V.  Nevin,  4  Cal.  App.  347,  87 
Pac.  1105;  F.  Haag  &  Bros.  v.  Reich- 
ert,  142  Ky.  298,  134  S.  W.  191; 
Wooster  v.  Crane  &  Co.,  IZ  N.  J. 
Eq.  22,  66  Atl.  1093;  Smith  v.  Pitts, 
57  Tex.  Civ.  App.  97,  122  S.  W.  46 
(holding  that  the  contract  of  war- 
ranty usually  contained  in  deeds  con- 
veying real  estate  involves  a  per- 
sonal obligation  upon  the  part  of 
the  grantor  to  which  the  grantee  has 
a  right,  and  which  cannot  be  denied 
him  or  shifted  to  another  without 
his  consent) ;  Epperson  v.  Epperson, 


701                                                    ASSIGNMENTS.  §    1 436 

terms  or  by  the  subject-matter  of  the  contract.^^    But  where  the 

character  of  the  work  requires  skill  and  experience  the  builder 

has  a  right  to  make  his  contract  with  a  party  having  the  requisite 
knowledge   and   experience,   and   when   it  appears  that   he  has 

selected  a  particular  contractor  on  account  of  his  skill  and  ex- 
perience, a  relation  of  personal  confidence  arises  between  the 
parties  and  the  contract  cannot  be  assigned.^* 

§  1436.    Examples  of  unassignable  contracts. — Executory 
contracts  for  the  performance  of  a  particular  work,  such  as  the 

108  Va.  471,  61  S.  E.  344.  "When  Tull  Lumber  Co.,  94  Miss.  780,  43 
rights  arising  out  of  contracts  are  So.  966;  Leahy  v.  Dugdale's  Admr., 
coupled  with  obHgations  to  be  per-  2  Mo.  437 ;  Columbia  Water  Power 
formed  by  the  contractor,  and  in-  Co.  v.  Columbia,  5  S.  Car.  225;  Min- 
volve  such  a  relation  of  personal  netonka  Oil  Co.  v.  Cleveland  Vitri- 
contidence  that  it  must  have  been  in-  fied  Brick  Co.,  27  Okla.  180,  111  Pac. 
tended  that  the  rights  should  be  ex-  326.  In  the  following  cases  public 
ercised  and  the  obligations  per-  construction  contracts  were  held 
formed  by  him  alone,  the  contracts,  assignable  by  the  contractor.  Tay- 
including  both  his  rights  and  his  lor  v.  Palmer,  31  Cal.  240  (contract 
obligations,  cannot  be  assigned  with-  to  grade  a  street)  ;  Anderson  v.  De 
out  the  consent  of  the  other  party  Urioste,  96  Cal.  404,  31  Pac.  266 
to  the  original  contract."  Burck  v.  (sewer  construction  contracts)  ;  St. 
Taylor,  152  U.  S.  634,  38  L.  Louis  to  the  use  of  Alice  Sullivan 
ed.  578,  14  Sup.  Ct.  696,  quot-  Admx.  v.  Clemens,  42  Mo.  69  (con- 
ing from  Delaware  County  Comrs.  tract  to  grade  curb  and  macadamize 
V.  Diebold  Safe  &  Lock  Co.,  a  street)  ;  Ernst  v.  Kunkle,  5  Ohio 
133  U.  S.  473,  ZZ  L.  ed.  674,  St.  520  (contract  to  improve  street)  ; 
10  Sup.  Ct.  399.  A  contract  for  Compare  with  Pike  v.  Waltham,  168 
personal  services  cannot  be  assigned  Mass.  581,  47  N.  E.  437.  The  fact 
so  that  the  assignee  may  command  that  the  assignor  of  a  neuralgia  lo- 
the  labor  of  one  who  has  never  tion  may  have  given  the  first  as- 
agreed  to  serve  him.  Board  of  Edu-  signees,  persons  he  knew  and  in 
cation  v.  State  Board  of  Education,  whom  he  had  confidence,  a  license 
81  N.  J.  L.  211,  81  Atl.  163.  The  to  use  his  picture  and  certificate  does 
nonassignability  of  a  contract  arising  not  pass  to  subsequent  assignees, 
by  inference  from  a  relation  of  per-  Edison  v.  Edison  Polyform  Mfg. 
sonal  confidence  may  be  waived  by  Co.,  12)  N.  J.  Eq.  136,  67  Atl.  392. 
the  consent  of  the  parties  or  the  as-  '**  Swarts  v.  Xarragansett  Elec,  &c. 
signment  of  such  contracts  may  be  Co.,  26  R.  I.  388,  69  Atl.  11,  26  R.  I. 
ratified  by  the  party  reposing  the  436,  59  Atl.  Ill  (contract  for  in- 
trust. Weatherhogg  v.  Board  of  stalling  an  electric  apparatus)  ;  John- 
Commissioners,  158  Ind.  14,  62  N.  son  v.  Vickers,  139  Wis.  145,  120 
E.  477;  Pulaski  Stave  Co.  v.  Miller's  N.  W.  837,  21  L.  R.  A.  (N.  S.)  359n, 
Creek  Lumber  Co.  (Ky.),  128  S.  W.  131  Am.  St.  1046  (contract  to  build 
96.  See  also,  Harlow  v.  Oregonian  a  canning  factory).  There  is  of 
Pub.  Co.,  ^2)  Ore.  272,  100  Pac.  7.  course  a  distinction  between  assign- 
*'  Lakeview  Land  Co.  v.  San  An-  ment  of  the  performance  of  the 
toriio  Tract.  Co.,  95  Tex.  252,  66  S.  work  itself  and  the  mere  assignment 
W.  766.  See  also,  American  Bond-  of  payments  under  the  contract.  See 
ing  &  Trust  Co.  v.  Baltimore  &  O.  Sharp  v.  Edgar,  3  Sandf.  (N,  V.) 
S.  W.  R.  Co.,  124  Fed.  866,  60  C.  C.  379. 
A.  52;   A.   &   S.   Spengler  v.    Stiles- 


§  1436 


CONTRACTS. 


702 


smelting  of  lead  ore  by  particular  persons  conducting  a  smelter, 
when  deal  involved  an  allowance  of  credit,^^  to  build  a  side  track  to 
the  saw  mill  of  a  designated  person/"  an  agreement  by  a  nursery- 
man to  plant,  prune  and  care  for  fruit  trees  during  a  term  of 
years,*^  and  a  contract  with  a  certain  advertising  agency/^  or  for 
legal  services/^  or  to  take  personal  charge  of  a  ranch/*  have  been 
held  unassignable  for  the  reason  hereinbefore  mentioned.*^  A 
contract  between  an  author  and  publisher  for  the  publication  of 
a  book  calls  for  the  performance  of  a  personal  service  of  a  par- 
ticular character  which  prevents  the  assignment  of  the  contract 
by  the  publisher/''  even  though  the  contract  provides  that  the  pub- 
lisher and  its  legal  representatives  and  assigns  shall  keep  and  per- 
form the  agreement.''^  A  contract  for  the  sale  of  goods  to  be 
manufactured  cannot  be  assigned  by  the  vendor  where  the  vendee 
relies  upon  the  skill  and  experience  of  the  manufacturer  as  well  as 


**  Arkansas  Valley  Smelting  Co. 
V.  Belden  Min.  Co.,  127  U.  S.  379. 
32  L.  ed.  246,  8  Sup.  Ct.  1308.  To 
same  effect,  Demarest  v.  Dulton 
Lumber  Co.,  161  Fed.  264,  88  C.  C. 
A.  310. 

"Tifton  &c.  R.  Co.  v.  Bedgood, 
116  Ga.  945,  43   S.   E.  257. 

"Edison  v.  Babka,  111  Mich.  235, 
69  N.   W.  499. 

*^  Eastern  Advertising  Co.  v.  Mc- 
Gaw,  89  Md.  72,  42  Atl.  923.  As  to 
when  one  is  considered  as  having 
relied  on  the  special  skill  or  talent 
of  the  one  with  whom  he  contracts 
to  prepare  a  booklet  for  advertising 
purposes,  see  H.  C.  Brown  &  Co.  v. 
Jno.  P.  Sharkey  Co.,  58  Ore.  480, 
115  Pac.  156. 

*' Corson  v.  Lewis,  11  Nebr.  446, 
109  N.  W.  735. 

*^  Fitch  v.  Brockmon,  3  Cal.  348. 
See  also,  Streeter  v.  Sumner,  31  N. 
H.  542;  Hudson's  Admrs.  v.  Farris, 
30  Tex.  574  (agreement  to  locate 
colonists'  land). 

"  See  also,  Spencer  v.  Woodbury, 
1  Minn.  105  (agreement  to  cut  and 
split  several  thousand  rails).  See, 
however,  Janvey  v.  Loketz,  122  App. 
Div.  (N.  Y.)  411,  106  N.  Y.  S.  690, 
holding  that  a  contract  for  the  per- 
formance of  certain  painting,  deco- 
rating, and  white  washing  involved 
no  personal  confidential  relation  and 


no  exceptional  personal  skill  nor 
knowledge  and  might  be  assigned. 
It  appeared,  however,  that  the  de- 
fendant had  knowledge  of  and  con- 
sented to  the  assignment. 

"  Griffith  V.  Tower  Publishing  Co. 
(1897),  1  Ch.  21.  See  also,  Parker 
V.  Evening  News  Pub.  Co.,  54  Fla. 
544,  45  So.  309  (holding  a  contract 
with  a  newspaper  to  print  delinquent 
tax  list  not  assignable)  ;  New  York 
Phonograph  Co.  v.  Davega,  127  App. 
Div.  (N.  Y.)  222,  111  N.  Y.  S.  363 
(holding  an  inventor's  contract  with 
a  corporation  to  exploit  his  inven- 
tions not  assignable). 

"  Wooster  v.  Crane  &  Co.,  Th  N. 
J.  Eq.  22,  66  Atl.  1093.  In  the  above 
case  the  contract  of  publication  was 
made  with  Crane  &  Co.,  a  New  Jer- 
sey Corporation.  Subsequently  this 
corporation  was  dissolved  and  a 
new  one  organized  bearing  the  same 
name  under  the  laws  of  Arizona,  and 
all  the  property,  plant  and  contracts 
of  the  original  corporation  were 
assigned  and  transferred  to  the  new 
company.  The  same  stockholders 
owned  and  controlled  the  stock  in 
the  new  corporation.  It  was  held 
that  the  contract  of  publication  was 
not  assignable  to  the  new  company 
against  the  dissent  of  the  author. 
Compare  with  Sunday  Mirror  Co.  v. 
Galvin,  55  Mo.  App.  412. 


703 


ASSIGNMENTS. 


1436 


Upon  the  implied  warranty  of  quality.*"  So  a  beneficiary  under  a 
will  by  which  it  is  made  the  duty  of  his  children  to  care  for  and 
support  him  during  the  remainder  of  his  life  cannot  assign  to 
another  his  right  to  receive  care  and  support  during  his  life." 
The  converse  of  this  is  also  true  and  a  covenant  by  a  grantee  of 
land  to  support  the  grantor,  an  aged  and  feeble  man,  in  considera- 
tion of  the  conveyance,  is  personal  and  cannot  be  shifted  by  the 
grantee  to  a  purchaser  of  the  land  against  the  will  and  consent  of 
the  party  with  whom  the  agreement  was  made.°" 

Even  though  there  are  general  provisions  in  a  contract  for  as- 
signability, the  use  of  such  language  does  not  in  every  case  abso- 
lutely determine  its  assignability.  Notwithstanding  the  use  of 
such  terms,  the  intention  of  the  parties  must  be  gathered  from  a 
consideration  of  the  terms  and  the  entire  tenor  of  the  contract, 
and  if  upon  such  consideration  it  appears  that  the  contract  calls 
for  the  performance  of  an  obligation  purely  personal  in  its  nature, 
the  rule  is  general  that  the  obligation,  if  personal,  cannot  be  as- 
signed without  the  consent  of  the  party  to  be  benefited.^^    Thus, 


*"'The  injustice  of  permitting  an 
assignment  of  a  contract  for  per- 
sonal services,  for  the  painting  of  a 
picture,  for  a  partnership,  is  obvious. 
A  contract  for  the  sale  of  goods  to 
be  manufactured  stands  on  similar 
grounds  where  the  vendee  relies 
upon  the  skill  and  experience  of 
the  manufacturer,  as  w^ell  as  upon 
the  implied  warranty  of  quality.  No 
man  who  has  employed  a  tailor  to 
make  a  suit  of  clothes  ought  to  be 
compelled  to  accept  a  suit  made  by 
the  tailor's  assignee."  Schlessinger 
V.  Forest  Products  Co.,  78  N.  J.  L. 
637,  76  Atl.  1024,  30  L.  R.  A.  (N. 
S.)  347,  138  Am.  St.  627.  To  same 
effect,  Dr.  Jaeger's  Sanitary  Woolen 
System  Co.  v.  Walker,  11  L.  T.  (N. 
S.)  180. 

^'Merchants'  Nat.  Bank  v.  Crisp, 
140  Iowa  308,  118  N.  W.  394,  23  L. 
R.  A.  526n,  132  Am.  St.  267.  The 
court  said :  "The  service  required 
was  so  distinctly  a  personal  service 
to  the  father  that  it  could  not  be 
converted  by  him  into  a  money 
claim." 

'"Divan  v.  Loomis,  68  Wis.  150,  31 
N.   W.   760.     To   same   effect,   In   re 


Shearn's  Estate,  38  Utah  492,  114 
Pac.  131.  Compare  the  foregoing 
case  with  that  of  Matheny  v.  Chest- 
er (Ky.),  133  S.  W.  754,  holding  that 
a  third  person  who  furnishes  care 
and  support  to  one  in  accordance 
with  the  condition  of  a  deed  which 
required  the  grantee  to  furnish  such 
support  cannot  recover  from  the 
grantee  the  value  of  the  care  and  ex- 
penses incurred  merely  because  he 
had  furnished  the  beneficiary  money, 
or  care,  or  board,  which  the  grantee 
had  obligated  himself  to  do. 

"  Montgomery  v.  De  Picot,  153 
Cal.  509,  96  Pac.  305,  126  Am.  St. 
84;  Wooster  v.  Crane  &  Co.,  12>  N. 
J.  Eq.  22,  66  Atl.  1093.  In  this  latter 
case  the  court  said :  "Upon  the 
whole,  I  am  of  the  opinion  that  the 
only  effect  of  the  word  'assigns'  is 
to  give  the  right  which  Crane  &  Co. 
have  without  that  word,  viz.,  that 
their  assignee  would  take  whatever 
interest  they  had  in  the  contract  up 
to  the  time  of  the  assignment,  pre- 
cisely as  in  the  case  of  one  partner 
selling  out  his  interest  in  the  part- 
nership." 


^  1437 


CONTRACTS. 


704 


in  a  contract  which  gave  to  certain  designated  persons  and  their 
assigns,  for  a  limited  time,  an  exchisive  agency  for  the  sale  of 
specified  property,  the  word  "assigns"  has  been  construed  to 
mean  a  purchaser  ready,  able  and  willing  to  buy,  to  whom  the 
original  parties  might  assign  their  option  and  not  to  the  public 
generally,  and  not  any  person  to  whom  the  original  party  might 
for  other  purposes  assign  an  interest  in  the  option.^^ 

§  1437.  Parties  may  stipulate  against  assignment. — There 
exists  a  second  exception  to  the  rule  that  contracts  may  be  as- 
signed. The  parties  themselves  may  stipulate  that  the  contract 
shall  not  be  assignable.^^  Thus,  a  provision  in  a  contract  for  the 
conditional  sale  of  real  estate  to  the  effect  that  no  assignment  of 
the  agreement  would  be  valid  without  the  consent  and  signature 
of  the  vendor  has  been  upheld.^*  Under  the  Iowa  statute,  how- 
ever, a  stipulation  of  nonassignability  in  a  contract  of  this  charac- 
ter will  not  prevent  its  transfer  to  an  assignee  subject,  of  course, 
to  all  defenses  which  would  have  been  available  in  the  hands  of 


'=  Puffer  V.  Welch,  144  Wis.  506, 
129  N.  W.  525,  Ann.  Cas.  1912A, 
1120. 

Tabler  v.  Sheffield  Land  &c.  Co., 
79  Ala.  2>n,  58  Am.  Rep.  593;  Def- 
fenbaugh  v.  Foster,  40  Ind.  382; 
Andrew  v.  Meyerdirck,  87  Md.  511, 
40  Atl.  173;  Wakefield  v.  American 
Surety  Co.,  209  Mass.  173,  95  N.  E. 
350  (contract  for  the  construction 
of  a  sewer  which  contained  a  pro- 
vision that  no  portion  of  the  work 
should  be  assigned  without  the  pre- 
vious assent  of  the  board  of  sewer 
commissioners)  ;  Omaha  v.  Stand- 
ard Oil  Co.,  55  Nebr.  ZZ1 ,  75  N.  W. 
859.  But  compare  Board  Trustees 
School  Dist.  No.  1  V.  Whalen,  17 
Mont.  1,  41  Pac.  849;  and  see,  con- 
tra. In  re  Turcan,  40  Ch.  Div.  5,  58 
L.  J.  Ch.  101,  59  L.  T.  (N.  S.)  712, 
37  W.  R.  70;  Grigg  v.  Landis,  21  N. 
J.  Eq.  494;  Manchester  v.  Kendall, 
103  N.  Y.  638;  Brewster  v.  Hornells- 
ville,  35  App.  Div.  (N.  Y.)  161,  54 
N.  Y.  S.  904;  Hackett  v.  Campbell, 
10  App.  Div.  (N.  Y.)  523,  42  N.  Y. 
S.  47,  affd.  159  N.  Y.  537,  53  N.  E. 
1125.     "One  who  accepts  an  assign- 


ment of  a  contract,  which  by  express 
terms  is  made  nonassignable,  ac- 
quires only  a  cause  of  action  against 
the  assignor."  Bonds-Foster  Lum- 
ber Co.  V.  Northern  Pac.  R.  Co.,  53 
Wash.  302,  101  Pac.  877.  The  at- 
tempted assignee  cannot  maintain  an 
action  thereon.  Barringer  v.  Bes 
Line  Construction  Co.,  2Z  Okla.  131, 
99  Pac.  775,  21  L.  R.  A.  597n  (time 
check). 

"  Lockerby  v.  Amon,  64  Wash.  24, 
116  Pac.  463,  35  L.  R.  A.  (N.  S.) 
1064  and  note.  See  also,  Mont- 
gomery V.  De  Picot,  153  Cal.  509,  96 
Pac.  305,  126  Am.  St.  84;  Andrew 
V.  Meyerdirck,  87  Md.  511,  40  Atl. 
173.  Compare  the  foregoing  cases 
with  Cheney  v.  Bilby,  74  Fed.  52,  20 
C.  C.  A.  291.  Z(i  U.  S.  App.  720; 
Johnson  v.  Eklund,  72  Minn.  195,  75 
N.  W.  14;  Wagner  v.  Cheney,  16 
Nebr.  202,  20  N.  W  222.  Such  a 
provision  may  be  waived.  Cheney  v. 
Bilby,  74  Fed.  52,  20  C.  C.  A.  291, 
36  U.  S.  App.  720;  Camp  v.  Wig- 
gins, n  Iowa  643.  34  N.  W.  461 ;  Ma- 
day  v.  Roth,  160  Mich.  289,  125  N. 
W.  13,  136  Am.  St.  441. 


705 


ASSIGNMENTS. 


1438 


the  assignor.""  And  an  assignment  may  be  valid  as  between  the 
immediate  parties  thereto  even  though  not  binding  upon  the  ven- 
dor.^" A  provision  against  assignment  in  a  contract  may  be 
waived  by  the  parties  thereto."^ 

§  1438.  Assignment  may  be  forbidden  by  statute. — The  as- 
signment of  certain  contracts  may  also  be  specitically  forbidden 
by  statutory  enactment  except  on  prescribed  conditions.  Thus  an 
act  passed  to  prevent  fraud  on  the  treasury  of  the  United  States 
provides  that  claims  against  the  United  States  cannot  be  assigned 
until  the  allowance  of  the  claim  and  the  issuance  of  the  warrant 
therefor."^  These  sections  make  absolutely  null  and  void  all 
voluntary  assignments  of  whatsoever  kind  or  nature,  of  unal- 
lowed claims  against  the  government."^  These  sections  have 
been  held  not  to  apply  to  assignments  by  a  proceeding  in  bank- 
ruptcy, voluntary  assignments  by  debtors  of  all  their  estate  and 
the  passing  of  claims  by  operation  of  law  to  executors  and  admin- 
istrators, legatees  and  the  like.*'°    Statutes  against  the  assignment 


"Thomassen  v.  De  Gey,  133  Iowa 
278,  110  N.  W.  581,  119  Am.  St.  605. 

'"  SprouU  V.  Miles,  82  Ark.  455.  102 
S.  W.  204.  See  also,  Montgomery  v. 
De  Picot,  153  Cal.  509,  96  Pac.  305, 
126  Am.  St.  84,  holding  that  vendor 
may  be  estopped  to  deny  the  con- 
tract is  not  assignable.  See  further 
on  this  subject  post,  §  1448. 

"Cheney  v.  Bilby,  74  Fed.  ^2,  20 
C.  C.  A.  291,  36  U.  S.  App.  720; 
Camp  V.  Wiggins,  72  Iowa  643,  34 
N.  W.  461;  Pulaski  Stave  Co.  v. 
Miller's  Creek  Lumber  Co.  (Ky.), 
128  S.  W.  96;  Maday  v.  Roth,  160 
Mich.  289,  125  N.  W.  13,  136  Am.  St. 
441 ;  Brewster  v.  Hornellsville,  35 
App.  Div.  (N.  Y.)  161,  54  N.  Y.  S. 
904.  See  also,  Wakefield  v.  Amer- 
ican Surety  Co.,  209  Mass.  173,  95 
N.  E.  350.  in  which  the  evidence  was 
held    insufficient    to    show    a    waiver. 

"Revised  Statutes  of  United 
States  (1878),  §§  3477,  Z7Z7.  See 
also.  Cote  Case,  3  Ct.  CI.  (U.  S.) 
64;  Cooper's  Case,  1  Ct.  CI.  (U.  S.) 
85;  Sines's  Case,  1  Ct.  CI.  (U.  S.)  12; 
St.  Paul  &c.  R.  Co.  V.  United  States, 
112  U.  S.  732,  28  L.  ed.  861,  5  Sup. 
Ct.  366. 

*»Emmons    v.    United    States,    189 

45 — Contracts,  Vol.  2 


Fed.  414;  Spofford  v.  Kirk,  97  U.  S. 
484,  24  L.  ed.  1032;  National  Bank 
of  Commerce  v.  Downie,  218  U.  S. 
345,  54  L.  ed.  1065,  31  Sup.  Ct.  89. 
Compare  the  foregoing  with  the  fol- 
lowing, Dulaney  v.  Scudder,  94  Fed. 
6,  36  C.  C.  A.  52;  Jernegan  v.  Os- 
born,  155  Mass.  207,  29  N.  E.  520; 
Fewell  V.  American  Surety  Co.,  80 
Miss.  782,  28  So.  755,  92  Am.  St. 
625;  York  v.  Conde,  147  N.  Y.  486, 
42  N.  E.  193,  which  holds  that  these 
statutes  were  enacted  for  the  pro- 
tection of  the  government  and  not 
the  claimant,  and  that  if  the  govern- 
ment chooses  to  recognize  the  as- 
signment neither  the  claimant  nor 
any  one  else  can  complain.  Freed- 
man's  Sav.  &  Trust  Co.  v.  Shepherd, 
127  U.  S.  494,  32  L.  ed.  163,  8  Sup. 
Ct.  1250;  Hobbs  v.  McLean,  117  U. 
S.  567,  29  L.  ed.  940,  6  Sup.  Ct.  870; 
Goodman  v.  Niblack,  102  U.  S.  556, 
26  L.  ed.  229;  Lopez  v.  United  States, 
24  Ct.  CI.  (U.  S.)  84,  2  L.  R.  A. 
571. 

"^  National  Bank  of  Commerce  v. 
Downie,  218  U.  S.  345,  54  L.  ed.  1065. 
31  Sup.  Ct.  89;  Goodman  v.  Niblack, 
102  U.  S.  556,  26  L.  ed.  229;  Erwin 
v.    United    States,   97   U.    S.   392,   24 


§    1439  CONTRACTS.  706 

of  claims  to  a  citizen  of  another  state  in  order  to  evade  the  exemp- 
tion law  of  the  state  passing  the  act  have  been  upheld.®^  A  stat- 
utory provision  of  this  character  may  be  rendered  effective  by 
making  the  assignment  a  criminal  offense/"  or  by  rendering  the 
assignor  liable  for  the  ainount  collected  by  the  foreign  assignee."^ 

§  1439.    Assignment  of  liabilities  by  act  of  parties. — When 

the  personal  financial  responsibility  of  one  to  whom  credit  is 
given,  was  the  distinctive  feature  of  the  contract  and  appeared  to 
be  the  material  inducement  to  it,  then,  under  the  general  rule,  the 
one  to  whom  credit  is  given  cannot  assign  the  agreement  without 
the  consent  of  the  other  party  so  that  the  latter  can  be  compelled 
to  accept  the  credit  of  the  assignee  since  the  basis  upon  which  the 
credit  was  extended  rested  on  the  confidence  which  the  creditor 
had  in  the  debtor.*'*  It  is  so  held  for  the  reason  that  every  one 
has  a  right  to  select  and  determine  with  whom  he  will  contract 
and  cannot  have  another  person  thrust  upon  him  without  his  con- 
sent. He  has  a  right  to  the  benefit  which  he  anticipated  from  the 
character,  credit  and  substance  of  the  party  with  whom  he  con- 
tracted."^  On  the  same  principle  a  contract  for  personal  services 
cannot  be  assigned  so  that  the  assignee  may  command  the  labor  of 
one  who  has  never  agreed  to  serve  him.*'®  A  party  who,  with  no 
interest  to  protect,  voluntarily  and  without  request  pays  the  debt 
of  another  with  no  understanding  at  the  time  that  an  assignment 

L.  ed.  1065,  14  Ct.  CI.  (U.  S.)   577;  2   B.  &  Ad.  303,  22  E.   C.   L.   132; 

Howes   &   Co.    V.    United    States,  24  Montgomery   v.    De    Picot,    153    Cal. 

Ct.  CI.  (U.  S.)  170,  5  L.  R.  A.  66.  509,   96   Pac.   305,    126   Am.   St.   84; 

"Sweeny   v.    Hunter,    145    Pa.    St.  Parsons  v.   Woodward,   22   N.  J.   L. 

363,   22   Atl.   653,    14   L,    R.    A.   594.  196;   Arkansas   Valley   Smelting  Co., 

See    also,    Bishop    v.    Middleton,    43  v.   Belden   Min.   Co.,    127   U.   S.  379, 

Nebr.  10,  61  N.  W.  129,  26  L.  R.  A.  32  L.  ed.  246,  8  Sup.  Ct.  1308.     See 

445;  Singer  Mfg.  Co.  v.  Fleming,  39  also,    Winchester    v.    Davis     Pyrites 

Nebr.  679,  58  N.  W.  226,  23  L.  R.  A.  Co.,  67  Fed.  45,  14  C.  C.  A.  300,  28 

210,  42   Am.   St.   613;   Gordon   Bros.  U.  S.  App.  353. 

V.   Wageman,  11   Nebr.    185,    108   N.        *"  Montgomery    v.    De    Picot,    153 

W.   1067.  Cal.   509,  96   Pac.   305,    126  Am.    St. 

^See    State   v.    Dittmer,    120    Ind.  84;  Wooster  v.  Crane  &  Co.,  IZ  N. 

54,  388,  22  N.  E.  88,  22  N.   E.  299.  J.    Eq.    22,    66   Atl.    1093;    Arkansas 

•^Bishop    V.    Middleton,    43    Nebr.  Valley  Smelting  Co.  v.   Belden   Min. 

10.  61  N.  W.  129,  26  L.  R.  A.  445;  Co.,    127   U.   S.   379,  32   L.   ed.  246, 

O'Connor   v.   Walter,   Zl   Nebr.   267,  8    Sup.    Ct.    1308.      See     also,     ante, 

55  N.  W.  867,  23   L.  R.  A.  650,  40  §  1433  et  seq. 
Am.  St.  486.  ''Board     of     Education     v.     State 

"British  Waggon  Co.  v.  Lea,  5  Q.  Board  of  Education,  81  N.  J.  L.  211, 

B.  Div.  149;  Robson  v.  Drummond,  81   Atl.   163. 


707  ASSIGNMENTS.  §    I44O 

is  contemplated,  cannot  subsequently  secure  a  formal  assignment 
of  the  claim  and  enforce  collection  from  the  debtor." 

§  1440.  Assignment  of  rights  by  acts  of  parties. — The 
rights  or  benefits  of  a  contract,  however,  which  are  unconnected 
with  liabilities  may  be  assigned  or  transferred  without  the  other 
party's  consent.  This,  generally  speaking,  includes  anything 
that  directly  or  indirectly  involves  a  right  of  property."^  Thus, 
one  may  be  entitled  to  transfer  whatever  interest  he  had  in  a  con- 
tract up  to  the  time  of  the  assignment  when  he  could  not  assign 
the  contract  proper.*"*  But  while  the  benefit  of  the  contract  may 
be  assigned,  the  assignor  cannot  put  the  assignee  in  a  better  posi- 
tion than  he  himself  sustains.  The  assignee  takes  subject  to  all 
defenses  which  would  have  been  available  in  the  hands  of  the  as- 
signor.^" 

§  1441.  Form  and  elements  of  assignments. — As  between 
the  assignor  or  assignee,  no  special  form  of  words  is  necessary  to 
make  an  assignment  in  the  absence  of  any  statutory  enactment 
which  restricts  the  assignor's  rights,  or  in  the  absence  of  restric- 
tions placed  by  the  parties  themselves  on  the  manner  in  which  the 
assignment  must  be  made.''^     Where  there  is   an  intention  to 

"  Cape  Gera  dean  Bell  Tel.  Co.  v.  fidence  cannot  be  assigned.    See  ante, 

Hamil's    Estate,    153    Mo.    App.   404,  §   1433  et  seq. 

134  S.  W.  1103.  "'Wooster  v.   Crane  &   Co.,  li  N. 

"'La   Rue    v.    Groezinger,    84    Cal.  J.    Eq.    22,    66    Atl.    1093.      The    ac- 

281,    24    Pac.    42,    18    Am.    St.    179;  crued     cause     of     action     may     be 

Louisville,    N.    A.    &    C.    R.    Co.    v.  assigned.     H.   C.   Brown   v.   Jno.    P. 

Goodbar,    88    Ind.    213;    Mulhall    v.  Sharkey   Co.,  58   Ore.  480,   115   Pac. 

Quinn,   1  Gray   (Mass.)   105,  61  Am.  156.      "An     assignment     of     moneys 

Dec.  414;  Dayton  v.  Fargo,  45  Mich,  due  or  to  become  due  is  not  an  as- 

153,  7  N.  W.  758;  Up  River  Ice  Co.  signment  of  the  contract."     National 

V.   Denier,   114  Mich.  296,  72  N.  W.  Surety  Co.  v.  Maag,  43  Ind.  App.  16, 

157,    68    Am.    St.    480;    Harbord    v.  86   N.    E.   862.     To    same   effect,    In 

Cooper,  43  Minn.  466,  45  N.  W.  860;  re  Wright,  157  Fed  544.  85  C.  C.  A. 

Fleekenstein    Bros.    Co.    v.    Fleeken-  206,  18  L.  R.  A.  (N.  S.)  193n. 

stein    (N.    J.),    53    Atl.    1043;    Fran-  '"Tolhurst   v.    Associated    Portland 

Cisco  V.  Smith,  143  N.  Y.  488,  38  N.  Cement    Mfgs..    1901.    2    K.    B.    811, 

E.   980;    Grant    v.    Ludlow's    .-^dmr.,  1903,   A.   C   414;    Thomassen   v.    De 

8  Ohio  St.   1;   Burkett  v.  Moses,   11  Goey,  133  Iowa  278,   110  N.  W.  581, 

Rich.   L.    (S.    Car.)    432.     See   ante,  119  Am.  St.  605.    See  post.  §  1457. 

§  1433  et  seq.     It  must,  of  course,  be  "  Galbreath    v.    Wallrich,    45    Colo, 

borne   in   mind   that   executory   con-  537,    102    Pac.    1085     (contract    held 

tracts    for   the   performance   of   per-  sufficient  as  an  assignment  of  a  con- 

sonal     services     or     other    contracts  tract     to     furnish     railroad     ties) ; 

which  involve  personal  trust  or  con-  Southern  Mutual  Life  Ins.  Assn.  v. 


b-  1 441 


CONTRACTS. 


708 


assign  on  the  one  side,  and  an  assent  to  receive  on  the  other,  it 
will  operate  as  an  equitable  assignment  of  the  subject-matter  of 
transfer  if  sustained  by  a  sufficient  consideration.'^-  In  the  ab- 
sence of  any  statutory  provision  requiring  it  the  assignment  need 


Durdin,  132  Ga.  495,  64  S.  E.  264, 
131  Am.  St.  210;  McDaniel  v.  Max- 
well, 21  Ore.  202,  27  Pac.  952,  28 
Am.  St.  740.  In  re  Fett's  Estate,  39 
Pa.  Super.  Ct.  246;  McCleery  v. 
Stoup,  2,2  Pa.  Super.  Ct.  42.  "If  there 
be  any  proposition  settled  in  our 
law,  it  is  to  the  effect  that  no  par- 
ticular form  of  words  is  necessary 
to  the  assignment  of  an  account  or 
obligation.  Any  act  showing  an  in- 
tention to  transfer  the  party's  in- 
terest for  that  purpose  is  sufficient." 
Wheless  v.  Meyer  &  Schmid  Grocer 
Co.,  140  Mo.  App.  572,  120  S.  W. 
708.  It  has  been  held  that  in  the 
absence  of  a  statute,  a  mere  in- 
dorsement upon  an  instrument  not 
negotiable  is  not  sufficient  to_  oper- 
ate as  an  assignment  of  the  instru- 
ment but  this  rule  may  be  changed 
by  statute.  Larson  v.  Glos,  235  111. 
584,  85  N.  E.  926.  Whether  the 
transaction  operated  as  payrnent  or 
as  an  assignment  held  a  question  for 
the  jury.  Barry  v.  Curley,  202 
Mass.  42,  88  N.  E.  437. 

"Wood  V.  Casserleigh,  30  Colo. 
287,  71  Pac.  360,  97  Am.  St.  138; 
Colehour  v.  Bass,  143  111.  App. 
530;  Gray  v.  Bever,  122  111.  App.  1; 
Metcalfe  v.  Kaincaid,  87  Iowa  443, 
54  N.  W.  867,  43  Am.  St.  391 ;  Whe- 
less V.  Mever  &c.  Grocer  Co.,  140 
Mo.  App.  572,  120  S.  W.  708;  Levins 
V.  Stark,  57  Ore.  189,  110  Pac.  980. 
There  must,  however,  be  enough  to 
show  an  intention  to  assign  as  dis- 
tinguished from  a  mere  offer  to  do 
so.  E.  Strickland  &  Co.  v.  Lesesne, 
160  Ala.  213,  49  So.  233.  The  party 
to  whom  the  assignment  is  directed 
is  presumed  to  accept  it.  Randolph 
Bank  v.  Armstrong,  11  Iowa  515. 
See  also,  Townson  v.  Tickell,  3  B. 
&  Aid.  31,  5  E.  C.  L.  28;  Van  Bus- 
kirk  V.  Warren,  4  Abb.  Dec.  (N.  Y.) 
457;  Moir  v.  Brown,  14  Barb.  (N. 
Y.)  39;  Brooks  v.  Marbury,  11  Wheat 
(U.  S.)  78,  6  L.  ed.  423.  "To  con- 
stitute an  equitable  assignment  good 


as  between  the  assignor  and  assign- 
ee, it  is  not  essential  that  the  debt 
should  have  been  earned  or  the  fund 
be  in  esse  at  the  time  of  the  assign- 
ment, or  that  notice  be  given  the 
present  or  future  holder  of  the  fund. 
The  intent  of  the  parties  to  create 
the  lien  being  apparent,  it  is  suffi- 
cient that  there  be  a  reasonable  ex- 
pectancy that  the  debt  will  be  fully 
earned  and  the  fund  come  into  ex- 
istence." Barnes  v.  Shattuck,  13 
Ariz.  338,  114  Pac.  952.  It  is  not 
always  necessary  to  put  the  assignee 
in  the  possession  of  the  thing  or 
right  assigned,  especially  when  the 
assignor  owns  no  interest  in  the 
physical  property  itself  (Belden  v. 
Farmers'  &c.  Bank,  16  Cal.  App. 
452,  118  Pac.  449),  or  when  the 
nature  of  the  property  is  such  that 
it  cannot  be  physically  transferred. 
In  re  McCawley,  158  Fed.  322.  One 
Hill  entered  into  a  contract  with  the 
plaintiff  brick  company  which  the 
defendant  gas  company  adopted  and 
acted  upon.  It  was  held  that  Hill's 
agreement  became  the  contract  of 
the  gas  company.  Chanute  Brick 
&c.  Co.  v.  Gas  Belt  Fuel  Co.,  82 
Kans.  752,  109  Pac.  398.  An  order  by 
which  the  clerk  of  a  sale  is  directed 
to  turn  certain  of  the  proceeds  to  a 
designated  party  does  not  amount  to 
either  a  legal  or  equitable  assign- 
ment of  such  funds  and  may  be  re- 
voked at  any  time  prior  to  compli- 
ance with  the  order.  Loughlin  v. 
Larson   (S.  D.),   131  N.  W.     304. 

"Heath  v.  Hall,  2  Rose  271,  4 
Taunt.  326,  13  Rev.  Rep.  610;  Lowery 
V.  Peterson,  75  Ala.  109;  Wiggins  v. 
McDonald,  18  Cal.  126;  Perkins  v. 
Peterson,  2  Colo.  App.  242,  29  Pac. 
1135;  Mason  v.  Chicago  Title  & 
Trust  Co.,  77  111.  App.  19;  Leslie  E. 
Kceley  Co.  v.  Hargreaves,  236  III. 
316,  86  N.  E.  132;  Ross  v.  Schneider, 
30  Ind.  423;  Slaughter  v.  Foust,  4 
Blackf.  (Ind.)  379;  McAleer  v.  Mc- 
Namara,    140   Iowa    112,    117   N.   W. 


709 


ASSIGXMEXTS. 


§    1442 


§  1442.  Informal  assignments. — Written  assignments  very 
informally  worded  have  been  upheld.  Thus,  a  slip  attached  to  a 
bank  book  on  which  were  written  these  words,  "Ed.,  this  is  for 
you.  Lida,"  has  been  held  sufficient  to  sustain  an  assignment  of 
the  funds  evidenced  by  the  bank  book."  A  life  insurance  policy 
may  also  be  assigned  by  informal  words.'^     The  statutes  of  some 


1122;  Tone  v.  Shankland,  110  Iowa 
525,  81  N.  W.  789;  Seymour  v.  Ault- 
man,  109  Iowa  297,  80  N.  W.  401; 
Preston  v.  Peterson,  107  Iowa  244, 
n  N.  W.  864;  Clark  v.  Wiss,  34 
Kans.  553,  9  Pac.  281;  McCubbin  v. 
Atchison,  12  Kans.  166;  Newby  v. 
Hill,  2  Mete.  (Ky.)  530;  Edwards 
V.  Succession  of  Daley,  14  La.  Ann. 
384;  Delassize's  Succession,  8  Rob. 
(La.)  259;  White  v.  Kilgore,  11 
Maine  571,  1  Atl.  739;  Sprague  v. 
Frankfort,  60  Maine  253;  Simpson 
V.  Bibber,  59  Maine  196 ;  Garnsey  v. 
Gardner,  49  Maine  167;  Porter  v. 
Bullard,  26  Maine  448;  Spiker  v. 
Nydegger,  30  Md.  315;  Crane  v. 
Gough,  4  Md.  316;  Baden  v.  State,  1 
Gill  (Md.)   165;  Mitchell  v.  ^litchell, 

1  Gill  (Md.)  66;  Onion  v.  Paul,  1 
Har.  &  J.  (Md.)  114;  Smith  v.  Penn- 
American  Plate  Glass  Co.,  Ill  Md. 
696,  n  Atl.  264;  Macomber  v.  Doane, 

2  Allen  (Mass.)  541;  Currier  v. 
Howard,  14  Gray  (Mass.)  511;  Gro- 
ver  V.  Grover,  24  Pick.  (Mass.)  261, 
35  Am.  Dec.  319;  Dunn  v.  Snell.  15 
Mass.  481 ;  Jones  v.  Witter,  13  Alass. 
304;  Quiner  v.  Marblehead  Social 
Ins.  Co.,  10  ]\Iass.  476;  Crocker  v. 
Whitney,  10  Mass.  316;  Donovan  v. 
Halsey  Fire  Engine  Co.,  58  Mich. 
38,  24  N.  W.  819;  Draper  v.  Fletcher, 
26  ?ilich.  154;  Hurlev  v.  Bendel,  67 
Minn.  41.  69  N.  W.  477;  Pass  v.  Mc- 
Rea,  36  :\Iiss.  143;  Boyle  v.  Qark,  61 
Mo.  App.  473;  Johnson  County  v. 
Bryson,  27  Mo.  App.  341 ;  Oppen- 
heimer  v.  First  Nat.  Bank,  20  ^lont. 
192,  50  Pac.  419;  Curtis  v.  Zutavern, 
67  Nebr.  183,  93  N.  W.  400;  Gage 
V.  Dow,  59  N.  H.  383;  Jordan  v.  Gil- 
len,  44  N.  H.  424;  Brewer  v.  Frank- 
lin Mills,  42  N.  H.  292;  Thompson 
V.  Emery.  27  N.  H.  269;  Hutchings 
V.  Low,  13  N.  J.  L.  246;  Lanigan's 
Admr.  v.  Bradley  &  Currier  Co..  50 
N.  J.  Eq.  201,  24  Atl.  505 ;  New  Jer- 
sey Produce  Co.  v.  Gluck,  79  N.  J. 
L.  115,  74  Atl.  443;  Hooker  v.  Eagle 


Bank,  30  N.  Y.  83,  86  Am.  Dec.  351 ; 
Risley  v.  Phenix  Bank,  83  N.  Y. 
318,  38  Am.  Rep.  421,  afTd.  Ill  U.  S. 
125,  28  L.  ed.  374,  4  Sup.  Ct.  322; 
Selleck  v.  Manhattan  Fire  Alarm 
Co.,  117  N.  Y.  S.  964  (reassignment 
by  parol)  ;  Haller  v.  Ingraham,  101 
N.  Y.  S.  789;  Ponton  v.  Griffin,  72 
N.  Car.  362 ;  Roberts  v.  First  Nat. 
Bank,  8  N.  Dak.  474,  79  N.  W.  993; 
Craft  V.  Webster,  4  Rawle  (Pa.) 
242 ;  Miller  v.  Newell,  20  S.  Car.  123, 
47  Am.  Rep.  833;  Howell  v.  Bulkley, 
1  Nott  &  McC.  (S.  Car.)  249;  Perry- 
clear  V.  Jacobs,  2  Hill  Eq.  (  S.  Car.) 
504,  Riley  Eq.  (S.  Car.)  47;  Cleve- 
land V.  Martin,  2  Head.  (Tenn.) 
128;  Graham  v.  IMcCampbell,  Meigs 
(Tenn.)  52,  ZZ  Am.  Dec.  126;  Clark 
V.  Gillespie,  70  Tex.  513.  8  S.  W. 
121;  Ross  V.  Smith,  19  Tex.  171,  70 
Am.  Dec.  Z21  \  Rollison  v.  Hope,  18 
Tex.  446;  Singletary  v.  Goeman 
(Tex.  Civ.  App.),  123  S.  W.  436; 
Hutchins  v.  Watts,  35  Vt.  360;  Wilt 
V.  Huffman.  46  W.  Va.  473,  II  S.  E. 
279;  Kenneweg  v.  Schilanskv,  45  W. 
Va.  521.  31  S.  E.  949;  Bentley  v. 
Standard  Fire  Ins.  Co.,  40  W.  Va. 
729,  23  S.  E.  584;  Scraggs  v.  Hill,  'S7 
W.  Va.  706.  17  S.  E.  185;  Arpin  v. 
Burch,  68  Wis.  619,  32  N.  W.  681; 
Farmers'  &  Drovers'  Sav.  Bank  v. 
Kansas  Citv  Pub.  Co.,  3  Dill.  (U.  S.) 
287,  Fed.  Cas.  No.  4652.  "No  par- 
ticular form  is  necessary  to  consti- 
tute an  assignment  of  a  debt.  If  the 
intent  of  the  party  to  effect  an  as- 
signment be  clearly  established,  that 
is  sufficient.  Neither  is  it  necessary 
that  the  assignment  be  in  writing. 
If  in  writing,  it  may  be  in  the  form 
of  an  agreement,  and  order,  or  of 
any  other  instrument  which  the  par- 
ties may  use  for  that  purpose.'_| 
^loore  V.  Lowrev,  25  Iowa  Zid,  95 
Am.  Dec.  790. 

"Stacks  V.  Butcn.  141  Wis.  235, 
124  N.  W.  403.  135  Am.  St.  39. 

'^  Southern   ISIutual  Life  Insurance 


§    144^  CONTRACTS.  7IO 

states,  however,  provide  that  certain  kinds  of  contracts  must  be 
assigned  with  prescribed  formalities/*'  In  some  states  assign- 
ments to  be  valid  at  law  must  be  in  writing.''  However,  when  a 
statutory  mode  of  assignment  is  provided,  it  is  cumulative  in  the 
absence  of  express  words  inhibiting  other  modes  of  assignment.'® 
But  when  the  statute  is  mandatory  instead  of  its  being  merely 
directory,  its  provisions  must  be  complied  with.  Assignments 
may,  by  statutory  enactment,  be  required  to  be  in  writing.'"  Other 
statutes  provide  that  certain  designated  assignments  must  be  re- 
corded.®" So  when  a  statute  provides  that  a  purchaser's  certifi- 
cate at  a  judicial  sale  may  be  assigned  by  indorsement  on  the  cer- 
tificate, legal  title  is  not  invested  to  such  certificate  by  a  blank  as- 
sigment  on  a  separate  sheet  of  paper.^^  In  the  absence  of  any 
statutory  restriction  or  an  agreement  between  the  party  to  the 
contrary,  a  valid  assignment  may  be  accomplished  by  delivery 
only.^^  Neither  is  it  necessary  that  the  assignment  should  'be 
made  with  the  same  solemnity  that  characterizes  the  execution  of 
the  obligation  itself.®^  Thus  a  sealed  contract  may  be  assigned 
by  parol  so  as  to  vest  the  equitable  title  thereto  In  the  assignee.*** 

Assn.  V.  Durdin,   132  Ga.  495,  64  S.  22  Atl.  171.    In  the  above  a  recorded 

E.  264,  131  Am.  St.  210.  assignment  was  given  preference  over 

'^See    Kentucky    Refining    Co.    v.  an    order    for   wages    due    earlier    in 

Globe  Refining  Co.,   104  Ky.   559,  20  date  but  not  accepted  in  writing  until 

Ky.  L.  778,  47   S.  W.  602,  42  L.  R.  after  the  assignment  had  been   duly 

A.  353,  84  Am.  St.  468.  recorded.       Gilman     v.     Inman,     85 

"  Planters'  Bank  v.   Prater,  64  Ga.  Maine  105,  26  Atl.  1049.    In  this  case 

609;    Turk    v.    Cook,    63    Ga.    681;  the  assignment  was   recorded  at  the 

Swann  Davis   Co.  v.   Stanton,  7  Ga.  domicil   of   the   assignor.     The   stat- 

App.  668,  67  S.  E.  888.  ute  provided  that  the  assignment  was 

^*  Gardner  v.   Mobile  &   N.   W.    R.  to  be  recorded  at  the  place  in  which 

Co.,  102  Ala.  635,  15  So.  271,  48  Am.  the  assignor   "was   commorant   while 

St.  84.     See  also,  Kelley  v.  Love,  35  earning  the  wages."  In  this  case  the 

Ind.  106;  Allen  v.  Newberry,  8  Iowa  assignor     was     a    river     driver.      It 

65.  was   held   that    the   assignment    need 

™  Hartford  Fire  Ins.  Co.  v.  Amos,  not  be  recorded  in  the  different  towns 

98  Ga.  533,  25  S.  E.  575.    The  above  through    which    the   assignor    passed 

case  lays  down  the  rule  that  if  the  while  earning  wages.     See  also,  San 

assignment    is    not    in    writing,    the  Antonio  &c.  R.  Co.  v.  Seehorn  (Tex. 

assignee  cannot  bring  an  action  there-  Civ.   App.),   127  S.  W.  246. 

on  in  his  own  name,  but  must  neces-  "  Chytraus   v.    Smith,    141    111.   231, 

sarily  use  the  name  of  the  assignor  30  N.  E.  450. 

as  suing  for  his  use.     Foster  v.  Sut-  ^'Littlefield    v.     Smith,     17    Maine 

live,  110  Ga.  297,  34  S.  E.  1037.  327;   Clark  v.   Rogers,  2  Maine   143. 

**  Rachels  &  Robinson  v.  Doniphan  See  also.  Pease  v.  Rush.  2  Minn.  107. 

Lumber  Co.,  98  Ark.  529,  136  S.  W.  ^Dennis    v.    Twitchell,    10    Mete. 

^58    (assignment   to   attorney   of   in-  (Mass.)    180. 

terest  in  a  client's  cause  of  action);  "Barrett   v.    Hinckley,   124   111.   32, 

Peabody  v.  Lewiston,  83  Maine  286,  14   N.   E.  863,   7   Am.   St.   331.     See 


711 


ASSIGNMENTS. 


§    1443 


An  assignment  may,  however,  be  unenforcible  because  of  its 
vagueness  and  indefiniteness.^'  Thus  an  agreement  by  a  party 
to  pay  his  attorney  a  reasonable  compensation  for  services  ren- 
dered by  him  out  of  the  proceeds  of  the  suit  has  been  held  unen- 
forcible and  inoi)erative  as  an  assignment  because  of  its  uncer- 
tainty.^" 

§  1443.  Partial  assignments. — It  is  well  settled  that  at  com- 
mon law  a  chose  in  action  cannot  be  assigned  in  part,  so  as  to 
enable  the  assignee  of  such  part  to  bring  suit  upon  it  without  the 
consent  of  the  party  liable."  Thus,  one  cannot  assign  a  portion 
of  a  claim  for  wages,  the  entire  sum  of  which  is  due  and  payable 
at  one  time,  so  as  to  give  the  assignee  the  right  to  sue  the  debtor  in 
the  absence  of  any  assent  to  or  ratification  of  the  assignment  by 
the  debtor.^^  The  partial  assignment  of  one's  interest  in  a  prom- 
issory note  is  not  binding  on  the  maker  of  the  note,  unless  ac- 
cepted by  the  latter,  where  there  is  no  suit  in  equity  to  which  all 
persons  interested  are  parties.®*'     The  same  has  been  held  true  of 


also,  Fruhauf  v.  Bendheim,  127  N. 
Y.  587,  28  N.  E.  417.  It  has  been 
held  that  a  bond  may  be  assigned  by 
parol.  Hoffman  v.  Smith,  94  Iowa 
495.  63  N.  W.  182. 

"Raines's  Case,  11  Ct.  CI.  (U.  S.) 
648. 

"Story  V.  Hull,  143  111.  506,  32 
N.  E.  265.  Compare,  however,  with 
Milmo  National  Bank  v.  Convery,  8 
Tex.  Civ.  App.  181.  27  S.  W.  828; 
Bower  v.  Hadden  Blue  Stone  Co.,  30 
N.  J.  Eq.  171. 

"  Kansas  City,  M.  &  B.  R.  v.  Rob- 
ertson, 109  Ala.  296.  19  So.  432; 
Grain  v.  Aldrich,  38  Cal.  514,  99  Am. 
Dec.  423:  Rivers  v.  A.  &  C.  Wright 
&  Co.,  117  Ga.  81.  43  S.  E.  499; 
Southern  Printing  Co.  v.  Potter,  133 
Ga.  869.  72  S.  E.  427;  Getchell  v. 
Maney,  69  Maine  442;  Tripp  v. 
Brownell.  12  Cush.  (Mass.)  376;  Gib- 
son v.  Cooke,  20  Pick.  (Mass.)  15 
32  Am.  Dec.  194;  Milroy  v.  Spurr 
Mountain  Iron  Co..  43  Mich.  231.  5 
N.  W.  287;  Dean  v.  St.  Paul  &  D. 
R..  53  Minn.  504.  55  N.  W.  628-; 
Beardslee  v.  Morgner,  73  Mo.  22; 
IMcDaniel  v.  Maxwell.  21  Ore.  202, 
27  Pac.  952,  28  Am.  St.  740; 
Philadelphia's    Appeals,    86    Pa.    St. 


179;  Harris  v.  Campbell,  68  Tex. 
22,  3  S.  W.  243,  2  Am.  St 
467;  Mandeville  v.  Welch,  5  Wheat. 
(U.  S.)  277,  5  L.  ed.  87;  Carter  v. 
Nichols.  58  Vt.  553.  5  Atl.  197;  Sko- 
bis  v.  Ferge,  102  Wis.  122,  78  N.  W. 
426.  However,  under  a  contract  for 
work  which  provides  for  payment  in 
instalments,  it  has  been  held  that 
each  instalment  is  a  separate  demand, 
and  mav  be  assigned.  Adler  v.  Kan- 
sas City,  S.  &  M.  R.  Co.,  92  Mo. 
242,  4  S.  W.  917.  If  the  debtor  re- 
fuses to  recognize  a  partial  assign- 
ment, the  creditor  can  maintain  an 
action  to  recover  the  entire  debt. 
Thiel  V.  John  Week  Lumber  Co. 
137  Wis.  272.  118  N.  W.  802,  20  L. 
R.  A.  (N.  S.)  842,  129  Am.  St.  1064. 
See  also,  Ives  v.  New  Bern  Lum- 
ber Co.,  147  N.  Car.  306,  61  S.  E. 
70. 

^Kansas  Citv  M.  &  B.  R.  Co.  v. 
Robertson,  109' Ala.  296,  19  So.  432; 
Getchell  v.  Manev,  69  Maine  442; 
Sternberg  &  Co.  v.  Lehigh  Valley  R. 
Co.,  78  N.  J.  L.  277,  73  Atl.  39;  Fair- 
grieves  V.  Lehieh  Navigation  Co.,  2 
Phila.  (Pa.)  182;  Carter  v.  Nichols. 
58  Vt.  553.  5  Atl.  197. 

*  Shearer  v.  Shearer,  137  Ga.  51,  72 


s  1444 


CONTRACTS. 


712 


the  partial  assignment  of  a  judgment  without  the  consent  of  the 
judgment  debtor.°°  The  purpose  of  this  rule  is  to  prevent  a  cred- 
itor from  splitting  up  a  single  cause  of  action  so  as  to  subject  his 
debtor  to  several  actions  instead  of  one.°^  The  reason  for  the 
rule  fails,  however,  when  the  partial  assignment  makes  the  as- 
signor and  assignee  co-owners,  and  they  join  in  an  action  to  en- 
force the  entire  claim,  in  which  case  the  suit  may  be  maintained.^^ 
The  debtor  may  also  assent  to  the  partial  assignment,  and  if  he 
does  so  no  one  else  has  the  right  to  object  to  the  assignment  on 
the  ground  that  it  is  partial. °^  Once  having  assented,  neither  the 
debtor,^*  the  assignor,^^  nor  his  creditors""  can  subsequently  raise 
the  question. 

§  1444.  Partial  assignments  in  equity. — The  rule  against 
partial  assignments  only  applies  when  the  assignment  is  sought  to 
be  enforced  at  law.  A  partial  assignment  is  upheld  in  equity  for 
the  reason  that  if  parts  of  a  single  demand  are  assigned  to  differ- 


S.  E.  428;  Miller  v.  Bledsoe,  1  Scam. 
(III.)  530,  32  Am.  Dec.  Z7.  See  also, 
Conover  v.  Earl,  26  Iowa  167 ; 
Hutchinson  v.  Simon,  57  Miss.  628; 
Hughes  V.  Kiddell,  2  Bay  (S.  Car.) 
324;  Lindsay  v.  Price,  Z2>  Tex.  280; 
Frank  v.  Kaigler,  36  Tex.  305. 

""Love  V.  Fairfield,  13  Mo.  300,  SZ 
Am.  Dec.  148;  Loomis  v.  Robinson, 
76  Mo.  488;  Hopkins  v.  Stockdale, 
117  Pa.  St.  365,  11  Atl.  368.  ^  Nor  is 
a  partial  assignment  of  one's  inter- 
est in  a  fund  in  the  hands  of  another, 
binding  on  the  latter,  unless  accepted 
by  him.  Shearer  v.  Shearer,  137  Ga. 
51,  72  S.  E.  428.  See  also,  Petti- 
bone  V.  Thomson,  130  N,  Y.  S.  284. 

"' :\Iandeville  v.  Welch,  5  Wheat. 
(U.  S.)  277,  5  L.  ed.  87;  Rivers  v. 
Wright,  117  Ga.  81,  43  S.  E.  499; 
Gibson  v.  Cooke,  20  Pick.  (Mass.) 
15,  32  Am.  Dec.  194;  Swift  v.  Wa- 
bash R.  Co.,  149  Mo.  App.  526,  131 
S.  W.  124. 

"=  Evans  v.  Land  &  Coal  Co.,  80 
Fed.  433,  25  C.  C.  A.  531;  Shilling 
V.  Mullen,  55  Minn.  122,  56  N.  W. 
586,  43  Am.  St.  475 ;  Whittemore  v. 
Judd  Linseed  &o.  Oil  Co.,  124  N.  Y. 
565,  27  N.  E.  244,  21  Am.  St.  708; 
Ramsey  v.  Johnson,  8  Wyo.  476,  58 
Pac  755,  80  Am.  St.  948. 


"^Methven  v.  Staten  Island  Power 
Co.,  66  Fed.  113,  13  C.  C.  A.  362; 
Manchester  Fire  Assur.  Co.  v.  Glenn, 
13  Ind.  App.  365,  40  N.  E.  926,  41 
N.  E.  847,  55  Am.  St.  225;  Des 
Moines  County  v.  Hinkley,  62  Iowa 
637,  17  N.  W.  915 ;  Lannan  v.  Smith, 
7  Grav  (Mass.)  150;  Grippin  v.  Ben- 
ham,  5  Wash.  589,  32  Pac.  555.  In 
an  action  at  law  it  has  been  held 
that  where  the  parties  had  fought 
out  the  merits  of  the  cases  and  set- 
tled the  amount  due  under  the  con- 
tract, and  the  defendants  alleged  that 
they  were  willing  to  pay  the  money 
if  they  could  safely  do  so,  and  the 
use-plaintiff  conceded  the  right  of 
the  court  to  so  control  the  payment 
of  the  money  as  to  protect  the  de- 
fendant from  the  risk  of  a  subse- 
quent suit,  the  rule  against  partial 
assignments  did  not  apply.  Colum- 
bian Reinforced  Concrete  Co.  v. 
Rose,  187  Fed.  803,  109  C  C  A.  563. 

^St.  Lawrence  &c.  Mfg.  Co.  v. 
Price,  49  W.  Va.  432,  38  S.   E.  526. 

*^  Potter  V.  Northrup  Banking  Co., 
59  Kans.  455,  53   Pac.   520. 

""Burditt  V.  Porter,  63  Vt.  296,  21 
Atl.  955,  25  Am.  St.  763. 


/M 


ASSIGNMENTS. 


§    1444 


ent  persons  the  rights  of  all  the  assignees  can  be  settled  in  one 
suit;  and  in  a  suit  by  one  assignee  not  only  the  debtor  and  as- 
signor, but  all  assignees  or  claimants  to  any  part  of  a  fund,  can 
be  made  parties  to  the  suit,  so  that  one  decree  may  determine  the 
duty  of  the  debtor  to  each  claimant  and  his  rights  and  interests 
be  fully  protected. °^  In  equity  neither  the  debtor,"*  subsequent  as- 
signees,"" nor  attaching  creditors^  can  object  to  a  partial  assign- 
ment.^ Thus  an  order  drawn  upon  the  debtor,  payable  out  of  a 
designated  fund  or  debt  then  due  or  to  become  due,  operates, 
when  delivered  to  the  payee,  as  an  equitable  assignment  or  appro- 
priation of  the  fund  pro  tanto,  and  no  acceptance  by  the  drawee 
is  necessary.^  In  such  case,  however,  in  order  to  render  the  as- 
signment valid  it  must  not  be  couched  merely  in  general  terms, 
but  must  be  drawn  on  a  particular  fund.*  A  bill  of  exchange, 
order  or  check  drawn  generally  and  not  upon  a  designated  fund 
does  not  operate  as  an  assignment  pro  tanto  unless  accepted. ° 


"  In  re  The  Elmbank,  72  Fed.  610 ; 
Dulles  V.  H.  D.  Crippen  Mfg.  Co., 
156  Fed.  706;  Daniels  v.  Meinhard, 
53  Ga.  359;  Warren  v.  Bank,  149  III. 
9.  38  N.  E.  122.  25  L.  R.  A.  746; 
Fordyce  v.  Nelson,  91  Ind.  447;  Des 
Moines  County  v.  Hinkley,  62  Iowa 
637,  17  N.  W.  915:  National  Exch. 
Bank  v.  McLoon,  73  Maine  498,  40 
Am.  Rep.  388;  Cantv  v.  Latternar,  31 
Minn.  239,  17  N.  VV.  385;  Schilling 
V.  Mullen.  55  Minn.  122,  56  N.  W.  586, 
43  Am.  St.  475 ;  Bower  v.  Hadden 
Blue  Stone  Co.,  30  N.  J.  Eq.  171; 
Field  V.  New  York,  6  N.  Y.  179.  57 
Am.  Dec.  435;  Risley  v.  Phenix  Bank, 
83  N.  Y.  318.  38  Am.  Rep.  421.  affd. 
Ill  U.  S.  125,  28  L.  ed.  374,  4  Sup. 
Ct.  322 ;  Chambers  v.  Lancaster,  160 
N.  Y.  342,  54  N.  E.  707;  Dickinson 
V.  Tvson,  125  App.  Div.  (N.  Y.)  735, 
110  'N.  Y.  S.  269;  Etheredge  v. 
Vernov,  74  N.  Car.  800;  McDaniel 
V.  Ma.xwell,  21  Ore.  202,  27  Pac.  952, 
28  Am.  St.  740;  Harris  County  v. 
Campbell,  68  Tex.  22,  3  S.  \V.  243,  2 
Am.  St.  467;  First  Nat.  Bank  v. 
Kimberlands,  16  W.  Va.  555;  Dud- 
ley V.  Barrett.  66  W.  Va.  363,  66  S. 
E.  507.  Contra,  Burnett  v.  Crandall, 
63  Mo.  410;  Gardner  v.  Smith,  5 
Heisk.  (Tenn.)  256.  Some  cases 
hold  that  the  consent  of  the  debtor  is 


necessary  even  in  equity.  Bland  v. 
Robinson  (Mo.  App.),  127  S.  W. 
614;  Mandeville  v.  Welch,  5  Wheat. 
(U.  S.)  277,  5  L.  ed.  87.  See  James 
V.  Newton,  142  Mass.  366,  8  N.  E. 
122,  56  Am.  Rep.  692 ;  Kingsbury  v. 
Burrill,  151  Mass.  199,  24  N.  E.  36. 

"'Pittsburgh  &c.  R.  Co.  v.  Volkert, 
58  Ohio  St.  362,  50  N.  E.  924. 

"^Fairbanks  v.  Sargent,  117  N.  Y. 
320,  22  N.  E.  1039,  6  L.  R.  A.  475. 

'Warreo  v.  Bank,  149  111.  9,  38  N. 
E.  122,  25  L.  R.  A.  746;  Robbins  v. 
Klein,  60  Ohio  St.  199,  54  N.  E.  94; 
McDaniel  v.  Maxwell.  21  Ore.  202, 
27^  Pac.  952,  28  Am.  St.  740. 

"  Even  if  separate  actions  are 
brought  they  may  in  equity  be  con- 
solidated. Averv  v.  Popper,  92  Tex. 
337,  49  S.  W.  219,  50  S.  W.  122,  71 
Am.    St.  849. 

^  :\IcDaniel  v.  Maxwell,  21  Ore.  202, 
27  Pac.  952,  28  Am.  St.  740. 

*  Cashman  v.  Harrison,  90  Cal.  297, 
27  Pac.  283;  Hall  v.  Flanders,  83 
Maine  242,  22  Atl.  158;  Harris  Coun- 
ty V.  Campbell,  68  Tex.  22,  3  S.  W. 
243.  2  Am.  St.  467. 

°  Le  Breton  v.  Stanlev  Contracting 
Co.,  15  Cal  App.  429.  114  Pac.  1028 
(check  never  presented  to  nor  ac- 
cepted by  the  bank  upon  which  it  is 
drawn  does  not  amount  to  an  assign- 


§  1445 


CONTRACTS. 


714 


§  1445.  Notice  of  assignment  as  between  the  assignor  and 
assignee  and  the  party  liable. — As  between  the  assignor  and 
assignee  and  those  standing  in  the  shoes  of  the  assignor,  notice 
to  the  debtor  or  holder  of  the  fund  is  not  necessary  to  complete 
the  assignment.^  It  is  well  settled,  however,  that  the  debtor  or 
person  liable  must  have  notice  of  the  assignment  and  he  will  not 
be  bound  thereby  until  he  has  received  notice.^     And  as  to  inter- 


ment   of   the   amount    called    for    in 
the  check)  ;  John  M.  C.  Marble  Co. 
V.  ^Merchants'  Nat.  Bank  (Cal.  App.), 
115    Pac.    59    (unaccepted    check   not 
an  assignment  of  the   funds   against 
which  it  is  drawn)  ;  Harlan  v.  Glad- 
ding &c.  Co.,  7  Cal.  App.  49,  93  Pac. 
400;   Eastern  Milling  Co.  v.   Eastern 
Milling  &c.   Co.,   146  Fed.   761,  afifd. 
151   Fed.   764;    Bowker  v.   Haight  & 
Freese   Co.,    146   Fed.   257;   Western 
&c.    R.    Co.    V.    Union    Inv.    Co.,    128 
Ga.  74,  57  S.  E.  100 ;  Poland  v.  Love, 
7  Ind.  Ter.  42,  103  S.  W.  759;  Hol- 
brook  V.  Payne,  151  Mass.  383.  24  N. 
E.   210,   21    Am.    St.   456;    Lonier   v. 
State  Sav.  Bank,  149  Mich.  483,   112 
N.  W.  1119;  Bush  v.  Foote,  58  Miss. 
5,  38  Am.  Rep.  310;   Chase  v.  Alex- 
ander, 6  Mo.  App.  505  ;  Brill  v.  Tuttle, 
81  N.  Y.  454,  2n  Am.  St.  515 ;  People  v. 
Remington,    45    Hun    (N.    Y.)    347; 
Marysville   Bank   v.   Windisch-Muhl- 
hauser  Brew.   Co.,  50  Ohio  St.   151 
Croyle  v.  Guelich,  35   Pa.  Super.  Ct 
356;    McBride    v.    American    R.    &c 
Co.  (Tex.  Civ.  App.),  127  S.  W.  229 
Christmas   v.    Russell,    14   Wall.    (U 
S.)  69,  20  L.  ed.  762.    Compare  with 
Vaughan  v.  Farmers'  &c.  Nat.  Bank 
(Tex.  Civ.  App.),  126  S.  W.  690,  and 
Hove   v.    Stanhope    State    Bank,    138 
Iowa  39,   115   N.  W.  476.     See  also, 
Fredrick    v.    Spokane    Grain    Co.,   47 
Wash.  85,  91  Pac.  570.    As  to  the  as- 
signment of  a  certificate  of  deposit, 
see   Philpot  v.   Temple  Banking  Co., 
3  Ga.  App.  742,  60  S.   E.  480._    The 
rule  applies  even  though  the  instru- 
ment   is    not   negotiable.      Shaver    v. 
Western   Union    Tel.    Co.,   57   N.   Y. 
461.     See  also.  Smith  v.  Penn  Ameri- 
can Plate  Glass  Co.,  Ill  Md.  696,  11 
Atl.    264.      But    an    order    or    check 
drawn  against  a  special  fund  or  de- 
posit operates  as  an  equitable  assign- 
ment  of   the    fund.      Elliott   v.    First 
Nat.  Bank   (Tex.  Civ.  App.),  135  S. 


W.  159.  To  same  effect,  see  Cope 
V.  C.  B.  Walton  Co.  (N.  J.  Eq.),  76 
Atl.  1044;  Hall  v.  Jones,  151  N.  Car. 
419,  66  S.  E.  350;  McBride  v. 
American  R.  &c.  Co.  (Tex.  Civ. 
App.),  127  S.  W.  229;  Wamsley  v. 
Ward,  61  W.  Va.  65,  55  S.  E.  998. 
Compare  with  Brady  v.  Ranch  Min- 
ing Co.,  7  Cal.  App.  182,  94  Pac.  85 ; 
Poland  v.  Love,  164  Fed.  186,  91  C. 
C.  A.  466.  As  to  the  liability  of 
the  drawer  of  an  order  payable  in 
chattels  or  out  of  a  particular  fund, 
see  Maynard  v.  Maynard,  105  Maine 
567,  75  Atl.  299.  In  some  jurisdic- 
tions a  check  on  a  bank  is  consid- 
ered as  an  assignment  pro  tanto  of 
the  drawer's  deposit.  Loan  &c.  Sav. 
Bank  v.  Farmers'  &  Merchants' 
Bank,  74  S.  Car.  210,  54  S.  E.  364, 
114  Am.  St.  991;  Southern  Seating 
&c.  Co.  v.  First  Nat.  Bank  (S.  Car.), 
68  S.  E.  962.  See  also.  Smith  v. 
Nelson,  83  S.  Car.  294,  65  S.  E.  261, 
137  Am.  St.  808. 

*  Gorringe  v.  Irwell  India  Rubber 
Works,  34  Ch.  D.  128;  Burn  v.  Car- 
valho,  4  Myl.  &  C.  690;  Bishop  v. 
Holcomb,  10  Conn.  444;  Thayer  v. 
Daniels,  113  Mass.  129;  Wood  v. 
Partridge,  11  Mass.  488;  Marsh  v. 
Carney,  69  N.  H.  236,  45  Atl.  745; 
Cogan  V.  Conover  Mfg.  Co.,  69  N.  J. 
Eq.  809,  64  Atl.  973,  115  Am.  St. 
629;  Kafes  v.  McPherson  (N.  J. 
Eq.),  32  Atl.  710;  Muir  v.  Schenck,  3 
Hill  (N.  Y.)  228,  38  Am.  Dec.  633. 
See  also,  Bank  of  Yolo  v.  Bank  of 
Woodland,  3  Cal.  App.  561,  86  Pac. 
820. 

^  Maple  Leaf  Rubber  Co.  v.  Brodie, 
18  Quebec  Super.  Ct.  352;  Graham 
Paper  Co.  v.  Pembroke,  124  Cal.  117, 
56  Pac.  627,  44  L.  R.  A.  632,  71  Am. 
St.  26.  Compare  the  foregoing  Cali- 
fornia case  with  Morgan  v.  Lowe, 
Ebbets  &  Co.,  5  Cal.  325,  dZ  Am.  Dec. 
132;    Adams    v.    Leavens,    20    Conn. 


7^i 


ASSIGNMENTS. 


§    1446 


vening-  equities  the  liability  of  the  debtor  is  determined  by  the  date 
on  which  he  receives  notice  of  the  assignment  and  not  by  the 
date  on  which  the  assignment  was  made.®  Thus  if  the  debtor  or 
person  liable  receive  no  notice,  he  may  discharge  all  or  part  of 
the  obligation  by  payment  to  the  assignor." 

§  1446.  Effect  of  notice  to  debtor  or  person  liable — Rights 
of  parties  generally. — After  notice  of  the  assignment,  the 
debtor  or  person  liable  cannot  make  a  settlement  which  will  be 
prejudicial  to  the  rights  of  the  assignee  without  the  assent  of  the 
latter,^**  and  if,  after  notice,  the  debtor  settles  with  the  assignor, 


17i\  Woodbridge  v.  Perkins,  3  Day 
(Conn.)  364;  Bach  v.  Twogood,  18 
La.  414 ;  Lehman  Dry  Goods  Co.  v. 
Lemoine,  129  La.  382,  56  So.  324; 
Robinson  v.  Marshall,  11  Md.  251; 
Shields  v.  Taylor,  25  Miss.  13 ;  Rich- 
ards V.  Griggs,  16  Mo.  416,  57  Am. 
Dec.  240;  Heermans  v.  Ellsworth,  64 
N.  Y.  159;  Crosby  v.  Kropf,  ZZ  App. 
Div.  (N.  Y.)  446,  54  N.  Y.  S.  76; 
Gardner  v.  National  City  Bank,  39 
Ohio  St.  600 ;  Commonwealth  v. 
Sides,  176  Pa.  St.  616,  35  Atl.  136; 
Hobson  V.  Stevenson,  1  Tenn.  Ch. 
203;  Dillingham  v.  Traders'  Ins.  Co. 
(Tenn.).  108  S.  W.  1148;  Inghs  v. 
Inglis's  Exrs.,  2  Dall.  (U.  S.)  45. 
1  L.  ed.  282;  Loomis  v.  Loomis,  26 
Vt.  198;  Stebbins  v.  Bruce.  80  Va. 
389;  Cox  v.  Wayt,  26  W.  Va.  807; 
Stebbins  v.  Union  Pac.  R.  Co.,  2 
Wyo.  71.  Notice  to  one  partner  is 
notice  to  the  firm.  Fitch  v.  Stamps, 
6  How.  (Miss.)  487. 

nValker  v.  Bradford  Old  Bank, 
12  Q.  B.  D.  511,  53  L.  J.  Q.  B.  280, 
32  W.  R.  645;  Williams  v.  Sorrell,  4 
Ves.  Jr.  389;  Merchants'  &  Mechan- 
ics' Bank  v.  Hewitt,  3  Iowa  93,  66 
Am.  Dec.  49;  American  Bridge  Co. 
V.  City  of  Boston.  202  Mass.  374.  88 
N.  E.  1089;  Callanan  v.  Edwards, 
32  N.  Y.  483;  Clement  v.  Philadel- 
phia, 137  Pa.  St.  328,  20  Atl.  1000. 
21  Am.  St.  876:  Miller  v.  Kreiter,  Id 
Pa.  St.  78.  See  also,  Zuccarello  v. 
Randolph  (Tenn.  Ch.),  58  S.  W. 
453.  And  in  the  absence  of  any  stat- 
ute requiring  or  authorizing  the  re- 
cording of  the  assignment  of  a  lien 
the  recording  of  the  assignment  to 
the  assignee  does  not  operate  as  con- 


structive notice  to  the  debtor.  Dial 
V.  Inland  Logging  Co.,  52  Wash.  81, 
100  Pac.   157. 

"  Graham  Paper  Co.  v.  Pembroke, 
124  Cal.  117,  56  Pac.  627,  44  L.  R.  A. 
632,  71  Am.  St.  26;  Robinson  v.  Mar- 
shall, 11  Md.  251;  Washington  Tp. 
V.  First  Nat.  Bank,  147  Mich.  571, 
111  N.  W.  349,  11  L.  R.  A.  (N.  S.) 
471n ;  Van  Keuren  v.  Corkins,  66  N. 
Y.  n.  See  also,  Dial  v.  Inland  Log- 
ging Co.,  52  Wash.  81,  100  Pac.  157. 
"The  debtor  is  liable,  at  law,  to  the 
assignor  of  the  debt,  and  at  law 
must  pay  the  assignor  if  the  assignor 
sues  in  respect  of  it.  If  so,  it  fol- 
lows that  he  must  pay  without  suit. 
The  payment  of  the  debtor  to  the 
assignor  discharges  the  debt  at  law. 
The  assignee  has  no  legal  right,  and 
can  only  sue  in  the  assignor's  name. 
How  can  he  sue  if  the  debt  has  been 
paid?  If  a  court  of  equity  laid  down 
the  rule  that  the  debtor  is  a  trustee 
for  the  assignee,  without  having  any 
notice  of  the  assignment,  it  would  be 
impossible  for  the  debtor  safely  to  pay 
a  debt  to  his  creditor.  The  law  of"  the 
court  has  therefore  required  notice 
to  be  given  to  the  debtor  of  the  as- 
signment, in  order  to  perfect  the 
title  of  the  assignee."  Stocks  v.  Dod- 
son.  4  DeG.  M.  &  G.  11.  As  to 
sufficiencv  of  notice,  see  Hellen  v. 
City  of  "Boston,  194  Mass.  579,  80 
N.  E.  603.    See  also.  post.  §  1459. 

"McCarthy  v.  Mt.  Tecarte  Land 
&c.  Co.,  110  Cal.  m,  43  Pac.  391; 
Chestnut-Hill  Reservoir  Co.  v.  Chase, 
14  Conn.  123:  Fanton  v.  Fairfield 
County  Bank,  23  Conn.  485 ;  Oiapman 
v.   Shattuck,  3  Gilm.   (111.)   49;  Bart- 


1446 


CONTRACTS. 


•i6 


he  does  so  at  his  peril."  It  is  the  duty  of  the  assignee  to  give  or 
to  procure  to  be  given^-  notice  of  the  assignment  to  the  debtor  or 
his  agent/^  or,  in  case  of  the  debtor's  death,  to  his  personal 
representative."  No  special  form  of  notice  of  an  assignment  is 
required."    The  written  assignment  itself  need  not  be  exhibited,^" 


lett  V.  Pearson.  29  Maine  9;  jNIilliken 
V.  Loring.  2)1  Maine  408;  Jenkins  v. 
Brewster,  14  Mass.  291 ;  Laughlin  v. 
Fairbanks.  8  Mo.  367;  Thompson  v. 
Emerv,  27  N.  H.  269;  Wheeler  v. 
Wheeler,  9  Cow.  (N.  Y.)  34;  Man- 
ufacturers' Commercial  Co.  v. 
Rochester  R.  Co.,  137  App.  Div.  (N. 
Y.)  802,  123  N.  Y.  S.  1128;  Cum- 
mings  V.  Fullam,  13  Vt.  434;  Camp- 
bell V.  Day,  16  Vt.  558;  Blake  v. 
Buchanan,  22  Vt.  548;  Loomis  v. 
Loomis,  26  Vt.  198;  Strong  v.  Strong, 
2  Aik.  (Vt.)  ZTi.  Where  plaintiff 
received  an  order  of  assignment  with- 
out objection  and  placed  it  on  file,  it 
was  held  to  have  assented  to  the 
transfer  and  became  obligated  to  pay 
the  indebtedness  to  the  assignee. 
^Montgomery  Door  &  Sash  Co.  v.  At- 
lantic Lumber  Co.,  206  Mass.  144,  92 
N.  E.  71.  See  also,  Manufacturers' 
Commercial  Co.  v.  Rochester  R.  Co., 
137  App.  Div.  (N.  Y.)  882.  123  N. 
Y.  S.  1128.  Where  one  notwithstand- 
ing an  assignment  of  all  the  moneys 
due  or  that  might  become  due  under 
a  contract  subsequently  obtained  a 
judgment  against  the  debtor,  it  was 
held  proper  for  a  court  of  equity  to 
order  the  judgment  marked  for  the 
use  of  the  assignee.  Watson  v.  Mc- 
Manus,  224  Pa.  430,  11  Atl.  931.  The 
debtor  may,  however,  have  the  right 
to  disregard  an  assignment  of  which 
he  has  notice  when  it  is  necessary  to 
pay  the  assignor  part  of  the  funds 
assigned  in  order  to  obtain  perform- 
ance by  the  assignor  of  its  contract 
with  the  debtor  when  such  payment 
was  reasonable  and  necessary  for 
the  protection  of  his  own  interests. 
Peden  Iron  &  Steel  Co.  v.  McKnight, 
(Tex.  Civ.  App.),  128  S.  W.  156, 
"Kithcart  v.  Kithcart,  145  Iowa 
549,  124  N.  W.  305,  30  L.  R.  A.  (N. 
S.)  1062n;  Wells  v.  Edwards  House 
&c.  R.  Co.,  96  Miss.  191,  50  So.  628, 
27  L.  R.  A.  (N.  S.)  404n;  Weniger 
V.  14th  Street  Store,  191  N.  Y.  423, 
84  N.  E.  394;  Kieselstein  v.  Shoebel, 
110  N.  Y.  S.  907.    See  also.  City  Bank 


of  New  Haven  v.  Wilson,  193  ]\Iass. 
164,  79  N.  E.  246;  King  v.  Miller, 
53  Ore.  53,  97  Pac.  542. 

'=Holt  V.  Babcock,  63  Vt.  634,  22 
Atl.  459;  Barron  v.  Porter,  44  Vt. 
587;  Brickett  v.  Nichols,  30  Vt.  743; 
Webster  v.  Moranville,  30  Vt.  701; 
Peck  &  Co.  v.  Walton,  25  Vt.  Z2>. 

"y\nniston  National  Bank  v.  Dur- 
ham, 118  N.  Car.  383,  24  S.  E.  792; 
Weed  Sewing  Machine  Co.  v.  Bou- 
telle,  56  Vt.  570,  48  Am.  St.  821. 

"Walker  v.  Bradford  Old  Bank, 
12  Q.  B.  D.  511,  53  L.  J.  Q.  B.  280, 
Z2  W.  R.  645;  Seward  v.  Garlin,  33 
Vt.  583;  Brown  v.  Millington,  25  Vt. 
242. 

"  Manning  v.  Mathews,  70  Iowa 
303,  30  N.  W.  749 ;  Bank  of  St.  Mary 
v.  Morton,  12  Rob.  (La.)  409;  Flint 
v.  Franklin,  9  Rob.  (La.)  207;  De- 
lassize's  Succession,  8  Rob.  (La.) 
259;  Gillett  v.  Landis,  17  La.  470; 
Reeves  v.  Burton,  6  Mart.  (La.)  (N. 
S.)  283;  Touro  v.  Cushing,  1  Mart. 
(La.)  (N.  S.)  425;  Jewett  v.  Dock- 
ray,  34  Maine  45 ;  Robbins  v.  Bacon, 
3  Greenl.  (Maine)  346;  Dale  v. 
Kimpton,  46  Vt.  76.  Under  the  Eng- 
lish Judicature  Act  notice  must  be 
in  writing.  It  may  be  given  either 
by  indorsing  the  assignment  on  the 
original  obligation  and  forwarding 
it  to  the  debtor,  or  by  separate 
writing.  Read  v.  Brown,  22  Q.  B. 
D.  128,  58  L.  J.  Q.  B.  120,  60  L.  T. 
(N.  S.)  250,  Zl  W.  R.  131;  Harding 
V.  Harding,  17  Q.  B.  D.  442,  55  L.  J. 
Q.  B.  462,  34  W.  R.  775;  Buck  v. 
Robson,  3  Q.  B.  D.  686,  48  L.  J.  Q. 
B.  250,  39  L.  T.  (N.  S.)  325,  26 
W.  R.  804;  Brice  v.  Bannister,  3  Q. 
B.  D.  569,  47  L.  J.  Q.  B.  722,  38  L. 
T.  (N.  S.)  739,  26  W.  R.  670;  Lett 
v.  Morris,  1  L.  J.  Ch.  17,  4  Sim.  607, 
6  Eng.  Ch.  607;  Ex  parte  South,  3 
Swanst.  393.  Notice  of  an  equitable 
assignment  may,  however,  be  verbal. 
Ex  parte  Agra  Bank.  L.  R.  3  Ch. 
555,  Zl  L.  J.  Bankr.  23,  18  L.  T.  (N. 
S.)  866,  16  W.  R.  879. 

^®  National  Fertilizer  Co.  v.  Thom- 


T17  ASSIGNMENTS.  §    I447 

at  least  when  the  party  hable  does  not  demand  it.^^  However,  in 
order  to  effect  one  with  notice  not  formally  given,  it  must  come 
in  such  a  way  or  under  such  circumstances  to  the  person  alleged 
to  have  been  notified,  that,  as  a  reasonable  man,  he  ought  to  re- 
gard it  as  notice  to  control  his  conduct  in  relation  to  the  matter 
which  is  the  subject  of  the  notice.^^  The  mere  fact  that  the  no- 
tice was  served  on  Sunday  has  been  held  not  to  affect  its  legality/" 
The  question  of  whether  the  debtor  has  notice  of  the  assignment 
is  usually  a  question  of  fact,  but  it  may  become  one  of  law  when 
it  depends  merely  on  the  construction  to  be  placed  on  writing.^" 

§  1447.  Assignments  by  operation  of  law — Generally. — Un- 
der certain  conditions,  the  law  operates  to  effect  the  transfer  of  a 
chose  in  action  from  one  person  to  another  without  any  concur- 
ring act  on  the  part  of  the  parties  or  indeed  without  their  assent. 
The  usual  ways  by  which  such  transfers  are  brought  to  pass  are 
by  the  transfer  of  an  interest  in  land,  by  marriage,  and  by  death. 
These  different  modes  of  assignment  by  operation  of  law  will  be 
discussed  in  the  order  named. 

§  1448.  Assignment  by  operation  of  law — Effect  of  trans- 
fer of  interest  in  land. — Real  property  is  peculiar  in  that,  up- 
on its  transfer,  covenants  may  be  annexed  to  the  contract  which 
run  with  the  land  and  one  who  subsequently  acquires  an  interest 
therein  takes  it  subject  to  the  benefits  and  obligations  of  such 
covenants.  Thus,  in  case  the  lessee  of  premises  assigns  the  same, 
the  assignee  takes  the  lease  subject  to  the  conditions  therein  con- 
tained and  will,  as  a  general  rule,  be  bound  to  the  landlord  by 
the  same  duties  and  entitled  to  the  same  rights  as  his  assignor.^^ 

ason.  109  Ala.  173,  19  So.  415;  Touro  ^'Renten   v.   Monnier,  11  Cal.  449, 

V.    Gushing,    1    Mart.    (La.)    (N.    S.)  19  Pac.  820;  Whitman  v.  Winchester 

425 ;    Davenport    v.    Woodbridge,    8  Repeating   Arms    Co.,    55    Conn.   247. 

Greenl.    (Maine)    17.  10   Atl.   571;    Crouch   v.    Muller,    141 

"  Rean  v.  Simpson,  16  Maine  49.  N.  Y.  495,  36  X.  E.  394. 

"Phillips'  Estate,  205   Pa.   St.  525,  =^  Spencer's    Case.     1     Smith    Lead 

55  Atl.  216,  97  Am.  St.  750.     In  the  Cas.    (8th    Am.    ed.)    145;    Clegg   v. 

above  case  it  was  held  that  a  letter  Hands,    44    Ch.    Div.    503 ;    Callan    v. 

written  which  merely  contained  an  in-  McDaniel.    72    Ala.   96 ;    Salisbury    v. 

cidental  reference  in  it  to  the  assign-  Shirley,  66  Cal.  223,  5  Pac.  104;  Sex- 

ment  was  held  insufficient  as  notice,  ton  v.   Chicago   Storage  Co.    129  111. 

"Crozier  v.  John  G.  Shants  &  Co.,  318.  21   X.   E.  920.   16  Am.   St.   274: 

43  Vt.  478.  Webster    v.    Xichols,    104    111.     160; 

Gordon  v.  George,  12  Ind.  408,  Huff- 


1448 


CONTRACTS. 


So,  covenants  to  repair  or  leave  in  good  repair,  or  to  deal  with 
the  land  in  a  specified  manner,  run  with  the  land.^^  When  the 
covenants  in  a  lease  concern  the  thing  demised,  but  also  relate  to 
something  not  in  existence  at  the  time  of  its  execution,  such  cove- 
nants do  not  bind  the  lessee's  assignee  unless  made  with  the 
lessee  and  his  assigns."    A  covenant  which  is  merely  personal  and 


cut  &  W.  Am.  Cas.  Cont.  468 ;  Donel- 
son  V.  Polk,  64  Aid.  501,  2  Atl.  824; 
Patten  v.  Deshon,  1  Gray  (Alass.) 
325;  Trask  v.  Graham,  47  Minn.  571, 
50  N.  W.  917;  Willi  v.  Dryden,  52 
Mo.  319;  Stewart  v.  Long  Island  R. 
Co.,  102  N.  Y.  601,  8  N.  E.  200,  55 
Am.  Rep.  844;  Suydam  v.  Jones,  10 
Wend.  (N.  Y.)  180,  25  Am.  Dec. 
552;  Masury  v.  Southworth,  9  Ohio 
St.  340;  Washington  Nat.  Gas  Co.  v. 
Johnson,  123  Pa.  576,  16  Atl.  799,  10 
Am.  St.  553n;  State  v.  Martin,  14 
Lea  (Tenn.)  92,  52  Am.  Rep.  167; 
Hunt  V.  Danforth,  2  Curt.  (U.  S.) 
592,  Fed.  Cas.  Xo.-  6,887;  Overman 
V.  Sanborn,  27  Vt.  54;  De  Pere  v. 
Reynen,  65  Wis.  271,  22  N.  W.  761, 
27  X.  W.  155 ;  And  see  Wills  v.  Sum- 
mers, 45  Minn.  90,  47  X.  W.  463. 
An  action  may  still  be  maintained 
against  the  lessee  on  his  express 
covenants  after  he  has  assigned  the 
lease.  In  re  Spencer,  1  Smith  Lead. 
Cas.  (8th  Am.  ed.)  145;  Wilson  v. 
Gerhardt,  9  Colo.  585,  13  Pac.  705; 
Grommes  v.  St.  Paul  Trust  Co.,  147 
111.  634,  35  N.  E.  820,  Zl  Am.  St. 
248;  Harris  v.  Heackman,  62  Iowa 
411,  17  N.  W.  592;  Greenleaf  v.  Al- 
len, 127  Mass.  248;  Washington 
Xatural  Gas  Co.  v.  Johnson,  123  Pa. 
576,  16  Atl.  799,  10  Am.  St.  553n; 
Bailey  v.  Wells,  8  Wis.  141,  76  Am. 
Dec.  233.  But  where  the  lessee's 
liability  to  pay  rent  is  such  only  as 
is  implied  by  law  from  his  occupa- 
tion of  the  premises,  the  assignment 
by  him  of  the  lease  and  surrender 
of  possession  to  the  assignee,  the 
lessor  assenting,  extinguishes  the 
privity  of  estate  between  the  lessee, 
and  the  consequent  implied  liability 
to  pay  rent.  Harmony  Lodge  v. 
White,  30  Ohio  St.  569,  27  Am.  Rep. 
492.  The  receiver  of  an  insolvent 
corporation  who  takes  possession  of 
its  leasehold  estate  is  liable  only  for 
a  reasonable  rent  during  the  time  of 


his  occupancy,  and  he  does  not  be- 
come an  assignee  thereof,  and  is  not 
liable  on  the  covenants  of  the  lease. 
Bell  V.  American  Protective  League, 
163  Mass.  558,  40  X.  E.  857,  28  L.  R. 
A.  452,  47  Am.  St.  481.  It  is  the 
privity  of  estate  which  renders  the 
assignee  of  a  lease  liable  to  the  land- 
lord. Consequently,  when  the  privity 
ceases  to  exist  it  terminates  the  li- 
ability of  the  assignee  for  future 
breaches  of  covenants  in  the  lease, 
whether  express  or  implied.  Mason 
V.  Smith,  131  Mass.  510.  A  lessee 
who  assigns  a  lease  containing  _a 
covenant  to  pay  taxes,  and  who  is 
afterwards  obliged  to  discharge  this 
obligation  to  the  lessor,  may  re- 
cover the  amount  from  the  assignee, 
though  his  own  interest  in  the  estate 
has  entirely  ceased.  Mason  v. 
Smith,  131  Mass.  510.  See  also, 
Jackson  v.  Port,  17  Johns.  (N.  Y.) 
479,  A  lease  is  assignable  by  act  of 
the  parties,  irrespective  of  whether 
the  word  "assigns"  is  inserted  or 
not.  Spear  v.  Fuller,  8  N.  H.  174,  28 
Am.  Dec.  391. 

"  In  re  Spencer,  1  Smith  Lead. 
Cas.  (8th  Am.  ed.)  145,  and  cases 
collected  in  note;  Callan  v.  McDan- 
iel,  72  Ala.  96;  Coburn  v.  Goodall, 
72  Cal.  498,  14  Pac.  190,  1  Am.  St. 
75;  Fitch  v.  Johnson,  104  111.  Ill; 
Donelson  v.  Polk,  64  Md.  501,  2  Atl. 
824;  Leppla  v.  Mackey,  31  Minn. 
75,  16  X.  W.  470;  Xorman  v.  Wells, 
17  Wend.  (X.  Y.)  136;  Suydam  v. 
Jones,  10  Wend.  (N.  Y.)  180,  25 
Am.  Dec.  552;  Demarest  v.  Willard, 
8  Cow.  (N.  Y.)  206;  Post  v.  Kear- 
ney, 2  X.  Y.  394,  51  Am.  Dec.  303. 

'"^  In  re  Spencer,  1  Smith  Lead. 
Cas.  (8th  Am.  ed.)  145;  Bailey  v. 
Richardson,  66  Cal.  416,  5  Pac.  910; 
Hansen  v.  Meyer,  81  111.  321,  25  Am. 
Rep.  282;  Coffin  v.  Talman,  4  N.  Y. 
134,  8  N.  Y.  465;  Newburg  Petro- 
leum Co.  V.  Weare,  44  Ohio  St.  604, 


719  ASSIGNMENTS.  g     1 449 

collateral  and  which  does  not  concern  the  land,  does  not  bind  the 
assignee."*  Thus,  a  covenant  with  a  lessee,  for  himself  and  as- 
signs, not  to  hire  persons  to  work  in  the  mill  demised  who  were 
settled  in  other  parishes,  was  held  not  to  run  with  the  land  or  bind 
his  assignee.^" 

§  1449.  Nature  and  purpose  of  covenant  contracts — Re- 
strictions as  to  use  of  real  property. — A  covenant  of  this  char- 
acter may  not  bind  the  assigns,  though  they  are  expressly  men- 
tioned. Whether  the  assignee  is  bound  depends  more  upon  the 
nature  and  purpose  of  the  covenant  than  upon  its  form  and  the 
use  of  any  particular  words.  Thus  where  the  owner  of  two  ad- 
jacent city  lots  conveyed  one  of  them  by  a  deed  which  contained 
this  clause,  "said  grantor,  being  also  the  owner  of  the  adjoining 
lot,  *  *  *  for  himself,  his  heirs,  executors,  administrators  and 
assigns,  does  hereby  covenant  to  and  with  the  said  party  of  the 
second  part,  his  heirs,  executors,  administrators  and  assigns,  that 
he  will  not  erect  or  cause  to  be  erected  on  said  lot  *  *  *  any 
building  which  shall  be  regarded  as  a  nuisance,"  it  was  held  that 
the  covenant  was  against  such  erection  by  the  grantor  alone,  and 
that  he  was  not  liable  under  it  for  a  nuisance  erected  by  his 
grantee  of  the  adjoining  lot,  whose  conveyance  contained  no  re- 
striction as  to  use.*°  Restrictions  in  the  use  of  land  conveyed  in 
fee  are  not  favored,  but  the  courts  will  enforce  them  where  the 
intention  of  the  parties  in  their  creation  is  clear.^^  Where  a  re- 
striction is  confined  within  reasonable  bounds  and  the  party  in 
whose  favor  it  is  made  has  an  interest  in  the  subject-matter  of 
the  restriction,  or  others  in  privity  with  him  have  such  an  interest, 

9  N.  E.  845;  Bream  v.  Dickerson,  2  v.  Eastern  R.  Co.,  41  Minn.  461,  43  X. 

Humph.     (Tenn.)     126;     Hartung    v.  W.  469,  6  L.  R.  A.  111. 

Witte,   59   Wis.   285,    18   N.   W.    175.  ^Congleton    v.    Pattison,    10    East 

See,   however,   MinshuU  v.  Oakes,  2  130. 

H.  &  N.  793;  Masury  v.  Southworth,  ="  Clarke  v.  De  Voe,  124  N.  Y.  120, 

9  Ohio  St.  340.    Even  though  a  cove-  26  X.   E.  275,  21   Am.   St.  652.   affg. 

nant  may  be  made  by  one  for  himself  48  Hun    (X.   Y.)    512,   16  X.   Y.   St. 

and   assigns,  yet,  if   it   does  concern  264,  1  N.  Y.  S.  132.  See  also,  Thomas 

the   land    and     is    merely    collateral  v.  Ha\^vard,  L.  R.  4  E.xch.  31 L 

thereto,    his    assignee    is    not    bound  "  Hutchinson    v.     Ulrich,     145    111. 

bv    it.     Congleten    v.     Pattison,     10  336,  34  X.  E.  556.  21   L.  R.  A.  391; 

East    130;    Xorcross    v.    James,    140  Eckhart  v.  Irons.  128  111.  568.  20  N. 

Mass.  188.  2  X.  E.  946.  E.    687;     Peabodv     Heights     Co.    v. 

**Norcross    v.    James,    140    Mass.  Willson,  82  Md.   186,  32  Atl.  386,  36 

188,  2  N.  E.  946;  Kettle  River  R.  Co.  L.  R.  A.  393. 


?  I450 


CONTRACTS. 


720 


it  will  be  sustained.^®  "It  must  not  therefore  be  supposed  that 
incidents  of  a  novel  kind  can  be  devised  and  attached  to  property, 
at  the  fancy  or  caprice  of  any  owner.  *  *  *  Great  detriment 
would  arise  and  much  confusion  of  rights,  if  parties  were  allowed 
to  invent  new  modes  of  holding  and  enjoying  real  property,  and  to 
impress  upon  their  land  and  tenements  a  peculiar  character,  which 
should  follow  them  into  all  hands,  however  remote."-^  A  cove- 
nant which  relates  to  a  matter  which  is  purely  personal  between 
the  covenantor  and  covenantee  does  not  run  with  the  land.^*^ 

§  1450.  Valid  covenants  running  with  the  land. — However, 
it  has  been  held  that  a  contract  between  the  owner  of  land  and 
his  neighbor  purchasing  a  part  of  it  that  the  latter  shall  either  use 
or  abstain  from  using  the  land  purchased  in  a  particular  way  may 
be  enforced,  the  court  stating  that  the  cjuestion  is  not  whether 
the  covenant  runs  with  the  land  but  whether  a  party  shall  be 
permitted  to  use  the  land  in  a  manner  inconsistent  with  the  con- 
tract entered  into  by  his  vendor  and  with  notice  of  which  he  pur- 
chased.^^ Thus  a  covenant  not  to  carry  on  a  particular  trade  or 
business  is  binding  upon  an  assignee  with  notice,^"  It  has  also 
been  held  that  the  assignee  of  a  contract  of  conditional  sale  of 
real  estate  might  enforce  a  guaranty  by  the  vendor  that  certain 
improvements  would  be  made.^^     The  subject  of  covenants  which 


494. 

29 

517. 


Grigg   V.    Landis,   21    N.    J.    Eq. 
Keppell  V.   Bailey,   2   Myl.   &   K. 


'"Lyford  v.  North  Pac.  C.  R.  Co., 
92  Cal.  93,  28  Pac.  103;  Indianapolis 
Water  Co.  v.  Nulte,  126  Ind.  Z72,,  26 
N.  E.  72;  Glenn  v.  Canby,  24  Md. 
127;  Brewer  v.  Marshall,  18  N.  J. 
Eq.  337,  affd.  19  N.  J.  Eq.  537,  97 
Am.  Dec.  679;  Costigan  v.  Pennsyl- 
vania R.  Co.,  54  X.  J.  L.  233,  23  Atl. 
810;  Cole  v.  Hughes,  54  N.  Y.  444, 
13  Am.  Rep.  611;  Masury  v.  South- 
worth,  9  Ohio  St.  340.  It  has  been 
held  that  the  right  to  compensation 
or  liability  to  reimburse,  for  the  use 
of  a  party  wall,  under  a  contract  be- 
tween adjoining  landowners,  is  per- 
sonal, and  does  not  run  with  the 
land.  Cole  v.  Hughes,  54  N.  Y.  444, 
13  Am.  Rep.  611.  To  the  same  effect, 
Gibson  v.  Holden,  115  111.  199,  3  N. 


E.  282,  56  Am.  Rep.  146;  Todd  v. 
Stokes,  10  Pa.  St.  155;  Nalle  v.  Pag- 
gi  (Tex.),  9  S  W.  205,  1  L.  R.  A. 
22).  But  see,  Conduitt  v.  Ross,  102 
Ind.  166,  26  N.  E.  198:  King  v. 
Wight,  155  Mass.  444,  29  N.  E.  644; 
Mott  V.  Oppenheimer,  135  N.  Y.  312, 
31  N.  E.  1097,  17  L.  R.  A.  409.  A 
covenant  to  support  an  old  man  in 
consideration  of  a  conveyance  by 
him  is  personal,  and  cannot  be 
shifted  to  a  purchaser  of  the  land 
from  the  grantee  against  the  will  and 
consent  of  the  party  with  whom  the 
contract  was  made.  Divan  v. 
Loomis,  68  Wis.   150,  31   N.  W.  760. 

"^Tulk  V.  Moxhay,  2  Phillips  774. 

==  Parker  v.  Whyte,  1  H.  &  M. 
167. 

^^  Anderson  v.  American  Suburban 
Corp.,  155  N.  Car.  131,  71  S.  E.  221, 
36  L.  R.  A.  (N.  S.)  896. 


721  ASSIGNMENTS.  §    1 45 1 

run  with  the  land  is  one  more  properly  a  subject  of  treatment  in 
a  work  on  real  property,  but  it  will  be  further  considered  in  a 
subsequent  volume  under  the  title  of  Deeds  and  Conveyancing.^'* 

§  1451.  Effect  of  marriage. — At  common  law  the  personal 
property  of  the  wife,  the  use  of  her  real  estate,  and  the  right  to 
her  labor  and  earnings  passed  to  the  husband  upon  marriage.^* 
At  common  law  a  wife  could  not  maintain  an  action  of  assumpsit 
against  her  husband  and  in  so  far  as  this  rule  still  obtains  the 
wife  cannot  assign  a  claim  which  she  has  against  her  husband 
so  as  to  enable  the  assignee  to  sue  thereon,  for  the  reason  that  an 
assignee  of  a  chose  in  action  takes  the  same  subject  to  all  equities 
existing  between  the  original  parties.^'  However,  if  the  husband 
does  not  reduce  the  choses  in  action  of  his  wife  to  possession  she 
does  not  lose  her  rights  thereto  by  coverture,  and  in  case  her  hus- 
band dies  first  they  survive  to  her  or  pass  to  her  personal  repre- 
sentative should  she  die  in  his  lifetime.^*'  Not  only  did  marriage 
at  common  law  effect  a  conditional  assignment  of  the  wife's 
rights  to  the  husband,  but  it  also  rendered  him  jointly  liable  with 
her  for  all  liabilities  that  she  had  incurred  before  marriage"  even 
though  the  husband  might  be  an  infant.'^  This  liability  on  the 
part  of  the  husband  existed  only  during  the  continuance  of  the 
relationship.^'*  The  rights  of  husband  and  wife  have  been  greatly 
modified  by  the  statutes  in  both  England  and  the  United  States. 
In  some  jurisdictions  all  of  her  disabilities  have  been  abolished.**' 
In  a  number  of  jurisdictions  the  husband  still  remains  liable  for 
the  wife's  antenuptial  debts  to  the  extent  of  the  property  acquired 
by  him  from  the  wife  as  a  result  of  the  marriage." 

"a  Vol.  IV,  Tit.  VII.  Eq.   (S.  Car.)   273,  46  Am.  Dec.  43. 

"Kies  V.   Young,  64  Ark.   381,  42  "Gray  v.     Thacker.    4    Ala.     136; 

S    W.  669,  62  Am.  St.  198:  Botts  v.  Platner  v.   Patchin.  19  Wis.  333. 

Gooch,  97  Mo.  88,   11    S.  W.  42,   10  '''Roach    v.    Quick,    9    Wend.    (N. 

Am.   St.  286;  Alexander  v.  Morgan,  Y.)  238.     See  ante,  ch.  11. 

31  Ohio  St.  546;  Platner  v.  Patchin,  ''Bell  v.  Stocker,  10  Q.  B.  D.  129; 

19  Wis.  333.  Lamb  v.  Belden,   16  Ark.  539. 

*"  Perkins    v.    Blethen,    107    Maine  '"See  ante,  ch.   13. 

443,  78  Atl.  574,  31  L.  R.  A.  (N.  S.)  ^^  Madden  v.   Gilmer.  40  Ala.  637; 

1148n.     To    same    effect,    Muller    v.  Wood     v.     Orford,     52     Cal.     412; 

Witte.   78  Conn.  495,  62  Atl.  756.  Howarth  v.     Warmser.     58    111.     48: 

^''See  Fleet  v.  Perrins,  L.  R.  4  Q.  Burns'    Rev.     Stat.     (Ind.)     1908,     § 

B.  500;   Boozer  v.  Addison,  2  Rich.  7862. 

46 — Contracts,  Vol.  2 


§    1453  CONTRACTS.  ']22. 

§  1452.  Effect  of  death  of  one  of  the  parties — Actions  that 
survive. — All  of  one's  personal  estate  passes  by  operation  of 
law,  on  his  death,  to  his  executor  or  administrator.  The  same 
is  true  of  all  actions  on  contracts  which  will  affect  the  estate 
or  contractual  liabilities  chargeable  against  it.*-  Suit  is  main- 
tained on  such  contract  by  or  against  the  personal  representative 
in  his  own  name.*^  Thus  the  benefits  and  liabilities  arising  from 
covenants  attached  to  a  leasehold  estate  have  been  held  to  pass 
with  the  personalty  to  the  representative.**  An  action  for  money 
due  under  a  contract  survives.^® 

§  1453.  Actions  that  do  not  survive. — It  is  well  settled, 
however,  that  contracts  which  involve  personal  confidence  be- 
tween the  parties  or  which  call  for  the  exercise  of  personal  skill 
on  the  part  of  the  promisor  are  construed  as  conditional  on  the 
life  of  both,  and  are  terminated  by  the  death  of  either  party  to  the 
contract.*^  Likewise,  the  personal  representative  of  a  deceased 
cannot  bring  an  action  for  the  breach  of  a  contract  which  involved 
a  purely  personal  loss,  such  as  an  action  for  breach  of  promise  to 
marry  the  deceased  when  no  pecuniary  damages  were  sustained 
by  the  deceased.*^     Nor  are  the  personal  representatives  liable 

"Devon    v.     Powlett,    2    Vinner's  Rosensteel,   24   Fed.    583;    Middlesex 

Abridgment  132.    Snodgrass  v.  Cabi-  Water    Co.    v.    Knappmann    Whiting 

ness.      15    Ala.      160;      Beecher      v.  Co.,  64  N.  J.  L.  240,  45  Atl.  692,  49 

Buckingham,   18   Conn.    110,  44  Am.  L.  R.  A.  572,  81  Am.  St.  467;  Lacy 

Dec.  580;  Henderson  v.  Henshall,  54  v.  Getman,  119  N.  Y.  109,  23  N    E. 

Fed    320    4  C.  C.  A.  357;   Jewett  v.  452,  6  L.  R.  A.  728,  16  Am.  St.  806; 

Smith     12     Mass.     309;     Shirley     v.  Siler  v.  Gray,  86  N.  Car.  566;  Blake- 

Healds,  34  N.   H.  407.     The  subject  ly  v.  Sousa,  197  Pa.  305,  47  Atl.  286, 

of  deceased's  estates  is  governed  al-  80  Am.  St.  821;   Dickinsori  v.  Cala- 

most  entirely  by  the  statutes  of  var-  ban's  Admrs.,   19   Pa.   St.  227,   Huff- 

ious    jurisdictions.  cut  &  W.  Am.  Cas    Cont.  479.     See 

"Potter   v.    Van    Vranken,   36    N.  also,  Griggs  v.   Swift,  82  Ga.  392,  9 

Y  619.  S.  E.  1062,  5  L.  R.  A.  405,  14  Am.  St. 

**  Chamberlain    v.    Dunlop,    126   N.  176.     But  the  death  of  a  party  to  a 

Y.  45,  26  N.  E.  966,  22  Am.  St.  807.  contract  which  calls  for  personal  skill 

'^  St'ubbs   v.   Holywell    R.,   L.   R.   2  and  confidence  does  not  take  away  a 

Ex.   311.     See  also,   Wright  v.    Hoi-  right  of  action  already  vested.   Stubbs 

brook,  32  N.  Y.  587,  holding  that  a  v.  Holywell     R.,  L.  R.  2  Exch.  311. 

devisee  of  real  estate  has  the  right  And  where  the  contract  does  not  re- 

to  have  a  promissory  note  given  by  quire  personal  skill  and  confidence  it 

his     devisor     for    unpaid     purchase-  is  not  terminated  by  the  death  of  one 

money  paid  out   of   the  latter's   per-  of  the  parties.     In  re  Billings's  Ap- 

sonal  assets  P^^l-    ^06  Pa.   558. 

"Farrow  v.  Wilson,  L.  R.  4  C.  P.        '"  Chamberlain    v.     Williamson,     2 

744;    Baxter   v.    Burfield.   2    Strange  Ml.  &  S.  408. 
1266;    Howe    Sewing    Mach.    Co.    v. 


723  ASSIGNMENTS.  §    I454 

in  an  action  for  the  breach  by  the  deceased  of  a  promise  to  marry, 
no  special  damage  being  alleged/**  The  executors  and  adminis- 
trators of  a  deceased  as  such  derive  no  benefit  from  their  dece- 
dent's contracts  of  this  nature  nor  does  any  personal  liability 
attach  to  them.  They  merely  represent  the  decedent  to  the  ex- 
tent of  his  estate  and  no  more. 

§  1454.  Effect  of  assignment. — The  valid  and  binding  as- 
signment of  a  chose  in  action  vests  in  the  assignee  the  legal  and 
equitable  title  to  the  chose  to  the  same  extent  to  which  the  as- 
signors held  title.*''  The  assignee,  as  a  general  rule,  takes  the 
chose  subject  to  all  defenses  which  would  have  been  available 
against  the  assignor.'^*'  The  assignment  passes  all  of  the  as- 
signor's rights  in  the  contract  assigned  in  accordance  with  the 
terms  of  assignment,^^  the  assignor  having  no  further  interest 
therein.'^-  Thus  it  has  been  held  that  where  a  contractor  who 
does  not  have  money  enough  to  finance  the  job  makes  an  absolute 
transfer  of  all  money  due  or  to  become  due  under  the  contract 
to  another  in  consideration  of  the  latter  advancing  the  necessary 

"Finlay  v.  Chirney,  20  Q.  D.  494;  gener,   140  Ky.  444,   131   S.   W.   188; 

Hovey  v.  Page,  55  Maine  142 ;  Chase  Hoover  v.   Columbia   Nat.   Bank,   58 

V.    Fitz,    132    Mass.    359;    Smith    v.  Nebr.  420,  78   N.   W.   717;    Kennedy 

Sherman,     4     Cush.      (Mass.)     408;  v.    Parke,   17   N.   J.   Eq.   415;   Straus 

Stebbins  v.  Palmer,  1   Pick.   (Mass.)  v.  Wessel,  30  Ohio  St.  211;  Winn  v. 

71.  11  Am.  Dec.  146;  Wade  v.  Kalb-  Fort  Worth  &c.  R.  Co.,  12  Tex.  Civ. 

fleisch,   58   N.    Y.   282;   Lattimore   v.  App.  198,  33  S.  W.  593.     A  contract 

Simmons,  3   Serg.   &   R.    (Pa.)    183;  of    assignment    of    "all    sums    owing 

Grubb's     Admr.     v.     Suit.     32    Grat.  the  assignee   *    *    *    under  or  by  vii- 

(Va.)   203,  34  Am.  Rep.  765.  Under  tue  of   a   certain   written   agreement 

the  North  Carolina  statutes  the  death  *    *    *   or  under  or  by  virtue  of  any 

of    a    defendant    does    not    abate    an  transaction    based    upon    or    growing 

action   for  breach  of  promise.    Allen  out  of  said  contract  or  any  business 

V.  Baker,  86  N.  Car.  91,  41  Am.  Rep.  done      thereunder"      includes      only 

444.  claims    arising    out    of    the    original 

"  St.     John     V.      Smith,      1      Root  contract  but  also  those  arising  after 

(Conn.)    156;    Dole   v.   Olmstead,   41  its    extension    by    mutual    agreement. 

111.  344,  89  Am.  Dec.  386 ;  Thompson  Lindsev   Lumber   Co.    v.    Mason,    165 

V.  Allen,  12  Ind.  539:  Wood  v.  Don-  Ala.  194,  51  So.  750. 

ovan,  132  Mass.  84;  Sanders  v.  Sout-  "Loomis  v.   Smith.   37  Mich.   595; 

ter,  136  N.  Y.  97,  32  N.  E.  638.  Papin  v.  Massey,  27  Mo.  445 ;  Holmes' 

""  Thomassen  v.  De  Goey,  133  Iowa  Exrs.  v.  Bigelow,  3  Desaus.  (S.  Car.) 

278.  110  N.  W.  581,  119  Am.  St.  605;  497.      See   also,    Belden    v.    Farmers' 

Trimmier  v.   Valley   Falls   Mfg.   Co.,  &c.  Bank,  16  Cal.  App.  452.  118  Pac. 

85   S.   Car.    13.  66   S.   E.    1055.  449;     White    v.     Fernald- Woodward 

"Kentucky  Refining   Co.  v.  Wag-  Co.  (N.  H.),  79  Atl.  641. 


§  1455 


CONTRACTS, 


724 


funds  and  material,  the  owner  cannot  be  required  to  pay  a  part 
of  the  money  so  assigned  to  subcontractors  and  material-men.^^ 

§  1455.  Rights  of  Assignee — Qualified  assignments. — It  is 
also  tnie  generally  that  in  the  absence  of  an  agreement  to  the  con- 
trary, the  assignee  for  value  of  a  note,  bill,  judgment,  decree  or 
other  evidence  of  indebtedness,  for  the  payment  of  which  the 
assignor  holds  collateral  security,  is  in  equity  entitled,  by  virtue 
of  the  assignment  to  him  of  the  principal  obligation  or  evidence 
of  indebtedness,  to  the  collateral  as  such,  although  not  named  in 
the  instrument  of  assignment,  and  regardless  of  his  knowledge  or 
lack  of  knowledge  of  the  existence  of  such  collateral.^*  One  who 
assigns  his  interest  in  a  debt  also  vests  in  the  assignee  the  as- 
signor's right  to  sue  either  an  undisclosed  principal  or  his  agent.'"' 


"'  South  Texas  Lumber  Co.  v.  Con- 
crete Const.  Co.  (Tex.  Civ.  App.), 
139  S.  W.  913.  "There  is  nothing  to 
stand  in  the  way  of  the  vaHdity  of 
an  agreement  by  which  a  debtor 
transfers  to  his  creditor  a  credit 
which  is  to  mature  at  some  future 
time,  in  satisfaction  of  a  debt  not  yet 
mature,  or  even  not  yet  in  existence, 
but  which  will  be  mature,  or  be  in 
existence  and  payable,  by  the  time 
the  transferred  credit  itself  matures 
and  is  payable.  In  such  a  case  the 
agreement  goes  into  immediate  opera- 
tion for  that  part  of  the  debt  already 
existing,  and  it  goes  into  operation 
for  that  part  of  the  debt  to  be  there- 
after created  as  the  latter  debt 
springs  into  existence.  A  agrees  to 
advance  to  B  certain  moneys,  and  B 
agrees  that,  as  the  moneys  are  ad- 
vanced, a  like  amount  of  credit  which 
he  (B)  has  against  C  is  to  be  con- 
sidered as  transferred  to  A,  and  C  is 
duly  notified  of  this  arrangement,  and 
accedes  to  it.  We  can  discover  no 
legal  obstacle  to  the  perfect  validity 
of  such  an  arrangement."  Cox  v. 
First  Nat.  Bank,  126  La.  88,  52  So. 
227.  "The  contractor  could  not  make 
a  valid  order  on  the  defendant  for 
a  greater  sum  than  was  due  to  him 
from  it.  The  acceptance  of  the  order 
operated  as  an  equitable  assignment 
only  of  the  balance  due.  Nor  can  the 
defendant  be  held  for  the  amount  of 
the  order  merely  because  of  its  oral 


acceptance,  if  the  amount  of  the  or- 
der was  in  excess  of  the  sum  due 
from  it."  Carboy  v.  Polstein  &c. 
Const.  Co.,  62  Misc.  (N.  Y.)  302, 
114  N.  Y.  S.  838. 

"Edwards  v.  Bay  State  Gas  Co., 
184  Fed.  979,  citing  and  reviewing 
the  authorities.  "It  is  a  well-settled 
rule  of  law  that  the  assignment  of  a 
debt  carries  with  it  every  remedy  and 
security  for  such  debt  available  by 
the  assignor  as  incident  thereto,  al- 
though they  are  not  specially  named 
in  the  instrument  of  assignment."  In 
re  Levin,  173  Fed._  119.  Thus  the 
assignment  of  a  judgment  carries 
with  it  the  debt  upon  which  it  is 
based  and  if  the  latter  is  secured  by 
a  mortgage  it  carries  the  mortgage 
also.  King  v.  Miller,  53  Ore.  53.  97 
Pac.  542.  See  also,  Dawson  v.  Eng- 
lish, 8  Ga.  App.  585,  69  S.  E.  1133; 
Roach  v.  Sanborn  Land  Co.,  135  Wis. 
354,  115  N.  W.  1102.  Compare  with 
McLean  v.  Fidelity  &  Deposit  Co., 
56  Misc.  (N.  Y.)  623,  107  N.  Y.  S. 
907. 

'=  Berry  v.  Chase,  179  Fed.  426,  102 
C.  C.  A.  572.  But  it  has  been  held 
that  the  assignment  of  a  sharehold- 
er's contract  in  a  colonization  com- 
pany does  not  convey  to  the  assignee 
the  assignor's  right  to  maintain  an 
action  for  money  had  and  received 
against  the  vendor  of  the  land.  Steele 
V.  Brazier,  139  Mo.  App.  319,  123 
S.  W.  477. 


7^5  ASSIGXMEXTS.  §    I456 

A  qualified  assignment  may  be  rnade^"  and  an  assignment  absolute 
on  its  face  may  be  shown  to  have  been  given  merely  as  security." 
But  such  an  assignment  will  not  be  so  construed  unless  it  is  clearly 
made  to  appear  that  it  was  in  fact  a  qualified  assignment.'^ 

§  1456.  Implied  warranties  in  assignments — Rights  and 
liabilities  of  assignor  and  assignee. — In  every  transfer  of  a 
chose  in  action  by  assignment  without  recourse  there  is  an  im- 
plied warranty  that  it  is  genuine,  that  it  is  supported  by  a  suffi- 
cient and  valid  consideration,  and  that  the  amount  of  money  it 
calls  for  was  owing  and  unpaid  at  the  time  of  the  assignment 
in  the  absence  of  an  express  agreement  to  the  contrary.^."  The 
assignor  does  not  by  the  assignment  of  his  contract  relieve  him- 
self of  the  obligation  which  it  imposes  upon  him.°"  But  in  the 
absence  of  any  contract  or  guaranty  the  assignor  is  not  liable  to 
his  assignee  for  a  breach  by  the  other  party  to  the  original  agree- 
ment of  the  obligations  of  his  contract  with  the  assignor.*'^  On  the 
other  hand  the  assignment  of  a  mere  personal  contract  does  not 
give  the  other  party  to  the  original  agreement  a  right  of  action 
against  the  assignee  for  its  breach.*^-     However,  if  the  assignee 

**Herbstreit  v.  Beckwith,  35  Mich.  The  assignee  mereh'  impliedly  war- 

93.  rants  that  the  contract  is  what  it  pur- 

"Wing  &  Bostwick  Co.  v.  United  ports  to  be;  or,  in  other  words,  that 

States    &c.    Guaranty    Co.,    150    Fed.  it    is   genuine."      Galbreath   v.    Wall- 

672 ;  Bend  v.  Susquehanna  Bridge  &c.  rich,  45  Colo.  537,  102  Pac.  1085.     It 

Co.,  6  Har.  &  J.   (Md.)    128,  14  Am.  has   been    held   that   no    warranty   is 

Dec.  261 ;   Despard  v.  Walbridge,   15  implied  by  the  words  "do  hereby  sell, 

N.  Y.  374.    An  assignment  for  secur-  assign,    transfer    and    set    over    unto 

ity    purposes    may    be    annulled    and  said  party  of  the  second  part  all  his 

made  absolute  by  a  subsequent  con-  right,  title  and   interest  in  and   to  a 

tract     of     assignment.       Barker     v.  certain    contract."      Pierce   v.    Coryn, 

More,  18  N.  Dak.  82,  118  N.  W.  823.  126  111.  App.  244. 

^'Desport     v.     Metcalf,     3     Head        "  Comstock    v.    Hitt,    37    111.    542; 

(Tenn.)   424.  Suvdam  v.  Dunton,  84  Hun   (N.  Y.) 

'"Trustees    of    Broaddus    Institute  506,  65   N.  Y.   St.  491.  32   N.  Y.   S. 

V.    Siers,   68   W.    Va.    125.   69   S.    E.  333;   Adams   v.    Wadhams,   40    Barb 

468,   Ann.   Cas.   1912.\,  920  and  note  (N.  Y.)  225;  Heinze  v.  Buckingham, 

on  page  923.     See  also.  Galbreath  v.  62  Hun  (N.  Y.)  622.  42  N.  Y.  St.  427, 

iWallrich,  45  Colo.  537.  102  Pac.  1085.  17  N.   Y.   S.   12;   New  York   Phono- 

**  Martin  v.  Orndorff,  22  Iowa  504 ;  graph  Co.  v.  Davega,  127  App.   Div. 

Hart  V.  Summers,  38  Mich.  399;  Cur-  (N.  Y.)  222,  111  N.  Y.  S.  363;  An- 

rier  v.  Taylor,  19  N.  H.  189.  derson  v.  New  York  &c.  R.  Co.,  132 

^■^Langdale  v.  Griffin,   135  Ga.  669,  App.    Div.    (N.    Y.)    183,    116   N.   Y. 

70  S.  E.  561.     See  also,  Riley  v.  Gal-  S.  954   ("The  assignee  of  a  personal 

arneault,    103   Minn.    165,   114   N.   W.  contract  is  not  liable  on.  and  cannot 

755.     "The  assignment  of  a  non-ne-  be   compelled   to   perform,   the   cover 

gotiable    contract    does    not    carry    a  nants    of    the    assignor")  ;    Smilh   v. 

warranty  that  it  will  be  performed.  Kellogg,  46  Vt.  560.     Compare  with 


§    1457  CONTRACTS.  726 

expressly  agrees  to  be  bound  by  the  terms  of  the  original  con- 
tract''^ or  if  he  promises  upon  a  sufficient  consideration  to  pay 
money  to  third  parties,  the  latter  may  maintain  an  action  on  the 
promise.^*  When  a  contract  is  assigned  after  it  has  been  modi- 
fied by  the  original  parties  thereto,  it  is  an  assignment  not  of  the 
contract  as  originally  drawn  but  as  niodified."^  Nor  does  the 
assignment  of  a  continuing  contract  operate  as  an  assignment  of 
the  cause  of  action  for  a  breach  committed  prior  to  the  assign- 
ment.''^  The  party  liable  may,  by  statements  made  by  him  prior 
to  the  assignment,  estop  himself  from  denying  the  validity  of  the 
claim  assigned."  An  assignment  may  be  avoided  by  the  proper 
party  when  procured  through  fraud,  duress  or  undue  influence.^^ 

§  1457.  Title  of  assignee. — But  v^hile  the  assignee  takes  all 
the  rights  of  his  assignor  under  the  agreement  transferred  to 
him,''''  the  assignor  can  assign  no  greater  interest  in  the  contract 
than  he  himself  has,  and  the  assignee  can  take  no  greater  interest 
therein  than  that  possessed  by  the  assignor  at  the  time  when  the 
debtor  or  person  liable  receives  notice  of  the  assignment.'^"     This 

American  Bridge  Co.  v.  Boston,  202  ""Regan  Vapor  Engine  Co.  v  Pa- 
Mass.  374,  88  N.  E.  1089.  The  mere  cific  Gas  Engine  Co.,  49  Fed.  68,  1 
fact  that  one  takes  land  subject  to  C.  C.  A.  169;  Chicago  Cheese  Co_v. 
deferred  payment  does  not  make  him  Fogg,  53  Fed.  72 ;  Love  v.  Van  Ev- 
personally  liable  for  such  payments  cry,  18  Mo.  App.  196 
in  the  absence  of  any  express  agree-  ""Stone  v.  Hart  (Ky.),  66  b.  W. 
ment  by  which  they  are  assumed.  191.  . 
Lavelle  v.  Gordon,  15  Mont.  515,  39  **Farjeon  v.  Indian  Territory  &c. 
Pac   740.  Oil  Co.,  120  N.  Y.  S.  298. 

'^Wiggins    Ferry    Co.    v.    Chicago  ""Walker  v.  Maddox,   105  Ga.  253, 

&c.  R.  Co.,  IZ  Mo.  389,  39  Am.  Rep.  31  S.  E.  165 ;  United  States  Casualty 

519.      See    also,    Anderson    v.    New  Co.  v.  Bagdley,   129  Mich    70,  8/   N. 

York  &c.  R.  Co..  132  App.  Div.   (N.  W.  1044,  55  L.  R.  A.  616,  95  Am.  St, 

Y)   183    116  N.  Y.  S.  954;  Younce  v.  424;    Sohnsky  v.   Fourth   Nat.   Bank, 

Broad  River  Lumber  Co.   (N.  Car.),  82  Tex.  244,  17  S    W.  1050;  Wilson 

61  S   E  624  V.    Sullivan,    1/    Utah   341,    53    Pac. 

« Smith    V.    Flack,    95    Ind.     116;  994 

Wightman  v.  Spofford,  56  Iowa  145,  *"  Doherty  v.  Doe,  18  Colo   456,  33 

8  N   W  680  •  Parks  v.  Clark,  41  Hun  Pac.  165 ;  Deming  v.  Orient  Ins.  Co., 

(n'Y)   638    2  N.  Y.   St.  329.     See  78    Fed.     1;    Third     Nat.     Bank    v. 

also,  Warrington   v.   Mengel,  41   Pa.  Western  &c.  R.  Co.,  114  Ga.  890,  40 

Super     Ct.    362.      Otherwise    where  S.   E.   1016;   Ostertag  v.   Evans,    176 

theVe  was  no  express  promise.     New  111.   215,   52   \  E.   255 ;   Commercial 

England   Dredging   Co.   v.    Rockport  Nat.  Bank  v.  Burch    141     11.  519,  6\ 

GraCe    Co.,    f49\lass.    381,    21    N.  N.  E.  420    33  Am.   St^  331 ;   Roberts 

E.  947;  Morrill  v.  Lane,  136  Mass.  93 ;  v.   Clelland    82  H^   538;   Peterson  v. 

Turner   v.    McCarty,   22    Mich.   265;  Ball,    121    Iowa   544,   97    N.    W.    79; 

Shafer  v.  Niver,  9  Mich.  253.  Sambaugh  J.  Current.  Ill  Iowa  121 

"Wood  V.  Donovan,  132  Mass.  84.  82   N.   W.  497;   State  Trust  Co.  v. 


7^7 


ASSIGNMENTS, 


§    1457 


is  true  even  though  the  assignee  may  have  acquired  the  chose 
for  value  and  without  notice."  Thus,  if  the  assignor  has  no  title 
the  assignee  takes  none,"  or  if  the  assignor  has  no  right  to  a 
vendor's  lien  his  assignee  obtains  no  such  right.'^  The  rights 
of  the  assignee  do  not  go  beyond  the  assignment  to  him,  nor  can 
they  rise  higher  than  those  of  his  assignor.''*  Thus,  any  defense 
available  against  the  original  party  to  the  contract  would  be 
available  against  his  assigTiee,"  such  as  illegality, ''°  or  a  material 


Turner,  111  Iowa  664.  82  N.  W.  1029, 
53  L.  R.  A.  136;  Wing  v.  Page,  62 
Iowa  87,  11  N.  W.  639,  17  N.  W. 
181 ;  Gossom  v.  Sharp's  Heirs,  7 
Dana  (Ky.)  140;  Willis  v.  Twambly, 
13  Mass.  204;  Hooper  v.  Van  Husen, 
105  Mich.  592,  63  N.  W.  522;  Warner 
V.  Whittaker,  6  Mich.  133,  72  Am. 
Dec.  65;  Lewis  v.  Holdredge,  56 
Nebr.  379,  76  N.  W.  890,  revg.  on 
other  grounds  on  rehearing.  55  Nebr. 
173,  75  N.  W.  549,  modified,  57  Nebr. 
219,  77  N.  W.  656:  Littlefield  v.  Al- 
bany County  Bank-,  97  N.  Y.  581  ;  Cal- 
lanan  v.  Edwards.  32  N.  Y.  483 :  Ray- 
burn  V.  Hurd,  20  Ore.  229,  25  Pac. 
635;  Pittman  v.  Ravsor,  49  S.  Car. 
469,  27  S.  E.  475 ;  Patterson  v.  Rabb, 
38  S.  Car.  138,  17  S.  E.  463,  19  L.  R. 
A.  831 ;  Judson  v.  Corcoran,  17  How. 
(U.  S.)  612,  15  L.  ed.  231;  Prim  v. 
Mcintosh,  43  W.  Va.  790,  28  S.  E. 
742. 

"Bruschke  v.  Wright,  166  111.  183, 
46  N.  E.  813,  57  Am.  St.  125.  The  as- 
signee of  a  judgment  takes  it  sub- 
ject "to  all  the  equities  of  the  debtor 
against  the  assignors  existing  at  the 
date  of  the  assignment,  or  which 
arose  after  the  assignment  and  be- 
fore the  debtor  had  notice  of  it;  and 
this  is  the  rule  of  law,  though  the  as- 
signee has  taken  the  assignment  for 
the  value,  bona  fide,  and  without 
notice  of  the  equity."  Selden  v.  Will- 
iams, 108  Va.  542,  62  S.  E.  380.  To 
same  effect,  King  v.  Miller,  53  Ore. 
53   97  Pac.  542. 

^=  Barrett'  v.'PIinklev.  124  111.  32, 
14  N.  E.  863,  7  Am.  St.  331.  Thus, 
where  the  thing  assigned  is  held 
merely  as  collateral  security  for  a 
debt  the  assignee  takes  it  subject  to 
the  rights  of  the  debtor  to  redeem 
it.  Drake  v.  Cloonan,  99  Mich.  121, 
57  N.  W.  1098,  41  Am.  St.  586.    See 


also.  Real  Estate  Trust  Co.  v.  Riter- 
Conley  Mfg.  Co..  223  Pa.  350,  72  Atl. 
695.  The  assignee  of  a  contract  for 
the  sale  of  land  who  takes  the  same 
with  knowledge  that  his  assignor  has 
preyiously  surrendered  it  to  the  orig- 
inal vendor  for  the  purpose  of  selling 
the  property  to  the  city  takes  subject 
to  the  result  of  such  negotiations 
with  the  city,  and  cannot  compel  a 
conveyance  until  negotiations  with 
the  city  have  been  broken  off.  Allen 
V.  Detroit,  167  Mich.  464,  133  N.  W. 
317,  36  L.  R.  A.   (N.  S.)   890. 

"Bell  V.  Pelt,  51  Ark.  433,  117  S. 
W.  684,  4  L.  R.  A.  247,  14  Am.  St. 
57. 

'*  Egbert  v.  Kimberly,  146  Pa.  St. 
96,  23  Atl.  437.  See  also,  Watrous 
V.  Hilliard,  38  Colo.  255,  88  Pac. 
185;  Thurston  v.  ]\lcLellan,  34  App. 
(D.  C.)  294;  Quarton  v.  American 
Law  Book  Co.,  143  Iowa  517.  121 
N.  W.  1009;  Thompson  v.  Union 
Sawmill  Co.,  121  La.  318,  46  So.  341 ; 
American  Bridge  Co.  v.  Boston,  202 
Mass.  374,  88  N.  E.  1089;  Selden  v. 
Williams,  108  Va.  542,  62  S.  E.  380.  _ 
'■*  Boatmen's  Bank  v.  Fritzlen,  175 
Fed.  183;  Thomassen  v.  De  Goey,  133 
Iowa  278.  110  N.  W.  581,  119  Am. 
St.  605;  Jack  v.  Wichita  Nat.  Bank, 
17  Okla.  430,  89  Pac.  219;  Real  Estate 
Trust  Co.  V.  Riter-Conlev  Mfg.  Co., 
223  Pa.  350.  12  .\tl.  695;  Trimmier 
V.  Valley  Falls  Mfg.  Co.,  85  S.  Car. 
13.  66  S.  E.  1055. 

"Commercial  Nat.  Bank  v.  Burch, 
141  111.  519,  31  N.  E.  420,  Z2>  Am.  St. 
331n;  Nester  v.  Continental  Brewing 
Co.,  161  Pa.  St.  473,  29  Atl.  102, 
24  L.  R.  A.  247.  41  Am.  St.  894. 
See  also,  United  Shoe  Mach.  Co.  v. 
Ramlose,  210  Mo.  631,  109  S.  W. 
567. 


§  1457 


CONTRACTS. 


728 


alteration  of  the  contract."  A  right  of  set-off  existing  in  favor 
of  the  debtor  or  person  liable  at  the  time  he  receives  notice  of 
the  assignment,"  or  counterclaim  for  a  breach  of  warranty/* 
may  be  pleaded  by  the  debtor.  It  has  also  been  held  that  an 
assignee  of  architect's  certificates  for  work  done  under  a  building 
contract  takes  them  subject  to  the  right  of  the  owner  to  recoup 
for  damages  suffered  by  reason  of  the  assignor's  default  in  the 
performance  of  his  contract.'"  If  the  rights  of  the  assignor  cease 
because  of  death  the  rights  of  the  assignee  also  fail.^^  Where 
the  insolvency  of  the  assignor  makes  impossible  the  performance 
of  a  contract  to  secure  a  loan  for  him,  the  insolvent's  assignee 
of  the  loan  contract  takes  no  right  thereunder.^^"  Nonperform- 
ance may  be  set  up  as  a  defense  against  the  assignee.*^  So  where 
the  future  earnings  of  a  contract  are  assigned,  and  the  assignor 
fails  to  complete  the  work  and  the  owner  is  compelled  to  expend 
all  or  more  of  the  contract  price  to  protect  himself  and  complete 
the  contract,  the  assignee  can  recover  nothing.'" 


"  Shiffer  V.  Mosier,  225  Pa.  552.  74 
Atl.  426,  24  L.  R.  A.   (N.  S.)   1155n. 

'^Jennings  v.  California  Bank,  79 
Cal.  323,  21  Pac.  852,  5  L.  R.  A.  233, 
12  Am.  St.  145;  Burton  v.  Willin, 
6  Houst.  (Del.)  522,  22  Am.  St.  363; 
Northwestern  &c.  Bank  v.  Rauch,  8 
Idaho  50,  66  Pac.  807;  Benson  v. 
Haywood,  86  Iowa  107,  53  N.  W.  85, 
23  L.  R.  A.  335;  First  Nat.  Bank  v. 
Security  Nat.  Bank,  34  Nebr.  71,  51 
N.  W.  305,  15  L.  R.  A.  386,  33  Am. 
St.  618:  King  V.  Armstrong.  50  Ohio 
St.  222,  34  N.  E.  163;  Nugent  v. 
Allen,  95  Tenn.  97,  32  S.  W.  9;  Bra- 
shear  V.  West,  7  Pet.  (U.  S.)  608,  8 
L.  ed.  801. 

'*  National  Bank  of  Commerce  v. 
Feeney,  12  S.  Dak.  156,  80  N.  W.  186, 
46  L.  R.  A.  732,  76  Am.  St.  594. 

^American  Bridge  Co.  v.  Boston, 
202  Mass.  374,  88  N.  E.  1089. 

"In  re  Brown's  Appeal,  125  Pa. 
St.  303,  17  Atl.  419,  11  Am.  St.  90. 
Compare  with  Harlow  v.  Oregonian 
Pub.  Co.  (Ore.),  100  Pac.  7. 

^  First  Nat.  Bank  v.  Western  Sure- 
ty Co.,  50  Kans.  313,  31  Pac.  1080. 

^^  Pacific  Rolling  Mill  Co.  v.  Eng- 
lish, 118  Cal.  123,  50  Pac.  383;  Bar- 
ber V.  Johnson,  5  App.  (D.  C)  305; 
El  Paso  Cattle  Co.  v.   Stafford,   176 


Fed.  41,  99  C.  C.  A.  515;  Sargent  v. 
Kansas  &c.  R.  Co.,  48  Kans.  672,  29 
Pac.  1063;  Buttrick  Lumber  Co  v. 
Collins,  202  Mass.  413,  89  N.  E.  138 
(holding  that  the  assignee  could  not 
recover  without  proof  that  the  con- 
tract had  been  performed  and  that  it 
was  for  the  jury  to  determine  wheth- 
er there  had  been  performance)  ; 
Chambers  v.  Lancaster,  160  N.  Y.  342, 
54  N.  E.  707;  Hazelton  Mercantile 
Co.  V.  Union  Improvement  Co.,  143 
Pa.  St.  573,  22  Atl.  906.  See  also, 
Drake  v.  Cloonan,  99  Mich.  121,  57 
N.  W.  1098,  41  Am.  St.  586.  In  the 
above  case  it  appeared  that  the  party 
against  whom  the  assignee  sought  to 
enforce  the  obligation  had  on  account 
of  nonperformance  on  the  part  of 
the  assignor  been  compelled  to  ex- 
pend more  money  than  the  contract 
price  in  completing  the  contract.  And 
Grant  v.  Sicklesteel  Lumber  Co.,  155 
Mich.  600,  119  N.  W.  1092  (holding 
that  the  assignee  of  a  money  demand 
for  the  sale  price  of  a  carload  of 
lumber  had  no  claim  against  the  pur- 
chaser when  he  refused  to  receive 
the  lumber  because  it  was  not  of  the 
qualitv    which   he   had   ordered). 

"Jenks  V.  Wells,  90  Mich.  515,  51 
N.    W.    636;    Fisken    v.    Milwaukee 


729 


ASSIGNMENTS. 


§    1458 


§  1458.  Equities  of  third  persons. — While  it  is  true  as  a 
general  rule  that  the  assignee  of  a  chose  in  action  takes  it  sub- 
ject to  the  equities  which  existed  between  the  original  parties 
to  the  contract,  yet  as  between  the  assignee  and  the  creditors  of 
the  assignor  the  former  will  be  given  priority  unless  the  convey- 
ance is  one  which  the  law  will  declare  fraudulent  as  to  creditors." 
Nor  is  the  rule  changed  by  the  fact  that  the  assignment  is  made 
as  collateral  merely,  or  as  payment  to  the  assignee  and  others 
to  whom  he  is  to  distribute  the  money  derived  from  the  trans- 
action,^*^ and  the  rule  applies  notwithstanding  neither  the  gar- 


Bridse  &c.  Works,  86  Mich.  199,  49 
N.  W.  133,  rehearing  denied  87  Mich. 
591,  49  N.  W.  873;  Union  Pacific  R. 
Co.  V.  Douglass  County  Bank,  42 
Nebr.  469,  60  N.  W.  886;  People  v. 
Third  Nat.  Bank.  159  N.  Y.  382,  54 
N.  E.35;  Beardsley  V.  Cook,  143  N.  Y. 
143,  38  N.  E.  109;  Greene  v.  Duncan, 
2>7  S.  Car.  239,  15  S.  E.  956.  See  also, 
Peden  Iron  &c.  Co.  v.  ^McKnight 
(Tex.  Civ.  App.),  128  S.  W.  156,  and 
compare  Homer  v.  Shaw  (Mass.), 
98  N.  E.  697.  Thus,  when  the  "prof- 
its" of  a  contract  are  assigned  and 
the  contract  is  performed  at  a  loss 
the  assignee  has  no  right  of  action 
against  the  debtor.  Price  v.  Cush- 
ing  &  O'Keefe  (Iowa),  110  N.  W. 
1030.  A  surety  company's  equity  of 
subrogation  has  been  held  antecedent 
to  any  claim  arising  under  an  equi- 
table assignment  of  the  contract 
where  the  work  was  completed  at  a 
loss.  Hardawav  v.  Xational  Surety 
Co.,  150  Fed.  465.  80  C.  C.  A.  283. 

"Falkner  v.  Jones,  12  Ala.  165; 
Early  v.  Redwood  City.  57  Cal.  193; 
Hopkins  v.  Pratt,  7  La.  Ann.  336; 
Brett  V.  Thompson,  46  Maine  480; 
Baldwin  v.  Wright,  3  Gill  (Md.)  241. 
See  Carroll  v.  Sullivan,  103  Mass.  31 ; 
Spengler  v.  Stiles-Tull  Lumber  Co., 
48  Miss.  780,  48  So.  966;  Cope  v. 
C.  B.  Walton  Co.,  77  N.  J.  Eq.  512, 
76  Atl.  1044.  However,  the  assignee 
for  value  of  a  distributive  share  in 
a  decedent's  estate  takes  it  subject  to 
debts  of  the  distributee  to  the  estate. 
Ford  V.  O'Donnell,  40  Mo.  App.  51; 
Crater  v.  Crater.  32  X.  J.  Eq.  484. 
See  York  v.  Conde.  66  Hun  (N.  Y.) 
316,  49  N.  Y.  St.  544,  20  N.  Y.  S. 
961.      Compare    Kinney   v.    Reid    Ice 


Cream  Co.,  57  App.  Div.  (N.  Y.) 
206,  68  N.  Y.  S.  325;  North  Penn 
Iron  Co.  V.  International  Lithoid  Co., 
217  Pa.  538,  66  Atl.  860.  Where  a 
debt  is  not  specifically  assigned,  but 
is  merely  one  of  a  number  of  sim- 
ilarly assigned  debts,  the  assignee 
will  not  in  a  court  of  equity  be  al- 
lowed to  hold  the  same  to  the  ex- 
clusion of  the  assignor's  creditors 
without  showing  that  the  remaining 
debts  assigned  fail  to  satisfy  his 
claim.  Perry  v.  Merchants'  Bank.  69 
N.  Car.  551.  When  money  is  paid  to 
an  attorney  to  be  applied  toward  the 
discharge  of  certain  judgments  ob- 
tained by  him  for  the  judgment  cred- 
itors, but  which  was  not  so  applied, 
an  assignment  by  the  judgment 
debtor  to  creditors  other  than  the 
judgment  creditors,  belongs  to  such 
other  creditors  in  preference  to  the 
judgment  creditor.  Huntingdon  v. 
Spann,  1  McCord  Eq.  (S.  Car.)  167; 
Slater  v.  Gaillard,  3  Brev.  (S.  Car.) 
115;  Fhckey  v.  Loney,  4  Baxt. 
(Tenn.)  169;  Nelson  v.  Trigg,  7  Lea 
(Tenn.)  69.  See  also,  Hubbard  v. 
Turner,  2  McLean  (U.  S.)  519.  Fed. 
Cas.  No.  6819.  The  assignment  is 
valid  as  between  the  parties  even  if 
made  with  intent  to  defraud  cred- 
itors. King  V.  Miller,  53  Ore.  53,  97 
Pac.  542. 

'"Jones  V.  Lowerv  Banking  Co.,  104 
Ala.  252.  16  So.  11;  Porter  v.  Bull- 
ard,  26  Maine  448;  Wheeler  v.  Emer- 
son, 44  N.  H.  182;  Claflin  v.  Kimball, 
52  Vt.  6.  See  also,  Finnigan  v. 
Floeck,  8  Tex.  Civ.  App.  518,  28  S. 
W.  268.  An  assignment  made  as  col- 
lateral must  be  supported  by  a  valua- 
ble consideration.     Langley  v.  Berry, 


1458 


'CONTRACTS. 


730 


nishee  nor  attaching  creditor  has  been  given  notice  of  the  assign- 
ment,*^ provided  notice  of  the  assignment  is  given  to  the  debtor 


14  N.  H.  82;  Giddings  v.  Coleman, 
12  N.  H.  153.  ^    _. 

"Davis  V.  Freethy,  24  Q.  B.  Div. 
519  59  L.  J.  Q.  B.  318;  Badeley  v. 
Consolidated  Bank,  38  Ch.  Div.  238 
57  L  J.  Ch.  468,  59  L.  T.  (N.  S.) 
419,  36  Week.  Rep.  745  ;  In  re  General 
Horticultural  Co.,  32  Ch.  Div.  512  55 
L.  J.  Ch.  608.  54  L.  T.   (N.  S.)  898, 

34  Week.  Rep.  681 ;  Morgan  v.  Lowe, 
5  Cal.  325,  63  Am.  Dec.  132  (assign- 
ment was  upheld  where  notice  there- 
of was  given  within  a  reasonable  time 
after  it  became  possible  to  give  notice 
notwithstanding  an  attachment  had 
been  levied  on  the  goods  prior  to 
such  notice)  ;  Chamberlin  v.  Gilman, 
10  Colo.  94,  14  Pac.  107;  Kitzinger 
V.  Beck,  4  Colo.  App.  206,  35  Pac. 
278;    Clark  v.   Connecticut   Peat   Co., 

35  Conn.  303;  Willes  v.  Pitkin,  1 
Root  (Conn.)  47;  Whitten  v.  Little, 
2  Ga.  Dec.  99;  Knight  v.  Griffey,  161 
111.  85.  43  N.  E.  727;  Price  v.  Ger- 
man Exch.  Bank,  60  111.  App.  418; 
Knight  V.  Grififey,  57  111.  App.  583, 
affd  161  111.  85,  43  N.  E.  727; 
Gregg  V.  Savage,  51  111.  App. 
281,  afTd.  150  111.  161,  Zl  N. 
E.  312.  In  this  jurisdiction  a 
chose  in  action  cannot  be  trans- 
ferred as  against  an  attaching  or  gar- 
nishing creditor,  an  attachment  or 
garnishment  proceeding  having  been 
instituted.  Commercial  Nat.  Bank  v. 
Pavne,  161  111.  316,  43  N.  E.  1070. 
Th'is  applies  not  only  to  the  attaching 
creditor  who  commences  the  suit, 
but  also  to  other  attaching  creditors 
who,  under  the  garnishment  law, 
have  a  right  to  share  alike  in  the  at- 
tached fund  by  reason  of  their  hav- 
ing recovered  judgment  at  the  same 
term  of  court.  Reeve  v.  Smith,  113 
111.  47.  In  Indiana  in  a  proceeding 
supplementary  to  execution,  both  the 
person  indebted  to  the  execution  de- 
fendant and  the  execution  defendant 
himself  are  necessary  parties  and 
both  must  be  served,  and  \i,  before 
service  is  had  on  the  judgment 
debtor,  the  latter  assigns  the  claim 
held  bv  him,  no  lien  is  acquired  by 
the  proceeding  although  the  assign- 
ment be  to  assignees  in  bankruptcy. 
Hoadley  v.    Cay  wood,  40   Ind.   239; 


McGuire  v.  Pitt's  Sons,  42  Iowa  535 ; 
Easley  v.  Gibbs,  29  Iowa  129;  Weire 
V.  Davenport,  11  Iowa  49,  71  Am. 
Dec.  132;  Smith  v.  Clarke,  9  Iowa 
241;  West  v.  Sanders,  1  A.  K. 
Marsh.  (Ky.)  108;  Manly  v.  Bitzer, 
12  Ky.  L.  262;  Carlin  v.  Dumartrait, 

8  Mart.  (La.)  (N.  S.)  212.  Com- 
pare the  above  case  with  Golsan  v. 
Powell,  32  La.  Ann.  521;  Littlefield 
v.  Smith,  17  Maine  Zll ;  Myer  v. 
Liverpool,  London  &  Globe  Ins.  Co., 
40  Aid.  595;  Baldwin  v.  Wright,  3 
Gill  (Md.)  241;  Kimball  v.  Le  Pert, 
1  Allen  (Alass.)  469;  Gardner  v. 
Hoeg,  18  Pick.  (Mass.)  168;  Brown 
V.  Maine  Bank,  11  Mass.  153;  Dix 
V.  Cobb,  4  Mass.  508;  Perkins  v. 
Parker,  1  Mass.  117;  Buttrick  Lum- 
ber Co.  v.  Collins,  202  Mass.  413,  89 
N.  E.  138.  But  see  Brown  v.  Foster, 
4  Cush.  (Mass.)  214;  MacDonald  v. 
Kneeland,  5  Alinn.  352;  Schoolfield  v. 
Hirsh,  71  Miss.  55.  14  So.  528,  42  Am. 
St.  450.  See,  however,  in  connection 
with  the  above  case.  Hart  v.  Forbes, 
60  Miss.  745;  Smith  v.  Sterritt,  24 
Mo.  260;  Sleeper  v.  Weymouth,  26 
N.  H.  34;  Coates  v.  First  Nat.  Bank, 
91  N.  Y.  20,  revg.  47  N.  Y.  Super. 
Ct.  322;  Callanan  v.  Edwards,  2>2 
N.  Y.  483.  Compare  with  Bishop  v. 
Garcia,  14  Abb.  Pr.  (N.  Y.)  (N. 
S.)  69;  Pellman  v.  Hart,  1  Pa.  St. 
263.  In  Pennsylvania  an  assignee  in 
bankruptcy  is  not  a  bona  fide  _  as- 
signee to  whom  notice  must  be  given 
of  an  attachment  of  debtor's  effects 
on  execution.     Cowden  v.   Pleasants, 

9  Pa.  St.  59;  Tiernay  v.  McGarity,  14 
R.  I.  231 ;  Tracy  v.  McGarty,  12  R.  I. 
168;  Bischoff  v.  Ward,  5  S.  Car.  140 ; 
Brown  v.  Mimis,  1  McCord  (S.  Car.) 
80;  Johnson  v.  Irby,  8  Humph. 
(Tenn.)  654.  "As  between  an  as- 
signee of  a  fund  under  an  equitable 
assignment  and  the  receiver  of  the 
assignor,  an  insolvent  corporation, 
notice  of  the  assignment  to  the  debtor 
or  holder  of  the  fund  is  not  neces- 
sary to  perfect  the  title  of  the  as- 
signee." Cope  v.  C.  B.  Walton,  11 
N.  J.  Eq.  512.  l(y  Atl.  1044,  quoting 
from  Cogan  v.  Conover  Mfg.  Co., 
69  N.  J.  Eq.  809,  64  Atl.  973,  115  Am. 
St.  629.    To  same  effect,  In  re  Cin- 


731 


ASSIGNMENTS. 


§    1459 


prior  to  the  entering  of  judgment,^®  and  irrespective  of  whether 
the  money  assigned  is  due  at  the  time  of  the  assignment,  or  is 
to  become  due  subsequently.®" 

However,  where  the  assignee  fails  to  give  notice  of  the  assign- 
ment to  the  debtor  until  after  judgment  is  entered  against  the 
latter  as  garnishee  defendant,  the  attaching  creditor  is  entitled  to 
preference  over  the  assignee.®"*  As  between  the  assignee  and 
prior  lienholders,  the  former  takes  the  thing  assigned  subject  to 
all  valid  and  subsisting  liens  thereon  at  the  time  of  the  assign- 
ment.®^ 

§  1459.  Rights  of  assignees  as  between  themselves — Prior- 
ity of  notice. — As  between  successive  assignees  it  is  well  es- 
tablished that  a  subsequent  assignee  who  has  notice  of  a  prior 
assignment  takes  the  thing  assigned  subject  to  the  rights  of  the 
prior  assignee.""     Difficulty,  however,  is  found  in  those  cases 


cinnati  Iron  Store  Co.,  167  Fed.  486, 
93  C.  C.  A.  122;  Spengler  v.  Stiles- 
Tull  Lumber  Co.,  48  Miss.  780,  48 
So.  966. 

**See  post,  note  90. 

'*  Smith  V.  Jennings,  15  Gray 
(Mass.)  69;  Millett  v.  Swift.  138  Ky. 
408,  128  S.  W.  312.  Insolvency  on  the 
part  of  the  assignor  known  to  the 
assignee  may  render  the  assignment 
invalid  as  against  creditors.  Cope  v. 
C.  B.  Walton  Co.,  11  N.  J.  Eq.  512, 
76  Atl.  1044.  Compare  with  In  re 
Macauley,  158  Fed.  322;  Farmers'  &c. 
Bank  v.  Wood  Bros.  &  Co.  (Iowa.), 
118  N.  W.  282. 

**Vanbuskirk  v.  Hartford  F. 
Ins.  Co.,  14  Conn.  141,  36  Am. 
Dec.  473;  Walters  v.  Washing- 
ton Ins.  Co.,  1  Iowa  404,  63  Am.  Dec. 
451;  Wood  v.  Partridge,  11  Mass. 
488;  Richards  v.  Griggs.  16  Mo.  416, 
57  Am.  Dec.  240;  Bishel  v.  Echert, 
3  Leg.  Op.  (Pa.)  375;  Rodes  v. 
Haynes,  95  Tenn.  673,  IZ  S.  W.  564; 
Nixon  V.  Joshua  Hendy  Mach. 
Works.  51  Wash.  419,  99  Pac.  11. 
The  effectiveness  of  the  assignment 
is  not  impaired  by  the  fact  that  the 
garnishee  was  not  informed  thereof 
until  after  the  service  of  the  process 
of  garnishment.  If  informed  thereof 
soon  enough  to  interpose  the  same  in 
answer  to  it  timely,  the  assignee  may 


protect  himself  from  liability  as  gar- 
nishee by  showing  the  assignment  at 
any  time  before  judgment.  Steltzer 
V.  Condon,  139  Iowa  754,  118  N.  W. 
39.  See  also,  Jackson  v.  Hollowav, 
14  B.  Mon.  (Kv.)  108;  Nichols  v. 
Hooper.  61  Vt.  295,  17  Atl.  134.  But 
see  MacDonald  v.  Kneeland,  5  Minn. 
352;  Kafes  v.  McPherson  (N.  J.), 
32  Atl.  710;  Board  of  Education  v. 
Duparquet,  50  N.  J.  Eq.  234,  24  Atl 
922;  ^leier  v.  Hess,  23  Ore.  599.  32 
Pac.  755. 

*"  Early  v.  Redwood  Citv,  57  Cal. 
193:  Randall  v.  Archer,  5  Fla.  438; 
Hetherington  v.  Hayden,  11  Iowa 
335;  First  Ward  Nat.  Bank  v.  Thom- 
as, 125  Mass.  278;  Coverdale  v.  Aid- 
rich,  19  Pick.  (Mass.)  391;  Corning 
V.  White,  2  Paige  (N.  Y.)  567,  2/ 
Am.  Dec.  659;  Franklin  Fire  Ins.  Co. 
v.  West,  8  Watts  &  S.  (Pa.)  350. 
See  also.  Tvler  v.  .Mavre,  95  Cal.  160, 
27  Pac.  160.  30  Pac.  196. 

°=Ostertag  v.  Evans,  176  111.  215, 
52  N.  E.  255;  Heins  v.  Wicke,  102 
Iowa  396,  71  N.  W.  345;  McCormac 
V.  Smith,  3  T.  B.  Mon.  (Ky.)  429; 
People  v.  Svracuse  Third  Nat.  Bank, 
159  N.  Y.  382.  54  N.  E.  35;  Gillette 
V.  Murphy.  7  Okla.  91,  54  Pac.  413: 
Creed  v.  Lancaster  Bank,  1  Ohio  St. 
1 :  Paul  V.  WilHams.  12  Lea  (Tenn.) 
215;  Leonard  v.  Burgess,  16  Wis.  41. 


§  1459 


CONTRACTS, 


732 


where  the  equities  are  latent  and  arise  between  successive  as- 
signees of  the  same  chose  in  action,  it  having  been  transferred 
to  the  subsequent  assignee  without  notice  of  the  prior  assignment 
having  been  given  or  the  latent  equity  divulged.  While  there  is 
a  conflict  of  authority  on  this  point  it  is  believed  that  the  general 
rule  in  this  country  is  that  the  assignee  who  first  gives  notice  to 
the  debtor  of  the  assignment  obtains  priority  even  though  it  is 
in  fact  subsequent.^^  Thus,  it  has  been  held  that  a  subsequent 
bona  fide  assignee  of  a  chose  in  action  who  takes  the  same  without 
any  notice  of  a  prior  assignment  and  who  promptly  gives  notice 
of  his  assignment  to  the  debtor  or  trustee  of  the  fund  and  who 
takes  possession  of  the  evidences  of  the  debt  has  a  superior  equity 
to  a  prior  assignee  who  neglects  to  give  notice  to  the  debtor  or 
trustee  holding  the  fund  and  does  not  take  possession  of  the  evi- 
dences of  the  debt.^*     As  between  two  assignees  neither  of  whom 


gives  notice,  the  one  prior  in  point  of  time  will  be  sustained 


95 


»'  Stocks  V.  Dobson,  4  DeG.  M.  &  G. 
11,  and  extended  annotations  thereto; 
Dearie  v.  Hall,  3  Russ.  1;  Graham 
Paper  Co.  v.  Pembroke.  124  Cal.  117, 
56  Pac.  627,  44  L.  R.  A.  632,  71  Am. 
St.  26;  In  re  Gillespie,  15  Fed.  734; 
Methven  v.  Staten  Island  Light, 
Heat  &  Power  Co.,  66  Fed.  113,  13 
C  C.  A.  362;  The  Elmbank,  72  Fed. 
610;  Merchants'  &  Mechanics'  Bank 
V.  Hewitt,  3  Iowa  93,  66  Am.  Dec. 
49;  Lambert  v.  Morgan,  110  Md.  1, 
72  Atl.  407,  132  Am.  St.  412;  Mur- 
doch V.  Finney,  21  Mo.  138;  Rich- 
ards V.  Griggs,  16  Mo.  416,  57  Am. 
Dec  240-  Jack  v.  National  Bank,  17 
Okla.  4"30,  89  Pac.  219;  Citizens'  Nat. 
Bank  v.  Mitchell,  24  Okla.  488,  103 
Pac.  720;  Spain  v.  Hamilton's  Admr., 
1  Wall.  604,  623;  Judson  v.  Corcoran, 
17  How.  (U.  S.)  612,  15  L.  ed.  231; 
Laclede  Bank  v.  Schuler.  120  U.  S. 
511.  30  L.  ed.  704,  7  Sup.  Ct.  644; 
Ward  V.  Morrison,  25  Vt.  593 ;  Camp- 
bell V.  Dav,  16  Vt.  558;  Coffman  v. 
Liggett's  Admr.,  107  Va.  418,  59  S.  E. 
392.  A  number  of  Pennsylvania 
cases  are  usually  cited  as  sustaining 
this  rule,  but  see  In  re  Phillip's  Es- 
tate, 205  Pa.  St.  515,  55  Atl.  213, 
66  L.  R.  A.  (N.  S.)  760n,  97  Am.  St. 
746,  where  the  court  said :  "With  the 
question  now  fairly  before  us,  we 
adopt  and  announce,  as  the  only  safe 
rule,  that,  if  an  assignee  fails  to  give 


notice  to  the  person  holding  the  fund 
assigned  to  him,  a  subsequent  as- 
signee, without  notice  of  the  forrner 
assignment,  will,  upon  giving  notice 
of  his  assignment,  acquire  priority." 
Trexler  v.  Kuntz,  36  Pa.  Super.  Ct. 
352;  American  Exchange  Nat.  Bank 
V.  Federal  Nat.  Bank,  226  Pa.  483, 
75  Atl.  683.  27  L.  R.  A.  (N.  S.)  666n, 
134  Am.  St.  1071.  See  Washington 
v.  Wabash  Bridge  &c.  Works.  147 
Mich.  571,  111  N.  W.  349,  11  L.  R. 
A.  (N.  S.)  471n,  holding  that  where 
money  is  loaned  on  a  written  assign- 
ment of  a  contract  for  public^  work 
and  the  lender  gives  no  notice  of 
his  rights  and  permits  the  contractor 
to  retain  possession  of  the  contract, 
complete  the  work  and  obtain  time 
orders  for  the  amount  due  which  he 
sells  for  value  to  a  stranger,  the 
stranger  has  the  prior  rights.  See 
also.  King  Bros.  &  Co.  v.  Central  of 
Georgia  R.  Co.,  135  Ga.  225.  69  S. 
E.  113,  Ann.  Cas.  1912A,  672  and 
note.  Hall  v.  Boston  Plate  &c.  Glass 
Co.,  207  Mass.  328,  93  N.  E.  640  (as- 
signment of  wages  decided  under 
statute)  ;  Erie  R.  Co.  v.  Smith.  68 
Misc.  (N.  Y.)  136.  123  N.  Y.  S.  973, 
affd.  128  N.  Y.  S.  1122  (assignment 
of  wages  decided  under  statute). 

»*  In  re  Gillespie.  15  Fed.  734. 

^'^  Murdoch  v.  Finney,  21  Mo.  138. 
A  subsequent  assignee  may  be  guilty 


71'^ 


ASSIGNMENTS. 


§    1460 


§  1460.  Priority  in  point  of  time — Rule  criticized. — How- 
ever, in  almost  an  equal  number  of  jurisdictions  it  is  held  that  as 
between  different  assignees  of  the  same  demand  by  an  express 
assignment  from  the  same  person,  the  one  prior  in  point  of  time 
will  be  sustained  although  such  prior  assignee  has  given  no  notice 
of  his  assignment  either  to  the  subsequent  assignee  or  to  the  one 
from  whom  the  demand  is  due.""  The  rule  announced  in  the  pre- 
ceding section  is  believed  to  state  the  better  doctrine,  and  the 
courts  of  this  country  are  gradually  adopting  it,  for  the  reason 
that  the  purchaser  should  be  required  to  do  all  that  reasonably  lies 
in  his  power  to  make  it  impossible  for  the  assignor  to  commit  a 
fraud  or  to  do  an  injury  to  subsequent  assignees  relying  on  his  in- 
tegrity and  having  no  means  of  knowing  that  he  had  ceased  to  be 
the  owner.    The  failure  to  give  notice  puts  it  in  the  power  of  the 


of  negligence  and  no  relief  extended 
to  him,  where  he  fails  to  make  in- 
quiry. Murdoch  v.  Finney,  21  Mo. 
138;  Maybin  v.  Kirby,  4  Rich.  Eq. 
(S.  Car.)  105.  See,  to  the  same 
effect,  Bank  of  Yolo  v.  Bank  of 
Woodland,  3  Cal.  App.  561,  86  Pac. 
820. 

~  White  V.  Wilev,  14  Ind.  496;  Tal- 
bot V.  Cook,  7  T.  B.  Mon.  (Ky.)  438; 
Columbia  Finance  &  Trust  Co.  v. 
First  Nat.  Bank,  116  Kv.  364,  25  Ky. 
L.  561,  76  S.  W.  156;  Gill  v.  Clagett, 
4  Md.  Ch.  153.  See,  however,  Lau- 
bert  V.  Morgan,  110  Md.  1.  12  Atl. 
407,  132  Am.  St.  412;  ^lacDonald  v. 
Kneeland,  5  Minn.  352;  Luse's  Exrs. 
V.  Parke,  17  N.  J.  Eq.  415;  Fortunato 
V.  Patten,  147  N.  Y.  277.  41  N.  E. 
572;  Williams  v.  Ingersoll,  89  N.  Y. 
508;  Muir  v.  Schenck.  3  Hill  (N.  Y.) 
228,  38  Am.  Dec.  633;  Fairbanks  v. 
Sargent,  104  N.  Y.  108,  9  N.  E.  870,  6 
L.  R.  A.  475,  58  Am.  Rep.  490 ;  York 
V.  Conde.  61  Hun  (X.  Y.)  26.  15  N. 
Y.  S.  380;  Bradlev  v.  Root,  5  Paige 
Ch.  (N.  Y.)  632:  Hopkins  v.  Banks,  7 
Cow.  (N.  Y.)  650;  Meier  v.  Hess,  23 
Ore.  599,  32  Pac.  755;  Mavbin  v. 
Kirby,  4  Rich.  Eq.  (S.  Car.)  105; 
Brander  v.  Young,  12  Tex.  332; 
Henke  v.  Keller,  50  Tex.  Civ.  App. 
533,  110  S.  W.  783;  Clarke  v.  Hoge- 
man,  13  W.  Va.  718;  Tingle  v.  Fisher, 


20  W.  Va.  497;  Leonard  v.  Burgess, 
16  Wis.  41.  See  also.  Huntress  v. 
Hanley,  195  Mass.  236,  80  N.  E.  946. 
The  assignee  of  a  bill  of  lading  of 
goods  consigned  to  the  assignee's 
vendee  stands  in  the  position  of  a 
purchaser  for  good  faith  of  the  chat- 
tels themselves  while  in  possession 
and  control  of  the  owner  and  has  a 
right  which  is  superior  to  one  who 
holds  a  prior  assignment  of  the  pur- 
chase-price due  from  the  one  to 
whom  the  goods  are  consigned.  Man- 
ufacturers' Commercial  Co.  v.  Roch- 
ester R.  Co.,  117  N.  Y.  S.  989,  affd. 
123  N.  Y.  S.  1128.  The  rule  that  the 
one  prior  in  point  of  time  is  also 
prior  in  point  of  right  has  been  said 
to  apply  only  as  between  parties  hav- 
ing equitable  interests,  where  such 
interests  are  in  all  respects  equal. 
"It  is  only  where  the  interests  as- 
signed are  equitable  in  their  nature, 
and  the  equity  of  no  assignee  is  in- 
trinsically superior  to  the  others,  that 
the  order  of  time  determines  the 
order  of  priority.  Where  the  subse- 
quent assignee  has  acquired  the  legal 
title  for  a  valuable  consideration  and 
without  notice  of  the  prior  equitable 
assignment,  he  is  protected."  King 
Bros.  &  Co.  V.  Central  of  Georgia  R. 
Co.,  135  Ga.  225,  69  S.  E.  113,  Ann. 
Cas.  1912A,  672. 


§    1 46 1  CONTRACTS.  734 

assignor  to  do  this  wrong  and  the  consequences  of  the  failure 
ought  therefore  to  be  upon  him  who  commits  it.°^ 

§  1461.  Successive  assignees — Existing  equities. — Closely 
connected  in  principle  with  the  preceding  cases  are  those  which 
have  to  do  with  the  effect  which  equities  existing  between  the 
prior  assignee  and  his  assignor  have  upon  the  rights  of  a  succes- 
sive assignee  of  a  chose  in  action.  A  number  of  authorities 
apply  the  rule  that  the  succeeding  assignee  of  a  chose  in  action 
takes  it  subject  to  all  existing  equities  at  the  time  of  such  assign- 
ment, and  hold  that  the  last  assignee  takes  the  thing  assigned 
subject  to  equities  existing  between  the  prior  assignor  and  his 
assignee.®^  Other  authorities  hold,  however,  that  when  the  last 
assignee  acts  in  good  faith  and  without  any  notice  of  equities 
existing  between  a  prior  assignor  and  his  assignee,  he  takes  the 
chose  assigned  free  from  such  equity.^''  Thus,  where  overdue 
notes  appear  on  their  face  to  have  been  assigned  absolutely,  but 
were  in  fact  taken  as  collateral  security,  it  has  been  held  that 
a  bona  fide  assignee  of  the  one  accepting  them  as  collateral 
security  is  protected  against  latent  equities  of  tliird  persons.^ 
The  same  result  was  reached  where  a  note  secured  by  a  mortgage 
long  overdue  was  transferred  by  one  holding  under  an  apparently 
valid  transfer  from  the  true  owner  to  an  innocent  purchaser  for 
value,  notwithstanding  the  assignor  had  in  fact  secured  the  trans- 
fer to  himself  by  fraud.^     It  is,  of  course,  true  that  the  succes- 

*^As    stating    the    reason    for    the  v.   Perris   Irr.   Dist.,   107  Cal.   55,  40 

rule,  see,  Dearie  v.  Hall,  3  Russ.   1,  Pac.   45;   Y.   M.   C   A.   Gym.   Co.  v. 

38;  Graham  Paper  Co.  v.  Pembroke,  Bank,  179  111.  599,  54  N.  E.  297,  46 

124  Cal.  117,  56  Pac.  627,  44  L.  R.  A.  L.  R.  A.  753n,  70  Am.  St.  135;  Moore 

632,  71  Am.  St.  26;  Lambert  v.  Mor-  v.  Moore,  112  Ind.  149,  13  N.  E.  (il2>, 

gan,  110  Md.  1,  72  Atl.  407,  132  Am.  2  Am.  St.  170;  Williams  v.  Donnelly, 

St.   412;    In   re   Phillip's   Estate,   205  54  Nebr.  193,  74  N.  W.  601:  Moore  v. 

Pa.  St.  515,  55  Atl.  213,  66  L.  R.  A.  Metropolitan  Nat.  Bank,  55  N.  Y.  41, 

760,    97    Am.     St.    746.     See,    ante,  14  Am.  Rep.  173,  overruling  Bush  v. 

§  1459.  Lathrop.    22    N.    Y.    535;    Baker    v. 

*'  Sutherland  v.  Reeve,  151  111.  384,  Wood,  157  U.  S.  212,  39  L.  ed.  Q1, 

38  N.  E.   130;  Gillette  v.  Murphy,  7  15  Sup.  Ct.  577. 

Okla.  91,  54  Pac.  413;   Westbury  v.  '  Y.  M.  C.  A.  Gym.  Co.  v.  Rockford 

Simmons,  57  S.   Car.  467,  35   S.   E.  Nat.  Bank,  179  111.  599,  54  N.  E.  297, 

764 ;     Downer     v.     South     Royalton  46  L.  R.  A.  753n,  70  Am.  St.  135. 

Bank,  39  Vt.  25.     See  also,  Drake  v.  ^Gardner  v.  Beacon  Trust  Co.,  190 

Qoonan,  99  Mich.  121,  57  N.  W.  1098,  Mass.  27,  76  N.  E.  455.  2  L.  R.  A.  (N. 

41  Am.  St.  586.  S.)   767,  and  note,   112  Am.   St.  303. 

**  Quebec  Bank  v.  Taggart,  27  Ont.  To    same    effect,    Radovsky    v.    Fall 

162;   First  Nat.  Bank  of  Bridgeport  River  Sav.   Bank,   196  Mass.  557,  82 


735  ASSIGNMENTS.  §    I462 

sive  assignee  has  no  better  title,  legal  or  equitable,  than  his  trans- 
ferrer had,  and  that  the  note  is  subject  in  his  hands  to  the  same 
infirmities  of  title  as  against  the  true  owner  and  to  the  same 
defenses  as  against  the  maker  that  it  was  subject  to  in  the  hands 
of  his  transferrer.  But  there  is  a  broad  distinction  between 
those  cases  in  which  the  transferrer  had  in  fact  no  title,  and  those 
cases  in  which  the  true  owner  of  an  overdue  note  transferred  it 
under  circumstances  which  enabled  his  transferee  to  deal  with 
it  as  if  he  were  the  true  owner  and  an  innocent  purchaser  for 
value  takes  it  from  such  transferee  before  the  transfer  has 
been  avoided ;  in  the  latter  case  no  equity  attaches  to  the  note  in 
favor  of  the  true  owner  as  against  an  innocent  purchaser  for 
value,  since  it  was  by  his  own  act  that  the  perpetrator  of  the 
fraud  was  enabled  to  commit  it.^ 

§  1462.  Evidence  of  assignment  and  of  assignee's  rights — 
Right  of  assignee  to  sue — Burden  of  proof. — In  some  juris- 
dictions it  is  provided  that  in  case  of  an  assignment  by  written 
indorsement  the  assignor  need  not  be  made  a  party,  but  that  if 
there  is  no  such  assignment  he  must  be  made  a  party  to  answer  as 
to  his  own  interest.  In  many  jurisdictions  the  assignee  is  allowed 
to  sue,  in  a  proper  case,  in  the  assignor's  name.  It  is  also  the  law 
in  many  jurisdictions  that  if  there  appears  to  be  such  a  written 
assignment  it  can  only  be  questioned  and  put  in  issue  by  the 
defendant  by  an  answer  under  oath.  In  such  a  case  it  has  been 
held  that  where  the  assignment  of  an  account  sued  on  by  the 
assignee  is  not  put  in  issue  by  an  answer  under  oath,  formal 
proof  of  the  assignment  is  unnecessary,  and  that  it  is  not  neces- 
sary to  show  the  plaintiff's  acceptance  of  the  assignment,  nor 
to  show  demand  of  payment  before  the  commencement  of  the 
action,'*  but  that  where  the  assignment  is  denied  by  an  answer 
under  oath  or  other  pleading  sufficient  under  the  statute,  the  bur- 
den is  on  the  plaintiff  to  show  a  sufficient  assignment  by  a  pre- 

N.  E.  693.    Otherwise  where  the  sue-  E.  297.  46  L.  R.  A.  753n,  70  Am.  St. 

cessive  assignee  takes  with  notice  that  135 ;    Gardner   v.   Beacon   Trust   Co., 

the  paper  is  held  as  collateral  secur-  190  Mass.  27,  76  N.  E.  455.  2  L.  R.  A. 

ity.    Dark  v.  Roberts,  206  Mass.  235,  (N.  S.)  767.  112  Am.  St.  303. 
92  N.  E.  461.  *Woronieki  v.  Pariskiego,  74  Conn. 

'  See  Y.  M.  C.  A.  Gvm.  Co.  v.  Rock-  224.  50  Atl.  562 ;  Lassiter  v.  Jackman, 

ford  Nat.  Bank,   179  111.  599,  54  N.  88  Ind.  118. 


§    1463  CONTRACTS.  736 

ponderance  of  the  evidence.^  In  another  jurisdiction,  it  has  been 
held  that  where  the  complaint  alleges  that  the  plaintiff  is  the 
actual  bona  fide  owner  of  the  claim  sued  on,  by  written  assign- 
ment, although  a  general  denial  admits  the  due  execution  and 
delivery  of  the  written  assignment,  yet  such  denial  puts  in  issue 
the  right  of  the  plaintiff  to  sue  as  the  actual  bona  fide  owner  of 
the  claim,  and  the  burden  is  upon  him  to  show  that  he  is  its  owner 
for  his  own  benefit,  without  accountability.^  Where,  however,  the 
plaintiff  holds  the  cause  of  action  as  collateral  security  for  a  debt 
due  him  from  a  third  person,  the  burden  of  proving  a  defense 
arising  out  of  the  state  of  dealings  between  the  plaintiff  and  his 
principal  debtor,  such,  for  instance,  as  that  the  principal  debt  has 
been  paid,  or  is  not  equitably  enforcible  as  against  the  defendant, 
has  been  held  to  be  upon  the  latter.'^ 

§  1463.  Evidence  of  assignee's  right. — In  a  case  where  a 
statement  of  the  account  sued  on  was  attached  to  the  complaint, 
and  an  assignment  of  the  account  in  writing  appeared  at  the  close 
thereof  signed  by  the  person  who  performed  the  services  which 
the  account  was  for,  and  he  testified  that  the  signature  was  gen- 
uine, this  was  held  sufficient  evidence  of  the  assignee's  right 
to  sue.*  It  has  also  been  held,  that  where  one  assigned  a  trade 
secret,  but  did  not  become  the  owner  thereof  until  afterward, 
his  assignee  took  title  by  estoppel.**  In  another  case,  a  promise 
by  a  son  to  his  father  on  receiving  property  from  the  latter,  that, 
at  the  death  of  the  father,  the  son  would  pay  his  sister  a  certain 
sum,  was  held  to  be  or  create  a  chose  in  action,  which,  being 
assigned  to  the  sister,  could  be  enforced  by  her.  It  was  also  held 
that  the  agreement  of  the  son  with  his  sister,  at  the  request  of  the 

''Stair  V.  Richardson,  108  Ind.  429,  Wis.  145,  120  N.  W.  837,  21  L.  R.  A. 

9  N.  E.  300;  Doty  v.  Graska  (Iowa),  (N.  S.)  359n,  131  Am.  St.  1046. 

126  N  W   1108  'Hogarty  v.   Lynch,   6   Bosw.    (N. 

•Uncas    Paper    Co.    v.    Corbin,    75  Y.)    138.    See,  generally,  as  to  when 

Conn.  675,  55  Atl.  165 ;  Woronieki  v.  assignee  may  sue   m  his  own  name, 

Pariskiego,  74  Conn.  224,  50  Atl.  562 ;  the  notes  in  64  L.  R.  A.  581,  and  17 

Gaffney  v.  Tammany,  72   Conn.  701.  L.  R  A    (N   S.)  1113. 

46   Atl     156-    Wagenhurst   v.    Wine-  « Neal  v.  Heymg  (Iowa),  98  N.  W. 

land,  20  App.  (D.  C.)  85.   Where  the  603              ^    .     .       _ 

answer  is  a  general  denial  the  bur-  ^   Vulcan  Detinning  Co  v  American 

den  is  on  the  assignee  to  show  a  valid  Can  Co.,  67  N.  J.  hq.  ^4J,  58  Atl.  <iyu. 
assignment.    Johnson  v.  Vickers,  139 


y2>7  ASSIGNMENTS.  §    1 463 

father,  to  pay  the  money  to  her,  was  sufficient  evidence  of  a  de- 
livery of  such  chose  in  action." 

In  another  instance  the  action  was  brought  on  certain  bounty 
claims  against  the  state,  and  evidence  that  the  plaintiff's  as- 
signor had  purchased  them  from  one  claiming  to  be  the  person 
named  as  the  owner  in  a  certificate  issued  to  such  owner,  in 
accordance  with  the  statute,  by  the  clerk,  and  who  then  had  such 
certificate  in  his  possession  and  thereupon  delivered  it  to  the  pur- 
chaser, and  each  of  the  holders  of  such  certificates  transferred 
the  same  in  the  name  of  such  holder,  authorizing  the  purchaser  by 
power  of  attorney  to  receive  the  warrant  therefor  from  the  state 
controller  and  the  money  from  the  state  treasurer,  was  held  suffi- 
cient to  prove  that  such  claims  were  transferred  to  plaintiff  by 
the  original  owners,  in  the  absence  of  evidence  that  the  persons 
making  the  assignments  were  not  the  identical  persons  named 
in  the  certificates.  The  line  of  argument  pursued  by  the  court 
was  substantially  as  follows :  The  law  presumes  that  a  person 
is  the  owner  of  property  from  exercising  acts  of  ownership. 
Likewise,  the  law  presumes  that  a  person  is  innocent  of  crime 
or  wrong  in  civil  as  well  as  in  criminal  cases,  and  it  will  be 
presumed  that  the  persons  making  the  transfers  and  executing 
the  power  of  attorney  did  not  attempt  to  personate  others,  and 
by  so  doing  fraudulently  procure  property  to  which  they  were 
not  entitled,  but  rather  that  they  were  the  persons  whom  they 
represented  themselves  to  be,  the  persons  designated  in  the  cer- 
tificates of  which  they  had  possession,  and  the  owners  of  claims 
which  they  purported  to  sell.  In  each  transaction  the  person 
signing  the  power  of  attorney  signed,  as  his  name,  the  name 
appearing  in  the  certificate  as  the  name  of  the  person  to  whom  the 
certificate  had  been  issued.  Identity  of  person  is  presumed  from 
identity  of  name,  and  it  must  therefore  be  presmned  that  the  per- 
son signing  the  power  of  attorney  was  the  person  named  in  the 
certificate  as  the  original  owner  of  the  claim.  As  the  person  who 
signed  the  power  of  attorney  is  the  person  who  sold  the  claim, 
the  proof  is  complete.  ^^ 

"Ebel  V.  Piehl,  134  Mich.  64,  95  N.        "  Bickerdikc   v.    State.  144  Cal.  681, 
W.  1004.  78  Pac.  270.    See  also,  Bauer  v.  State, 

144  Cal.  740,  78  Pac.  280. 

47 — Contracts,  Vol.  2 


§    1464  CONTRACTS.  738 

§  1464.  Proof  of  the  assignment. — It  has  been  held  that  a 
patent  regularly  issued  to  the  assignee  of  a  land  warrant  is  prima 
facie  evidence  that  the  assignment  was  regularly  made/^  and 
that  such  an  assignment  will  be  presumed  from  great  lapse  of 
time,  together  with  the  fact  of  payment  of  a  consideration  for 
the  land."  The  execution  of  a  written  assignment  may  generally 
be  proved  by  the  acknowledgment  of  the  assignor,  or  it  may  be 
proved,  as  in  New  York,  by  a  subscribing  witness,  before  an 
officer  authorized  to  take  acknowledgment  and  proof  of  deeds; 
and  this  may  be  done  in  that  state  even  after  the  action  has  been 
commenced,  and  at  any  time  before  the  actual  offer  of  the  docu- 
ment in  evidence."  But  unless  this  is  authorized  in  the  particular 
jurisdiction,  and  is  done,  the  assignment,  whether  under  seal  or 
not,^^  if  attested  by  a  subscribing  witness,  must  generally  be 
proved  by  the  witness  or  by  his  handwriting,^^  except  where, 
as  in  many  jurisdictions,  the  rule  requiring  a  subscribing  witness 
to  be  called  has  been  relaxed  by  statute  or  otherwise.^^ 

Direct  proof  of  an  assignment,  however,  is  not  always  essen- 
tial. The  assignment  of  a  mortgage  or  collateral  may  be  shown 
in  many  instances  by  proof  of  an  assignment  of  the  principal 
obligation.^^  But  an  assignment  of  the  principal  obligation  can- 
not ordinarily  be  inferred  from  the  mere  fact  of  an  assignment 
of  a  collateral  security  or  other  incident.^* 

"McArthur    v.    Phoebus,    2    Ohio  unless  denied  under  the  oath.    Even 

415 ;     McArthur's    Heirs'    Lessee    v.  the  beneficiary,  it  has  been  held,  may 

Gallaher,  8  Ohio  512.  testify  to  its  execution  if  there  is  no 

"Duke  V.  Thompson,   16  Ohio  34;  subscribing    witness.     Tittle    v.    Van- 

Bridenbaugh    v.    King,    42    Ohio    St.  leer  (Tex.  Civ.  App.),  27  S.  W.  736. 

410.  "Ryan  v.  Dunlap,  17  111.  40,  63  Am. 

"Holbrook  v.  New  Jersey  Zinc  Co.,  Dec.  334;  Lindsey  v.  Bates,  42  Miss. 

57  N    Y   616  397;  Jackson  v.  Blodget,  5  Cow.   (N. 

"1  Greenleaf  Ev.   (15th  ed.),§569;  Y.)  202;  Green  v.  Hart,  1  Johns.  (N. 

King  V.  Smith,  21  Barb.  (N.  Y.)   158.  Y.)    580;   Cady  v.   Sheldon,  38  Barb. 

"1  Greenleaf  Ev.  (15th  ed.),  §  569;  (N.  Y.)  103;  Pattison  v.  Hull,  9  Cow. 

Jones    V.    Underwood,   28   Barb.    (N.  (N.   Y.)    747;    Bowdoin   v.    Coleman, 

Y.)  481.  3  Abb.  Pr.   (N.  Y.)  431,  6  Duer.  (N. 

"It  is  now  the  law  in  most  juris-  Y.)    182;   Bolen  v.   Crosby,  49  N.  Y. 

dictions  that  the  execution  of  an  or-  183.     See   also,   Baugher  v.   Woollen, 

dinary  written  assignment  of  a  chose  147   Ind.   308,  45   N.    E.  94;    Bartlett 

in  action  or  the  like  may  be  proved  Estate  Co.  v.  Fairhaven  Land  Co.,  49 

by  evidence  of  those  who  saw  it  exe-  Wash.   58,  94  Pac.  900,    15   L.   R.   A. 

cuted,  and  by  proof  of  the  signature,  (N.  S.)   590n,  126  Am.  St.  856. 

as  well  as  in  other  ways.    So,  as  al-  ^*Merritt    v.    Bartholick,    36    N.    Y. 

ready  shown,   in   many  jurisdictions,  44,  affg.  47  Barb.    (N.  Y.)   253.    See 

its  execution  is  regarded  as  admitted  also,  Jones  v.  Williams,  155  N.  Car. 


739  ASSIGNMENTS.  §    I465 

If  the  assignment  is  oral  it  may  be  proved  by  parol, ^^  even 
though  there  was  an  agreement  unperformed  to  give  a  written 
transfer."  But  the  plain  import  of  a  written  assignment  cannot 
be  varied  by  parol  evidence.^^  It  is  sufficient  proof  of  a  parol 
assignment  that  some  evidence  of  the  debt,  such  as  a  bond 
and  mortgage,  or  a  note  held  for  the  debt,  or  the  like,  was 
delivered  to  the  assignee  by  the  assignor,^^  with  intent  to 
transfer  the  title  to  the  demand;  and  the  declarations  of  the 
assignor  accompanying  the  delivery  may  usually  be  proved  as  a 
part  of  the  res  gestae.  But,  on  the  other  hand,  it  has  been  held 
that  neither  the  mere  production  of  a  nonnegotiable  security,** 
nor  proof  of  mere  words  of  intention  on  the  part  of  the  alleged 
assignor,  are  enough,  and  that  the  plaintiff  cannot  prove  his  title 
by  mere  evidence  of  oral  declarations  of  the  assignor,  unknown 
to  the  defendant,  that  he  had  at  a  previous  time  assigned  the 
demand  to  plaintiff.^^  Under  an  allegation  of  an  assignment, 
evidence  of  an  assignment  after  the  commencement  of  the  suit 
has  been  held  insufficient  to  sustain  the  action.^® 

§  1465.  Assignee  of  corporation. — Where  the  plaintiff 
claims  as  assignee  of  a  corporation,  it  has  been  said  that  evidence 

179,  71  S.  E.  222,  36  L.  R.  A.  (N.  S.)  assignment   was   not    made    in    good 

426.  faith,  but  merely  for  the  purpose  of 

^"Gurnell    v.    Gardner,   9   Jur.    (N.  qualifying  the  assignor  as  a  witness 

S.)   1220;  Hoffman  v.  Smith.  94  Iowa  in  the  action. 

495,  63  N.  W.  182 ;  Dunn  v.  Snell,  15  "  Worrall  v.  Parmelee.  1  N.  Y.  519 ; 

Mass.  481;  Hooker  v.  Eagle  Bank,  30  Crocker  v.   Muller,  4  Misc.    (N.   Y.) 

N.  Y.  83,  86  Am.  Dec.  351;  Kessel  v.  685,  83   N.  Y.   S.   189   (testimony  of 

Albetis,  56  Barb.   (N.  Y.)  362.  the  assignor  that  he  intended  to  as- 

^  Doremus  v.  Williams,  4  Hun  (N.  sign   his  title  to  the  chose  in  action 

Y.)  458.  held  sufficient).    A  mere  intention  to 

'* Albert  v.  Albert,  12  Cal.  App.  268,  assign  is  not  sufficient,  however;  the 

107  Pac.  156.  intention    must    be    actually    consum- 

"Runyan   v.    Mersereau,   11    Johns,  mated.   Werner  v.  Finley  (Mo.  .-Kpp.), 

(N.    Y.)    534.     And    see    Kamend   v.  129  S.  W.  IZ.    A  mere  promise  to  as- 

Huelbig,   12  Am.  Law.  Reg.    (N.  S.)  sign  is  not  an  assignment.    Henke  v. 

61;   Mack  v.   Mack,  3  Hun    (N.  Y.)  Keller.  50  Tex.  Civ.  App.  533.  110  S. 

323,  5  Thomp.  &  C.  528;  Armstrong  W.  783.    To  same  effect.  Speckman  v. 

V.   Cushney,   43   Barb.    (N.   Y.)    340;  Smedlev.   153   Fed.  771;   Mathison  v. 

Billings   V.   Jane,    11    Barb.    (N.   Y.)  Magnuson.  226  111.  368.  80  N.  E.  885. 

620.    I3ut  as  to  the  strict  common-law  °°  Bowen  v.   New  York  &c.  R.  Co., 

rule,   see  Palmer  v.  Merrill,  6  Cush.  202  Mass.  263,  88  N.  E.  781 ;  Garrigue 

(Mass.)   282,  52  Am.  Dec.  782.  v.  Loescher,  3  Bosw.  (N.  Y.)  578.    It 

"*  Barrick  v.   Austin,  21   Barb.    (N.  has  been  held  that  ratification  of  un- 

Y.)   241.    See  also,   Platner  v.  Rvan,  authorized  assignment  of  a  chose  in 

76  N.  J.  L.  239,  69  Atl.  1007,  holding  action  made  after  suit  is  brought  will 

evidence  admissible  to  show  that  the  not  relate  back  to  the  date  of  such 


§    1465  CONTRACTS.  74O 

of  the  existence  of  the  corporation  is  admissible  without  any  alle- 
gation of  the  fact  other  than  such  as  is  implied  in  the  mention 
of  the  corporate  name  in  the  complaint.-^  As  against  the  debtor, 
an  assignment  of  the  cause  of  action  has  been  presumed  valid, 
although  a  vote  of  the  board  was  necessary  to  its  legality,  and 
there  was  no  evidence  thereof.^^  But  where  there  was  evidence 
that  the  transfer  was  made  without  a  vote  of  the  board,  the  bur- 
den was  held  to  be  on  the  assignee  to  show  that  he  took  it  for 
value  and  without  notice.""  This  he  may  show  in  support  of  his 
title,  whether  he  took  directly  from  the  corporation  or  through  a 
a  third  person.^''  The  fact  that  the  plaintiff,  himself,^^  was  a 
director  at  the  time  of  such  an  illegal  transfer  has  also  been  held 
sufficient  evidence  of  notice  to  defeat  the  action.  The  official 
character  of  the  officers  making  the  transfer  may  be  proved  either 
by  the  corporate  minutes,  or,  in  a  proper  case,  by  witnesses  tes- 
tifying to  the  fact  of  their  habitually  acting  as  such,^^  and  the 
jur}^  may  infer  that  the  officer  had  authority  to  do  the  particular 
act  from  evidence  of  the  exercise  by  him  of  the  same  general 
power,  with  knowledge  and  acquiescence  of  the  directors.^^  So, 
where  the  due  execution  of  the  assignment  is  admitted  in  the 
pleadings,  this  admission  implies  that  the  persons  who  executed 

assignment,  and  thereby  support  the  ^  Smith  v.  Hall,  5  Bosw.   (N.  Y.) 

action.    Read  v.   Buffum,  79  Cal.  11,  319. 

21    Pac.    555,    12   Am.    St.    131.     But  ^^  Partridge  v.  Badger,  25  Barb.  (N. 

variance  in  the  mode  of  assignment  Y.)    146.     An  assignment  of  a  claim 

may  be  disregarded,   if  not   prejudi-  by   a    corporation,     executed    by    its 

cial.    Bowman  v.  Keleman,  65  N.  Y.  president,  and  attested  by  its  secre- 

598.   See  as  to  presumption  and  proof  tary  and  corporate   seal,   is   sufficient 

of  date,   Barrick  v.  Austin,  21   Barb,  to   protect   the   debtor   in   paying  the 

(N.  Y.)  241.  amount  of  the  claim  to  the  assignee. 

"Kennedy  v.  Cotton,  28  Barb.   (N.  Purdy   v.    Nova    Scotia    Midland    R. 

Y.)  59.  Co.,  8  Misc.  (N.  Y.)  510,  28  N.  Y.  S. 

'*Belden  v.  Meeker,  47  N.  Y.  307,  758,  59  N.  Y.  St.  409,  affd.   11  Misc. 

affg.  2  Lans.   (N.  Y.)   470,  9  Moak's  (N.  Y.)   406,  32  N.  Y.  S.  157,  65  N. 

Eng.    255,    note;    Houghton    v.    Mc-  Y.    St.    282.      But    authority    of    the 

Auliff,    2   Abb.    Dec.  (N.  Y.)  409,  26  secretary  to  make  an  assignment  of 

How.  Pr.  (N.  Y.)  270.  the  indebtedness  due  to  the  corpora- 

"  Houghton    v.    McAuliff,    2    Abb.  tion  will  not  be  presumed.     Read  v. 

Dec.   (N.  Y.)   409,  26  How.  Pr.    (N.  Buffum,  79   Cal.  11,  21   Pac.  555,   12 

Y.)  270.    Contra,  Caryl  v.  McElrath,  Am.   St.   131. 

3  Sandf.  (N.  Y.)  176.  "Merchants'   Bank  v.   State   Bank, 

''Curtis    V.    Leavitt,    15    N.    Y.    9.  10    Wall.     (U.    S.)    604,    19    L.    ed. 

Proof  of  payment  of  value  has  been  1008.      Compare   Hoyt   v.   Thompson, 

said  to  raise  a  presumption  that  the  5    N.    Y.   320;    Jackson   v.    Campbell, 

plaintiff  took  without  notice.   Warner  5  Wend.   (N.  Y.)  572. 
V.  Chappell,  32  Barb.  (N.  Y.)  309. 


741 


ASSIGNMENTS. 


§    1466 


it  in  behalf  of  the  corporation  had  authority  to  do  so,  and  that  the 
seal  attached  is  its  common  seal.^* 

§  1466.  Delivery  and  acceptance. — Delivery  of  a  written 
assignment  is  sufficiently  proved  or  presumed  when  the  instru- 
ment is  proved  to  have  been  executed  by  the  assignor,  and  is 
actually  produced  by  the  plaintiff  at  the  trial."  So,  it  has  been 
held  that  affinnative  proof  of  the  acceptance  of  an  assignment 
which  appears  to  be  beneficial  to  the  assignee  is  not  required  from 
the  party  relying  upon  it,  and  that  the  party  impeaching  it  must 
disprove  acceptance.^"  The  presumption  is  usually  indulged  in 
such  a  case  that  the  assignment,  being  beneficial  to  the  assignee, 
was  accepted  by  him,^^  and  the  same  presiunption  of  acceptance 
has  been  held  to  arise  in  case  of  a  voluntary  general  assignment 
for  the  benefit  of  creditors.^^  So,  the  assignment  of  a  mortgage 
by  a  nominal  mortgagee  is  sufficient  to  show  an  acceptance  by 
him."** 


"Woronieki  v.  Pariskiego,  74 
Conn.  224,  50  Atl.  562. 

=^  Story  V.  Bishop,  4  E.  D.  Smith 
(N  Y.)  423;  North  v.  Turner,  9 
Serg.  &  R.  (Pa.)  244. 

^Van  Buskirk  v.  Warren,  4  Abb. 
App.  Dec.  (N.  Y.)  457.  As  to  evi- 
dence of  delivery  and  acceptance 
generally,  see  Marshall  v.  Strange, 
10  Ky.  L.  410,  9  S.  W.  250 ;  William- 
son v.  Yager,  91  Kv.  282,  15  S.  W. 
660,  34  Am.  St.  184n ;  Owen  v.  Pot- 
ter. 115  Mich.  556,  11  N.  W.  977; 
Palmer  v.  Merrill,  6  Cush.  (Mass.) 
282,  52  Am.  Dec.  782:  Hackett  v. 
Moxley,  65  Vt.  71,  25  Atl.  898.  As 
to  assignment  by  separate  writing, 
see  Franklin  v.  Twogood,  18  Iowa 
515 ;  Erickson  v.  Kelly,  9  N.  Dak.  12, 
81  N.  W.  n .  As  to  constructive  de- 
livery where  there  is  no  writing,  see 
Preston  v.  Peterson,  107  Iowa  244, 
77  N.  W.  864;  White  v.  Kilgore,  11 
Maine  571,  1  Atl.  739;  Risley  v. 
Phoenix  Bank,  83  N.  Y.  318.  38  Am. 
Rep.  421.  affd.  Ill  U.  S.  425,  28  L. 
ed.  374,  4  Sup.  Ct.  322  (proof  of  de- 
liverv  not  required)  ;  Wolcott  v. 
Merchants'  &c.  Oil  Co.,  60  N.  Y.  S. 
862    (Long   acquiescence    in    the   as- 


signee's claim  was  held  to  raise  a 
presumption  of  its  legal  origin,  and 
proof  of  delivery  was  not  required. )  ; 
Rollison  V.  Hope,  18  Tex.  446; 
Noyes  v.  Brown,  ZZ  Vt.  431. 

"Kaufman  v.  State  Sav.  Bank, 
151  Mich.  65,  114  N.  W.  863;  18  L. 
R.  A.  (N.  S.)  630n,  123  Am.  St. 
259;  Peavey  v.  Tilton,  18  N.  H.  151. 
See  note  in  45  Am.  Dec.  365,  and 
Merrills  v.  Swift,  18  Conn.  257,  46 
Am.  Dec.  315. 

^^Burrill  Assignments,  §  239; 
Fleming  v.  Stiefel,  8  Ohio  Dec.  R. 
779,  9  Wkly.  L.  Bui.  350. 

'*Lady  Superior  of  the  Congre- 
gational Nunnery  v.  McNamara.  3 
Barb.  Ch.  (N.  Y.)  375,  49  Am.  Dec. 
184.  And  acceptance  of  a  contract 
to  sell  real  estate  has  been  held  suf- 
ficiently shown  by  the  placing  of  the 
matter  in  the  hands  of  a  title  guar- 
anty company  with  directions  to  ex- 
amine the  title  and  prepare  a  deed, 
and  requiring  the  assignor  to  secure 
title  to  a  small  strip  of  ground  upon 
which  a  building  on  the  land  en- 
croaches. Evans  v.  Stratton,  142  Ky. 
615,  134  S.  W.  1154.  34  L.  R.  A. 
(N.  S.)  393. 


CHAPTER  XXXIV. 


JOINT  AND  SEVERAL  CONTRACTS. 


§  1470.  What  is  joint  and   what  sev-     §  1484. 
eral. 

1471.  General    Rule    Stated— Rights       1485. 

of    Parties.  1486. 

1472.  Illustrative    cases — Joint    con- 

tracts. 1487. 

1473.  Joint     contracts — Further     il-       1488. 

lustrated. 

1474.  Illustrative    cases — S  e  v  e  r  a  1        1489. 

contracts. 

1475.  Illustrative    cases — Joint    and        1490. 

several    contracts. 

1476.  Intention  of  parties  generally        1491. 

governs.  1492. 

1477.  Form  of  promise  as  test.  1493. 

1478.  Interest  of  parties  as  test.  1494. 

1479.  Liability  of  joint  obligors. 

1480.  Contracts  of  subscription.  1495. 

1481.  Subscription    Contracts    Fur- 

ther    Illustrated— May     Be       1496. 
Joint.  1497. 

1482.  Effect  of  release  of  one  joint        1498. 

debtor. 

1483.  As  Affected  by  the  Intention 

of  the  Parties. 


Settlement  with  one  joint 
debtor. 

Covenant  not  to  sue. 

Effect  of  Death  of  Joint  Con- 
tractor at  Lawr. 

The  Rule  in  Equity. 

Where  the  deceased  joint 
debtor   is   surety. 

When  a  surety's  estate  is 
held  liable. 

Contribution  among  joint 
debtors. 

Contribution    among    sureties. 

Actions  on  joint  contracts. 

Judgments  on  joint  contracts. 

Judgments  on  joint  eontracts 
further  considered. 

Actions  on  joint  and  several 
contracts. 

Statutory    modifications. 

Other  statutory  modifications. 

Effect  of  statute  of  Limita- 
tion. 


§  1470.    What  is  joint  and  what  several. — Contracts  may 

be  joint,  or  several,  or  they  may  be  joint  and  several.  A  joint 
contract  is  one  by  which  two  or  more  promisors  are  jointly  bound 
to  fulfil  its  obligations  and  either  of  whom  may  be  charged  with 
the  entire  liability  arising  under  the  contract  or  by  which  two  or 
mort  obligors  are  given  a  joint  right.^     "Several  contract"  is  the 


Mason  v.  Eldred,  6  Wall.  (U.  S.) 
231,  18  L.  ed.  783;  Black's  L.  Diet. 
In  Louisiana  a  different  nomencla- 
ture is  used.  In  that  jurisdiction  the 
term  "solidary  obligation"  is  synon- 
ymous with  the  common-law  term 
"joint  contracts,"  and  "joint  obli- 
gation" with  the  common-law  "sever- 
al contracts."    Thus  "A  joint  obliga- 


tion under  the  law  of  Louisiana  binds 
the  parties  thereto  only  for  their 
proportion  of  the  debt  *  *  * 
whilst  solidary  obligation,  on  the 
contrary,  binds  each  of  the  obligors 
for  the  whole  debt."  Groves  v.  Sen- 
tell,  153  U.  S.  465,  38  L.  ed.  785,  14 
Sup.  Ct.  898. 


742 


743  JOINT    AND    SEVERAL    CONTRACTS.  §    1 47 1 

antonym  of  "joint  obligation."  In  the  former  the  h'abihty  of  each 
promisor  is  individual  and  separate,  and  is  coextensive  only  with 
that  fraction  of  the  entire  obligation  assumed  by  him,^  or  it  may 
be  that  each  severally  undertakes  the  entire  liability  and  remains 
seixirately  responsible  without  reference  to  the  liability  of  his  co- 
promisors.^  A  joint  and  several  contract  combines  the  elements 
found  in  the  two  groups  just  mentioned.  When  the  contract  is 
joint  and  several  its  obligations  are  imposed  upon  each  promisor 
individually  and  upon  all  the  promisors  jointly,  and  the  promisee 
may  elect  to  sue  the  parties  liable  separately  on  their  several  en- 
gagements or  together  on  their  joint  imdertaking.* 

§  1471.  General  rule  stated — Rights  of  parties. — The  gen- 
eral rule  may  be  stated  as  follows:  If  the  contract  made  by 
several  persons  purports  simply  to  bind  themselves  or  to  covenant 
without  more,  the  obligation,  or  covenant,  is  taken  to  be  joint  only 
and  not  several;  if  the  contract  purports  that  they  bind  them- 
selves,- or  covenant  severally,  the  liability  is  separate;  if  they 
purport  to  bind  themselves  jointly  and  severally,  or  to  bind 
themselves  and  each  of  them,  or  to  covenant  for  themselves 
and  each  of  them,  using  both  joint  and  several  words,  the 
liability  is  both  joint  and  several.^  The  introduction  into  a 
contract  of  terms  expressly  joint  will  entail  a  joint  liability, 
although  the  parties  would  have  been  otherwise  only  sev- 
erally^ or  jointly  and  severally  liable.'^  On  the  other  hand, 
where  words  of  severalty  are  introduced  into  the  contract 
or  agreement,  the  parties  thereby  incurring  liability  are  en- 
titled to  the  benefit  resulting  from  them.®  The  promisee  has  no 
right  to  treat  the  contract  as  either  joint  or  several  at  his  election.' 

'Evans    v.    Sanders,    10    B.    Mon.  'Chicago.   M.   &  St.   P.   R.   Co.  v. 

(Ky.)  291.     See  also,  Landwerlen  v.  Chicago.  183  111.  341.  55  N.  E.  648. 

Wheeler,  106  Ind.  523,  5  N.  E.  888.  'Perkins    Co.   v.    Miller,   55    Nebr. 

See  also,  Bouv.  L.  Diet.  141,   75    N.   W.   577. 

'Lurton   v.   Gilliam,   2  111.   577,  33  *Manscll  v.  Burredge,  7  T.  R.  352; 

Am.    Dec.   430;    Pavne   v.   Jelleff,   67  Lee  v.  Nixon,  1  Ad.  &  El.  201:  Mc- 

Wis.  246,  30  N.  W.'  526.  Arthur   v.    Board.    119   Iowa   562,   93 

*  Mason    v.    Eldred.    6    Wall.     (U.  N.  W.   580:   Board  of   Education  of 

S.)  231.    See  also,  Beecham  v.  Smith,  Newark  v.   Howard,  65  N.  J.  L.  75, 

El.  B.  &  E.  442 :   Schilling  v.  Black,  46  Atl.  574.  See  also.  Silver  v.  Tecot- 

49  Kans.  552,  31  Pac.  143.  sky.  129  N.  Y.  S.  74. 

**  Simpson  v.  Vaughan,  2  Atk.  31.  "Eveleth  v.  Sawyer,  96  Maine  227. 


§  1472 


CONTRACTS. 


744 


§  1472.   Illustrative  cases — ^Joint  contracts. — When  two  or 

more  persons  assume  a  contractual  obligation  or  are  given  a  right, 
it  is  prestuned  to  be  a  joint  obligation  or  a  joint  right  in  the 
absence  of  anything  to  show  a  different  intention  or  a  statutory 
enactment  changing  the  rule/*^  The  presumption  that  the  obliga- 
tion is  a  joint  undertaking  is  not  conclusive,  however,  and  may  be 
rebutted,  and  is  rebutted  when  the  obligation  contains  words  of 
severance  which  show  that  it  was  the  intention  of  the  parties  that 
it  should  be  several  as  well  as  joint."  But  a  promise,  the  subject- 
matter  of  which  is  entire,  and  which  is  joint  in  its  terms  and  ob- 
ject, cannot  be  made  several  by  any  doubtful  implication  or  limi- 
tations."    Such  words  as  "we  promise,'"^  "we  hereby  guaran- 


52  Atl.  639.  A  joint  promise  cannot 
be  treated  as  a  several  one.  Post  v. 
Shafer,  63  Mich.  85,  29  N.  W.  519. 
However,  the  same  contract  may 
contain  covenants  that  are  joint  and 
others  that  are  several.  Krbel  v. 
Krbel.  84  Nebr.  160,  120  N.  W.  935. 
See  also,  Current  v.  Fulton,  10  Ind. 
App.  617,  38  N.  E.  419. 

^"Forster  v.  Taylor,  3  Camp.  49; 
London  Gaslight  &c.  Co.  v.  Nicholls, 
2  Car.  &  P.  365;  Gummer  v.  Mairs, 
140  Cal.  535,  74  Pac.  26  (made  stat- 
utory virith  exceptions)  ;  McArthur 
V.  Board,  119  Iowa  562,  93  N. 
W.  580;  Hill  v.  Combs,  92  Mo. 
App.  242;  Turley  v.  Thomas,  31  Nev. 
181,  101  Pac.  568,  135  Am.  St.  667n; 
Alpaugh  V.  Wood,  53  N.  J.  L.  638,  23 
Atl.  261;  Clements  v.  Miller,  13  N. 
Dak.  176,  100  N.  W.  239;  Morrison 
V.  American  Surety  Co.,  224  Pa.  41, 
IZ  Atl.  10;  Hascsak  v.  Leseinsky,  39 
Pa.  Super.  Ct.  642.  "Words  of  sever- 
ance are  necessary  to  overcome  this 
primary  presumption,''  Pittsley  v. 
Young,  206  Pa.  193,  55  Atl.  920, 
quoting  from  Philadelphia  v.  Reeves, 
48  Pa.  St.  472.  See  also,  Rosenzweig 
V.  McCaffrey,  27  Misc.  (N.  Y.)  808, 
57  N.  Y.  S.  219,  28  Misc.  (N.  Y.) 
485,  59  N.  Y.  S.  863.  See,  however, 
Schultz  v.  Howard,  63  Minn.  196,  65 
N.  W.  363,  56  Am.  St.  470,  in  which 
it  is  said  that  "There  should  be  no 
presumption  in  favor  of  an  obliga- 
tion being  joint,  instead  of  joint  and 
several."  See  also.  Bank  of  Topeka 
V.   Eaton,   95    Fed.   355    (construing 


Kansas  statute) ;  Rose  v.  Williams, 
5  Kans.  483  (statutory)  ;  Morgan  v. 
Brach,  104  Minn.  247,  116  N.  W. 
490.    See  post,   §   1496. 

"Morrison  v.  American  Surety 
Co.,  224  Pa.  41,  IZ  Atl.  10,  holding 
that  the  words  "we  bind  ourselves 
and  each  of  our  heirs;"  "ourselves, 
our  heirs;"  "and  every  of  them;" 
"respectively;"  "to  be  levied  of  our 
several  goods;"  and  also  in  the  par- 
ticular case  the  words  "the  payment 
whereof  said  principal  binds  himself, 
his  heirs,  executors,  administrators, 
and  assigns,  and  said  surety  binds 
itself  and  its  successors,  firmly  by 
these  presents"  overcome  the  pre- 
sumption that  the  obligation  was  a 
joint  undertaking.  See  also,  Hascsak 
v.  Leseinsky,  39  Pa.  Super.  Ct.  642. 

''  McCullis  v.  Thurston,  27  Vt.  596, 
in  which  several  persons  signed  a 
writing  which  purported  by  its  terms 
to  be  a  joint  agreement  to  idemnify 
the  plaintiff  for  becoming  bail,  but 
annexed  to  each  of  their  signatures 
a  character  and  figure  indicating  a 
different  sum  in  dollars  and  cents. 
It  was  held  that  the  contract  was  not 
thereby  rendered  several. 

■""Barnett  v.  Juday,  38  Ind.  86; 
Taylor  v.  Reger,  18  Ind.  App.  466, 
48  N.  E.  262,  63  Am.  St.  352 ;  Albany 
Furniture  Co.  v.  Merchants'  Nat. 
Bank,  17  Ind.  App.  531,  47  N.  E. 
227,  60  Am.  St.  178;  New  Orleans  v. 
Ripley,  5  La.  121,  25  Am.  Dec.  175. 
"If  two,  three,  or  more,  bind  them- 
selves   in    an    obligation    thus,    obli- 


745  JOINT    AND    SEVERAL    CONTRACTS.  §    1 473 

tee,""  "we  will  undertake,"''^  "the  plaintiffs  are  to  pay,"'"  "the 
directors  promise,"^^  no  other  element  entering  in,  import  that  the 
contract  is  not  to  be  performed  by  one  of  the  obligors  but  by  all  of 
them  and  is  therefore  joint. 

§  1473.  Joint  contracts — Further  illustrated. — A  bond  in 
this  form :  Know  all  men  that  we,  A  as  principal  and  B,  C  and  D 
as  sureties,  are  bound  unto  the  people  in  the  several  sums  affixed 
to  our  names,  viz. :  B  in  the  sum  of  ten  thousand  dollars,  C  in 
the  sum  of  five  thousand  dollars,  D  in  the  sum  of  three  thousand 
dollars,  etc.,  "for  the  which  payment,  well  and  truly  to  be  made, 
we  severally  bind  ourselves,  our  heirs,"  etc.,  was  held  to  be  an 
instrument  embracing  several  distinct  obligations,  each  of  which 
is  a  joint  obligation  of  the  principal  and  one  surety,  and  not  joint 
and  several. ^^  In  the  case  of  a  copartnership  it  has  been  said 
that  its  members  "undertake  joint  enterprises,  they  assume  joint 
risks,  and  they  incur  in  all  cases  joint  liabilities.""  In  a  proper 
case  husband  and  wife  may  be  joint  debtors.^"  If  a  joint  agree- 
ment is  invalid  or  incapable  of  enforcement  against  all  of  its 
makers,  it  is  invalid  and  incapable  of  enforcement  against  any  one 
or  more  of  them."^ 

§  1474.  Illustrative  cases — Several  contracts. — While  in 
the  absence  of  anything  to  show  a  contrary  intention,  the  contract 
is  presumed  to  be  joint,  yet  when  the  language  used  shows  an 
intention  on  the  part  of  each  promisor  to  assume  only  a  part  of 
the  total  liability  it  imports  a  several  contract."     Where  the  con- 

gamous  nos,   and   say  no   more,   the  S.)  231,  18  L.  ed.  783.     Partners  are 

obligation  is  and  shall  be  taken  to  be  jointly    as    well    as    severally    hable. 

joint  only,  and  not  several."     Shep-  Wood  v.  Carter,  67  Nebr.  133,  93  N. 

pard's   Touchstone  of    Common   As-  W.   158. 

suranccs  375.  ""Stevenson  v.  Craig,  12  Nebr.  464. 

"Louisiana  &c.  R.  Co.  v.  Dillard,  In  some  jurisdictions  they  are  joint- 
Si  La.  Ann.  1484,  26  So.  451.  ly  and  severally  liable  for  family  ex- 

"New   Haven  &c.  R.   Co.  v.   Hay-  penses.     IMurdy  v.   Skyles,   101    Iowa 

den,  119  Mass.  361.  549,  70  N.  W.  714,  63  Am.  St.  411; 

"  Eller  v.  Lacy.  137  Ind.  436,  36  N.  In    re    Skillman's    Estate.    146    Iowa 

E.  1088.  601,    125    N.    W.    343,    140    Am.    St. 

"Mckensey    v.    Edwards,    88    Ky.  295. 

272,   10  Ky.  L.  854,  10  S.  W.  815,  3  -'Bennett  v.    Morse,   6  Colo.   App. 

L.  R.  A.  397,  21  Am.  St.  339.  122,    39    Pac.    582.     To   same   effect, 

"People   v.    Hartley,   21    Cal.    585,  Smith   v.    Woodward,    51    Colo.    311, 

82  Am.  Dec.  758.  117  Pac.  140. 

"Mason    v.    Eldred,    6    Wall.    (U.  "Moss    v.    Wilson,    40    Cal.    159; 


§    1474  CONTRACTS.  746 

tract  requires  the  obligor  to  account  to  each  of  the  obligees,  respec- 
tively, or,  by  the  use  of  any  words,  imports  a  separate  right  of 
action,  the  contract  is  several,  and  each  obligee  may  sue  thereon." 
A  contract  by  which  stockholders  in  a  corporation  agreed  to 
repay  to  the  lenders  money  borrowed  by  the  corporation,  not 
exceeding  in  the  aggregate  five  per  cent,  of  the  amount  of  the  par 
value  of  their  respective  holdings  of  stock,  has  been  held  the 
several  obligation  of  each  of  the  signers  to  pay  his  separate  pro- 
portionate share.^*  And  where  the  several  stockholders  in  a 
corporation  agreed  "each  with  the  other  that  no  one  of  them 
would  sell  or  transfer  his  holdings  in  said  corporation  to  any 
outside  party  without  first  giving  the  remaining  corporators  the 
right  to  purchase  said  holdings,"  their  contract  was  held  several 
and  not  joint.^^  It  has  been  held  that  an  agreement  by  which 
all  the  stockholders  in  a  corporation  deposited  their  certificates  of 
stock  with  a  trustee,  with  authority  in  such  trustee  to  sell  the  en- 
tire assets  of  the  corporation,  including  stock  in  hand,  was  joint 
only  as  far  as  it  bound  each  stockholder  to  place  his  certificate  of 
stock  in  the  hands  of  the  trustee  to  be  sold  and  that  an  individual 
stockholder  might  sue  the  purchaser  for  breach  of  contract  on  his 
failure  to  pay  for  the  stock  at  the  agreed  price.^®  A  contract 
which  provided  that  certain  stock  was  to  be  carried  by  the  parties 
named,  pro  rata  according  to  the  amount  of  their  respective  inter- 
ests in  a  banking  corporation,  was  held  to  create  a  several  obli- 
gation as  to  the  extent  and  amount  of  the  number  of  shares  of 
banking  stock  held  by  each  and  its  value.^^  A  covenant  to  pay 
each  of  different  law  firms  one-third  of  the  agreed  fee,  has  been 
held  not  to  create  a  joint  right  of  action,  and  the  legal  effect  of 
the  contract  was  held  to  be  the  same  is  if  there  had  been  three 

Colt  V.  Learned,  118  Mass.  380;  Mor-  Y.)   369,  104  N.  Y.  S.  537,  affd.  123 

rison    v.    American    Surety    Co.    of  App.  Div.   (N.  Y.)  629,  107  N.  Y.  S. 

New   York,   224   Pa.   41,   11  Atl.    10.  1054.     Such  language  as  "We  prom- 

'     **  Consolidated  Canal  Co.  v.  Peters,  ise  each  to  pay"  a  certain  pro  rata 

5  Ariz.  80,  46  Pac.  74.  share,  usually  creates  a  several  con- 

**Dornan     v.     Swift,     1     Pennew.  tract.     McArthur  v.  Board,  119  Iowa 

(Del.)  457,  41  Atl.  1105.  562,  93  N.  W.  580;  Fuselier  v.  Lac- 

''Streator  v.  Paxton,  201  Pa.  135,  our,  3  La.  Ann.  162;  Larkin  v.  But- 

50  Atl.  926.  terfield,  29  Mich.  254;  Adriatic  Fire 

"Dowling    V.    Wheeler,    117    Mo.  Ins.  Co.  v.  Treadwell,  108  U.  S.  361, 

App.  169,  93  S.  W.  924.  27  L.  ed.  754,  2  Sup.  Ct.  772. 

"Villard   V.    Moyer,   54   Misc.    (N. 


747 


JOINT    AND    SEVERAL    CONTRACTS. 


§    1475 


several  and  separate  written  contracts  in  favor  of  each  of  the 
three  several  firms  or  groups  of  attorneys.^'' 

§  1475.    Illustrative  cases — Joint  and  several  contracts. — 

When  it  appears  from  the  language  used  that  the  obligation  of 
the  contract  is  assumed  by  all  or  each  of  the  promisors  at  the 
option  of  the  promisee,  the  agreement  is  joint  and  several  in  its 
nature.  Thus  where  the  contract  reads  "I  promise,"^"  or  *T 
hereby  bind  myself,"  and  is  signed  by  two  or  more  promisors^"  it 
has  been  held  to  impose  a  joint  and  several  liability.  The  same 
has  been  held  true  of  a  promissory  note  which  read  "I  promise  to 
pay"  and  was  signed  by  one  person  at  the  bottom,  and  by  an- 
other on  the  back  thereof  .^^  An  agreement  between  three  creditors 
of  a  bankrupt,  that  it  should  have  a  third  of  any  dividend  paid  on 
a  claim  filed  by  two  of  the  debtors,  has  been  held  a  joint  and  sev- 
eral contract.^"  Such  expressions  as  "We  or  either  of  us,"^^  or 
"We  jointly  and  severally  promise"^*  usually  give  rise  to  a  joint 
and  several  obligation.     This  has  also  been  held  true  of  the 


^Mcintosh  V.  Zaring,  150  Ind.  301, 
49  N.  E.  164.  For  further  illustra- 
tion of  Several  Contracts  see  post, 
§  1480  et  seq. 

"iMarch  v.  Ward,  Peake  (N.  P.) 
177;  Clerk  v.  Blackstock,  Holt  (N. 
P.)  474;  Salomon  v.  Hopkins,  61 
Conn.  47,  23  Atl.  716;  Maiden  v.  Web- 
ster, 30  Ind.  317;  Hemmenway  v. 
Stone.  7  ]\Iass.  58.  5  Am.  Dec. 
27;  Wolford  v.  Bowen,  57  Minn. 
267,  59  N.  W.  195 ;  Ladd  v.  Baker. 
26  N.  H.  76,  57  Am.  Dec.  355; 
Van  Alstyne  v.  Van  Slyck,  10 
Barb.  (N.  Y.)  383;  Wallace  v.  Je- 
well, 21  Ohio  St.  163,  8  Am.  Rep. 
48 ;  Thompson  v.  Crocker,  1  Rice 
(S.  Car.)  23;  Arbuckle  v.  Temple- 
ton.  65  Vt.  205,  25  Atl.  1095;  Kel- 
ler's Admr.  v.  McHuffman,  15  W. 
Va.  64;  Dill  v.  White,  52  Wis.  456. 
9  N.  W.  404;  Dart  v.  Sherwood.  7 
Wis.  523,  76  Am.  Dec.  228.  It  has 
been  held,  however,  in  New  York, 
that  a  promissory  note  which  reads 
"I  promise"  is  a  several  note  only. 
Brownell  v.  Winnie.  29  N.  Y.  400, 
29  How.  Pr.  (N.  Y.)  193,  86  Am. 
Dec.    314. 

'"Scheid  v.  Leibschultz,  51  Ind. 
38. 


'^  Booth  V.  Huff,  116  Ga.  8,  42  S. 
E.  381,  94  Am.  St.  98;  Dow  Law 
Bank  v.  Godfrey,  126  Mich.  521,  85 
N.  \y.  1075.  86  Am.  St.  559.  A 
promissory  note  in  form  "I  promise 
to  pay,"  etc..  and  subscribed  by  two 
or  more  persons  is  a  joint  and  sever- 
al note.  Monson  v.  Drakeley.  40 
Conn.  552,  16  Am.  Rep.  74 ;  Salomon 
v.  Hopkins,  61  Conn.  47,  23  Atl.  716; 
Maiden  v.  Webster,  30  Ind.  317; 
Hemmenway  v.  Stone.  7  Mass.  58, 
5  Am.  Dec.  27;  Wolford  v.  Bowen, 
57  Minn.  267,  59  N.  W.  195 ;  Ladd  v. 
Baker.  26  N.  H.  76,  57  Am.  Dec. 
355;  Partridge  v.  Colbv.  19  Barb. 
(N.  Y.)  248;  Parks  v.  Brinkerhoff,  2 
Hill  (N.  Y.)  663;  Wallace  v.  Jewell. 
21  Ohio  St.  162:  Dill  v.  White,  52 
Wis.  456,  9  N.  W.  404. 

"Rankin  v.  McCleery  (Ala.),  57 
So.  599. 

"  Pogue  V.  Clark,  25  111.  333 ;  Har- 
vey V.  Irvine,  11  Iowa  82.  "We 
either  of  us  hereby  guarantee"  held 
joint  and  several.  Savannah  &c. 
Trust  Co.  v.  Purvis.  6  Ga.  App.  275, 
65  S.  E.  35. 

"Rees  v.  Abbott,  Cowp.  832. 


§    14/6  CONTRACTS.  748 

words  "The  payment  whereof  said  principal  binds  himself,  his 
heirs,  executors,  administrators  and  assigns,  and  said  surety  binds 
itself  and  its  successors,  firmly  by  these  presents."^''  Where  the 
obligatory  part  of  a  bond  is  in  these  words :  "We  *  *  *  are 
holden  and  bound  to  M.  C.  in  the  sum  of  five  hundred  dollars,  for 
the  payment  of  which  sum  well  and  truly  to  be  made,  we  do 
hereby  bind  ourselves,  and  each  of  us,"  it  is  a  joint  and  several 
bond,  on  which  an  action  may  be  brought  against  one  of  the 
obligors  separately.^*  Principal  and  surety  are  usually  held  to  be 
jointly  liable." 

§  1476.    Intention  of  parties  generally  governs. — When  a 

contract  is  ambiguous  and  is  liable  to  different  constructions,  the 
question  of  whether  the  contract  is  joint,  or  several,  or  joint 
and  several,  depends  upon  the  intention  of  the  parties  as  ascer- 
tained by  the  established  rules  of  construction.  The  parties  have 
the  right  to  make  their  own  bargain.^^  The  contract  must  be 
considered  as  a  whole,  and  if,  upon  such  consideration,  the  inten- 
tion of  the  parties  becomes  apparent,  it  must  prevail  over  the 
literal  interpretation  of  detached  words,  phrases  and  clauses.^^ 

^Morrison     v.     American     Surety  joint   debtors.     Walsh   v.    Miller,   51 

Co.   224  Pa.  41.  12,  Atl.  10.  Ohio  St.  462,  38  N.  E.  381 ;  Wolf  v. 

="•  Carter  v.  Carter,  2  Day  (Conn.)  Fink,  1  Pa.  St.  435,  44  Am.  Dec.  141. 
442,  2  Am.  Dec.  113.  A  bond  run-  When  it  is  established  that  the  par- 
ning  thus :  "For  which  sums  re-  ties  are  sureties  on  a  note  the  pre- 
spectively,  unto  the  said  State  of  sumption  arises  that  they  are  co- 
California,  in  the  manner  and  in  the  sureties.  Baldwin  v.  Fleming,  90 
proportions    hereinbe'fore    set    forth,  Ind.   177. 

we  bind  ourselves,   our  and  each  of  ^*  Morrison     v.     American     Surety 

our  heirs,  executors  and  administrat-  Co.,  224  Pa.  41,  Ti  Atl.  10.     See  also, 

ors,  jointly  and   severally,   firmly  by  Babcock  v.  Farwell,  146  111.  App.  307, 

these  presents"  is  a  joint  and  several  affd.   245    111.    14,   91    N.    E.   683,    137 

bond.      "We    certainly    know    of    no  Am.    St.    284;    Coe    v.    Harvey,    142 

words  more  apt  to  express  that  idea  Iowa  574,  120  N.  W.  97;  In  re  Col- 

than    those    used.      They   have    been  ket's  Estate,  217  Pa.  643,  66  Atl.  980. 

long  used   for  that   purpose."     Peo-  ^*  Smith    v.    Woodward,    51    Colo, 

pie  V.  Love,  25  Cal.  520.  311,    117    Pac.     140;    Landwerlen    v. 

"Lowther  v.  Chappell,  8  Ala.  353,  Wheeler,  106  Ind.  523,  5  N.  E.  888; 
42  Am.  Dec.  364;  Caldwell  v.  Sigour-  Jacobs  v.  Spalding,  71  Wis.  177,  36 
ney,  19  Conn.  TH  \  Shepley  v.  Water-  N.  W.  608.  In  the  construction  of 
house,  22  Maine  497;  Frye  v.  Bar-  contracts,  the  court  will  look  at  all 
ker,  4  Pick.  (Mass.)  382;  Sigourney  the  circumstances  of  the  case,  and 
V.  Drury,  14  Pick.  (Mass.)  387;  ascertain  by  reasonable  inference 
Whitaker  v.  Rice,  9  Minn.  13,  86  Am.  what  the  parties  must  have  under- 
Dee.  78;  Green  v.  Greensboro  Fe-  stood  and  mutually  expected  at  the 
male  College,  83  N.  Car.  449,  35  Am.  time  of  making  the  contract.  Dwel- 
Rep.  579.     Cosureties  have  been  held  ley  v.  Dwelley,  143  Mass.  509,  10  N. 


749  JOINT   AND   SEVERAL   CONTRACTS.  §    1 477 

A  contract  which  is  plainly  meant  to  be  several  is  not  to  be  treated 
as  joint  merely  because  several  persons  have  signed  it  on  one  side 
or  the  other."  When  persons  engage  for  the  performance  of 
distinct  and  several  duties,  mere  words  of  plurality,  such  as  "we 
bind  ourselves,"  will  not  make  the  contract  joint.''  Wiiere  a 
contract  describes  the  parties  on  one  side  as  principal  and  sureties, 
and  stipulates  that  the  principal  shall  perform  the  obligations 
and  receive  the  pay,  while  the  sureties  shall  only  be  liable  for 
liquidated  damages  on  his  default,  it  is,  in  effect,  a  severable  con- 
tract, and  the  sureties  need  not  be  joined  as  plaintiffs  in  a  suit 
upon  it." 

§  1477.  Form  of  promise  as  test. — When  an  express  con- 
tract is  entered  into  which  is  unambiguous  in  its  terms,  no  pre- 
sumptions are  indulged  in  and  there  is  no  room  for  construction. 
The  courts  will  not  permit  construction  of  that  which  needs  no 
construction.  Where  the  terms  of  an  express  agreement  are 
unambiguous  the  contract  itself  is  the  only  criterion  of  the  inten- 
tion of  the  parties,  notwithstanding  the  real  intent  of  the  parties 
may  have  been  at  variance  with  the  particular  expressions  of  their 
-agreement.*^ 

E.  468.  "'In  construing  such  a  con-  are    to    be    construed    according    to 

tract,  it  should  be  taken  by  the  four  their    spirit    and    intent.     Ludlow    v. 

corners,   and  the   intent  of  the  sign-  McCrea,  1  Wend.    (N.  Y.)   228. 
ers  gathered  therefrom,  if  it  is  pos-        "Collins  v.  Prosser,  1  B.  &  C.  682; 

sible  to  do  so,  giving  due  considera-  Gleason  v.  Sanitary  Milk-Supply  Co., 

tion  to  every  part  thereof.'  In  Lach-  93   Maine  544,   45   Atl.   825,  74  Am. 

mund    V.    Lope    Sing,    54    Ore.    106,  St.  370. 

Ill,  102  Pac.  598.  600,  it  is  said,  *=  Widner  v.  Western  Union  Tel. 
that:  'The  contract  must  be  con-  Co.,  47  Mich.  612,  11  N.  W.  407.  By 
strued  to  effect  the  intention  of  the  the  terms  of  the  contract  the  sure- 
parties  as  gathered  from  the  entire  ties  were  neither  promisors  nor  prom- 
instrument;  and,  if  there  are  re-  isees  except  in  the  separate  clause  re- 
pugnant clauses,  they  must  be  recon-  lating  to  liquidated  damages, 
ciled,  if  possible.  The  intent,  and  "  "Where  the  rights  and  interests 
not  the  words,  is  the  essence  of  of  the  parties  are  definitely  and 
every  agreement,  if  it  can  be  ascer-  clearly  stated,  the  terms  of  the  con- 
tained therefrom.' "  Gaines  v.  Van-  tract  fairly  interpreted  should  con- 
decar,  58  Ore.  187,  115  Pac.  721.  See  trol,  for  it  must  be  assumed  that  the 
also,  Shannon  Copper  Co.  v.  Potter,  intent  of  the  parties  is  as  it  is  dis- 
13  Ariz.  245,  108  Pac.  486.  See  tinctly  and  positively  expressed  by 
further,  post,  ch.  35.  them."  .\tlanta  &c.  R.  Co.  v.  Thomas, 
"Larkin  v.  Butterfield,  29  Mich.  60  Fla.  412,  53  So.  510.  See  also. 
254;  Widner  v.  Western  Union  Tel.  Moreing  v.  Weber,  3  Cal.  App.  14, 
Co.,  47  Mich.  612,  11  N.  W.  407.  See  84  Pac.  220:  International  Hotel  Co. 
also,  Dornan  v.  Swift,  1  Pennew.  v.  Flynn,  238  111.  636,  87  N.  E.  855; 
<Del.)  457,  41  Atl.  1105.     Covenants  Clark  v.  Mallory,  185  111.  227,  56  N. 


§    1478  CONTRACTS.  75O 

§  1478.  Interest  of  parties  as  test. — When  the  language  is 
ambiguous  the  contract  will  generally  be  construed  as  joint  or 
several  according  to  the  interests  of  the  parties.  It  will  be  joint 
if  the  interests  are  joint,  and  several  if  the  interests  are  several, 
if  the  words  used  are  capable  of  that  construction  or  even  not 
inconsistent  with  it.'*^  It  has  been  held  that  when  the  legal  inter- 
est in  a  covenant  and  in  the  cause  of  action  thereon  is  joint,  the 
covenant  is  joint,  although  it  may,  in  its  terms,  be  several  or  joint 
and  several.*^  The  nature,  and  especially  the  entireness  of  the 
consideration,  is  of  great  importance  in  determining  whether  the 
promise  be  joint  or  several,  because,  if  the  consideration  moved 
from  many  persons  jointly,  then  the  promise  is  joint,  if  from 
many  persons,  but  from  each  severally,  then  the  promise  is  sev- 
eral in  the  absence  of  any  binding  language  to  the  contrary.**^ 

§  1479.  Liability  of  joint  obligors. — Where  two  or  more 
make  a  joint  promise  each  is  liable  to  the  promisee  for  the  whole 
debt  or  liability.  Each  obligor  who  is  bound  at  all  is  legally 
liable  in  solido  for  the  whole  undertaking,^^     It  is  incident  to 

E.  1099,  affg.  83  111.  App.  488;  Krbel  C.   410;    Petrie   v.   Bury,  3   B.   &   C. 

V.   Krbel,  84   Nebr.    160,    120   N.   W.  353 ;  Scott  v.  Godwin,  1  B.  &  P.  67 ; 

935;    Parker   v.    Mayes,    85    S.    Car.  James     v.     Emery,     8     Taunt.     245; 

419,  67   S.   E.  559,   137  Am.   St.  912.  Wakefield  v.  Brown,  9  Ad.  &  El.  (N. 

"Goldsmith  V.  Sachs,  17  Fed.  726,  S.)  209;  Magnay  v.  Edwards,  13  C. 
8  Sawy.  (U.  S.)  110;  Atlanta  &c.  B.  479;  Pugh  v.  Stringfield,  3  C.  B. 
R.  Co.  V.  Thomas,  60  Fla.  412,  53  (N.  S.)  2.  This  language,  however. 
So.  510;  International  Hotel  Co.  v.  is  inaccurate  and  does  not  state  the 
Flynn,  238  111.  636,  87  N.  E.  855.  See  true  rule.  The  true  rule  is  that  a 
also,  Eccleston  v.  Clipsham,  1  Wm.  covenant  may  be  construed  to  be 
Saund.  153;  Eveleth  v.  Sawyer,  96  joint  or  several,  according  to  the  in- 
Maine  227,  52  Atl.  639.  "(1)  Where  terests  of  the  parties  appearing  upon 
the  covenant  is,  in  its  terms,  several,  the  face  of  the  obligation,  if  the 
but  the  interest  of  the  covenantees  words  are  capable  of  such  a  con- 
is  joint,  they  must  join  in  suing  struction ;  but  it  will  not  be  con- 
upon  the  covenant;  *  *  *  (2)  strued  to  be  several  by  reason  of 
Where  the  covenant  is  in  its  terms  several  interests,  if  it  be  expressly 
expressly  and  positively  joint,  the  joint.  International  Hotel  Co.  v. 
covenantees  must  join  in  an  action  Flynn,  238  111.  636,  87  N.  E.  855. 
upon  the  covenant,  although  as  be-  *"  Beck  v.  Pounds,  20  Ga.  36. 
tween  themselves  their  interest  is  "  Allin  v.  Shadburne's  Exr.,  1 
several.  (3)  Where  the  language  of  Dana  (Ky.)  68,  25  Am.  Dec.  121; 
the  covenant  is  capable  of  being  so  Perkins  County  v.  Miller,  55  Nebr. 
construed,  it  shall  be  taken  to  be  141,  75  N.  W.  577;  Field  v.  Runk,  22 
joint  or  several,  according  to  the  in-  N.  J.  L.  525;  Clark  v.  Rawson,  2 
terest  of  the  covenantees."  Capen  Denio  (N.  Y.)  135;  Slocum  v.  Fair- 
V.  Barrows,  1   Gray   (Mass.)   376.  child,  7  Hill    (N.  Y.)   292;   Baum  v. 

*»Bradburne   v.    Botfield,    14   M.   &  McAfee    (Tex.    Civ.    App.),    125    S. 

W.  559;  Servante  v.  James,  10  B.  &  W.  984.    "Where  several  persons  are 


751  JOINT    AND    SEVERAL    CONTRACTS.  §    I480 

every  joint  contract  that  all  are  bound  to  its  performance.  Each 
and  every  one  of  the  contractors  stipulates  that  the  contract  shall 
be  performed  by  all.  If  two  persons  hire  a  carriage  without  a 
driver,  and  it  be  broken  by  the  negligence  of  one  who  attempts 
to  drive  it,  both  would  be  liable,  although  the  other  was  passive 
and  free  from  blame.  And  where  several  persons  jointly  hire  a 
carriage,  horses  and  driver,  and  it  is  a  part  of  the  contract  that 
the  carriage  should  be  driven  by  the  driver  alone,  then  to  permit 
a  stranger  to  drive  it  or  to  drive  it  themselves  would  be  a  violation 
of  the  contract,  and  for  any  damage  arising  out  of  the  breach  of 
the  joint  contract  all  are  liable."*^  Each  party  to  a  joint  contract 
is  severally  liable  in  one  sense,  that  is,  if  when  sued  severally,  he 
does  not  plead  in  abatement,  he  is  liable  to  pay  the  entire  debt,  but 
he  is  not  severally  liable  in  the  same  sense  as  he  is  on  a  joint  and 
several  bond,  which  instrument,  although  on  one  piece  of  parch- 
ment or  paper,  in  effect  comprises  the  joint  bond  of  all  and  the 
several  bonds  of  each  of  the  obligors.*® 

§  1480.  Contracts  of  subscription. — Where  a  number  of 
persons,  for  a  good  consideration,  sign  a  subscription  paper, 
agreeing  to  pay  a  certain  sum,  and  by  its  terms  each  subscriber 
is  to  be  liable  only  for  the  amount  set  opposite  his  name,  the  con- 
tract is  several.'*''  In  an  instrument  reading:  "The  following 
rates  of  tuition  we,  the  subscribers,  agree  to  pay  the  proposed 
teacher,  at  the  expiration  of  the  term,"  the  rates  of  tuition  being 

jointly    indebted,    and    one    of    them  Gait's  Exr.  v.  Swain,  9  Grat.   (VaO 

pays   his   specific   share   of   the   debt,  633,  60   Am.    Dec.   311.      See,   to   the 

and  it  is   received  and  receipted   for  same    effect,    O'Connor    v.     Hooper, 

by   the   creditor   as   such,    such   pay-  102   Cal.    528.   36   Pac.   939;    Robert- 

ment    will    not    exonerate    the    party  son    v.    March,    4    111.    198;    Davis    & 

paving  from  his  liability  for  the  re-  Rankin  Bldg.  &  Mfg.  Co.  v.  Murray, 

sidue  of  the  debt."     Ripley  v.  Crook-  102  Mich.  217,  60  N.  W.  437 ;  Davis 

er.  47   Maine  370,   74   .^m.   Dec.   491.  v.   Ravenna  Creamery  Co..  48  Nebr. 

"O'Brien    v.    Bound,    2    Speer    (S.  471,  67  N.  W.  436;  Darnall  v.  Lyon 

Car.)   495,  42  Am.  Dec.  384.  (Tex.    App.).    19    S.    W.    506;    Con- 


<»  I': 


'  King  V.  Hoare,   13  M.  &  W.  494.  necticut  &  P.  R.  R.  v.  Bailey,  24  Vt. 

""Moss    V.    Wilson,    40    Cal.    159;  465,    58    Am.    Dec.    181:    Hodges    v. 

Robertson  v.  March,  4  111.  198:  Wat-  Nalty,   104  Wis.  464.  80  N.  W.  726; 

kins  V.  Eames,  9  Cush.   (Mass.)  537;  Davis  &  Rankin  Bldg.  &  Mfg.  Co.  v. 

Carter   v.    Carter,    14    Pick.    (Mass.)  Cupp.    89    Wis.    673,    62    N.    W.    520. 

424;  Gibbons  v.  Bente,  51  Minn.  499,  The    wording    of    such    contracts    is 

53   N.   W.   756,   22  L.   R.   A.  80  and  usually  such  as  to  make  them  several, 

note;  Hoosier  Canning  Co.  v.  Dono-  but  even  wlien  the  language  has  been 

van,  6  Ohio    N.    P.   431 ;    Darnall    v.  doubtful    the    construction    has    been 

Lyon    (Tex.    App.),    19    S.   W.   506;  that   each  subscription  was  separate. 


§    1 48 1  CONTRACTS.  752 

given  and  the  names  of  the  subscribers,  with  the  number  of 
scholars  entered  by  each,  it  was  held  that  the  liability  of  the  sub- 
scribers was  several,  and  not  joint.^^  A  paper  reading,  "We,  the 
undersigned,  promise  to  pay  the  following  subscriptions  for  a  new 
church,"  etc.,  followed  by  names,  opposite  which  are  different 
amounts,  was  held  to  be  the  several  and  not  the  joint  obligation 
of  the  subscribers.^^  In  a  case  involving  the  construction  of  a 
contract  to  build  a  butter  and  cheese  factory,  where  sixty-one  per- 
sons subscribed  the  contract  for  various  amounts,  it  was  held  that, 
notwithstanding  the  use  of  the  words  "we  agree  to  pay,"  the  con- 
tract was  several,  and  not  joint.^'  Where  several  subscribers  to 
the  stock  of  a  railroad  company  sign  the  same  subscription  agree- 
ment, the  obligation  is  construed  to  be  several,  and  not  joint.^* 
In  a  stock  subscription  contract  which  contained  a  clause  to  the 
effect  that  "we,  the  subscribers  hereto,  agree  to  pay  the  above 
amount,"  and  another  read  "each  stockholder  shall  be  liable  only 
for  the  amount  subscribed  by  him,"  the  latter  provision  rendered 
the  obligation  of  the  subscribers  several  and  not  joint.°° 

§  1481.  Subscription  contracts  further  illustrated — May  be 
joint. — A  stock  subscription  contract  which  read  "We,  the 
subscribers  hereto,  agree  to  pay  the  above  amount,"  and  "there 
shall  be  no  waiver  of  the  original  and  joint  liability  until  the  con- 
tract price  is  fully  paid,"  was  held  to  impose  a  several  and  not  a 
joint  liability  on  each  subscriber  when  there  was  placed  opposite 
the  name  of  each  the  amount  of  stock  he  agreed  to  take.^^  And 
where  fifteen  out  of  twenty-six  of  those  who  subscribed  money 
toward  the  erection  of  a  creamery  placed  opposite  their  names 
the  amount  of  their  subscription  and  the  remaining  eleven  failed 

•^  Beck  V.  Pounds,  20  Ga.  36.  "  Price  v.  Grand  Rapids  &c.  R.  Co., 

"Landwerlen  v.  Wheeler,  106  Ind.  18  Ind.  137.     "These  stock  subscrip- 

523.  tions,    though    in    form    joint    con- 

"  Davis    &c.    Mfg.    Co.    v.    Barber,  tracts,   are   intended   to   be,   and    are 

51    Fed.    148,   disapproving   Davis   v.  to   be   treated   as   several,    and    each 

Shafer,   50   Fed.   764;    Davis  v.    Bel-  stockholder  as   liable  simply   for  the 

ford,    70    Mich.    120,    37    N.    W.   919  amount  opposite  his  ovirn  name." 

(similar   contract   held   to   be   sever-  '"'Waddy    Blue    Grass    &c.    Co.    v. 

al) ;    Frost   v.    Williams,   2    S.    Dak.  Davis-Ranking    &c.     Mfg.     Co.,     103 

457,  50  N.  W.  964   (contract  with  a  Ky.  579,  45  S.  W.  895,  20  Ky.  L.  259. 

number  of  farmers  to  build  a  cheese  "'Chicago  Building  &  Mfg.  Co.  v. 

factory);    Gibbons     v.     Grinsel,     79  Graham,    78   Fed.    83,    23    C.    C.    A. 

Wis.  365,  48  N.  W.  255.  657, 


753 


JOINT    AND    SEVERAL    CONTRACTS. 


§     1482 


to  indicate  the  amount  of  their  several  suoscriplions,  it  was  held 
that  these  eleven  became  liable  severally,  not  jointly,  each  for  his 
proportion  of  the  balance  due  over  and  above  the  amount  sub- 
scribed by  the  fifteen  who  indicated  the  amount  of  their  subscrip- 
tion.°^  Each  subscription,  when  several,  is  an  independent  un- 
dertaking, and  in  no  way  affected  by  the  terms  of  other  subscrip- 
tions.**®  Subscription  contracts  are  usually  several  in^  their  nature, 
but  the  use  of  words  which  are  apt  for  the  creation  of  a  joint 
liability  may  make  a  contract  joint  in  the  absence  of  anything 
to  show  the  contrary  intention. ^^ 

§  1482.    Effect  of  release  of  one  joint  debtor. — It  is  well 

settled  under  the  common-law  rule  that  the  release  of  one  or 
more  joint,  or  joint  and  several  obligors,  operates  as  a  release  of 
all  those  jointly  or  jointly  and  severally  liable.®"  The  debt  is  entire 


"  The  court  said :  "It  is  very 
clear  that,  had  not  a  part  of  the  de- 
fendants limited,  by  figures  placed 
opposite  their  respective  names,  the 
amounts  of  their  subscriptions,  when 
signing  this  contract,  it  would  have 
been  a  joint  and  several  obligation 
on  the  part  of  all  of  the  subscribers." 
Cornish  v.  West,  82  Minn.  107,  84 
N.  W.  750,  52  L.  R.  A.  355.  Com- 
pare with  Pittsley  v.  Young,  206  Pa. 
193,  55  Atl.  920  (holding  the  con- 
tract joint).  See  also,  Moreing  v. 
Weber,  3  Cal.  App.  14,  84  Pac.  220 
(agreement  by  abutting  property 
owners  with  a  contractor  to  improve 
a   street   held   joint   and   several). 

^  Erie  &c.  R.  Co.  v.  Patrick,  2  Abb. 
App.  Dec.  (N.  Y.)  72;  Connecticut 
&  P.  R.  R.  Co.  v.  Bailey,  24  Vt.  465, 
58  Am.  Dec.  181.  See  also.  Hall  v. 
Thaver,  12  Mete.  (Mass.)  130; 
Dav'is  V.  Belford,  70  Mich.  120,  37 
N.  W.  919.  Subscriptions  to  corpo- 
rate stock  are  separate  contracts. 
Whittlesey  v.  Frantz.  74  N.  Y.  456. 
When  the  liability  is  several  the  sub- 
scriber cannot  object  that  other  sub- 
scribers or  minors  are  insolvent.  That 
fact  docs  not  increase  his  liability. 
Chicago  Bldg.  &  Mfg.  Co.  v.  Hig- 
ginbotham    (Miss.).  29  So.  79. 

"Davis  V.  Shafer.  50  Fed.  764; 
Pittsley  V.  Young,  206  Pa.  193,  55 
Atl.  920.     Part  of  the  obligations  of 

48 — Contracts,  Vol.  2 


a  subscription  contract  may  be  joint 
and  part  several.  See  Current  v. 
Fulton,  10  Ind.  App.  617,  38  N. 
E.  419;  Gibbons  v.  Rente,  51  Minn. 
499,  53  N.  W.  756.  22  L.  R.  A.  80n. 
•"Nabors  v.  Camp,  14  Ala.  460; 
Johnson  v.  Collins,  20  Ala.  435 ;  Car- 
roll V.  Corbitt,  57  Ala.  579;  Vandever 
V.  Clark,  16  Ark.  331;  Heckman  v. 
Manning,  4  Colo.  543;  Merrick  v. 
Giddings,  1  Mackey  (12  D.  C)  394, 
affd.  115  U.  S.  300.  29  L.  ed.  403,  6 
Sup.  Ct.  65 ;  Chamblee  v.  Davie,  88 
Ga.  205,  14  S.  E.  195 ;  Clark  v.  Mal- 
lorv,  83  111.  App.  488,  affd.  185  111. 
227,  56  N.  E.  1099;  Kirby  v.  Can- 
non, 9  Ind.  371;  Walls  v.  Baird,  91 
Ind.  429;  Gardner  v.  Baker,  25  Iowa 
343;  Drake  v.  Hill,  53  Iowa  37,  3  N. 
W.  811,  5  N.  W.  745;  Haney  & 
Campbell  Mfg.  Co.  v.  Adaza  Co- 
operative Creamery  Co.,  108  Iowa 
313,  79  N.  W.  79;  Baldwin  v.  Gray, 
4  Mart.  (La.)  (N.  S.)  192.  16  Am. 
Dec.  169;  Merritt  v.  Bucknam,  90 
Maine  146,  37  Atl.  885;  Booth  v, 
Campbell,  15  Md.  569;  Whitaker  v 
Salisbury,  15  Pick.  (Mass.)  534 
Winsor  v.  Savage,  9  Met.  (Mass.) 
346;  Collier  v.  Field,  2  Mont.  205 
Neligh  v.  Bradford,  1  Nebr.  451 
Young  V.  Currier,  63  N.  H.  419 
Saxton  v.  Dodge,  46  How.  Pr.  (N 
Y.)  467;  Harbeck  v.  Pulin,  145  N 
Y.  70,  39  N.   E.   722,  affg.   73   Hun 


I4S3 


CONTRACTS. 


754 


and  when  once  satisfied  or  released  can  no  longer  be  enforced 
against  any  party  to  it."  But  under  the  strict  common-law  rule, 
the  release,  in  order  to  operate  as  a  discharge  of  the  other  prom- 
isors from  their  liability  on  the  contract,  must  be  a  technical  re- 
lease under  seal.**^  The  necessity  for  and  effect  of  a  seal  upon  an 
instrument  which  purports  to  be  a  release  depends  largely  upon 
whether  the  distinctions  between  sealed  and  unsealed  instruments 
have  been  abolished  by  statute."^ 

§  1483.  As  affected  by  the  intention  of  the  parties. — How- 
ever, irrespective  of  the  question  of  whether  a  seal  is  or  is  not 
necessary,  an  instrument  which  is  alleged  to  be  a  discharge  of  one 
of  the  joint  obligors  will  not  be  given  this  effect  when  it  is  so 
drawn  as  to  show  a  contrary  intention,  or  that  it  had  for  its  object 
some  other  purpose.*^*     The  intention  of  the  parties  as  evidenced 


(N.  Y.)  1,  56  N.  Y.  St.  67,  25  N.  Y. 
S.  952;  Dudley  v.  Bland,  83  N.  Car. 
220;  Woolsey  v.  Seely,  Wright 
(Ohio)  360;  Crawford  v.  Roberts,  8 
Ore.  324;  Mortland  v.  Himes,  8  Pa. 
St.  265;  Brown  v.  Marsh,  7  Vt.  320; 
Brodeck  v.  Farnum,  11  Wash.  565,  40 
Pac.  189;  Maslin's  Exrs.  v.  Hiett,  Z1 
W.  Va.  15,  16  S.  E.  437;  Rutherford 
V.  Rutherford,  55  W.  Va.  56,  47  S. 
E.  240.  A  contract  may  contain 
covenants  that  are  both  joint  and 
several,  in  which  case  a  release  of 
one  of  the  obligors  releases  all  as 
to  the  joint  obligations  but  does  not 
discharge  the  several  covenants. 
Krbel  V.  Krbel,  84  Nebr.  160,  120  N. 
W.  935.  The  reason  for  this  rule  is 
that  if  it  were  otherwise  an  injustice 
would  be  worked  against  the  co- 
obligors  not  so  released.  They  would 
be  required  to  pay  more  of  the  joint 
indebtedness  than  they  had  by  their 
contract  agreed  to  pay.  See  cases  cited 
ante  this  note.  The  reason  and  ex- 
tent of  this  rule  is  well  illustrated 
by  cases  involving  the  relation  of 
principal  and  surety.  The  release  of 
the  principal  operates  as  a  discharge 
of  the  surety,  but  the  release  of  the 
surety  does  not  discharge  the  prin- 
cipal, for  the  reason  that  the  prin- 
cipal is  not  damaged  thereby,  for  his 
burden  is  in  no  way  increased  and  he 
cannot  enforce  contributions  from  the 
surety.     Blackburn  v.   Beall,  21   Md. 


208.  But  where  one  of  the  joint 
promisors  is  an  infant,  recovery  may 
be  had  against  the  others.  Cole  v. 
Manners,  76  Nebr.  454,  107  N.  W. 
Til. 

•'^  Stanley  v.  Leahy,  87  111.  App. 
465 ;  Wiggin  v.  Tudor,  23  Pick. 
(Mass.)  434;  Goodnow  v.  Smith,  18 
Pick.   (Mass.)   414,  29  Am.  Dec.  600. 

"'Shaw  V.  Pratt,  22  Pick.  (Mass.) 
305;  Ludlow  v.  McCrea,  1  Wend.  (N. 
Y.)  228;  Harrison  v.  Close,  2  Johns. 
(N.  Y.)  448,  3  Am.  Dec.  444;  Row- 
ley v.  Stoddard,  7  Johns.  (N.  Y.) 
207;  De  Zeng  v.  Bailey,  9  Wend.  (N. 
Y.)  336;  Morgan  v.  Smith,  70  N.  Y. 
537;  Clifton  v.  Foster  (Tex.  Civ. 
App.),  20  S.  W.  1005.  See,  however, 
Nicholson  v.  Revill,  4  Ad.  &  El.  675; 
Seligman  v.  Pinet,  78  Mich.  50,  43 
N.  W.  1091,  holding  that  "under  our 
laws  to-day  I  think  a  discharge  or 
acquittance  of  a  debt  is  just  as  good 
without  a  seal  as  with  it."  Milliken 
y.  Brown,  1  Rawle  (Pa.)  391,  hold- 
ing that  an  instrument  not  under 
seal  which  purports  to  be  a  release 
of  one  of  several  joint  debtors  can- 
not be  modified  by  showing  that 
something    else    was    intended. 

*"  See  Evans  v.  Pigg,  3  Cold. 
(Tenn.)    395. 

"Evans  v.  Carey,  29  Ala.  99;  Arm- 
strong v.  Hayward,  6  Cal.  183;  Mc- 
Allester  v.  Sprague,  34  Maine  296; 
Drinkwater  v.  Jordan,  46  Maine  432; 


755 


JOINT    AND    SEVERAL    CONTRACTS. 


1483 


by  the  instrument  itself,  the  circumstances  of  the  case,  and  the 
relation  of  the  parties  to  each  other,  determines  whether  the  in- 
strument shall  operate  as  a  release.*"^  Equity  will  limit  the  instru- 
ment to  the  particular  matter  intended  to  be  released. "^  But 
where  a  given  act  or  omission  is  by  operation  of  the  law  a  release, 
it  operates  as  such  despite  the  intention  of  the  parties.^^  And 
there  are  cases  which  hold  that  if  the  instrument  appears  to  be 
a  release  the  intention  of  the  parties  has  no  bearing  in  its  con- 
struction.°^ 


Bradford  v.  Prescott,  85  Maine  482, 
29  Atl.  461;  Vallcv  Sav.  Bank  v. 
Afercer,  97  Md.  458.  55  Atl.  435; 
Ruggles  V.  Patten,  8  Mass.  480;  Good- 
now  V.  Smith,  18  Pick.  (Mass.)  414, 
29  Am.  Dec.  600;  Shaw  v.  Pratt,  22 
Pick.  (Mass.)  305;  Wiggin  v.  Tu- 
dor, 23  Pick.  (Mass.)  434;  Pond  v. 
Williams,  1  Gray  (Mass.)  630;  Hale 
V.  Spaulding,  145  Mass.  482,  14  N.  E. 
534,  1  Am.  St.  475;  Seligman  v. 
Pinet,  78  Mich.  50.  43  N.  W.  1091; 
Line  v.  Nelson,  38  N.  J.  L.  358;  Har- 
rison V.  Close,  2  Johns.  (N.  Y.) 
448,  3  Am.  Dec.  444;  Rowley  v. 
Stoddard,  7  Johns.  (N.  Y.)  207; 
Schemerhorn  v.  Loines,  7  Johns.  (N. 
Y.)  311;  Halsted  v.  Schmelzel,  17 
Johns.  (N.  Y.)  80;  Dewey  v.  Derby, 
20  Johns.  (N.  Y.)  462;  De  Zeng  v. 
Bailey,  9  Wend.  (N.  Y.)  336;  Hope 
V.  Johnston,  11  Rich.  L.  (S.  Car.) 
135 ;  Harvey  v.  Sweasy,  4  Humph. 
(Tenn.)  449;  Bridges  v.  Phillips,  17 
Tex.  128;  Lancaster  v.  Brown,  20 
Tex.  154;  Seely  v.  Spencer,  3  Vt. 
334. 

°°  Parmelee  v.  Lawrence,  44  111. 
405 ;  Bonney  v.  Bonney,  29  Iowa 
448;  Haney  &  Campbell  Mfg.  Co.  v. 
Adaza  Co-operative  Creamery  Co., 
108  Iowa  313.  79  N.  W.  79;  South- 
wick  V.  Hopkins,  47  Maine  362;  Hale 
V.  Spaulding.  145  Mass.  482.  14  N. 
E.  534,  1  Am.  St.  475;  Benton  v. 
Mullen.  61  N.  H.  125;  Couch  v. 
Mills,  21  Wend.  (N.  Y.)  424;  Whit- 
temore  v.  Judd  &c.  Co.,  124  N.  Y. 
565.  27  N.  E.  244,  21  Am.  St.  708; 
Russell  V.  Addertton,  64  N.  Car.  417; 
Evans  v.  Raper,  74  N.  Car.  639; 
Winslow  V.  Brown,  7  R.  I.  95.  80 
Am.  Dec.  638;  Hamilton  v.  Ritchie 
(Tenn.),  53  S.  W.  198;  Merchants' 
Nat.   Bank  v.   McAnulty    (Tex.   Civ. 


App.),  31  S.  W.  1091;  Elgin  City 
Banking  Co.  v.  Self  (Tex.  Civ.  App.), 

35  S.  W.  953 ;  Joy  v.  Wurtz,  2  Wash. 
C  C.  (U.  S.)  266,  Fed.  Cas.  No. 
7555;  Paret  v.  Bryson,  2  West.  Jur. 
351,  Fed.  Cas.  No.  10710;  Bogert  v. 
Phelps,  14  Wis.  88.  However,  there 
must  be  something  in  the  instrument 
to  show  a  contrary  intention  when 
apt  words  of  release  are  used.  Mer- 
ritt  V.  Buckman,  90  Maine  146,  2>7 
Atl.  885;  Hale  v.  Spaulding,  145 
Mass.  482,  14  N.  E.  534,  1  Am.  St. 
475.  See  also,  cases  cited  ante  this 
note.  The  rule  that  the  intent  of  the 
parties  is  to  be  given  effect  is  an 
equitable  one.  See  Russell  v.  Ad- 
dertton, 64  N.  Car.  417. 

""Norris  v.  Ham.  R.  M.  Charlt. 
(Ga.)  267:  Legrand  v.  Baker.  6  T. 
B.  Mon.  (Kv.)  235;  McNeal's  Admrs. 
v.  Blackburn,  7  Dana  (Ky.)  170; 
Newcomb  v.  Newcomb,  6  Kv.  L.  668; 
Clagett  v.  Salmon,  5  Gill  &  T.  (Md  ) 
314;  Kirby  v.  Tavlor,  6  Johns.  Ch. 
(N.  Y.)  242;  Pierce  v.  Sweet.  2,2,  Pa. 
151 ;  McLarren  v.  Robertson,  20  Pa. 
125;  Massey  v.  Brown,  4  S.  Car.  85. 

"  Connecticut  Fire  Ins.  Co.  v.  Olen- 
dorff,  7Z  Fed.  88,  19  C.  C.  A.  379; 
Munyan   v.    French,  60   N.   J.   L.    12, 

36  Atl.  771;  Sloan  v.  Courtenay,  54 
S.  Car.  314,  32  S.  E.  431;  Bowman 
V.  Rector  (Tenn.),  59  S.  W.  389. 

"'Rice  v.  Webster.  18  111.  331;  Jov 
V.  Wurtz.  2  Wash.  C.  C.  (U.  S.)  266, 
Fed.  Cas  No.  7555.  Compare,  how- 
ever, with  this  case,  Parmelee  v.  Law- 
rence, 44  111.  405 :  Milliken  v.  Brown, 
1  Rawle  (Pa.)  391.  See,  however,  in 
connection  with  this  Pennsylvania 
case,  Burke  v.  Noble,  48  Pa.  168; 
Bell  V.  Steele,  21  Tenn.  (2  Humph.) 
148. 


§    1484  CONTRACTS.  756 

§  1484.  Settlement  with  one  joint  debtor. — Quite  fre- 
quently an  instrument  is  given  one  of  the  joint  obligors  by  which 
the  obligee  releases  one  or  more  of  the  promisors  and  reserves 
his  right  against  the  others  by  appropriate  words,  such  as  "re- 
serving my  rights  against  all  others,"  or  "but  this  shall  not  oper- 
ate to  discharge  the  others."*"*  An  instrument  of  this  character, 
it  is  said,  is  in  fact  not  a  release,  but  on  the  contrary  it  shows  that 
it  was  not  intended  by  the  parties  that  it  shall  operate  as  a  re- 
lease/" It  operates  as  a  release  only  to  the  extent  of  the  amount 
actually  paid  by  the  joint  obligor  to  whom  release  is  given.'^  Con- 
sequently when  several  persons  are  jointly  indebted,  and  one  of 
them  pays  his  specific  share  of  the  debt,  and  it  is  received  and 
receipted  for  by  the  creditor  as  such,  such  payment  will  not  exon- 
erate the  party  paying  -from  his  liability  for  the  residue  of  the 
debt.  Notwithstanding  such  receipt,  the  parties  to  the  contract 
will  remain  jointly  bound,  to  the  extent  of  what  is  unpaid,  in  the 
same  manner  as  if  no  such  specific  payment  had  been  made.'^  It 
has  been  held  that  the  satisfaction  of  a  judgment  against  one  of 
several  tort  feasors  bars  an  action  against  the  others  notwith- 
standing there  is  inserted  in  the  satisfaction  a  stipulation  that  it 
was  not  intended  to  relinquish  the  judgment  against  those  not 

•*  Northern   Ins.   Co.   v.    Potter,  63  ley  v.  Crooker,  47  Maine  370,  74  Am. 

Cal.   157;   McAllester  v.   Sprague,  34  Dec.  491.     Suit  cannot  be  maintained 

Maine  296;   Bradford  v.  Prescott,  85  against  one  of  three  joint  promisors 

Maine  482,  27  Atl.  461 ;  Yates  v.  Don-  on  allegations  that  the  other  two  have 

aldson,  5  Md.  389,  61  Am.  Dec.  283 ;  paid  their  share  of  the  amount  due. 

Kenworthy  v.  Sawyer,  125  Mass.  28;  Eller  v.  Lacy,  137  Ind.  436,  36  N.  E. 

Berry  v.   Gillis,   17  N.   H.  9.  43  Am.  1088.     A  receipt  for  money  received 

Dec.  584;   Rogers  v.  Hosack's  Exrs.,  from   one   obligor    does    not    operate 

18  Wend.   (N.  Y.)  319;  Honegger  v.  as   a    release   when   part   payment   is 

Wettstein,  47   N.   Y.   Super.    Ct.    125,  made    and    a    partial    receipt    given 

revd.  94  N.  Y.  252.  13  Abb.  N.  Cas.  (Rogers  v.  Hemsted,  Kirby   (Conn.) 

(N.   Y.)   393;    Harbeck  v.   Pupin,  23  44;    Clifton    v.     Foster     (Tex.     Civ. 

Abb.  N.  Cas.   (N.  Y.)   190;  Goldbeck  App.),  20  S.  W.  1005),  or  where  on 

V.  Kensington  Nat.  Bank,  147  Pa.  267,  part    payment    a    receipt    in    full    is 

23  Atl.  565,  affg.  10  Pa.  County  Ct.  97.  given.     Pettigrew  Mach.  Co.  v.  Har- 

'"  Northern  Ins.  Co.  v.  Potter,  63  mon,  45  Ark.  290 ;  Armstrong  v.  Hay- 
Cal.  157;  McAllester  v.  Sprague,  34  ward,  6  Cal.  183;  Moore  v.  Gate- 
Maine  296;  Bradford  v.  Prescott,  85  wood,  5  Ky.  L.  (abstract)  111;  Row- 
Maine  482,  27  Atl.  461.  See  also,  ley  v.  Stoddard,  7  Johns.  (N.  Y.) 
Clark  v.  Mallory,  83  111.  App.  488,  207;  Buckinham  v.  Oliver,  3  E.  D. 
affd.  185  111.  227,  56  N.  E.   1099.  Smith   (N.  Y.)   129.     It  may  be  oth- 

"  Howard    v.    Yost,    6    Kans.    App.  erwise,    however,    where    the    receipt 

374,  50  Pac.  1098;  Ripley  v.  Crooker,  is    under    seal.      Hale   v.    Spaulding, 

47  Maine  370,  74  Am.  Dec.  491.  145  Mass.  482,  14  N.  E.  534,   1  Am. 

"^'Eldred  v.  Peterson,  80  Iowa  264,  St.  475. 
45  N.  W.  755   (part  payment)  ;  Rip- 


757  JOINT    AND    SEVERAL    CONTRACTS.  §    I485 

expressly  released.''^  But  the  rule  that  the  release  of  a  co- 
obligor  will  operate  to  discharge  all  the  obligors  has  been  held  to 
have  no  application  where  the  release  is  made  by  the  consent  of  all 
the  parties  to  the  instrument."  Thus,  where  a  promisee  releases 
a  joint  promisor  at  the  request  of  the  other  joint  promisors,  the 
latter  are  not  released.'"^ 

§  1485.  Covenant  not  to  sue. — An  agreement  whereby  the 
obligee  releases  one  or  more  of  the  joint  obligors  and  reserves  his 
right  against  the  others  has  been  compared  to  a  covenant  not  to 
sue,^°  which  is  not  regarded  as  a  release  and  when  given  to  one 
of  several  joint  debtors  is  not  construed  as  a  release  to  the 
others.  The  remedy  of  the  party  to  whom  a  covenant  not  to  sue 
is  given,  if  afterward  molested  on  account  of  the  debt,  is  by  a 
special  action  founded  upon  such  agreement.  It  cannot  be  pleaded 
in  bar  of  an  action  against  all  or  set  up  in  defense.^^  A  covenant 
not  to  sue  one  of  two  joint  obligors  will  not  discharge  the  other. '^^ 

§  1486.  Effect  of  death  of  joint  contractor  at  law. — It  is  the 
settled  rule  of  the  common  law  that  the  death  of  a  joint  promisor 
discharges  his  estate  and  leaves  the  survivor  liable  for  the  entire 
amount  of  the  debt.^^    Upon  the  death  of  one  of  the  makers  of  a 

"Ducey  v.  Patterson,  Zl  Colo.  216,  Nat.   Bank,  45   N.  J.   L.  360;   Crane 

86  Pac.  109,  9  L.  R.  A.  (N.  S.)  1066,  v.  Ailing,  15  N.  J.  L.  423;  Couch  v. 

119  Am.   St.  284.  Mills,  21  Wend.    (N.  Y.)   424. 

"Marks  v.   Deposit   Bank,  21    Ky.        '*  Cuyler   v.    Cuyler,   2   Johns.    (N. 

L.   117,  50  S.  W.   1103;   Campbell  v.  Y.)   186;  Miller  v.  Fenton,  11   Paige 

Booth,  8  Md.  107.     See  also.  Wande-  (N.   Y.)    18;   Butchers'  &c.   Bank  v. 

lohr  V.  Logan,  21  Ky.  L.  1773,  56  S.  Brown,  1  N.  Y.  Leg.  Obs.  149;  Frink 

W.  412.  V.  Green,  5  Barb.  (N.  Y.)  455;  Bank 

"Drake  v.    Reed,    4    Stew.    &    P.  of  Chenango  v.  Osgood,  4  Wend.  (N. 

(Ala.)  192.    An  agreement  with  other  Y.)  607;  Phelps  v.  Johnson,  8  Johns. 

joint   obligors   to    sue   the   defendant  (N.    Y.)    54;    Lysaght   v.    Phillips,    5 

alone   in   the   first   instance   does   not  Duer   (N.  Y.)    106.     A  covenant  not 

amount  to  a  release  of  those  not  sued,  to  sue  one  of  two  tort  feasors  does 

and  consequently  does  not  release  the  not  operate  as  a  release  of  the  other 

defendant.     Carter  v.  Long,  125  Ala.  from     liability.       Musolf    v.     Duluth 

280.  28  So.  74.  Edison    Electric   Co.,    108   Minn.   369, 

"Bradford   v.    Prescott,   85    Maine  122  N.  W.  499,  24  L.  R.  A.   (N.  S.) 

482,  27  Atl.  461.  451  and  note. 


Dean  v.  Newhall,  8  T.  R.  168 
Hutton  V.  Eyre,  6  Taunt.  289 
Walmeslev  v.  Cooper,  11  Ad.  &  El 
216;  Webb  v.  Spicer,  13  Q.  B.  894 
Thompson  v.  Lack.  3  M.  G.  &  S.  540 


"Godson  V.  Good,  6  Taunt.  587; 
Seaman  v.  Slater.  18  Fed.  485 ;  Haw- 
kins V.  Ball's  Admr.,  18  B.  Mon. 
(Ky.)  816,  68  Am.  Dec.  755n ;  Foster 
V.  Hooper,  2  Mass.  572;  New  Haven 


Bradford  v.   Prescott.  85  Maine  482,     &c.   Co.   v.   Havden,    119   Mass.   361; 
27  Atl.  461;  Bowne  v.  Mount  Holly    Bradley  v.  Burwell,  3  Denio  (N.  Y.) 


§  1487 


CONTRACTS. 


758 


joint  note  his  representatives  are,  at  law,  discharged,  and  the 
surv^ivor  alone  can  be  sued.^°  But  in  case  of  a  several  contract, 
or  of  a  contract  joint  and  several,  the  executor  or  administrator 
of  one  of  the  parties  deceased  could  be  sued  in  a  separate  action, 
but  not  jointly  with  the  survivors,  because  he  was  to  be  charged 
de  bonis  testatoris  and  they  de  bonis  propriis/^  A  joint  contract 
is  an  entirety  and  if  one  of  the  joint  obligees  dies  the  whole  inter- 
est vests  in  the  survivor  or  survivors.®^ 

§  1487.  The  rule  in  equity. — But  while,  at  law,  the  death 
of  a  joint  contractor  terminates  his  liability,  and  the  surviving 
joint  contractors  alone  remain  liable,  the  doctrine  of  equity  is 
different.  In  equity,  upon  the  death  of  one  joint  contractor,  the 
liability  does  not  rest  solely  upon  the  survivors,  but  may  be 
enforced  against  the  estate  of  the  decedent  if  an  inability  to  collect 
from  the  survivors  is  shown,^^    This  equitable  doctrine  has  been 


61 ;  Johnson  v.  Harvey,  84  N.  Y.  363, 
38  Am.  Rep.  515;  Potts  v.  Baldwin, 
173  N.  Y.  335,  66  N.  E.  4,  affg.  67 
App.  Div.  (N.  Y.)  434,  74  N.  Y.  S. 
655;  Burgovne  v.  Ohio  Life  Ins.  & 
Trust  Co.,  5  Ohio  St.  586;  Hogan  v. 
SuHivan,  79  Vt.  36,  64  Atl.  234.  In 
Lane  v.  Doty,  4  Barb.  (N.  Y.)  530, 
Judge  Paige  remarks :  "In  case  of  a 
joint  contract,  if  one  of  the  parties 
died,  his  executor  or  administrator 
is  at  law  discharged  from  liability, 
and  the  survivor  alone  can  be  sued." 
"The  general  rule  is,  that  upon  the 
death  of  one  of  several  joint  con- 
tractors before  complete  performance 
of  the  contract,  the  survivors  are 
bound  by  the  obligations  of  the  con- 
tract and  entitled  to  its  benefit."  Bab- 
cock  V.  Farwell,  245  111.  14,  91  N.  E. 
683,  137  Am.  St.  284,  affg.  146  111. 
App.  307. 

*"  Towers  v.  Moor,  2  Vern.  98; 
Simpson  v.  Vaughan,  2  Atk.  31 ; 
Stevens  v.  Catlin,  44  111.  App.  114; 
Richter  v.  Poppenhausen,  42  N.  Y. 
373',  Boykin  v.  Watson's  Admrs.,  1 
Const.   Tr.    (S.   Car.)    157. 

^'Mattison  v.  Childs,  5  Colo.  78; 
Seaman  v.  Slater,  18  Fed.  485;  New 
Haven  &c.  Co.  v.  Hayden,  119  Mass. 
361. 

**Brower  v.  Nellis,  6  Ind.  App.  323, 
33   N.   E.  672   (holding  that  Indiana 


code  has  not  changed  the  rule)  ;  In- 
diana B.  &  W.  R.  Co.  v.  Adamson, 
114  Ind.  282,  15  N.  E.  5 ;  Semper  v. 
Coates,  93  Minn.  76,  100  N.  W.  662. 
In  case  of  the  death  of  one  of  two 
joint  obligees  who  are  partners  the 
right  to  sue  vests  in  the  survivor. 
Mcintosh  V.  Zaring,  150  Ind.  301, 
49  N.  E.  164. 

*'  Simpson  v.  Vaughan,  2  Atk.  31 ; 
Ex  parte  Kendall,  17  Ves.  514;  Voor- 
his  V.  Childs,  17  N.  Y.  354;  Pope  v. 
Cole,  55  N.  Y.  124,  14  Am.  Rep.  198; 
Potts  v.  Bounce,  173  N.  Y.  335,  66 
N.  E.  4;  Hunt  v.  Rousmanier's 
Admrs.,  8  Wheat.  (U.  S.)  174,  5  L. 
ed.  589.  The  theory  upon  which  the 
estate  of  a  joint  debtor  is  held 
bound  in  equity,  is  that  the  obliga- 
tion is  joint  and  several  in  equity,  al- 
though joint  in  form  and  only  joint 
in  law.  In  cases  where  there  is  an 
obligation  to  pay  the  debt  irrespective 
of  the  joint  obligation,  equity  will 
conclusively  presume  that  the  parties 
intended  that  the  contract  should  have 
been  and  was  intended  to  be  made 
joint  and  several,  but  was  joint  in 
form,  by  mistake.  Hunt  v.  Rous- 
manier,  1  Pet.  (U.  S.)  1,  7  L.  ed. 
27;  United  States  v.  Price,  9  How. 
(U.  S.)  83,  13  L.  ed.  56.  In  Pick- 
ersgill  v.  Lahens,  15  Wall.  (U.  S.) 
140,  21    L.   ed.    119,   the   court   says: 


759 


JOINT    AND    SEVERAL    CONTRACTS. 


§     1488 


incorporated  into  the  statutes  of  several  of  the  states.  In  some 
states,  the  statute  provides  that  if  one  of  several  joint  contractors 
dies,  his  estate  may  be  charged,  as  if  the  contract  had  been  joint 
and  several,  that  is,  by  an  action  against  the  personal  representa- 
tive alone.""^  And  in  a  number  of  states  there  are  statutes  ex- 
pressly authorizing  an  action  to  be  brought  against  the  survivors 
and  the  personal  representatives  of  the  deceased  joint  con- 
tractor." 

§  1488.  Where  the  deceased  joint  debtor  is  surety. — While 
the  courts  have  been  disposed  to  treat  a  joint  obligation  as  joint 
and  several  in  equity  under  peculiar  circumstances,  this  rule  is  not 
applied  as  against  a  surety.^"  It  is  a  rule  of  the  common  law 
that  if  a  joint  obligor  dying  be  a  surety,  he  is  not  liable  for  the 


"The  court  will  not  vary  the  leigal 
effect  of  the  instrument  by  making 
it  several  as  well  as  joint,  unless  it 
can  see  either  by  independent  testi- 
mony or  from  the  nature  of  the 
transaction  itself,  that  the  parties 
concerned  intended  to  create  a  sep- 
arate as  well  as  a  joint  liability.  If, 
through  fraud,  ignorance  or  mistake, 
the  joint  obligation  docs  not  express 
the  meaning  of  the  parties,  it  will  be 
reformed  so  as  to  conform  to  it. 
This  has  been  done  where  there  is 
a  previous  equity  which  gives  the 
obligee  the  right  to  a  several  indem- 
nity from  each  of  the  obligors,  as  in 
the  case  of  money  loaned  to  both  of 
them.  There  a  court  of  equity  will 
enforce  the  obligation  against  the 
representative  of  a  deceased  obligor, 
although  the  bond  be  joint  and  not 
several,  on  the  ground  that  the  lend- 
ing to  both  creates  a  moral  obliga- 
tion in  both  to  pay,  and  that  the  rea- 
sonable presumption  is  the  parties  in- 
tended their  contract  to  be  joint  and 
several,  but  through  fraud,  ignorance, 
mistake  or  want  of  skill  failed  to  ac- 
complish their  object." 

"Curtis  V.  Mansfield,  11  Cush. 
(Mass.)  152;  Samnson  v.  Shaw.  101 
Mass.  145,  3  Am.  Rep.  327;  Thomp- 
son V.  Johnson.  40  N.  J.  L.  220; 
Potts  V.  Dounce,  \7:->  X.  Y.  335,  66 
N.  E.  4  (holding  that  wliile  the  stnt- 
ute  changes  the  rule  of  hiw  it  docs 
not  affect  the  procedure). 


"•McClaskey  v.  Barr,  79  Fed.  408 
(construing  Ohio  statutes).  Some 
statutes  provide  that  upon  the  death 
of  a  joint  promisor  a  joint  contract 
is  to  be  treated  as  a  joint  and  several 
contract.  Philadelphia  &c.  Co.  v.  But- 
ler, 181  Mass.  468,  62,  N.  E.  949.  Ran- 
ney,  C.  J.,  in  Burgoyne  v.  Ohio  Life 
Ins.  &c.  Co.,  5  Ohio  St.  586,  referring 
to  the  Ohio  statute,  said :  "This 
statute  effected  an  entire  abrogation 
of  the  common-law  principle  to 
which  allusion  has  been  made,  and 
left  the  estate  of  the  deceased  joint 
debtor  liable  to  every  legal  remedy, 
as  fully  as  though  the  contract  had 
been  joint  and  several."  See  also, 
Weil  v.  Guerin,  42  Ohio  St.  299.  In 
Indiana,  it  has  been  held  that  the 
code  of  procedure,  by  abolishing  the 
distinctions  between  legal  and  equita- 
ble actions,  and  introducing  the 
equitable  doctrines  concerning  par- 
ties, and  providing  for  the  severance 
of  the  judgment,  has,  without  any 
special  provision  on  this  subject,  in- 
troduced this  equitable  rule  into  the 
law.  Daily  v.  Robinson,  86  Ind.  2^2; 
Corbaley  v.  State,  81  Ind.  62;  Eaton 
V.  Burns,  31  Ind.  390;  Braxton  v. 
State.  25  Ind.  82. 

^'Rislev  V.  Brown,  67  N.  Y.  160; 
Pickersgill  v.  Lahens,  15  Wall.  (U. 
S.)  140,  21  L.  ed.  119,  and  cases 
cited. 


§    1489  CONTRACTS.  760 

debt  irrespective  of  the  joint  obligation,  and  his  estate  is  absolute- 
ly discharged,  both  at  law  and  in  equity,  the  survivor  only  being 
liable."  And  it  makes  no  difference  that  the  surety  died  after 
a  joint  judgment  was  rendered  against  him  and  the  principal.*^ 

§  1489.  When  a  surety's  estate  is  held  liable. — When,  how- 
ever, the  surety  or  guarantor  in  a  joint  obligation  is  directly  bene- 
fited from  the  contract,  his  estate  will  not  be  discharged  from  lia- 
bility.'*'' Accordingly,  if  the  surety  participates  in  the  considera- 
tion for  which  the  joint  obligation  was  given  as  where  it  was  the 
discharge  of  a  prior  obligation  on  which  the  surety  was  liable, 
such  discharge  would  be  sufficient  to  render  the  estate  of  the 
surety  liable."'*  Where  in  some  states  all  causes  of  action  founded 
on  contract  survive,  the  estate  of  a  deceased  surety  on  a  joint,  but 
not  several,  promissory  note  will  not  be  discharged  from  lia- 
bility.''^ 

§  1490.  Contribution  among  joint  debtors. — Where  two  or 
more  persons  are  jointly  liable  to  pay  a  claim,  and  one  of  them 
pays  the  whole  of  it  or  more  than  his  relative  portion,  either 
voluntarily  for  the  common  benefit  of  the  co-obligors,  or  by  com- 
pulsion of  legal  process,  he  may  recover  from  the  others  the  pro- 
portion of  the  claim  that  each  ought  to  pay.®^     The  doctrine  of 

*^  Towers  v.   Moor,    2    Vern.    98;  409;   Susong  v.  Vaiden,   10  S.   Car. 

Simpson    v.    Vaughan,    2    Atk.   31 ;  247,  30  Am.  Rep.  SOn ;  United  States 

Sumner  v.  Powell,  2  Mer.  30;  Jones  v.   Price,  9  How.   (U.  S.)   83,   13  L. 

V.  Beach,  2  DeG.  M.  &  G.  886;  Brad-  ed.  56. 

ley  V.  Burwell,  3  Denio  (N.  Y.)  61;  '* Richardson  v.  Draper,  87   N.   Y. 

Baskin  V.  Andrews,  53  Hun  (N.  Y.)  ZZ7,  affg.  23  Hun.    (N.  Y.)    188. 

95,  6  N.  Y.  S.  441,  24  N.  Y.  St.  874,  ""Boyd  v.  Bell,  69  Tex.  735,  7  S. 

affd.    130   N.   Y.   313,  29  N.   E.   310  W.  657. 

(Mr.  Baskin  having  died  before  the  "Brandt  on  Suretyship,  §  140.  See 

enactment  of  §  758,  New  York  Code  also,  Hudelson  v.  Armstrong,  70  Ind. 

of  Civil  Procedure,  the  rule  applica-  99. 

ble  to  this  case  is  the  one  existing  '^Bailey  v.  Bussing,  28  Conn.  455; 

at  common  law)  ;  Getty  v.  Binsse,  49  Roehl  v.  Porteous,  47  La.  Ann.  1582, 

N.  Y.  385,   10  Am.  Rep.  379;  Wood  18  So.  645;   Bennison  v.  McConnell, 

V.  Fisk.  63  N.  Y.  245,  20  Am.  Rep.  56  Nebr.  46,  76  N.  W.  412;  Booth  v. 

528;  Davis  v.  Van   Buren,  72  N.  Y.  Farmers'  &   Mechanics'  Bank,  74  N. 

587;    Randall   v.    Sackett,    77   N.    Y.  Y.  228;  Harbach's  Admrs.  v.  Elder, 

480.     Compare  with   Royal   Ins.   Co.  18  Pa.   St.  ZZ.     In  order  to  recover 

V.  Davies,  40  Iowa  469,  20  Am.  Rep.  he  must  prove  payment  for  the  com- 

581.  mon   benefit   of    more   than   his    first 

''Chard  v.  Hamilton,  56  Hun   (N.  share  of  the  common  obligation.  Mor- 

Y.)  259,  9  N.  Y.  S.  575,  30  N.  Y.  St.  rison  v.  Warner,   197  Pa.   St.  59,  46 

594,  affd.   125   N.  Y.  777,  27  N.   E.  Atl.  1030.     A  joint  maker  of  a  note 


761 


JOINT    AND    SEVERAL    CONTRACTS. 


§    1490 


contribution  rests  upon  the  broad  principle  of  justice,  that  when 
one  has  discharged  a  debt  or  obhgation,  which  others  were 
equally  bound  with  him  to  discharge,  and  thus  removed  a  common 
burden,  the  others  who  have  received  a  benefit  ought,  in  con- 
science, to  refund  to  him  a  ratable  proportion."^  The  doctrine  of 
contribution  applies  equally  between  original  contractors,  that  is. 
those  jointly  bound  on  their  own  account — not  copartners — "*  as  it 
does  between  cosureties,  that  is,  those  jointly  bound  to  answer  for 
the  debt  or  default  of  another."''  There  must  be  a  fixed  and  posi- 
tive obligation  to  pay.""  If  a  party  has  voluntarily  paid  money 
on  a  void  note  or  obligation,  he  cannot  maintain  an  action  for  con- 
tribution," nor  when  he  pays  a  claim  barred  by  the  statute  of  lim- 
itations."^ Where  one  of  two  defendants  in  a  joint  judgment 
pays  it,  but  not  with  the  intention  of  discharging  it,  he  may  en- 
force the  judgment  against  the  codefendant  for  his  legal  pro- 
portion of  the  debt."® 


may  purchase  the  obligation,  and  the 
ol)ligation  may  be  assigned  to  him, 
but  the  assignment  to  him  will  not 
pass  title,  and  he  cannot  afterward 
revive  it  as  a  subsisting  contract 
against  a  cosignor.  He  has  only  the 
right  to  compel  the  cosignor  to  con- 
tribute his  ratable  proportion  of  the 
amount  which  he  has  paid  for  the  ob- 
ligation. Davis  V.  Stevens,  10  N.  H. 
186;  Deavenport  v.  Green  River  De- 
posit Bank,  138  Kv.  352.  128  S.  W. 
88,  137  Am.  St.  386,  holding  that  a 
partner  cannot  purchase  an  interest 
in  a  firm  note  and  then  assign  or  hold 
the  firm  liable  on  the  note.  The  only 
right  remaining  in  him  is  the  right 
to  enforce  contributions  against  his 
cosignor,  and  he  can  only  recover 
on  the  basis  of  the  amount  actually 
paid  bv  him. 

•'Aspinwall  v.  Sacchi,  57  N.  Y. 
331.  See  also.  Potts  v.  Dullin,  125 
N.  Car.  413,  34  S.  E.  514. 

Sands    v.    Durham,   98    Va.    592, 


36  S.  E.  472. 
"  Sadler  v. 
Chipman 


Nixon.  5  B.  &  Ad.  936; 
_...,..._..     .-    Morrill.    20    Cal.    130; 
Snyder  v.  Kirtlev,  35  !^Io.  423;  Fin- 
lav  V.  Stewart,  56  Pa.  St.  183. 
'Titt  V.  Purssord,  8  M.  &  W.  538; 


Esgen  V.  Smith,  113  Iowa  25,  84  N. 
W.  954;  Frith  v.  Sprague,  14  Mass. 
455.  See  also,  Park  v.  Kribs,  24 
Tex.  Civ.  App.  650,  60  S.  W.  905. 

•'  Russell  V.  Failor,  1  Ohio  St.  327, 
59  Am.  Dec.  631. 

"« Williamson  v.  Rees,  15  Ohio  St. 
572;  Williamson  v.  Collins,  17  Ohio 
354. 

•'Wood  V.  Merritt,  2  Bosw.  (N. 
Y.)  368;  Parker  v.  Ellis,  2  Sand.  (N. 
Y.)  223;  Murray  v.  Bogert,  14  Johns. 
(N.  Y.)  318,  7  Am.  Dec.  466.  (Where 
a  party  has  paid  a  judgment  against 
him  for  an  entire  demand,  to  ^yhich 
a  person  not  party  to  a  suit  was  joint- 
ly liable,  he  cannot  maintain  action 
against  such  person  for  contribu- 
tion.). See  also.  Sand's  Admr.  v.  Dur- 
ham, 98  Va.  392,  36  S.  E.  472,  54  L.  R. 
A.  614n.  Contribution  among  joint 
principals.  Henderson  v.  McDuflFee, 
5  N.  H.  38.  20  Am.  Dec.  557;  Peas- 
lee  V.  Breed.  10  N.  H.  489.  34  Am. 
Dec.  178;  Mills  v.  Hyde.  19  Vt.  59, 
46  Am.  Dec.  177  and  notes.  Suit  by 
one  joint  promisor  against  another 
for  excess  paid  by  him  beyond  his 
share.  Fletcher  v.  Grover,  11  N.  H. 
368.  35  Am.  Dec.  497;  Mills  v.  Hyde, 
19  Vt.  59,  46  Am.  Dec.  177. 


§  I49I 


CONTRACTS. 


762 


§  1491.  Contribution  among  sureties. — An  action  at  law 
will  lie  by  one  surety  who  has  paid  more  than  his  share  to  recover 
contribution  from  his  cosurety.^     The  law  implies  a  contract  be- 


MVilHams  v.  Riehl,  127  Cal.  365, 
59  Pac.  762.  78  Am.  St.  60;  Burgett 
V.  Strean,  85  111.  App.  12;  Harts  v. 
Latham.  84  III.  App.  483;  Morrison 
V.  Poyntz,  7  Dana  (Ky.)  307,  32  Am. 
Dec.  91;  Crisfield  v.  Murdock,  127 
N.  Y.  315,  21  N.  E.  1046;  Rindge  v. 
Baker,  57  N.  Y.  209,  15  Am.  Rep. 
475;  Roeder  v.  Niedermeier,  112 
^lich.  608,  71  N.  W.  154;  Montgom- 
ery V.  Page,  29  Ore.  320,  44  Pac.  689. 
The  right  to  contribution  "has  been 
considered  as  depending  rather  upon 
a  principle  of  equity  than  upon  con- 
tract ;  but  it  may  well  be  considered 
as  resting  alike  on  both  for  its  foun- 
dation ;  for  although,  generally,  there 
is  no  express  agreement  entered  into 
between  joint  sureties,  yet  from  the 
uniform  and  almost  universal  under- 
standing which  seems  to  pervade  the 
whole  community,  that  from  the  cir- 
cumstance alone  of  their  agreeing  to 
be,  and  becoming  accordingly  cosure- 
ties of  the  principal,  they  mutually  be- 
come bound  to  each  other  to  divide 
and  equalize  any  loss  that  may  arise 
therefrom  to  either  or  any  of  them, 
it  may  with  great  propriety  be  said 
that  there  is  at  least  an  implied  con- 
tract." Agnew  v.  Bell,  4  Watts  (Pa.) 
31.  Right  of  surety  to  enforce 
contribution  from  another.  Cases 
collected  in  note  to  Gross  v. 
Davis,  87  Tenn.  226,  11  S.  W.  92,  10 
Am.  St.  635n;  McBride  v.  Potter- 
Lovell  Co.,  169  Mass.  7,  47  N.  E. 
242,  61  Am.  St.  265.  As  to  the  right 
to  enforce  contribution  being  equita- 
ble in  its  nature,  see  White  v.  Banks, 
21  Ala.  705,  56  Am.  Dec.  283;  Wells 
v.  Miller,  66  N.  Y.  255;  Gross  v. 
Davis,  87  Tenn.  226,  11  S.  W.  92,  10 
Am.  St.  635n.  But  see  Hood  v.  Mor- 
gan, 47  W.  Va.  817,  35  S.  E.  911.  One 
who  is  surety  on  a  contractor's  bond 
and  who  on  failure  of  the  contractor 
to  complete  the  work,  finishes  it,  as 
surety,  is  entitled  to  call  upon  his  co- 
securities  to  share  the  expense  thus 
incurred,  but  he  must  also  permit 
the  cosureties  to  share  in  the  amount 
received  by  him  under  the  contract. 
Labbe  v.  Bernard,  196  Mass.  551,  82 
N.  E.  688,  14  L.  R.  A.   (N.  S.)   457 


and  note.  As  between  different  sets 
of  sureties  who  secure  the  same  debt 
at  different  stages  in  a  legal  proceed- 
ing, it  is  held  as  a  general  principle 
that  the  second  bond  becomes  the 
primary  security  and  that  the  first  is 
suspended  until  the  second  is  ex- 
hausted. Culliford  v.  Walser,  158  N. 
Y.  65,  52  N.  E.  648,  70  Am.  St.  437; 
Bobo  V.  Vaiden,  20  S.  Car.  271; 
Morris  v.  Morris,  9  Heisk.  (Tenn.) 
814.  But  when  different  sets  of  sure- 
ties secure  one  and  the  same 
obligation  of  a  common  principal, 
one  set  may  compel  contribu- 
tion from  the  other.  Deering  v.  Earl 
of  Winchelsea,  2  Bos.  &  P.  270,  1 
Cox  318;  Pendlebury  v.  Walker,  4 
Y.  &  C.  424;  Mayhew  v.  Crickett,  2 
Swanst.  193,  1  Wils.  Ch.  418;  Whiting 
v.  Burke,  L.  R.  10  Eq.  539;  Powell 
v.  Powell,  48  Cal.  234  (two  bonds 
given  by  the  administrator)  ;  Hutch- 
ison V.  Roberts,  6  Del.  Ch.  112,  11 
Atl.  48;  Snow  v.  Brown,  100  Ga.  117, 
120,  28  S.  E.  11;  Stevens  v.  Tucker, 
87  Ind.  109;  Bosley  v.  Taylor,  5  Dana 
(Ky.)  157,  30  Am.  Dec.  677;  Cobb  v. 
Haynes,  8  B.  Mon.  (Ky.)  137  (dif- 
ferent sets  of  sureties  given  by  an 
administrator)  ;  Kellar  v.  Williams, 
10  Bush.  (Ky.)  216;  Ketler  v.  Thomp- 
son, 13  Bush.  (Ky.)  287;  Loring  v. 
Bacon,  3  Cush.  (Mass.)  465;  Forbes 
V.  Harrington,  171  Mass.  386,  50  N. 
E.  641;  Brooks  v.  Whitmore,  142 
Mass.  399,  8  N.  E.  117;  State  v. 
Fields,  53  Mo.  474;  Norton  v. 
Coons,  3  Denio  (N.  Y.)  130, 
affd.  6  N.  Y.  ZZ;  Wells  v.  Miller, 
66  N.  Y.  255;  Armitage  v.  Pulver, 
Zl  N.  Y.  494;  Pickens  v.  Miller,  83 
N.  Car.  543  (successive  bonds  given 
by  an  administrator)  ;  Jones  v.  Hays, 
38  N.  Car.  502,  44  Am.  Dec.  78 ;  Jones 
v.  Blanton,  41  N.  Car.  115,  51  Am. 
Dec.  415 ;  Bell's  Admr.  v.  Jasper,  2 
Ired.  Eq.  (N.  Car.)  597;  Thomp- 
son V.  Dekum,  32  Ore.  506,  52  Pac.  517 
(successive  bonds  by  an  executor)  ; 
Field  V.  Pelot,  McMul.  Eq.  (S.  Car.) 
369;  Odom  v.  Owen,  2  Baxt.  (Tenn.) 
446;  Harrison  v.  Lane,  5  Leigh  (Va.) 
414,  27  Am.  Dec.  607;  Bentley  v. 
Harris'    Admr.,   2    Grat.    (Va.)    357. 


l^Z 


JOINT    AND    SEVERAL    COXTRACTS. 


I49I 


tweeii  the  sureties,  originating  at  the  time  they  executed  the 
obligation  by  which  they  became  such,  to  contribute  ratably 
toward  discharging  any  liability  which  they  incur  in  belialf  of 
their  principal,  and  in  the  case  of  death  of  either  of  them,  the 
obligation  devolves  upon  his  legal  representatives,  the  same  as 
any  other  contract  made  by  him,  the  breach  of  which  occurs  after 
his  death.^  But  he  must  first  pay  the  obligations  to  which  the 
cosurety  is  asked  to  contribute.^  Nor  can  a  surety  compel  contri- 
butions when  he  voluntarily  pays  that  which  could  not  have  been 
coerced  from  him.*  When  a  surety  liable  for  contribution  is  in- 
solvent, contribution  must  be  in  proportion  to  the  number  of 
solvent  sureties."  One  surety  may  be  regarded  as  liable  as 
principal  to  another  surety  when  it  appears  positively  or  by  fair 
inference  that  such  surety  intended  to  stand  in  the  character  of 
principal  to  subsequent  signers,  but  the  mere  request  by  one  to 
another  to  join  him  as  cosurety  does  not  give  rise  to  this  rela- 


Compare  Harnsberger  v.  Yancey,  Z2) 
Grat.  (Va.)  527.  It  may  be  provided 
by  the  statute  that  the  first  surety 
shall  be  released  upon  the  giving  of 
a  new  obligation.  Lingle  v.  Cook's 
Admrs.,  32  Grat.  (Va.)  262;  People 
V.  Lott,  27  111.  215.  One  set  of 
sureties  cannot  enforce  contributions 
from  the  other  unless  they  secure  the 
same  debt.  Hutchinson  v.  Roberts, 
6  Del.  Ch.  112,  11  Atl.  48;  Rosen- 
baum  V.  Goodman,  78  Va.  121 ;  Har- 
rison v.  Lane,  5  Leigh  (Va.)  414,  27 
Am.  Dec.  607;  Langford's  Exr.  v. 
Perrin.  5  Leigh  (Va.)  552.  Thus 
it  has  been  held  that  sureties  on  a 
replevin  bond  and  a  supersedeas  bond 
(Kellar  v.  Williams.  10  Bush.  (Ky.) 
216)  or  on  a  replevin  and  injunc- 
tion bond  (Brandenburg  v.  Flynn,  12 
B.  Mon.  (Ky.)  397)  are  not  co- 
sureties. 

^  Bachelder  v.  Fiske,  17  Mass.  464 ; 
Wood  v.  Leland,  1  Mete.  (Mass.) 
387;  Barry  v.  Ransom,  12  N.  Y.  462; 
Bradlev  v.  Burwell,  3  Denio  (N.  Y.) 
61 ;  Johnson  v.  Harvey,  84  N.  Y.  363. 
38  Am.  Rep.  515.  Contra,  Waters' 
Representatives  v.  Riley's  Admr.,  2 
Har.  &  G.  (Md.)  305.  The  last- 
named  case  was  expressly  disap- 
proved in  Johnson  v.  Harvey,  84  N. 
Y.   363,  38  Am.   Rep.   515. 

"Taylor  v.   Reynolds,  53   Cal.  686; 


Magruder  v.  Admire,  4  Mo.  App.  133 ; 
Ladd  V.  Chamber  of  Commerce,  Zl 
Ore.  49.  60  Pac.  713,  61  Pac.  1127,  62 
Pac.  208.  See  also,  Chenault  v.  Bush, 
84  Ky.  528,  8  Ky.  L.  490,  2  S.  W.  160 ; 
Nally  V.  Long,  56  Md.  567;  Wavland 
v.  Tucker,  4  Grat.  (Va.)  267,  50  Am. 
Dec.   76. 

*HaIsey  v.  Murray,  112  Ala.  185, 
20  So.  575.  But  a  surety  may  with- 
out compulsion  discharge  a  judgment 
on  an  official  bond  and  sue  his  co- 
surety for  contribution.  Mason  v. 
Pierrson,  69  Wis.  585,  34  N.  W.  921. 

°  Hitchman  v.  Stewart,  3  Drew. 
271;  Burroughs  v.  Lott.  19  Cal.  125; 
Bosley  v.  Taylor,  5  Dana  (Ky.)  157, 
30  Am.  Dec.  677 ;  Morrison  v.  Poyntz, 
7  Dana  (Kv.)  307,  32  Am.  Dec.  92; 
Cobb  v.  Haynes,  8  B.  Mon.  (Kv.) 
137;  Young  v.  Lyons,  8  Gill  (Md.) 
162;  Van  Petten  v.  Richardson,  68 
Mo.  379;  Smith  v.  Mason,  44  Xebr. 
610,  63  N.  W.  41 ;  Henderson  v.  Mc- 
Duffee,  5  N.  H.  38.  20  Am.  Dec.  557j 
Sloan  v.  Gibbes,  56  S.  Car.  480,  35 
S.  E.  408,  76  Am.  St.  559;  Acers  v. 
Curtis.  68  Tex.  423,  4  S.  W.  551; 
Liddell  v.  Wiswell,  59  Vt.  365.  8  Atl. 
680.  Compare  Whiting  v.  Burke.  L. 
R.  10  Eq.  539,  affd.  L.  R.  6  Ch.  App. 
342.  The  rule  was  otherwise  at  com- 
mon law.  Browne  v.  Lee,  6  B.  & 
C.  689,  9  Dowl.  &  R.  700;  Moore  v. 


1492 


CONTRACTS. 


764 


tion.®  The  weight  of  authority  is  that  successive  accommoda- 
tion indorsers  of  negotiable  instruments  are  not,  in  the  absence  of 
an  agreement  to  that  effect,  cosureties,  nor  Hable  to  contribution 
as  between  each  other. '^ 

§  1492.  Actions  on  joint  contracts. — An  instrument  can 
only  be  sued  upon  in  the  manner  in  which  the  parties  have  made 
themselves  liable.  If  the  words  show  that  they  meant  to  render 
themselves  liable  separately  and  not  jointly,  then  they  must  be 
sued  severally.®  The  common-law  rule  is  that  all  the  obligors  to 
a  joint  contract  must  be  sued  jointly  as  parties  defendant  unless 
they  waive  the  right  by  not  interposing  a  plea  in  abatement  or 
provided  neither  has  been  discharged  by  operation  of  a  bankrupt 
or  insolvent  law,  or  is  not  liable  on  the  ground  of  infancy.* 
Where  an  obligation  is  made  to  several  persons  jointly  all  the 
obligees  must  join  in  an  action  to  enforce  it  in  the  absence  of 
any  statute  changing  the  rule."     Thus  all  the  parties  jointly 


Baker,  34  Fed.  1;  Van  Petten  v. 
Richardson,  68  Mo.  379;  Stothoff  v. 
Dunham's  Exrs.,  19  N.  J.  L.  181; 
Powell  V.  Mathis,  26  N.  Car.  83,  40 
Am.  Dec.  427. 

"Chappel  V.  John,  45  Colo.  45,  99 
Pac.  44,  132  Am.  St.  134. 

'lanson  v.  Paxton,  22  U.  C.  C.  P. 
505;  Sherrod  v.  Rhodes,  5  Ala.  683; 
Armstrong  v.  Harshman,  61  Ind.  52, 
28  Am.  Rep.  665 ;  McGurk  v.  Huggett, 
56  Mich.  187,  22  N.  W.  308;  McCune 
V.  Belt,  45  Mo.  174;  Hillegas  v. 
Stephenson,  75  Mo.  118,  42  Am.  Rep. 
393;  Phillips  v.  Plato,  42  Hun  (N. 
Y.)  189,  5  N.  Y.  St.  124;  Daniel  v. 
McRae,  9  N.  Car.  590,  11  Am.  Dec. 
787;  Atwater  v.  Farthing,  118  N. 
Car.  388,  24  S.  E.  736;  McCarty  v. 
Roots,  21  How.  (U.  S.)  432,  16  L. 
ed.  162;  Stovall  v.  Border  Grange 
Bank,  78  Va.  188. 

«Lee  V.  Nixon,  1  Ad.  &  El.  201; 
Eveleth  v.  Sawyer,  96  Maine  227,  52 
Atl.  639;  Board  of  Education  v. 
Howard,  65  N.  J.  L.  75,  46  Atl.  574. 

•Anderson  v.  Martindale,  1  East 
497;  Eccleston  v.  Clipsham,  1  Wm. 
Saund.  153,  note  1 ;  Hopkinson  v.  Lee, 
6  Ad.  &  El.  (N.  S.)  964;  Foley  v. 
Addenbrooke,  4  Ad.  &  El.  (N.  S.) 
197;  Brower  v.  Nellis,  6  Ind.  App. 
323,  33  N.  E.  672;  Post  v.  Shafer,  63 


Mich.  85,  29  N.  W.  519;  Robertson 
V.  Smith,  18  Johns.  (N.  Y.)  459,  9 
Am.  Dec.  227 ;  Clements  v.  Miller,  13 
N.  Dak.  176,  100  N.  W.  239.  See 
also,  McMaster  v.  City  Nat.  Bank, 
23  Okla.  550,  101  Pac.  1103,  138  Am. 
St.  831.  Where  the  contract  is  not 
several,  nor  joint  and  several,  but 
joint  merely,  the  action  on  it,  if  there 
be  two  obligors,  and  both  of  them 
living  at  the  time  of  action  brought, 
must  necessarily  be  a  joint  action 
against  both.  Newman  v.  Graham, 
3  Munf.  (Va.)  187.  Where  a  suit  is 
brought  agajnst  three  joint  contract- 
ors, and  the  writ  is  served  on  two 
only,  the  two,  by  pleading  the  general 
issue,  waive  their  right  to  object  to 
the  want  of  service  on  the  third. 
Bartlett  v.  Robbins,  5  Mete.  (Mass.) 
184.  Where  one  of  two  joint  obligors 
is  an  infant,  a  recovery  may  be  had 
against  the  other  and  a  discharge  as 
to  the  infant.  Cole  v.  Manners,  76 
Nebr.  454,  107  N.  W.  777. 

"  Mcintosh  v.  Zaring,  150  Ind.  301, 
49  N.  E.  164;  Ohnsorg  v.  Turner, 
33  Mo.  App.  486;  Clark  v.  Cable,  21 
Mo.  223;  Dewey  v.  Carey,  60  Mo. 
224;  Henry  v.  Mt.  Pleasant,  70  Mo. 
500.  Nothing  is  better  settled  than 
the  rule  that,  on  an  undertaking  to 


7^5  JOINT    AND    SEVERAL    CONTRACTS.  §    1 493 

insured  in  a  policy  of  insurance  should  join  in  an  action  to  re- 
cover for  a  loss."  All  the  payees  in  a  note  must  join  in  an  action 
thereon,  unless  it  has  been  assigned  to  a  less  number  of  them." 
And  all  the  joint  obligees  of  a  bond  are  necessary  parties  plaintiff 
in  an  action  for  its  breach.  They  are  joint  proprietors,  and  one 
must  have  as  much  right  as  the  other  to  say  and  determine  when 
suit  shall  be  brought  and  when  it  shall  be  compromised  or  settled 
without  suit.  Neither  can  sue  alone  for  his  proportion.^^  And 
there  can  be  no  recovery,  except  for  damages  in  which  all  such 
obligees  are  interested."  In  assumpsit,  the  nonjoinder  of  a  co- 
promisor  as  defendant  can  only  be  taken  advantage  of  by  plea  in 
abatement;  but  the  nonjoinder  of  a  copromisee  as  plaintiff  is 
ground  for  a  nonsuit. ^^  If  one  joint  contractor  is  sued  alone,  and 
does  not  plead  in  abatement  the  nonjoinder  of  the  other,  and 
judgment  is  rendered  against  the  one  sued,  it  merges  the  cause  of 
action  against  him,  and,  unless  otherwise  provided  by  statute, 
inasmuch  as  the  two  are  no  longer  jointly  liable,  prevents  a  sub- 
sequent recovery  against  the  other  joint  contractor.^® 

§  1493.    Judgments  on  joint  contracts. — At  common  law, 
in  a  joint  action,  whether  upon  a  joint  or  a  joint  and  several 

two,  both  must  join  in  an  action  on  (Mass.)    79;    Monaghan   v.   Agricul- 

it;    otherwise    there    is    no    cause   of  tural  Fire  Ins.  Co.,  53  Mich.  238,  18 

action.     It  is  a  part  of  the  contract  N.   W.   797. 

that     both     shall     sue.       Rainey     v.  "Yell  v.   Snow,  24  Ark.  554.     See 

Smizer,  28   Mo.  310.     Compare   with  also,     Slaughter    v.     Davenport,     151 

Curry  v.  Kansas  &  C.  P.  R.  Co.,  58  Mo.  26,   51    S.   W.  471.     It   is,  how- 

Kans.  6,  48  Pac.   579,  in  which  it  is  ever,    otherwise    where    the    note    is 

said  :   "The   compensation  to  be  paid  joint  and  several.     Curtis  v.  Bowrie, 

for  their  joint  act  was  to  be  paid  to  2  McLean  (U.  S.)  374,  Fed.  Cas.  No. 

them    separately,    and   none   of   them  3498. 

had  an   interest  in  the  compensation  "  Ryan    v.     Riddle,     78    Mo.     521 ; 

to  be  paid  to  the  others.     'Where,  in  Sweigart  v.  Berk,  8  Serg.  &  R.  (Pa.) 

a  contract,  two  of  the  three  contract-  308. 

ing  parties  agree  to  perform  certain  "  Burns  v.  Follansbee,  20  111.  App. 

services    for   the   third,   and   each   of  41.     A  joint  owner  of  a  cause  of  ac- 

the  two  is  to  receive  therefor  a  sep-  tion    cannot    introduce    a    new    joint 

arate    and    distinct    compensation,    it  owner  into  the  contract  by  individual 

is   not   necessary   that   both   of   them  assignment.      Learned    v.    Ayres,    41 

join    in    a    suit    for    such    compensa-  Mich.  677,  3  N.  W.   178. 

tion,  but  either  may  maintain  a  sep-  "  Holyoke    v.    Loud,    69   Maine   59, 

arate    action    for    the    amount    due  2  Greenleaf  Ev.,  §   110. 

him.'"       Quoting     from     Richey     v.  '"Vanston     v.     Boughton.     71      111. 

Branson,  33  Mo.  App.  418.  App.  627;  Cowlev  v.  Patch    120  Mass. 

"Blanchard  v.  Dyer,  21  Maine  111,  137:   Purvis  v.   Butler,  87  Mich.  248, 

38  Am.   Dec.   253;   Tate  v,   Citizens'  49  N.  W.  564,  effect  of  nonjoinder.' 
Mutual     Fire     Ins.     Co.,     13     Gray 


§    1493  CONTRACTS.  766 

contract,  or  upon  several  distinct  contracts,  the  general  rule  was 
that  there  could  be  no  judgment  except  for  or  against  all  of  the 
defendants."  Where  the  plaintiff  treats  the  contract  as  joint  by 
suing  the  makers  jointly,  the  rule  of  recovery  in  actions  upon 
joint  contracts  must  govem.^^  This  general  rule  was,  however, 
subject  to  this  exception:  If  one  or  more  of  the  defendants 
pleaded  infancy  or  coverture,  or  discharge  in  bankruptcy,  these 
pleas  being  inconsistent  with  the  averment  in  the  declaration  of 
an  original  joint  contract,  the  plaintiff  could  enter  a  nolle  prosequi 
as  to  such  defendants,  and  recover  judgment  against  the  other 
defendants. ^'^  A  judgment  against  one  of  several  makers  of  a 
note,  without  process  against  the  others,  releases  those  who  are 
not  sued.-*'  In  some  of  the  states,  in  derogation  of  the  common- 
law  rule,  a  distinction  is  taken  between  joint  contracts  and  such 
as  are  joint  and  several,  the  courts  holding  that,  in  an  action  upon 
the  latter  species  of  obligation,  the  plaintiff  may  enter  a  nolle 
prosequi  against  one  of  the  defendants  and  proceed  to  judgment 
against  the  others."  The  statutes  of  most  of  the  states  have 
changed  the  common-law  rule.^^ 

"Freeman    on    Judgments,    §    43;  or      the      like.       Fuller      v.      Robb, 

Nesto  V.  Foss,  21  Fla.  143;  Aten  v.  26  111.  246.     Enterprise  Distilling  Co. 

Brown,   14   111.   App.  451;    Brown  v.  v.   Bradley,   17   111.  App.   509.  Excep- 

Tuttle,   27   111.   App.   389;    Enterprise  tion  where  one  of  the  joint  promisors 

Distilling  Co.  v.  Bradley,  17  111.  App.  resides      without      the      jurisdiction. 

509;    Gibbons    v.    Surber,    4    Blackf.  West  v.  Furbish,  67  Maine  17. 
(Ind)    155;    Woodward   v.    Newhall,        '"Mitchell     v.     Brewster,     28     111. 

1     Pick.     (Mass.)     500;     Proctor    v.  163;   Bell  v.   State,  7  Blackf.    (Ind.) 

Lewis,  SO  Mich.  329,   15   N.  W.  495;  33    (a  judgment  against  one  defend- 

Fisk  V.  Henarie,  14  Ore.  29,  13  Pac.  ant  on  an  action  on  contract  against 

193    (rule    changed    by    the    code)  ;  two     erroneous     unless    there     is     a 

Murdy    v.    McCutcheon,    95    Pa.    St.  suggestion  of  "not  found"  as  to  the 

435;    Wootters     v.     Kauffmann,     67  other).      McMaster     v.      City     Nat. 

Texas    488,    3    S.    W.    465;    Minor  Bank,   23   Okla.   550,   101    Pac.    1103, 

V.     Mechanics'     Bank,     1     Pet.     (U.  138  Am.   St.  831. 
S)      46,     7     L.     ed.     47;     Midkiff        ^  Peyton  v.  Scott,  2  How.   (Miss.) 

V.     Lusher,     27     W.  Va.     439     (the  870;    1   Black  on   Judgments,   §   206. 
judgment      being      a      joint      judg-         '^Carmien    v.     Whitaker,     36    Ind. 

ment,    if    set    aside    as    to    one    of  509;   Erwin  v.  Scotten,  40  Ind.  389; 

the  defendants,  it  would  have  to  be  Moore  v.  Estes,  79  Ky.  282,  2  Ky.  L. 

set  aside  as  to  both).  256;      Huot      v.      Wise,      27      Minn. 

"Gould  V.   Sternburg,  69  111.  531.  68,  6  N.  W.  425;   Stedeker  v.   Bern- 

^^  Westheimer  v.  Craig,  76  Md.  399,  ard,  102  N.  Y.  327,  6  N.  E.  791;  Lee 

25    Atl.    419;    Cole    v.    Manners,    76  v.  Basey,  85  Ind.  543;  Sawin  v.  Ken- 

Nebr.  454,  107  N.  W.  777.     The  ex-  ny,  93  U.  S.  289,  23  L.  ed.  926.   Black 

ception  is  where  the  defense  is  per-  on  Judgments,  §  82. 
sonal,    as    infancy,     or     bankruptcy, 


76/ 


JOINT    AND    SEVERAL    CONTRACTS. 


§    1494 


§  1494.  Judgments  on  joint  contracts  further  considered. 
— The  doctrine  at  common  law  is  that  a  judgment  against  one  or 
more  of  several  joint  debtors  absolutely  discharges  the  others 
from  all  liability  on  the  joint  contract  and  bars  a  subsequent 
action  against  them.-^  Where  all  the  defendants  are  brought  into 
court,  judgment  rendered  by  agreement  against  one  is  tantamount 
to  a  dismissal  as  to  the  others."  When  the  contract  is  joint,  and 
not  joint  and  several,  the  entire  cause  of  action  is  merged  in  the 
judgment.  The  joint  liability  of  the  parties  not  sued  with  those 
against  whom  judgment  is  recovered  being  extinguished,  their 
entire  liability  is  gone.  They  cannot  be  sued  separately,  for  they 
have  incurred  no  separate  obligation ;  they  cannot  be  sued  jointly 
with  others,  because  judgment  has  already  been  recovered  against 
the  latter,  who  would  otherwise  be  subjected  to  two  suits  for  the 
same  cause."     It  has  been  held  that  a  judgment  recovered  against 


'^  Martin  v.  Baugh,  1  Ind.  App.  20, 
27  N.  E.  110;  Cowley  v.  Patch.  120 
Mass.  137;  Candee  v.  Smith,  93  N. 
Y.  349;  Sloo  v.  Lea,  18  Ohio  279; 
McMaster  v.  Citv  Nat.  Bank,  23 
Okla.  550,  101  Pac.  1103.  138  Am.  St. 
831;  Smith  v.  Black,  9  S.  &  R.  (Pa.) 
142,  11  Am.  Dec.  686;  Wooters  v. 
Smith,  56  Texas  198.  See  generally 
article  by  G.  C.  H.  Corliss  on  "Joint 
Debtors,"  36  Albany  Law  J.  245. 

-*  Henry  v.  Gibson.  55  Mo.  570. 
Verdict  for  a  defendant  who  pleads 
payment  in  a  suit  against  him  and 
another  on  their  joint  note  dis- 
charges both.  Lenoir  v.  Moore,  61 
Aliss.  400.  The  promisee  cannot  dis- 
miss as  to  some  of  the  joint  obh- 
gors  and  have  judgment  against  the 
others.  Van  Leyen  v.  Wreford,  81 
Mich.  606,  45   N.  W.   1116. 

==King  V.  Hoare,  13  Mees.  &  W. 
494;  Ward  v.  Johnson,  13  Mass.  148; 
McMaster  v.  City  Nat.  Bank,  23 
Okla.  550.  101  Pac.  1103,  138  Am. 
St.  831;  Mason  v.  Eldred,  6  Wall. 
(U.  S.)  231,  18  L.  ed.  783,  overruling 
Sheehy  v.  Mandeville,  6  Cranch. 
(U.  S.)  254,  3  L.  ed.  216;  Lauer  v. 
Bandow,  48  Wis.  638,  4  N.  W.  774; 
Bowen  v.  Hastings.  47  Wis.  232.  2 
N.  W.  301.  The  decision  in  the  case 
of  Sheehv  v.  Mandeville,  6  Cranch. 
(U.  S.)  254,  3  L.  ed.  216,  to  the  con- 


trary has  been  distinctly  overruled  in 
this  country  and  in  England.  In 
Wann  v.  McNulty,  2  Gilm.  (111.) 
355,  43  Am.  Dec.  58,  the  Supreme 
Court  of  Illinois  commented  upon 
the  case  and  declined  to  follow  it  as 
authority.  '  Ferrall  v.  Bradford,  2 
Fla.  508,  50  Am.  Dec.  293.  "It  is 
the  right  of  persons  jointly  liable  to 
pav  a  debt  to  insist  on  being  sued  to- 
gether. If  then  there  are  three  per- 
sons so  liable,  and  the  creditor  sues 
two  of  them,  and  those  two  make 
no  objection,  the  creditor  may  re- 
cover judgment  against  those  two. 
But  should  he  afterward  bring  a 
farther  action  against  the  third, 
that  third  may  justly  contend  that 
the  three  should  be  sued  together." 
By  recovering  judgment  against  two 
in  the  same  cause  of  action,  the 
creditor  has  disabled  himself  from 
suing  the  third  in  the  way  in  which 
the  third  has  a  right  to  be  sued. 
Kendall  v.  Hamilton,  L.  R.  4  App. 
Cas.  504.  The  rule  here  laid  down 
does  not  apply  where  the  parties 
are  severally  as  well  as  jointly 
bound,  and  the  recovery  of  a  judg- 
ment against  one  is  no  bar  to  an  ac- 
tion against  the  other,  until  the  judg- 
ment has  been  satisfied.  Bermond- 
sev  Vestry  v.  Ramsey,  L.  R.  6  C.  P. 
247. 


§    1495  CONTRACTS.  768 

one  of  two  partners  is  a  bar  to  a  subsequent  suit  against  both, 
although  the  new  defendant  was  a  dormant  partner  at  the  time 
of  the  contract,  and  was  not  discovered  until  after  the  judgment." 
The  rule  that  judgment  recovered  against  one  or  two  joint  con- 
tractors is  a  bar  to  an  action  against  the  other,  applies  equally 
when  one  of  the  joint  contractors  is  a  married  woman,  contract- 
ing in  respect  of  her  separate  property."  A  judgment  in  favor 
of  one  or  more  joint  debtors,  however,  who  were  served  with 
process,  is  held  no  bar  to  a  suit  against  some  not  served,  particu- 
larly when  those  not  served  are  nonresidents.^^  And  there  are 
several  cases  which  hold  that  where  the  joint  debtors  live  in 
different  jurisdictions,  judgment  against  one  of  them  in  one  juris- 
diction is  no  bar  to  a  subsequent  action  against  the  other  or  both 
in  another  iurisdiction.^® 

§  1495.  Actions  on  joint  and  several  contracts. — Contracts 
which  are  joint  and  several  may  be  regarded  as  furnishing  two 
distinct  remedies,  one  by  a  joint  action  against  all  the  obligors 
and  the  other  by  a  several  action  against  each.^"  The  only  differ- 
ence between  a  contract  merely  joint  and  one  joint  and  several, 
as  respects  the  right  of  the  holder  of  the  one  or  the  other  in  pursu- 
ing his  remedy,  is,  that  on  the  first  he  is  obliged  to  sue  all  the 
living  promisors,  whereas  on  the  latter  he  has  the  right  to  elect 
between  one  and  all  of  them.  Having  made  his  election,  the 
contract  becomes,  so  far  as  the  rules  of  law  applicable  to  his 

"'Smith    V.    Black,   9    Serg.    &    R.  other  maker  where  he  is  a  nonresi- 

(Pa.)    142,    11    Am.    Dec.   686.     "No  dent,   and  not  made  a  party  to  the 

principle,"   said   the  court,  "is  better  former  suit. 

settled    than    that    a   judgment    once  '*01cott  v.  Little,  9  N.  H.  259,  32 

rendered     absorbs     and     merges    the  Am.   Dec.   357;    Dennett  v.    Chick,   2 

whole    cause    of     action,     and    that  Greenl.    (Maine)    191,    11    Am.    Dec. 

neither   the   matter,    nor   the   parties,  59;  West  v.  Furbish,  67  Maine  17. 

can  be  severed,  unless,  indeed,  where  ^"People   v.    Harrison,    82    111.    84; 

the    cause    of    action    is    joint    and  Cummings  v.  People,  50  111.  132;  Me- 

several,      which,      certainly,      actions  lick   v.    Foster,   64   N.    J.   L.   394,   45 

against  partners  are  not."  Atl.  911;   Minor  v.  Mechanics'  Bank, 

=^Hoare  v.  Niblett,  L.  R.  1  Q.  B.  1  Pet.  (U.  S.)  46,  7  L.  ed.  47.     In  a 

781.  joint  and   several   contract,  the   con- 

^*Larison   v.    Hager,    44    Fed.    49;  tract  is  that   of   each   contractor  in- 

Merriman    v.    Barker,    121    Ind.    74,  dividually,  and  that  of  all  jointly,  and 

22   N.    E.  992.     A   judgment   against  different    remedies    may    be    pursued 

one   of   the    joint-makers    of    a   note  against    each.     Mason    v.    Eldred,    6 

does  not  merge  the  cause  of   action  Wall.  (U.  S.)  231,  18  L.  ed.  783. 
and  bar  a  separate  action  against  the 


769 


JOINT    AND    SEVERAL    CONTRACTS. 


1496 


remedy  are  concerned,  purely  several  or  purely  joint ;  and  he  is  no 
longer  at  liberty  to  consider  it  other  than  what  he  has  made  it 
by  his  own  determination.^^  If  the  plaintiff  obtains  a  joint  judg- 
ment, he  cannot  afterward  sue  the  promisors  or  obligors  sepa- 
rately, for  the  reason  that  the  contract  or  bond  is  merged  in  the 
judgment,  nor  can  he  maintain  a  joint  action  after  he  has  recov- 
ered judgment  against  one  of  the  parties  in  a  separate  action,  as 
the  prior  judgment  is  a  waiver  of  his  right  to  pursue  a  joint  rem- 
edy.^^  The  action,  if  brought  under  the  common  law,  is  to  be 
against  all  the  obligors  jointly,  or  one  of  them  singly,  and  not 
against  any  intermediate  number,  unless  some  obligor  or  obligors 
shall  have  died,  in  which  case  the  death  of  him,  or  them,  must  be 
stated  in  the  declaration.^^ 

§  1496.  Statutory  modifications. — Joint  contracts,  or  con- 
tracts which  would  be  joint  by  the  common  law,  are  in  many 
states  declared  to  be  construed  as  joint  and  several.^*     Thus  it 


"■  Gibbons  v.  Surber,  4  Blackf . 
(Ind.)  155.  On  a  joint  and  several 
bond,  suit  may  be  brought  against 
one  of  the  sureties  without  joining 
another  with  him  (Poullain  v. 
Brown,  80  Ga.  27,  5  S.  E.  107),  and 
a  suit  may  be  brought  against  a 
surety  without  joining  the  principal. 
People  y.  Butler,  74  Mich.  643,  72 
N.  W.  273.  The  law  appears  to  be 
well  settled,  that  if  two  or  more 
are  bound  jointly  and  severally,  the 
obligee  may  elect  to  sue  them  jointly 
or  severally.  United  States  v.  Ar- 
cher's Exrs.,  1  Wall.  Jr.  (U.  S.) 
173.  The  creditor  is  bound  by  his 
election  in  treating  a  joint  and  sev- 
eral contract  either  as  joint  or 
several.  Winslow  v.  Herrick,  9 
Mich.  380;  Benson  v.  Paine,  9  Abb. 
Pr.  (N.  Y.)  28,  2  Hilt.  552,  17  How. 
Pr.  (N.  Y.)  407;  Downey  v.  Farm- 
ers' &c.  Bank,  13  Serg.  &  R.  (Pa.) 
288;  United  States  v.  Ames,  99  U. 
S.  35,  25  L.  ed.  295. 

"  Sessions  v.  Johnson,  95  U.  S. 
347.  24  L.  ed.  596. 

"Leflwich  v.  Berkeley.  1  H.  &  M. 
(Va.)  61;  Saunders  v.  Wood,  1 
Munf.  (Va.)  406:  Newell  v.  Wood, 
1  Munf.  (Va.)  555;  Amis  v.  Smith, 
16  Pet.  (U,  S.)  303,  10  L.  ed.  973. 
When    an    obligation    is    joint    and 

49 — CoNTR.\CTS,  Vol.  2 


several,  it  can  not  be  treated  as 
several  as  to  some  and  joint  as  to  the 
rest.  Streatfield  v.  Halliday,  3  T. 
R.  779;  Cabell  v.  Vaughan,  1  Wm. 
Saund.  291 ;  President  of  Bangor 
Bank  v.  Treat,  6  Greenl.  (Maine) 
207,  19  Am.  Dec.  210.  All  must  be 
proceeded  against  jointly,  or  each 
severally,  subject  to  certain  excep- 
tions, as  where  one  is  an  infant,  or 
has  been  discharged  in  bankruptcy. 
Fay  V.  Jenks,  78  Mich.  312.  44  N. 
W.  380.  In  California  under  the 
code,  in  an  action  upon  a  joint  and 
several  contract,  the  plaintiff  may, 
at  his  election,  sue  one  or  more,  or 
all  of  the  parties  severally  liable. 
Code  Civ.  Proc.  §  383.  Hurlbutt  v. 
Spaulding  Saw  Co.,  93  Cal.  55,  28 
Pac.  795;  People  of  California  v. 
Love,  25  Cal.  520.  In  many  states 
the  law  provides  that  when  two  or 
more  persons  are  bound  by  contract, 
whether  jointly  only  or  jointly  and 
severally  or  severally  only,  the  ac- 
tion may,  at  the  plaintiff's  option,  be 
brought  against  any  or  all  of  them. 
Stimson's  American  Statute  Law, 
§  5015. 

"Cole  V.  Harvey,  142  Iowa  574, 
120  N.  W.  97;  Rose  v.  Will- 
iams, 5  Kans-  483 ;  Morgan  v. 
Brach,     104     Minn.     247,      116     N. 


§    1496  CONTRACTS.  770 

may  be  provided  by  statute  that,  where  the  parties  unite  in  a 
promise  and  receive  a  benefit  from  the  consideration,  their  prom- 
ise is  presumed  to  be  joint  and  several. ^^  The  statutes  of  some 
jurisdictions  provide  that  where  all  the  parties  who  unite  in  a 
promise  receive  some  benefit  from  the  consideration,  whether 
past  or  present,  their  promise  is  presumed  to  be  joint  and  sev- 
eral.^'' The  rules  of  the  common  law,  as  it  prevails  in  this  coun- 
try and  in  England,  except  as  the  same  have  been  modified  by 
statute,  are  very  strict  in  requiring  sei'vice  of  process  upon  all 
the  defendants  in  an  action  on  a  demand  against  joint  obligors 
or  partners.  If  any  of  the  joint  defendants  were  beyond  seas, 
or  could  not  be  found,  so  that  it  was  impossible  to  reach  them 
by  the  process  of  the  court,  the  proper  mode  thereon  was  to  insti- 
tute proceedings  of  outlawry  against  them,  and  after  a  judgment 
of  outlawry  had  been  rendered,  the  plaintiff  could  then  obtain  a 
separate  judgment  against  the  defendants  before  the  court.^^ 
Statutes  have  been  passed  in  most  of  the  states,  and  in  all  in 
which  the  code  system  of  pleading  prevails,  which  provide  that 
when  action  is  commenced  against  two  or  more  defendants, 
jointly  or  severally  liable  on  a  contract,  and  the  summons  iS 
served  on  one  or  more  of  the  defendants,  but  not  on  all,  the 
plaintiff  may  proceed  against  the  defendants  served  in  the  same 
manner  as  if  they  were  the  only  defendants..^^     And  a  recovery 

W.  490;  Knapp  v.  Hanley,  153  and  several,  have  been  held  to  re- 
Mo.  App.  169,  132  S.  W.  747;  Mc-  late  only  to  proceedings,  and  not  to 
Master  v.  City  Nat.  Bank,  23  Okla.  change  a  joint  contract  to  a  several 
550,  101  Pac.  1103,  138  Am.  St.  831.  obligation.  White  v.  Connecticut 
Belleville  Savings  Bank  v.  Winslow,  General  Life  Ins.  Co.,  34  App.  (D. 
30    Fed.    488     (under    the     Missouri  C.)  460. 

statute  providing  that  "all  contracts  ^  Bell  v,   Adams,   150  Cal.   772,  90 

which,    by    common    law,    are    joint  Pac.    118    (contract  by   mine   owners 

only,   shall  be  construed  to  be   joint  to  employ  one  to  operate  the  mines, 

and  several")  ;  Wiley  v.   Holmes,  28  agreeing  to   pay  him   the   reasonable 

Mo.  286,  75  Am.  Dec.  126.     Sections  value  of  his  services  whenever  they 

of  a  statute  which  provided  that  one  sold  the  mines).     Civ.  Code  of  Cal., 

action    may    be   brought    against    any  §  1659. 

or   all   of    the   parties   to   a  joint   or  *' Cummer  v.    Mairs,   140   Cal.   535, 

several    contract,    that,    for   the    pur-  74   Pac.  26;    McKee  v.   Cunningham, 

poses  of  suit,  every  contract  entered  2  Cal.  App.  684,  84  Pac.  260. 

into  by  two  or  more  persons  shall  be  °^  Edwards  v.   Carter,    1    Stra.  473; 

considered  as  joint  and  several,  and  Hall  v.  Lanning,  91  U.  S.  160,  23  L. 

that    on    the    death    of    one    of    the  ed.  271. 

parties    his    personal    representatives  "^  Bell   v.    Adams,    150   Cal.   772,  90 

shall   be   bound    to   the    same    extent  Pac.    118;    Wood    v.    Watkinson,    17 

and   in   the   same   manner    as    if   the  Conn.  500,  44  Am.  Dec.  562n. 
contract  were  expressed  to  be  joint 


771  JOINT    AND    SEVERAL    CONTRACTS.  §    1 497 

may  be  had  against  one  defendant  alone,  in  a  proper  case,  not- 
withstanding another  of  the  debtors  has  been  released  by  the 
plaintiff  upon  a  compromise."" 

§  1497.  Other  statutory  modifications. — In  most  of  the 
states  acts  called  "joint  debtor  acts"  provide  that  judgment  may 
be  given  "for  or  against  one  or  more  of  several  plaintiffs,  and  for 
or  against  one  or  more  of  several  defendants,"  and  usually  con- 
tain a  provision  that  "in  an  action  against  several  defendants  the 
court  may,  in  its  discretion,  render  judgment  against  one  or  more 
of  them,  leaving  the  action  to  proceed  against  the  others,  when- 
ever a  several  judgment  is  proper."'*'*  Under  these  statutes,  if  a 
plaintiff  commences  an  action  against  two  or  more  defendants 
upon  a  joint  obligation,  he  is  no  longer  compelled  to  establish  a 
joint  cause  of  action  against  all,  but  a  judgment  may  be  taken 
against  the  party  or  parties  shown  to  be  liable,  when  the  others 
are  not  liable." 

§  1498.  Effect  of  statute  of  limitation. — On  the  principle 
that  a  discharge  of  one  joint  debtor  discharges  all  it  has  been 

'*Moss   V.   Jerome,    10    Bosw.    (N.  have  been  brought,  or  a  several  judg- 

Y.)   220.  ment  on  the  facts  of  the  case  would 

'"California    Code    of    Civil    Pro-  be  proper.     Van  Ness  v.  Corkins,  12 

cedure    (1899),    §§    578,    579;    Iowa  Wis.     186;     Bonesteel     v.     Todd,     9 

Code     (1897),    §    2>77Z;    New    York  Mich.  371,  80  Am.   Dec.  90.     Action 

Code     of     Civil     Procedure     (1896),  was  brought  against  two  parties,  one 

§    1932;    Ohio   General   Code    (1910),  of  whom  was  alone  served  with  proc- 

§§    11583-4;   Wisconsin   Code    (1898),  ess.      He    produced    the    record    of  a 

§     2883;      Arkansas     Code      (1904),  judgment    recovered    against    himself 

§    6229-6230;    Wagner    on    Missouri  and  his  codefendant   under  the  joint 

Statutes,   p.   1019,    §   32;    1   Black  on  debtor  act  of   New  York,  process  in 

Judgments.  §  208.  that   state   having  been    served   upon 

"  Richardson     v.     Jones,     58     Ind.  his    codefendant    alone.      The    court 

240.      Various     effects     and     conse-  said:      "We    cannot,    therefore,     re- 

quences  are  attributed  to  such  judg-  gard    the    liabiHty    as     extinguished, 

ments    in    the    states    in    which    they  And    inasmuch    as    the    new    action 

are    rendered.      Longstreet    &    Sedg-  must    be    based     upon     the    original 

wick  V.  Rea  &  Co.,  52  Ala.  195 ;  Hub-  claim,  while,  as  in  the  case  of   f or- 

bell  V.  Woolf.   15   Ind.  204;   Stafford  eign    judgment    at    common    law,    it 

V.  Nutt,  51   Ind.   535;   Eyre  v.  Cook,  may     be     of     no     great     importance 

9  Iowa  185 ;  Blodget  v.  Morris,  14  N.  whether  the  action   may   be   brought 

Y.  482;  Lampkin  v.  Chisom,  10  Ohio  in  form  upon  the  judgment  or  on  the 

St.   450;   Ah   Lcp   v.   Gong  Choy,    13  primary  debt,  it  is  certainly  more  in 

Ore.   205,  9   Pac.   483;    Hall  v.   Lan-  harmony    with    our    practice    to    re- 

ning,  91  U.  S.  160,  23  L.  ed.  271.     A  sort  to  the  form  of  action  appropri- 

judgment    may    be    entered    against  ate   to    the    real    demand    in    contro- 

any  one  or  more  of  several  defend-  versy."     Oakley   v.    Aspinwall,   4    N. 

ants   wherever   a  several   suit    might  Y.    513.      Where    the    court    of    ap- 


§  1498 


CONTRACTS. 


772 


held  that  where  an  obligation  is  barred  by  the  statute  of  limitation 
as  to  one  of  several  debtors  it  is  a  bar  in  favor  of  all  the  joint 
obligors.'*'*  Thus,  where  an  action  is  barred  against  the  principal 
it  also  bars  an  action  against  the  surety.*^  For  instance,  it  has 
been  held  that  a  stockholder  stands  in  the  relation  of  a  surety  to 
the  corporation  and  that  such  stockholder's  liability  ceases  when 
the  liability  of  the  corporation  is  barred  by  the  statute  of  limita- 
tion.** Acts  by  which  one  of  several  joint  or  joint  and  several 
obligors  acknowledges  his  liability  on  the  joint  obligation  do  not 
toll  the  statute  of  limitations  as  to  such  other  joint  obligors.*^ 


peals  of  New  York  considered  the 
effect  of  a  judgment  recovered  under 
the  joint  debtor  act  of  that  state 
upon  the  original  demand,  Bronson, 
J.,  said :  "It  is  said  that  the 
original  demand  was  merged  in 
and  extinguished  by  the  judg- 
ment, and,  consequently,  that  the 
plaintiff  must  sue  upon  the  judgment, 
if  he  sues  at  all.  That  would  un- 
doubtedly be  so  if  both  the  defend- 
ants had  been  before  the  court  in 
the  original  action.  But  the  joint 
debtor  act  creates  an  anomaly  in  the 
law.  And  for  the  purpose  of  giving 
effect  to  the  statute,  and  at  the  same 
time  preserving  the  rights  of  all  par- 
ties, the  plaintiff  must  be  allowed 
to  sue  on  the  original  demand." 

^'Ashby  V.   Bell's  Admr.,   80   Va, 
811. 


**  Auchampaugh  v.  Schmidt,  70 
Iowa  642,  27  N.  W.  805,  59  Am.  Rep. 
459;  Pacific  Elevator  Co.  v.  Whit- 
beck,  6Z  Kans.  102,  64  Pac.  984,  88 
Am.  St.  229.  On  the  other  hand,  the 
fact  that  the  statute  of  limitations 
bars  an  action  against  the  surety 
does  not  in  itself  create  a  bar  to  an 
action  against  the  principal.  Berkin 
V.  Marsh,  18  Vt.  152,  44  Atl.  528,  56 
Am.  St.  565. 

**  Pacific  Elevator  Co.  v.  Whit- 
beck,  63  Kans.  102,  64  Pac.  984,  88 
Am.  St.  229. 

*"  Boynton  v.  Spafford,  162  111.  113, 
44  N.  E.  379,  33  Am.  St.  274,  affg.  61 
111.  App.  384 ;  Tate  v.  Hawkins,  81  Ky. 
577,  50  Am.  Rep.  181 ;  Meade  v.  Mc- 
Dowell, 5  Bin.  (Pa.)  195;  Phelps  v. 
Stewart,  12  Vt.  256. 


CHAPTER  XXXV. 


INTERPRETATION  AND  CONSTRUCTION. 


1 1505.  Meaning  of  terms — Purpose.      §  1523. 

1506.  No     room     for     construction 

when  contract  is  unambigu- 
ous. 1524. 

1507.  Rules   of   construction  gener-       1525. 

ally. 

1508.  Rules  of  construction  general- 

ly— Intention  of  parties.  1526. 

1509.  Rules    of    construction    gener- 

ally— 'Words    understood    in        1527. 
their  ordinary  meaning. 

1510.  Rules    of    construction    gener- 

ally— Language     used     evi- 
dences the  intent.  1528. 

1511.  Rules   of   construction   gener- 

ally— Technical   terms. 

1512.  Rules    of    construction — Com- 

mercial terms — Words  used        1529. 
in  legal  sense. 

1513.  General      rules — Technical       1530. 

words  governed  by  the  in-        1531. 
tent. 

1514.  Rules    of    construction   gener- 

ally— W  hole      instruments 
looked   to. 

1515.  Rules   of   construction   gener- 

ally— Construing     particular       1532. 
clauses. 

1516.  Rules   of   construction   gener- 

ally— Noscitur    a    sociis.  1533. 

1517.  Rules   of    construction   gener- 

ally— Surrounding      circum- 
stances. 1534. 

1518.  Rule  illustrated. 

1519.  Rule    concerning    surrounding 

circumstances    further    con-       1535. 
sidered. 

1520.  Subsidiary   rules   of  construc- 

tion— Construction     uphold-        1536. 
ing  contract  preferred. 

1521.  Subsidiary   rules  of  construe-        1537. 

tion — A       reasonable      con-        1538. 
struction  will  be  adopted. 

1522.  Subsidiary  rules   of  construe-        1539. 

tion — Construing  several  in-        1540. 
struments  together.  1541. 

77Z 


Contracts  contained  in  more 
than  one  instrument  fur- 
ther illustrated. 

The  rule   further   illustrated. 

Subsidiary  rules  of  construc- 
tion— Instruments  partly 
written  and  partly  printed. 

Repugnant  provisions  must  be 
irreconcilable. 

Must  not  be  construed  to  de- 
feat intention  of  parties — 
Construction  of  words  and 
figures. 

Subsidiary  rules  of  construc- 
tion— Doubtful  words  con- 
strued against  the  party  us- 
ing them. 

Construction  of  grants  by 
government. 

Application  of  the  rule. 

Subsidiary  rules  of  construc- 
tion— Language  to  be  un- 
derstood in  sense  in  which 
promisor  knew  or  had  rea- 
son to  believe  the  other  par- 
ty understood  it. 

Subsidiary  rules  of  construc- 
tion— General  and  particular 
words — Ejusdcm    generis. 

Subsidiary  rules  of  construc- 
tion— Expressio  unius  est 
exclusio  alterius. 

Subsidiary  rules  of  construc- 
tion— P  unctuation  and 
grammar. 

Subsidiary  rules  of  construc- 
tion— Rejecting  and  inter- 
polating words. 

Rejecting  and  interpolating 
words — Limits  of  rule. 

Practical   construction. 

Contemporaneous  and  subse- 
quent acts  considered. 

The  rule  illustrated. 

-Additional  illustrations. 

Must  be  the  act  of  both  par- 
ties. 


§     1505  CONTRACTS.  774 

§  1542.  Contract   must  be   ambiguous.     §  1554.  When  time  is  not  of  the  es- 

1543.  Entire    and     Severable     Con-  sence  of  a  contract. 

tracts.  1555.  Time   not    generally   regarded 

1544.  Contract  consisting  of  several  in  equity  as  of  the  essence 

distinct  items.  of  the   contract. 

1545.  Illustrations    of    Entire    Con-        1556.  Illustrations. 

tracts.  1557.  Where  the  property  is  subject 

1546.  Example    of    Severable    Con-  to  fluctuations  in  value. 

tracts.  1558.  Stipulations  in  regard  to  real 

1547.  Dependent     and     independent  estate. 

Promises.  1559.  Rules     as     to     penalties     and 

1548.  Alternative     stipulations     and  liquidated  damages. 

options.  1560.  Illustrations. 

1549.  Rules    as    to    time — Perform-        1561.  Stipulations    in    building    con- 

ance.  tracts. 

1550.  Computation  of  time   from  a        1562.  Further    illustrations    of    pen- 

particular  day  or  a  particu-  alties. 

lar  event.  1563.  The    intention    of    the    parties 

1551.  Time — Time  at  law^  generally  and  nature  of  the  agreement 

of    the    essence    of    a    con-  — Controlling  guides. 

tract.  1564.  Province    of    courts  and   jury 

1552.  Time — Relative  to  the  sale  of  in  construing  contract. 

goods.  1565.  Province    of    court    and    jury 

1553.  Conditions  precedent.  further  considered. 

1566.  Oral  contracts. 

§  1505.  Meaning  of  terms — Purpose. — The  terms  "inter- 
pretation of  a  contract"  and  "construction  of  a  contract"  are  usu- 
ally used  interchangeably.  They  are  not,  however,  exact  syno- 
nyms. The  word  "interpretation"  is  narrower  in  its  application. 
Properly  speaking  interpretation  consists  in  ascertaining  the 
meaning  of  the  words  used.^  When  the  meaning  of  the  words 
has  been  ascertained  and  the  contract  still  remains  ambiguous, 
the  language  used  will  be  considered  in  connection  with  the  condi- 
tions and  circumstances  under  which  the  parties  were  contract- 
ing, and  the  relation  which  they  sustain  to  each  other,  and  an 
attempt  be  thus  made  to  arrive  at  the  intention  of  the  parties.* 
The  foregoing  indicates  the  difference  between  the  two.  "Inter- 
pretation" is  concerned  primarily  with  the  meaning  of  the  words 
actually  used.  "Construction"  takes  into  consideration  the  whole 
transaction,  of  which  the  words  used  are  but  a  part.  The  purpose 
of  all  interpretations  is  to  ascertain  and  give  effect  to  the  actual 
contract  entered  into  by  the  parties, — the  contract  which  they 
intended  to  make  and  upon  which  their  minds  met.' 

"See  Black's  L.   Diet.,  under  title  20  Idaho  97,  117  Pac.  122,  36  L.  R. 

Construction.  A.   (N.  S.)  313. 

^See   Black's   L.   Diet,   under  title  ^Pressed  Steel  Car  Co.  v.  Eastern 

Construction;  Schurger  v.  Moorman,  R.    Co.,    121    Fed.   609,   57   C.   C.   A. 


775 


INTERPRETATION    AND    CONSTRUCTION, 


§    1506 


§  1506.  No  room  for  construction  when  contract  is  unam- 
biguous.— The  term  "construction"  implies  an  uncertainty  as 
to  the  meaning  of  the  contract  for  when  the  meaning  is  clear 
and  unambiguous  there  is  nothing  to  be  construed.*  Moreover, 
when  the  language  employed  is  unequivocal  although  the  parties 
may  have  failed  to  express  their  real  intention,  the  legal  effect  of 
the  instrument  will  usually  be  enforced  as  written.''     Where  no 


635 ;  A.  Leschen  &  Son  Rope  Co.  v. 
Mayflower  Gold  Min.  &c.  Co.,  173 
Fed.  855.  97  C  C.  A.  465,  35  L.  R.  A. 
(N.  S.)  In;  American  Bonding  Co. 
V.  Pueblo  Investment  Co.,  150  Fed.  17, 
80  C.  C  A.  97,  9  L.  R.  A.  (N.  S.) 
557n,  10  Am.  &  Eng.  Ann.  Cas.  357. 
The  necessity  for  a  rule  of  interpre- 
tation and  construction  "arises  from 
the  imperfection  of  language  and  from 
the  imperfect  use  of  it  in  those  in- 
stances in  which  language  wholly  un- 
equivocal and  explicit  might  be  se- 
lected. 'If,'  says  Vattel,  'the  ideas 
of  men  were  always  distinct  and  per- 
fectly determined;  if,  in  order  to 
make  them  known,  they  had  only 
proper  terms,  and  none  but  such  ex- 
pressions as  were  clear,  precise,  and 
susceptible  of  only  one  sense,  there 
would  never  be  any  difficulty  in  dis- 
covering their  meaning  in  the  words 
by  which  they  would  express  it. 
Nothing  more  would  be  necessary 
than  to  understand  the  language.' 
Even  in  this  state  of  things,  however, 
it  is  obvious  to  those  who  have  ex- 
perience in  the  affairs  of  life  that 
rules  of  construction  would  be  neces- 
sary. In  contracts  where  more  than 
one  definite  object  is  stipulated  for, 
(at  least  wherever  a  general  object 
is  intended  to  be  secured  by  a  stipula- 
tion concerning  a  variety  of  par- 
ticulars), it  is  hardly  possible  to  fore- 
see every  case  that  will  arise  even 
under  the  course  of  events  that  is 
anticipated.  Much  less  can  the  state 
of  affairs  be  foreseen  which  new 
conjunctures  and  unexpected  events 
will  certainly  produce.  Yet  it  would 
be  injurious  to  both  parties,  if  the 
exact  literal  stipulations  of  a  com- 
plicated contract  were  to  be  per- 
formed, and  nothing  more;  and 
therefore  it  is  necessary  to  resort  to 
construction,  that  is,  to  inductions 
drawn  from  the  general  views  of  the 


parties,  (as  expressed  in  their  con- 
tract) with  reference  to  the  existing 
circumstances;  in  other  words,  to 
collect  from  the  object,  drift,  and 
spirit  of  their  agreement  what  their 
leading  and  paramount  intentions 
were  and  to  carry  those  intentions 
into  effect."  Metcalf  on  Contracts, 
272. 

*  Sargeant  v.  Leach.  47  Ind.  App. 
318,  94  X.  E.  579;  Williamson  v.  Mc- 
Clure,  Zl  Pa.  St.  402;  Griffin  v.  Fair- 
mount  Coal  Co..  59  W.  Va.  480,  53 
S.  E.  24,  2  L.  R.  A.  (N.  S.)  1115. 
Montana  Revised  Code,  §  5025  pro- 
vides :  "  'A  contract  must  be  so 
interpreted  as  to  give  effect  to  the 
mutual  intention  of  the  parties  as  it 
existed  at  the  time  of  contracting, 
so  far  as  the  same  is  ascertainable 
and  lawful.'  However,  this  section 
simply  means  that  the  intention  of 
the  parties  shall  be  ascertained  in  the 
first  instance  by  reference  to  the  lan- 
guage employed  by  them.  Where  the 
words  used  are  clear,  certain,  and 
unambiguous,  interpretation  may  not 
be  resorted  to.  The  language  em- 
ployed must  be  given  its  ordinary 
meaning."  Quirk  v.  Rich,  40  Mont. 
552,  107  Pac.  821.  "There  is  a  dis- 
tinction between  an  inaccuracy  and  an 
ambiguity  of  language.  Language 
may  be  inaccurate  without  being  am- 
biguous, and  it  may  be  ambiguous 
though  perfectly  accurate.  *  *  * 
The  language  may  be  inaccurate,  but 
if  the  court  can  determine  the  mean- 
ing of  this  inaccurate  language  with- 
out any  other  guide  than  a  knowl- 
edge of  the  simple  facts  upon  which, 
from  the  nature  of  language  in  gen- 
eral, its  meaning  depends,  the  lan- 
guage, though  inaccurate,  could  not 
be  ambiguous."  Donovan  v.  Boeck, 
217  Mo.  70.  116  S.  W.  543.  quoting 
from  Riggs  v.  Myers,  20  Mo.  239. 
'Clark  V.  Mallory,  185  111.  227,  56 


I^O 


D^/ 


CONTRACTS. 


71^. 


uncertainty  exists  there  is  no  room  for  construction,'  When  the 
meaning  is  plain  another  meaning  cannot  be  added  by  impHca- 
tion  or  intendment.' 

.  §  1507.  Rules  of  construction  generally. — The  primary  ob- 
ject of  all  rules  of  interpretation  and  construction  is  to  arrive 
at  and  give  effect  to  the  mutual  intention  of  the  parties  as  ex- 
pressed in  the  contract  when  not  forbidden  by  law.^     It  must  be 


N.  E.  1099,  affg.  83  III.  App.  488. 
"Parties  cannot  use  terms  with  a 
fixed  and  certain  meaning  and  then 
disclaim  such  meaning  at  least  not 
without  reformation  of  the  contract." 
Zohrlaut  v.  Mengelberg  (Wis.),  124 
N.  W.  247.  See  also,  Jocobs  v.  Par- 
odi.  50  Fla.  541.  39  So.  833;  Rosen 
V.  Rosen,  159  Mich.  72,  123  N.  W. 
559,  134  Am.  St.  712.  Compare  the 
foregoing  with  Klueter  v.  Joseph 
Schlitz,  143  Wis.  347,  128  N.  W.  43, 
32  L.  R.  A.  (N.  S.)  383n,  in  which 
it  is  said:  "It  is  said  that,  when  the 
language  of  a  contract  is  plain,  it  is 
not  open  to  construction.  That  is 
true  in  the  general  sense,  but,  un- 
less viewed  broadly,  it  does  not  con- 
vey accurately  the  full  scope  of  the 
field  where  rules  for  construction 
are  applicable.  The  words  of  a  con- 
tract, in  themselves,  may  be  plain,  yet 
when  applied  to  the  situation  with 
which  it  deals,  not  plain,  the  literal 
sense  leading  to  such  unreasonable- 
ness as  to  suggest  that  the  parties 
probably  did  not  so  intend.  In  so 
applying  the  contract  oral  testimony 
is  generally  necessary  and  permissible 
to  the  end  that  the  full  scope  of  the 
situation  dealt  with  may  be  observed. 
As  to  when  the  language  of  a  con- 
tract, in  its  literal  sense,  is  to  be 
taken  as  expressing  the  intention  of 
the  parties,  is  correctly  indicated  by 
Vattel's  rule  which  has  been  often 
cited  by  this  and  other  courts:  'When 
the  meaning  is  evident,  and  leads  to 
no  absurd  conclusions,  there  can  be 
no  reason  for  refusing  to  admit  the 
meaning  which  the  words  naturally 
present.'  Note  the  language  'when 
the  meaning  is  evident.'  The  mean- 
ing is  not  evident  when,  if  looking 
at  the  subject-matter,  it  is  so  un- 
reasonable as  to  appear  unlikely  that 
the  parties  so  intended.     To  enable 


one  to  read  the  contract  in  the  light 
of  the  subject-matter  and  the  effects 
and  consequences,  obviously  evidence 
of  facts  and  circumstances,  not  mere 
conversations,  leading  up  to  and  con- 
current with  the  making  of  the  con- 
tract,  is  often   necessary." 

"Clark  V.  Mallorv,  185  111.  227,  56 
N.  E.  1099,  affg.  83  111.  App.  488; 
Walker  v.  Tucker,  70  111.  527;  Clark 
V.  Mallory,  185  111.  App.  227,  56  N.  E. 
1099,  affg.  83  111.  App.  488;  Gibbs  v. 
People's  Nat.  Bank,  198  111.  307,  64 
N.  E.  1060;  Louisville  &  N.  R.  Co.  v. 
Louisville  Southern  R.  Co.,  100  Ky. 
690,  19  Ky.  L.  11,  39  S.  W.  42; 
Menage  v.  Rosenthal,  175  Mass.  358, 
56  N.  E.  579;  Johnson  v.  Dalrymple, 
140  Mo.  App.  232,  123  S.  W.  1020; 
American  Hardwood  Lumber  Co.  v. 
Dent,  151  Mo.  App.  614,  132  S.  W. 
320;  Dwight  v.  Germania  Life  Ins. 
Co.,  103  N.  Y.  341,  8  N.  E.  654,  57 
Am.  Rep.  729;  Schoonmaker  v.  Hoyt, 
148  N.  Y.  425,  42  N.  E.  1059;  Hart  v. 
Hart,  117  Wis.  639.  94  N.  W.  890. 
See  further,  post,  §  1509. 

^  Diederich  v.  Rose,  228  111.  610,  81 
N.  E.  1140. 

*  Hubert  v.  Sistrunk  (Ala.),  53  So. 
819;  Donahue  v.  McNulty,  24  Cal. 
411,  85  Am.  Dec.  78;  Brown  v.  Slater, 
16  Conn.  192,  41  Am.  Dec.  136;  Bar- 
tholomew V.  Muzzy,  61  Conn.  387, 
23  Atl.  604,  29  Am.  St.  206;  Walters 
V.  Morrow,  1  Houst.  (Del.)  527;  E. 
S.  Adkins  v.  Campbell,  6  Pennew. 
(Del.)  96,  64  Atl.  628;  A.  Leschen 
&  Sons  Rope  Co.  v.  Mayflower  Gold 
Min.  &c.  Co..  173  Fed.  855,  97  C.  C. 
A.  465,  35  L.  R.  A.  (N.  S.)  In; 
American  Bonding  Co.  v.  Pueblo 
Investment  Co.,  150  Fed.  17,  80  C. 
C  A.  97,  9  L.  R.  A.  (N.  S.)  5S7n, 
10  Am.  &  Eng.  Ann.  Cas.  357;  Turner 
V.  Tremont,  159  Fed.  221 ;  Walker  v. 
Douglas,  70  111.  445;  Field  v.  Leiter, 


777 


INTERPRETATION    AND    CONSTRUCTION. 


§    1507 


borne  in  mind  that  all  applicable  laws  in  existence  when  an 
agreement  is  made  necessarily  enter  into  and  form  a  part  of  it 
as  fully  as  if  they  were  expressly  referred  to  or  incorporated  in 
its  terms."'  Moreover,  the  plain  legal  import  of  an  instrumenT 


118  111.  17,  6  N.  E.  877;  Clark  v. 
University  of  Illinois,  103  111.  App. 
261 ;  Farnam  v.  Thompkins,  171  111. 
519,  49  N.  E.  568;  Pratt  v.  Prouty, 
104  Iowa  419,  12,  N.  W.  1035,  65  Am. 
St.  472;  Garden  City  v.  Heller,  61 
Kans.  767,  60  Pac.  1060;  Hunter's 
Admrs.  v.  Miller's  Exrs.,  6  B.  Mon. 
(Ky.)  612;  McConncU  v.  New  Or- 
leans, 35  La.  Ann.  273 ;  Lower  Terre- 
bonne Refining  Mfg.  Co.  v.  Barrow, 
126  La.  263,  52  So.  487;  Hawes  v. 
Smith,  12  Maine  429;  Bell  v.  Jordan, 
102  Maine  67.  65  Atl.  759;  Hall  v. 
Farmers'  Nat.  Bank,  53  Md.  120;  At- 
wood  V.  Cobb,  16  Pick.  (Mass.)  227, 
26  Am.  Dec.  657;  Worcester  Gas 
Light  Co.  V.  Worcester,  110  Mass. 
353 ;  Mathews  v.  Phelps,  61  ^lich.  Zll , 
28  N.  W.  108,  1  Am.  St.  581 ;  Price's 
Heirs  v.  Evans,  26  Mo.  30;  St.  Louis 
V.  St.  Louis  &  S.  F.  R.  Co.,  228  Mo. 
712,  129  S.  W.  691;  Walsh  v.  Sov- 
ereign Camp,  Woodmen  of  the  World 
(Mo.  App.),  127  S.  W.  645;  Jackson 
V.  Phillips,  57  Nebr.  189,  11  N.  W. 
683;  Melick  v.  Pidcock,  44  N.  J.  Eq. 
525,  15  Atl.  3,  6  Am.  St.  901 ;  United 
Boxboard  &  Paper  Co.  v.  McEwan, 
Bros.  Co.  (N.  J.  Ch.),  76  Atl.  550; 
Den  V.  Camp,  19  N.  J.  L.  148; 
French  v.  Carhart,  1  N.  Y.  96,  4 
How.  Pr.  181 ;  Dwight  v.  Germania 
Life  Ins.  Co.,  103  N.  Y.  341,  8  N. 
E.  654,  57  Am.  Rep.  729;  Smith  v. 
Kerr,  108  N.  Y.  31,  15  N.  E.  70,  2 
Am.  St.  362;  Gail  v.  Gail,  127  App. 
Div.  (N.  Y.)  892.  112  N.  Y.  S.  96; 
Atlantic  &c.  R.  Co.  v.  Atlantic  &c. 
Co..  147  N.  Car.  368,  61  S.  E.  185, 
23  L.  R.  A.  (N.  S.)  223n,  125  Am. 
St.  550;  Edwards  v.  Bowden,  99  N. 
Car.  80,  5  S.  E.  283,  6  Am.  St.  487; 
Young  v.  :Metcalf  Land  Co.,  18  N. 
Dak.  441,  122  N.  W.  1101;  Wisner 
V.  Field  (N.  Dak.).  106  N.  W.  38; 
Wolfe  v.  Scarborough,  2  Ohio  St. 
361 ;  Williamson  v.  McClure,  Zl  Pa. 
St.  402;  Bradlev  v.  Washington 
Steam  Packet  Co'.  13  Pet.  (U.  S.) 
89,  10  L.  ed.  12\  Chesapeake  &  Ohio 
Canal  Co.  v.  Hill,  15  Wall.  (U.  S.) 
94,  21  L.  ed.  64;   Mauran  v.  Bullus, 


16  Pet.  (U.  S.)  528,  10  L.  ed.  1056 
(construction  of  a  letter  of  guar- 
anty) ;  The  Binghamton  Bridge,  3 
Wall.  (U.  S.)  51,  18  L.  ed.  137;  Bock 
v.  Perkins.  139  U.  S.  628,  35  L.  ed. 
314,  11  Sup.  Ct.  677;  Flagg  v.  Fames, 
40  Vt.  16,  94  Am.  Dec.  363;  Noyes 
V.  Nichols,  28  Vt.  159;  Griffin  v.  Fair- 
mont Coal  Co.,  59  W.  Va.  480,  53  S. 
E.  24,  2  L.  R.  A.  (N.  S.)  1115; 
Weiseger  v.  Wheeler,  14  Wis.  101. 
See  also,  Pittsburg  Bridge  Co.  v.  St. 
Louis  Transit  Co.,  135  Mo.  App.  579, 
116  S.  W.  467,  transferred  from  the 
Supreme  Court  (1907),  205  Mo.  176, 
103  S.  W.  546.  The  intention  of  the 
parties  is  to  be  derived  from  the 
terms  and  subject-matter  and  not 
from  the  statements  of  one  party  as 
to  what  may  have  been  his  under- 
standing when  it  does  not  appear  that 
the  other  party  knew  or  had  reason 
to  believe  that  he  so  understood  it. 
Meinhardt  v.  Mode,  22  Fla.  279. 

"Armour  Packing  Co.  v.  United 
States,  153  Fed.  1,  82  C.  C.  A.  135, 
14  L.  R.  A.  (N.  S.)  400n;  Seaboard 
Air  Line  R.  Co.  v.  Railroad  Commis- 
sion of  Alabama,  155  Fed.  792;  Mc- 
Caskill  V.  Union  Naval  Stores  Co., 
59  Fla.  571,  52  So.  961;  State  v. 
Tampa  Waterworks  Co.,  56  Fla.  858, 
47  So.  358,  19  L.  R.  A.  (N.  S.)  183n; 
Lynch  v.  Baltimore  &  O.  S.  W.  R. 
Co.,  240  111.  567,  88  N.  E.  1034;  Met- 
ropolitan Life  Ins.  Co.  v.  Johnson 
(Ind.  App.),  94  N.  E.  785;  Long  v. 
Straus,  107  Ind.  94,  6  N.  E.  123,  7 
N.  E.  IdZ,  SI  Am.  Rep.  87.  The  law 
applicable  to  a  contract  is  to  be  con- 
sidered in  construing  the  same. 
Strauss  v.  Yeager  (Ind.  App.),  93 
N.  E.  877;  J.  B.  Watkins  &  Co.  v. 
Kobiela,  84  Nebr.  422.  121  N.  W. 
448;  Hutchinson  v.  Ward,  114  App. 
Diy.  (N.  Y.)  156,  99  N.  Y.  S.  708; 
Leiendecker  v.  /Etna  Indemnity  Co., 
52  Wash.  609,  101  Pac.  219.  "All 
contracts  are  to  be  construed  in  the 
light  of  the  rules  and  principles  of 
law  applicable  to  the  subject-matter  of 
the  transaction,  and  the  rights  and  ob- 
ligations of  the  parties  are  controlled 


§  i5oS 


CONTRACTS. 


778 


is  a  part  thereof  as  well  as  the  express  provisions  which  it  con- 
tains.^" The  connotations  of  a  contract  are  enforcible  as  well  as 
its  express  terms."  Rules  for  the  construction  of  contracts  in 
ascertaining  the  intention  of  the  parties  are,  in  general,  the  same 
whether  applied  to  one  kind  of  contract  or  another,  although 
different  kinds  of  contracts  may  be  applied  or  operate  differently 
after  their  construction  has  been  ascertained.^^  These  rules  are 
usually  the  same  in  equity  as  in  law.^^  It  must  be  constantly 
borne  in  mind,  however,  that  rules  of  construction  are  not  strict 
rules  of  law.  They  are  but  aids  in  ascertaining  the  intention  of 
the  parties.^* 

§  1508.  Rules  of  construction  generally — Intention  of  par- 
ties.— When  a  contract  is  ambiguous  and  open  to  construc- 
tion the  true  end  to  be  reached  is  to  ascertain  what  the  parties 
intended,  and  when  that  intention  is  found,  it  prevails  over  verbal 
inaccuracies,  inapt  expressions,  and  the  dry  words  of  the  stipu- 
lations. The  court  should  as  far  as  possible  place  itself  in  the 
position  of  the  parties  when  their  minds  met  upon  the  terms  of 


by  those  rules,  except  where  the 
written  contract  discloses  an  inten- 
tion to  depart  therefrom."  Haugen 
V.  Sundseth,  106  Minn.  129,  118  N. 
W.  666.  See  also,  Scripps  v.  Sweeney, 
160  Mich.  148,  125  N.  W.  72  (holding 
contract  in  question  againt  public 
policy)  ;  Snider  v.  Yarbrough,  43 
Mont.  203.  115  Pac.  411 ;  S.  H.  Hawes 
&  Co.  V.  Trigg  Co.,  110  Va.  165,  65 
S.  E.  538;  Manvell  v.  Weaver,  53 
Wash.  408,  102  Pac.  36;  Wright  v. 
Computing  Scale  Co.,  47  Wash.  107, 
91  Pac.  571.  Compare  with  Cronin 
V.  Pace,  82  Conn.  252,  n  Atl.  137. 
It  is  not  meant  by  this,  however,  that 
the  operation  or  application  of  some 
particular  law  or  rule  cannot  be  ex- 
cluded, in  a  proper  case,  by  the  terms 
of  the  contract. 

.  "Kessler  v.  Clayes,  147  Mo.  App. 
''88,  125  S.  W.  799.  "If  the  contract 
by  its  conditions  and  legal  effect  in- 
vests a  party  with  a  right,  it  is  the 
same  as  if  the  right  had  been  ex- 
pressly stipulated  in  the  instrument.'' 
Noon  V.  Mironski,  58  Wash.  453,  lOaf 
Pac,  1069.  / 

"  Brown  v.  Rome  Mach.  &  Foundry 


Co.,  5  Ga.  App.  142,  62  S.  E.  72.  "The 
express  mention  of  what  would  be 
otherwise  fairly  implied  cannot 
change  the  nature  of  the  contract  or 
the  rights  of  the  parties."  Friedman 
V.  Hampden  County,  204  Mass.  494, 
90  N.  E.  851.  See  also,  Blake  v. 
Scott  (Ark.),  121  S.  W.  1054;  Col- 
gate V.  James  T.  White  &  Co.,  180 
Fed.  882;  New  York  v.  Paoli,  202 
N.  Y.  18,  94  N.  E.  1077;  Patterson 
V.  Guardian  Trust  Co.,  144  App.  Div. 
(N.  Y.)  863,  129  N.  Y.  S.  807; 
Creamer  v  Metropolitan  Securities 
Co.,  120  App.  Div.  (N.  Y.)  422,  105 
N.  Y.  S.  28;  El  Paso  &  S.  W.  R. 
Co.  V.  Eichel  (Tex.  Civ.  App.),  130 
S.  W.  922.  As  to  the  meaning  of  the 
phrase  "necessary  implication,"  see 
Tuttle  v.  Woolworth,  74  N.  J.  Eq. 
310.  n  Atl.  684.    See  ante,  ch.  31. 

"  Daly  V.  Old,  35  Utah  74.  99  Pac. 
460,  28  L.  R.  A.  (N.  S.)  463n. 

"Jersey  City  v.  Flynn,  74  N.  J.  Ch. 
104,  70  Atl.  497. 

"Hoffman  v.  Eastern  Wisconsin 
&c.  Co.,  134  Wis.  603,  115  N.  W.  383. 
See  also,  Scotch  Mfg.  Co.  v.  Carr,  53 
Fla.  480,  43  So.  427. 


779 


INTERPRETATION    AND    CONSTRUCTION. 


§    1508 


the  agreement,  and  then  from  a  consideration  of  the  writing  itself, 
its  purpose,  and  the  circumstances  surrounding  the  transaction 
endeavor  to  ascertain  what  they  intended  and  what  they  agreed 
to  do,  i.  e.,  upon  what  sense  or  meaning  of  the  terms  used, 
their  minds  actually  met."  The  purpose  of  all  rules  for  the  con- 
struction of  contracts  is  to  aid  in  ascertaining  the  intention  of  the 
parties  from  a  construction  of  the  whole  agreement."  Thus,  in 
the  construction  of  an  insurance  policy  it  is  the  duty  of  the  court 
to  adopt  that  construction  of  the  policy  which  in  its  judgment 
will  best  correspond  with  the  intention  of  the  parties."     To  ascer- 


"  Pressed  Steel  Car  Co.  v.  Eastern 
R.  Co..  121  Fed.  609,  57  C  C.  A.  635 ; 
United  States  Fidelity  &c.  Co.  v. 
Board  of  Comrs.,  145  Fed.  144,  76 
C.  C.  A.  114;  Uinta  Tunnel  Min.  & 
Transp.  Co.  v.  Ajax  Gold  Min.  Co., 
141  Fed.  563,  IZ  C.  C.  A.  35 ;  United 
States  Fidelity  &  Guaranty  Co.  v. 
Board  of  Comrs.  of  Woodson  County 
Kan.,  145  Fed.  144,  76  C.  C.  A. 
114;  Brown  v.  Beckwith,  60  Fla.  310, 
53  So.  542;  L'Engle  v.  Overstreet,  61 
Fla.  653,  55  So.  381 ;  Atwood  v.  Cobb, 
lj6  Pick.  (Mass.)  227,  26  Am.  Dec. 
^57;   Newbern  Banking  &  Trust  Co. 

/v.   Duffy,    153    N.   Car.  62,   68   S.   E. 

■  915.  "The  great  object  of  construc- 
tion is  to  collect  from  the  terms  or 
language  of  the  instrument,  the  man- 
ner and  extent  to  which  the  parties 
intended  to  be  bound.  To  facilitate 
this,  the  law  has  devised  certain 
rules,  which  are  not  merely  conven- 
tional, but  are  the  canons  by  which 
all  writings  are  to  be  construed,  and 
the  meaning  and  intention  of  men  to 
be  ascertained.  These  rules  are  to  be 
applied  with  consistency  and  uni- 
formity. They  constitute  a  part  of 
the  common  law  and  the  application 
of  them,  in  the  interpretation  and 
construction  of  dispositive  writings, 
is  not  discretionary  with  courts  of 
justice,  but  an  imperative  duty.  If 
it  were  otherwise,  no  lawyer  would 
be  safe  in  advising  upon  the  con- 
struction of  a  written  instrument,  nor 
any  partv  in  taking  under  it/  South 
Penn  Oil  Co.  v.  Knox,  68  W.  Va. 
362,  69  S.  E.  1020.  quoting  from 
Johnson  County  v.  Wood,  84  Mo.  489. 
"The  grammatical  and  ordinary  sense 
of    the   words   is    to   be   adhered    to 


*  *  *  'unless  that  would  lead  to 
some  absurdity  or  some  repugnance 
or  inconsistency  with  the  rest  of  the 
instrument,  in  which  case  the  gram- 
matical and  ordinary  sense  of  the 
words  may  be  modified,  so  as  to 
avoid  that  absurdity  and  incon- 
sistency, but  no  further.' "  Thomp- 
son V.  Trenton  Water  Power  Co.  (N. 
J.  Eq.),  11  Atl.  410,  quoting  from 
Grey  v.  Pearson,  6  H.  L.  Cas.  61. 

"Farrell  v.  Garfield  Mining.  Mill- 
ing &  Smelting  Co.,  49  Colo.  159,  111 
Pac.  839;  Smith  v.  Woodward,  51 
Colo.  311,  117  Pac.  140;  Mizell  Live 
Stock  Co.  V.  McCaskill  Co.,  59  Fla. 
322,  51  So.  547;  Western  Railway  E. 
Co.  V.  Missouri  Malleable  I.  Co.,  91 
111.  App.  28;  Securitv  Trust  Co.  v. 
Joesting,  96  Minn.  1663,  104  N.  W. 
830;  Kirkman  v.  Hodgin,  151  N.  Car. 
588,  66  S.  E.  616;  El  Paso  &  S.  W.  R. 
Co.  V.  Eichel  &  Weikel  (Tex.  Civ. 
App.).  130  S.  W.  922;  Caine  v.  Hag- 
cnbarth,  2>1  Utah  69.  106  Pac.  945; 
Gray  v.  Clark.  11  Vt.  583.  "The  in- 
tent is  to  be  determined  from  the 
whole  contract,  and  every  clause,  and 
even  every  word  therein,  when  possi- 
ble, should  have  assigned  to  it  some 
meaning."  Warrum  v.  White,  171 
Ind.  574.  86  N.  E.  959.  Itjs  the 
mutual  intention  of  both  parties,  not 
the  intention  of  one  party,  that  con- 
trols. Harten  v.  Loffler,  29  App.  D. 
C.  490. 

"  Jennings  v.  Brotherhood  Acci- 
dent Co..  44  Colo.  68.  96  Pac.  982.  18 
L.  R.  A.  (N.  S.)  109n.  130  Am.  St. 
109;  Johnson  v.  Marvland  Casualty 
Co.,  n  N.  H.  259,  60' Atl.  1009,  111 
Am.  St.  609. 


§  1509 


CONTRACTS. 


780 


tain  the  intention,  regard  must  be  had  to  the  nature  of  the  instru- 
ment itself,  the  circumstances  under  which  it  was  executed  and 
the  object  which  the  parties  had  in  view."  The  words  employed, 
if  capable  of  more  than  one  meaning,  are  to  be  given  that  meaning 
which  it  is  apparent  the  parties  intended  them  to  have.^° 

§  1509.  Rules  of  construction  generally — Words  under- 
stood in  their  ordinary  meaning. — The  words  used  in  a  con- 
tract are  to  be  interpreted  in  accordance  with  their  usual  and 
ordinary  meaning  unless  it  appears  from  the  whole  contract  that 
both  parties  intended  that  they  should  be  understood  in  a  different 
sense.-**     It  has  been  held  that  the  word  "disability"  as  used  in 


"McConnell  v.  Murphy,  L.  R.  5 
P.  C.  203;  Fearnley  v.  Fearnley,  44 
Colo.  417,  98  Pac.  819;  Chicago  Flour 
Co.  V.  Chicago,  243  111.  268,  90  N.  E. 
674;  Pierpont  v.  Lanphere,  104  111. 
App.  232;  Ramage  v.  Wilson,  451  Ind. 
App.  599,  88  N.  E.  862;  Merica  v. 
Burgett,  36  Ind.  App.  453,  75  N.  E. 
1083;  /Etna  Indemnity  Co.  v.  Waters, 
110  Md.  673,  11  Atl.  712;  Laing  v. 
Holmes,  93  Mo.  App.  231 ;  Wilson  v. 
Wilson,  115  Mo.  App.  641,  92  S.  W. 
145;  Mathews  v.  Modern  Woodmen 
of  America,  236  Mo.  326,  139  S.  W. 
151;   Grothe  v.   Lane,  11   Nebr.  605, 

110  X.  W.  305;  Rhyne  v.  Rhyne,  151 
N.  Car.  400,  66  S.  E.  348;  Common- 
wealth V.  Sanderson,  40  Pa.  Super. 
Ct.  416;  Armstrong  v.  National  Life 
Ins.  Co.  (Tex.  Civ.  App.),  112  S.  W. 
327;  Portsmouth  Cotton  Oil  Re- 
fining Corp.   V.   Oliver   Refining   Co., 

111  Va.  745,  69  S.  E.  958;  Hunter 
V.  Wenatchee  Land  Co.,  50  Wash. 
438,  97  Pac.  494;  Hall  Min.  Co.  v. 
Consolidated  Fuel  Co.,  69  W.  Va.  47, 
70  S.  E.  857.  "Aside  from  some 
technical  rules  adopted  for  the  gen- 
eral good,  there  is,  ordinarily,  no 
hard  and  fast  rule  to  govern  the  in- 
terpretation of  an  intention.  In  con- 
versation it  is  shown  by  look,  a  ges- 
ture, an  emphasis,  or  tone  of  voice. 
In  writing,  a  mere  word,  phrase,  or 
sentence  will  put  a  meaning  on  a  con- 
tract which  may  control  implications 
of  law,  and  which  will  give  it  a  direc- 
tion and  application  contrary  to  what 
it  otherwise  would  have  received." 
Lvnch  v.  Huston,  138  Mo.  App.  167, 
119  S.  W.  994. 


"Calcutta  &  Burmah  Steam  Nav. 
Co.  V.  De  Mattos,  32  L.  J.  Q.  B.  322 
(according  to  the  intent  apparent  on 
the  face  as  far  as  words  will  admit)  ; 
Williams  v.  Gray,  9  C.  B.  730,  67 
E.  C.  L.  730 ;  Pensacola  Gas.  Co.  v. 
Lotzes,  23  Fla.  368,  2  So.  609;  Mc- 
Naughton  v.  Stephens,  8  Ga.  App. 
545,  70  S.  E.  61 ;  Benjamin's  Suc- 
cession, 39  La.  Ann.  612,  2  So.  187; 
Belch  v.  Miller,  32  Mo.  App.  387; 
Crocker  v.  Hill,  61  N.  H.  345,  60  Am. 
Rep.  322;  Tennessee  v.  Whitworth, 
117  U.  S.  129,  29  L.  ed.  830,  6  Sup. 
Ct.  645  (the  construction  is  to  be  ac- 
cording to  the  intention  of  the  par- 
ties). 

=°Hewet  V.  Painter,  1  Bulst.  174; 
Robertson  v.  French,  4  East  130; 
Taylor  v.  St.  Helen's  Corporation,  6 
Ch.  Div.  264 ;  Stanley  v.  Western  Ins. 
Co.,  L.  R.  3  Exch.  71 ;  Scudder  v. 
Perce,  159  Cal.  429,  114  Pac.  571; 
Alderson  v.  Houston,  154  Cal.  1,  96 
Pac.  884;  Hall  v.  Rand,  8  Conn.  560; 
Stettauer  v.  Hamlin,  97  111.  312; 
Stears  v.  Sweet,  78  111.  446;  Gibbs  v. 
People's  Nat.  Bank,  198  111.  307,  64 
N.  E.  1060;  Strauss  v.  Yeager  (Ind. 
App.),  93  N.  E.  877;  Warrum  v. 
White,  171  Ind.  574,  86  N.  E.  959; 
Willmering  v.  McGaughey,  30  Iowa 
205,  6  Am.  Rep.  673n;  Rindskoff  v. 
Barrett,  14  Iowa  101 ;  Cash  v.  Hin- 
kle,  36  Iowa  623;  Grant  v.  Dabney, 
19  Kans.  388,  27  Am.  Rep.  125; 
Spring  Garden  Ins.  Co.  v.  Imperial 
Tobacco  Co.,  132  Ky.  7,  116  S.  W. 
234,  20  L.  R.  A.  (N.  S.)  277n,  136 
Am.  St.  164  (construing  the  word 
"riot"   as   used    in   a   fire   insurance 


781  INTERPRETATION   AND   CONSTRUCTION.  §    1 509 

an  accident  policy  does  not  mean  the  same  as  the  word  "death"." 
The  word  "guarantee"  as  used  in  the  contract  under  consideration 
has  been  interpreted  as  a  synonym  of  "agree"  or  "promise"," 
and  the  word  "erected"  as  synonymous  with  "completed".-^  A 
transaction  which  was  plainly  a  loan  secured  by  the  assignment 
of  a  life  insurance  policy  will  not  be  construed  as  an  offer  or 
option  to  sell  the  policy  for  a  certain  sum  because  the  agreement 
gave  the  company  the  right  to  cancel  the  policy  at  its  option,  in 
case  of  default  of  payment  of  the  loan."  Under  this  rule  the  use 
of  clear  and  lucid  language  in  a  contract,  which  when  viewed  as 
an  entirety  is  unambiguous,  is  conclusive  evidence  of  the  inten- 
tion of  the  parties  in  the  absence  of  fraud  or  mistake.^' 

policy)  ;  Hawes  v.  Smith,  12  Maine  Williams  v.  South  Pa.  Oil  Co.,  52 
429;  E.  A.  Strout  Co.  v.  Gay,  105  W.  Va.  181,  43  S.  E.  214,  60  L.  R. 
Maine  108.  72  Atl.  881,  24  L.  R.  A.  A.  795.  See  also,  Rogers  v.  Modern 
(N.  S.)  562n ;  Hall  v.  Farmers'  Nat.  Brotherhood  of  America,  131  Mo. 
Bank,  53  Md.  120;  Mutual  Life  Ins.  App.  353,  111  S.  W.  518.  The  words 
Co.  of  New  York  v.  Murray,  111  should  be  understood  in  the  sense  in- 
Md.  600,  75  Atl.  348 ;  Smith  V.  Abing-  tended  by  the  parties.  Conwell  v. 
ton  Bank,  171  Mass.  178,  50  N.  E.  Pumphrey,  9  Ind.  135,  68  Am.  Dec. 
545;  Rosen  v.  Rosen,  159  Mich.  72,  611;  Warn  v.  Brown,  102  Pa.  347. 
123  N.  W.  559,  134  Am.  St.  712;  A  reasonable  meaning  should  be 
Bradshaw  v.  Bradbury,  64  Mo.  334;  given  the  words  used.  Wadlington 
Lovelace  v.  Protective  Assn.,  126  Mo.  v.  Hill,  10  Smedes  &  M.  (Miss.)  560. 
104,  28  S.  W.  877.  30  L.  R.  A.  209n;  The  phrase  "it  being  understood"  is 
Liggett  v.  Levy,  233  I^Io.  590,  136  S.  usually  equivalent  to  "it  is  agreed." 
W.  299;  Simmons  v.  Westlake  Const.  Lind  v.  United  States,  44  Ct.  CI. 
Co.  (Mo.  App.),  126  S.  W.  518;  (U.  S.)  558.  See  also  Mariner  v. 
Greason  v.  St.  Louis,  I.  M.  &  S.  R.  Ingraham,  127  111.  App.  542  (con- 
Co.,  112  Mo.  App.  116,  86  S.  W.  122;  struing  the  word  "advantageous"). 
Quirk  V.  Rich,  40  Mont.  552,  107  Ware  v.  Hylton,  3  Dall.  (U.  S.)  199. 
Pac.  821;  Moore  v.  Phoenix  Ins.  Co.,  1  L  ed.  164;  Moran  v.  Prather,  23 
62  N.  H.  240,  13  Am.  St.  556,  Huflt-  Wall.  (U.  S.)  492,  23  L.  ed.  121. 
cut  &  W.  Am.  Cas.  Cont.  531;  ^  Hill  v.  Travelers'  Ins.  Co.,  146 
American  Lithographic  Co.  v.  Com-  Iowa  133.  124  N.  W.  898,  28  L.  R. 
mercial  Casualty  Ins.  Co.,  81  N.  J.  A.  (N.  S.)  742n. 
271,  80  Atl.  25;  Ripley  v.  .Etna  In-  "Richard  Deeves  v.  Manhattan 
surance  Co.,  30  N.  Y.  136,  86  Am.  Life  Ins.  Co.,  195  N.  Y.  324,  88  N.  E. 
Dec.  362;  Schoonmaker  v.  Hoyt.  148  395. 

N.  Y.  425.  42  N.  E.  1059;  Mansfield  '^  Hartrath    v.    Holsman,     127    111. 

&  S.  C.  R.  Co.  v.  Veeder,  17  Ohio  App.  560. 

385;    Schuylkill     Navigation    Co.    v.  "*  Frese    v.    ^Mutual    Life    Ins.    Co. 

Moore,  2  Whart.  (Pa.)  477;  Monon-  (Col.  App.),  105  Pac.  265. 

gahela    Navigation    Co.    v.    Coons.  6  "Rogers    v.    Atkinson,    1    Ga.    12; 

Watts.    &    S.    (Pa.)    101;    Strafford  Walker  v.  Tucker.  70  111.  527:  Bearss 

Pub.    Co.   v.    Stetson,   41    Pa.    Super,  v.  Ford.  108  111.  16;  Eagle  Fire  Ins. 

Ct.    560;    Stewart    v.    Morris,    84    S.  Co.   v.   John    Sprv   Lumber   Co.,    138 

Car.    148,    65    S.    E.    1044 ;    West    v.  111.  App.  609 ;  Greene  v.  Dav,  34  Iowa 

Hermann.  47  Tex.  Civ.  App.  131.  104  328;  Bobb  v.  Bancroft.  13  Kans.  123- 

S.  W.  428:  Dalv  v.  Old,  35  Utah  74.  McLellan    v.    Cumberland    Bank,    24 

99   Pac.    460.   28   L    R.    A.    (N.    S.)  J^Iaine    566;     Jeffrev    v.     Grant.     17 

463n;    Clark   v.    Lillie,    39   Vt.   405;  Maine   236;    Mumford    v.    McPher- 


I5IO 


CONTRACTS. 


782 


§  1510.  Rules  of  construction  generally — Language  used 
evidences  the  intent. — The  language  of  a  written  contract 
complete  in  itself  and  which  when  viewed  as  an  entirety  is  unam- 
biguous is,  while  it  is  in  force,  the  only  legitimate  evidence  of  what 
the  parties  intended  and  understood  by  it.-"  In  such  case  the  in- 
tention of  the  parties  is  to  be  gathered  from  the  words  used.^'^ 
Having  voluntarily  selected  the  words  by  which  they  choose  to 
be  bound  they  are  bound  by  them.-^  It  is  ordinarily  presumed 
that  the  intention  of  the  parties  is  expressed  by  the  writing, 
that  it  contains  the  whole  contract, -°  and  that  a  person  means 
what  his  language,  by  its  terms,  and  under  the  circumstances  un- 
der which  it  is  used,  would  be  fairly  understood  to  mean,  and  this 
presumption  cannot  be  rebutted  by  proof  that  he  intended  some- 
thing more  or  different,  which  he  made  no  attempt  to  express,  and 


son,  1  Johns.  (N.  Y.)  414,  3  Am. 
Dec.  339;  Mumford  v.  AlcPherson,  1 
Johns.  (N.  Y.)  414,  3  Am.  Dec.  339; 
Westcott  V.  Thompson,  18  N.  Y. 
363;  Dent  v.  North  American  Steam- 
ship Co.,  49  N.  Y.  390;  Heirs  of 
Watrous  v.  ]\IcKie,  54  Tex.  65 :  Zohr- 
laut  V.  Mengelberg  (Wis.),  124  N. 
W.  247. 

='West  Haven  Water  Co.  v.  Red- 
field,  58  Conn.  39,  18  Atl.  978.  See 
1  Elliott  on  Evidence,  §  568  et  seq. 
See  also,  Webb  v.  Missouri  State 
Life  Ins.  Co.,  134  Mo.  App.  576,  115 
S.  W.  481. 

"Shuler  v.  Allam,  45  Colo.  372, 
101  Pac.  350;  Millikin  v.  Starr,  79 
111.  App.  443,  affd.  180  111.  458,  54 
N.  E.  328;  Stout  v.  Whitney,  12  111. 
218;  Tracy  v.  Chicago,  24  111.  500; 
Streeter  v.  Streeter,  43  III.  155;  Wil- 
son V.  Marlow,  66  111.  385;  Wal- 
ker v.  Douglas,  70  111.  445 ;  .Schneider 
V.  Turner,  130  111.  28.  22  X.  E.  497, 
6  L.  R.  A.  164n;  Hill  v.  Parker,  10 
111.  -App.  323 ;  Chestnut  v.  Chestnut, 
15  111.  App.  390;  Sinnickson  v.  Rich- 
ter,  140  111.  App.  212;  Illinois  Cent. 
R.  Co.  V.  Vaughn  CKy.),  33  Kv.  L. 
906,  111  S.  W.  707:  Curtin-Clark 
Hardware  Co.  v.  Churchill,  126  Mo. 
App.  462,  104  S.  W.  476;  Cranes 
Nest  Coal  &  Coke  Co.  v.  Virginia 
Iron  Coal  &  Coke  Co.,  105  Va.  785, 
54  S.  E.  884;  Smith  v.  Merrill.  134 
Wis.  227,  114  N.  W.  508.  The  mean- 
ing and   intention   of   the  parties   to 


a  contract  is  to  be  ascertained  from 
the  face  of  the  instrument  and  by 
the  application  of  common  sense  to 
the  particular  case.  Green  v.  Dyers- 
burg,  2  Flip.  (U.  S.)  477.  See  also. 
Book  V.  Thomas,  61  Wash.  607,  112 
Pac.  917. 

^^Mallan  v.  May,  13  M.  &  W.  511; 
Biddlecombe  v.  Bond,  4  Adol.  &  E. 
332;  Canterberry  v.  Miller,  76  111. 
355;  Pratt  v.  McCoy,  128  La.  570,  54 
So.  1012;  Maryland  Coal  Co.  v. 
Cumberland  &  P.  R.  Co.,  41  Md.  343; 
Rogers  v.  Danforth.  9  N.  J.  Eq.  289; 
Dwight  V.  Germania  Life  Ins.  Co., 
103  N.  Y.  341,  8  N.  E.  654,  57  Am. 
Rep.  729;  Zimmermann  v.  Loft,  125 
App.  Div.  (N.  Y.)  725,  110  N.  Y. 
S.  499;  Reagan  v.  Bruff,  49  Tex.  Civ. 
App.  226,  108  S.  W.  185;  Noyes  v. 
Nichols.  28  Vt.  159.  See  also,  Up- 
ton V.  Tribilcock,  91  U.  S.  45,  23  L. 
ed.  203;  William  Cramp  &c.  Build- 
ing Co.  V.  Sloan,  21  Fed.  561 ;  Scotch 
Mfg.  Co.  V.  Carr,  53  Fla.  480,  43  So. 
427.  See  also,  Scheweinburg  v.  Alt- 
man.  145  App.  Div.  (N.  Y.)  377,  130 
N.  Y.  S.  37. 

='Farrar  v.  Hinch,  20  111.  646; 
Merchants'  Ins.  Co.  v.  Morrison,  62 
111.  242,  U  Am.  Rep.  93 ;  Harding  v. 
Commercial  Loan  Co.,  84  111.  251  ; 
Wight  V.  Sampter,  127  111.  167.  20 
N.  E.  47;  Griffin  v.  Fairmount  Coal 
Co..  59  W.  Va.  480.  53  S.  E.  24, 
2  L.  R.  A.  fN.  S.)  1115.  See  1 
Elliott  Ev.,  §  568  et  seq. 


7^3 


INTERPRETATION    AXD    CONSTRUCTION. 


§    I5IO 


which  a  person  dealing  with  him  neither  understood  nor  had  rea- 
son to  understand,^"  Accordingly,  a  prior  verbal  contract  will  be 
merged  in  a  subsequent  written  one.^^  The  court  cannot  import 
words  into  a  contract  which  would  make  it  materially  different 
in  a  vital  particular  from  what  it  is.^-  However,  the  words  used 
will  not  be  given  a  literal  interpretation  when  to  do  so  would 
defeat  the  intention  of  the  parties  as  evidenced  by  the  entire  con- 
tract.^^  Even  an  apparently  unambiguous  contract  may  be  ren- 
dered ambiguous  and  open  to  construction  if  the  words  taken 
literally  lead  to  absurdity  or  illegality  when  applied  to  the  facts.^* 
Moreover,  when  the  language  of  the  agreement  is  doubtful  so 
that  it  is  susceptible  of  two  constructions  one  of  which  makes  it 
fair,  customary,  and  such  as  prudent  men  would  naturally  exe- 
cute, while  the  other  makes  it  inequitable,  unusual,  or  such  as 
reasonable  men  would  not  be  likely  to  enter  into,  the  interpreta- 
tion which  makes  it  a  rational  and  probable  agreement  will  be 
preferred  to  that  which  makes  it  an  unusual,  unfair  or  improbable 
contract.  ^° 


'"American  Merchants'  Mfg.  Co.  v. 
Kantrovvitz.  77  111.  App.  155;  Bren- 
sel  V.  Kirschner,  128  111.  App.  136; 
Merriam  v.  Pine  City  Lumber  Co., 
23  Minn.  314 :  Collier  v.  Robinson, 
(Tex.  Civ.  App.).  129  S.  W.  389; 
Clark  V.  Lillie,  39  Vt.  405;  Zohr- 
laut  V.  Mengelberg  (Wis.),  124  N. 
W.  247.  A  plea  of  this  character  is 
demurrable.  Langley  v.  Owens.  52 
Fla.  302.  42  So.  457.  It  is  otherwise 
where  the  writing  does  not  purport 
to  contain  the  entire  agreement. 
Chamberlain  v.  Lesley,  39  Fla.  452, 
22  So.  736. 

"Fuchs  &  Lang  Mfg.  Co.  v.  R.  J. 
Kittredge  &  Co.,  146  111.  App.  350, 
judgment  affirmed  242  111.  88.  89  N. 
E.  723;  Carr  v.  Xavs.  110  Ind.  408, 
11  N.  E.  25;  Wck  v.  Rhodius,  87  Ind. 
1.  44  Am.  Rep.  747,  and  cases  cited; 
Stoddard  v.  Nelson,  17  Ore.  417,  21 
Pac.  456;  Stuebben  v.  Granger,  63 
Mich.  .306.  29  N.  W.  716. 

"  Windmiller  v.  People,  78  111.  App. 
273;  Robinson  v.  Stow.  39  111.  568; 
Fitzgerald  v.  Staples,  88  111.  234.  30 
Am.  Rep.  551 ;  Gavinzel  v.  Crump, 
22  Wall.  (U.  S.)  308,  22  L.  ed.  783 


(construction  of  a  bond)  ;  First  Nat. 
Rank  v.  Mcintosh  &  Peters  Live 
Stock  &c.  Co.,  72  Kans.  603,  84  Pac. 
535;  Zohrlaut  v.  Mengelberg  (Wis.), 
124  N.  W.  247. 

^  Wallis  V.  Smith,  21  Ch.  Div.  243 ; 
Taber  Lumber  Co.  v.  O'Neal,  160 
Fed.  596,  87  C.  C.  A.  498;  Carter  v. 
Alexander,  71  Mo.  585. 

"  Klueter  v.  Joseph  Schlitz  Brew- 
ing Co.,  143  Wis.  347,  128  N.  W.  43, 
32  L.  R.  A.  (N.  S.)  383n;  Clappen- 
back  V.  New  York  Life  Ins.  Co.,  136 
Wis.  626,  118  N.  W.  245.  See  also, 
San  Jacinto  Oil  Co.  v.  Ft.  Worth  &c. 
Power  Co.,  41  Tex.  Civ.  App.  ^3, 
93  S.  W.  173. 

"Stein  V.  Archibald.  151  Cal.  220, 
90  Pac.  536;  A.  Leschen  &  Sons 
Rope  Co.  V.  Mavflower  Gold  Min. 
&x.  Co.,  173  Fed.  855.  97  C.  C.  A.  465. 
35  L.  R.  A.  (N.  S.)  In;  Pressed 
Steel  Car  Co.  v.  Eastern  R.  Co.,  121 
Fed.  609,  57  C.  C.  A.  635:  American 
Bonding  Co.  v.  Pudlow  Investment 
Co.,  150  Fed.  17.  80  C.  C.  A.  97.  9 
L.  R.  A.  (N.  S.)  557n.  10  Am.  & 
Fng.  .'Xnn.  Cas.  357.  See  also.  Ln<;ee 
V.  Brunson,  141  111.  App.  326;  Griffin 


§  15II 


CONTRACTS. 


784 


§  1511.  Rules  of  construction  generally — Technical  terms. 
— Technical  words  are  to  be  interpreted  as  usually  understood  by 
persons  in  the  profession  or  business  to  which  they  relate,^* 
unless  it  is  evident  that  they  were  used  in  a  different  sense. ^^  If 
it  appears  that  a  term  used  in  a  contract  has  an  established  mean- 
ing among  those  engaged  in  the  business  to  which  the  contract 
has  reference,  and,  unless  it  is  given  that  meaning,  is  indefinite 
and  equivocal,  it  should  be  treated,  in  interpreting  the  contract, 
as  used  according  to  that  understanding.^^ 

§  1512.  Rules  of  construction — Commercial  terms — Words 
used  in  legal  sense. — Mercantile  terms  used  in  mercantile 
contracts  are  to  be  understood  in  their  ordinary  mercantile  mean- 
ing.^ ^     Commercial  letters  are  not  to  be  construed  upon  the  same 


V.  Fairmount  Coal  Co.,  59  W.  Va. 
480.  53  S.  E.  24,  2  L.  R.  A.  (N.  S.) 
1115.   See  post,  §  1521. 

=' Myers  v.  Tibbals,  72  Cal.  278, 
13  Pac.  695;  Hatch  v.  Douglas,  48 
Conn.  116,  40  Am.  Rep.  154;  Soper 
V.  Tyler,  11  Conn.  104,  58  Atl.  699; 
Potter  V.  Pheonix  Ins.  Co.,  63  Fed. 
382;  Reed  v.  Hobbs,  2  Scam.  (111.) 
297;  Elgin  v.  Joslyn,  136  111.  525,  26 
N.  E.  1090;  Jacksonville,  L.  &  St.  L. 
R.  Co.  V.  Louisville  &  N.  R.  Co.,  150 
111.  480,  n  N.  E.  924;  Gauch  v.  St. 
Louis  Mut.  Life  Ins.  Co.,  88  111.  251, 
30  Am.  Rep.  554;  Everett  v.  Indi- 
ana Paper  Co.,  25  Ind.  App.  287,  57 
N.  E.  281 ;  Peterson  v.  Modern 
Brotherhood  of  America,  125  Iowa 
562,  101  N.  W.  289,  67  L.  R.  A.  631 ; 
Aetna  Indemnity  Co.  v.  Waters,  110 
Md.  673,  1Z  Atl.  712;  Eaton  v.  Smith, 
20  Pick.  (Mass.)  150;  Thompson  v. 
Thorne,  83  Mo.  App.  241;  CoUender 
V.  Dinsmore,  55  N.  Y.  200,  14  Am. 
Rep.  224;  Nelson  v.  Sun  Mut.  Ins. 
Co.,  71  N.  Y.  453 ;  Levy  v.  Schreyer, 
19  Misc.  (N.  Y.)  227,  43  N.  Y.  S. 
199,  revd.  27  App.  Div.  (N.  Y.)  282, 
50  N.  Y.  S.  584;  Strong  v.  Waters, 
27  App.  Div.  (N.  Y.)  299,  50  N.  Y. 
S.  257;  Dana  v.  Fiedler,  12  N.  Y. 
40,  62  Am.  Dec.  130;  Ellmaker  v. 
Ellmaker,  4  Watts.  (Pa.)  89;  Welsh 
V.  Huckestein,  152  Pa.  St.  27,  25 
Atl.  138;  McDonough  v.  Jolly,  165 
Pa.   St.   542,  30   Atl.    1048;    Simpson 


&  Co.  v.  United  States,  31  Ct.  CI.  (U. 
S.)  217. 

='  Wynkoop  v.  Cowing,  21  111.  570 ; 
Home  Ins.  Co.  v.  Favorite,  46  111. 
263;  Bowman  v.  Long,  89  111.  19; 
Fisher  Elec.  Co.  v.  Bath  Iron  Works, 
116  Mich.  293,  74  N.  W.  493;  Jack- 
son V.  Myers,  3  Johns.  (N.  Y.)  388, 
3  Am.  Dec.  504;  Mansfield  &c.  R. 
Co.  V.  Veeder,  17  Ohio  385 ;  Warn  v. 
Brown,  102  Pa.  St.  347;  Lehigh  & 
Wilkesbarre  Coal  Co.  v.  Wright,  177 
Pa.  St.  387,  35  Atl.  919. 

*'  Metropolitan  Exhibition  Co.  v. 
Ewing,  42  Fed.  198,  7  L.  R.  A.  381, 
where  the  contract  was  with  defend- 
ant for  his  services  as  a  base-ball 
player.  The  case  turned  upon  the 
meaning  and  effect  of  the  clause 
which  gave  the  club  the  "right  to 
reserve"  the  defendant  for  the  sea- 
son next  ensuing.  "The  promise  of 
a  base-ball  player  to  reserve  him- 
self for  a  particular  club  for  a  given 
season  would  hardly,  without  more, 
convey  any  definite  meaning  of  the 
understanding  of  the  parties."  New 
England  Granite  Works  v.  Bailey, 
69  Vt.  257,  yi  Atl.  1043. 

»*  Smith  V.  Phipps,  65  Conn.  302, 
32  Atl.  367;  Beach  v.  Travelers'  Ins. 
Co.,  IZ  Conn.  118,  46  Atl.  867;  Bis- 
sell  v.  Ryan,  23  111.  566 ;  Lyon  v.  Cul- 
bertson,  83  111.  ZZ,  25  Am.  Rep.  349; 
Cleveland,  C.  C.  &  St.  L.  R.  Co.  v. 
Jenkins,   174   111.   398,   51   N.   E.   811, 


785 


INTERPRETATION    AND    CONSTRUCTION. 


§    I513 


principle  as  bonds,  but  ought  to  receive  a  fair  and  reasonable 
interpretation,  according  to  the  true  import  of  the  terms,  or  to 
what  is  fairly  to  be  presumed  to  have  been  the  understanding  of 
the  parties.*"  Bonds  usually  contain  the  entire  contract,  beyond 
which  courts  rarely  look  for  circumstances  to  aid  in  their  con- 
struction ;  and,  if  there  be  sureties  bound  by  them,  and  the  mean- 
ing is  doubtful,  the  construction  is  restricted  and  made  most  fa- 
vorable to  the  sureties.*^  When  terms  of  law  are  used  in  defin- 
ing the  obligations  assumed  by  the  parties,  their  technical  legal 
sense  should  be  preferred.*^  In  case  a  word  which  has  a  definite 
statutory  or  legal  meaning  is  knowingly  used  in  a  written  instru- 
ment, this  meaning  will  be  taken  to  be  its  ordinary  and  common 
meaning,  and  courts  will  assume  that  it  is  used  by  the  contracting 
parties  in  its  statutory  or  legal  sense  in  the  absence  of  any  con- 
trary intention  being  evidenced  by  the  instrument.*' 

§  1513,  General  rules — Technical  words  governed  by  the 
intent. — When  the  same  word  has  both  a  technical  and  popu- 
lar meaning  it  will  be  given  its  technical  sense  when  it  appears 


62  L.  R.  A.  922,  66  Am.  St.  296; 
Morningstar  v.  Cunningham,  110 
Ind.  328,  11  N.  E.  593,  59  Am.  Rep. 
211;  McSherry  v.  Blanchfield,  68 
Kans.  310,  75  Pac.  121 ;  Hawes  v. 
Smith,  12  Maine  429;  Duling  v.  Phil- 
adelphia, W.  &  B.  R.  Co..  66  Md. 
120,  6  Atl.  592;  Baltimore  Base  Ball 
&c.  Co.  V.  Pickett,  78  Md.  375,  28 
Atl.  279,  22  L.  R.  A.  690,  44  Am.  St. 
304 ;  Thompson  v.  Hamilton,  12 
Pick.  (Mass.)  425,  23  Am.  Dec.  619; 
Howard  v.  Great  Western  Ins.  Co., 
109  Mass.  384;  Heyworth  v.  Miller 
Grain  Co.,  174  Mo.  171,  72,  S.  W. 
498;  McKee  v.  Wild,  52  Nebr.  9,  71 
N.  W.  958;  Smith  v.  Wright,  1  Cai. 
(N.  Y.)  43;  Rickerson  v.  Hartford 
Fire  Ins.  Co.,  149  N.  Y.  307,  43  N.  E. 
856;  Adams  v.  Pittsburgh  Ins.  Co., 
95  Pa.  348,  40  Am.  Rep.  662 ;  Ambler 
V.  Phillips,  132  Pa.  St.  167,  19  Atl. 
71 ;  Hansbrough  v.  Neal,  94  Va.  722, 
27  S.  E.  593 ;  Lamb  v.  Klaus,  30  Wis. 
94. 

"Bell  V.   Bruen,   1    How.    (U.   S.) 
169,  11  L.  ed.  89;  Lawrence  v.  Mc- 


Calmont,  2  How.  (U.  S.)  426.  11 
L.  ed.  326,  stating  the  principles 
which  should  govern  the  construc- 
tion of  commercial  guaranties.  A 
guaranty  is  a  mercantile  instrument, 
and  to  be  construed  according  to 
what  is  fairly  to  be  presumed  to  have 
been  the  understanding  of  the  par- 
ties, without  any  strict  technical 
nicety.  Lee  v.  Dick,  10  Pet.  (U.  S.) 
482,  9  L.  ed.  503. 

*^Bell  V.  Bruen,  1  How.  (U.  S.) 
169,  11  L.  ed.  89. 

"Ellmaker  v.  Ellmaker,  4  Watts. 
(Pa.)  89;  Findley  v.  Findlev,  11 
Grat.  (Va.)  434. 

*"Langlev  v.  Owens.  52  Fla.  302, 
42  So.  457 ;  Green  v.  Moffett.  22  Mo. 
529  (where  a  statute  fi.xed  the  mean- 
ing of  the  word  "ton")  ;  Citv  of 
Roanoke  v.  Blair.  107  Va.  639.  60  S. 
E.  75 ;  Lathers  v.  Mutual  Fire  Ins. 
Co.,  135  Wis.  431,  116  N.  W.  1, 
22  L.  R.  A.  (N.  S.)  848n.  See  also, 
Higgins  V.  California  Petroleum  & 
Asphalt  Co.,  120  Cal.  629,  52  Pac. 
1080. 


50 — CoNTR.xcTS,  Vol.  2 


I5I3 


CONTRACTS. 


786 


that  It  was  the  intention  of  the  parties  to  give  it  this  meaning.** 
But  the  court  will  use  the  terms  employed  according  to  their 
popular  signification,  if  to  apply  them  according  to  technical 
rules  would  defeat  the  manifest  intention  of  the  party, "'^  When 
words  with  a  popular  meaning  are  used  in  a  sense  which  is  incon- 
sistent with  the  special  meaning  which  they  have  acquired  by 
usage  the  popular  will  usually  prevail  over  the  special  meaning.'*" 


**  Maryland  Coal  Co.  v.  Cumber- 
land &  P.  R.  Co.,  41  Md.  343 ;  Eaton 
V.  Smith,  20  Pick.  (Mass.)  150;  Ell- 
maker  V.  Ellmaker,  4  Watts.  (Pa.) 
89;  Hart  v.  Hammett,  18  Vt.  127; 
Findley's  Exrs.  v.  Findley,  11  Grat. 
(Va.)  434.  "When  a  new  and  un- 
usual word  is  used  in  the  contract, 
or  when  a  word  is  used  in  a  technic- 
al or  peculiar  sense,  as  applicable  to 
any  trade  or  branch  of  business  or 
to  any  particular  class  of  people,  it 
is  proper  to  receive  evidence  of  us- 
age to  explain  and  illustrate  it. 
But  when  no  new  word  is  used, 
or  when  an  old  word,  having  an  es- 
tablished place  in  the  language,  is 
not  apparently  used  in  any  new, 
technical  or  peculiar  sense,  it  is  the 
province  of  the  court  to  put  a  con- 
struction upon  the  written  contract 
of  parties,  according  to  the  estab- 
lished usage  of  language  as  applied 
to  the  subject-matter."  Willmering 
V.  McGaughey,  30  Iowa  205,  6  Am. 
Rep.  673n. 

**  Mansfield  &c.  R.  Co.  v.  Veeder, 
17  Ohio  385.  See  also,  Stone  v.  Pills- 
bury,  167  Mass.  332,  45  N.  E.  768, 
in  which  evidence  as  to  the  meaning 
of  "a  single  dwelling-house"  as  un- 
derstood by  real  estate  men,  was 
held  inadmissible  in  an  action  on  a 
contract  containing  such  phrase  en- 
tered into  between  parties  not  real 
estate  men.  Braney  v.  Millbury,  167 
^lass.  16,  44  N.  E.  1060  (expert  evi- 
dence held  inadmissible  to  show  that 
among  contractors  a  contract  to  ex- 
cavate earth  does  not  include  stone)  ; 
Kentucky  Wagon  Mfg.  Co.  v.  Peo- 
ple's Supply  Co.,  77  S.  Car.  92,  57 
S.E.  676,  122  Am.  St.  540n  (parol 
evidence  held  inadmissible  to  show 
that  the  term  "fully  insured"  as 
used  in  the  contract  in  question 
meant    that    the    property   should    be 


kept  insured  for  three-fourths  of 
its  value)  ;  Toothman  v.  Courtney,  62 
W.  Va.  167,  58  S.  E.  915  (discussing 
the  principle  in  its  relation  to  deeds 
and  leases).  As  to  the  admissibility 
of  the  parol  evidence  of  custom  and 
usage  in  the  interpretation  of  a  writ- 
ten contract  see  Tilley  v.  County  of 
Cook,  103  U.  S.  155,  26  L.  ed.  374; 
Grace  v.  American  Central  Ins.  Co., 
109  U.  S.  278,  27  L.  ed.  932,  3  Sup. 
Ct.  207. 

"Gibbon  v.  Young,  8  Taunt.  254; 
Webb  V.  Plummer,  2  Barn  &  Aid. 
746;  Doed  Spicer  v.  Lea,  11  East. 
312;  Corwin  v.  Patch,  4  Cal.  204; 
Cadwell  v.  Meek,  17  111.  220;  Van 
Camp  Packing  Co.  v.  Hartman,  126 
Ind.  177,  25  N.  E.  901;  Woods  v. 
Miller,  55  Iowa  168,  39  Am.  Rep.  170; 
Castleman  v.  Southern  Mut.  Life 
Ins.  Co.,  14  Bush  (Ky.)  197;  Balti- 
more Base  Ball  &c.  Co.  v.  Pickett, 
78  Md.  375,  28  Atl.  279,  22  L.  R.  A. 
690,  44  Am.  St.  304 :  Haskins  v.  War- 
ren, 115  Mass.  514;  Greenstine  v. 
Borchard,  50  Mich.  434,  15  N.  W. 
540,  45  Am.  Rep.  51;  Globe  Milling 
Co.  v.  Minneapolis  Elevator  Co.,  44 
Minn.  153,  46  N.  W.  306;  Wolff  v. 
Campbell,  110  Mo.  114,  19  S.  W.  622; 
Cummings  v.  Blanchard,  67  N.  H. 
268,  36  Atl.  556,  68  Am.  St.  664 ;  Col- 
lender  v.  Dinsmore,  55  N.  Y.  200,  14 
Am.  Rep.  224;  Bradley  v.  Wheeler,  44 
N.  Y.  495;  Sleght  v.  Rhinelander,  1 
Johns.  (N.  Y.)  192;  McCulsky  v. 
Kloaterman,  20  Ore.  108,  25  Pac.  366, 
10  L.  R.  A.  785n ;  Sweeney  v.  Thom- 
ason,  9  Lea  (Tenn.)  359,  42  Am.  Rep. 
676n;  A.  M.  Dillow  &  Co.  v.  Monti- 
cello,  145  Iowa  424,  124  N.  W.  186; 
Stagg  V.  Connecticut  Mut.  Life  Ins. 
Co.,  10  Wall.  (U.  S.)  589,  19  L.  ed. 
1038;  Erickson  v.  Green,  47  Wash. 
613,  92  Pac.  449. 


7^7 


INTERPRETATION    AND    CONSTRUCTION. 


§    I514 


Thus,  the  question  of  whether  the  word  "taxes"  as  used  in  a  con- 
tract is  intended  to  include  or  exclude  special  assessments  for  local 
improvements  depends  upon  the  contract/^  The  foregoing 
merely  illustrates  that  when  words  have  acquired  a  peculiar 
meaning  by  usage  the  court  will  give  the  words  used  that  mean- 
ing which  is  necessary  to  arrive  at  the  intention  of  the  parties/^ 

§  1514.  Rules  of  construction  generally — Whole  instru- 
ments looked  to. — The  actual  contract  of  the  parties  must  be 
deduced  from  the  entire  agreement  and  from  all  its  provisions 
considered  together,  and  not  from  specific  provisions  or  fragmen- 
tary parts  of  the  instrument,  because  the  intention  of  the  parties 
is  not  expressed  by  any  single  part  or  provision  of  the  agreement 
but  by  every  part  and  term  so  construed,  if  possible,  as  to  be 
consistent  with  every  other  part  and  with  the  entire  agreement 
since  the  parties  could  not  have  intended  apparently  conflicting 
clauses  in  a  contradictory  sense.*''     Effect  must  be  given  to  all  the 


*^  Chicago  Great  Western  R.  Co.  v. 
Kansas  Citv  Northwestern  R.  Co.,  75 
Kans.  167,  88  Pac.  1085. 

■**  Brough  V.  Whitmore,  4  Term  R. 
206;  Anderson  v.  Pitcher,  2  Br.  &  B. 
164;  Taylor  v.  Briggs,  2  Car.  &  P. 
525 ;  Doe  v.  Benson,  4  Barn.  &  Aid. 
588;  Furley  v.  Wood,  1  Esp.  198; 
Van  Ness  v.  Pacard,  2  Pet.  (U.  S.) 
137,  7  L.  ed.  374;  Washington  Bank 
V.  Triplett,  1  Pet.  (U.  S.)  25,  7  L. 
ed.  Zl;  Moran  v.  Prather,  23  Wall. 
(U.  S.)  492.  23  L.  ed.  121;  Leach  v. 
Beardslee,  22  Conn.  404 ;  Pilmer  v. 
Branch  of  State  Bank,  16  Iowa  321 ; 
Rindskoff  v.  Barrett,  14  Iowa  101; 
Destrehan  v.  Louisiana  Cypress 
Lumber  Co.,  45  La.  Ann.  920,  13  So. 
230,  40  Am.  St.  265;  Perkins  v.  Jor- 
dan, 35  Maine  23;  Robinson  v.  Fiske, 
25  Maine  401 ;  Appleman  v.  Fisher, 
34  Md.  540 ;  Seccomb  v.  Provincial 
Ins.  Co..  10  Allen  (Mass.)  305;  War- 
ren Bank  v.  Parker,  8  Gray  (Mass.) 
221;  Maurin  v.  Lyon,  69  Minn.  257, 
72  N.  W.  n,  65  Am.  St.  568;  Aloore 
V.  Phoenix  Ins.  Co.,  62  N.  H.  240,  13 
Am.  St.  556 ;  Huflfcut  &  W.  Am.  Cas. 
Cont.  531;  Smith  v.  Clews,  114  N.  Y. 
190,  21  N.  E.  160,  11  Am.  St. 
627,  4  L.  R.  A.  392n.  "The 
proper  office  of  custom  or  us- 
age in  trade  is  to  ascertain  and  ex- 


plain the  meaning  and  intention  of 
the  parties  to  a  contract,  whether 
written  or  in  parol,  which  could  not 
be  done  without  the  aid  of  extrinsic 
evidence.  It  does  not  go  beyond 
this,  and  is  used  as  a  mode  of  in- 
terpretation, on  the  theory  that  the 
parties  knew  of  its  existence  and 
contracted  with  reference  to  it.  It 
is  often  employed  to  explain  words 
or  phrases  in  a  contract  of  doubtful 
signification  or  which  may  be  under- 
stood in  different  senses,  accordin^; 
to  the  subject-matter  to  which  they 
are  applied.  But,  if  it  be  inconsist- 
ent with  the  contract  or  expressly  or 
by  necessary  implication  contradicts 
it,  it  cannot  be  received  in  evidence 
to  effect  it."  A.  M.  Dillow  &  Co.  v. 
City  of  Monticello,  145  Iowa  424, 
124  N.  W.  186,  188,  quoting  from 
Barnard  v.  Kellogg,  10  Wall.  (U.  S.) 
383.  19  L.  ed.  987. 

**  American  Bonding  Co.  v.  Pueblo 
Investment  Co.,  150  Fed.  17,  SO  C.  C 
A.  97, 9  L.  R.  A.  (N.  S.)  557n;  Pressed 
Steel  Car  Co.  v.  Eastern  R.  Co., 
121  Fed.  609,  57  C.  C.  A.  635; 
Turner  v.  Citv  of  Fremont,  159  Fed. 
221,  affd.  170  Fed.  259.  95  C.  C.  A. 
455;  United  States  Fidelity  &c.  Co. 
V.  Woodson  County,  145  Fed.  144. 
76     C.     C.     A.     114;     Uinta     Tunnel 


§    1 5 14                                                 CONTRACTS,  788 

provisions  and  parts  of  the  contract  where  possible  and  no  part 
should  be  rejected  unless  absolutely  repugnant  to  the  general  in- 
tent.^"    A  single  word  or  sentence  should  not  be  construed  alone, 

Min.  &  Transp.  Co.  v.  Ajax  Gold  W.  879.  See  also,  Yost  v.  Anchor 
Min.  Co.,  141  Fed.  563,  73  C.  C.  A.  Fire  Ins.  Co.,  38  Pa.  Super.  Ct.  594. 
35 ;  Ft.  Smith  Light  &  Traction  Co.  The  written  and  oral  parts  of  an 
V.  Kelle\',  94  Ark.  461,  127  S.  W.  agreement  must  be  construed  together. 
975;  Town  of  Sterling  v.  Hurd,  44  American  Mercantile  Exchange  v. 
Colo.  436.  98  Pac.  174;  Brown  v.  Blunt,  102  Maine  128,  66  Atl.  212,  10 
Slater,  16  Conn.  192,  41  Am.  Dec.  L.  R.  A.  (N.  S.)  414n. 
136;  Hewitt  v.  Wheeler,  22  Conn.  ''"Northern  v.  Tatum,  164  Ala.  368, 
557;  Tracy  v.  Chicago,  24  111.  500;  51  So.  17;  Hall  v.  Hardaker,  61 
Morey  v.  Terre  Haute  Traction  &  Fla.  267,  55  So.  977;  McLean  County 
Light  Co.,  47  Ind.  App.  16,  93  N.  E.  Coal  Co.  v.  Bloomington,  234  111.  90, 
710;  Chicago  Veneer  Co.  v.  Ander-  84  N.  E.  624,  reversing  judgment 
son,  32  Ky.  L.  7,  105  S.  W.  108;  137  111.  App.  582;  Brooks  v.  Halane, 
Chase  v.  Bradley,  26  Maine  531;  116  111.  App.  383;  Richmond  v. 
Ivlerrill  v.  Gore,  29  Maine  346;  Chap-  Brandt,  118  111.  App.  624;  Strauss  v. 
man  v.  Seccomb,  36  Maine  102;  Yeager  (Ind.  App.),  93  N.  E.  877;  T. 
Smith  V.  Davenport,  34  Maine  520 ;  M.  Sinclair  v.  National  Surety  Co. 
Heywood  v.  Perrin,  10  Pick.  (Mass.)  (Iowa),  107  N.  W.  184;  Smith  v. 
228.  20  Am.  Dec.  518;  Goosey  v.  Durkee,  166  Mich.  484,  131  N.  W. 
Goosey,  48  Miss.  210;  Salmon  Falls  1116;  Gail  v.  Gail,  127  App.  Div.  (N. 
Mfg.  Co.  V.  Portsmouth  Co.,  46  Y.)  892,  112  N.  Y.  S.  96;  Williams 
N.  H.  249;  Colorado  Telephone  Co.  v.  Gridley,  187  N.  Y.  526,  79  N.  E. 
V.  Fields,  15  N.  Mex.  431,  110  Pac.  1119;  Knickerbocker  Trust  Co.  v. 
571 ;  Monmouth  Park  Association  v.  Ryan,  227  Pa.  245,  75  Atl.  1073 ;  Mc- 
Wallis  Iron  Works.  55  N.  J.  L.  132,  Millin  v.  Titus,  222  Pa.  500,  72  Atl. 
26  Atl.  140,  19  L.  R.  A.  456,  39  Am.  240;  El  Paso  &  S.  W.  R.  Co.  v. 
St.  626;  Hamilton  v.  Taylor,  18  N.  Eichel  (Tex.  Civ.  App.),  130  S.  W. 
Y.  358;  Richards  v.  Warring,  39  922;  Ryan  v.  Curlew  Irr.  &c.  Co., 
Barb.  (N.  Y.)  42,  affd.  1  Key.  (N.  36  Utah  382,  104  Pac.  218.»  "In 
Y.)  576,  4  Abb.  Dec.  (N.  Y.)  construing  any  written  instrument, 
47;  Gulf  Refining  Co.  v.  Char-  whether  a  deed  of  conveyance,  a  bill 
lotte  Construction  Co.,  157  N.  of  sale,  mortgage,  contract,  or  what 
Car.  277,  72  S.  E.  1003;  At-  not,  the  entire  instrument  must  be 
lantic  &c.  R.  Co.  v.  Atlantic  considered  in  order  to  gather  the 
&c.  Co.,  147  N.  Car.  368,  61  real  intent  and  true  design  of  the 
S.  E.  185,  23  L.  R.  A.  (N.  S.)  makers  thereof.  To  that  end  all  the 
223n,  125  Am.  St.  550;  Wilkie  v.  different  provisions  of  such  instru- 
New  York  Life  Ins.  Co.,  146  N.  ment  must  be  looked  to  and  all  con- 
Car.  513,  60  S.  E.  427;  Stewart  v.  strued  so  as  to  give  effect  to  each  and 
Lang,  37  Pa.  St.  201,  78  Am.  Dec.  every  of  them,  if  that  can  reason- 
414;  Brittson  v.  Smith,  165  Mich.  222,  ably  be  done.  If  clauses  therein 
130  N.  W.  599,  18  Detroit  Leg.  N.  seem  to  be  repugnant  to  each  other, 
160;  Koles  v.  Borough  Park  Co.,  they  must  be  given  such  an  inter- 
142  App.  Div.  (N.  Y.)  765,  127  N.  pretation  and  construction  as  to  rec- 
Y.  S.  671;  Northern  Texas  Realty  oncile  them  if  possible,  remembering 
&  Construction  Co.  v.  Lary  (Tex.  that  the  intent  is  the  principal  thing 
Civ.  App.),  136  S.  W.  843;  Malloy  to  be  regarded.  If  one  interpreta- 
V.  Interstate  Irr.  Co.,  62  Wash,  487,  tion,  looking  to  the  other  provisions 
114  Pac.  167;  Wisdom  v.  Wilson  of  the  instrument  and  its  general 
(Tex.  Civ.  App.),  127  S.  W.  1128;  scope,  would  lead  to  an  absurd  con- 
Toellner  v.  McGinnis,  55  Wash.  430,  elusion,  such  interpretation  must  be 
104  Pac.  641,  24  L.  R.  A.  (N.  S.)  abandoned,  and  one  adopted  which 
1082n ;  Southern  Flour  &  Grain  Co.  will  be  more  in  accord  with  reason 
V.  McGeehan,   144  Wis.   130,   128  N.  and  probability."     Hull  v.   Burr,   58 


789  INTERPRETATION    AND    CONSTRUCTION.  §    I515 

but  should  be  considered  with  reference  to  the  context." 

§  1515.  Rules  of  construction  generally — Construing  par- 
ticular clauses. — In  the  interpretation  of  any  particular  clause 
of  a  contract,  the  court  is  required  to  examine  the  entire  contract, 
and  may  also  consider  the  relations  of  the  parties,  their  connec- 
tion with  the  subject-matter  of  the  contract,  and  the  circum- 
stances under  which  it  was  made."  The  construction  should 
make  the  whole  consistent,  giving  all  parts  their  due  weight." 
Force  and  effect  should  be  given  to  all  the  words  employed  by  the 
parties  where  that  is  possible.'^*     And  one  part  of  the  agreement 


Fla.  432,  50  So.  754.  "The  rule  that 
rejects  a  repugnant  clause  of  a  con- 
tract is  an  expedient  to  which  a 
court  will  very  reluctantly,  in  any 
case,  have  recourse,  and  never  un- 
less absolutely  compelled  to  do  so." 
Lachmund  v.  Lope  Sing,  54  Ore.  106, 
102  Pac.  598.  See  also,  Ford  Hard- 
wood Lumber  Co.  v.  Clement  (Ark.), 
135  S.  W.  343:  Scudder  v.  Perce, 
159  Cal.  429,  114  Pac.  571;  Nunn- 
gesser  v.  Hart,  122  Iowa  647,  98  N. 
W.  505;  A.  &  S.  Spengler  v.  Stiles- 
TuU  Lumber  Co.,  94  Miss.  780,  48 
So.  966;  Humphreys  v.  McFarland 
(Miss.),  48  So.  1027. 

"Tevis  V.  Ryan,  13  Ariz.  120,  108 
Pac.  461 ;  Farrell  v.  Garfield  Mining, 
Milling  &  Smelting  Co.,  49  Colo.  159, 
111  Pac.  839;  Central  Trust  Co.  v. 
Wabash,  St.  L.  &  P.  R.  Co.,  29  Fed. 
546,  affd.  138  U.  S.  1,  34  L.  ed.  843, 
11  Sup.  Ct.  243;  Morey  v.  Terre 
Haute  Trac.  &c.  Co.,  47  Ind.  App.  16, 
93  N.  E.  710;  St.  Landry  Bank  v. 
Meyers,  52  La.  Ann.  1769,  28  So. 
136;  New  England  Cotton  Yarn  Co. 
V.  Laurel  Lake  Mills,  190  Mass.  48, 
Id  N.  E.  231.  The  meaning  of  the 
parties  must  be  ascertained  by  the 
tenor  of  the  writing,  and  not  by 
looking  at  a  part.  Baron  v.  Placide, 
7  La.  Ann.  229;  Metcalf  v.  Taylor, 
2>6  Maine  28 ;  Hevwood  v.  Hevwood, 
42  Maine  229,  66  Am.  Dec.  277";  Haz- 
elton  Coal  Co.  v.  Buck  Mountain  Coal 
Co.,  57  Pa.  St.  301 ;  Boardman  v. 
Reed  &  Ford's  Lessee,  6  Pet.  (U.  S.) 
328.  8  L.  ed.  415. 

"  Fearnley  v.  Fearnlev,  44  Colo. 
417.  98  Pac.  819:  Central  Trust  Co. 
V.  Condon,  67  Fed.  84,  14  C.  C.  A. 


314;  Western  Hardw.  &  Mfg.  Co.  v. 
Bancroft-Charnley  Steel  Co.,  116 
Fed.  176,  53  C.  C.  A.  548;  Burke 
Land  &  Live  Stock  Co.  v.  Wells- 
Fargo  &  Co.,  7  Idaho  42,  60  Pac.  87 ; 
Off  V.  J.  B.  Inderrieden  Co.,  74  111. 
App.  105;  Reissner  v.  Oxley,  80  Ind. 
580;  Beard  v.  Lofton,  102  Ind.  408,  2 
N.  E.  129;  Kramer  v.  Messner,  101 
Iowa  88,  69  N.  W.  1142;  J.  B.  Ehrsam 
&  Sons  Mfg.  Co.  V.  Jackman,  73  Kans. 
435,  85  Pac.  559,  91  Pac.  486;  Trex- 
ler  V.  Reynolds,  43  Pa.  Super.  Ct.  168 ; 
Chicago  R.  I.  &c.  R.  Co.  v.  Denver  & 
R.  G.  R.  Co.,  143  U.  S.  596.  36  L. 
ed.  277,  12  Sup.  Ct.  479;  Knox  Co.  v. 
Ninth  Nat.  Bank,  147  U.  S.  91,  TH 
L.  ed.  93,  13  Sup.  Ct.  267;  Chicago, 
M.  &  St.  P.  R.  Co.  v.  Hoyt,  89  Wis. 
314,  62  N.  W.  189.  See  also,  Pratt 
V.  Prouty,  104  Iowa  419,  1Z  N.  W. 
1035,  65  Am.  St.  472.  For  a  con- 
struction of  the  terms  "the  amount 
of  expenditures  actually  made,"  and 
"shop  cost"  see,  Berlin  Iron  Bridge 
Co.  V.  American  Bridge  Co.,  76 
Conn.  1,  55  Atl.  573. 

"Cincinnati,  S.  &  C.  R.  Co.  v.  In- 
diana, B.  &  W.  R.  Co.,  44  Ohio  St. 
287,  7  N.  E.  139;  McKav  v.  Barnett, 
21  Utah  239,  60  Pac.  1100.  SO  L.  R. 
A.  371.  And  see  Bent  v.  Alexander, 
15  Mo.  App.  181 ;  Chrisman  v.  State 
Ins.  Co.,  16  Ore.  283,  18  Pac.  466. 

"Chicago.  B.  &  Q.  R.  Co.  v. 
Bartlett.  120  111.  603,  11  N.  E.  867; 
Bowman  v.  Long,  89  111.  19;  Spring 
Garden  Ins.  Co.  v.  Imperial  Tobacco 
Co.,  132  Kv.  7.  116  S.  W.  234.  20  L. 
R.  A.  (N.  S.)  277n.  136  Am.  St.  164; 
Folev  V.  New  York  Mut.  Benev. 
Society,  141  App.  Div.   (N.  Y.)   180, 


§    1 51 5  CONTRACTS.  790 

may  be  resorted  to  to  explain  the  meaning  of  the  language  or 
expressions  of  another  part  when  both  relate  to  the  same  subject- 
matter.^^  The  meaning  of  a  clause  or  sentence  may  be  limited 
by  the  sentence  preceding  it.^^  Thus,  where  the  words  in  the 
operative  part  of  the  instrument  are  of  doubtful  meaning,  the 
recitals  preceding  the  doubtful  part  may  be  used  as  a  test  to  dis- 
cover the  intention  of  the  parties  and  fix  the  meaning  of  the 
words.^^  This  simply  means  that  the  entire  language  shall  be 
considered,  that  included  in  the  recitals  as  well  as  that  included  in 
the  operative  part  of  the  instrument,  and  from  the  whole  the  in- 
tention of  the  parties  ascertained.^*  Where  the  contract  is  a  bond 
the  condition  should  be  considered  in  the  construction  of  the 
obligatory  part.^^  Provisions  for  both  forfeiture  and  damages 
are  not  necessarily  irreconcilable. ""^  In  construing  a  contract 
entered  into  by  correspondence,  the  whole  correspondence  must 
be  considered.**^  But  while  words  or  clauses  in  a  contract  appar- 
ently repugnant  should  be  reconciled  if  it  can  be  done  by  any  rea- 
sonable construction,  yet  a  proviso  which  is  utterly  repugnant  to 
the  body  of  the  contract  and  irreconcilable  with  a  former  clause 

126  N.  Y.  S.  12 ;  New  Jersey  Foundry  ^  Union    Ferry    Co.    v.     Southern 

&  Machine  Co.  v.  United  States,  44  Imp.  &c.  Co.,  124  La.  759,  50  So.  704 ; 

Ct.    CI.    (U.    S.)    570.      In    Barton   v.  Otto  v.  Young,  227  Mo.   193,   127   S. 

Fitzgerald,  15   East  530,  Lord  Ellen-  W.    9.      Other    things    being    equal, 

borough  said:    "It  is  a  true  rule  of  words  used  in  a  certain  sense  in  one 

construction     that     the     sense     and  part  of  an  instrument  are  deemed  to 

meaning  of  the  parties,   in   any  par-  have  been  used  in  the  same  sense  in 

ticular  part  of  an  instrument,  may  be  another     part     thereof.       Pringle     v. 

collected  ex  antecedentibus  et  conse-  Wilson,  156  Cal.  313,  104  Pac.  316. 

quentibus.     Every  part  of  it  may  be  "  Walker  v.  Tucker,  70  111.  527.  See 

brought  into  action  in  order  to  col-  also,   Altman   v.   McMillin,    115   App. 

lect  from  the  whole  one  uniform  and  Div.   (N.  Y.)   234,   100  N.  Y.   S.  970. 

consistent    sense,     if     that     may     be  See  also,  post,  §  1516. 

done."  '*  Burgess   v.   Badger,   124   111.  288, 

"Read's    Drug    Store    v.    Hessig-  14  N.  E.  850. 

Ellis  Drug  Co.,  93  Ark.  497,   125   S.  <>*  McCormick      Harvesting      Mach. 

W.  434;  Dollar  v.  International  Bank-  Co.  v.  Laster,  70  111.  App.  425:   Chi- 

ing  Corp.,  10  Cal.  App.  83,  101  Pac.  cago  &c.  R.  Co.  v.  Aurora,  99  111.  205 ; 

34;    Pensacola    Gas    Co.    v.    Lotzes,  American  Surety  Co.  v.  Halliwell  Co., 

23    Fla.    368,    2    So.    609;    Stout    v.  9  Kans.  App.  8,  57  Pac.  237. 

Whitney,  12  111.  218;  North  &  South  ""United    States    v.     Perkins,     143 

Rolling- Stock  Co.  v.  O'Hara,  73  111.  Fed.  688. 

App.   691;    Belch   v.    Miller,   32   Mo.  ''Gates  v.   Dudgeon,  72   App.   Div. 

App.  387;   German   Fire   Ins.   Co.  v.  (N.  Y.)   562,  76  N.  Y.  S.  561,  revd. 

Roost,    55    Ohio    St.    581,    45    N.    E.  173  N.  Y.  426,  66  N.  E.  116,  93  Am. 

1097,  36  L.  R.  A.  236,  60  Am.  St.  711;  St.  608;   United   States  v.   Boji^wick, 

Teske   v.    Dittberner,   83    Nebr.    701,  94  U.  S.  53,  24  L.  ed.  65. 
120  N.  W.  198. 


791 


INTERPRETATION    AND    CONSTRUCTION. 


§    I516 


and  repugnant  to  the  general  purpose  and  intent  of  the  contract 
will  be  set  aside  or  rejected ;  likewise,  a  subsequent  clause  irrecon- 
cilable with  a  former  clause  and  repugnant  to  the  general  pur- 
pose and  intent  of  the  contract  will  be  set  aside  or  rejected."^ 

§  1516.  Rules  of  construction  generally — Noscitur  a  sociis. 
— The  maxim  "noscitur  a  sociis"  (it  is  known  from  its  associates 
or  association)  supplements  the  rules  of  construction  that  have 
been  mentioned  in  the  preceding  sections  of  this  chapter.  It 
merely  means  that  the  sense  in  which  a  word  or  phrase  is  used  in 
a  contract  may  be  determined  by  reference  to  the  meaning  of  the 
words  associated  with  it.®* 

§  1517.  Rules  of  construction  generally — Surrounding  cir- 
cumstances.— Where  the  language  is  ambiguous  and  suscep- 
tible of  more  than  one  construction,  the  court  should  attempt  to 


""Jones  V.  Pennsylvania  Casualty 
Co.,  140  N.  Car.  262.  52  S.  E.  578,  5 
L.  R.  A.  (N.  S.)  932,  111  Am.  St. 
843;  Davis  v.  Frazier,  150  N.  Car. 
447,  64  S.  E.  200;  Gulf  Refining  Co. 
V.  Charlotte  Const.  Co.,  157  N.  Car. 
277,  72  S.  E.  1003.  If  two  clauses 
of  a  contract  are  so  wholly  repugnant 
to  each  other  that  they  cannot  stand 
together  the  first  shall  stand  if  in 
harmony  with  the  other  parts  of  the 
contract  and  the  latter  be  rejected. 
Henne  v.  Summers,  16  Cal.  App.  67, 
116  Pac.  86;  Employers'  Liability 
Assur.  Corp.  v.  Morrow,  143  Fed. 
750,  74  C.  C.  A.  640 ;  Brady  v.  Car- 
olina Steel  Bridge  &c.  Co.,  Id  S.  Car. 
297,  56  S.  E.  964.  See  also,  post,  § 
1535  et  seq. 

^  See  Birmingham  v.  Birmingham 
Waterworks  Co..  152  Ala.  306.  44  So. 
581.  11  L.  R.  A.  (N.  S.)  613n.  hold- 
ing that  the  maxim  "noscitur  a 
sociis"  is  applicable  to  the  descrip- 
tive expression  "public  boarding 
house"  and  that  the  coupling  there- 
with of  the  word  "public"  has  no 
effect  to  expand  the  signification 
present  in  the  term  "boarding-house" 
so  as  to  make  it  nominative  of  a 
class  of  buildings  not  used  as  dwell- 
ings. Also.  American  Bonding  Co. 
V.  Pueblo  Inv.  Co.,  150  Fed.  17.  80  C. 
C.  A.  97,  9  L.  R.  A.   (N.  S.)  557n; 


Chesapeake  &  O.  R.  Co.  v.  American 
Exchange  Bank,  92  Va.  496,  23  S. 
E.  935,  44  L.  R.  A.  449.  holding  that 
the  phrase  "other  accidental  causes" 
must  be  ascertained  by  reference  to 
the  preceding  special  words  and 
meant  other  unavoidable  accidental 
causes.  See  also.  State  v.  Lowrv', 
166  Ind.  Zn,  77  N.  E.  728,  4  L.  R. 
A.  (N.  S.)  528n;  Hoflfman  v.  East- 
ern Wisconsin  R.  &  Light  Co.,  134 
Wis.  603,  115  N.  W.  383.  "Where 
reference  is  made  to  something  pre- 
cedent, the  last  item  next  before  such 
reference  must  be  held  to  be  in- 
tended." Baxter  Springs  v.  Baxter 
Springs  Light  &c.  Co..  64  Kans.  591, 
68  Pac.  63.  See  also.  Perry  v.  Mott 
Iron  Works  Co.,  207  Mass.  501.  93 
N.  E.  798.  "The  general  rule  is  that, 
where  in  a  contract  clauses  are  re- 
pugnant and  incompatible,  the  earlier 
prevails,  if  the  inconsistency  be  not 
so  great  as  to  avoid  the  instrument 
for  uncertainty.  1  Sheppard's  Touch- 
stone, 88;  2  Parsons  on  Contracts. 
513;  Daniel  v.  Veal.  32  Ga.  589; 
Petty  v.  Boothe,  19  Ala.  633.  This 
rule  is  subject  to  the  qualification, 
however,  that  the  contract  must  be 
construed  to  effect  the  intention  of 
the  parties  as  gathered  from  the  en- 
tire instrument:  and.  if  there  are  re- 
pugnant clauses,  they  must  be  recon- 


§  I5I7 


CONTRACTS. 


792 


place  itself  as  near  as  possible  in  the  situation  of  the  parties  to 
the  contract  at  the  time  the  agreement  was  entered  into  so  that  it 
may  view  the  circumstances  as  viewed  by  the  parties  and  thus 
be  enabled  to  understand  the  language  used  in  the  sense  with 
which  the  parties  used  it.^*  In  order  to  accomplish  this  object 
it  is  generally  proper  for  the  court  to  take  notice  of  surrounding 
and  attendant  circumstances  and  construe  the  language  used  in 
the  lioht  of  such  circumstances.^'' 


died,  if  possible.  The  intent,  and 
not  the  words,  is  the  essence  of 
every  agreement  if  it  can  be  ascer- 
tained therefrom."  Lachmund  v. 
Lope  Sing,  54  Ore.  106,  102  Pac.  598. 
"Ft.  Smith  Light  &  Traction  Co. 
V.  Kelley,  94  Ark.  461,  127  S.  W. 
975;  Lintweiler  Pumping  Engine  Co. 
V.  Ukiah  Water  &  Imp.  Co.,  16  Cal. 
App.  198,  116  Pac.  707;  Vocalion 
Organ  Co.  v.  Wright,  137  Fed.  313; 
Wilson  V.  Roots,  119  111.  379,  10  N. 
E.  204;  Matthews  v.  Kerfoot,  167 
111.  313,  47  N.  E.  859;  Carroll  v. 
Drury,  170  111.  571,  49  N.  E.  311; 
Chambers  v.  Prewitt,  172  111.  615,  50 
N.  E.  145;  Close  v.  Browne,  230 
111.  228,  82  N.  E.  629,  13  L.  R.  A. 
(N.  S.)  634;  Brockmeyer  v.  Sani- 
tary Dist.  of  Chicago,  118  111.  App. 
49;  Cravens  v.  Eagle  Cotton  Mills 
Co.,  120  Ind.  6,  21  N.  E.  981,  16  Am. 
St.  298;  Roberts  v.  Bonaparte,  73 
Md.  191,  20  Atl.  918,  10  L.  R.  A. 
689;  Mathews  v.  Phelps,  61  Mich. 
2>n,  28  N.  W.  108,  1  Am.  St.  581; 
Laclede  Const.  Co.  v.  Moss  Tie  Co., 
185  Mo.  25,  84  S.  W.  76;  Donovan 
V.  Boeck,  217  Mo.  70,  116  S.  W.  543; 
Alywin  v.  Morley,  41  Mont.  191,  108 
Pac.  778;  Smith  v.  Kerr,  108  N.  Y. 
31,  15  N.  E.  70,  2  Am.  St.  362;  Gil- 
let  V.  Bank  of  America,  160  N.  Y. 
549,  55  N.  E.  292;  Hardwick  v. 
American  Can  Co.,  113  Tenn.  657.  88 
S.  W.  797;  Coleman  v.  Ebeling  (Tex. 
Civ.  App.),  138  S.  W.  199;  Nash  v. 
Towne.  5  Wall.  (U.  S.)  689,  18  L. 
ed.  527;  Scott  v.  United  States,  12 
Wall.  (U.  S.)  443;  Goddard  v.  Fos- 
ter, 17  Wall.  (U.  S.)  123,  21  L. 
ed.  589;  Merriam  v.  United  States, 
107  U.  S.  437,  27  L.  ed.  531,  2  Sup. 
Ct.  536,  18  Ct.  CI.  (U.  S.)  760; 
Walsh  V.  Myers,  92  Wis.  397,  66  N. 
W.    250;    Zohrlaut    v.     Mengelberg 


(Wis.),  124  N.  W.  247.  This  rule 
applies  to  ambiguous  written  instru- 
ments. Driscoll  V.  Penrod  (Ind.), 
95  N.  E.  313.  See  also,  Klueter  v. 
Joseph  Schlitz  Brewing  Co.,  143 
Wis.  347,  128  N.  W.  43,  32  L.  R.  A. 
(N.  S.)  383n.  A  contract  made 
within  the  Confederate  States  during 
the  war  of  1861-65  to  pay  a  certain 
sum  in  "dollars,"  without  specifying 
the  kind  of  currency  in  which  pay- 
ment was  to  be  made,  may  be  shown 
by  the  nature  of  the  transaction  and 
the  attendant  circumstances,  as  well 
as  by  the  language  of  the  contract 
itself,  to  have  contemplated  pay- 
ment in  confederate  currency.  Rives 
V.  Duke,  105  U.  S.  132,  26  L.  ed. 
1031. 

""'Shore  v.  Wilson,  9  CI.  &  Fin. 
355;  MacDonald  v.  Longbottom,  1 
El.   &   El.   977;    Carr  v.    Montefiore, 

5  B.  &  S.  408;  Thompson  v.  McKay, 
41  Cal.  221;  True  v.  Rocky  Ford 
Canal  Reservoir  &  Land  Co.,  36 
Colo.  43,  85  Pac.  842;  Excelsior 
Needle  Co.,  v.  Smith,  61  Conn.  56, 
23  Atl.  693;  Nelson  v.  Ohio  Culti- 
vator Co.,  188  Fed.  620;  Marx  v. 
American  Malting  Co.,  169  Fed.  582, 
95  C.  C.  A.  80;  Western  Lumber  Co. 
v.  Willis,  160  Fed.  27,  87  C.  C.  A. 
183;  Mt.  Vernon  Refrigerating  Co.  v. 
Fred  W.  Wolf  Co.,  188  Fed.  164, 
110  C.  C  A.  200;  Jacobs  v.  Parodi, 
50  Fla.  541,  39  So.  833;  Burke  Land 

6  Livestock  Co.  v.  Wells,  Fargo  & 
Co.,  7  Idaho  42,  60  Pac.  87 ;  Schurger 
v.  Moorman,  20  Idaho  97,  117  Pac. 
122,  36  L.  R.  A.  (N.  S.)  313;  Haddcn 
V.  Shoutz,  15  111.  581 ;  Thomas  v. 
Wiggers,  41  111.  470;  Kuecken  v. 
Voltz.  110  Til.  264;  Wood  v.  Clark, 
121  111.  359,  12  N.  E.  271 ;  Gwinn  v. 
Wright,  42  Ind.  App.  597,  86  N.  E. 
453;  Indiana  Natural  Gas  &  Oil  Co. 


793 


INTERPRETATIONT    AND    CONSTRUCTION. 


i=;i! 


§  1518.  Rule  illustrated. — Thus,  an  insurance  policy  which 
provided  "the  risk  to  be  suspended  while  vessel  is  at  Baker's 
Island  loading"  was  construed  to  mean  while  the  ship  was  at 
Baker's  Island  "for  the  purpose  of  loading"  whether  actually 
engaged  in  loading  or  not,  in  view  of  the  dangerous  character 
of  the  place.®"  If  the  vendor  of  a  city  lot  should,  in  a  deed  of 
such  lot,  reserve  to  himself  a  building  standing  thereon  it  would 
be  manifest  that  he  reserved  only  the  right  to  remove  such  build- 


V.  Stewart,  45  Ind.  App.  554,  90  N. 
E.  384;  Pratt  v.  Prouty,  104  Iowa 
419,  1i  N.  W.  1035,  65  Am.  St.  472; 
Simpson  v.  Kimberlin,  12  Kans.  579; 
Chanute  Brick  and  Tile  Co.  v.  Gas 
Belt  Inicl  Co.,  82  Kans.  752,  109  Pac. 
398;  First  Nat.  Bank  v.  Gerke,  68 
Md.  449,  13  Atl.  358,  6  Am.  St.  453; 
Knight  V.  New  England  Worsted 
Co.,  2  Cush.  (Mass.)  271;  Callender 
V.  Flint,  187  Mass.  104,  72  N.  E. 
345;  Mathews  v.  Phelps,  61  Mich. 
327,  28  N.  W.  108,  1  Am.  St.  581; 
Crawford  v.  Elliott,  78  Mo.  497; 
Kenyon  Printing  &  Mfg.  Co.  v. 
Barnsley  Bros.  Cutlery  Co.,  143  IMo. 
App.  518,  127  S.  W.  666;  Fiscus  v. 
Wilson,  74  Nebr.  444,  104  N.  W.  856; 
Morris  Canal  &  B.  Co.  v.  Matthie- 
sen,  17  N.  J.  Eq.  385;  United  Box- 
board  &  Paper  Co.  v.  McEwan 
Bros.  Co.  (N.  J.  Ch.),  76  Atl.  550; 
Hornthal  v.  Howcott,  154  N.  Car. 
228,  70  S.  E.  171;  Mosier  v.  Parry, 
60  Ohio  St.  388,  54  N.  E.  364;  Lacy 
V.  Green,  84  Pa.  St.  514;  Lipscomb  v. 
Fuqua.  103  Tex.  585,  131  S.  W.  1061, 
affirming  judgment  (Tex.  Civ.  App.), 
121  S.  W.  193;  IMerriam  v.  United 
States,  107  U.  S.  437,  27  L.  ed.  531, 
2  Sup.  Ct.  536,  18  Ct.  CI.  (U.  S.) 
760;  Mobile  &  IM.  R.  Co.  v.  Jurey, 
111  U.  S.  584,  28  L.  ed.  527,  4  Sup. 
Ct.  566;  Brawley  v.  United  States, 
96  U.  S.  168.  24  L.  ed.  622,  13  Ct. 
CI.  (U.  S.)  521;  Nash  v.  Towne,  5 
Wall.  (U.  S.)  689,  18  L.  ed.  527; 
Barreda  v.  Silsbee,  21  How.  (U.  S.) 
146,  16  L.  ed.  86;  Daly  v.  Old,  35 
Utah  74,  99  Pac.  460,  28  L.  R.  A. 
(N.  S.)  463n;  Nilson  v.  Morse,  52 
Wis.  240,  9  N.  W.  1;  McMillen  v. 
Pratt,  89  Wis.  612,  62  N.  W.  588; 
Zohrlaut  v.  Mengelberg  (Wis.),  124 
N.  W.  247;  McMillan  v.  Hollev,  145 
Wis.  617,   130  N.  W.  455.     See  also, 


Lexington  &c.  R.  Co.  v.  Moore,  140 
Ky.  514,  131  S.  W.  257.  "The  court 
will  infer  the  intention  of  the  parties, 
*  *  *  from  the  circumstances  at- 
tending the  transaction."  Chicago, 
M.  &  St.  P.  R.  Co.  V.  Hoyt,  89  Wis. 
314,  62  N.  W.  189.  The  usage  of  the 
business  may  be  one  of  the  sur- 
rounding circumstances  to  be  taken 
into  consideration.  Shewsbury  v. 
Tufts,  41  W.  Va.  212,  23  S.  E.  692. 
See  also,  Fox  v.  Mackay,  125  Cal.  54, 
57  Pac.  672.  Facts  of  public  notorie- 
ty relating  to  the  subject  of  a  con- 
tract must  be  presumed  to  have  been 
known  to  the  parties  at  the  time  of 
making  the  contract,  and  the  lan- 
guage used  must  be  construed  in  ref- 
erence to  these  facts.  Anse  &c.  Oil 
Mineral  Co.  v.  Babb,  122  La.  415,  47 
So.  754,  quoting  from  Woodruff  v. 
Woodruff,  52  N.  Y.  53.  To  same 
effect,  Schurger  v.  Moorman,  20 
Idaho  97,  117  Pac.  122,  36  L.  R.  A. 
(N.  S.)  313;  McMillin  v.  Titus,  222 
Pa.  500,  72  Atl.  240.  See  also.  Trow 
V.  Preferred  Accident  Ins.  Co.  (Vt.), 
67  Atl.  821.  "According  to  old  law, 
the  patent  ambiguity  of  the  clause 
might  make  the  stipulation  void; 
but  this  doctrine  is  no  longer  en- 
forced as  strictly  as  formerly,  and, 
whether  an  ambiguity  is  patent  or 
latent,  a  court  will  endeavor  to  glean 
the  intention  of  the  parties  from  the 
whole  instrument  and  the  instances 
attendant  on  its  execution."  Con- 
servative Realty  Co.  v.  St.  Louis 
Brewing  Assn.,  133  Mo.  App.  261, 
113  S.  W.  229.  To  same  effect,  Lex- 
ington &  B.  S.  R.  Co.  v.  Moore,  140 
Ky.  514,  131  S.  W.  257. 

""Reed  v.  Merchants'  Mut.  Ins. 
Co.  of  Baltimore,  95  U.  S.  23,  24  L. 
ed.  348. 


§    1 5 19  CONTRACTS.  794 

ing,  since  a  different  construction  would  be  destructive  of  the 
grant.  On  the  other  hand,  if  a  testator  devised  to  his  sons  a 
large  farm,  reserving  to  his  widow  the  right  to  occupy  the  farm- 
house during  her  life,  it  might  and  probably  would  be  held  to 
include  the  outbuildings  and  gardens  or  messuage.  So,  while  a 
shop  in  which  an  individual  carried  on  a  trade  might  be  limited  to 
the  particular  building,  and  even  to  the  particular  room  in  which 
his  work  was  done,  we  should  not  apply  this  narrow  construction 
to  the  shops  in  which  a  large  railroad  corporation  carries  on  its 
manufacturing  and  repairing.  Here  the  word  "shops"  would 
include  such  lands  as  are  used  or  procured  for  shop  purposes  and 
appurtenant  to  the  shops.  "^^  It  has  been  held  that  where  a  con- 
tract provided  that  the  intervener  should  be  limited  to  such 
amount  of  stock  and  bonds  as  the  Railroad  Commission  should 
authorize,  the  term  "should"  meant  such  an  amount  as  the  Com- 
mission elected  to  authorize.'^'*  That  construction  will  be  adopted 
which,  in  the  light  of  surrounding  circumstances  and  upon  a  view 
of  the  whole  instrument,  is  in  accordance  with  the  apparent  intent 
of  the  parties.**^ 

§  1519.  Rule  concerning  surrounding  circumstances  fur- 
ther considered. — There  should  be  a  proper  regard  for  the 
object  which  the  parties  had  in  entering  into  the  contract  as  well 
as  the  language  employed  in  arriving  at  its  proper  construction.'^" 

''Chicago  &c.  R.  Co.  v.  Denver  &c.  Co.   v.   Bartlett,    120    111.   603,    11    N. 

R    Co.    143  U.  S.  596,  36  L.  ed.  277,  E.    867;    Consolidated    Coal    Co.    v. 

12  Sup.  Ct.  479.  Peers,    150    111.   344,    11    N.    E.    937; 

°*  United    States    &   Mexican   Trust  Bull  v.  Quincy,  155  111.  566,  40  N.  E. 

Co    V.  Delaware  Western  Const.  Co.  1035;    Starr  v.   Millikin,   180  111.  458, 

(Tex.  Civ.  App.),  112  S.  W.  447.  54  N.  E.  328;  Briquette  Fuel  Co.  of 

*°  Construction    Information    Co.   v.  St.  Louis  v.  Davis,  134  111.  App.  343; 

Cass,    74    Conn.    213,    50    Atl.    563;  Pittsburg  C.   C.   &   St.   L.   R.   Co.  v. 

Springsteen    v.     Samson,    32    N.    Y.  Wilson,   46   Ind.   App.  444,  91    N.   E. 

703;    United    States   v.    Gibbons,    109  725;   Jacobs  v.  Jacobs,  42  Iowa  600; 

U    S.  200,  27  L.  ed.  906.  3  Sup.  Ct.  Field      v.      Woodmancy,      10      Cush. 

117.     See  also,  Twin  Falls  &c.  Fruit  (Mass.)     427;     Morrill     &     Whiton 

Co.   v.    Salsbury,    20    Idaho    110,    117  Const.  Co.  v.  Boston,  186  Mass.  217, 

Pac.  118.  71    N.   E.  550;    Penfold  v.  Universal 

'"Messenger  v.  German-American  Life  Ins.  Co.,  85  N.  Y.  317,  39  Am. 
Ins.  Co.,  47  Colo.  448,  107  Pac.  643;  Rep.  660;  Robertson  v.  Ongley  Elec- 
Jennings  v.  Brotherhood  Ace.  Co.,  trie  Co.,  146  N.  Y.  20,  40  N.  E.  390; 
44  Colo.  68,  96  Pac.  982,  18  L.  R.  A.  Teutonia  Fire  Ins.  Co.  v.  Mund,  102 
(N.  S.)  109n,  130  Am.  St.  109;  Pa.  St.  89;  Parker  v.  Oil-Well  Sup- 
Brown  V.  Slater,  16  Conn.  192,  41  ply  Co.,  186  Pa.  St.  294,  40  Atl.  18; 
Am.  Dec.   136;  Chicago,  B.  &  Q.  R.  Mosier  v.  Parry,  60  Ohio  St.  388,  54 


795 


INTERPRETATION    AND    CONSTRUCTION. 


§    I519 


Inquiry  may  be  made  as  to  their  situation  at  the  time  the  contract 
was  entered  into,  and  the  purpose  to  be  accompHshed  by  its  exe- 
cution." Thus,  where  the  defendant  was  given  the  right  to  sell  a 
a  certain  commodity  within  the  state  of  Illinois  on  the  payment  of 
a  royalty  to  the  plaintiff  for  goods  sold  in  such  state  the  former 
could  not  avoid  payment  of  the  royalty  by  making  the  contract  of 
sale  in  another  jurisdiction  with  knowledge  that  the  goods  were 
to  be  used  in  Illinois.''^  Previous  and  contemporary  transactions 
and  facts  may  be  taken  into  consideration  to  ascertain  the  sub- 
ject-matter and  tlie  sense  in  which  the  parties  have  used  particular 
terms,  but  not  to  modify  the  plain  language."''  It  is  proper  to 
look  at  all  the  surrounding  circumstances  and  the  pre-existing 
relation  between  the  parties,  and  then  to  see  what  they  mean  when 
they  speak."     Accordingly  an  indemnity  bond  may  be  read  in  the 


N.  E.  364;  O'Brien  v.  Miller.  168  U. 
S.  287.  42  L.  ed.  469.  18  S.  Ct.  140; 
Canal  Co.  v.  Hill,  15  Wall.  (U.  S.) 
94.  21  L.  ed.  64.  "Contracts  are  not 
to  be  interpreted  by  giving  a  strict 
and  rigid  meaning  to  general  words 
or  expressions  without  regard  to  the 
surrounding  circumstances  or  the  ap- 
parent purpose  which  the  parties 
sought  to  accomplish."  Gillet  v. 
Bank  of  America.  160  N.  Y.  549,  55 
N.  E.  292.  The  purpose  of  the  con- 
tract rather  than  the  name  given  it 
by  the  parties  is  to  be  looked  to  in 
determining  its  real  character.  Men- 
nis  V.  Manning,  136  111.  App.  406. 
To  same  effect,  Steele  v.  State,  159 
Ala.  9,  48  So.  673;  Prather  v.  Bran- 
don, 44  Ind.  App.  45.  88  N.  E.  700; 
Wilson  V.  Wilson,  115  Mo.  App.  641, 
92   S.  W.   145. 

"  Payne  v.  Neuval.  155  Cal.  46.  99 
Pac.  476  (contract  having  some  of 
the  features  of  a  grant  and  some  of 
a  lease)  ;  Kauffman  v.  Raeder.  108 
Fed.  171,  47  C.  C.  A.  278.  54  L.  R.  A. 
247;  Illges  v.  Dexter.  11  Ga.  36;  Vin- 
cennes  v.  Citizens'  Gas  Light  Co.. 
132  Ind.  114.  31  N.  E.  573:  Kreitz 
V.  Egelhoff.  231  Mo.  694,  132  S.  W. 
1124;  Citv  of  St.  Louis  v.  St.  Louis 
&  S.  F.  R.  Co..  228  Mo.  712.  129  S. 
W.  691 ;  Wirth  v.  Kahlenberg.  62  N. 
Y.  S.  1030;  Purrington  v.  Grimm, 
9,Z  Vt  466.  16  Atl.  158;  Spencer  v. 
Potter's   Estate    (Vt.),   80   Atl.   821. 


When  an  agreement  is  entered  into 
in  anticipation  of  certain  legislation, 
and  such  legislation,  when  enacted, 
falls  within  the  spirit  of  the  contract, 
if  not  within  its  letter,  the  legislation 
is  within  the  contract.  Dudley  v. 
Owen,  31  App.  D.  C.  177. 

"  Illinois  Terra  Cotta  Lumber  Co. 
V.  Owen,  167  111.  360,  47  X.  E.  722. 

"Brawley  v.  United  States,  96  U. 
S.  168,  24  L.  ed.  622,  13  Ct.  CI.  521 ; 
White  V.  White.  64  W.  Va.  30.  60  S. 
E.  885.  See  also,  Newcomb  v.  Kloeb- 
len.  11  N.  J.  L.  791,  74  Atl.  511;  El 
Dorado  Jewelry  Co.  v.  Hopkins,  34 
Pa.  Super.  Ct.  446  (oral  agreement 
collateral  to  written  agreement). 
When  the  parties  to  a  contract  de- 
liberately put  their  agreement  in 
writing  in  such  terms  as  import  a 
legal  obligation  all  prior  negotiations, 
letters  and  telegrams  are  thereby 
merged  in  the  written  contract. 
Fuchs  &  Lang  Mfg.  Co.  v.  R.  J.  Kit- 
tredge  &  Co..  146  111.  App.  350,  affd. 
242  111.  88.  89  N.  E.  723. 

"Brevfogle  v.  Walsh.  80  Fed.  172. 
25  C.  C.  A.  357;  Wceks-Betts  Hard- 
ware Co.  V.  Roosevelt  Lead  &  Zinc 
Co..  153  Mo.  App.  387.  134  S.  W.  35 : 
Nebraska  Hardware  Co.  v.  Hum- 
phrev  Hardware  Co.,  81  Nebr.  693. 
116  N.  W.  6.59;  Fox  v.  International 
Hotel  Co..  168  N.  Y.  658.  61  X.  E. 
1129.  affg.  41  App.  Div.  (X.  Y.)  140. 
58  X.  Y.   S.  441 ;  Gallup  v.  Sterling, 


§    I5-0  CONTRACTS.  796 

light  of  surrounding  circumstances,  in  order  more  perfectly  to 
understand  the  intent  and  meaning  of  the  parties.'^  It  has  even 
been  held  that  written  options  preceding  the  execution  of  leases 
and  an  agreement,  afforded  some  light  in  ascertaining  the  under- 
standing of  the  parties,  and  are  competent  to  be  considered  for 
that  purpose.'"  An  obscure  and  ambiguous  oral  contract  may- 
be interpreted  in  the  light  of  the  conversations  of  the  parties 
making  it/^  But  the  rule  which  requires  that  a  contract  be 
viewed  in  the  light  of  surrounding  circumstances  is  a  rule  of  con- 
struction merely,  and  does  not  permit  the  making  of  a  new  con- 
tract, nor  a  reformation  of  it,  nor  a  disregard  of  its  terms.  It 
authorizes  only  a  just  construction  of  the  terms  used  and  a  fair 
inference  as  to  the  common  understanding  of  both  of  the  con- 
tracting parties.'^*  And  evidence  of  the  surrounding  circum- 
stances may  not  be  admissible  when  the  contract  is  plain  and 
when  no  ambiguity  exists  as  to  its  terms.  The  contract  then 
speaks  for  itself.''* 

§  1520.  Subsidiary  rules  of  construction — Construction 
upholding  contract  preferred. — Where  the  language  of  an  in- 
strument in  writing  or  the  facts  of  a  transaction  are  of  a  character 
to  leave  in  some  doubt  what  the  party  thereto  intended  should  be 
the  precise  nature  of  the  legal  effect  thereof,  the  contract  is  not  to 
be  so  construed  as  to  render  it  invalid  if  it  is  reasonably  suscepti- 
ble of  construction  that  will   render  it  valid.®'*     If  reasonably 

22  Misc.    (N.  Y.)    672,  49  N.   Y.   S.  Y.)  209;  Griffiths  v.  Hardenbergh,  41 

942.  In  re  the  New  York  C.  R.  Co.,  N.  Y.  464. 

49    N.    Y.   414;    Nash   v.    Towne,    5  '"Chicago     Auditorium     Assn.     v. 

Wall.    (U.    S.)    689,    18   L.    ed.    527;  Corporation    of    Fine   Arts    Building. 

Pittsburgh,    C.    &    St.    L.    R.    Co.    v.  150  111.   App.  262,  judgment  affirmed 

Columbus,  C.  &  I.  C.  R.  Co.,  8  Biss.  244  111.  532,  91  N.  E.  665. 

(U.    S.)    456,   Fed.    Cas.   No.    11197;  "Jennings  v.  Whitehead  &  Ather- 

Reed  v.  Insurance  Co.,  95  U.   S.  23,  ton   Mach.   Co.,   138  Mass.   594.     See 

24  L.  ed.  348.     The  agreement  is  to  also.  Valley  Planting  Co.  v.  Wise,  93 

be  viewed  in  the  light  of  surround-  Ark.    1,   123   S.  W.  768,  26  L.   R.  A. 

ing  circumstances  at  the  time  it  was  (N.   S.)    403. 

made  and  not  in  the  light  of  after  "Clark  v.  Woodruff,  83  N.  Y.  518. 

events.     Davin  v.   City  of    Syracuse,  ''  Crosse    v.    Barman,    9    Cal.    App. 

69  Misc.    (N.  Y.)   285,  126  N.  Y.  S.  650,  100  Pac.  348;  Zohrlaut  v.  Men- 

1002.  129  N.  Y.  S.  1119.  gelberg  (Wis.),  124  N.  W.  247.   Com- 

■"*  Rogers  v.   Kimball,   121    Cal.  247,  pare   with    Lexington   &c.    R.    Co.    v. 

53  Pac.  648;  California  Sav.  Bank  v.  Moore,   140  Ky.  514,   131   S.  W.  257. 

American    Surety    Co.,    82    Fed.   866;  *°Belden  v.  Farmers  &  Mechanics* 

Bancroft  v.  Winspear,  44  Barb.    (N.  Bank,  16  Cal.  App.  452,  118  Pac.  449; 


797 


INTERPRETATION    AND    CONSTRUCTION. 


i;20 


possible  the  contract  will  be  so  construed  as  to  make  it  lawful. 
It  will  not  be  presumed  that  the  parties  intended  to  violate  the 
law."     Thus,  a  contract  will  not  be  held  illegal  on  the  ground 


Mebius  &  Drescher  Co.  v.  Mills,  ISO 
Cal.  229,  88  Pac.  917;  Hunter  W. 
Finch  &  Co.  v.  Zenith  Furnace  Co., 
146  111.  App.  257,  judgment  affirmed 
92  N.  E.  521,  245  111.  586;  Cole  v. 
Brown-Hurley  Hardware  Co.,  139 
Iowa  487,  117  N.  W.  746,  18  L.  R. 
A.  (N.  S.)  1161n;  Rapp  v.  H.  Line- 
barger.  149  Iowa  429,  128  N.  W. 
555,  reversing  judgment  on  rehear- 
ing 125  N.  W.  209;  State  v.  Lewin, 
128  Mo.  App.  149,  106  S.  W.  581 
(grant  from  state)  ;  Young  v.  Met- 
calf  Land  Co..  18  N.  Dak.  441,  122 
N.  W.  1101.  "The  law  does  not 
favor,  but  leans  against  the  de- 
struction of  contracts  because  of  un- 
certainty; it  will,  if  feasible,  so 
construe  the  contract  as  to  carry 
into  effect  the  reasonable  intention  of 
the  parties  if  that  can  be  ascer- 
tained." Mclntyre  Lumber  &c.  Co. 
V.  Tackson  Lumber  Co.,  165  Ala.  268, 
51  So.  767.  138  Am.  St.  66.  "It  is  the 
understanding  and  intention  of  the 
parties — that  is,  their  mutual  intention 
— which  is  to  govern  the  contract,  if 
it  can  be  reasonably  deduced  from 
the  contract  itself ;  but  if  the  con- 
tract is  so  expressed  as  to  be  sus- 
ceptible of  one  interpretation  as- 
serted by  one  party  as  his  under- 
standing, and  of  another  interpreta- 
tion asserted  by  the  adverse  party  as 
his  understanding,  then  there  is  no 
mutual  intention  of  the  parties,  and 
that  interpretation  will  be  adopted 
which  will  uphold,  rather  than  de- 
feat, the  validity  of  the  instrument." 
McEvoy  V.  Security  Fire  Ins.  Co.  of 
Baltimore  Citv,  110  Md.  275,  72>  Atl. 
157,  22  L.  R.  A.  (N.  S.)  964,  132 
Am.  St.  428n.  "We  recognize  the 
rule  that,  in  a  case  of  doubt,  courts 
should  favor  a  construction  which 
upholds  the  validity  of  the  contract, 
but  such  a  rule  cannot  apply  to  a 
case  where  the  intent  of  the  parties 
is  obvious.  A  court  cannot  do  vio- 
lence to  the  plain  meaning  of  words 
and  the  clear  intent  by  making  a 
contract  for  the  parties,  under  the 
fiction   of   a   construction."      Scripps 


V.    Sweeney,    160    Mich.    148,    125   N. 
W.   72. 

"Wvatt  V.  Irrigation  Co.,  18  Colo. 
298,  23  Pac.  144,  36  Am.  St.  280; 
Wiggin  V.  Stock  Co.,  77  Conn.  507, 
59  Atl.  607;  Stewart  v.  Stearns  & 
Culver  Lumber  Co.,  56  Fla.  570,  48 
So.  19,  24  L.  R.  A.  (M.  S.)  649n ; 
Luke  V.  Livingston,  9  Ga.  App.  116, 
70  S.  E.  596  (holds  that  on  demurrer 
the  court  will  give  a  contract,  open 
to  two  constructions,  that  meaning 
which  will  render  it  lawful,  until  the 
circumstances  under  which  the  con- 
tract was  made  appear  in  proof)  ; 
Crittenden  v.  French,  21  111.  598; 
Hunt  V.  Elliott,  80  Ind.  245,  41  Am. 
Rep.  794;  Guernsey  v.  Cook,  120 
Mass.  501 ;  Wiggins  Ferry  Co.  v. 
Chicago  R.  Co.,  128  Mo.  224,  27  S. 
W.  568;  Horton  v.  Rohlff,  69  Xebr. 
95,  95  N.  W.  36;  Rice  v.  Lincoln 
&  N.  W.  R.  Co.,  88  Xebr.  307,  129 
N.  W.  425  (holds  that  when  a  con- 
tract is  readily  susceptible  of  a  con- 
struction that  will  render  it  valid  the 
court  will  not  construe  doubtful 
language  so  as  to  make  the  contract 
contrary  to  the  law  against  per- 
petuities) ;  Pitney  v.  Bolton,  45  N.  J. 
Eq.  639,  18  Atl.  211,  affd.  46  N.  J. 
Eq.  610,  22  Atl.  56;  Archibald  v. 
Thomas,  3  Cow.  (N.  Y.)  284;  Covne 
V.  Weaver,  84  N.  Y.  386;  Lorillard 
V.  Clvde,  86  N.  Y.  384;  Beasley  v. 
Aberdeen  &  Rockfish  R.  Co.  (X. 
Car.),  59  S.  E.  60;  Keadv  v.  United 
R.  Co.  (Ore.),  108  Pac.  197;  W.  A. 
IMorgan  &  Bros.  v.  Missouri  K.  & 
T.  R.  Co.  of  Texas.  50  Te.x.  Civ. 
App.  420,  110  S.  W.  978;  Watters  v. 
McGuigan,  72  Wis.  155,  39  X.  W. 
382 ;  Lippert  v.  Garrick  Theater  Co., 
144  Wis.  413,  129  X.  W.  409;  Hobbs 
V.  McLean.  117  U.  S.  567,  29  L.  ed. 
940,  6  Sup.  Ct.  870;  United  States 
V.  Central  &c.  R.  Co.,  118  U.  S.  235, 
6  Sup.  Ct.  1038.  See  also,  Keller  v. 
State  (Tex.).  87  S.  W.  669,  1  L.  R. 
A.  (X.  S.)  489.  A  fortiori  when  the 
party  seeking  the  illegal  c<instruc- 
tion  is  the  one  who  made  the  con- 
tract  (Delaware  &c.  R.   Co.  v.   Kut- 


§    1 521  CONTRACTS.  /QS 

that  the  promisor  binds  himself  to  labor  for  the  promisee  in  in- 
voluntary servitude  when  it  is  susceptible  of  a  construction  which 
will  make  it  legal.^^  As  between  two  meanings  which  the  words 
will  bear,  that  meaning  should  be  adopted  which  will  make  the 
agreement  a  valid  and  not  a  void  one.  The  agreement  should,  if 
possible,  be  rendered  operative,  as  the  parties  are  supposed  to  have 
intended  something  by  their  agreement. ^^  That  construction 
which  sustains  and  vitalizes  an  agreement  should  be  preferred  to 
that  which  strikes  it  down  and  paralyzes  it.^*  Thus,  where  a  con- 
tract is  equally  susceptible  of  two  interpretations,  one  of  which 
is  consistent  with  and  accomplishes  the  intention  of  the  parties 
while  the  other  would  render  it  merely  senseless  and  nugatory, 
the  former  is  the  true  one  and  will  be  adopted.®^ 

§  1521.  Subsidiary  rules  of  construction — A  reasonable 
construction  will  be  adopted. — In  addition,  the  contract  is  to 
be  given  a  reasonable  construction.  It  will  not  be  construed  so 
as  to  render  it  oppressive  or  inequitable  as  to  either  party  or  so  as 
to  place  one  of  the  parties  at  the  mercy  of  the  other  unless  it  is 
clear  that  such  was  their  manifest  intention  at  the  time  the  agree- 

ter,  147  Fed.  11,  11  C.  C.  A.  315),  or  Cent.  Ins.  Co.,  100  N.  Y.  417,  3  N. 

one  who  has  been  benefited  thereby.  E.   309,   53  Am.   Rep.  202;   Lewis  v. 

Virginia  Bridge  &  Iron  Co.  v.  Crafts,  Tipton,  10  Ohio  St.  88,  75  Am.  Dec. 

2  Ga.  App.  126,  58  S.  E.  322.  498;    Thrall    v.    Newell,    19   Vt.    202, 

"Potts  V.  Riddle,  5  Ga.  App.  378,  47  Am.   Dec.   682;   Walsh  v.   Myers, 

63  S    E   253.  92  Wis.  397,  66  N.  W.  250. 

^Saunders  v.   Clark,  29  Cal.  299;  ''United    States   Fidelity   &    Guar- 

Hammond   v.    Haskell,    14   Cal.    App.  anty    Co.    v.    Board    of    Comrs.    of 

522,   112   Pac.  575;  Brown  v.   Slater,  Woodson    County,    Kans.,    145    Fed. 

16    Conn.    192,    41    Am.    Dec.    136;  144,  76  C.  C.  A.  114;  Berry  v.  Fris- 

Construction      Information      Co.      v.  bie,   120   Ky.  ZZl,  21   Ky.   L.  724,  86 

Cass,    74    Conn.    213,    50    Atl.    563;  S.  W.  558. 

Peckham    v.    Haddock,    36    111.    38;  ^  Shreffler  v.   Nadelhoffer,   133   111. 

Chicago,  M.  &  N.  R.  Co.  v.  National  536,  25   N.   E.  630,  23   Am.   St.   626. 

Elevator  &c.  Co.,   153  111.  70,  38  N.  To  same  effect,  T.  M.  Sinclair  &  Co. 

E.  915:  Minn.  Lumber  Co.  v.  White-  v.   National   Surety  Co.    (Iowa),   107 

breast  Coal  Co.,  160  111.  85,  43  N.  E.  N.   W.   184;   Farmers'   Nat.   Bank  v. 

774,  31  L.  R.  A.  529;  Rankin  v.  Ran-  Delaware  Ins.  Co.,  83  Ohio   St.  309, 

kin,  216  111.  132,  74  N.  E.  763;  Irwin  94    N.    E.     834;     Olympia     Bottling 

V.  Kilburn,  104  Ind.  113,  3  N.  E.  650;  Works  v.   Olympia   Brewing  Co.,   56 

Davenport    v.    Gwilliams,     133     Ind.  Ore.    87,    107    Pac.    969.      See    also, 

142    31  N.  E    790    22  L.  R.  A.  244;  Thompson  v.  Trenton  Water  Power 

Atwood   V.   Cobb,    16   Pick.    (Mass.)  Co.,    11   N.   J.    L.   672,    13   Atl.   410; 

227     26    Am.     Dec.    657;     Black    v.  New   York   v.    American    R.    Traffic 

Bachelder,    120    Mass.    171;    Vickers  Co.,  66  Misc.  (N.  Y.)   166,  121  N.  Y. 

V.  Electrozone  Co.,  67  N.  J.  L.  665,  S.    221,    affd.     128    N.    Y.     S.     1118 

52  Atl.  467;  Waldron  v.  Willard,  17  (memorandum  decision). 
N.    Y.    466;    Griffey   v.    New    York 


799  INTERPRETATION    AND    CONSTRUCTION.  §    1 52 1 

ment  was  made.^*  Thus,  an  agreement  by  a  railroad  company 
with  one  owning  land  adjacent  to  its  tracks  that,  if  he  would 
build  a  coal  tipple  and  a  trestle  therdfrom  to  its  track,  it  would 
construct  a  switch  thereon  and  thereafter  deliver  coal  to  him, 
has  been  held  not  to  contain  an  implication  that  the  switch  would 
be  perpetual.*^  An  application  to  a  broker  for  a  loan  of  money 
for  a  certain  time  and  rate  of  interest,  the  principal  and  interest 
payable  at  such  place  as  the  lender  may  appoint,  to  be  secured  by 
note  and  trust  deed  in  the  broker's  "usual  form",  does  not  bind  the 
applicant  to  agree  to  pay  in  gold  coin,  although  that  provision 
appears  in  the  forms  used  by  the  broker,  where  it  is  not  shown 
that  the  existence  of  such  provision  was  known  to  the  applicant.'*" 
And  where  the  plaintiffs  might  under  their  contract  elect  to  take 

■^  Paine  v.  Copper  Belle  Min.  Co.  of  588,  44  L.  ed.  284,  20  Sup.  Ct.  228; 
Arizona  (Ariz.),  114  Pac.  964;  Chi-  Caine  v.  Hagenbarth,  Zl  Utah  69, 
cago  B.  &  Q.  R.  Co.  v.  Provolt,  42  106  Pac.  945;  Jacobs  v.  Spalding.  71 
Colo.  103,  93  Pac.  1126,  16  L.  R.  A.  Wis.  177,  36  N.  W.  608;  Kentzler 
(N  S)  587;  A.  Leschen  &  Sons  v.  American  Mut.  Ace.  Assn^  88 
Rope  Co.  V.  Mayflower  Gold  Min.  &c.  Wis.  589,  60  N.  W.  1002,  43  Am. 
Co.,  173  Fed.  855.  97  C.  C.  A.  465,  St.  934.  "That  construction  of  a 
35  L.  R.  A.  (N.  S.)  In;  Choctaw  O.  written  instrument  will  be  adopted, 
&  G.  R.  Co.  V.  Bond,  160  Fed.  403,  if  possible,  which  will  make  it 
87  C.  C.  A.  355,  affg.  6  Ind.  T.  515,  effectual,  rather  than  ineffectual, 
98  S.  W.  335;  Hall  v.  Hardaker,  61  and  reasonable  and  just  rather  than 
Fla.  267,  55  So.  977 ;  Haag  v.  Rogers,  the  opposite."  DriscoU  v.  Penrod 
9  Ga.  App.  650,  72  S.  E.  46;  Twin  (Ind.),  95  N.  E.  313.  See  also. 
Falls  &c.  Fruit  Co.  v.  Salsbury,  20  Mississippi  Home  Ins.  Co.  v.  Adams, 
Idaho  110,  117  Pac.  118;  Gale  v.  84  Ark.  431,  106  S.  W.  209;  Christian 
Dean,  20  111.  320;  Streeter  v.  Street-  v.  First  Nat.  Bank,  155  Fed.  705,  84 
er,  43  111.  155;  Wilson  v.  Marlow,  C.  C.  A.  53;  Mercer  v.  Stupp  Bros. 
66  111.  385 ;  Blitz  V.  Union  Steamboat  Bridge  &  Iron  Co.,  115  111.  App. 
Co.,  51  Mich.  558,  17  N.  W.  55;  Con-  298;  Redwine  v.  Hudman  (Tex.), 
queror  Zinc  &  Lead  Co.  v.  Aetna  133  S.  W.  426;  Citizens'  Bank  v. 
Life  Ins.  Co.,  152  Mo.  App.  332,  133  Taylor  &  Co.,  104  Va.  164,  51  S.  E. 
S.  W.  156;  American  Hardwood  159.  See  also,  Jacobs  v.  Spaldmg,  71 
Lumber  Co.  v.  Dent,  151  Mo.  App.  Wis.  177,  36  X.  W.  608.  However, 
614,  132  S.  W.  320:  Jersey  City  v.  when  parties  have  made  their  con- 
Flynn,  74  N.  J.  Ch.  104,  70  Atl.  497;  tract,  it  is  the  duty  of  the  courts  to 
Russell  V.  Allerton.  108  N.  Y.  288,  enforce  it  as  they  have  elected  to 
15  N.  E.  391 ;  Gillet  v.  Bank  of  make  it  without  regard  to  the  fact 
America.  160  N.  Y.  549,  55  N.  E.  that  in  the  light  of  subsequent  events 
292;  Dunning  v.  Elmore  &  Hamil-  a  hardship  may  be  worked.  Nor- 
ton Contracting  Co.,  139  App.  Div.  cross  v.  Wills,  198  N.  Y.  336.  91  N. 
(N.  Y.)  249,  124  N.  Y.  S.  107;  E.  803.  affg.  130  App.  Div.  (N.  Y.) 
Reeves  &  Co.  v.  Martin.  20  Okla.  470,  114  N.  Y.  S.  969.  To  same 
558.  94  Pac.  1058;  Bickford  v.  Coop-  effect,  Lee  v.  Cochran,  157  Ala.  311, 
er,   41    Pa.    St.    142;    Smiley   v.    Gal-  47   So.  581. 

lagher,  164  Pa.  St.  498.  30  KW.  713;        "Jones  v.  Newport  News  &c.  Co., 

United  States  v.  Gibbons.   109  U.   S.  65  Fed.  736.  13  C.  C.  A.  95. 
200.  27   L.   ed.  906,   3   Sup.   Ct.    117;        ^  Peabodv  v.  Dewey.  153  111.657,39 

United  States  v.  Gleason,  175  U.  S.  N.  E.  977,  21  L.  R.  A.  122. 


1^22 


CONTRACTS. 


800 


the  entire  output  of  a  factory  it  was  held  on  breach  of  the  con- 
tract by  the  defendant  that  the  defendant  had  not  bound  itself 
to  make  the  largest  possible  output  and  that  the  plaintiffs  were 
entitled  to  recover  such  damages  only  as  they  were  able  to  show 
resulted  to  them  from  the  failure  of  the  defendant  to  operate  its 
factory  in  a  reasonable  manner  and  that  such  damages  should  be 
computed  on  the  least  quantity  that  would  have  been  produced  in 
case  the  factory  had  been  operated  in  good  faith.®^  The  words 
"at  once"  in  a  wrecking  contract  for  the  removal  of  a  certain 
building  have  been  construed  to  mean  such  time  as  was  reasonable 
under  the  attendant  circumstances.^** 

§  1522.  Subsidiary  rules  of  construction — Construing  sev- 
eral instruments  together. — Several  instruments  which  refer 
to  the  same  subject-matter  between  the  same  parties  and  made  as 
parts  of  substantially  one  transaction  are  considered  as  one  con- 
tract and  receive  the  same  construction  as  if  their  several  pro- 
visions were  in  one  and  the  same  instrument.^^     This  principle  is 

Idaho  588,  87  Pac.  1129;  Illinois 
Match  Co.  V.  Chicago  &c.  R.  Co.,  250 
111.  396,  95  N.  E.  492;  Keith  v.  Mil- 
ler, 174  111.  64,  51  N.  E.  151;  Harris 
V.  Dozier,  72  111.  App.  542;  Denby  v. 
Graff,  10  111.  App.  195;  Galena  &  S. 
W.  Railroad  v.  Barrett,  95  111.  467; 
Hennessy  v.  Gore,  35  111.  App.  594 
(promissory  notes  and  deed  of 
trust)  ;  Wilson  v.  Roots,  119  111.  379, 
10  N.  E.  204;  Chicago  Trust  &  Sav- 
ings Bank  v.  Chicago  Title  &  Trust 
Co.,  190  111.  404,  60  N.  E.  586,  83 
Am.  St.  138;  Gould  v.  Magnolia 
Metal  Co.,  207  111.  172,  69  N.  E.  896; 
Rider  v.  Rider,  114  111.  App.  202; 
Leach  v.  Rains,  149  Ind.  152,  48  N. 
E.  858;  Allen  v.  Nof singer,  13  Ind. 
494;  Carr  v.  Hays,  110  Ind.  408,  11 
N.  E.  25,  25  Cent.  L.  Jour.  32;  Mc- 
Cauley  v.  Schatzley,  44  Ind.  App. 
262,  88  N.  E.  972 ;  Salt  Co.  v.  Barber, 
58  Kans.  419,  49  Pac.  524;  Kurt  v. 
Lanyon,  72  Kans.  60,  82  Pac.  459; 
Farmers'  Alliance  Ins.  Co.  v.  Hanks, 
83  Kans.  96,  110  Pac.  99;  Bliss  v. 
Young,  7  Kans.  App.  728,  52  Pac. 
577  (note  and  coupon  to  be  con- 
strued together)  ;  Kurt  v.  Lanyon, 
72  Kans.  60,  82  Pac.  459;  Parks' 
Exr.  V.  Cooke,  3   Bush    (Ky.)    168; 


**  Nute  V.  American  Glucose  Co., 
55  Kans.  225,  40  Pac.  279. 

""Wetter  v.  Kleinert,  139  App. 
Div.  (N.  Y.)  220,  123  N.  Y.  S.  755. 

"  In  re  Phoenix  Bessemer  Steel 
Co.,  44  L.  J.  Ch.  683;  Whitehurst  v. 
Boyd,  8  Ala.  375 ;  Byrne  v.  Marshall, 
44  Ala.  355;  Chambers  v.  Marks,  93 
Ala.  412,  9  So.  74;  Daigle  v.  Mad- 
docks,  2  Alaska  387;  Meyer  v. 
Weber,  133  Cal.  681,  65  Pac.  1110; 
Flinn  v.  Mowry,  131  Cal.  481,  63 
Pac.  724.  modified,  131  Cal.  481,  63 
Pac.  1006;  Getz  Bros.  &  Co.  v.  Fed- 
eral Salt  Co.,  147  Cal.  115,  81  Pac. 
416,  109  Am.  St.  114;  Isham  v.  Mor- 
gan, 9  Conn.  374,  23  Am.  Dec.  361; 
R.  A.  Sherman's  Sons  Co.  v.  In- 
dustrial &  Mfg.  Co.,  82  Conn.  479,  74 
Atl.  773;  Nash  v.  Milford,  33  App. 
(D.  C)  142;  Brown  v.  Hight,  33 
App.  (D.  C.)  260  (one  paper  an  ab- 
solute assignment  by  a  borrower  of 
his  reversionary  interest  in  a  fund 
and  the  other  a  receipt  for  money 
which  recited  that  the  transaction 
was  a  loan)  ;  Male  v.  Lafferty,  105 
Fed.  564;  Woodward  v.  Jewell,  25 
Fed.  689;  Phillipi  Colliers  Co.  v. 
Thompson,  163  Fed.  23,  89  C.  C.  A. 
501 ;  Hunt  v.  Capital  State  Bank,  12 


8oi                         INTERPRETATION    AND    CONSTRUCTION.  §    1 522 

of  wide  application  and  the  illustrative  cases  are  numerous.'"^ 

Sackett  v.  Haggard,  142  Kv.  500,  38  Week.  Notes  Cas.  (Pa.)  487; 
134  S.  W.  888;  American  Gas  &  Kenyon  v.  Nichols,  1  R.  I.  411; 
Ventilation  Mach.  Co.  v.  Wood,  90  Stewart  v.  Morris,  84  S.  Car.  148, 
Maine  516,  38  Atl.  548,  43  L.  R.  A.  65  S.  E.  1044  (two  leases  construed 
449;  Gammon  v.  Freeman,  31  Maine  together);  Olds  v.  East  Tennessee 
243;  American  Gas  &  Ventilating  Stone  &  Marble  Co.  (Tenn.),  48  S. 
Mach.  Co.  V.  Wood,  90  Maine  516,  W.  333;  Livingston  v.  Story,  11  Pet. 
38  Atl.  548,  43  L.  R.  A.  449;  iMake-  (U.  S.)  351,  9  L.  ed.  746;  John 
peace  v.  Harvard  College,  10  Pick.  Bailey  v.  Hannibal  &  St.  Joseph  R. 
(Mass.)  298;  Perry  v.  Holden,  22  Co.,  17  Wall.  (U.  S.)  96,  21  L.  ed. 
Pick.  (Mass.)  269;  Gaffney  v.  611;  Joy  v.  St.  Louis,  138  U.  S.  1, 
Hicks,  131  Mass.  124;  Avery  v.  34  L.  ed.  843,  11  Sup.  Ct.  243;  Greg- 
Bushnell,  123  Mass.  349;  Collins  v.  cry  v.  Marks,  8  Biss.  (U.  S.)  44, 
Delaporte,  115  Mass.  159;  Wash-  4  L.  &  Eq.  283,  Fed.  Cas.  No.  5802, 
burn  &  Moen  Mfg.  Co.  v.  Salisbury,  9  Chicago  Leg.  News  394  (7th  U. 
152  Mass.  346,  25  N.  E.  724;  Penn.  S.  Cir.)  (111.  1877)  (Where  a  claim 
Mut.  Life  Ins.  Co.  v.  Crane,  134  in  a  trust  deed  provided  that  the  in- 
Mass.  56,  45  Am.  Rep.  282;  Sutton  debtedness  secured  thereby  was  to 
V.  Beckwith,  68  Mich.  303,  36  N.  W.  become  wholly  due  and  payable  in 
79,  13  Am.  St.  344;  Dudgeon  v.  Hag-  case  of  default  in  the  payment  of  in- 
gart,  17  Mich.  273  (where  a  large  terest,  it  was  held  that  the  note  and 
number  of  cases  on  this  point  are  the  trust  deed,  being  contemporane- 
collected).  Reber  v.  Pearson,  155  ous,  must  be  construed  together, 
Mich.  593,  119  N.  W.  897,  15  De-  and  that,  if  default  was  made  in  the 
troit  Leg.  N.  1111;  Myrick  v.  Pur-  payment  of  interest,  the  whole  in- 
cell,  95  Minn.  133,  103  N,  W.  902;  debtedness  became  due.);  Coughran 
Myrick  v.  Purcell,  95  Minn.  133,  103  v.  Bigelow,  9  Utah  260,  34  Pac.  51, 
N.  W.  902;  Jennings  v.  Todd,  118  affd.,  164  U.  S.  301,  41  L.  ed.  442, 
Mo.  296,  24  S.  W.  148,  40  Am.  St.  17  Sup.  Ct.  117  (contract  and  a  bond 
373;  Talbott  v.  Heinze,  25  Mont.  4,  referring  to  the  contract  construed 
63  Pac.  624;  Seieroe  v.  First  Nat.  together)  ;  Sterling  v.  Head  Camo, 
Bank,  50  Nebr.  612,  70  N.  W.  220;  Pacific  Jurisdiction,  Woodmen  of 
Nebraska  Hardware  Co.  v.  Hum-  the  World,  28  Utah  505.  80 
phrey  Hardware  Co.,  81  Nebr.  693,  Pac.  375;  Strong  v.  Barnes,  11  Vt. 
116  N.  W.  659;  Hill  v.  Huntress,  43  221,  34  Am.  Dec.  684;  Reed  v.  Field, 
N.  H.  480;  Ownes  v.  Ownes,  23  N.  J.  15  Vt.  672;  Portsmouth  Cotton  &c. 
Eq.  60;  Church  v.  Brown,  21  N.  Y.  Co.  v.  Oliver  Refining  Co.,  109  Va. 
315;  Pepper  v.  Haight,  20  Barb.  (N.  513,  64  S.  E.  56,  132  Am.  St.  924; 
Y.)  429;  Hamilton  v.  Taylor,  18  N.  Norton  v.  Kearney,  10  Wis.  443; 
Y.  358;  Wilson  v.  Randall,  67  N.  Y.  Stapleton  v.  Brannon,  102  Wis.  26, 
338;  Marsh  V.  Dodge,  66  N.  Y.  533;  78  N.  W.  181;  Wright  v.  C.  S. 
IMeriden  Britannia  Co.  v.  Zingsen,  Graves  Land  Co.,  100  Wis.  269,  75 
48  N.  Y.  247,  8  Am.  Rep.  549;  Dra-  N.  W.  1000;  Hagerty  v.  White.  69 
per  V.  Snow,  20  N.  Y.  331,  75  Am.  Wis.  317,  34  N.  W.  92;  Hannig  v. 
Dec.  408;  Baird  v.  Erie  R.  Co.,  72  Mueller,  82  Wis.  235,  52  N.  W.  98 
Misc.  (N.  Y.)  162,  129  N.  Y.  S.  (deed  and  bond)  ;  Herbst  v.  Lowe, 
329;  Battery  Park  Bank  v.  Lough-  65  Wis.  316,  26  N.  W.  751;  Security 
ran,  122  N.  Car.  668,  30  S.  E.  17;  Trust  &  Life  Ins.  Co.  v.  Ellsworth, 
Smith  V.  Turpin.  20  Ohio  St.  478;  129  Wis.  349,  109  N.  W.  125  (mort- 
Jacobs  V.  Mitchell,  46  Ohio  St.  601,  gage  and  agency  contracts). 
22  N.  E.  768;  Chrisman  v.  State  Ins.  "a  The  fact  that  they  bear  different 
Co.,  16  Ore.  283.  18  Pac.  466;  Dean  dates  is  immaterial  if  the  contract  is 
V.  Lawham,  7  Ore.  422;  Maffett  v.  not  carried  into  effect  until  both  are 
Thompson,  32  Ore.  546,  52  Pac.  565,  executed.  Knowles  v.  Toone,  96  N. 
53  Pac.  854;  Cummings  v.  Antes,  19  Y.  534.  To  the  same  effect,  Neill  v. 
Pa.  St.  287;  Joseph  Iron  Co.  v.  Chessen,  15  111.  App.  266;  Baltimore 
Richardson,    2    Pa.    Super.    Ct.    208,  &  O.  S.  W.  R.  Co.  v.  Brubaker,  217 

51 — Contracts,  Vol.  2 


§    15^3  CONTRACTS.  8o2 

Thus,  where  the  making  of  a  note  is  accompanied  by  an  agree- 
ment in  relation  thereto,  the  note  and  the  agreement  are  to  be 
taken  together  and  form  one  entire  transaction."^  So  a  memo- 
randum written  on  the  back  of  a  note  at  its  inception  and  prior 
to  its  deHvery  providing  for  a  renewal  of  the  instrument  has  been 
held  a  part  of  the  note."^ 

§  1523.  Contracts  contained  in  more  than  one  instrument 
further  illustrated. — Where  four  contracts  were  made  at  the 
same  time,  one  between  the  Metropolitan  Railway  Company  and 
the  New  York  City  Company  by  which  the  latter  company  agreed 
to  furnish  the  former  $8,000,000.00,  one  between  the  New  York 
City  Company  and  the  Metropolitan  Securities  Company  by 
which  the  Security  company  on  a  consideration  moving  from  the 
Metropolitan  Street  Railway  Company  agreed  to  furnish  the  city 
company  the  money  necessary  to  carry  out  its  agreement  with  the 
Metropolitan  Street  Railway  Company  and  one  between  the  Met- 
ropolitan Surety  Company  and  the  Interborough-Metropolitan 
Security   Company    reciting   that   the    latter    owned   ninety-six 

111.  462,  75  N.  E.  523  (contract  and  Glass  Co.,  11  N.  J.  Eq.  498,  78  Atl. 
deed  construed  together  although  710.  The  contracts  may  be  distinct 
several  months  elapsed  between  the  and  separate  even  though  made  be- 
execution  of  the  two)  ;  Canadian  tween  the  same  parties  and  re- 
Coal  Co.  V.  Lynch,  28  Okla.  585,  115  lating  to  the  same  subject-matter. 
Pac.  466.  See  also,  Alden  v.  Camden  Gayton  v.  Day,  178  Fed.  249,  101  C. 
Anchor-Rockland  Mach.  Co.,  107  C.  A.  609.  A  mere  collateral  agree- 
Maine  508,  78  Atl.  977;  Western  ment  is  not  to  be  construed  so  as 
Adv.  Co.  V.  Star  Pub.  Co.,  146  Mo.  to  add  to  or  change  the  provisions 
App.  90,  123  S.  W.  969  (recognizing  of  the  original  agreement.  Milske 
the  rule  but  holding  that  it  does  v.  Steiner  Mantel  Co.,  103  Md.  235, 
not  apply  where  the  contracts  were  63  Atl.  471,  5  L.  R.  A.  (N.  S.)  1105, 
made  between  different  parties  and  115  Am.  St.  354.  Knudsten  v.  Rem- 
with  no  reference  whatever  in  the  mel,  141  App.  Div.  (N.  Y.)  445,  126 
one  to  the  other).  This  rule  does  N.  Y.  S.  249  (collateral  oral  agree- 
not  admit  evidence  for  the  purpose  ment  which  added  nothing  to  the 
of  changing,  modifying,  or  abrogat-  written  proposition), 
ing  the  contract,  but  that  the  whole  "^  Bailey  v.  Cromwell,  3  Scam, 
contract  in  all  its  parts,  may  be  pre-  (111.)  71;  Bradley  v.  Marshall,  54 
sented,  construed,  and  interpreted  to-  111.  173;  Denby  v.  Graff,  10  111.  App. 
gether.  Oliver  Typewriter  Co.  v.  195;  Toledo  Computing  Scale  Co.  v. 
Huffman,  65  W.  Ya.  51,  63  S.  E.  Tydoen,  141  111.  App.  21;  Fuller  v. 
1086.  Documents  which  go  to  make  Pryor,  57  Tex.  Civ.  App.  425,  122 
up  a  contract  must  be  construed  with  S.  W.  418  (note  and  instrument 
reference  to  the  common  and  ordi-  creating  lien  to  secure  payment), 
nary  meaning  of  the  words  when  "^  Alden  v.  Camden  Anchor-Rock- 
there  is  nothing  to  show  that  they  land  Machine  Co.,  107  Maine  508,  78 
are  used  in  a  special  or  technical  Atl.  977. 
sense.      Mellon    v.    Mississippi    Wire 


803  INTERPRETATION    AND    CONSTRUCTION.  §    1 524 

per  cent,  of  the  stock  of  the  former  company  and  agreeing  to  ad- 
vance it  $15,000,000.00  and  one  between  the  Interborough  Com- 
pany and  the  Mercantile  Trust  Company  by  which  the  latter 
agreed  to  pay  the  former  $15,000,000.00  they  were  construed  to- 
gether when  they  were  in  pari  materia  and  the  first  four  corpora- 
tions mentioned  were  under  the  same  management  and  control.^* 
A  provision  for  forfeiture  in  a  contract  of  agency  has  been  held  to 
apply  to  a  "rider"  attached  thereto  when  the  "rider"  is  declared 
to  be  a  part  of  the  agency  contract."'^  So  an  insurance  policy  and 
the  application  will  be  construed  together.®"  A  chattel  mortgage 
on  buildings  in  course  of  erection  and  upon  a  leasehold  interest, 
an  assignment  of  the  lease,  and  a  contract  between  the  parties 
in  relation  to  the  subject-matter,  all  executed  on  the  same  day, 
were  construed  together  in  determining  the  rights  of  the  parties 
thereunder."^  Where  a  contract  has  reference  to  another  paper 
for  its  terms,  the  effect  is  the  same  as  if  the  words  of  the  paper 
referred  to  were  inserted  in  the  contract.®^  Where  two  papers  are 
executed  in  duplicate,  one  of  the  parties  signing  one  of  the  papers 
and  the  other  party  signing  the  other,  both  papers  together  are  to 
be  treated  as  one  document."® 

§  1524.  The  rule  further  illustrated. — For  the  purpose  of 
arriving  at  the  intent  of  the  parties  it  has  been  held  that  both  copies 
of  the  contract  sued  on  purporting  to  have  been  made  in  duplicate, 
but  varying  in  terms,  are  to  be  construed  together/  A  deed  of  con- 
veyance and  a  written  agreement  for  a  reconveyance,"  or  a  cove- 

**  Metropolitan     Securities     Co.     v.  ^  Shelmire    v.    Williams    Sec.    Ferti- 

Ladd.  173  Fed.  269,  97  C.  C.  A.  435.  lizer  Co.,  68  Hun  (N.  Y.)  196. 

■^  Barton  v.  Travelers'  Ins.  Co.,  84  '  Gaffney  v.    Hicks,   131    Mass.   124. 

S.  Car.  209,  66  S.  E.  118.  See    also,    McClurkan    v.    Thompson, 

""Mutual  Life  Ins.  Co.  v.  Kelly,  114  69  Pa.   St.  305.     Where  a   deed  has 

Fed.  268,  52  C.  C.  A.  154;  been  executed  and  accepted  as  a  per- 

"^  Edling    V.     Bradford,    30     Nebr.  formance    of    an    executory    contract 

593,  46  N.  W.  836.  to  convey   real   estate,   the   rights   of 

'*  Adams  v.  Hill,  16  Maine  215;  the  parties  rest  thereafter  solely  on 
Patrick  v.  Y.  M.  C.  A.,  120  Mich,  the  deed.  This  is  true  although  the 
185,  79  N.  W.  208;  Stewart  v.  Mor-  deed  thus  accepted  varies  from  that 
ris,  84  S.  Car.  148,  65  S.  E.  1044.  provided  for  in  the  contract,  and  the 
See  also,  Coughran  v.  Bigelow,  9  law  remits  the  grantee  to  his  cove- 
Utah  260,  34  Pac.  51.  affd.  164  U.  S.  nant  in  the  deed  if  there  is  no  in- 
301,  41   L.  ed.  442.  17  Sup.  Ct.   117.  gredient  of   fraud  or  mistake  in  the 

"•Richmond  &  D.  R.  Co.  v.  Shomo,  case.      Portsmouth    Cotton    &c.    Re- 

90  Ga.  496,  16  S.  E.  220.  fining  Co.  v.  Oliver  Refining  Co.,  109 


§    1525  CONTRACTS.  804 

nant  by  the  grantee  to  support  and  maintain  the  grantor,^  when 
parts  of  the  same  transaction,  are  to  be  construed  together.  When 
a  note  is  secured  by  a  mortgage  the  note  and  mortgage  are  to  be 
construed  together/  And,  where  a  telegram  is  sent  referring  to  a 
letter  which  had  been  mailed  the  same  day,  the  letter  must  also 
be  taken  into  consideration  in  determining  the  relation  assumed 
by  the  parties.^  Deeds  and  a  mortgage  executed  at  the  same  time 
and  having  a  relation  to  the  same  subject-matter  have  been  con- 
strued together.^  Under  a  contract  for  the  improvement  of  a 
street  which  provided  that  the  grading  was  to  be  completed  "in 
accordance  with  the  plans  and  specifications  therefor"  it  was  held 
that  the  specifications  furnished  the  plan  for  the  grading  and  be- 
came a  part  of  the  contract  for  this  specified  purpose,  but  that 
they  were  foreign  to  the  contract  for  all  other  purposes/  Where 
parties  make  several  contracts  concerning  the  same  subject- 
matter,  but  upon  different  dates  and  inconsistent  with  each 
other,  the  latest  must  control  their  respective  rights  and  liabili- 
ties as  far  as  it  goes/ 

§  1525.    Subsidiary    rules    of    construction — Instruments 
partly  written  and  partly  printed. — When  the  provisions  of  a 

Va.   513,  64  S.  E.  56,   132  Am.   St.  163  Fed.  23,  89  C.  C.  A.  501;  Davis 

924  V.   McVickers,   11   111.  327. 

'  Fort   V.   Richey,   128  111.   502,   21  '  Morling  v.  Weber,  3  Cal.  App.  14, 

N    E   498  84   Pac.   220.     See   also,   Womble   v. 

'*  Schultz  V.  Plankington  Bank,  141  Hickson,  91  Ark.  266,  121  S.  W.  401 

III.  116,  30  N.  E.  346,  33  Am.  St.  290;  (house   to   be    erected    which    would 

Kennion    v.    Kelsey,    10    Iowa    443 ;  duplicate  a  designated  house  with  cer- 

Beer  v.  Altman-Taylor  Co.,  32  Minn,  tain   specified   exceptions)  ;    Howe   v. 

90,    19    N.    W.    388;    Longfellow    v.  Schmidt,  151  Cal.  436,  90  Pac.  1056; 

Huffman,   57    Ore.    338,    112    Pac.    8  McArthor  v.   McGilvay,    1    Ga.   App. 

(note    secured    by    chattel    mortgage  643.  57  S.   E.   1058;  Cleveland  C.  C. 

and    a    contract    thereafter   executed  &  St.  L.  R.  Co.  v.  Moore,  170  Ind.  328, 

construed    together).  82  N.  E.  52,  84  N.  E.  540  (construc- 

''Olds  V.   East   Tennessee  Stone  &  tion   contract);    Derby    Desk    Co.    v. 

Marble   Co.    (Tenn.),  48  S.   W.  333.  Conners  Bros.  Const.  Co.,  204  Mass. 

Letters    and     telegrams    which     evi-  461,    90    N.    E.    543     (building    con- 

dence  a  contract  are  to  be  considered  tract)  ;    McGregor    v.    J.    A.    Ware 

in    connection    with    its    construction.  Const.    Co.,    188    Mo.   611,   87    S.    W. 

Mann  v.  Urquhart,  89  Ark.  239,  116  981    (construction   contracts).     Com- 

S.   W.  219.  pare    with    Beattie    v.    McMuUen,    80 

*Knepper   v.    Eggiman    (Ind.),   97  Conn.    160,    67    Atl.    488;    Noyes    v. 

N.  E.  161 ;  Bartels  v.  Davis,  34  Mont.  Butler   Bros.,  98   Minn.   448,    108   N. 

285,  85  Pac.  1027  (note,  deed  and  de-  W.  839. 

feasance,   deed   intended  as   a  mort-  *Loper    v.    United    States,    13    Ct. 

gage    to    secure    note).       See    also,  CI.   (U.  S.)   269.     See  also,  Clark  v. 

Phillipi    Colliers    Co.    v.    Thompson,  Nemann,  56  Nebr.  374,  76  N.  W.  892. 


8o5 


INTERPRETATION    AND    CONSTRUCTION. 


1^2 


:)-o 


contract  are  partly  in  writing  and  partly  printed  and  the  written 
and  printed  parts  are  inconsistent  with  each  other  the  written  part 
is  presumed  to  express  the  true  intention  of  the  parties  and  will 
govern  the  printed  matter,  for  the  reason  that  printed  forms  are 
very  general  in  their  terms,  and  are  intended  for  any  like  occasion 
while  the  written  words  are  considered  as  having  been  especially 
selected  by  the  parties  themselves  for  the  particular  case."  Thus 
the  written  part  of  an  insurance  policy  will  prevail  over  the 
printed  part  in  case  of  repugnancy  when  the  intention  of  the  par- 
ties is  not  thereby  defeated.^"  The  written  part  of  a  contract  has 
also  been  held  to  take  precedence  over  the  printed  matter  in  a  let- 
ter head,^^  or  in  a  bill  head.^"  A  written  insertion  in  a  printed  con- 
tract which  provided  ''that  time  was  of  the  essence  of  the  con- 
tract" has  been  held  to  control  printed  matter  providing  that  the 
contractor  assumed  no  liability  for  damages  on  account  of  de- 
lays.^^  A  typewritten  provision  will  in  general  control  an  uncer- 
tain or  repugnant  printed  provision.^* 


*  Bolman  v.  Lohman,  79  Ala.  63 ; 
Loveless  v.  Thomas,  152  111.  479,  38 
N.  E.  907;  Chicago  v.  Weir,  165  111. 
582,  46  N.  E.  725;  American  Ex- 
press Co.  V.  Pinckney,  29  111.  392 ; 
Perry  v.  Acme  Oil  Co.  (Ind.  App.), 
80  N.  E.  174;  Russell  v.  Bondie,  51 
Mich.  76,  16  N.  W.  239;  Sprague 
Electric  Co.  v.  Hennepin  County,  83 
Minn.  262,  86  N.  W.  332;  Murray  v. 
Pillsbury,  59  Minn.  85,  60  N.  W. 
844;  Davis  v.  Ravenna  Creamery  Co., 
48  Nebr.  471,  67  N.  W.  436;  Sulli- 
van V.  Spring  Garden  Ins.  Co.,  34 
App.  Div.  (N.  Y.)  128,  54  N.  Y.  S. 
629;  Harper  v.  Albany  Mut.  Ins. 
Co.,  17  N.  Y.  194;  Clark  v.  Woodruff, 
83  N.  Y.  518:  Chadsey  v.  Guion,  97 
N.  Y.  333 ;  Wichman  v.  Fort  Orange 
Oil  Co.,  6  Ohio  Dec.  540;  Dick  v. 
Ireland,  130  Pa.  St.  299,  18  Atl.  735 ; 
Commonwealth  &c.  Ins.  Co.  v.  Ellis, 
192  Pa.  St.  321,  43  Atl.  1034,  73 
Am.  St.  816;  Armstrong  v.  National 
Life  Ins.  Co.  (Tex.  Civ.  App.),  112 
S.  W.  327 :  Thomas  v.  Taggart,  28 
Sup.  Ct.  519,  209  U.  S.  385,  52  L. 
ed.  845,  affg.  In  re  Jacob  Berry  & 
Co..  149  Fed.  176,  79  C.  C.  A.  124; 
Davis  V.  Lee,  52  Wash.  330,  100  Pac. 


752,  132  Am.  St.  973;  Gilbert  v. 
Stockman,  76  Wis.  62,  44  N.  W.  845, 
20  Am.  St.  23.  See  also,  American 
Bridge  Co.  of  New  York  v.  Glen- 
more  Distilleries  Co.  (Ky.  App.), 
107  S.  W.  279,  32  Ky.  L.  873.  The 
written  words  are  the  terms  selected 
by  the  parties  themselves  to  express 
their  meaning  in  the  particular  case. 
Duffield  V.  Hue,  129  Pa.  St.  94,  18 
Atl.  566. 

"  Harper  v.  Albany  Mutual  Ins. 
Co.,  17  N.  Y.  194;  Farmers'  Nat. 
Bank  v.  Delaware  Ins.  Co.,  83  Ohio 
St.  309,  94  N.  E.  834  (insurance  on 
a  quantity  of  tobacco). 

"Summers  v.  Hibbard,  153  111. 
102.  38  N.  E.  899,  46  Am.  St.  872. 

^^  Schenck  v.  Saunders,  13  Gray 
(Mass.)  37;  Sturm  v.  Boker,  150  U. 
S.  312,  37  L.  ed.  1093,  14  Sup.  Ct. 
99.  As  to  the  admissibility  of  ad- 
vertising matter  in  evidence,  see 
Asbestolith  IMfg.  Co.  v.  Howland, 
120  N.  Y.  S.  93. 

"  Pike's  Peak  Hydro-Electric  Co. 
v.  Power  &  Mining  Machinerv  Co., 
165   Fed.    184. 

"  Heyn  v.  New  York  Life  Ins.  Co., 
192  N.  Y.  1,  84  N.  E.  725. 


§    1526  CONTRACTS.  806 

§  1526.  Repugnant  provisions  must  be  irreconcilable. — It 
is  obvious,  however,  that  the  foregoing  rule  applies  only  when 
there  exists  an  inconsistency  between  the  written  and  printed 
parts  of  the  contracts.^**  While  the  written  provision  of  a  contract 
should  prevail  over  one  which  is  inconsistent  with  it,  and  which 
is  part  of  a  printed  form  adopted  for  general  use,  yet  only  so  far 
as  it  is  apparent  that  the  parties  intended  to  modify  or  disregard 
the  printed  stipulations  will  the  latter  give  way."  Moreover, 
the  written  and  printed  parts  of  the  contract  will  be  reconciled, 
if  this  can  be  done  by  any  reasonable  construction.  Effect  will 
be  given  to  every  part  of  the  instrument  if  possible  since  it  is 
not  presumed  that  the  parties  intended  that  there  should  exist 
in  the  contract  inconsistent  provisions.^^ 

§  1527.  Must  not  be  construed  to  defeat  intention  of  par- 
ties— Construction  of  words  and  figures. — The  rule  that  the 
written  parts  of  a  contract  should  control  those  that  are  printed  is 
subordinate  to  another  rule  which  provides  that  the  contract  is 
not  to  be  construed  so  as  to  defeat  the  intention  of  the  parties. 
The  wTitten  provisions  of  the  contract  prevail  over  the  printed 
form  only  in  so  far  as  it  is  apparent  that  the  parties  intended 

"  Michaelis    v.    Wolf,    136    111.    68,  that  may  be  presented.     But  the  rule 

26  N.  E.  384 ;  Wheeling  &c.  R.  Co.  v.  can  not  properly  receive  an  applica- 

Gourley,  99  Pa.  St.  171.  tion  in  cases  other  than  those  where 

"Frost's    &c.     Lumber    Works    v.  the    written    and    printed    words    so 

Millers'   &c.   Ins.    Co.,   11   Minn.   300,  contradict    each    other    that    the    one 

34  N.  W.  35,  5  Am.  St.  846.  must  yield  to  the  other.     Where  they 

"  Bolman  v.  Lohman,  79  Ala.  63 ;  do  not,  the  principle  must  necessarily 
Seaver  v.  Thompson,  189  111.  158,  be  subordinate  to  another,  to  which 
59  N.  E.  553;  J.  B.  Ehrsam  &  Sons  the  policy  of  insurance  and  all  other 
Mfg.  Co.  V.  Jackman,  IZ  Kans.  435,  contracts  are  subject  in  their  inter- 
85  Pac.  559,  91  Pac.  486;  Frost's  De-  pretation,  viz.,  that  every  part  of 
troit  Lumber  &  W.  W.  Works  v.  them  should  have  effect,  if  possible. 
Millers'  &c.  Ins.  Co.,  Zl  Minn.  300,  This  is  a  fundamental  rule  of  con- 
34  N.  W.  35,  5  Am.  St.  846;  Miller  struction,  to  which  we  do  not  at  this 
V.  Hannibal  &  St.  Joe  R.  Co.,  90  N.  moment  recollect  an  exception,  and 
Y.  430,  43  Am.  Rep.  179;  Barhydt  v.  it  is  founded  on  the  plainest  of  rea- 
Ellis,  45  N.  Y.  107.  "The  rule  in-  sons,  namely,  that  it  cannot  be  sup- 
voked  by  this  argument,  that  the  posed  that  terms  to  which  a  mean- 
written  parts  of  the  policy  should  ing  can  be  given,  and  which  have  an 
control  those  that  are  printed,  is  important  bearing  on  the  interests 
correct,  because  the  written  words  of  the  parties,  were  inserted  or  left 
are  the  immediate  language  and  in  the  contract  for  no  purpose." 
terms  stated  by  the  parties  them-  Goicoechea  v.  Louisiana  Ins.  Co.,  6 
selves  for  the  expression  of  their  Mart.  (La.)  (N.  S.)  51,  17  Am.  Dec. 
meaning,  and  the  printed  ones,  a  gen-  175.  See  also,  ante,  §  1514. 
eral     formula    made     for    all    cases 


8o7 


INTERPRETATION    AND    CONSTRUCTION. 


1^2^ 


to  modify  or  disregard  the  printed  stipulation,''  It  is  also  proper 
to  mention  in  this  connection  that  where  written  words  and 
figures  are  used  in  a  contract  to  express  the  same  number  and 
there  is  a  discrepancy  between  the  two  the  words  ordinarily  pre- 
vail over  the  figures.'" 

§  1528.  Subsidiary  rules  of  construction — Doubtful  words 
construed  against  the  party  using  them. — Another  subsidiary 
rule  is  that  when  there  exists  an  uncertainty  or  ambiguity  as  to 
the  meaning  of  the  terms  of  an  agreement  and  the  language  used 
may  be  attributed  to  one  of  the  parties  thereto  it  will  be  con- 
strued most  strongly  against  the  party  using  the  language  since 
he  is  considered  as  having  chosen  the  language  thereof.^"    The 


"Frost's  Detroit  Lumber  &c. 
Works  V.  Millers'  &c.  Ins.  Co.,  11 
Minn.  300,  34  N.  W.  35,  5  Am.  St. 
846.  See  also,  Goicoechea  v.  Louisi- 
ana State  Ins.  Co.,  6  Mart.  (La.) 
(N.  S.)   51,  17  Am.  Dec.  175. 

"United  Surety  Co.  v.  Summers, 
110  Md.  95.  12  Atl.  775;  Bradshaw  v. 
Bradbury,  64  Mo.  334. 

^  Paine  v.  Copper  Belle  Mining  Co. 
of  Arizona,  13  Ariz.  406,  114  Pac. 
964  (stating  that  the  contract  is  to 
be  construed  favorably  to  the  party 
who  takes  an  agreement  as  prepared 
by  another)  ;  Ford  Hardwood  Lum- 
ber Co.  V.  Clement,  97  Ark.  522,  135 
S.  W.  343;  Laidlaw  v.  Marye,  133 
Cal.  170,  65  Pac.  391 ;  Wyatt  v.  Lari- 
mer &  Weld  Irrigation  Co.,  18  Colo. 
298,  Zl  Pac.  144,  36  Am.  St.  280; 
Noonan  v.  Bradley,  9  Wall.  (U.  S.) 
394,  19  L.  ed.  757 ;  American  Surety 
Co.  V.  Pauly,  170  U.  S.  160,  42  L. 
ed.  987,  18  S.  Ct.  563;  Minton  v.  F.  G. 
Smith  Piano  Co.,  36  App.  D.  C.  137, 
Zl  L.  R.  A.  (X.  S.)  305  (prize  con- 
test construed  against  proposer)  ; 
Capital  Citv  Bank  v.  Hilson,  59  Fla. 
215,  51  So.' 853;  McCarty  v.  Howell, 
24  111.  341;  Massie  v.  Belford,  68 
111.  290;  Kirbv  v.  Wabash.  St.  L.  & 
P.  R.  Co.,  109'  111.  412;  McClenathan 
V.  Davis,  243  111.  87,  90  N.  E.  265, 
27  L  R.  A.  (N.  S.)  1017n;  Cobb  v. 
McElroy.  79  Iowa  603.  44  N.  W. 
824;  Barney  v.  Newcomb,  9  Cush. 
(Mass.)  46;  American  Lithographic 
Co.  V.  Commercial  Casualty  Ins.  Co., 


81    N.    J.   271,   80   Atl.   25;    General 
Proprietors    of    Eastern    Division    of 
New  Jersey  v.  Force's  Exrs.,   11   N. 
J.  Eq.  56,  68  Atl.  914;  Marvin  v.  Stone, 
2  Cow.   (X.  Y.)  781;  Edsall  v.  Cam- 
den &  A.   R.   Trans.   Co.,   50   X.   Y. 
661 ;  Gillet  v.  Bank  of  America,  160 
N.   Y.   549.   55    X.   E.   292;    Bean  v. 
Ford,  65   Misc.   (X.  Y.)   481,   119  X. 
Y.  S.  1074;   White  v.  Smith,  II  Pa. 
186,    75    Am.    Dec.    589;    Deblois    v. 
Earle,  7   R.   L  26.     To  same  effect, 
McFarlane  v.  York,  90  Ark.  88.   117 
S.  W.  ni.    See  also,  Ashlev  v.  Cath- 
cart,   159  Ala.  474,  49  So.   75.     Xot- 
withstanding   this    rule   the   language 
should  be  given  a  meaning  in  accord 
with   the   object   in  view.     Brown  v. 
Beckwith,  60  Fla.  310,  53  So.  542.  He 
who   creates   the   doubt   will    have    it 
resolved  against  his  interest.  Pavne  v.. 
Xeuval,    155    Cal.    46.   99    Pac'  476; 
Dollar      V.      International      Banking 
Corp.,  10  Cal.  App.  83,  101  Pac.  34; 
Loomis  v.   MacFarlane,  50  Ore.   129, 
91   Pac.  466.     Compare  with  L'Engle 
V.  Overstreet.  61  Fla.  653,  55  So.  381. 
Xotwithstanding  the   fact  that  under 
the  statute  the  promisor  is  presumed 
to  have  caused  the  ambiguity  or  un- 
certainty  in   the   terms  of   a   written 
contract,    when    it    appears    that    the 
promisee    wrote    the    agreement    and 
selected   the   terms   to   be   used   it   is 
presumed    that    he    caused    the    un- 
certaintv.     Blankenship  v.  Decker,  34 
Mont.   292,  85   Pac.   1035.     See  also, 
cases   cited  ante   this   note. 


§    1^28 


CONTRACTS. 


808 


foregoing  is  particularly  applicable  to  insurance  contracts.  The 
insurance  company  prepares  the  contract  and  embodies  in  it  such 
conditions  as  it  deems  proper,  and  when  the  language  is  suscepti- 
ble of  different  interpretations  that  one  will  usually  be  preferred 
which  is  in  favor  of  the  insured."^  When  a  contract  is  entered  into 
upon  a  regularly  printed  form  of  proposal,  prepared  and  generally 
used  by  one  of  the  parties,  and  doubt  arises  as  to  the  true  meaning 
of  such  form,  it  should  be  construed  most  strongly  against  the  party 
preparing  it.^*  The  rule  has  also  been  held  applicable  to  a  guar- 
anty given  by  a  father  which  read  "I  will  be  responsible  for  any 

Insurance  Co.,  59  N.  J.  L.  544,  27 
Atl.  1022,  59  Am.  St.  625;  Hoffman 
V.  iEtna  Fire  Ins.  Co.,  19  Abb. 
Prac.  (N.  Y.)  325,  24  N.  Y.  Super. 
Ct.  501,  afifd.  32  N.  Y.  405,  88  Am. 
Dec.  22)7 ;  Kratzenstein  v.  Western 
Assurance  Co.,  116  N.  Y.  54,  22  N.  E. 
221,  5  L.  R.  A.  799;  Halpin  v.  ^tna 
Fire  Ins.  Co.,  120  N.  Y.  70,  23  N.  E. 
988;  Teutonia  Fire  Ins.  Co.  v.  Mund, 
102  Pa.  St.  89;  Western  &  A.  Pipe 
Lines  v.  Home  Ins.  Co.,  145  Pa.  St. 
346,  22  Atl.  665,  27  Am.  St.  703; 
Brink  v.  Merchants'  &c.  Ins.  Co.,  49 
Vt.  442;  Wakefield  v.  Orient  Insur- 
ance Co.,  50  Wis.  532,  7  N.  W.  647. 
"Uniform  rule  of  construction  of  in- 
surance policies  is  that,  if  reasonably 
susceptible  of  two  constructions,  one 
shall  be  adopted  which  is  most  fav- 
orable to  the  insured."  Jones  v. 
Pennsylvania  Casualty  Co.,  140  N. 
Car.  262,  52  S.  E.  578,  5  L.  R.  A.  (N. 
S.)  932,  111  Am.  St.  843,  quoting 
from  Kendricks  v.  Mutual  Benefit 
Life  Ins.  Co.,  124  N.  Car.  315,  32  S. 
E.  728,  70  Am.  St.  592.  Compare 
with.  Spring  Garden  Ins.  Co.  v.  Im- 
perial Tobacco  Co.,  132  Ky.  7,  116 
S.  W.  234,  20  L.  R.  A.  (N.  S.)  277n, 
136  Am.  St.  164;  Wilkie  v.  New 
York  Mut.  Life  Ins.  Co.,  146  N.  Car. 
513,  60  S.  E.  427. 

^  Mt.  Vernon  Refrigerating  Co.  v. 
Fred  W.  Wolf  Co.,  188  Fed.  164; 
Hardy  v.  Ward,  150  N.  Car.  385,  64 
S.  E.  171 ;  Farmers'  Nat.  Bank  v. 
Delaware  Ins.  Co.,  83  Ohio  St.  309, 
94  N.  E.  834.  To  same  effect.  Van ' 
Zandt  V.  Hanover  Nat.  Bank,  149 
Fed.  127.  79  C.  C.  A.  23.  See  also, 
Moorefield  v.  Fidelity  Mut.  Life  Ins. 
Co.,  135  Ga.  186,  69  S.  E.  119;  Gold- 


'^  Wells  V.  Pacific  Ins.  Co.,  44  Cal. 
397;  Boon  v.  Aetna  Ins.  Co.,  40 
Conn.  575;  Moorefield  v.  Fidelity 
Mut.  Life  Ins.  Co.,  135  Ga.  186,  69 
S.  E.  119  (construing  Georgia  stat- 
ute) ;  Commercial  Ins.  Co.  v.  Robin- 
son, 64  111.  265,  16  Am.  Rep.  557; 
Forest  City  Ins.  Co.  v.  Hardesty,  182 
111.  39,  55  N.  E.  139,  74  Am.  St. 
161 ;  Northwestern  Mut.  Life  Ins. 
Co.  V.  Hazelett,  105  Ind.  212,  4  N.  E. 
582,  55  Am.  Rep.  192;  Rogers  v. 
Phoenix  Insurance  Co.,  121  Ind.  570, 
23  N.  E.  498;  Goodwin  v.  Provident 
Sav.  Life  Assurance  Soc,  97  Iowa 
226.  66  N.  W.  157,  32  L.  R.  A.  473, 
59  Am.  St.  411;  McEvoy  v.  Surety 
Fire  Ins.  Co.,  110  Md.  275,  72  Atl. 
157,  22  L.  R.  A.  (N.  S.)  964,  132  Am. 
St.  428n;  Dole  v.  New  England  &c. 
Ins.  Co.,  6  Allen  (Mass.)  272;  Park- 
hurst  V.  Gloucester  Mut.  Fishing 
Ins.  Co.,  100  Mass.  301,  97  Am.  Dec. 
100,  1  Am.  Rep.  105;  Chandler  v. 
Ins.  Co.,  21  Minn.  85,  18  Am.  Rep. 
385;  Nat.  Bank  v.  Ins.  Co.,  95  U. 
S.  673,  24  L.  ed.  563;  Moular  v.  In- 
surance Co.,  Ill  U.  S.  335,  28  L. 
ed.  447,  4  Sup.  Ct.  466;  Thompson 
V.  Phenix  Insurance  Co.,  136  U.  S. 
287,  34  L.  ed.  408,  10  Sup.  Ct.  1019. 
Conqueror  Zinc  &c.  Co.  v.  ^tna 
Life  Ins.  Co.,  152  Mo  App.  332,  133 
S.  W.  156  (holds  that  a  contract  of 
indemnity  insurance  by  which  the  in- 
surance company  was  given  entire 
control  of  the  defense  to  actions  is 
for  the  benefit  of,  and  should  be 
construed  most  strongly  against  the 
insurer,  and  that  the  latter  will  be 
liable  for  the  costs  of  a  suit  in  which 
judgment  is  rendered  against  the  in- 
sured) ;    Snyder   v.   Dwelling    House 


809  INTERPRETATION    AND    CONSTRUCTION.  §    1 529 

bill  that  my  son  James  will  make,"  the  words  being  construed  as  a 
continuing  guaranty.*^  Where  a  charter-party  is  prepared  by  the 
charterers  of  a  vessel,  and  contains  a  clause  manifestly  inserted 
for  their  benefit,  ambiguities,  if  any  there  are  in  its  phrasing, 
should  be  resolved  against  them.**  It  has  also  been  said  that  a 
vendor  is  bound  to  express  himself  clearly  as  to  the  extent  of 
his  obligations,  and  an  obscure  or  ambiguous  clause  must  be  in- 
terpreted against  him."  Words  or  clauses  in  a  deed  of  convey- 
ance which  are  reasonably  susceptible  of  two  constructions  are 
construed  most  strongly  against  the  grantor  for  the  same  rea- 
son.^'^  The  construction  of  grants  should  usually  be  favorable  to 
the  grantee.*^  That  doubtful  words  and  provisions  are  to  be  taken 
most  strongly  against  the  grantor  is  an  ancient  principle  of  the 
common  law.^* 

§  1529.  Construction  of  grants  by  government. — However, 
every  public  grant  of  property,  or  of  privileges,  or  franchises, 
if  ambiguous,  is  to  be  construed  against  the  grantee  and  in 
favor  of  the  public  for  the  reason  that  no  presumption  arises 

stein  V.  D'Arcy,  201  Mass.  312,  87  N.  Jackson  v.  Blodget,  16  Johns.  (N.  Y.) 

E.  584.  172;  Hathaway  v.  Power,  6  Hill  (N. 

=^Newcomb  v.   Kloeblen,   11   N.   J.  Y.)  453;  Beeson  v.  Patterson,  36  Pa. 

L.  791,  74  Atl.  511.  24;  Waterman  v.  Andrews,  14  R.  I. 

^*  MacAndrews   v.   Mignano,    14  U.  589;    Griffin    v.    Fairmont    Coal    Co., 

S.  App.  10.  59  W.  Va.  480,  53  S.  E.  24,  2  L.  R. 

'^Delogny's    Heirs    v.    Mercer,    43  A.    (N.   S.)    1115;   Green   Bay  &  M. 

La.  Ann.  205,  8  So.  903.  Canal  Co.  v.  Hewitt.  55  Wis.  96,   12 

^•Hager    v.    Spect,    52    Cal.    579;  N.  W.  382,  42  Am.  Rep.  701. 

Sears  v.  Ackerman,    138  Cal.  583,  72  "Doe    v.    Williams,    1    H.    Bl.    25; 

Pac.    171 ;    Bushnell    v.    Ore    Bed,    31  Winslow  v.  Patten,  34  Maine  25. 

Conn.  150;  Alton  V.  Illinois  Transpor-  ^Marshall   v.    Niles,   8   Conn.   369 

tation  Co.,  12  111.  38,  52  Am.  Dec.  479;  East  St.  Louis  Connecting  R.  Co.  v 

Sharp  V.  Thompson,   100  111.  447,  39  East  St.  Louis,  81  111.  App.  109,  affd 

Am.  Rep.  61 ;  Hunt  v.  Francis,  5  Ind.  182  111.  433,  55   N.  E.   533 ;    Pike  v 

302;    Hopwood    v.    Corbin,   63    Iowa  Alunroe,  36  Maine  309,  58  Am.  Dec 

218,  18  N.  W.  911;  Frisbie  V.  Bigham  751;    Watson    v.    Bovlston,    5    Mass. 

Masonic  Lodge,   133  Ky.  588,   118  S.  411.  Hogg's  Appeal,  22  Pa.   St.  479 

W.  359  (holding  that  a  writing  which  Long    Island    Water-Supply    Co.    v. 

grants  an  easement  is  to  be  construed  City  of  Brooklyn,   166  U.   S.  685,  41 

most  favorably  to  the  claimant  of  the  L.  ed.   1165,   17  Sup.  Ct.  718.     "It  is 

easement)  ;  Winter  v.  White,  70  Md.  a  well  known  rule  in  the  construction 

305,  17  Atl.  84;  Salisbury  v.  Andrews,  of  private  grants,  if  the  meaning  of 

19    Pick.     (Mass.)     250;     Melvin    v.  the   words   be    doubtful,   to    construe 

Proprietors    of    the   Locks    &   Canals  them  most  strongly  against  the  grant- 

of  Merrimac  River,  5  Mete.   (Mass.)  or."      Storv,     J.,     in    Charles    River 

15.  38  Am.  Dec.  384:  Bolio  v.  Mar-  Bridge  v.  Warren  Bridge,  11  Pet.  (U. 

vin,    130    IMich.    82,    89   N.   W.    563;  S.)  420,  9  L.  ed.  111. 
Dunn  V.   English,  24   N.  J.   L.   126; 


§  I530 


CONTRACTS. 


8lO 


that  the  government  intended  to  grant  to  private  persons  or 
to  a  particular  corporation  property  or  rights  in  which  the  whole 
public  is  interested  unless  unequivocally  expressed  or  necessarily 
to  be  implied  in  the  terms  of  the  grant  and  for  the  further  rea- 
son that  the  grant  is  supposed  to  be  made  at  the  solicitation  of 
the  grantee,  and  to  be  drawn  up  by  him  or  his  agent,  and  there- 
fore the  words  used  are  to  be  treated  as  those  of  the  grantee.^" 
Contracts  are  to  be  construed  liberally  in  favor  of  the  public, 
when  the  subject-matter  concerns  the  interest  of  the  public/** 

§  1530.  Application  of  the  rule. — When  an  exception  or 
reservation  is  inserted  in  a  deed  or  other  instrument  which  is 
reasonably  susceptible  of  different  constructions,  it  is  to  be  con- 
strued most  strongly  against  the  party  in  whose  favor  it  runs, 
for  the  reason  that  he  is  presumed  to  have  chosen  the  words.^^ 


"Hartford  Bridge  Co.  v.  Union 
Ferry  Co.,  29  Conn.  210;  Mills  v. 
Countv  of  St.  Clair,  2  Gilm.  (111.) 
197,  affd.  8  How.  (U.  S.)  569,  12  L. 
ed.  1201 ;  People  v.  Pullman's  Palace 
Car  Co.,  175  111.  125.  51  N.  E.  664, 
64  L.  R.  A.  366;  Republican  River 
Bridge  Co.  v.  Kansas  Pacific  R.  Co., 
12  Kans.  409;  Chicago  &c.  R.  Co. 
V.  Pfaender,  23  Minn  217;  St.  Louis 
V.  St.  Louis  &  S.  F.  R.  Co.,  228  Mo. 
712,  129  S.  W.  691 ;  Mayor  etc.  of 
New  York  v.  Broadway  &c.  R.  Co., 
97  N.  Y.  275;  Hume  v.  Rogue  River 
Packing  Co.,  51  Ore.  237,  83  Pac. 
391,  92  Pac.  1065,  96  Pac.  865,  31 
L.  R.  A.  (N.  S.)  396n,  131  Am.  St. 
732n  (holding  that  a  grant  of  tide 
lands  by  the  state  does  not  convey 
to  the  grantee  the  exclusive  right  to 
take  floating  fish)  ;  Mayor  &c.  of 
Allegheny  v.  Ohio  &  Pennsylvania  R. 
Co.,  26  Pa.  St.  355 ;  Dugan  v.  Bridge 
Co.,  27  Pa.  St.  303,  67  Am.  Dec.  464; 
Charles  River  Bridge  v.  Warren 
Bridge,  11  Pet.  (U.  S.)  420,  9  L. 
ed.  nZ;  Rice  v.  Minnesota  &  N.  W. 
R.  Co.,  1  Black.  (U.  S.)  358,  17  L. 
ed.  147;  Central  Transp.  Co.  v.  Pull- 
man's Palace  Car  Co.,  139  U.  S.  24, 
35  L.  ed.  55,  11  S.  Ct.  478.  The  rule 
that  grants  of  the  sovereign  are  to  be 
strictly  construed  against  its  grantees 
perhaps  does  not  apply  in  all  its 
severity  when  the   subject-matter  of 


the  contracts  relates  to  rights  of 
property  not  related  to  a  public  use, 
or  affecting  limitation  upon  the  pre- 
rogative of  the  sovereign,  and  when 
the  contract  itself  is  based  upon  an 
adequate  and  valuable  consideration. 
See  Garrison  v.  United  States,  7 
Wall.  (U.  S.)  688,  19  L.  ed.  277,  7 
Ct.  CI.  (U.  S.)  78.  To  the  same  effect, 
Langdon  v.  New  York,  93  N.  Y.  129; 
Dermott  v.  State,  99  N.  Y.  101,  1  N. 
E.  242.  The  king's  grant  is  taken 
most  strongly  in  favor  of  the  king 
against  the  grantee.  Willion  v.  Berk- 
ley,   1   Plowd  223,  243.     See   also,  3 

Elliott  R.  R.   (2d  ed.),  §  1080. 
""Joy  v.  St.  Louis.  138  U.  S.  1,  34 

L.  ed.  843,  11  Sup.  Ct.  243. 
*^  United    States    Mortgage    Co.    v. 

Gross,    93     111.     483;     Richmond    v. 

Brandt,     118     111.     App.     624;     Fort 

Wayne  v.  Lake  Shore  &c.  R.  Co.,  132 

Ind.  558,  32  N.  E.  215,  18  L.  R.  A. 

367,    32    Am.    St.    277;    Wellman    v. 

Churchill,  92  Maine  193,  42  Atl.  352; 

Derby  v.  Hall,  2  Gray  (Mass.)  236; 

Bolio   V.    Marvin,    130    Mich.    82,    89 

N.    W.    563;    Cocheco    Mfg.    Co.    v. 

Whittier.    10  N.   H.  305;   Grafton   v. 

Moir,   130  N.  Y.  465,  29  N.  E.  974, 

27   Am.   St.   533;  Klaer  v.   Ridgway, 

86  Pa.   St.  529.     See  also,   Lange  v. 

Waters,   156  Cal.   142,   103   Pac.  889, 

19  Ann.  Cas.  1207. 


8ii 


INTERPRETATION'    AND    CONSTRUCTION. 


I53I 


This  rule  is  resorted  to,  however,  only  when  the  language  is 
capable  of  being  given  two  equally  probable  constructions  and 
all  other  rules  of  construction  fail."  Moreover,  as  the  statement 
of  the  rule  implies,  it  is  not  applicable  to  language  common  to 
both  parties  but  only  to  such  words  as  may  be  attributed  to  one 
party." 

§  1531.  Subsidiary  rules  of  construction — Language  to  be 
understood  in  sense  in  which  promisor  knew  or  had  reason  to 
believe  the  other  party  understood  it. — Closely  analogous  to 
the  rule  just  considered  is  the  rule  to  the  effect  that  where 
the  language  of  an  agreement  is  doubtful  that  sense  is  to 
prevail  against  either  party  in  which  he  knew^*  or  had  rea- 
son to  suppose  that  the  other  party  understood  it  if  this  can  be 
done  without  making  a  new  contract.^^    Thus,  it  has  been  held 


"  Patterson  v.  Gage,  11  Colo.  SO, 
16  Pac.  560;  Falley  v.  Giles,  29  Ind. 
114:  Wiley  v.  Sirdorus,  41  Iowa  224; 
T.  M.  Sinclair  &  Co.  v.  National  Sure- 
ty Co.,  132  Iowa  549,  107  X.  VV.  184; 
Varnum  v.  Thurston,  17  Md.  470; 
Aldrich  v.  Bay  State  Const.  Co.,  186 
Mass.  489,  72  N.  E.  53;  Wetmore  v. 
Pattison,  45  Mich.  439,  8  N.  W.  67; 
Johnson  v.  Wood,  84  Mo.  489;  Em- 
pire Rubber  Mfg.  Co.  v.  Morris,  11 
N.  J.  L.  602.  65  Atl.  450;  Flagg  v. 
Eames,  40  Vt.  16,  94  Am.  Dec.  363. 
This  rule  is  the  last  to  be  resorted 
to,  and  is  never  to  be  relied  upon  but 
where  all  other  rules  of  exposition 
of  words  fail.  Bacon  Max.  Reg.  3, 
Patterson  v.  Gage,  11  Colo.  50,  16 
Pac.  560. 

"  Beckwith  v.  Howard.  6  R.  I.  1. 

"Brent  v.  Chas.  H.  Lilly  Co.,  174 
Fed.  877;  Potter  v.  Ontario  &  L. 
Mut.  Ins.  Co.,  5  Hill  (N.  Y.  147; 
Barlow  v.  Scott,  24  N.  Y.  40;  Jordon 
V.  Dyer.  34  Vt.  104.  80  Am.  Dec. 
668.  See  also.  Colgate  v.  James  T. 
White  &  Co.,  180  Fed.  882. 

^Fowkes  V.  Manchester  &c.  As- 
surance Assn.,  3  B.  &  S.  917 ;  Lassing 
V.  James,  107  Cal.  348,  40  Pac.  534; 
Elting  V.  Sturtevant,  41  Conn.  176; 
Hatch  V.  Douglas.  48  Conn.  116.  40 
Am.  Rep.  154:  Potter  v.  Borthelet.  20 
Fed.  240;  .American  Loan  S:  Trust  Co. 
V.  Toledo,  C.  &  S.  R.  Co.,  47  Fed.  343 ; 


Wells  V.  Carpenter,  65  111.  447;  For- 
est City  Ins.  Co.  v.  Hardesty,  182  III. 
39,  55  N.  E.  139,  74  Am.  St.  161; 
Wood  V.  Allen,  111  Iowa  97,  82  N. 
W.  451;  Evans  v.  McConnell,  99 
Iowa  326,  63  N.  W.  570,  68  X.  W. 
790;  Thoubboron  v.  Lewis,  43  Mich. 
635,  5  N.  W.  1082,  38  Am.  Rep.  218; 
Bruner  v.  Wheaton,  46  Mo.  363; 
Southern  Realty  Co.  v.  Hannon,  89 
Nebr.  802,  132  N.  W.  533;  American 
Lithographic  Co.  v.  Commercial  Cas- 
ualty Ins.  Co.,  81  N.  J.  L.  271.  80  Atl. 
25;  Hoffman  v.  Aetna  Fire  Ins.  Co., 
19  Abb.  Pr.  325.  24  N.  Y.  Super.  Ct. 
501;  32  N.  Y.  405.  88  Am.  Dec.  337; 
Tallcot  V.  Arnold,  61  X.  Y.  616; 
White  V.  Hoyt.  IZ  N.  Y.  505 :  GiUet 
V.  Bank  of  America,  160  X.  Y.  549. 
55  N.  E.  292;  Hamer  v.  Sidway.  124 
N.  Y.  538,  27  N.  E.  256,  12  L.  R.  A. 
463,  21  Am.  St.  693;  Johnson  v. 
Hathorn,2Key.  (N.Y.)  476.  3  Key. 
(X.  Y.)  26,  2  Abb.  Dec.  465;  Sher- 
wood V.  Crane,  12  Misc.  (N. 
Y.)  83,  ZZ  N.  Y.  S.  17;  Ran- 
som V.  Wheelwright,  17  Misc. 
(N.  Y.)  141,  39  N.  Y.  S.  342;  Guc- 
cione  V.  Scott.  21  Misc.  (X.  Y.)  410, 
47  X.  Y.  S.  475.  affd.  ZZ  App.  Div. 
(N.  Y.)  214,  53  X.  Y.  S.  462:  Stan- 
ton V.  Erie  R.  Co..  131  App.  Div.  (N. 
Y.)  879.  116  X.  Y.  S.  375:  Kendrick 
V.  Mutual  Ben.  Life  Ins.  Co..  124  N. 
Car.  315,  32  S.  E.   728,  70  Am.  St 


s  1531 


CONTRACTS. 


812 


that  where  the  bank  officials  had  reason  to  suppose  that  a  cus- 
tomer of  the  bank  understood  that  its  president  "was  acting  in  its 
behalf  in  executing  and  delivering  to  her  a  document  by  which 
he  directed  the  bank  to  pay  her  at  a  time  certain  a  specified  sum 
of  money,  the  institution"  was  bound  by  such  understanding.^" 
It  has  been  held  that  where  one  party  to  a  building  contract 
mailed  a  letter  to  the  other  party  by  which  he  advised  the  latter 
of  the  construction  which  he  placed  on  the  contract  and  the  con- 
tract was  signed  and  returned  without  any  reference  to  the  let- 
ter, the  party  writing  the  letter  had  a  right  to  assume  that  his  con- 
struction of  the  contract  had  been  assented  to  in  view  of  the  am- 
biguity and  uncertainty  of  the  contract.^'  This  rule  is  applicable 
only  when  the  language  used  is  fairly  susceptible  of  different  con- 
structions.^^ 


592;  Chamberlain  v.  Painesville  & 
H.  R.  Co.,  15  Ohio  St.  225;  Webster 
V.  DvvelHng-House  Ins.  Co.,  53  Ohio 
St.  558,  42  N.  E.  546,  53  Am.  St.  658, 
30  L.  R.  A.  719;  Williamson  v.  Mc- 
Clure,  Zl  Pa.  St.  402;  Burkhard  v. 
Travellers'  Ins.  Co.,  102  Pa.  St.  262, 
48  Am.  Rep.  205;  San  Jacinto  Oil 
Co.  V.  Ft.  Worth  Light  &  Power  Co., 
41  Tex.  Civ.  App.  293,  93  S.  W.  173 ; 
Ballard  v.  Burton,  64  Vt.  387,  24  Atl. 
769,  16  L.  R.  A.  664.  Thus  "when 
the  terms  of  an  agreement  have  been 
intended  in  a  different  sense  by  the 
parties  to  it,  that  sense  is  to  prevail 
against  either  party  in  which  he  had 
reason  to  suppose  the  other  under- 
stood it."  Inman  Mfg.  Co.  v.  Ameri- 
can Cereal  Co.,  133  Iowa  71,  110  N. 
W.  287,  8  L.  R.  A.  (N.  S.)  1140n.  It 
has  also  been  said  that  the  language 
of  a  promisor  is  to  be  interpreted  as 
the  promisee  had  a  right  to  under- 
stand it  or  as  the  promisor  expected 
him  to  understand  it  (Gunnison  v. 
Bancroft,  11  Vt.  490),  and  that  the 
language  used  is  not  to  be  given  a 
meaning  which  the  promisor  made  no 
attempt  to  express, — a  sense  in  which 
it  was  not  understood  by  the  prom- 
isee and  in  which  he  had  no  reason 
to  understand  it.  Clark  v.  Lillie, 
39  Vt.  405. 

''Patterson  v.  First  Nat.  Bank,  78 
Nebr.  228.  110  N.  W.  721. 

"Snead    &    Co.    Iron    Works     v. 


Merchants*  Loan  &  Trust  Co.,  225 
111.  442,  80  N.  E.  237,  9  L.  R.  A. 
(N.  S.)  1007n.  See,  further,  as  to 
aiding  the  construction  of  building 
contracts  by  extrinsic  documents  un- 
der  title   six,   vol.   4. 

^  Street  v.  Chicago  Wharfing  &c. 
Co.,  157  III.  605,  41  N.  E.  1108,  affg. 
54  111.  App.  569;  Rouss  v.  Creglow, 
103  Iowa  60,  72  N.  W.  429;  Cole  v. 
Harvey,  142  Iowa  574,  120  N.  W.  97; 
Peterson  v.  Modern  Brotherhood,  125 
Iowa  562,  101  N.  W.  289,  67  L.  R.  A. 
631 ;  Johnson  v.  Northwestern  Nat. 
Ins.  Co.,  39  Wis.  87.  The  contract 
will  not  be  interpreted  as  understood 
by  the  promisee  when  the  language 
is  plain  and  unambiguous  unless  the 
plain  import  of  the  words  would  ren- 
der the  contract  absurd,  unjust  or  un- 
reasonable. Montgomery  v.  Fire- 
men's Ins.  Co.,  16  B.  Mon.  (Ky.) 
427.  The  language  used  must  be  ca- 
pable of  the  construction  placed  upon 
it.  See  Cowles  Elec.  Smelting  &c. 
Co.  V.  Lowrey,  79  Fed.  331,  24  C.  C. 
A.  616,  47  U.  S.  App.  531;  Metro- 
politan Bank  v.  Northern  Fuel  Co., 
12,  111.  App.  164,  affd.,  173  111.  345.  50 
N.  E.  1062;  Johnson  v.  Northwestern 
Nat.  Ins.  Co.,  39  Wis.  87.  See  also, 
Johnson's  Admr.  v.  Sellars'  Admr., 
ZZ  Ala.  265.  One  who  permits  an- 
other to  proceed  with  the  execution 
of  a  contract  with  knowledge  that 
the  party   executing  it   has  attached 


8l3  INTERPRETATION    AND    CONSTRUCTION.  §    1 532 

§  1532.  Subsidiary  rules  of  construction — General  and  par- 
ticular words — Ejusdem  generis. — The  doctrine  of  ejusdem 
generis  is  applied  in  cases  where  there  is  a  doubt  as  to  the  inten- 
tion of  the  parties,  and  as  a  rule  for  the  construction  of  contracts 
is  stated  to  be  that  when  general  words  are  used  in  a  contract  after 
specific  terms,  the  general  words  will  be  limited  in  their  meaning 
or  restricted  to  things  of  like  kind  and  nature  (ejusdem  generis) 
with  those  specified.^®  Thus,  a  provision  in  a  contract  for  the 
shipment  of  horses  which  read  that  "the  owner  *  *  *  under- 
takes all  risk  of  loss,  injury,  damage  and  other  contingencies  in 
loading,  unloading,  conveyance  and  otherwise,  whether  arising 
from  the  negligence,  default  or  misconduct,  gross  or  culpable,  or 
otherwise,  on  the  part  of  the  railway  company's  servants,  agents, 
or  officers,"  has  been  held  to  refer  to  default  in  the  particulars 
specified  in  the  previous  articles,  such  as  "loading,  unloading, 
conveyance  and  otherwise."*"  A  policy  of  marine  insurance 
against  designated  perils  of  the  sea  and  all  other  perils  and  losses 
that  should  come  to  the  said  goods  shipped  has  been  construed  to 
cover  only  cases  of  marine  damage  similar  to  the  kinds  specific- 
ally enumerated.*^  Where  a  contract  between  two  parties  pro- 
vided that  "if  by  reason  of  fire,  explosion  or  other  cause"  the  fac- 
tory (of  the  defendant)  shall  be  closed  down,  the  words  "other 
cause"  were  limited  in  their  application  to  causes  of  the  same  gen- 

thereto    a    certain    meaning    may    be  the      things      previously      specified." 

estopped    to    deny    that    such    is    the  Hawkins  v.  Great  Western  R.  Co.,  17 

meaning  of  the  contract.     Farley  v.  Mich.  57,  97  Am.  Dec.  179.     See  also, 

Pettes,  5  Mo.  App.  262.  Thompson  v.  Trenton  Water  Power 

*»SteUauer  v.  Hamlin,  97  111.  312;  Co.,   11   N.   J.   L.   672,   11   Atl.   410; 

First    Nat.    Bank   v.   Adam,    138    111.  South  Penn  Oil  Co.  v.  Knox,  68  W. 

483,   28    N.    E.  955 ;    Chicago   Union  Va.  362,  69  S.  E.  1020   (holding  that 

Tract.    Co.   v.    Chicago,    199   111.   484,  a  particular  description  prevails  over 

65  N.  E.  451;  59  L.  R.  A.  631;  Amer-  a   general    description).      As    applied 

ican    Bridge    Co.    of    New    York    v.  to     the     statutory     construction     see 

Glenmore  Distilleries  Co.   (Kv.),  107  State  v.    Prather,   79  Kans.   513,   100 

S.  W.  279,  32  Ky.  L.  873;  Railton  v.  Pac.   57,   21   L.   R.   A.    (N.    S.)    23n, 

Tavlor,  20  R.  I.  279,  38  Atl.  980,  39  131  Am.  St.  339;  State  v.  Chamber- 

L.  R.  A.  246:  Alabama  v.  Montague,  lain,    112   Minn.   52,    127   N.   W.   444, 

117  U.  S.  602,  29  L.  ed.  1000,  6  Sup.  30   L.   R.   A.    (N.    S.)    335.     To  the 

Ct.   911;    United    States    v.    Mescall,  same  effect.  Strange  v.  Grant  County, 

215  U.  S.  26,  54  L.  ed.  11,  30  Sup.  Ct.  173  Tnd.  640,  91  N.  E.  242. 

19.     "The  rule  is  usually  applicable,  ""Hawkins    v.    Great    Western    R. 

that  where  no  intention  to  the  con-  Co.,  17  Mich.  56. 

trary    appears,    general    words    used  "  Cullen  v.   Butler,  5  M.  &  S.  461. 

after   specific   terms    are   to   be   con-  See  also,   Phillips  v.   Barber,  5   B.  & 

iined  to  things  ejusdem  generis  with  Aid.    161;    Thames    &c.    Ins.    Co.    v. 


b'  1532 


CONTRACTS. 


814 


eral  nature  as  are  fire  and  explosion.*^  The  rule  is  said  to  be  uni- 
versal that  general  words  in  a  contract  are  strengthened  by  excep- 
tions, and  weakened  by  enumeration.*^  Words  are  not  to  be  taken 
at  their  broadest  import  and  extended  to  those  things  concerning 
which  it  is  apparent  the  parties  did  not  intend  to  contract  when 
it  is  equally  appropriate  to  limit  them  to  the  object  the  parties 
had  in  view.**  Thus,  in  a  contract  for  the  sale  of  a  patent  which 
provided  that  it  should  be  void  if  certain  designated  defects  were 
found  to  exist  in  the  patent,  "or  if  there  should  be  any  other  de- 
fect whatever,"  the  general  clause  was  held  to  refer  to  defects  in 
the  patent  and  not  to  defects  in  the  machine  itself.*^  It  must  be 
borne  in  mind,  however,  that  the  rule  of  ejusdem  generis  is  not  in 
and  of  itself  a  rule  of  interpretation,  but  an  aid  to  interpretation, 
when  the  intention  is  not  otherwise  apparent.**  It  has  no  binding 


Hamilton,  12  App.  Cas.  484;  Ellery 
V.  New  England  Ins.  Co.,  8  Pick. 
(Mass.)  14;  Swift  v.  Union  Mut. 
Marine   Ins.   Co.,   122   Mass.   573. 

"Hickman  v.  Cabot,  183  Fed.  747, 
106  C.  C.  A.  183. 

'"Shappless  v.  Mayor,  21  Pa.  St. 
147,  59  Am.  Dec.  759n ;  Webster  v. 
Morris,  66  Wis.  366,  57  Am.  Rep. 
278.  And  see  Wisconsin  Cent.  R. 
Co.  V.  Taylor  County,  52  Wis.  11 ,  8 
N.  W.  833.  According  to  Lord  Bacon 
"all  words,  whether  they  be  in  deeds 
or  statutes,  or  otherwise  if  they  be 
general,  and  not  express  and  precise, 
shall  be  restrained  into  the  fitness  of 
the  matter  and  the  person."  Broom's 
Legal  Maxims,  (8th  ed.)  646.  See 
also,  Thorpe  v.  Thorpe,  1  Ld.  Raym. 
235;  Moore  v.  Magrath,  1  Cowp.  9; 
Roe  V.  Vernon,  5  East  51 ;  Morrell  v. 
Fisher,  4  Exch.  591 ;  Wood  v.  Row- 
cliffe,  6  Exch.  407. 

"  Brickell  v.  Batchelder,  62  Cal.  623  ; 
Hendricks  v.  Webster.  159  Fed.  927, 
87  C.  C.  A.  107;  Hall  v.  Hardaker, 
61  Fla.  267,  55  So.  977;  Frisby  v. 
Ballance,  4  Scam.  (111.)  287,  39  Am. 
Dec.  409;  Street  v.  Chicago  Wharfing 
Co.,  157  111.  605,  41  N.  E.  1108;  Fol- 
som  V.  McDonough,  6  Cush.  (Mass.) 
208;  Gage  v.  Tirrell,  9  Allen  (Mass.) 
299;  Fisher  Electric  Co.  v.  Bath  Iron 
Works,  116  Mich.  293,  74  N.  W. 
493;  Harris  v.  Carlies,  40  Minn.  106, 
41  N.  W.  940,  2  L.  R.  A.  349;  Hoff- 


man V.  yEtna  Fire  Ins.  Co.,  32  N. 
Y.  405,  88  Am.  Dec.  337n ;  Holmes  v. 
Hubbard.  60  N.  Y.  183;  Smith's 
Estate,  210  Pa.  604,  60  Atl.  255;  Rei- 
ser V.  Reading  Suburban  Real  Estate 
Co.,  43  Pa.  Super.  Ct.  130;  Bock  v. 
Perkins,  139  U.  S.  628,  35  L.  ed.  314, 
11  Sup.  Ct.  677.  "General  expres- 
sions must  be  strictly  limited  to  the 
subject-matter  of  the  contract."  Daly 
V.  Old  (Utah),  99  Pac.  460.  A  con- 
tract to  do  all  the  sheet  metal  work 
consisting  of  ceilings,  side  walls,  and 
wainscoting  has  been  held  to  refer 
only  to  interior  work.  New  York 
Metal  Ceiling  Co.  v.  New  York,  133 
App.  Div.  (N.  Y.)  110,  117  N.  Y.  S. 
632.  See  also.  New  York  v.  Ameri- 
can R.  Traffic  Co.,  66  Misc.  (N.  Y.) 
166,  121  N.  Y.  S.  221,  affd.,  128  N. 
Y.  S.  118  (memorandum  decision), 
as  to  the  meaning  given  general 
words  followed  by  specific  terms. 
Scudder  v.  Perce,  159  Cal.  429,  114 
Pac.  571. 

'' Vaughan  v.  Porter,  16  Vt.  266. 

'"  Strange  v.  Grant  County,  173  Ind. 
640,  91  N.  E.  242.  "But  this  [the  rule 
of  ejusdem  generis]  is  only  a  rule 
of  construction  to  aid  us  in  arriving 
at  the  real  legislative  intent.  It  is 
not  a  cast-iron  rule,  it  does  not  over- 
ride all  other  rules  of  construction, 
and  it  is  never  applied  to  defeat  the 
real  purpose  of  the  statute,  as  that 
purpose   may   be  gathered   from  the 


8i5 


INTEKPRETATIOX    AND    CONSTRLXTION. 


1533 


force  in  the  construction  of  a  contract  when  it  is  clear  that  a 
larger  object  was  in  the  minds  of  the  parties  to  which  the  more 
general  phrases  can  distinctly  apply.*^ 

§  1533.  Subsidiary  rules  of  construction — Expressio  unius 
est  exclusio  alterius. — It  is  a  familiar  maxim  that  the  naming 
of  one  person  or  thing  is  an  exclusion  of  the  other,  or  as  usual- 
ly stated,  the  express  mention  of  one  thing  implies  the  exclusion 
of  another/^  Thus  when  an  insurance  company  by  a  legal  and 
proper  rule  provides  a  particular  method  of  changing  a  benefi- 
ciary, no  change  of  beneficiary  may  be  made  in  any  other  mode 
or  manner  for  the  reason  that  the  expression  of  one  thing  ex- 
cludes other  and  different  things.'"'  The  express  grant  of  the  right 
to  construct  underground  entries  for  the  purpose  of  mining  and 
removing  coal  for  certain  leased  land  has  been  held  to  negative 
any  implied  grant  which  might  otherwise  arise.^*^     Nothing,  it  is 


whole  instrument.  *  *  *  Whilst 
it  is  aimed  to  preserve  a  meaning  for 
the  particular  words,  it  is  not  in- 
tended to  render  meaningless  the 
general  words.  Therefore,  where  the 
particular  words  exhaust  the  class, 
the  general  words  must  be  construed 
as  embracing  something  outside  that 
class.  If  the  particular  words  ex- 
haust the  genus,  there  is  nothing 
ejusdem  generis  left,  and  in  such 
case  we  must  give  the  general  words 
a  meaning  outside  of  the  class  indi- 
cated by  the  particular  words,  or 
we  must  say  that  they  are  meaning- 
less, and  thereby  sacrifice  the  general 
to  preserve  the  particular  words.  In 
that  case  the  rule  would  defeat  its 
own  purpose."  United  States  v. 
Mescall,  215  U.  S.  26,  54  L.  ed.  11, 
30  Sup.  Ct.  19. 

"  Lindeke  v.  Associates'  Realty  Co., 
146  Fed.  630.  11  C.  C.  A.  56.  To  same 
effect,  Hoffman  v.  Eastern  Wiscon- 
sin &c.  Light  Co.,  134  Wis.  603,  115 
N.  W.  385. 

**  See  Bav  v.  Davidson  (Iowa),  111 
N.  W.  35,  9  L.  R.  A.  (N.  S.)  1014; 
St.  Landrv  State  Bank  v.  Mevers,  52 
La.  Ann. '1769.  28  So.  136;  Vander- 
ford  V.  Farmers'  &  Mechanics'  Nat. 
Bank.  105  Md.  164.  66  Atl.  47.  10  L. 
R.  A.   (N.  S.)    129n;  Ancient  Order 


of  Gleaners  v.  Burry,  165  Mich.  1, 
130  N.  W.  191,  34  L.  R.  A.  (X.  S.) 
277n.  "But  in  all  these  instances, 
where  a  contract  is  silent,  the  court 
or  jury  who  are  called  upon  to  im- 
ply an  obligation  or  the  other  side 
which  does  not  appear  in  the  terms 
of  the  contract  must  take  great  care 
that  they  do  not  make  the  contract 
speak  where  it  was  intentionally 
silent ;  and  above  all  that  they  do 
not  make  it  speak  entirely  contrary 
to  what,  as  may  be  gathered  from  the 
whole  terms  and  tenor  of  the  con- 
tract, was  the  intention  of  the  par- 
ties. This  I  take  to  be  a  sound  and 
safe  rule  of  construction  with  re- 
gard to  implied  covenants  and 
agreements  which  are  not  expressed 
in  the  contract."  East  Ohio  Gas.  Co. 
V.  Akron,  81  Ohio  St.  II,  90  N.  E. 
40,  42.  quoting  with  approval  from 
Churchward  v.  Queen,  L.  R.  1  Q. 
B.  173.  See  also.  Joseph  v.  Sulz- 
berger, 136  App.  Div.  (X.  Y.)  499, 
121  N.  Y.  S.  12)  (as  to  when  a  prom- 
ise will  be  implied). 

**  Ancient  Order  of  Gleaners  v. 
Burv.  165  Mich.  1,  130  N.  W.  191,  34 
L.  R.  A.   (N.  S.)  277n. 

°"  Thos.  Beck  &  Sons  v.  Economv 
Coal  Co.,  149  Iowa  24,  127  N.  W. 
1109. 


§  1534 


CONTRACTS. 


8i6 


said,  is  more  clearly  established  than  that  when  there  is  an  express 
contract  between  the  parties,  they  cannot  resort  to  an  implied 
one/^  The  maker  of  a  promissory  note  which  purports  to  bind 
him  and  no  one  else  will  not,  under  ordinary  circumstances  at 
least,  be  permitted  to  show  by  parol  that  he  in  fact  acted  as  agent 
or  in  any  capacity  other  than  maker/*  It  has  been  held  that  the 
maxim  could  not  be  invoked  to  give  validity  to  a  contract  void 
at  common  law  as  against  public  policy  because  it  does  not  fall 
within  the  provisions  of  the  statute  on  the  subject.^^  And  while 
recognizing  that  the  maxim  applies  to  the  construction  of  writ- 
ten instruments,  such  as  deeds,  wills  and  leases,  the  court  has 
refused  to  apply  it  to  a  contract  specifying  remedies  available 
under  the  law  independent  of  the  contract.*** 

§  1534.  Subsidiary  rules  of  construction — Punctuation  and 
grammar. — The  punctuation  of  a  written  contract  may  be 
looked  to  as  shedding  light  upon  the  meaning  of  the  parties, 
but  it  is  never  allowed  to  overturn  what  seems  to  be  the  plain 
meaning  of  the  whole  contract. ^^   Punctuation  is  a  fallible  stand- 


"  Cutter  V.  Powell,  6  T.  R.  320,  6 
Eng.  Rul.  Cas.  627,  2  Smith's  Lead. 
Cas.  1.     See  ante,  ch.  31. 

"Hypes  V.  Griffin,  89  111.  134,  31 
Am.  Rep.  71 ;  Hiatt  v.  Simpson,  8 
Ind.  256;  Junge  v.  Bowman,  12  Iowa 
648,  34  N.  W.  612;  Bogan  v.  Cal- 
houn, 19  La.  Ann.  472;  Brown  v. 
Parker,  7  Allen  (Mass.)  ZZl .  Morell 
V.  Codding,  4  Allen  (Mass.)  403; 
Sparks  v.  Dispatch  Transfer  Co.,  104 
Mo.  531,  15  S.  W.  417,  12  L.  R.  A. 
714n,  24  Am.  St.  351;  Duncan  v. 
Kirtley,  54  Mo.  App.  655;  Bass  v. 
O'Brien,  12  Gray  (Mass.)  477;  Chap- 
pell  V.  Dann,  21  Barb.  (N.  Y.)  17; 
Ruckman  v.  Lightner's  Exrs.,  24 
Grat.  (Va.)  19.  It  is  competent  to 
prove,  however,  that  the  name  of 
one  of  the  parties  who  appears  as 
the  maker  of  the  note  was  not  in 
fact  written  by  himself  but  by  an- 
other person  at  his  direction.  Morse 
V.  Green,  13  N.  H.  Z2,  38  Am.  Dec. 
47L 

"Bay  V.  Davidson  (Iowa).  Ill  N. 
W.  25,  9  L.  R.  A.  (N.  S.)  1014. 

"Strauss  v.  Yeager  (Ind.  App.), 
93  N.  E.  877. 


"Osborn  v.  Farwell,  87  111.  89,  29 
Am.  Rep.  47;  Olivet  v.  Whitworth,  82 
Md.  258,  ZZ  Atl.  723;  Perry  v.  J.  L. 
Mott  Iron  Works  Co.,  207  Mass.  501, 
93  N.  E.  798;  Rice  v.  Lincoln  &  N. 
W.  R.  Co.,  88  Nebr.  307,  129  N.  W. 
425  (holds  that  punctuation  marks 
will  not  be  allowed"  to  give  the  con- 
tract an  unconscionable  and  inequi- 
table meaning)  ;  Bunn  v.  Wells,  94  N. 
Car.  67;  White  v.  Smith,  ZZ  Pa.  St. 
186,  75  Am.  Dec.  589;  In  re  Abbott's 
Estate,  198  Pa.  493,  48  Atl.  435; 
Amory  Mfg.  Co.  v.  Gulf  C.  &  S.  F. 
R.  Co.,  89  Tex.  419,  Z1  S.  W.  856,  59 
Am.  St.  65 ;  Ewing  v.  Burnet,  Fed. 
Cas.  No.  4591,  1  McLean  266,  affd.,  11 
Pet.  (U.  S.)  41,  9  L.  ed.  624;  Joy  v. 
St.  Louis,  138  U.  S.  1,  23  L.  ed.  843, 
11  Sup.  Ct.  243.  Punctuation  does 
not  control.  English's  Exr.  v.  Mc- 
Nair's  Admrs.,  34  Ala.  40;  Central 
Trust  Co.  V.  Wabash  St.  L.  &  P.  R., 
29  Fed.  546,  affd.,  138  U.  S.  1,  34  L. 
ed.  843,  11  Sup.  Ct.  243.  Neither  do 
rules  of  grammar.  Tucker  v.  Meeks, 
2  Sweeny  736 ;  Northrup  v.  Smothers, 
39  111.  App.  588;  Nettleton  v.  Billings, 
13  N.  H.  446;  Gray  v.  Clark,  11  Vt. 


Siy  INTERPRETATION    AND    CONSTRUCTION.  §    1 535 

ard  by  which  to  interpret  a  writing.  It  may  be  resorted  to  when 
all  other  means  fail,  but  the  court  will  first  take  the  instrument  by 
the  four  corners  in  order  to  ascertain  its  meaning,  and,  if  it  is 
apparent,  the  punctuation  will  not  change  it/®  In  a  contract  the 
words  and  not  the  punctuation  are  the  controlling  guides  in  its 
interpretation.  The  words  control  the  punctuation  marks  and 
not  the  punctuation  the  words. "^^  When  the  meaning  of  a  clause 
in  an  instrument  is  doubtful,  the  court  may  insert  punctuation  as 
a  means  of  showing  what  construction  the  words  are  capable  of, 
and  if,  by  such  aid,  the  court  is  enabled  to  see  that  the  language 
can  bear  an  interpretation  which  will  make  the  whole  instrument 
rational  and  self-consistent,  it  is  bound  to  adopt  that  interpreta- 
tion in  preference  to  another  which  would  attribute  to  the  par- 
ties an  intention  utterly  capricious,  insensible  and  absurd."^ 

§  1535.  Subsidiary  rules  of  construction — Rejecting  and 
interpolating  words. — When  it  can  reasonably  be  done,  words 
or  clauses  apparently  repugnant  will  be  reconciled  each  with  the 
other  because  it  cannot  be  assumed  that  the  parties  intended  to  in- 
sert inconsistent  provisions.^®  However,  words  which  in  view  of 
the  purpose  of  the  transaction  are  nonsensical,  or  repugnant  with 
the  manifest  intention  of  the  parties  may  be  rejected  as  sur- 
plusage, if  without  them  the  contract  may  be  sustained  and  be 
given  effect  according  to  the  intent.®**  The  court  may  disregard 
or  correct  one  part  of  the  instrument  in  which  there  is  an  ob- 
vious mistake  when  the  intent  is  clear  from  other  parts  of  the 
instrument.®^   Thus  an  absurd  repugnant  clause  in  a  bill  of  ex- 

583.     Strict   rules   of   grammar   will  Series  427;  Cowles  Electric  Smelting 

not  control  a  writing  made  by  men  &c.   Co.  v.  Lowrey,  79  Fed.  331,   24 

who  are  not  grammarians.     Watson  C.  C.  A.  616;  Burgess  v.  Badger,  124 

V.  Blaine,  12  Serg.  &  R.  (Pa.)  131,  14  111.  288,  14  N.  E.  850. 

Am.  Dec.  669.  '"See  ante,  §   1514. 

«Ewing  V.  Burnet,  1  McLean   (U.  ""Cornell    v.    Green.    88    Fed.    821 

S.)  266.  Fed.  Cas.  No.  4591,  affd.,  11  affd..  95   Fed.   334.  37  C.  C.   A.   85 

Pet.  (U.  S.)  41,  9  L.  ed.  624.  See  also.  Walker    v.     Douglas.     70     111.     445 

Commonwealth   v.   Grant,  201    Mass.  Holmes   v.   Parker.  25   111.  App.  225, 

458.  87  N.  E.  895.  affd..  125  111.  478,  17  X.  E.  759;  Stock- 

"  Holmes    v.    Phenix    Ins.    Co.,  98  ton  v.  Turner.  7  J.  J.  Marsh.   (Ky.) 

Fed.  240,  39  C.  C.  A.  45,  47  L.  R.  A.  192 ;   Buck   v.    Burk,    18   N.   Y.   337 ; 

308.    See  also,  White  v.  Smith.  33  Pa.  Straus   v.  Wanamaker,    175   Pa.   213. 

St.  186,  75  Am.  Dec.  589;  Ketchem  v.  34  Atl.  648. 

Spurlock.  34  W.  Va.  597,  12  S.  E.  832.  "Marion  v.   Faxon.  20  Conn.  486; 

■^  In  re  Denny's  Estate.  8  Ir.  R.  Eq.  Steele  v.  McBurney,  96  Iowa  449,  65 

52 — Contracts,  \''ol.  2 


s  1535 


CONTRACTS. 


818 


change  may  be  rejected  as  surplusage.^^  If  the  condition  of  a 
bond  be  that  if  the  obhgor  do  not  pay,  the  bond  shall  be  void,  the 
word  "not"  will  be  rejected  for  when  the  condition  recites  a  debt 
and  subsequently  lays  an  obligation  not  to  pay  it,  it  is  in  that  re- 
pugnant and  void.°^  Where  a  void  provision  of  a  contract  is 
severable  it  does  not  invalidate  the  whole  contract."*  It  has 
been  held  that  an  abbreviation"^  or  the  sign  "etc."  may  be  disre- 
garded when  without  meaning. "•*  Recitals  such  as  "hereinafter 
named"  may  be  treated  as  surplusage  when  there  is  nothing  to 
which  the  recital  can  apply  and  it  is  unnecessary  to  the  validity  of 
the  contract."^ 

On  the  other  hand  words  which  have  been  inadvertently 
omitted  may  be  interpolated  and  the  instrument  made  to  read 
according  to  the  obvious  intention  of  the  parties  in  spite 
of  the  clerical  error  or  omission  when  it  can  be  corrected  by 
perusing  the  instrument  as  a  whole."^  Thus  the  dollar-sign,"'' 
the  word  "days,"'"  "not,"'^  and  the  verb  "fail"''  have  been  in- 


N.  W.  332;  Mercantile  Ins.  Co.  v. 
Jaynes,  87  111.  199;  Hibbard  v.  Mc- 
Kindley,  28  111.  240;  Schill  v.  Reis- 
dorf,  88  111.  411 ;  Siegel  v.  Colby,  176 
111.  210.  52  N.  E.  917,  affg.  61  111. 
App.  315;  Fowler  v.  Woodward,  26 
Minn.  347,  4  N.  W.  231;  De  Soto  v. 
Dickson,  34  Miss.  150:  Newbern 
Banking  &  Trust  Co.  v.  Duffy,  153  N. 
Car.  62.  68  S.  E.  915;  Richmond  v. 
Woodard,  32  Vt.  833;  Weed  v.  Ab- 
bott, 51  Vt.  609. 

"'Henschel  v.  Mahler,  3  Hill  (N. 
Y.)    132.  affd.,  3  Denio   (N.  Y.)  428. 

■^Wilson  V.  Wilson,  5  H.  L.  Cas. 
40;  Wells  v.  Tregusan,  2  Salk.  463. 
See  also,  Stockton  v.  Turner,  7  J.  J. 
Marsh.   (Ky.)   192. 

"Mack  V.  Jastro,  126  Cal.  130,  58 
Pac.  372.  See  also,  Nelson  v.  Allen, 
117  Wis.  91,  93  N.  W.  807. 

^  Berry  v.  Kowalsky,  95  Cal.  134, 
30  Pac.  202,  29  Am.  St.  101. 

•"■  Harrison  v.  McCormick,  89  Cal. 
327,  26  Pac.  830,  23  Am.  St.  469. 

^'Way  V.  Greer,  196  Mass.  237, 
81   N.   E.   1002. 

""Richelieu  Hotel  Co.  v.  Interna- 
tional Military  Encampment  Co.,  140 
111.  248,  29  N.  E.  1044,  33  Am.  St. 
234;  Schied  v.  LeibshuUz.  51  Ind.  38; 
Dodd  V.  Mitchell,  77  Ind.  388;  Dan- 


ker V.  Atwood,  119  Mass.  146;  But- 
ler V.  Bohn,  31  Minn.  325,  17  N.  W. 
862;  Gran  v.  Spangenberg,  53  Minn. 
42,  54  N.  W.  933;  Monmouth  Park 
Association  v.  Wallis  Iron  Works,  55 
N.  J.  L.  132,  26  Atl.  140,  19  L.  R.  A. 
456,  39  Am.  St.  626;  Sisson  v.  Don- 
nelly, 36  N.  J.  L.  432;  Monmouth 
Park  Assn.  v.  Wallis  Iron  Works, 
55  N.  J.  L.  132,  26  Atl.  140,  19  L.  R. 
A.  456,  39  Am.  St.  626.  Ex  parte 
Fulton,  7  Cow.  (N.  Y.)  484.  In 
order  to  give  effect  to  the  intention 
of  a  contract,  words  may  be  trans- 
posed, rejected,  or  supplied,  if  neces- 
sary to  make  the  meaning  of  the 
agreement  clear.  Potthoff  v.  Safety 
Amorite  Conduit  Co.,  143  App.  Div. 
(N.  Y.)   161,  127  N.  Y.  S.  994. 

"^  Richelieu  Hotel  Co.  v.  Interna- 
tional Military  Encampment  Co.,  140 
111.  248,  29  N.  E.  1044,  33  Am.  St. 
234. 

'"Boykin  v.  Bank  of  Mobile,  72 
Ala.  262,  47  Am.  Rep.  408. 

"Irwin  V.  Nichols,  87  Ark.  97,  112 
S.  W.  209;  Schroeder  v.  Griggs,  80 
Kans.  357,  102  Pac.  469. 

"  Monmouth  Park  Assn.  v.  Wallis 
Iron  Works,  55  N.  J.  L.  132,  26  Atl. 
140,  19  L.  R.  A.  456,  39  Am.  St.  626. 


8l9  INTERPRETATION    AND    CONSTRUCTION.  §    1 535 

lerpohted  when  it  appeared  from  a  reading  of  the  context  that 
they  had  been  inadvertently  omitted.  Where  a  receipt  had  in 
one  corner  one  hundred  and  fifty  dollars  in  figures  and  the  body 
of  the  receipt  read  "Received  *  *  *  hundred  and  fifty  dol- 
lars," it  was  held  that  the  figures  indicated  that  the  word  "one" 
had  been  omitted  from  before  the  word  "hundred.""  Not  only 
may  the  words  be  interpolated  but  the  words  actually  used  may 
be  changed,  and  the  meaning  thus  made  to  conform  with  the  in- 
tention of  the  parties.  Thus  the  word  "and"  may  be  read  as 
"or"  or  vice  versa  if  the  context  discloses  this  to  be  the  proper 
reading.'*  The  word  "each"  has  been  substituted  for  "such" 
when  it  appeared  that  the  use  of  the  latter  word  was  a  clerical 
error. ''°  The  word  "may"  when  considered  in  connection  with 
its  context  has  been  held  not  to  indicate  a  conditional  obliga- 
tion but  to  be  construed  as  absolute.'®  Plural  language  may  in  a 
proper  case  be  held  to  include  the  singular"  and  the  singular  the 
plural.'^  The  court  may,  where  there  is  an  obvious  mistake  on 
the  face  of  the  instrument  which  is  corrected  by  other  expressions 

"The  court  said:  "It  is  true  that  Betteman  v.  Harness,  42  W.  Va.  433, 
where  words  and  figures  are  used  26  S.  E.  271,  36  L.  R.  A.  566.  Corn- 
to  express  the  same  number,  and  they  pare  with  Atlantic  Terra  Cotta  Co. 
do  not  agree,  the  words  must  pre-  v.  Masons'  Supply  Co.,  180  Fed.  332, 
vail.  That  is  because  people  are  103  C.  C.  A.  462;  Bridgers  v.  Or- 
more  liable  to  mistake  in  writing  mond,  153  N.  Car.  113,  68  S.  E.  973. 
figures  than  words.  Such  is  not  this  "  Sheetz  v.  Price  (Mo.  App.) 
case.  The  words  alone  show  that  136  S.  W.  733.  A  lease  of  a  dairy  for 
there  was  a  mistake.  Resorting  to  three  years  with  a  provision  to  the 
the  figures  to  ascertain  what  word  effect  that  sixty  days  prior  to  the 
was  omitted  does  not  make  the  end  of  "such"  year  the  lease  might 
figures  prevail  over  the  words."  be  terminated  by  either  party,  may  be 
Gran  v.  Spangenberg,  53  Minn.  42,  terminated  on  notice  at  the  end  of 
54  N.  W.  933.  any  one  of  the  years. 

'♦Manson  v.  Davton,  153  Fed.  258,  "Watson  v.  Donald.   142  111.   App. 
82  C.  C.  A.  588;  Chicago  B.  &  O.  R.  110.    Compare,  however,  with  North- 
Co.  v.  Bartlett,  120  111.  603,  11  N.  E.  wester     Traveling     Men's     Assn.     v. 
867;    McCall    v.    Trevor,    4    Blackf.  Crawford.    126    111.    App.    468,    affd.. 
(Ind.)    496;    Davis  v.    Boardman,   12  Crawford  v.  Northwestern  Traveling 
Mass.  80;  Litchfield  v.  Cudworth,  15  Men's    Assn.,   226    111.   57.   80    N.   E. 
Pick.    (Mass.)    23;   Jackson   v.   Top-  736,  10  L.  R.  A.   (N.  S.)  264n. 
ping,  1  Wend.    (N.  Y.)   388,  19  Am.  "  Cowles  Electric  &c.  Co.  v.  Low- 
Dec.   515;    Decker   v.   Carr,    11    App.  rev,  79  Fed.  331.  24  C.  C.  A.  616. 
Div.    (N.  Y.)   432,  42  N.  Y.   S.  243,  "Kniselv  v.    Shenbcrger,   7   Watts, 
affd.,   154  N.  Y.  764,  49  N.  E.   1096;  (Pa.)   193;  Leith  v.  Bush,  61  Pa.  St. 
Lvcoming    Fire    Ins.    Co.    v.    Wood-  395;  George  v.  Tate,  102  U.  S.  564, 
worth,  83  Pa.  223 ;  Dumont  v.  United  26  L.  ed.  232. 
States,  98  U.  S.   142,  25  L.  ed.  65; 


§  1536 


CONTRACTS. 


820 


therein  when  the  whole  instrument  is  considered,  correct  the 
error'°  without  resort  to  equity.^** 

§  1536.    Rejecting  and  interpolating  words — Limits  of  rule. 

- — However,  the  court  will  refuse  to  add  words  to  a  contract  to 
help  a  doubtful  construction  when  a  more  natural  meaning  can 
be  gathered  from  the  contract  as  it  stands.^^  Moreover  when  a 
contract  is  silent  in  regard  to  a  matter  it  is  not  to  be  lightly  pre- 
sumed that  it  was  intended  to  imply  an  agreement  upon  that 
point.  Great  care  should  be  taken  not  to  make  the  contract 
speak  where  it  is  intentionally  silent,  and  above  all  not  to  make  it 
speak  entirely  contrary  to  the  intention  of  the  parties.  The  im- 
plication should  clearly  appear  from  the  whole  instrument.®'' 
Thus  it  has  been  held  that  when  a  contract  between  plaintiff  and 
defendant  contained  no  express  provision  binding  the  plaintiff 
to  take  and  pay  for  certain  stock  none  would  be  implied.^^  Wlien 
a  contract  is  indefinite  and  uncertain  and  no  attempt  has  been 


"Marion  v.  Faxon,  20  Conn.  486; 
Hibbard  v.  McKindley,  28  111.  240; 
Schill  V.  Reisdorf,  88  111.  411;  Steele 
V.  McBurney,  96  Iowa  449,  65  N.  W. 
332;  Fowler  v.  Woodward,  26  Minn. 
347,  4  N.  W.  231 ;  De  Soto  v.  Dick- 
son, 34  Miss.  150;  Richmond  v. 
Woodard,  32  Vt.  833;  Weed  v.  Ab- 
bott, 51  Vt.  609. 

^Siegel  V.  Colby,  176  111.  210,  52 
N.  E.  917,  affg.  61  111.  315;  Amett 
V.  Williams,  226  Mo.  109,  125  S.  W. 
1154. 

^  Klauder  v.  C.  V.  G.  Import  Co., 
61  Misc.  (N.  Y.)  255,  113  N.  Y.  S. 
716. 

"Churchward  v.  Queen,  L.  R.  1 
Q.  B.  173;  East  Ohio  Gas.  Co.  v. 
Akron,  81  Ohio  St.  33,  90  N.  E.  40. 
When  the  language  used  is  clear  and 
plain  the  court  cannot  by  implication 
put  into  a  written  instrument  what 
the  parties  have  left  out  of  it,  though 
by  mistake;  nor  reject  what  they 
have  put  into  it,  unless  repugnant  to 
some  other  part.  Caverly-Gould  Co. 
V.  Springfield,  83  Vt.  396,  76  Atl.  39. 
"It  is  the  duty  of  the  courts  to  lean 
against  the  destruction  of  contracts 
on  the  ground  of  uncertainty."  How- 


ever, "Courts  have  no  right  to  impose 
contracts  upon  parties,  and  this  they 
do  when  they  interpolate  or  elimi- 
nate a  term  of  material  legal  conse- 
quence to  save  them."  Elmore  v. 
Parrish,  170  Ala.  499,  54  So.  203.  See 
also,  Schreiber  v.  Straus,  147  111. 
App.  581;  Burt  v.  Garden  City  Sand 
Co.,  141  111.  App.  603,  affd.,  237  111. 
473,  86  N.  E.  1055;  Smyser  v.  Fair, 
11  Kans.  nZ.  85  Pac.  408;  Strout 
Co.  v.  Gay,  105  Maine  108,  72  Atl. 
881,  24  L.  R.  A.  (N.  S.)  562n;  Lig- 
gett V.  Levy,  233  Mo.  590,  136  S.  W. 
299;  Zohrlaut  v.  Mengelberg,  144 
Wis.  564,  124  N.  W.  247.  "What  is 
mutually  understood  and  agreed  to 
by  the  parties  will  enter  into  and  be- 
come a  part  of  a  contract,  as  will  a 
well-established  custom  of  the  trade 
enter  into  and  become  a  part  of  it 
when  the  custom  is  known  and  un- 
derstood by  the  parties  and  the  con- 
tract is  made  with  reference  to  it." 
Postal  Telegraph-Cable  Co.  v.  Louis- 
ville Cotton  Oil  Co.  (Ky.  App.), 
122  S.  W.  852. 

*^  Joseph    V.    Sulzberger,    136    App. 
Div.  (N.  Y.)  499,  121  N.  Y.  S.  11. 


821 


INTERPRETATION    AND    CONSTRUCTION. 


§    1537 


made  to  reform  it,  the  court  must  find  liability  in  the  contract  as 
written,  or  not  at  all.** 

§  1537.  Practical  construction. — It  is  a  familiar  law  that 
when  a  contract  is  ambiguous  in  its  terms,  a  construction  given 
to  it  by  the  parties  thereto  and  by  their  actions  thereunder,  before 
any  controversy  has  arisen  as  to  its  meaning,  with  knowledge  of 
its  teiTiis,  is  entitled  to  great  weight,  and  will,  when  reasonable, 
be  adopted  and  enforced  by  the  courts.**^  The  construction  placed 


•*"In  Faulkner  v.  Des  Moines 
Drug  Co.,  117  Iowa  120,  90  N.  W. 
585,  it  is  said  :  'It  is  a  familiar  propo- 
sition that  a  contract,  to  have  any 
binding  force  or  effect  in  law,  must 
be  sufficiently  definite  and  certain  in 
its  terms  to  furnish  a  criterion 
whereby  the  damages  recoverable  for 
the  breach  thereof  can  be  ascer- 
tained.' "  Rapp  V.  H.  Linebarger  & 
Son    (Iowa),   125  N.   W.  209. 

"^  Forbes  v.  Watt,  L.  R.  2  Sc.  &  D. 
214;  Keith  v.  Electrical  Engineering 
Co.,  136  Cal.  178,  68  Pac.  598;  Lovell 
V.  Goss,  45  Colo.  304.  101  Pac.  72,  22 
L.  R.  A.  (X.  S.)  1110,  132  Am.  St. 
184;Farrell  v.  Garfield  Min.  &c.  Co., 
49  Colo.  159,  111  Pac.  839;  Construc- 
tion Information  Co.  v.  Cass,  74  Conn- 
213,  50  Atl.  563 ;  Harten  v.  Loffer,  29 
App.  (D.  C.)  490;  Fitzgerald  v. 
First  Nat  Bank,  114  Fed.  474,  52  C. 
C  A.  276;  Gronstadt  v.  Withoff,  21 
Fed.  253 ;  Uinta  Tunnel  Min.  &c.  Co. 
V.  Ajax  Gold  Min.  Co.,  141  Fed.  563, 
73  C.  C.  A.  35;  Nickerson  v.  Atchi- 
son, T.  &  S.  F.  R.  Co.,  17  Fed.  408, 
3  McCrary  (U.  S.)  455;  Vermont 
St.  M.  E.  Church  v.  Brose,  104  111. 
206;  Purcell  Co.  v.  Sage,  200  111. 
342,  65  N.  E.  723;  Merrifield  v.  Canal 
Comrs.,  212  111.  456.  72  N.  E.  405,  67 
L.  R.  A.  369;  Slack  v.  Knox,  213  111. 
190,  72  N.  E.  746,  68  L.  R.  A.  606; 
Walker  v.  Illinois  Cent.  R.  Co..  215 
111.  610,  74  N.  E.  812;  Vinton  v.  Bald- 
win, 95  Ind.  433;  Fulton  Countv  v. 
Gibson.  158  Ind.  471,  63  N.  E.  982; 
Johnson  v.  Gibson,  78  Ind.  282,  and 
authorities  cited;  ^Etna  Life  Ins.  Co. 
V.  Nexsen,  84  Ind.  347.  43  Am.  Rep. 
91 ;  Indianapolis  v.  Kingsbury,  101 
Ind.  200,  51  Am.  Rep.  749;  Pratt  v. 
Prouty,  104  Iowa  419.  73  N.  W.  1035, 
65  Am.   St.  472;   Stewart  v.   Pierce, 


116  Iowa  733,  89  N.  W.  234;  Baxter 
Springs  V.  Baxter  Springs  Light  & 
Power  Co.,  64  Kans.  591,  68 
Pac.  63;  Lewiston  &  A.  R.  Co. 
V.  Grand  Trunk  R.  Co.,  97  Maine 
261,  54  Atl.  750;  Stone  v.  Clark, 
1  Met.  (Mass.)  378,  35  Am.  Dec. 
370n ;  Reynolds  v.  Boston  Rub- 
ber Co.,  160  Mass.  240,  35  N.  E. 
677;  Dwelley  v.  Dwelley,  143  Mass. 
509,  10  N.  E.  468;  Switzer  v.  Pin- 
conning  Mfg.  Co.,  59  Mich.  488,  26 
N.  W.  762;  Murray  v.  Nickerson, 
90  Minn.  197,  95  N.  W.  898;  La- 
clede Const.  Co.  V.  Moss  Tie  Co.,  185 
Mo.  25,  84  S.  W.  76;  C.  D.  Smith 
Drug  Co.  V.  Saunders,  70  Mo.  App. 
221 ;  Williams  v.  Kansas  &c.  Co.,  85 
Mo.  App.  103 ;  Williams  v.  Auten, 
68  Nebr.  27,  93  N.  W.  943;  Gorder  v. 
Pankonin,  83  Nebr.  204,  119  N.  W. 
449,  131  Am.  St.  629;  Becker  v.  Lin- 
ton, 80  Nebr.  655,  114  N.  W.  928, 
127  Am.  St.  795;  Hale  v.  Sheehan, 
52  Nebr.  184,  71  N.  W.  1019;  Fis- 
cus  V.  Wilson,  74  Nebr.  444,  104  N. 
W.  856;  Helme  v.  Strater,  52  N.  J. 
Eq.  591,  30  Atl.  333 ;  Jackson  v.  Per- 
rine,  35  N.  J.  L.  137;  Sattier  v.  Hal- 
lock.  160  N.  Y.  291.  54  N.  E.  667.  46  L. 
R.  A.  679,  73  Am.  St.  686;  Seymour  v. 
Warren,  179  N.  Y.  1.  71  N.  E.  260; 
Kling  V.  Bordner.  65  Ohio  St.  86,  61 
N.  E.  148;  Butler  v.  Moses.  43  Ohio 
St.  166,  1  N.  E.  316;  Straus  v. 
Wanamaker.  175  Pa.  St.  213,  34  Atl. 
648;  Gillespie  v.  Iseman,  210  Pa.  1, 
59  Atl.  266 ;  Hassett  v.  Cooper.  20  R. 
I.  585,  40  Atl.  841 ;  Chicago  v.  Shel- 
don. 9  Wall.  (U.  S.)  50,  19  L.  ed. 
594;  Brooklyn  Life  Ins.  Co.  v. 
Dutcher,  95  U.  S.  269,  24  L.  ed.  410; 
Topliff  V.  Topliff,  122  U.  S.  121,  30 
L.  ed.  1110,  7  Sup.  Ct.  1057;  Dis- 
trict of  Columbia  v.  Gallaher,  124  U. 


§  1537 


CONTRACTS. 


822 


on  the  contract  by  parties  thereto  prevails  when  the  language 
used  will  reasonably  allow  such  construction^*  even  though  the 
court  would  probably  adopt  a  different  construction  were  it  not 
for  the  practical  construction  already  placed  by  the  parties  on 
their  agreement."  The  construction  placed  upon  the  contract  by 
the  parties  themselves  is  of  great  value  in  determining  its  correct 
interpretation.^^  The  reason  underlying  this  rule  is  that  it  is  the 
duty  of  the  court  to  give  effect  to  the  intention  of  the  parties 
where  it  is  not  wholly  at  variance  with  the  correct  legal  interpre- 
tation of  the  terms  of  the  contract,  and  a  practical  construction 
placed  by  the  parties  upon  the  instrument  is  the  best  evidence 
of  their  intention.®^ 


S.  505,  31  L.  ed.  526,  8  Sup.  Ct.  585, 
23  Ct.  CI.  (U.  S.)  493;  Knox  County 
V.  Ninth  National  Bank,  147  U.  S.  91, 
37  L.  ed.  93,  13  Sup.  Ct.  267 ;  Wood- 
ward V.  Edmunds,  20  Utah  118,  57 
Pac.  848;  Thompson  v.  Prouty,  27 
Vt.  14;  Janesville  Cotton  Mills  v. 
Ford,  82  Wis.  416,  52  N.  W.  764,  17 
L.  R.  A.  564.  The  practical  construc- 
tion put  upon  a  contract  by  the  par- 
ties to  it,  is  sometimes  almost  con- 
clusive as  to  its  meaning.  NicoU  v. 
Sands,  131  N.  Y.  19,  29  N.  E.  818; 
Woolsey  v.  Funke,  121  N.  Y.  87,  24 
N.  E.  191.  See,  however,  Meissner  v. 
Standard  Equipment  Co.,  211  Mo. 
112,  109  S.  W.  730. 

^  Edgar  Lumber  Co.  v.  Cornie 
Stave  Co.,  95  Ark.  449,  130  S.  W. 
452;  Kennedy  v.  Lee,  147  Cal.  596, 
82  Pac.  257;  Buckhorn  Plaster  Co. 
V.  Consolidated  Plaster  Co.,  47  Colo. 
516,  108  Pac.  27;  Packwaukee  v. 
Am.  Bridge  Co.  of  N.  Y.,  183  Fed. 
359,  105  C.  C.  A.  579;  Michigan 
Home  Colony  Co.  v.  Tabor,  141  Fed. 
332,  72  C.  C.  A.  480;  Mizell  Live 
Stock  Co.  V.  J.  J.  McCaskill  Co.,  59 
Fla.  322,  51  So.  547;  Coulter  v. 
Crawfordsville  Trust  Co.,  45  Ind. 
App.  64,  88  N.  E.  865;  Welsh  v. 
Mischke,  154  Mo.  App.  728,  136  S. 
W.  36;  School  Dist.  of  City  of  South 
Omaha  v.  Davis,  76  Nebr.  612,  107 
N.  W.  842;  Jobst  v.  Hayden  Bros., 
84  Nebr.  735,  121  N.  W.  957 ;  Brad- 
dox  v.  Boner,  29  Ohio  C.  C.  300; 
Provident  Trust  Co.  v.  Spokane,  63 
Wash.  92,  114  Pac.  1030. 

"Pittsburgh   &c.    Bldg.    Brick   Co. 


V.  Bailey,  76  Kans.  42,  90  Pac.  803, 
12  L.  R.  A.  (N.  S.)  745;  City  of 
N.  Y.  V.  N.  Y.  City  R.  Co.,  193  N. 
Y.  543,  86  N.  E.  565,  affg.  124  App. 
Div.   (N.  Y.)  936,  109  N.  Y.  S.  1126. 

**  Waters  v.  Kopp.  34  App.  (D. 
C.)  575;  Mitchell  v.  Lambert,  34 
App.  (D.  C.)  583;  David  Bradley 
Mfg.  Co.  V.  Tedford,  127  111.  App.  1; 
Collins  &  Burgie  Co.  v.  Silver,  150 
111.  App.  430;  Scott  v.  Lafayette  Gas 
Co.,  42  Ind.  App.  614,  86  N.  E.  495; 
Henry  v.  Mason  City  &c.  R.  Co.,  140 
Iowa  201,  118  N.  W.  310;  Walton- 
Wilson-Rodes  Co.  v.  McKitrick,  141 
Ky.  415,  132  S.  W.  1046;  Carthage 
Tissue  Paper  Mills  v.  Carthage,  200 
N.  Y.  1,  93  N.  E.  60,  affg.  127  App. 
Div.  (N.  Y.)  945,  111  N.  Y.  S.  1112 
(memorandum  decision)  ;  Boyer  v. 
Metropolitan  Sewing  Mach.  Co.,  128 
App.  Div.  (N.  Y.)  458,  112  N.  Y.  S. 
817,  judgment  affirmed,  199  N.  Y. 
593,  93  N.  E.  1116;  Ferguson  Con- 
tracting Co.  V.  State,  70  Misc.  (N. 
Y.)  472,  126  N.  Y.  S.  808;  Trexler  v. 
Reynolds,  43  Pa.  Super.  Ct.  168; 
Buckley  v.  Herder  (Tex.  Civ.  App.), 
133  S.  W.  703 ;  Moore  v.  Ohio  Valley 
Gas  Co.,  63  W.  Va.  455,  60  S.  E.  401. 
Some  cases  state  that  the  construction 
placed  upon  a  contract  by  the  par- 
ties thereto  is  entitled  to  great,  if 
not  controlling  influence.  Rust  v. 
McWilliams,  3  Alaska  561 ;  Consaul 
v.  Cummings,  24  App.  (D.  C.)  36. 
See  also  Bruce  v.  Indianapolis  Gas 
Co.,  46  Ind.  App.  193,  92  N.  E.  189. 

*"  See  cases  cited  in  the  preceding 
notes  of  this  section. 


823 


INTERPRETATION    AND    CONSTRUCTION. 


§    1538 


§  1538.    Contemporaneous  and  subsequent  acts  considered. 

— In  order  to  prove  this  intenlion  resort  may  Ixi  had  to  the  con- 
temporaneous construction  given  to  the  contract  by  the  parties, 
as  evidenced  by  possession,  or  similar  acts.""  Subsequent  acts 
performed  before  any  controversy  arose  are  admitted  to  show 
how  the  parties  understood  their  contract  and  may  be  a  prac- 
tical construction  of  it."^  And  the  fact  that  considerable  time 
elapses,  in  this  case  seven  months,  after  the  execution  of  the  con- 
tract, before  the  acts  of  the  parties  thereto  occur,  does  not  change 
their  effect  as  a  construction  of  the  contract."-  It  makes  no  dif- 
ference whether  the  acts  which  result  in  a  partial  construction  of 
the  contract  are  contemporaneous  or  subsequent  when  performed 
before  any  controversy  arose.  It  is  allowable  to  look  to  them  for 
assistance  in  ascertaining  the  true  meaning  of  the  agreement." 


"Leete  v.  Pacific  Mill  &  Mining 
Co.,  88  Fed.  957,  affd..  94  Fed.  968, 
36  C  C.  A.  587;  Ingraham  v.  Marin- 
er, 194  111.  269,  62  N.  E.  609;  Metro- 
politan Bank  v.  Northern  Fuel  Co., 
73  111.  App.  164.  affd..  173  111.  345,  SO 
N.  E.  1062;  McLean  County  Coal  Co. 
V.  Bloomington.  234  111.  90,  84  N.  E. 
624,  revg.  judgment  127  111.  App.  582; 
Williamson  v.  Warfield,  Pratt.  How- 
ell Co.,  136  111.  App.  168;  Guccione  v. 
Scott,  21  Misc.  (N.  Y.)  410.  47  N. 
Y.  S.  475.  affd.  33  App.  Div.  (N.  Y.) 
214,  53  N.  Y.  S.  462. 

"  Mayberry  v.  Alhambra  Addition 
Water  Co..  125  Cal.  444.  54  Pac.  530, 
58  Pac.  68;  Lyman  v.  Kansas  City 
&  A.  R.  Co.,  101  Fed.  636;  Long- 
Bell  Lumber  Co.  v.  Stump,  86  Fed. 
574,  30  C.  C.  A.  260;  Schofield  v. 
State  Nat.  Bank,  97  Fed.  282,  38  C. 
C.  A.  179;  Hammerquist  v.  Swens- 
son,  44  111.  App.  627;  Ogden  v.  Stev- 
ens, 241  111.  556,  89  N.  E.  741,  132 
Am.  St.  237;  Beltine  Chemical  & 
Mfg.  Co.  V.  Zulfcr,  152  111.  App.  308; 
Pratt  V.  Proutv,  104  Iowa  419,  73 
N.  W.  1035,  65  Am.  St.  472;  St. 
Louis  Gas  Light  Co.  v.  St.  Louis,  46 
Mo.  121 ;  United  Boxboard  &  Paper 
Co.  V.  McEwan  Bros.  Co.  (N.  J. 
Eq.),  76  Atl.  550;  Coleman  v.  Grubb. 
23  Pa.  St.  393;  Svms  v.  Mavor.  105 
N.  Y.  153.  11  N.  E.  369;  Williamson 
V.  Eastern  Bldg.  &  Loan  Assn.  of 
Syracuse  N.  Y.,  54  S.  Car.  582,  22 


S.  E.  765.  71  Am.  St.  822;  Topliff  v. 
Topliff,  122  U.  S.  121,  30  L.  ed.  1110. 
7  Sup.  Ct.  1057;  Chicago  v.  Sheldon. 
9  Wall.  (U.  S.)  50,  19  L.  ed.  594; 
Jenkins  v.  Jensen.  24  Utah  108,  66 
Pac.  773,  91  Am.  St.  783;  Gray  v. 
Clark,  11  Vt.  583;  Barker  v.  Troy  & 
R.  Co.,  27  Vt.  766;  Vermont  &  Can- 
ada R.  Co.  V.  Vermont  &  Central  R. 
Co..  34  Vt.  1;  Malloy  v.  Interstate 
Irr.  Co.,  62  Wash.  487,  114  Pac.  167. 
In  Chapman  v.  Bluck,  5  Scott's  Re- 
ports 515,  Tindall,  J.,  says:  "But  we 
are  also  at  liberty  to  look  at  the  acts 
of  the  parties,  than  which  there  can 
not  be  a  better  means  of  ascertain- 
ing their  intention;"  and  Park,  J., 
after  laying  down  the  general  rule 
as  given  by  Lord  EUenborough, 
"that  the  intention  of  the  parties,  as 
declared  by  the  words  of  the  instru- 
ment, must  govern  the  construction," 
adds  that  subsequent  acts  and  declar- 
ations of  the  parties  may  be  looked 
to  in  aid  of  the  construction.  Where 
the  language  is  ambig^ious,  the  practi- 
cal interpretation  of  it  by  the  parties, 
is  entitled  to  great,  if  not  controlling 
influence. 

"  Powers  V.  World's  Fair  Min.  Co., 
10  Ariz.  5,  86  Pac.  15. 

"Vermont  Street  M.  E.  Church  v. 
Brose.  104  111.  206.  See  also.  Will- 
iam W.  Braner  Steamship  Co.  v. 
Piano  Mfg.  Co..  135  111.  App.  100; 
St.  Louis  V.  St.  Louis  &  S.  F.  R.  Co., 


§    1539  CONTRACTS.  824 

The  acts  of  the  parties  in  the  execution  of  a  parol  agreement 
are  the  best  guides  for  its  interpretation." 

§  1539.  The  rule  illustrated. — Thus,  where  a  contract  pro- 
vided that  a  theater  should  be  operated  as  "a  first-class  place  of 
amusement,"  the  court,  in  order  to  determine  whether  there  has 
been  a  breach  of  this  condition,  will  take,  as  a  standard  of  first- 
class  attractions,  one  which  the  parties  themselves  thought  first- 
class.®^  And  where  mail-transportation  service  has  been  ren- 
dered in  a  certain  way  for  nearly  twelve  years,  under  three  suc- 
cessive contracts,  the  court  will  adopt  the  construction  given  by 
the  parties,  although  the  abstract  inclined  to  a  different  one."' 
In  a  contract  for  the  hauling  of  stone  where  there  was  a  dispute 
as  to  whether  the  person  to  do  the  hauling  was  to  be  paid  by  the 
perch  or  by  the  cubic  yard  and  as  to  how  the  amount  hauled  was 
to  be  determined,  it  was  held  that  where  the  parties  had  made  bi- 
monthly settlements  based  on  payment  by  the  cubic  yard  deter- 
mined in  a  certain  way,  the  parties  were  bound  by  their  con- 
struction of  the  contract  to  which,  at  the  time,  neither  party 
objected.®^  Where  a  city  and  a  water  company,  for  about  four 
years,  proceeded  under  a  contract  for  the  maintenance  of  a  water- 
works system  upon  the  theory  that  the  water  company  was  re- 
quired to  give  direct  pressure  in  case  of  fire,  whenever  requested, 
such  construction  was  held  binding.®^  The  installation  of  a 
standard  duplex  pump  with  a  capacity  of  pumping  500,000  gal- 
lons of  water  in  twenty-four  hours  has  been  held  a  circumstance 
proper  for  the  consideration  of  the  jury  in  construing  a  contract 
to  supply  a  pump  of  the  above-mentioned  character  "of  ample 
daily  capacity.'"^    Where,  under  a  contract  for  the  sale  of  hops 

228  Mo.  712,  129  S.  W.  691;  Peter-  "^Leavitt  v.  Windsor  Land  &  In- 

son  V.  Tacoma  R.  &  Power  Co.,  60  vestment  Co.,  54  Fed.  439,  4  C.  C.  A, 

Wash.    406,    111    Pac.   338,    140   Am.  425. 

St  936  ""Carr  v.  United  States,  22  Ct.  CI. 

^Robbins  V.  Kimball,  55  Ark.  414,  (N.  Y.)   152. 

18  S.  W.  457,  29  Am.  St.  45.    A  ver-  *'  Trapp  v.  Conley,  28  Ky,  L.  475, 

bal  agreement  will  be  construed  ac-  89  S.  W.  514. 

cording    to    the    facts    and    circum-  "'  Bounds  v.  Hubbard  City,  47  Tex. 

stances   of    the    case.      Arbuckle    v.  Civ.  App.  233,  105  S.  W.  56. 

Smith,  74  Mich.  568,  42  N.  W.  124;  »"  Hubbard    City   v.    Bounds    (Tex. 

Thompson  v.  Andrus,  IZ  Mich.  551,  Civ.  App.),  95  S.  W.  69. 
41  N.  W.  683. 


825  INTERPRETATION    AND    CONSTRUCTION.  §    I54O 

for  several  successive  years,  the  vendor  for  two  years  notified 
the  vendee  when  the  crops  were  ready  for  delivery  whereupon 
the  latter  went  and  inspected  the  entire  crop  and  made  selections 
therefrom  to  fill  the  contract,  this  was  held  a  practical  construc- 
tion of  the  contract  showing  that  the  vendee  had  the  right  to  make 
such  inspection.^  Two  railroad  companies  entered  into  a  succes- 
sion of  contracts  in  pari  materia,  all  relating  to  the  joint  use  of 
terminal  property,  all  of  which  originally  belonged  to  one  com- 
pany, but  which  was  subsequently  added  to  by  the  other,  in  fixing 
a  basis  for  the  division  between  them  of  the  cost  of  maintenance. 
The  terms,  "wheelage"  and  "car  and  engine  mileage"  were  used 
indiscriminately,  but,  in  the  execution  of  the  contract  from  the 
first,  they  based  a  division  of  the  cost  of  maintenance  on  wheel- 
age,  and  that  construction  was  adopted  by  the  courts  in  determin- 
ing their  rights  thereunder.-  Where  one  who  was  under  contract 
to  furnish  three  wood-turning  lathes  to  the  United  States  for  use 
in  a  navy  yard  was  in  doubt  as  to  the  meaning  of  one  part  of  the 
specifications  and  wrote  the  naval  constructor  in  regard  there- 
to and  was  informed  specifically  as  to  the  requirements  and  after- 
ward delivered  the  lathes  in  conformity  therewith,  without  ob- 
jection, and  also  signed  a  voucher  for  the  contract-price,  it  was 
held  that  even  if  the  contract  was  ambiguous  he  was  bound  by 
the  construction  based  thereon  by  the  government  and  on  which 
he  acted  in  performing  it,  and  could  not  subsequently  insist  upon 
a  different  construction  and  recover  an  additional  sum,  on  the 
ground  that  the  lathes  furnished  were  more  expensive  than  those 
required  by  the  contract.^ 

§  1540.  Additional  illustrations. — The  principle  of  prac- 
tical construction  by  the  parties  has  been  applied  to  leases,*  ante- 
nuptial contracts,**  and  to  contracts  with  a  municipality  for  street 
lights.*   Where  the  writing  which  embodies  the  contract  of  the 

^Mitan  V.   Roddan,   149  Cal.   1,  84  ed.   136.  41   Ct.   CI.    (U.   S.)   214.  29 

Pac.  145,  6  L.  R.  A.  (N.  S.)  275.  Sup.  Ct.  ^7 

'  Columbus  &c.  R.  Co.  v.   Pennsyl-  *  Gorder  v.  Pankonin,  83  Nebr.  204, 

vania  Co.,  143  Fed.  757,  74  C.  C.  A.  119  N.  W.  449,  131  Am.  St.  629. 

(^■7  "  Becker    v.    Linton,    80    Nebr.    60D, 

'Walker  v.   United   States    (U.   S.  114  X.  W.  928,  127  Am.  St.  795. 

D    C     Pa.),  143  Fed.  685.     See  also,  "Baxter  Sprmgs  v.  Baxter  Sprmgs 

Bowers    Hydraulic    Dredging   Co.    v.  Light  &c.  Co.,  64  Kans.  591,  68  Pac. 

United  States,  211  U.  S.   176,  53  L.  63. 


§    1 541  CONTRACTS.  826 

parties  has  been  lost  it  has  been  held  that  its  meaning  can  best 
be  ascertained  by  what  the  parties  did  under  its  provisions.'^  If 
the  contract,  the  meaning  of  which  is  in  dispute,  was  not  reduced 
to  writing  its  nature  and  terms  must  be  ascertained  as  matter  of 
fact  from  the  conversations,  negotiations,  and  acts  of  the  parties 
by  whom  it  was  made.^  It  is  provided  by  statute  in  California 
that  the  terms  of  a  contract  may  be  evidenced  by  conduct  when 
not  stated  in  words.® 

§  1541.  Must  be  the  act  of  both  parties. — The  acts  per- 
formed must,  however,  be  the  acts  of  both  parties.  And  it  ought 
to  appear  with  reasonable  certainty  that  acts  alleged  to  have  been 
performed  in  the  construction  of  the  contract  were  in  fact  the 
voluntary  acts  of  both  parties  performed  with  knowledge  of  the 
terms  of  the  contract  and  in  view  of  a  purpose  at  least  consistent 
with  that  to  which  they  are  sought  to  be  applied. ^°  Thus  where  the 
lease  of  a  coal  mine  provided  for  a  royalty  of  $1.50  per  "railroad 
car,  or  its  equal  of  coal,"  and  no  act  was  performed  by  the  lessor 
other  than  to  receive  the  money  under  it  at  the  rate  of  $1.50  per 
railroad  car,  for  which  he  was  not  required  to  execute  a  written 
receipt,  such  lessor  was  not  deemed  to  have  acquiesced  in  the 
construction  sought  to  be  placed  upon  the  lease  by  the  lessee,  nor 
to  be  estopped  thereby  from  proving  that  he  had  a  different  un- 
derstanding of  the  lease  from  that  claimed  by  the  lessee."  The 
construction  placed  upon  a  contract  between  husband  and  wife 
by  an  attorney  of  the  latter,  unknown  to  the  husband,  has  been 
held  not  to  fix  the  meaning  of  the  contract  nor  affect  its  binding 
force.^^  No  other  element  entering  in,  the  interpretation  placed 
on  a  contract  by  one  of  the  parties  thereto  is  inadmissible  to  es- 
tablish its  meaning." 

"  Humphreys  v.  Fort  Smith  Tract.  "  Belcher  v.  Big  Four  Coal  &  Coke 

&c.  Co.,  71  Ark.  152,  71  S.  W.  662.  Co.,  68  W.  Va.  716,  70  S.  E.  712. 

"Patton  V.  Wells,  121  Fed.  W,  57  '*  Stokes  v.  Stokes,  240  111.  330,  88 

C.   C.   A.   551 ;    Massey   v.   Belisle,   2  N.  E.  829. 

Ired.  L.    (N.  C.)    170.  "  Dakan   v.   Union    Mut.    Life    Ins. 

•Perry   v.    Noonan    Furniture   Co.,  Co.,  125  Mo.  App.  451,  102  S.  W.  634. 

8   Cal.    App.   35,  95    Pac.    1128.    Cali-  See    also,    Ryley-Wilson    Grocer    Co. 

fornia  Civil  Code  1906,  §  1621.  v.    Seymour    Canning    Co.,    129    Mo. 

"  Sternbergh  v.  Brock,  225  Pa.  279,  App.  325,  108  S.  W.  628. 
74   Atl.    166,   24  L.   R.   A.    (N.    S.) 
1078n,  133  Am.  St.  877. 


82/ 


INTERPRETATION    AND    CONSTRUCTION. 


§    1542 


§  1542.  Contract  must  be  ambiguous. — The  rule  that  prac- 
tical construction  of  the  contract  by  the  parties  is  entitled  to  great 
weight  applies  only  when  the  contract  is  ambiguous  and  the  inten- 
tion doubtful.  Where  the  contract  is  free  from  ambiguity  and  its 
meaning  is  clear  in  the  eye  of  the  law  an  erroneous  construction 
of  it  by  the  parties  will  not  control  its  effect.^*  The  construction 
of  a  building  contract  by  the  parties  thereto  as  to  priority  and 
validity  of  liens  and  the  like,  is  immaterial  when  the  agreement 
is  necessarily  made  with  reference  to  the  statutory  right  of  cred- 
itors to  liens.^''  The  practical  construction  of  a  contract  adopted 
by  the  parties  thereto  will  not  control  or  override  language  that 
is  so  plain  as  to  admit  of  no  controversy  as  to  its  meaning.  In 
such  cases  the  intent  of  the  parties  must  be  determined  by  the  lan- 
guage employed,  rather  than  by  their  acts;  but  if  the  language 
employed  is  of  doubtful  import,  or  if  the  contract  contains  no 
provisions  on  a  given  point,  or  if  it  fails  to  define  with  certainty 
the  duties  of  the  parties  with  respect  to  a  particular  matter  or  in 
a  given  emergency,  then  it  is  proper  to  consider  how  the  parties 
have  construed  the  instrument  with  respect  to  such  debatable 
points.^"   In  holding  that  the  acts  of  the  parties  performed  under 


"Pierce  v.  Merrill,  128  Cal.  464, 
61  Pac.  64,  79  Am.  St.  56;  Cowles 
Electric  Smelting  &c.  Co.  v.  Lowrey, 
79  Fed.  331,  24  C.  C.  A.  616;  Davis 
V.  Shafer,  50  Fed.  764;  Omaha  Elec- 
Light  &  Power  Co.  v.  Omaha,  172 
Fed.  494;  Davis  v.  Sexton,  35  111. 
App.  407;  Grinton  v.  Strong,  148  111. 
587,  36  N.  E.  559;  Ingraham  v.  Mar- 
iner, 194  111.  269.  62  N.  E.  609 ;  Mor- 
ris v.  Thomas,  57  Ind.  316;  Wilkins 
V.  Young,  144  Ind.  1.  41  N.  E.  68 
55  Am.  St.  162;  Fawkner  v.  Lew 
Smith  Wall-Paper  Co..  88  Iowa  169 
174.  55  N.  W.  200,  45  Am.  St  230 
Citizens'  Ins.  &c.  Co.  v.  Doll,  35  Md 
89,  6  Am.  Rep.  360;  Menage  v 
Rosenthal,  175  Mass.  358,  56  N.  E 
579;  St.  Paul  &c.  R.  Co.  v.  Black- 
mar,  44  Minn.  514,  47  N.  W.  172 
Meissner  v.  Standard  R.  Equipment 
Co..  211  Mo.  112,  109  S.  W.  730 
Bader  v.  Chicago  Mill  &  Lumber  Co. 
134  Mo.  App.  135.  113  S.  W.  1154 
Michael  v.  St.  Louis  Mut.  Fire  Ins 
Co..  17  Mo.  App.  23:  Chrisman  v, 
Hodges,  75  Mo.  413;  Miller  v.  Dun- 


lap,  22  Mo.  App.  97;  Stewart  v. 
Lehigh  Valley  R.  Co.,  11  N.  J.  L.  53 : 
Giles  v.  Comstock,  4  X.  Y.  270.  53 
Am.  Dec.  374;  Cincinnati  v.  Gas 
Light  &c.  Co.,  53  Ohio  St.  278,  41 
N.  E.  239;  Sternbergh  v.  Brock,  225 
Pa.  279,  74  Atl.  166,  24  L.  R.  A. 
(N.  S.)  1078n,  133  Am.  St.  877 
(quoting  with  approval  language  to 
the  effect  that  if  clear  and  free  from 
ambiguity,  the  intention  shown  by 
its  face,  if  written,  must  be  followed, 
though  contrary  to  the  practical  in- 
terpretation by  the  parties,  and  ac- 
quiesced in  for  a  long  period  of 
time)  ;  El  Paso  &  S.  W.  R.  Co.  v. 
Eichel  &  Weikel  (Tex.  Civ.  App.), 
130  S.  W.  922 ;  Railroad  Co.  v.  Trim- 
ble, 10  Wall.  (U.  S.)  367,  19  L.  ed. 
948. 

"Hawes  &  Co.  v.  Trigg  &  Co.,  110 
Va.  165.  65  S.  E.  538. 

"Central  Trust  Co.  of  New  York 
V.  Wabash  &c.  R.  Co.,  34  Fed.  254, 
where  a  contract  between  two  rail- 
way companies  operating  a  joint 
line   did   not   expressly  provide   how 


§    1543  CONTRACTS.  828 

a  written  contract  are  admissible  for  the  purpose  of  ascertaining 
the  construction  placed  upon  it,  there  is  no  encroachment  upon 
the  rule  that  contemporaneous  parol  evidence  is  not  admissible 
to  vary  a  written  instrument,  for  acts  done  in  execution  of  the 
contract  are  subsequent  in  time  to  the  execution  of  the  instru- 
ment, and  different  from  the  mere  verbal  statements.*' 

§  1543.  Entire  and  severable  contracts. — This  subject  has 
•ilready  been  mentioned  in  the  chapters  on  Consideration  and 
Legality  of  Object."^  But  it  is  proper  to  give  this  subject  brief 
ihention  at  this  place  for  the  reason  that  the  question  of  whether 
4  contract  is  entire  or  is  to  be  regarded  as  severable  is  a  ques- 
tion of  construction.*^  C  A  contract  is  entire  when  its  terms, 
nature  and  purposes  show  that  it  is  contemplated  and  intended 
that  each  and  all  of  its  parts,  material  provisions  and  the  consid- 
eration are  common  each  to  the  other  and  interdependent.  A 
divisible  contract  is  one  which  from  its  nature  and  purposes  is 
susceptible  of  division  and  apportionment  and  has  two  or  more 
parts  in  respect  to  matters  and  things  embraced  by  it,  and  not 
necessarily  dependent  on  each  other,  and  the  parties  do  not  intend 
that  they  shall  be.*^  The  fact  that  the  contract  is  embraced  in 
one  instrument  does  not  make  it  entire  and  indivisible.^"  On  the 
other  hand,  the  fact  that  the  contract  is  embraced  in  more  than 
one  instrument  does  not  make  it  severable.^*  Whether  or  not  the 
contract  is  entire  or  divisible  depends  on  the  intention  of  the  par- 
ties.^^    The  intention  is  to  be  ascertained  from  the  language  used, 

cars  should  be  obtained  or  supplied  Mountain  Spring  Co.,  56  Wash.  176, 

for  the  use  of  the  line.    The  fact  that  105  Pac.  243   (holding  that  when  the 

one  company   for  several  years  paid  considerations     moving     from     each 

the  other  for  the  use  of  its  cars  was  party   are  practically   concurrent  the 

considered    as    a    construction    placed  contract  is  indivisible), 

on  the  contract  by  the  parties,   and  ^Strauss    v.    Yeager    (Ind.   App.), 

enforced  accordingly.  93  N.  E.  877. 

"  Lyles  V.  Lescher,  108  Ind.  382,  9  "  Floyd  v.  Arky,  89  Miss.  162,  42 

N.  E.  365.  So.  569. 

"a  See  chaps.  9,  21.  ^  Los    Angeles    Gas    &c.    Co.    v. 

"  Sterling  v.  Gregory,  149  Cal.  117,  Amalgamated  Oil   Co.,   156  Cal.  116, 

85   Pac.   305;   Los   Angeles   Gas.   &c.  106  Pac.  55;  Sterling  v.  Gregory,  149 

Co.  V.  Amalgated  Oil  Co.,  156  Cal.  Cal.   117,  85  Pac.  305;  White  Brass 

776,  106  Pac.  55.  Castings    Co.    v.    Union   Metal   Mfg. 

"Strauss  v.   Yeager    (Ind.   App.),  Co.,   135  111.  App.  12. 
93   N.   E.   877.     See   also,   State   v. 


829  INTERPRETATION    AND    CONSTRUCTION.  §    1 544 

the  subject-matter  of  the  contract  and  from  a  consideration  of  all 
the  circumstances.*^ 

§  1544.    Contract  consisting  of  several  distinct  items. — The 
divisibility  of  the  subject-matter,  while  not  controlling,  is  fre- 
quently of  importance  in  determining  the  intention  of  the  parties. 
Generally  when  the  part  to  be  performed  by  the  promisor  consists 
of  several  distinct  items  and  the  price  to  be  paid  is  apportioned 
to  each  item  according  to  its  value  and  not  as  a  part  of  a  lump 
sum,  the  contract  is  considered  as  several."     A  contract  by  which 
one  is  to  sow  and  harvest  corn,  oats  and  other  crops  upon  the 
land  of  another  has  been  held  severable  with  respect  to  the  va- 
rious grains  involved.^'    But  the  fact  that  a  price  has  been  affixed 
to  each  bushel  of  a  crop  contracted  to  be  threshed, ^°  or  the  fact 
that  the  mode  of  measuring  the  price  is  by  the  bushel,  ton,  or 
pound,  will  not  necessarily  change  the  effect  of  the  agreement." 
Where  one  agreed  to  furnish  a  certain  quantity  of  crushed  stone 
for  a  fixed  price  per  cubic  yard,  at  a  stated  rate  per  day,  it  was 
held  that  the  contract  was  entire,  and  that  it  required  full  per- 
formance before  payment  of  the  consideration  was  due.^®  A  con- 
tract to  change  a  gas  engine  into  a  gasoline  engine  and  set  it  up, 
has  been  held  a  single  and  entire  contract,  though  separate  quota- 
tions were  given  on  the  cost  of  transforming  and  the  cost  of  in- 
stalling.    It  was  also  held  that  the  person  making  the  guaranty 
was  entitled  to  recover  either  for  the  transformation  or  the  in- 
stallation where  the  engine  did  not  work  according  to  the  guar- 
anty.^" 

*•  Cole  V.  Harvey,  142  Iowa  574,  120  Mass.   158,  86  N.  E.  306.     See  ante. 

N.  W.  97 ;  Quarton  v.  American  Law  ch.  9. 

Book  Co.,   143  Iowa  517,  121   N.  W.  =*  Stoneking  v.  Long,  142  111.  App. 

1009;    Bamberger   Bros.   v.    Burrows,  203. 

145   Iowa  441,   124  X.   W.  333:   Gil-  ="  Johnson  v.  Fehsefeldt,  106  Mmn. 

more  &  Co.  v.  W.  B.  Samuels  &  Co.,  202,  118  N.  W.  797,  20  L.  R.  A.   (N. 

135  Ky.  706.  123  S.  W.  271;  Ganong  S.)   1069n. 

&  Chenweth  v.  Brown,  88  Miss.  53,  '"^  McKeef  ry      v.      United      States 

40  So.  556.  17  Am.  St.  731 ;  Powell  v.  Radiator  Co..  31  Pa.  Super.  Ct.  263 

Russell.  88  Miss.  549,  41  So.  5;  Dick  See    also.    Sauser    v.    Kearney,    147 

V.  Riddle,   139  Mo.  App.  584.  123  S.  Iowa  335,  126  N.  W.  322. 

W.   486;   Cullv  v.   Isham.   194  N.   Y.  -"  Prautsch  v.  Rasmussen,  133  Wis. 

584.  88  N.  E.  ill7.  affg.  125  App.  Div.  181,  113  N.  W.  416.  See  also.  Fletch- 

(N.  Y.)  97.  109  N.  Y.  S.  92;  Clark  er   v.   McMillan,    132   Ga.   477.  64   b. 

V.  West.   137  App.  Div.   (X.  Y.)   23,  E.  268  (contract  concerning  timber) 

122  X    Y    S   380.  ^'Kumberger   v.    Hartford,    114    N. 

"Barlow   Mfg.   Co.   v.    Stone,   200  Y.  S.  808.     An  agreement  by  which 


§    1545  CONTRACTS.  83O 

§  1545.  Illustrations  of  entire  contracts.— A  building  con- 
tract which  provided  for  the  erection  of  a  house  and  stable,  has 
been  held  an  entirety,  and  payments  made  by  the  owner  thereof 
are  to  be  credited  to  the  account  of  the  whole  work.^°  A  con- 
tract which  requires  a  contractor  to  remove  all  parts  of  a  wrecked 
vessel  so  as  to  secure  a  specified  depth  of  water,  and  provides  that 
"upon  the  satisfactory  completion  of  the  same"  he  shall  be  paid 
$1,100  is  entire.^'  A  telephone  rental  contract  required  the 
lessee  to  subscribe  for  one  share  of  the  telephone  company's  stock, 
to  be  paid  for  in  instalments,  and  the  lease  of  the  telephone  would 
not  have  been  made  on  refusal  to  subscribe  for  the  stock.  The 
subscription  was  held  dependent  on  the  lease,  and  not  a  separate 
contract,  and  the  lease  being  unenforcible  for  want  of  mutuahty, 
the  subscription  was  also  invalid/^  An  artist  contracted  with 
plaintiff  to  execute  a  bronze  statue ;  by  the  terms  of  the  contract 
10  per  cent,  of  the  price  was  to  be  paid  when  the  sketch  model 
of  the  statue  was  approved,  lo  per  cent,  when  the  staff  model  was 
completed  and  placed  on  its  pedestal,  and  other  payments  were 
to  be  made  at  various  stages  of  the  work.  The  sculptor  was 
required  to  give  a  bond  on  the  receipt  of  each  payment  condi- 
tioned for  the  completion  of  the  contract  in  accordance  with  its 
terms.  Two  payments  were  made,  and  bonds  executed,  signed 
by  defendant  as  surety,  after  which  the  principal  defaulted. 
The  contract  was  held  an  entire  one  for  completion  of  the  statue, 
and  not  a  series  of  independent  contracts  for  the  completion 
of  each  step  of  the  work,  and  the  failure  to  fully  perform  it  was 
a  breach  of  the  condition  of  each  bond  given,  and  entitled  plaintiff 
to  recover  thereon  as  substantial  damages  at  least  the  amount  of 
the  payments  made,  for  which  it  had  received  no  consideration.^' 
Plaintiff  agreed  to  print  in  its  stamp  directory  the  name  and  busi- 

one  acquires  certain  tangible  proper-  ^  Co-Operative   Tel.    Co.   v.    Katus. 

ty,  together  with  certain  patent  rights,  103   N.   W.   814,    140   Mich.   367,    112 

is  an  entire  contract,  notwithstanding  Am.  St.  414. 

a  separate  valuation  was  placed  upon  ''^  American     Surety    Co.    of     New 

the    tangible    property.    White    Brass  York  v.  Fidelity  Trust  Co.,  179  Fed. 

Castings    Co.    v.    Union    Metal    Mfg.  699,   103   C.   C.   A.   29,   affg.   Fidelity 

Co.,  135  111.  App.  32.  Trust    Co.   v.    American    Surety    Co., 

'"First    Xat.    Bank   v.    Mitchell,    46  175    Fed.    200.  See    also,    Holman    v. 

Misc.  CN.  Y.)  30,  93  N.  Y.  S.  231.  Updike,  208  Mass.  466,  94  N.  E.  689. 

^Poynter  v.   United  States,  41  Ct. 
CI.    (U.   S.)    443. 


831  INTERPRETATION    AND    CONSTRUCTION.  §    1 546 

ness  of  defendant,  and  to  obtain  orders  from  at  least  lOO  persons 
for  portraits  to  be  given  free  by  defendants  on  presentation  of 
stamps  worth  $25.  The  defendants  agreed  to  pay  plaintiff  $175 
for  100  frames  on  the  completion  of  the  canvas,  and  to  receive 
from  the  latter  staiiips  to  carry  out  the  scheme,  for  which  they 
were  to  pay  50  cents  per  100.  The  contract  also  stipulated 
that  it  was  a  part  of  the  agreement  that  100  persons  should  order 
100  frames.  The  agreement  was  held  not  a  severable  contract, 
and  plaintiff  performing  it  in  part  was  not  entitled  to  recover, 
especially  where  it  fraudulently  altered  orders  for  portraits  pro- 
cured by  it.^*  Where  the  defendant  agreed,  as  a  condition  to  the 
sale  of  mining  stock  to  the  plaintiff,  that  he  would  repurchase  it 
at  one  dollar  per  share  within  one  year  from  the  date  of  sale,  the 
agreement  was  held  an  entire  contract  for  the  sale  of  the  stock. 
It  was  also  held  that  the  plaintiff  was  entitled  to  recover  one 
dollar  per  share  where  he  offered  the  stock  back  to  the  defendant 
within  the  year  at  one  dollar  per  share. ^^  A  gas  company  con- 
tracted to  lay  and  connect  certain  gas  mains  with  the  plaintiff's 
lots.  The  agreement  was  held  not  divisible  so  as  to  allow  the 
plaintiff  to  recover  for  failure  to  connect  with  certain  of  the  lots 
after  the  supply  of  natural  gas  had  failed.^" 

§  1546.  Examples  of  severable  contracts. — A  contract  re- 
cited that  in  consideration  of  $1  C  held  in  trust  for  B  and  H  two 
undivided  third  interests  in  all  rights  and  interest  acquired  or 
to  be  acquired  by  C  under  and  by  virtue  of  an  agreement  of  W 
to  convey  to  C  certain  land  on  certain  named  terms  and  condi- 
tions, also  two  undivided  thirds  of  certain  other  land.  All  said 
lands,  rights  and  interest  had  been  purchased  by  C  with  funds 
furnished  in  equal  parts  by  himself,  H  and  B.    The  contract  was 

"American  Copying  Co.  v.  Leh-  bind  themselves  to  support  their  par- 
mann,  6  Cal.  App.  1,  91  Pac.  414.  See  ents  in  consideration  of  the  convey- 
also,  Edward  Thompson  Co.  v.  ance  of  certain  land  to  them  has  been 
Washburn,  191  Mass.  6,  11  N.  E.  held  entire,  and  not  severable.  It 
483  (sale  of  law  books)  ;  Ben  C.  was  also  held  that  when  it  was 
Jones  &  Co.  v.  Gammel-Statesman  breached  by  one  of  the  obligors,  this 
Pub.  Co..  (Tex.  Civ.  App  ).  94  S.  avoided  the  agreement  in  its  entirety. 
W.  191   (sale  of  Texas  reports).  Epperson   v.   Epperson,    108  Va.   471, 

"Vohland  v.  Gelhaar.  136  Wis.  75.  62  S.   E.  344. 

116  N.  W.  869.     .\  contract  entered  "  Bruce    v.    Indianapolis    Gas.    Co., 

into  by  two  children  by  which  they  46  Ind.  App.  193,  92  X.  E.  189. 


§    1547  CONTRACTS.  832 

held  severable  in  that  while  not  enforcible  as  to  the  first  tract 
it  might  be  enforced  as  to  the  second.^^  The  agreement  by  a 
trust  company  to  accept  a  certain  contract  if  the  construction 
company  would  pay  certain  expenses,  and  the  agreement  of  the 
construction  company  to  do  so  have  been  held  to  be  two  separate 
agreements  of  the  construction  company.^^  An  agreement  to 
waive  any  claim  for  damages  caused  by  reason  of  the  defendant's 
negligence  has  been  held  separable  from  the  rest  of  the  contract.^" 
A  lumber  company  contracted  with  another  corporation  to  sub- 
scribe for  a  certain  amount  of  its  capital  stock,  to  be  paid  for  in 
lumber.  The  latter  agreed  to  increase  its  capital  stock,  to  merge 
its  existing  business  into  the  new  business,  to  secure  land  for  a 
lumber  yard  and  to  perform  other  acts.  This  latter  agreement 
was  held  independent  and  separable,  so  that  strict  performance  of 
it  was  not  a  condition  precedent  to  a  right  to  maintain  an  action 
for  failure  of  the  lumber  company  to  perform  its  contract."" 

§  1547.    Dependent  and  independent  promises. — Where  a 

contract  contains  mutual  promises,  whether  to  pay  money  or 
perform  some  other  act,  and  the  time  for  performance  by  one 
party  is  to,  or  may,  arrive  before  the  time  for  performance  by  the 
other,  the  latter  promise  is  an  independent  obligation,  and  non- 
performance thereof  merely  raises  a  cause  of  action  in  the  prom- 
isee, and  does  not  defeat  the  right  of  the  party  making  it  to 
recover  for  a  breach  of  the  promise  made  to  him.''^  The  question 
of  whether  conditions  in  a  contract  are  dependent  or  independent 
is  determined  by  the  intention  of  the  parties  as  expressed  in  the 
instrument."  In  case  of  doubt  the  covenants  in  the  contract  are 
to  be  construed  as  dependent."' 

^Cantwell  v.  Crawley,  188  Mo.  44,  104  Pac.  641,  24  L.  R.  A.   (N.  S.) 

86  S.  W.  251.  1082n. 

«Kidd  V.   New   Hampshire  Tract.  "Ink  v.   Rohrig,  23   S.   Dak.   548, 

Co.,  74  N.  H.  160,  66  Atl.  127.  122  N.  W.  594.    To  the  same  effect, 

*»  Piper  V.  Boston  &c.  R.  Co.,  75  N.  World's  Fair  Mining  Co.  v.  Powers, 

H.  435,  75  Atl.  1041.  12  Ariz.  285,  100  Pac.  957.    See  also, 

**  Pacific  Mill  Co  v.  Inman,  46  Ore.  Laswell  v.  National  Handle  Co.,   147 

352,  80  Pac.  424;  post,  §  1577.  Mo.  App.  497,  126  S.   W.  969.     For 

*^  Kinney  v.    Federal   Laundry  Co.,  cases    illustrating   dependent    and   in- 

75  N.  J.  L.  497,  68  Atl.  111.  dependent  covenants,  see  Marinovich 

*'Con    P.    Curran    Printing   Co.   v.  v.  Kilburn,  153  Cal.  638,  96  Pac.  303 

St.  Louis,  213  Mo.  22,  111  S.  W.  812;  (sale  of  shares  of  stock  with  agree- 

Toellner  v.  McGinnis,  55  Wash.  430,  ment  to  purchase  such  stock  on  cer- 


833  INTERPRETATION    AND    CONSTRUCTION.  §    1 548 

§  1548.  Alternative  stipulations  and  options. — Contracts 
which  are  optional  in  respect  to  one  party  are  strictly  construed  in 
favor  of  the  party  that  is  bound  and  against  the  party  in  whose 
favor  the  option  runs.**  The  party  who  has  the  right  of  election 
must,  in  exercising  the  right,  give  such  notice  as  will  leave  no 
doubt  of  his  intention  to  exercise  the  right  given  him,*^  and  once 
having  made  his  election,  he  is  concluded  thereby.*®  It  has  been 
held  that  where  by  the  terms  of  an  agreement  one  party  thereto 
is  given  an  option  to  determine  or  to  consummate  it  as  a  contract, 
the  law  will  grant  a  like  privilege  to  the  other  party  until  both 
are  bound,  when  it  becomes  a  binding  contract.*'^ 

§  1549.  Rules  as  to  time — Performance. — Questions  con- 
cerning time  of  performance  are  determined  by  the  intention  of 
the  parties.  For  this  reason  it  is  difficult  to  lay  down  any  hard 
and  fast  rules  by  which  such  intentions  may  be  ascertained.  It 
is  a  general  rule  of  law,  however,  that  in  the  computation  of  time 
fractions  of  a  day  are  not  reckoned.*®  Consequently  where  a 
contract  provides  that  it  shall  be  performed  by  a  certain  day 
the  promisor  has  the  whole  of  the  last  day  to  perform  it,*'^  includ- 
ing  the  night  of  the  day  on  which  a  transaction  must  be  completed 
to  be  binding  when  the  nature  of  the  business  so  permits.^"     A 

tain  conditions)  ;  Mailhot  v.  Turner,  151 ;    Wright   v.    Mills,   4    H.    &    N. 

157   Mich.   167,    121    N.   W.   804,    133  488;  Queen  v.  St.  Mary,  1  El.  &  Bl. 

Am.    St.    333n    (lease    of    homestead  816.      Sir   William    Grant,    in    Lester 

with    a    privilege    of    purchase,    the  v.  Garland,   15  Ves.  248,  says :  ''Our 

lease  was  invalid  and  this  was  held  law  rejects  fractions  of  a  day  more 

to   avoid  the  contract  as   a  whole)  ;  generally  than  the  civil  law  does.  The 

Pearce   v.    Alward,    163    Mich.    313,  effect  is  to  render  the  day  a  sort  of 

128    N.    W.   210    (agreement   to   de-  indivisible    point;    so    that    any    act, 

liver  2,500  grapevines  which  defend-  done  in  the  compass  of  it,  is  no  more 

ant   was  to  cultivate   and   divide  the  referable    to    any    one,    than    to    any 

fruit    with    the    plaintiff,    who    also  other  portion  of  it;  but  the  act  and 

agreed    to    replace    the    vines    dying  the  day  are  coextensive,   and   there- 

within  two  vears)  ;  post,  §  1578.  fore  the  act  can  not  properly  be  said 

**KolachnV  v.   Galbreath,  26  Okla.  to    have    passed,    until    the    day    is 

772,  110  Pac.  902.  passed." 

**  German  Ins.  Co.  v.  Hazard  Bank,        '"Preston  v.  Dunham.  52  Ala.  217; 

31  Ky.  L.    1126.  104  S.  W.  725.  Massie  v.  Belford.  68  111.  290;  Stcv- 

"Twaits    V.    Pennsvlvania    R.    Co.,  ens  v.  Blunt,  7  Mass.  240;  Connolly 

n  N.  J.  Eq.  103,  75'Atl.  1010.  V.   Anderson,   1   Hill    (N.  Y.)    519. 

"  Mclntyre     Lumber     &c.     Co.     v.        ""  See  Elizabeth  City  Cotton  Mills  v. 

Jackson  Lumber  Co..  165  Ala.  268,  51  Dunstan,    121    N.   Car.    12.   27    S.    E. 

So.  767,  138  Am.  St.  66.  1001,  61  Am.  St.  654,  holding  that  a 

**In  re  Hull  R.  &c.  Co.,  L.  R.  20  contract    by    which    one    subscribed 

Ch.  Div.  203;  Field  v.  Jones,  9  East  for    capital    stock    in    a    corporation 

53— Contracts,  Vol.  2 


§    1550  CONTRACTS.  834 

promise  to  pay  on  or  before  a  designated  day  is  construed  as  a 
promise  to  pay  on  that  day  with  the  optional  privilege  of  paying 
before  the  time  specified.  °^ 

§  1550.  Computation  of  time  from  a  particular  day  or  a 
particular  event. — In  the  interpretation  of  contracts,  w^here 
time  is  to  be  computed  from  a  particular  day  or  a  particular 
event,  as  when  an  act  is  to  be  performed  within  a  specified  pe- 
riod from  or  after  a  day  named,  the  general  rule  is  to  exclude  the 
day  thus  designated  and  to  include  the  last  day  of  the  specified 
period.^*  In  a  leading  English  case  in  regard  to  a  lease  which 
was  to  commence  from  the  day  of  the  date,  the  matter  turned 
upon  the  question  whether  the  phrase  "to  commence  from  the  day 
of  the  date"  was  to  be  construed  as  excluding,  or  including,  the 
day  on  which  the  lease  bore  date.  The  court  established  the  prin- 
ciple that  the  words  when  used  in  an  instrument  were  to  receive 
an  inclusive  or  exclusive  sense,  according  to  the  intention  with 
which  they  were  used,  to  be  derived  from  the  context  and  subject- 
matter,  and  so  as  to  effectuate,  and  not  destroy,  the  deed  of  the 
parties. °^     Many  early  cases  made  a  distinction  between  compu- 

conditioned  on  a  certain  amount  be-  Rep.  470;  Duffy  v.  Ogden,  64  Pa.  St. 

ing  subscribed  by  a  certain  day  be-  240   (a  lease  for  one  year)  ;  Weld  v. 

comes  binding  if  such  amount  is  sub-  Barker,    153   Pa.   St.   465 ;    Phelan  v. 

scribed    on    the    night    of    the    day  Douglass,  11  How.  Pr.   (N.  Y.)   193. 

named.  "Time    is    not,    therefore,    computed 

"  Wilson    V.    Bicknell,     170    Mass.  from  the  hour  of  the  day  on  which 

259,  49  N.   E.   113;   Helmer  v.   Kro-  the    event   happened,    to   the    corres- 

lick,  36  Mich.  371 ;  Mattison  v.  Marks,  ponding  hour  of  the  day  of  perform- 

31  Mich.  421,  18  Am.  Rep.  197.  ance;    but   the   computation    is    from 

^^  Sheets  v.  Selden's  Lessee,  2  Wall,  the  day  when  the  act  was  done,  such 
(U.  S.)  177,  17  L.  ed.  822.  See  Cor-  day  being  regarded  as  a  point  of 
nell  V.  Moulton,  3  Denio  (N.  Y.)  time.  The  computation  begins  with 
12,  which  was  an  action  on  a  promis-  the  expiration  of  such  day.  It  is 
sory  note  payable  on  demand.  The  thus  computed  literally  from  such 
note  was  dated  February  14,  1839,  day,  that  is,  from  its  close,  its  end- 
and  the  question  was  whether  suit  ing,  its  expiration." 
commenced  on  the  14th  of  February,  °^  Pugh  v.  Duke  of  Leeds,  Cowp. 
1845  saved  the  operation  of  the  stat-  714;  Sands  v.  Lyons,  18  Conn.  18.  Jn 
ute  of  limitations.  The  court  held  the  leading  case  of  Bigelow  v.  Will- 
that  it  did.  Also  Blackman  v.  Near-  son,  1  Pick.  (Mass.)  485,  it  was  held 
ing,  43  Conn.  56,  21  Am.  Rep.  634.  that  under  a  statute  authorizing  the 
"No  rule,  however,  is  to  be  enforced  owner  of  an  equity  of  redemption, 
so  sternly  as  to  defeat  the  intent  of  sold  on  execution  and  conveyed  by 
the  parties;  that  is  always  paramount  an  officer,  to  redeem  it  "within  one 
to  all  other  considerations,  and  is  al-  year  next  after  the  time  of  execut- 
ways  to  be  carried  into  effect,  if  not  ing"  the  deed,  the  day  on  which  the 
contrary  to  law  or  public  policy."  Be-  deed  was  executed  was  excluded, 
mis  V.  Leonard,  118  Mass.  502, 19  Am. 


835  INTERPRETATION    AND    CONSTRUCTION.  §    I550 

tations  from  a  day  or  a  date  and  computations  from  an  act  done, 
or  from  an  event.  But  this  distinction  does  not  rest  upon  a 
sound  principle  and  in  most  jurisdictions  it  is  no  longer  recog- 
nized. The  tendency  of  recent  decisions  is  very  strongly  toward 
the  adoption  of  a  general  rule  which  excludes  the  day  as  the 
terminus  a  quo  in  such  cases.  But  this  rule  is  not  inflexible,  and 
in  the  interpretation  of  a  statute  or  contract  it  yields  to  a  mani- 
fest purpose  or  intention  in  conflict  with  it.°*  Words  such  as 
"until,"°°  "from"  or  the  like,^"  will  be  given  an  exclusive  or  in- 
clusive meaning  depending  upon  the  subject-matter  of  the  con- 
tract and  the  intention  of  the  parties.  The  mle  that  the  law  in 
the  computation  of  time  does  not  consider  the  fractions  of  days 
does  not  prevail  when  it  becomes  essential  for  the  purpose  of 
justice  to  ascertain  the  exact  hour  or  minute."  It  is  subject  to 
just  and  reasonable  exceptions,  and  does  not  govern  in  questions 
concerning  acts  of  the  parties  where  it  becomes  necessary  to 
distinguish  and  ascertain  which  of  several  persons  has  a  priority 
of  right,  as  where  a  bond  and  release  are  executed  on  the  same 
day."  Where  an  insurance  policy  was  made  to  expire  at  noon 
on  a  given  day  it  has  been  held  that  the  question  of  whether  noon 
meant  standard  or  sun  time  depended  upon  the  custom  of  the  com- 
munity, unless  an  intention  contrary  to  the  custom  was  evidenced 

"Seward  v.  Hayden,  150  Mass.  158.  N.   E.   1083;   Marys  v.  Anderson,  24 

The  American  cases  almost  uniform-  Pa.  St.  272. 

ly  exclude  the  first  day.     Teucher  v.  "  Combe    v.     Pitt,    3    Burr.     1423 ; 

Hiatt,  23   Iowa  527;    Portland   Bank  Grosvenor    v.     Magill,    2,7    111.    2i9\ 

V.  Maine  Bank,  11  Mass.  204;   Rand  Westbrook    Mfg.    Co.    v.    Grant,    60 

V.    Rand,    4    N.    H.    267;    Snyder    v.  Maine  88,   11   Am.   Rep.   181;   Follett 

Warren,  2  Cow.  (N.  Y.)  518,  14  Am.  v.    Hall,    16   Ohio   111,   47   Am.   Dec. 

Dec.    519.      Ex    parte    Dean,   2    Cow.  365.     Generally  the  law  does  not  re- 

(N.  Y.)  605.  14  Am.  Dec.  521.     Gil-  gard    fractions   of    a   day,    except    in 

lespie    V.    White,    16   John.    (N.    Y.)  cases   where   the   hour    itself    is    ma- 

117.     In    Iowa   the  manner   of   com-  terial.      Mitchell    v.    Schoonovcr,    16 

puting   time    has    been    regulated    by  Ore.  211,  17  Pac.  867,  8  Am.  St.  282, 

Rev.  Laws  1860,  §  4121.    "Unless  the  citing    Marvin   v.    Marvin,    75    N.    Y. 

terms  'clear  days'  are  used,  the  mode  240.      To    the    same    effect,    Judd    v. 

of  computing  time  is  by  excluding  the  Fulton,  10  Barb.  (N.  Y.)  117,  4  How. 

first    day    and    including    the    last."  Pr.  298;  Columbia  Turnpike  Road  v. 

Other  states  have  also  made  similar  Haywood,    10   Wend.    (N.    Y.)    422; 

provisions.  Hughes  v.  Patton,  12  Wend.  (N.  Y.) 

"Webster  v.   French,    12   111.   302;  234;    Blvdenburgh    v.    Cotheal.    4   N. 

Kendall  v.  Kingsley.  120  Mass.  94.  Y.  418,  3  Code  Rep.  216,  5  How.  Pr. 

"  Sands  v.  Lyons,   18  Conn.  18 :  Hig-  200. 

gins  v.  Halligan,  46  111.   173;   Peoria  '''Louisville     v.     Portsmouth     Sav, 

Sav.  &c.  Co.  V.  Elder,  165  111.  55,  45  Bank,  104  U.  S.  469.  26  L.  ed.  775; 


§  I550 


CONTRACTS. 


836 


by  the  contract.^^  When  a  contract  fails  to  fix  a  time  within 
which  performance  is  to  be  made,  it  is  presumed  that  the  contract 
is  to  be  performed  within  a  reasonable  time.*^**  Consequently 
the  promisor  is  not  in  default  until  a  reasonable  time  has 
elapsed. "^^  However,  a  failure  to  perform  within  a  reasonable 
time  constitutes  a  breach  of  the  contract.®^  And  the  promisee  is 
not  required  to  accept  performance  after  a  reasonable  time  has 
elapsed,  and  especially  after  he  has  changed  his  position.^^  It  is 
true  as  a  general  rule  that  what  constitutes  a  reasonable  time  is 
a  question  of  fact  to  be  determined  by  the  jury  from  all  the  cir- 
cumstances of  the  case.®*  Thus  where  a  contract  provided  that 
"if  work  is  pushed,  a  few  days  of  grace  will  be  allowed,"  it  was 
held  not  for  the  court  to  say  that  thirteen  days  were  the  few  days 
of  grace  contracted  for,  but  that  the  question  depended  upon  the 


In  re  Welman,  20  Vt.  653.  See  also, 
Maine  v.  Oilman,  11  Fed.  214;  West- 
brook  Mfg.  Co.  V.  Grant,  60  Maine 
88,  11  Am.  Rep.  181;  In  re  Richard- 
son, 2  Story  (U.  S.)  571. 

•*  Globe  &c.  Ins.  Co.  v.  David 
Moffat  Co.,  154  Fed.  13,  83  C  C.  A. 
91 ;  Rochester  German  Ins.  Co.  v. 
Peaslee-Gaulbert  Co.,  120  Ky.  752, 
27  Ky.  1155,  28  Ky.  130,  87  S.  W. 
1155,  89  S.  W.  3,  1  L.  R.  A.  (N.  S.) 
364.  See  also,  Salt  Lake  City  v. 
Robinson'  (Utah),  116  Pac.  442,  35 
L.  R.  A.  (N.  S.)  610,  holding  that  in 
the  case  of  a  contract  the  question 
as  to  whether  it  is  to  be  governed  by 
standard  or  sun  time  may  be  one  of 
fact  for  the  jury,  but  that  in  the 
construction  of  a  statute  or  municipal 
ordinance,  such  as  one  designating  a 
closing  hour  for  saloons,  the  ques- 
tion is  one  of  law  for  the  court. 

<=*  Ellis  V.  Thompson,  3  M.  &  W. 
445;  McFadden  v.  Henderson,  128 
Ala.  221,  29  So.  640;  Griffin  v.  Ogle- 
tree,  114  Ala.  343,  21  So.  488;  Comer 
V.  Way,  107  Ala.  300,  19  So.  966,  54 
Am.  St.*  93;  Bryant  v.  Atlantic  Coast 
Line  R.  Co.,  119  Ga.  607,  46  S.  E.  829; 
Atchison  &c.  R.  Co.  v.  Burlingame 
Tp.,  36  Kans.  628,  14  Pac.  271,  59 
Am.  Rep.  578;  Howe  v.  Taggart,  133 
Mass.  284;  Calkins  v.  Chandler,  36 
Mich.  320,  24  Am.  Rep.  593;  Pinney 
V.  First  Div.  of  St.  Paul  &  P.  R.  Co., 
19    Minn.    251;    Stewart    v.    Marvel, 


101  N.  Y.  357 ;  Van  Arsdale  v.  Brown, 
18  Ohio  C.  C.  52;  Gammon  v.  Bun- 
nel,  22  Utah  421,  64  Pac.  958;  Den- 
nis V.  Stoughton,  55  Vt.  376;  Poling 
v.  Condon-Lane  Boom  &c.  Co.,  55 
W.  Va.  529,  47  S.  E.  279. 
•^Bell  V.  Mendenhall,  78  Minn.  57, 

80  N.  W.  843. 

«"-Hume  V.  Mullins,  18  Ky.  L.  108, 
35  S.  W.  551 ;  Gainor  v.  Cheboygan 
River  Boom  Co.,  86  Mich.  112,  48  N. 
W.  787 ;  Lynd  v.  Apponang  &c.  Print- 
ing Co.,  20  R.  I.  344,  39  Atl.  188; 
Reynolds  v.  Reynolds,  74  Vt.  463,  52 
Atl.  1036. 

•'Meader  v.  Allen,   110  Iowa  588, 

81  N.  W.  799. 

•^  Drake  v.  Goree,  22  Ala.  409; 
Watt's  Exrs.  v.  Sheppard,  2  Ala.  425 ; 
Campbell  v.  Heney,  128  Cal.  109,  60 
Pac.  532;  Jenkins  v.  Lykes,  19  Fla. 
148,  45  Am.  Rep.  19;  Bearden  Mer- 
cantile Co.  V.  Madison  Oil  Co.,  128 
Ga.  695,  58  S.  E.  200 ;  Harding  v.  Ol- 
son, 177  111.  298,  52  N.  E.  482,  affg.  76 
111.  App.  475;  Morrison  v.  Wells, 
48  Kans.  494,  29  Pac.  601;  Asher  v. 
Asher,  141  Ky.  268,  132  S.  W.  415; 
Peabody  v.  Fellows,  181  Mass.  26, 
62  N.  E.  1053;  Elder  v.  Rourke,  27 
Ore.  363,  41  Pac.  6;  Hays  v.  Hays, 
10  Rich.  (S.  Car.)  419;  Brainerd  v. 
Van  Dyke,  71  Vt.  359,  45  Atl.  758; 
Boyington  v.  Sweeney,  11  Wis.  55,  45 
N.  W.  938. 


837  INTERPRETATION    AND    CONSTRUCTION.  §    1 55 1 

character  of  the  work  to  be  clone,  the  time  necessarily  required  in 
doing  it,  and  all  the  circumstances  surrounding  the  transaction.®' 
However,  where  the  facts  are  undisputed,  and  different  infer- 
ences cannot  be  reasonably  drawn  from  the  same  facts,  the 
question  of  what  is  the  reasonable  time  is  one  of  law."*' 

§  1551.  Time — Time  at  law  generally  of  the  essence  of  a 
contract. — At  law,  as  a  general  rule,  time  is  deemed  of  the 
essence  of  a  contract,  and  performance  is  required  at  the  day, 
or  the  consequence  of  default  may  follow."^  If  the  vendor,  in 
a  contract  for  the  sale  of  land,  is  not  ready  and  able  to  perform 
his  part  of  the  agreement  on  the  day  fixed  by  the  contract,  the 
purchaser  may  consider  the  contract  at  an  end,  and  stand  dis- 
charged from  its  obligation."^  Where  a  contract  for  the  sale  of 
land  recited  a  payment  of  a  material  portion  of  the  purchase- 
price  and  declared  that  on  the  payment  of  the  balance  any 
time  within  the  year  with  six  per  cent,  interest  the  defendant 
agreed  to  convey  the  land  to  plaintiff,  time  was  not  of  the 
essence  of  the  contract. °°  Where  a  party  contracts  to  perform 
certain  work  or  labor  in  a  specified  manner,  and  by  a  specified 
time,  time  is  as  much  the  essence  of  the  contract  as  the  manner 
in  which  the  work  or  labor  is  to  be  performed.^"     In  the  contracts 

•*Ross  V.  Loescher.  152  Mich.  386,  (U.  S.)  455,  7  L.  ed.  219  (agreement 

116  N.  \V.  193.  125  Am.  St.  418.  to  purchase  land). 

*"  Cotton    V.    Cotton,    75    Ala.    345;  **  Stowell  v.   Robinson,  3   Bing.   N. 

Luckhart    v.     Ogden,     30    Cal.    547;  C.  928;   Inman  v.  Western  Fire  Ins. 

Atwood  V.  Clark,  2  Maine  249:  Hill  Co.,  12  Wend.   (N.  Y.)  452. 

V.   Hobart,   16  Maine  164;  Echols  v,  "^Fullenwider  v.   Rowan,   136   Ala. 

New  Orleans  &c.  R.  Co.,  52  Miss.  610;  287,  34  So.  975. 

Turner  v.  Snvdcr.  139  Mo.  App.  656,  '"Merritt  v.  Penmsular  Const.  Co., 

123  S.  .W.  1050;  Wright  v.  Bank  of  91  Md.  453,  46  Atl.  1013;  Pittsburgh 

the  Metropolis.  110  N.  Y.  237,  18  N.  T.   &    S.   &c.    Co.   v.    National   Tube 

E.  79,  1  L.  R.  A.  289,  6  Am.  St.  356n;  Works,   184  Pa.   St.  251.  39  Atl.  76; 

Hedges  v.  Hudson  River  R.  Co.,  49  Warren   v.   Bean,   6   Wis.    120.     See 

N.  Y.  223.  Morrison  v.  Wells,  48  Kans.  494.  29 

"Wood  V.  Joliet  Gaslight  Co.,  Ill  Pac.  601.  where  the  parties  to  a  writ- 
Fed.  463,  49  C.  C.  A.  427;  Ogden  v.  ten  contract  conditioned  the  payment 
Kirby,  79  111.  555  (a  subscription  to  of  money  upon  the  completion  of 
aid  in  the  construction  of  a  railroad  certain  work  upon  a  building  by  a 
to  be  completed  to  a  certain  place  by  time  fixed  therein.  Allen  v.  Inhabi- 
a  certain  time)  ;  Cromwell  v.  Wil-  *tants  of  Cooper.  22  Maine  133.  where 
kinson.  18  Ind.  365;  McEntyre  v.  the  court  declares  that  "if  there  was 
Tucker.  Tid  -•Xpp.  Div.  (N.  Y.)'53.  55  an  agreement,  in  the  first  instance, 
N.  Y.  S.  153 ;  Inman  v.  Western  Fire  as  to  the  time  within  which  the  con- 
Ins.  Co.,  12  Wend.  (N.  Y.)  452;  tract  was  to  be  performed,  and  no 
Bank  of  Columbia  v.  Ilagner,  1  Pet.  waiver  of  it,  then,  at  law,  time  was 


§    1552  COXTRACTS.  83S 

of  merchants,  the  time  of  shipment  is  the  usual  and  convenient 
means  of  fixing  the  probable  time  of  arrival,  with  a  view  of 
providing  funds  to  pay  for  the  goods,  or  of  fulfilling  contracts 
with  third  persons.  A  statement  descriptive  of  some  material  in- 
cident, such  as  the  time  and  place  of  shipment,  is  ordinarily  to  be 
regarded  as  a  warranty,  in  the  law,  that  is  to  say,  a  condition 
precedent,  upon  the  failure  or  nonperformance  of  which  the 
party  aggrieved  may  repudiate  the  whole  contract.'^  Where  a 
policy  of  life  insurance  stipulates  for  the  payment  of  an  annual 
premium  by  the  insured,  with  a  condition  to  be  void  on  nonpay- 
ment, time  is  material  and  of  the  essence  of  the  contract.  Non- 
payment at  the  day  involves  absolute  forfeiture,  if  such  be  the 
terms  of  the  contract,  and  courts  cannot  with  safety  vary  the 
stipulation  of  the  parties  by  introducing  equities  for  the  relief 
of  the  insured  against  their  own  negligence."  A  waiver  of  a 
provision  that  time  shall  be  of  the  essence  of  the  contract  may  be 
implied  from  the  circumstances." 

§  1552.  Time — Relative  to  the  sale  of  goods. — Time  is  us- 
ually of  the  essence  of  an  executory  contract  for  the  sale  and 
subsequent  delivery  of  goods,  where  no  right  of  property  in  th« 

of  the  essence  of  the  contract."  The  will  be   compelled.     Carter  v.    Phil^ 

contract  in  that  case  was  for  laying  lips,  144  Mass.  100,  10  N.  E.  500. 

out  and  building  a  public  road,  and  "New  York  Life  Ins.  Co.  v.  Stat- 

the  work  was  to  be  done  within  that  ham,    93    U.    S.    24,    23    L.    ed.    789. 

and    the    next    year.      Pickering    v.  "Both  at  common  law  and  in  chan- 

Greenwood,    114    Mass.    479.      "The  eery  there  are  exceptions  to  this  rule, 

time    being    stated    in    the    contract  growing    out    of    the    nature    of    the 

when  the  work  should  be  finished,  it  thing  to  be  done  and  the  conduct  of 

was  of  the  essence  of  the   contract,  the    parties.      The    familiar    case    of 

and    the    work    must    be    performed  part  performance,  possession,  etc.,  in 

within  that  period."  chancery,   where   time  is   not  of   the 

"  Pope  V.  Porter,  102  N.  Y.  366,  7  essence  of  the  contract,  or  has  been 

N.    E.    304;    Norrington    v.    Wright,  waived    by    the    acquiescence    of    the 

115  U.  S.  188,  29  L.   ed.  366,  6  Sup.  party,   is   an    example   of   the    latter; 

Ct.  12;  Filley  v.  Pope,  115  U.  S.  213,  and  the  case  of  contracts  for  build- 

29  L.  ed.  372,  6  Sup.  Ct.   19.     When  ing  houses,   railroads   or  other  large 

the    contract    fixes    the    time    within  and  expensive  constructions  in  which 

which  it  is  to  be  performed,  and   it  the    means    of    the    builder    and    his 

appears   from  its  nature,  or  the  cir-  labor    become   combined    and    affixed 

cumstances    connected    with    its    per-  to  the  soil,  or  mixed  with  materials 

f ormance,    that    the   parties    intended  •  and  money  of  the  owner,  often   af- 

to    make   the    time    an    essential    ele-  ford  examples  at  law."     Phillips  &c. 

ment  of  the  agreement,  time  will  be  Const.  Co.  v.  Seymour,  91  U.  S.  646, 

deemed   of   the   essence   of    the   con-  23  L.  ed.  341. 

tract,  and  strict  compliance  therewith  "Vider  v.   Ferguson,  88  111.   App. 

136. 


839  INTERPRETATION    AND    CONSTRUCTION.  §    1 553 

same  passes  by  the  bargain  from  the  vendor  to  the  purchaser, 
and  the  rule  in  such  a  case  is,  that  the  purchaser  is  not  bound  to 
accept  and  pay  for  the  goods  unless  the  same  are  delivered  or 
tendered  on  the  day  specified  in  the  contract.''*  A  party  in  New 
York  wrote  to  parties  in  Boston,  offering  to  sell  them  coal,  and 
stating  that  he  had  a  vessel  of  375  tons  which  he  could  load  on 
Monday.  The  Boston  parties  telegraphed  in  reply:  "Ship 
*  *  *  that  cargo  coal  375  tons  immediately."  The  party  in 
New  York  did  not  begin  to  load  until  nine  days  afterward,  and 
then  shipped  a  cargo  of  392  tons.  The  Boston  parties  were  not 
bound  to  take  it.  Both  the  quantity  and  time  of  delivery  were 
essential  elements  of  the  contract.^^  In  the  absence  of  a  stipu- 
lated time  for  delivery,  the  law  prescribes  a  reasonable  time,  and 
what  is  a  reasonable  time  is  a  question  of  fact  for  the  jury  to  be 
determined  by  the  circumstances  of  each  case."  If  from  the 
facts  found,  or  undisputed,  in  a  particular  case,  the  court  can 
draw  the  conclusion  as  to  whether  the  time  is  reasonable  or  not. 
by  the  application  of  any  general  principle  or  definite  rule  of  law. 
the  question  is  one  of  law  for  the  court. ''^ 

§  1553.  Conditions  precedent. — Where  time  is  of  the  es- 
sence of  the  contract  there  can  be  no  recovery  at  law  in  case  of 
failure  to  perform  within  the  time  stipulated.''^  It  is  an  elemen- 
tary principle  that  a  party  bound  to  perform  a  condition  precedent 

''*  Wilson  V.  Empire  Dairy-Salt  Co.,  "  Cochran      v.      Toher,      14      Gil. 

SO  App.  Div.   (N.  Y.)   114,  63  N.  Y.  (Minn.)  293;  Pinney  v.  First  Div.  of 

S.  565:  Jones  v.  United  States.  96  U.  St.  Paul  &  P.  R.  Co.,   19  Minn.  251. 

S.  24,  24  L.  ed.  644,  13  Ct.  CI.  (U.  S.)  In  Mellish  v.   Rawdon.  9  Bing.   416. 

524.  relative  to  a  bill   of   exchange,   Tin- 

"  Rommel    v.    Wingate,    103    Mass.  dal,     C.     J.,    said :     "Whether    there 

327.  has  been  in  any  particular  case  rea- 

"  Smith  V.  Bruner,  68  111.  App.  61 ;  sonable    diligence    used,    or    whether 

Pinney  v.   First  Div.   of   St.   Paul  &  unreasonable  delay  has  occurred,  is  a 

P.    R.    Co.,    19   Minn.   251 ;    Hand   v.  mixed   question   of   law  and    fact,   to 

Brooks,   21    App.    Div.    (N.    Y.)    489,  be  determined  by  the  jury  acting  un- 

47  N.  Y.    S.  583;   Ideal  Wrench  Co.  der  the  direction  of  the  judge,  upon 

V.   Garvin    Mach.   Co..   65   App.    Div.  the  particular  circumstances  of  each 

(N.  Y.)  235.  72  N.  Y.  S.  662;  Browne  case." 

V.  Paterson.  165  N.  Y.  460.  59  N.  E.  '« Perin  v.  Cathcart.  115  Iowa  553. 

296.  affg.  36  App.  Div.   (N.  Y.)   167,  89  X.  W.  12;  Hill  v.  School  District. 

55  N.  Y.  S.  404;  Cragin  v.  O'Connell.  17    Maine   316:    Denton    v.    McTnnis. 

169  N.   Y.  573.  61    N.  E.   1128.  affg.  85    Mo.    App.   542;    Slater   v.    Emer- 

50  App.  Div.   (N.  Y.)  339,  63  N.  Y.  son,  19  How.  (U.  S.)  224,  15  L.  ed. 

S.  1071 ;  Kellam  v.  McKinstry.  69  N.  626. 
Y.  264. 


§  1553 


CONTRACTS. 


840 


cannot  sue  on  the  contract  without  proof  that  he  has  performed 
that  condition.  An  offer  to  perform  conditions  precedent  is  not 
usually  sufficient.'^  In  a  contract  to  aid  the  construction  of  a  rail- 
road by  a  subscription,  a  condition  that  the  road  should  be  put 
into  operation  by  a  certain  time  was  a  condition  precedent  to  the 
right  of  the  company  to  recover  on  the  contract.^"  In  determining 
whether  stipulations  as  to  the  time  of  performing  a  contract  of 
sale  are  conditions  precedent,  the  court  seeks  to  discover  the  in- 
tention of  the  parties,  and  if  time  appears,  from  the  language  used 
and  the  circumstances,  to  be  of  the  essence  of  the  contract,  stipu- 
lations in  regard  to  it  will  be  held  conditions  precedent.^^  Silence 
on  the  part  of  a  party  to  a  contract  may  amount  to  a  waiver  of 
the  performance  of  a  condition  precedent  in  cases  in  which  such 
silence  is  inconsistent  with  any  other  explanation.^^     Where  one 


"Cincinnati,,  S.  &  C.  R.  Co.  v. 
Benslev,  51  Fed.  738,  2  C.  C.  A.  480, 
19  L.  R.  A,  796;  Gouverneur  v.  Til- 
lotson,  3  Edw.  Ch.  (N.  Y.)  348; 
Tones  v.  United  States,  96  U.  S.  24, 
24  L.  ed.  644,  13  Ct.  CI.  (U.  S.)  524. 
See  Dermott  v.  Jones,  23  How.  (U. 
S.)  220,  16  L.  ed.  442,  an  action  upon 
a  special  contract  to  build  a  house 
by  a  certain  day,  which  was  not  ful- 
filled. By  the  terms  of  the  contract, 
the  performance  of  the  work  was  a 
condition  precedent  to  the  payment 
of  the  money  sued  for.  The  case  was 
remanded  to  the  circuit  court  to  be 
tried  upon  the  common  counts  for 
work  and  labor  done  and  materials 
furnished.  See  generally  post,  §§  1583, 
1584. 

"^  Burlington  &c.  R.  Co.  v.  Boestler, 
15  Iowa  555.  For  the  principle  is 
laid  up  among  the  fundamentals  of 
the  law  that,  when  a  time  for  the  per- 
formance of  an  act,  or  a  condition 
precedent,  is  fixed  by  the  contract, 
the  act  or  condition  must,  at  least  in 
a  court  of  law,  be  performed  within 
or  at  the  time.  Memphis  &c.  R.  Co. 
V.  Thompson,  24  Kans.  170.  (An  action 
upon  certain  bonds  issued  by  the 
City  of  Parsons  in  aid  of  the  con- 
struction of  a  railroad,  subject  to  a 
condition  that  the  plaintiff  should 
"have  its  road  constructed  and  in 
operation  *  *  *  on  or  before  the 
first    day    of    July,    1878."      It  was 


held  that  time  was  of  the  essence 
of  the  contract,  and  that  the  failure 
of  the  plaintiff  to  complete  the  road 
by  the  day  named  was  fatal  to  a  re- 
covery, notwithstanding  that  the  road 
was  completed  shortly  after,  and  the 
city  received  the  benefit  of  it.).  On  _a 
contract  where  time  does  not  consti- 
tute its  essence,  there  can  be  no  re- 
covery at  law  on  the  agreement, 
where  the  performance  was  not  with- 
in the  time  limited,  but  a  subsequent 
performance  and  acceptance  will  au- 
thorize a  recovery  on  a  quantum 
meruit.  Slater  v.  Emerson,  19  How. 
(U.  S.)   224,  15  L.  ed.  626. 

"  Harris  v.  Gregg,  17  App.  Div. 
(N.  Y.)  210,  45  N.  Y.  S.  364;  Hig- 
gins  V.  Delaware  &c.  R.  Co.,  60  N. 
Y.  553. 

*^  Burlington  &c.  R.  Co.  v.  Boest- 
ler, 15  Iowa  555;  Thompson  Lum- 
ber Co.  v.  Howard,  22  Ky.  L.  424, 
57  S.  W.  615.  No  parol  assent  or 
silent  acquiescence  can  destroy  the 
effect  of  an  express  condition  con- 
tained in  a  deed.  Jackson  v.  Crys- 
ler,  1  John.  Cas.  (N.  Y.)  125.  In 
case  of  default  in  a  building  con- 
tract, absolute  performance  may  be 
waived  by  allowing  the  party  in  de- 
fault to  go  on  so  as  to  render  the 
other  party  liable  for  the  contract 
price  of  the  work  when  completed. 
Phillips  &  Colby  Const.  Co.  v.  Sey- 
mour, 91  U.  S.  646,  23  L.  ed.  341. 


841  INTERPRETATION    AND    CONSTRUCTION.  §    1 554 

party  to  a  contract  demands  a  strict  performance  as  to  time,  he 
must  perform,  on  his  part,  all  the  conditions  requisite  to  enable 
the  other  party  to  perform  his  part,  and  a  failure  to  do  so  operates 
as  a  waiver  of  the  time  provision.*^ 

§  1554.  When  time  is  not  of  the  essence  of  a  contract. — In 
a  contract  for  work  or  skill,  and  the  materials  upon  which  it  is 
to  be  bestowed,  a  statement  fixing  the  time  of  performance  of  the 
contract  is  not  ordinarily  of  its  essence,  and  a  failure  to  perform 
within  the  time  stipulated,  followed  by  substantial  performance 
after  a  short  delay,  will  not  justify  the  aggrieved  party  in  repudi- 
ating the  entire  contract,  but  will  simply  give  him  his  action  for 
damages  for  the  breach  of  the  stipulation.®'*  A  contract  by  a  lith- 
ographing company  to  make  and  furnish,  "in  the  course  of  a 
year,"  designs  of  certain  buildings  of  a  manufacturing  company, 
with  sketches  of  its  trademarks,  to  execute  engravings,  and  to 
embody  same  on  large  amounts  of  stationery,  etc.,  is  one  for  work 
and  labor  requiring  artistic  skill ;  and  the  stipulation  as  to  time 
was  held  not  of  the  essence  of  the  contract  so  as  to  justify  a  re- 
pudiation thereof,  because  of  a  delay  in  delivery  of  six  or  eight 
days  after  the  expiration  of  the  year.®^  It  has  been  held  that  an 
express  stipulation  in  a  contract  for  the  construction  of  a  house 
that  it  should  be  completed  on  a  day  certain,  and  that,  in  case  of 
failure  to  complete  it  within  the  time  limited,  the  builder  would 
forfeit  $1,000,  would  not  justify  the  owner  of  the  land  on  which 
the  house  was  constructed  in  refusing  to  accept  it  for  a  breach  of 
this  stipulation,  when  the  house  was  completed  shortly  after  the 
time  fixed,  nor  even  in  retaining  the  penalty  stipulated  in  the  con- 
tract, but  that  he  must  perform  his  part  of  the  contract,  and  that 
he  could  retain  from  or  recover  of  the  builder  the  damages  he 
sustained  by  the  delay  and  those  only.^"     The  court  may  ordinar- 

"  Standard  Gaslight  Co.  v.  Wood,  Hambly  v.   Delaware  &c.  R.  Co.,  21 

61  Fed.  74,  9  C.  C.  A.  362;  Dannat  Fed.   541;    Bounds   v.    Hickerson,   26 

V.   Fuller,   120   N.   Y.   554,  24  N.   E.  Tex.   Civ.   App.   608,  63   S.   W.  887; 

815;   Gallagher  v.  Nichols,  60  N.  Y.  Tayloe  v.   Sandiford,   7  Wheat.    (U. 

438;   Grube  v.   Schultheiss,  57  N.  Y.  S.)   13.  5  L.  ed.  384. 

669;  District  of  Columbia  v.  Camden  '^  Beck   &c.    Lith.   Co.   v.   Colorado 

Iron  Works,  181  U.  S.  453,  45  L.  ed.  Milling  &c.    Co.,   52   Fed.    700,   3   C. 

948,  21    Sup.   Ct.  680;    McDonald   v.  C.  A.  248. 

Cole.  46  W.  Va.  186,  32  S.  E.  1033.  ^Tayloe   v.    Sandiford,    7    Wheat. 

**  American    Typefounders    Co.    v.  (U.   S.)    13,  5  L.  ed.  384. 
Packer,   130  Cal.   459.  62   Pac.  744; 


§    1555  CONTRACTS.  842 

ily  compensate  for  delay  in  the  payment  of  money  by  the  allow- 
ance of  interest;*^  hence  from  mere  designation  of  time  for  pay- 
ment of  money  there  can  be  no  necessary  implication  that  time 
was  intended  to  be  of  the  essence  of  the  contract.^^  Time  cannot 
be  made  essential  in  a  contract  merely  by  so  declaring,  if  it  would 
be  unconscionable  to  allow  it.  Parties  may  stipulate  to  make  it 
so,  where  the  stipulation  is  reasonable;  but,  if  the  stipulation  is 
not  reasonable  the  court  will  not  regard  it.®* 

§  1555.  Time  not  generally  regarded  in  equity  as  of  the 
essence  of  the  contract. — The  time  fixed  for  performance  is 
not  generally  considered  of  the  essence  of  the  contract  in  equity, 
unless  the  parties  have  expressly  so  treated  it,  or  it  necessarily 
follows  from  the  nature  or  circumstances  of  the  contract."**  If, 
however,  it  clearly  appears  to  be  the  intention  of  the  parties  to  an 
agreement  that  time  shall  be  deemed  of  the  essence  of  the  contract 
it  must  be  so  considered  in  equity.®^  And  when  parties  have  de- 
liberately by  their  agreements  or  covenants  fixed  the  time  for  the 
performance  of  an  act,  a  court  of  equity  will  not  interfere  unless 
essential  justice  demands  the  exercise  of  its  jurisdiction."^ 

"  Deford    v.    Maryland    Steel    Co.,  Jewett  v.  Black,  60  Nebr.  173,  82  N. 

113  Fed.  72,  51  C.  C.  A.  59.  W.  375;  Reynolds  v.  Burlington  &c. 

^Seaton   v.   Tohill,   11    Colo.   App.  R.  Co.,   11   Nebr.   186,  7  N.  W.  12n ; 

211,  53   Pac.   170;    Dynan  v.   McCol-  Baldwin   v.   VanVorst,    10   N.   J.   Eq. 

loch,   46   N.   J.    Eq.    11,    18   Atl.   822,  577;  Thompson  v.  Keeler  (N.  J.  Eq.), 

affd.,  46  N.  J.  Eq.  608,  22  Atl.  56.  42   Atl.    1043;    Benedict   v.   Lynch,    1 

^See    Richmond    v.    Robinson,    12  John.  Ch.    (N.  Y.)    370,  7  Am.   Dec. 

Mich.  193,  where,  by  the  terms  of  the  484     (Specific     performance     denied, 

contract,    it    was    "expressly    under-  Opinion    by    Chancellor    Kent    which 

stood  and  declared  that  time  is  and  has  been   often   cited.     Note  to  case 

shall  be  deemed  and  taken  as  of  the  in  7  Am.  Dec.  484.)  ;  Cheney  v.  Libby, 

very  essence  of  the  contract."  134  U.  S.  68,  2)1  L.  ed.  818,   10  Sup. 

""Dvnan    v.    McColloch,    46    N.    J.  Ct.   498;    Brown   v.   Guarantee  Trust 

Eq.   I'l,   18  Atl.   822;   affd.,  46  N.  J.  &c.    Co.,    128   U.    S.    403.   32   L.    ed. 

Eq.  608,  22  Atl.  56;  Shinn  V.  Roberts,  468,  9   Sup.    Ct.   127.     "But   it   must 

1   Spencer  (N.  J.)   435,  43  Am.   Dec.  affirmatively   appear   that   the   parties 

636;   Thacker  &c.   Mfg.   Co.  v.   Mai-  regarded  time  or  place  as  an  essential 

lory,  27  Wash.  670,  68  Pac.  199.  element    in     their    agreement,    or    a 

"Oaken  v.  Pike,  34  L.  J.  Ch.    (N.  court    of    equity   will    not    so    regard 

S.)  620;  Seton  v.  Slade,  7  Ves.  265;  it."      Secombe    v.    Steele,    20    How. 

Parkin    v.    Thorold,     16    Beav.    59;  (U.  S.)  94. 

Quinn  V.   Roath,  Zl  Conn.    16;   Hull  "'Potter  v.    Tuttle,   22   Conn.   512; 

&c.  Coke  Co.  V.  Empire  &c.  Coke  Co.,  Eaton  v.   Schneider,   185   111.  508,  57 

113  Fed.  256,  51  C.  C.  A.  213;   Stow  N.  E.  421;  Bullock  v.  Adams'  Exrs., 

V.  Russell,  36  111.  18;  Missouri  River  20  N.  J.  Eq.  367. 
&c.  R.  Co.  V.  Brickley,  21  Kans.  275; 


843  INTERPRETATION    AND    CONSTRUCTION.  §    1 556 

§  1556.  Illustrations. — Where  a  contractor  agrees  "not  to 
delay  the  work  any  time  after  the  stone  is  delivered,"  he  cannot 
be  held  responsible  for  a  delay  caused  by  the  failure  to  deliver 
him  stone."^  When  a  building  contract  provides  that,  in  case  of 
delay  in  the  completion  of  the  structure  by  a  certain  fixed  date, 
the  builder  shall  pay  a  forfeit  of  a  certain  sum  daily  during  the 
period  of  default,  other  provisions  of  the  contract  must  be  ex- 
amined and  compared,  in  order  to  determine  upon  whom,  from 
the  general  tenor  and  provisions  of  the  contract,  the  fault  is 
imposed  in  causing  the  delay  in  the  completion  of  the  building. 
When  those  other  provisions  disclose  that  the  builders  are  to  fur- 
nish the  materials  and  perform  the  work,  and  the  architects  are  to 
furnish  the  plans  and  specifications  and  superintend  the  work, 
it  is  an  easy  matter  to  show  by  evidence  whether  the  delay  in  the 
completion  of  the  work  was  caused  by  the  fault  of  the  builders 
or  the  architects.^*  The  general  rule  of  equity  is  that  time  is  not 
of  the  essence  of  the  contract,  unless  it  clearly  appears  from  the 
terms  of  the  contract,  in  the  light  of  all  the  circumstances,  that 
such  was  the  intention  of  the  parties.^^ 

§  1557.  Where  the  property  is  subject  to  fluctuations  in 
value. — Time  may  become  of  the  essence  of  a  contract  for  the 
sale  of  property,  not  only  by  the  express  stipulation  of  the  parties, 
but  from  the  very  nature  of  the  property  itself,  and  especially 
when  it  is  subject  to  sudden,  frequent  or  great  fluctuations  in 
value,  as  in  case  of  mining  property. "*'  Contracts  for  the  pur- 
chase of  stock  are  of  this  description,  and  the  reason  assigned 
is,  that  the  daily  fluctuations  in  the  price  render  a  punctual  per- 
formance of  the  essence  of  the  contract."  *Tf,  therefore."  said 
Alderson,  B.,  "the  thing  sold  be  of  greater  or  less  value  ac- 
cording to  the  effluxion  of  time,  it  is  manifest  that  time  is  of  the 

"Taylor    v.    Netherwood,    91    Va.  "^  Brown  v.   Covillaud,  6  Cal.   566; 

88  20  S.  E.  888.  Waterman   v.   Banks,    144  U.   S.  394, 

^  Mahonev  v.  St.  Paul's  Church,  47  36  L.  ed.  479. 

La.  Ann.  1064,  17  So.  484.  "'  Macbrvde    v.    Weekes.    22    Beav. 

""Steele  v.  Branch,  40  Cal.  3;  Bev-  533:    Doloret  v.   Rothchild.    1    Sim  & 

erly    v.    Blackwood,    102   Cal.   83,   36  Stu.   590;    Edgerton   v.    Peckham,   11 

Pac.  378.  Paige  (N.  Y.)  352. 


§    1558  CONTRACTS.  844 

essence  of  the  contract,  and  a  stipulation  as  to  time  must  then  be 
literally  complied  with  in  equity  as  well  as  in  law.""^ 

§  1558.  Stipulations  in  regard  to  real  estate. — The  doctrine 
that  time  is  not  of  the  essence  of  a  contract  is  generally  applied  in 
equity  to  stipulations  for  the  payment  of  money  upon  an  agree- 
ment for  the  sale  and  purchase  of  real  estate.  The  principal 
grounds  of  the  doctrine  are  that  the  rule  of  common  law,  requir- 
ing performance  of  every  contract  at  the  appointed  day,  is  often 
harsh  and  unjust  in  its  operation;  and  although  some  time  of 
performance  by  each  party  is  usually  named  in  any  agreement  for 
the  sale  of  land,  it  is  often  not  regarded  by  the  parties  as  one  of 
the  essential  terms  of  the  contract.""  Time  is  not  to  be  deemed 
of  the  essence  of  a  contract  to  convey  real  estate  unless  made  so 
by  its  terms,  or  by  implication  from  the  nature  of  the  subject- 
matter,  the  object  of  the  contract,  or  the  situation  of  the  parties.^ 
Where  a  contract  for  the  sale  of  land  contained  the  provision  that 
"in  case  of  the  failure  of  the  vendee  to  make  either  of  the  pay- 
ments, or  perform  any  of  the  covenants  on  his  part,  the  vendors, 
at  their  option,  might  declare  a  forfeiture,  and  retain  all  payments 
previously  made  as  liquidated  damages,"  the  court  held  that  these 
stipulations  showed  that  time  was  of  the  essence  of  the  contract.^ 

•'Hipwell  V.  Knight,  1  Y.  &  C.  401,  sence  of   a   contract   to  convey   real 

Weston  V.  Savage,  L.  R.  10  Ch.  Div.  estate,  in  the  absence  of  any  express 

736-  Withy  v.  Cottle,  T.  &  Russ.  78;  provision.      Martindale    v.    Waas,    3 

Pollard  V.  Clayton,  1  K.  &  J.  462.    In  McCrary  (U.  S.)  108,  8  Fed.  854. 
Taylor   v.    Longworth,    14    Pet.    172,        =  Kimball  v.  Tooke,  70  111.  553.   The 

10   L.   ed.   405,    Story,   J.,   says:    "In  only  payment  that  was  made  on  the 

the  first  place,  there  is  no  doubt  that  purchase    was    the    sum    of    $100,    at 

time  may  be  of  the  essence  of  a  con-  the   date  of   execution  of  the  agree- 

tract  for  the  sale  of. property.   It  may  ment.     Wells  v.  Smith,  7  Paige    (N. 

be   made  so  by   the   express  stipula-  Y.)  22,  31  Am.  Dec.  274n,  was  a  case 

tion  of  the  parties,  or  it  may  arise  by  where  the  vendee  agreed  to  build  a 

implication  from  the  very  nature  of  house  on   the  lot  purchased,   or  pay 

the  property,  or  the  avowed  objects  $1,000   of   the   purchase-money   as   a 

of  the  seller  or  the  purchaser."  first  payment,   on   a   certain    day  be- 

'*'  Prentiss  v.  Lyons,  105  La.  382,  29  fore  the  deed  was  to  be  given.     He 

So.  944;    Barnard   v.   Lee,  97   Mass.  neither  built  the  house  nor  paid  the 

92;   Hoper  v.   Pike,  70   Minn.  84,  72  money.     He  filed  his  bill  for  a  spe- 

N.  W.  829,  68  Am.  St.  512.  cific  performance.     The  specific  per- 

^  Green   v.    Covillaud,    10   Cal.    317,  formance  was  denied  on  the  ground 

70  Am.   Dec.  725;   Austin  v.  Wacks,  that  it  was  the  intention  of  the  par- 

30  Minn.  335,  15  N.  W.  409;  Cramer-  ties    to    make    the    building    of    the 

V.  Mooney,  59  N.  J.  Eq.  164,  44  Atl.  house  or  the  payment  of  the  money 

625;  Bullock  v.  Adams'  Exrs.  20  N.  at  the  time  specified  an  essential  part 

J.  Eq.  367.     Time  is  not  of  the  es-  of  the  contract.     "There  is  no  doubt 


845  INTERPRETATION    AND    CONSTRUCTION.  §    1 559 

In  this  country  time  is  regarded  as  more  important  in  respect  to 
the  sale  of  hind  than  in  England,  because  the  value  of  land  is 
more  fluctuating  here  than  there.'  Although  there  may  not  be 
performance  at  the  day,  when  time  has  not  been  made  essential, 
if  the  delay  is  excused,  and  the  situation  of  the  parties  or  of  the 
property  is  not  changed  so  that  injury  will  result,  and  the  party  is 
reasonably  vigilant,  the  court  will  relieve  from  the  consequences 
of  the  delay  and  grant  a  specific  performance.  Each  case  must 
be  judged  by  its  own  circumstances.*  The  parties  to  a  contract 
may,  by  its  terms,  make  the  time  of  performance  essentially  im- 
portant, and  its  observance  in  that  respect  requisite  to  relief,  and 
when  that  is  not  so,  either  of  the  parties  to  the  contract  may,  by 
a  reasonable  notice  to  the  other  party  for  that  purpose,  render  the 
time  of  performance  as  of  the  essence  of  the  contract  and  avail 
himself  of  forfeiture  on  default.*^ 

§  1559.  Rules  as  to  penalties  and  liquidated  damages. — 
Whether  the  sum  mentioned  in  a  contract  is  to  be  considered  as 
liquidated  damages  or  as  a  penalty  merely  "is  a  question  that  has 
often  come  before  the  courts,  both  in  this  country  and  in  England, 
and  has  given  rise  to  as  great  a  variety  of  judicial  utterance  as 
there  are  kinds  of  contracts  among  men.""  It  was  originally  true 
at  common  law  that  the  penalty  named  in  the  bond  was  a  security 
for  the  performance  of  a  condition  annexed  to  it.  Upon  for- 
feiture of  the  condition  the  obligee  was  entitled  to  recover  the 
penalty,  which  was  at  the  same  time  the  utmost  limit  and  beyond 
it  the  obligor's  liability  could  not  be  extended.'^     However,  there 

that  equity  may  decree  a  specific  per-  contract,  it  was  held  that  time  was  of 
formance  of  a  contract  for  sale  of  the  essence  of  the  contract.  Rich- 
property,  notwithstanding-  a  default  mond  v.  Gray,  3  Allen  (Mass.)  25; 
in  payment  upon  the  day  specified.  Hepburn  v.  Auld,  5  Cranch  (U.  S.) 
The  books  are  full  of  instances  where  262,  3  L..ed.  96. 

such  relief  has  been  granted,  and  in  *  Hubbell  v.  Von  Schoening,  49  N. 

many  cases  where  there  is  an  express  Y.  326. 

stipulation    of    forfeiture.      But    this  "Schmidt  v.  Reed,   132  N.  Y.   108. 

relief  has  always  been  afforded  upon  30  N.  E.  373;  Myers  v.  De  Mier,  52 

equitable    principles."    Per    Bliss,    J.,  N.  Y.  647. 

in  O'Fallon  v.  Kennerly,  45  Mo.  124.  'Smith  v.   Newall,  37  Fla.   147,  20 

'  Rogers  v.   Saunders,  16  Maine  92,  So.  249. 

33  Am,  Dec.  635;  Goldsmith  v.  Guild,  ^Williams   v.   Green,   14  Ark.  315; 

10    Allen,     (Mass.)    239,    where    the  Sun    Printing    &c.    Assn.    v.    Moore, 

plaintiff  agreed  to  pay  for  land  "with-  183  U.  S.  642,  46  L.  ed.  366,  22,  Sup. 

in  ten  days"  from  the  date  of   the  Ct.  240. 


§    1559  CONTRACTS.  846 

was  developed  in  equity  a  tendency  to  relieve  against  penalties  and 
forfeitures  annexed  to  bonds  and  other  instruments,  the  design 
of  which  was  to  secure  the  due  fulfilment  of  the  principal  obliga- 
tion by  decreeing  that  the  judgment  of  the  principal  sum  should 
stand  as  security  for  the  payment  by  the  obligor  of  such  damages 
as  the  obligee  had  actually  sustained.^  Subsequently  the  statute 
of  eight  and  nine  William  III  was  enacted  which  made  provision 
for  practically  the  same  measure  of  relief  in  an  action  at  law  as 
might  have  been  obtained  in  equity.  That  is  to  say,  the  statute 
restricted  obligees  in  actions  for  penalties  to  a  collection  of  the 
actual  damages  sustained.^  The  equitable  rule  as  embodied  in 
the  statute  of  eight  and  nine  William  III  has  in  the  main  been 
adopted  by  the  various  jurisdictions  in  the  United  States.  How- 
ever, when  penalties  became  unavailing  for  the  reason  that  the 
obligee  was  required  to  accept  the  compensation  in  damages  for 
such  injury  as  he  could  show  he  had  sustained,  there  arose  a  form 
of  contract  whereby  the  parties  anticipated  and  agreed  in  advance 
for  a  certain  amount  of  damages  which  would  be  accepted  as  full 
compensation  for  such  injuries  as  might  be  sustained  by  a  breach 
of  the  contract.^"  Out  of  this  has  grown  the  distinction  between 
a  penalty  and  liquidated  damages,  a  distinction  to  be  kept  in  mind 
on  account  of  the  different  effect  given  by  courts  to  provisions  of 
this  character. 

A  penalty  is  considered  as  a  sum  in  gross  to  be  paid  for  the 
non-performance  of  the  agreement  irrespective  of  the  damages 
actually  sustained.  Under  the  modern  theory  a  contract  for  the 
payment  of  a  penalty  is  void,  in  that  the  actual  damage  sustained 
must  be  proved,"  and  only  actual  damages  may  be  recovered, 
and  they  may  be  either  greater^-  or  less"   than  the  amount 

« Williams   v.   Green,   14  Ark.  315;  Minn.  523,  86  N.  W.  760,  85  Am.  St. 

Sun   Printing  &  Publishing  Assn.  v.  473 ;  Johnson  v.  Cook,  24  Wash.  474, 

Moore,    183   U.    S.   642,   22   Sup.    Ct.  64  Pac.  729. 

240,  46  L.  ed.  366.     See  also,  Wallis  "^  Williston  v.   Mathews,   55   Minn. 

V.    Smith,    L.    R.    21    Ch.    Div.    243;  422,  56  N.  W.  1112;  Morrill  v.  Weeks, 

Lowe  V.  Peers,  4  Burr.  2225;  Whit-  70  N.  H.  178,  46  Atl.  32;  Gloucester 

field  V.  Levy,  35  N.  J.  L.  149.  City  v.   Eschbach.   54   N.  .J.   L.    150, 

•Whitfield    V.    Levy,    35    N.    J.    L.  23    Atl.    360;    Commerce    Milling    & 

149;     Sun     Printing     &c.     Assn.     v.  Grain    Co.    v.    Morris,    27   Tex.    Civ. 

Moore,  183  U.  S.  642,  46  L.  ed.  366,  App.  553,  65   S.  W.   1118;  Watts  v. 

22  Sup    Ct   240.  Camors,    115    U.    S.    353,   29   L.    ed. 

^•Williams  V.  Green,  14  Ark.  315.  406,  6  Sup.  Ct.  91. 

"Wilson    V.    Dean,    10    Iowa    432;  "Henry   v.   Louisville   &c.    R    Co., 

Taylor  v.  Times  Newspaper  Co.,  83  91  Ala.  585,  8  So.  343;  Chicago  House 


847  INTERPRETATION    AND    CONSTRUCTION.  §    1 559 

Specified  by  the  penalty.  In  the  case  of  Hquidated  damages  the 
parties  anticipate  and  agree  in  advance  for  a  certain  amount  of 
damages  which  will  be  accepted  as  a  full  compensation  for  such 
injury  as  may  be  sustained  by  a  breach  of  the  agreement.  A 
good  faith  valuation  of  the  damages  which  will  result  from  the 
breach  of  a  contract  is  generally  upheld  and  the  amount  specified 
recoverable.^*  It  is  unnecessary  to  prove  the  actual  damage  sus- 
tained/°  though  it  must  appear  that  more  than  nominal  damages 
have  been  sustained."  The  amount  named  in  the  contract  as 
liquidated  damages  forms  a  measure  of  damages.  The  obligee 
is  entitled  to  this  much ;  the  obligor  is  not  required  to  pay  more." 
Whether  the  amount  stipulated  in  a  contract  to  be  paid  by 
a  party  upon  failure  of  performance  is  to  be  treated  as  liqui- 
dated damages  or  as  a  penalty  is  one  of  construction  to  be  de- 
termined from  the  language  and  subject-matter  of  the  contract, 
the  evident  intent  of  the  parties  and  all  the  facts  and  circum- 
stances under  which  the  contract  was  made."  No  form  of  words 
is  regarded  as  controlling.  Notwithstanding  the  contract  terms 
the  sum  named  as  liquidated  damages  it  may  be  treated  as  a  pen- 
alty when  it  appears  from  the  whole  transaction  that  such  was 
in  fact  its  character.*®    On  the  other  hand,  the  provision  for  a 

Wrecking  Co.  v.  United  States,  106  Moore,  183  U.  S.  642,  46  L.  ed.  366, 

Fed.  385,  45  C  C.  A.  343,  53  L.  R.  22     Sup.     Ct.     240;     Drumheller     v. 

A   122-  Hennessy  v.  Metzger,  152  111.  American  Surety  Co.,  30  Wash.  530, 

505    38  N.  E.   1058,  43  Am.  St.  267;  71  Pac.  25;  Madler  v.  Silverstone,  55 

Low   V.   Nolte.    16   111.  475;   Lord   v.  Wash.    159,    104   Pac.    165,   34   L.    R. 

Caddis,   9   Iowa  265;    Foley   v.    Mc-  A.  (N.  S.)  1. 

Keegan,  4  Iowa  1,  66  Am.  Dec.  107;  "Jacqua    v.    Headmgton,    114    Ind. 

Hahn  v.   Horstman.   12  Bush.    (Ky.)  309,   16  N.  E.  527;   Salem  v.  Anson, 

249-  Perkins  v.  Lvman,  11  Mass.  76,  40  Ore.  339,  67  Pac.  190,  56  L.  R.  A. 

6     Am.      Dec.      158;      Hamaker     v.  169;  Kelso  v.  Reid,  145   Pa.   St.  606, 

Schroers,    49    Mo.    406;    Lindsay    v.  23  Atl.  323,  27  Am.  St.  716;  Clark  v. 

Anesley,   28   N.   Car.    186;   Kelley  v.  Barnard,    108   U.    S.    436;    American 

Seay,  3  Okla.  527.  41  Pac.  615;  Big-  &c.  Works  v.  Malting  Co.,  30  Wash, 

ony  V.  Tvson.  75   Pa.   157;   Bearden  178.  70  Pac.  236. 

V.  Smith.'ll  Rich.  L.   (S.  Car.)   554;  "Hathaway  v.  Lynn,  75  Wis.   186, 

Watts  V.  Camors,  115  U.  S.  353,  29  43  N.  W.  956,  6  L.  R.  A.  551. 

L.  ed.  406,  6  Sup.  Ct.  91 ;  Van  Buren  "  See  cases  cited  m  the  precedmg 

V    Digges    11   How.   (U.  S.)   461,  13  notes  of  this  section. 

L     ed     771 ;    Johnson    v.    Cook,    24  "  Hennessy  v.  Metzger.  152  111.  505, 

Wash   474,  64  Pac.  729.  38  N.  E.  1058.  43  Am.  St.  267;  Tay- 

"  Williams  v.   Green,  14  Ark.  315;  lor  v.  Times  Newspaper  Co.,  83  Minn. 

Van  Tuvl  v.  Young.  23  Ohio  C.  C.  523.  86  N.  W.  760.  85  Am.   St.  473; 

15-    Pittsburgh   &c.    Co.   v.    National  Whitfield  v.  Levy,  35  N.  J.  L.  14^. 

Tube  Works  Co.,  184  Pa.  St.  251,  39  "  Kemble  v.   Farren.  6   Bmg.    141: 

Atl.  76;   Sun   Printing  &c.   Assn.  v.  Chicago    House    Wreckmg    Co.     v. 


1559 


CONTRACTS. 


848 


penalty  may  be  construed  as  a  contract  for  the  payment  of  liqui- 
dated damages."**  Such  words  as  "forfeits",  ^'forfeiture",  "paid 
sum",  "or  penalties",  may  furnish  a  strong  indication  of  the  in- 
tention of  the  parties;  yet  it  is  well  settled  that  the  weight  to  be 
given  to  such  words  will  depend  on  their  connection  with  other 
parts  of  the  instrument,  the  nature  of  the  agreement,  the  inten- 
tion of  the  parties,  and  other  facts  and  circumstances.^^  The 
term  used  by  the  parties  is  considered  as  prima  facie  correct.'^^ 
But  while  the  courts  will  attempt  to  give  effect  to  the  intention 
of  the  parties,  the  question  of  whether  the  sum  mentioned  in  the 
contract  is  to  be  considered  as  liquidated  damages,  or  as  a  penalty 
merely,  is  a  question  of  law  for  construction  by  the  courts."^ 
Moreover,  the  courts  are  inclined  to  treat  the  contract  as  creat- 
ing a  penalty  to  cover  damages  actually  sustained  by  the  breach 
and  not  as  liquidated  damages,  and  where  any  doubt  exists  as  to 
the  intention  of  the  parties  the  stipulation  will  be  treated  as  a 
penalty  when  open  to  two  constructions.^*    This  rule  is  founded 


United  States,  106  Fed.  385,  45  C  C 
A.  343,  53  L.  R.  A.  122;  Tilley  v. 
Loan  Association,  52  Fed.  618; 
Dwinel  v.  Brown,  54  Maine  468; 
Hoagland  v.  Segur,  38  N.  J.  L.  230; 
Bagley  v.  Peddie,  16  N.  Y.  469,  69 
Am.  Dec.  713;  Disosway  v.  Edwards, 
134  N.  Car.  254,  46  S.  E.  501 ;  Shreve 
V.  Brereton,  51  Pa.  St.  175;  Grand 
Tower  Co.  v.  Phillips,  23  Wall.  (U. 
S.)  471,  23  L.  ed.  71 ;  Fitzpatrick  v. 
Cottingham,  14  Wis.  219. 

="  Duffy  V.  Shockey,  11  Ind.  70,  71 
Am.  Dec.  348;  Robinson  v.  Aid  So- 
ciety, 68  N.  J.  L.  723,  54  Atl.  416; 
Tode  V.  Gross.  127  N.  Y.  480,  28  N. 
E.  469.  13  L.  R.  A.  652n,  24  Am.  St. 
475;  Illinois  Central  R.  Co.  v.  Sou- 
thern &c.  Cabinet  Co.,  104  Tenn.  568, 
58  S.  W.  303,  50  L.  R.  A.  729,  78 
Am.  St.  933. 

"'Mclntire  v.  Cagley,  Zl  Iowa  676; 
Wolf  V.  Des  Moines  &c.  R.  Co.,  64 
Iowa  380;  De  Graff,  Vrieling  &  Co. 
V.  Wickham,  89  Iowa  720,  52  N.  W. 
503.  57  N.  W.  420,  affd.,  89  Iowa  720, 
57  N.  W.  420 ;  Chamberlain  v.  Bagley, 
11  N.  H.  234. 

^^  "Liquidated  damages"  —  prima 
facie  correct.  Stegman  v.  O'Connor, 
80  L.  T.  (N.  S.)  234;  Kelly  v.  Fejer- 
vary,   111   Iowa  693,  83   N.  W.  791; 


Garst  V.  Harris,  177  Mass,  72._  58  N. 
E.  174.  "Penalty" — prima  facie  cor- 
rect. Smith  V.  Brown,  164  Mass. 
584,  42  N.  E.  101 ;  Wilkinson  v.  Col- 
ley,  164  Pa.  St.  35,  30  Atl.  286,  26  L. 
R.  A.  114.  Held  penalties  "in  the 
penal  sum  of  estimated  amount  of 
freight."  Watts  v.  Camors,  115  U. 
S.  353.  29  L.  ed.  406,  6  Sup.  Ct.  91. 
"Forfeiture."  Van  Buren  v.  Digges, 
11  How.  (U.  S.)  461,  13  L.  ed.  771. 
"The  parties  themselves  denominate 
it  a  penalty;  and  it  would  require 
very  strong  evidence  to  authorize  the 
court  to  say  that  their  own  words  do 
not  express  their  own  intention." 
Taylor  v.  Sandiford,  7  Wheat.  (U. 
S.)   13,  5  L.  ed.  198. 

=^  Smith  V.  Newell,  Z1  Fla.  147,  20 
So.  249;  Chase  v.  Allen,  13  Gray 
(Mass.)  42;  Whitfield  v.  Levy,  35  N. 
J.  L.  149;  Kemp  v.  Knickerbocker 
Ice  Co..  69  N.  Y.  45.  See  also,  Foley 
V.  McKeegan,  4  Iowa  1,  66  Am.  Dec. 
107. 

^  Scofield  V.  Tompkins,  95  III.  190, 
35  Am.  Rep.  160;  Foley  v.  Mc- 
Keegan, 4  Iowa  1,  66  Am.  Dec.  107; 
Carey  v.  Mackey.  82  Maine  516,  20 
Atl.  84.  9  L.  R.  A.  113,  17  Am.  St. 
500;  Shute  v.  Taylor,  5  Mete. 
(Mass.)  61;  Myer  v.  Hart,  40  Mich. 


849 


INTERPRETATION    AND    CONSTRUCTION. 


§    1559 


both  on  equitable  principles  and  on  the  rule  that  a  provision  in 
a  contract  for  the  benefit  of  one  of  the  parties  is  to  be  construed 
most  strongly  against  those  for  whose  benefit  it  is  introduced.*' 
Since  the  question  of  whether  the  amount  named  shall  be 
treated  as  a  penalty  or  as  liquidated  damages  is  in  its  last  analysis 
one  of  law  for  the  courts,  certain  general  principles  have  been 
announced  by  which  to  determine  the  nature  of  the  pro- 
vision. The  principal  rule  by  which  the  courts  are  guided  is,  that 
when  the  actual  damages  which  may  result  from  the  breach  of 
the  contract  are  in  their  nature  uncertain  and  cannot  be  meas- 
ured with  any  degree  of  accuracy  and  may  depend  upon  extrinsic 
considerations  and  circumstances  the  sum  agreed  to  be  paid  by 
the  party  in  default  will  be  regarded  as  liquidated  damages.^^ 
And  when  the  damages  are  of  this  character  the  mere  fact  that 
the  sum  agreed  to  be  paid  appears  to  be  excessive  does  not  in  it- 
self make  the  sum  a  penalty.^^     However,  it  has  been  held  that 


517,  29  Am.  Rep.  553;  Tinkham  v. 
Satori,  44  j\Io.  App.  659;  Hamann  v. 
Nebraska  Underwriters'  Ins.  Co.  of 
Omaha,  82  Nebr.  429,  118  N.  W.  65; 
Chiddick's  Exr.  v.  Marsh,  21  N.  J. 
L.  463;  Colwell  v.  Lawrence,  38  N. 
Y.  71,  36  How.  Pr.  (N.  Y.)  306; 
Moore  v.  Colt,  127  Pa.  St.  289,  18 
Atl.  8,  14  Am.  St.  845;  Baird  v.  Tol- 
liver,  6  Humph.  (Tenn.)  186.  44  Am. 
Dec.  298;  Kellam  v.  Hampton  (Tex. 
Civ.  App.),  124  S.  W.  970;  Tayloe 
V.  Sandiford,  7  Wheat.  (U.  S.)  13, 
5  L.  ed.  198;  Madler  v.  Silverstone, 
55  Wash.  159,  104  Pac.  165,  34  L. 
R.  A.  (N.  S.)  1.  The  meaning  of 
words  will  not  be  extended  beyond 
their  plain  meaning  in  order  to  work 
a  forfeiture.  Albers  v.  Merchants' 
Exch.  of  St.  Louis,  144  Mo.  App. 
446,  120  S.  W.  139.  See  also,  Jen- 
sen V.  Palatine  Ins.  Co.,  81  Nebr. 
523,  116  N.  W.  286. 

"*  See  ante,  note  8  this  section  and 
following  note.  See  also,  Forest  City 
Ins.  Co.  V.  Hardestv.  182  111.  39,  55 
N.  E.  139,  74  Am.  St.  161. 

"Kemble  v.  Farren,  6  "Bing.  141; 
Reynolds  v.  Bridge,  6  El.  &  Bl.  528; 
Watt's  Exrs.  v.  Shcppard,  2  Ala.  425 ; 
Tingley  v.  Cutler,  7  Conn.  291 ;  San- 
ders V.  Carter,  91  Ga.  450,  17  S.  E. 
345;    Scofield    v.    Tompkins,    95    111. 

54 — Contracts,  Vol.  2 


190,  35  Am.  Rep.  160,  citing  Sedg. 
Damages,  492;  Gobble  v.  Linder,  76 
111.  157;  Hennessy  v.  Metzger,  152 
111.  505,  38  N.  E.  1058,  43  Am.  St.  267 ; 
Hamilton  v.  Overton,  6  Blackf.  (Ind.) 
206,  38  Am.  Dec.  136;  Duffy  v. 
Shockey,  11  Ind.  70,  71  Am.  Dec. 
348;  Foley  v.  McKeegan,  4  Iowa  1, 
66  Am.  Dec.  107 ;  Holbrook  v.  Tobev, 
66  Maine  410,  22  Am.  Rep.  581 ;  Max- 
well V.  Allen,  78  Maine  Z2,  2  Atl. 
386,  57  Am.  Rep.  783 ;  Pierce  v.  Full- 
er, 8  Mass.  223,  5  Am.  Dec.  102; 
Morse  v.  Rathburn.  42  Mo.  594,  97 
Am.  Dec.  359;  Hurd  v.  Dunsmore, 
dZ  N.  H.  171;  State  v.  Dodd,  45  N. 
J.  L.  525;  Cotheal  v.  Talmage,  9  N. 
Y.  551,  61  Am.  Dec.  716,  Seld.  Notes 
238;  Baglev  v.  Peddie,  16  N.  Y. 
469,  69  Am.  Dec.  713;  Lange  v.  Werk. 
2  Ohio  St.  519;  Powell  v.  Burroughs, 
54  Pa.  St.  329;  Muse  v.  Swayne.  2 
Lea  (Tenn.)  251,  31  Am.  Rep.  607; 
Sun  Printing  &c.  Assn.  v.  Moore, 
183  U.  S.  642,  46  L.  ed.  366,  22  Sup. 
Ct.  240;  Crawford  v.  Heatwole,  110 
Va.  358,  66  S.  E.  46,  34  L.  R.  A.  (N. 
S.)  587;  Herherger  v.  H.  E.  Orr 
Co.,  62  Wash.  526.  114  Pac.  178;  Ly- 
man V.  Babcock,  40  Wis.  503. 

"Mead  v.  Wheeler,  13  N.  H.  351; 
Van  Buren  v.  Biggs,  11  How.  (U. 
S.)  461,  13  L.  ed.  771;  Sun  &c.  Print- 


8  1559 


CONTRACTS. 


850 


if  the  amount  fixed  is  unconscionably  large  it  will  be  deemed  a 
penalty.-®  And  when  the  contract  concerns  a  matter  of  cer- 
tain value  and  the  damages  sustained  can  be  readily  shown,  the 
sum  which  it  is  agreed  shall  be  paid  on  breach  of  the  contract 
will  be  regarded  merely  as  a  penalty  to  insure  prompt  payment  or 
performance.-®  A  third  general  rule  is  to  the  effect  that  where 
there  are  various  stipulations  or  terms  in  a  contract  which  are 
of  varying  or  uncertain  value  and  the  same  fixed  sum  is  to  be  paid 
for  the  breach  of  any  one  of  such  provisions  it  will  be  deemed  a 
penalty.''" 


ing  Assn.  v.  Moore,  183  U.  S.  642, 
46  L.  ed.  366,  22  Sup.  Ct.  240  (re- 
viewing authorities). 

==' Morse  v.   Rathburn.  42  Mo.  594, 
97     Am.     Dec.     359;     Bradstreet     v. 
Baker,    14   R.    I.   546.     This   is  more 
on  the  ground,  however,  that  the  ex- 
cessive   amount    named    shows    that 
the    obh'gor    was    the    victim    of    op- 
pression.   In  Greer  v.  Tweed,  13  Abb. 
Pr.  (N.  Y.)   (N.  S.)  427,  the  defend- 
ant agreed  to   furnish  his  biography 
to  the  plaintiff  for  publication,  within 
a    time    fixed,    and,    for    every    day's 
delay  beyond  that  time,  to  pay  $165. 
On  a  suit  to  recover  for  a  delay  to 
furnish  the  biography   for  one  hun- 
dred and  sixty-one  days,  it  was  held 
that  the  plaintiff  could  recover  only 
his  actual  loss.     The  court  said  the 
contract    was    "so    extortionate    and 
unjust  that  it  raises  the  presumption 
of  deceit  and  fraud  in  its  inception." 
See   also,    Chicago    House   Wrecking 
Co.  V.  United   States,   106   Fed.   385, 
45   C.   C.   A.   343.   53  L.   R.   A.    122; 
Gay  Mfg.  Co.  v.  Camp,  65  Fed.  794. 
13  C.  C.  A.  137,  25  U.  S.  App.  134, 
affd.,  68  Fed.  67,  15  C.  C.  A.  226,  25 
U.   S.   App.  376.     These  latter  cases 
are,    however,    disapproved    by    Sun 
Printing  &c.  Assn.  v.  Moore,  183  U. 
S.  642,  46  L.  ed.  366.  22  Sup.  Ct.  240. 
"Where  the  amount  of  the  damages 
for  the  breach  of  a  contract  is  un- 
certain and  difficult  of  ascertainment, 
and  the  agreement   discloses  the  in- 
tention  of   the   parties  to   fix   a   sum 
certain    as    the    liquidated   damages, 
the   contract   will   be   enforced.     But 
where  the  contract  discloses  no  such 
intention,   or  leaves  the  intention  of 
the  parties  in  this   regard  in   doubt, 


and  the  amount  specified  is  out  of 
all  reasonable  proportion  to  the  ac- 
tual damages  sustained,  the  contract 
is  not  an  agreement  for  liquidated 
damages."  Union  Pac.  R.  Co.  v. 
Mitchell-Crittenden  Tile  Co.,  190  Fed. 
544,  111  C.  C.  A.  396.  For  instances  in 
which  damages  sustained  by  reason 
of  the  breach  of  the  contract  are 
considered  as  uncertain  and  the 
amount  specified  considered  as 
liquidated  damages,  see  title  six, 
vol.  4. 

'*Astley  V.  Weldon,  2  Bos.  &  Pul. 
346;  Sanders  v.  Carter,  91  Ga.  450; 
Schoffield  v.  Tompkins,  95  111.  190, 
35  Am.  Rep.  160;  Poppers  v.  Mea- 
gher, 148  111.  192,  35  N.  E.  805;  J.  I. 
Case  Threshing  Co.  v.  Souders  (Ind. 
App.),  96  N.  E.  177,  reviewing  the 
Indiana  authorities;  Smith  v.  Wedg- 
wood, 74  Maine  457;  Willson  v.  Bal- 
timore, 83  Md.  203,  34  Atl.  774,  55 
Am.  St.  339;  Myer  v.  Hart,  40  Mich. 
517,  29  Am.  Rep.  553;  J.  I.  Case 
Threshing  Machine  Co.  v.  Fronk,  105 
Minn.  39,  117  N.  W.  229;  Basey  v. 
Ambrose,  28  Mo.  39;  Morse  v.  Rath- 
burn.  42  Mo.  594,  97  Am.  Dec.  359; 
Brennan  v.  Clark,  29  Nebr.  385,  45 
N.  W.  472;  Lansing  v.  Dodd,  45  N. 
J.  L.  525;  Moore  v.  Colt,  127  Pa. 
St.  289,  18  Atl.  8,  14  Am.  St.  845; 
Clement  v.  Schuylkill  River  E.  S. 
R.  Co.,  132  Pa.  St.  445,  19  Atl.  274; 
Bradstreet  v.  Baker,  14  R.  I.  546; 
Baird  v.  Tolliver,  6  Humph.  (Tenn.) 
186,  44  Am.  Dec.  298. 

'"Willson  V.  Love  (1896),  L.  R.  1 
Q  B.  626;  Keeble  v.  Keeble,  85  Ala. 
552.  5  So.  149;  Home  Land  &c.  Co. 
V.  McNamara,  111  Fed.  822,  49  C.  C. 
A.   642;    Smith   v.    Newell,   Zl    Fla. 


851 


INTERPRETATION    AND    CONSTRUCTION. 


1560 


§  1560.  Illustrations. — Calling  the  sum  named  a  penalty  or 
liquidated  damages  is  not  conclusive,  if  the  intention  appears 
otherwise,  from  the  consideration  of  the  whole  agreement;  if  it 
be  doubtful,  from  the  whole  agreement,  whether  it  is  intended 
to  be  a  penalty  or  stipulated  damages,  it  will  be  construed  as  a 
penalty,  and  if  it  is  called  a  penalty  it  will  be  held  to  be  such, 
unless  that  construction  is  overcome  by  a  very  clear  intention  to 
the  contrary,  derived  from  other  parts  of  the  agreement. ^^  Un- 
less the  intent  of  the  parties  is  very  clearly  expressed,  a  forfeiture 
named  for  non-fulfilment  of  a  contract,  where  excessive  will  not 
be  construed  as  intended  to  be  liquidated  damages.  Thus  when 
a  contract  for  doing  a  piece  of  work  in  building  a  vessel  stipu- 
lated for  its  completion  by  a  specified  time,  "under  a  forfeiture 
of  one  hundred  dollars  a  day  for  each  and  every  day  after  the 
above  date,  until  the  same  is  completed,"  it  was  held  a  penalty.'" 


147,  20  So.  249;  Trower  v.  Elder,  11 
111.  452;  Carpenter  v.  Lockhart,  1 
Ind.  434;  Foley  v.  McKeegan,  4  Iowa 
1,  66  Am.  Dec.  107;  Heatwole  v.  Gor- 
rell.  35  Kans.  692,  12  Pac.  135 ;  State 
V.  Larson.  83  Alinn.  124,  86  N.  W.  3. 
54  L.  R.  A.  487;  Carter  v.  Strom,  41 
Minn.  522,  43  N.  W.  394;  Morse  v. 
Rathburn,  42  Mo.  594,  97  Am.  Dec. 
359;  Squires  v.  Elwood,  2)2)  Nebr. 
126,  49  N.  W.  939;  Monmouth  Park 
Assn.  V.  Wallis  Iron  Works,  55  N.  J. 
L.  132,  26  Atl.  140.  19  L.  R.  A.  456, 
39  Am.  St.  626;  Lansing  v.  Dodd,  45 
N.  J.  L.  525 ;  Lampman  v.  Cochran, 
16  N.  Y.  275 ;  Cotheal  v.  Talmage.  9 
N.  Y.  551,  61  Am.  Dec.  716.  Seld. 
Notes  238 ;  Berry  v.  Wisdom,  3  Ohio 
St.  241 ;  El  Reno  v.  Cullinane,  4 
Okla.  457,  46  Pac.  510;  Wilhelm  v. 
Eaves,  21  Ore.  194.  27  Pac.  1053,  14 
L.  R.  A.  297;  Keck  v.  Bieber.  148 
Pa.  St.  645.  24  Atl.  170.  Z2,  Am.  St. 
84C,  Bignall  v.  Gould,  119  U.  S.  495, 
7  Sup.  Ct.  294.  30  L.  ed.  491 ;  John- 
son V.  Cook,  24  Wash.  474,  64  Pac. 
729;  Madison  v.  American  Sanitary 
Engineering  Co.,  118  Wis.  480.  95  N. 
W.  1097;  Kerslake  v.  Mclnnis,  113 
Wis.  659,  89  N.  W.  895;  Lyman  v. 
Babcock,  40  Wis.  503. 

"  Green  v.  Price,  13  M.  &  W.  695 ; 
Whitfield  V.  Levy,  35  N.  J.  L.  149; 
Cheddick's  Exr.  v.  Marsh,  21  N.  J. 
L.  463;  Shiell  v.  M'Nitt,  9  Paige  (N. 


Y.)  101;  Pastor  v.  Solomon,  26  Misc. 
(N.  Y.)  125,  55  N.  Y.  S.  956.  Chief 
Justice  Marshall,  in  Tayloe  v.  Sandi- 
ford,  7  Wheat.  13,  5  L.  ed.  198,  said : 
"In  general  a  sum  of  money,  in 
gross,  to  be  paid  for  the  non-perform- 
ance of  an  agreement,  is  considered 
as  a  penalty.  *  *  *  it  will  not,  of 
course,  be  considered  as  liquidated 
damages.  *  *  *  Much  stronger  is 
the  inference  in  favor  of  its  being  a 
penalty,  when  it  is  expressly  reserved 
as  one."  Durst  v.  Swift,  11  Texas 
273,  discussion  of  the  rules  respecting? 
stipulations  for  penalties  and 
liquidated   damages. 

^■In  Colwell  V.  Lawrence,  38  N.  Y. 
71,  the  word  "forfeiture"  which  is 
equivalent  to  a  penalty  is  used,  which 
manifests  that  a  penalty  was  intend- 
ed. "When  the  parties  to  a  con- 
tract, in  which  the  damages  to  be  as- 
certained, growing  out  of  a  breach, 
are  uncertain  in  amount,  mutually 
agree  that  a  certain  sum  shall  be  the 
damages  in  case  of  a  failure  to  per- 
form, and  in  language  plainly  ex- 
pressive of  such  agreement.  I  know 
of  no  sound  principle  or  rule  ap- 
plicable to  the  construction  of  con- 
tracts, that  will  enable  a  court  of  law 
to  say  that  they  intended  something 
else.  Where  the  sum  fixed  is  great- 
ly disproportionate  to  the  presumed 
actual   damage,   probably  a   court  of 


§    1 561  CONTRACTS.  852 

If  the  contract  provides  that  a  larger  sum  shall  be  paid  on  the 
failure  of  the  party  to  pay  a  less  sum,  the  larger  sum  is  treated 
as  a  penalty.^^  In  the  case  of  a  contract  for  the  payment  of 
money  simply,  a  stipulation  to  pay  a  fixed  sum  in  default  of  per- 
formance by  the  obligor  will  be  regarded  as  a  penalty  and  not  as 
a  covenant  for  liquidated  damages.  This  rule  is  based  upon  the 
principle  that  damages  for  the  breach  of  such  contracts  are  fixed 
and  liquidated  by  the  law,  and  require  no  liquidation  by  the  par- 
ties.'* 

§1561.  Stipulations  in  building  contracts. — The  stipula- 
tions of  parties  for  specified  damages  on  the  breach  of  a  contract 
to  build  within  a  limited  time  have  frequently  been  enforced  by 
the  courts.  In  one  case,  where  the  contract  was  to  complete  a 
grand-stand  for  a  race  course  by  a  designated  day,  the  contractor 
agreed  to  pay  the  owner  one  hundred  dollars  a  day  for  every  day 
that  he  should  be  in  default  after  the  day  stated,  which  sum  was 
thereby  agreed  upon,  fixed  and  determined  as  the  damages  the 
owner  would  suffer  by  reason  of  such  default,  "and  not  by  way  of 
penalty."  It  was  also  agreed  that  the  owner  might  deduct  and 
retain  the  same  out  of  any  moneys  becoming  due  to  the  contractor 

equity   may  relieve;   but  a   court  of  Smith's    Admrs.    v.    Wainwright,    24 

law  has  no  right  to  erroneously  con-  Vt.  97. 

strue  the  intention  of  the  parties,  ^  Kuhn  v.  Myers,  H  Iowa  351. 
when  clearly  expressed,  in  the  en-  Liquidated  damages  are  not  applica- 
deavor  to  make  better  contracts  for  ble  to  such  case.  If  they  were,  they 
them  than  they  have  made  for  them-  might  afford  a  sure  protection  for 
selves.  In  these,  as  in  all  other  usury,  and  countenance  oppression 
cases,  the  courts  are  bound  to  ascer-  under  the  forms  of  law.  State  v. 
tain  and  carry  into  effect  the  true  in-  Larson,  83  Minn.  124,  86  N.  W.  3, 
tent  of  the  parties."  Per  Wright,  J.,  54  L.  R.  A.  487;  Gray  v.  Crosby,  18 
in  Clement  v.  Cash,  21  N.  Y.  253.  John.  (N.  Y.)  219;  Wright  v.  Dobie 
The  words  "liquidated  damages"  are  3  Tex.  Civ.  App.  194  ($500  paid  as  a 
by  no  means  conclusive.  Wallis  v.  "forfeit ;"  held  that  whether  the  pay- 
Smith,  L.  R.  21  Ch.  Div.  243.  It  was  ment  was  made  as  a  penalty,  oras 
thought  in  Reilly  v.  Jones,  1  Bing.  liquidated  damages,  was  a  question 
302,  that  they  were  conclusive,  but  of  intent  to  be  determined  by  the 
Kemble  v.  Farren,  6  Bing.  141,  has  jury.).  "Whether  the  sum  rnentioned 
shown  that  they  are  not.  in  an  agreement  to  be  paid  for  a 
^'Astley  v.  Weldon,  2  B.  &  P.  346;  breach,  is  to  be  treated  as  a  penalty 
Reynolds  v.  Bridge,  6  E.  &  B.  528,  or  as  liquidated  and  ascertained  dam- 
26  L.  J.  Q.  B.  12;  Rutherford  v.  ages  is  a  question  of  law,  to  be  de- 
Stovel,  12  Up.  Can.  C.  P.  9;  Halde-  cided  by  the  judge  upon  a  considera- 
man  v.  Jennings,  14  Ark.  329;  Peine  tion  of  the  whole  instrument."  Wilde, 
v.  Weber,  47  111.  41 ;  Morse  v.  Rath-  C.  J.,  in  Sainter  v.  Ferguson,  7  C.  B. 
burn,  42  Mo.  594,  97  Am.  Dec.  359;  716. 


8.53 


INTERPRETATION    AND    CONSTRUCTION. 


1^62 


under  the  contract.     The  court  held  that  the  sum  of  one  hundred 
dollars  a  day  was  liquidated  damages. ^^ 

§  1562.  Further  illustrations  of  penalties. — Where  a  build- 
ing contract  specified  thai  twenty  dollars  should  be  paid  for 
every  day's  delay  in  completing  the  house,  the  court  held  the  stipu- 
lation to  be  a  penalty,  and  said  that  only  nominal  damages  could 
be  recovered  in  the  absence  of  proof  that  the  owner  was  injured 
by  the  delay.^"  When  the  damages  can  be  really  assessed,  and 
they  are  fixed  by  the  contract  itself  at  an  unconscionable  sum,  it 
is  the  plain  duty  of  a  court  exercising  equity  powers  to  relieve 
against  such  injustice,  and  treat  the  sum  named  as  a  penalty 
merely.  A  contract  to  raise  a  dwelling,  the  rental  value  of  which 
was  about  twenty-five  dollars  per  month,  provided  that  the  owner 
should  be  paid  one  hundred  and  fifty  dollars  per  week  after  the 
expiration  of  the  period  within  which  the  work  was  to  be  com- 
pleted. The  real  damage  being  easily  ascertainable,  the  stipulated 
sum  was  unconscionable.^^    In  case  of  failure  to  complete  build- 


"  See  also,  Monmouth  Park  Assn. 
V.  WalHs  Iron  Works,  55  N.  J. 
L.  132.  26  Atl.  140,  19  L.  R.  A. 
456,  39  Am.  St.  626;  Fletcher  v. 
Dyche,  2  T.  R.  Z2  (10  pounds  per 
week  for  delay  in  finishing  the 
parish  church)  ;  Duckworth  v.  Al- 
ison, 1  M.  &.  W.  412  (5  pounds 
per  week  for  delay  in  completing 
repairs  of  a  warehouse)  ;  Legge  v. 
Harlock,  12  Q.  B.  1015  (1  pound  per 
day  for  delay  in  erecting  a  barn, 
wagon  shed  and  granary)  ;  Law  v. 
Local  Board,  L.  R.  (1892)  1  Q.  B. 
127  (100  pounds  and  5  pounds  per 
week  for  delay  in  constructing  sew- 
erage work)  ;  Ward  v.  Hudson  River 
Bldg.  Co.,  125  N.  Y.  230,  26  N.  E. 
256  ($10  a  day  for  delay  in  erecting 
dwelling  houses)  ;  O'Donnell  v. 
Rosenberg,  4  Daly  (N.  Y.)  555,  14 
Abb.  Pr.  (N.  S.)  59  (a  stipulation 
for  $10  a  day  for  every  day's  delay 
in  completing  a  building  contract). 
In  Pearson  v.  Williams'  Admrs.,  26 
Wend.  (N.  Y.)  630,  a  purchaser  of 
14  city  lots  engaged  to  erect  on  the 
lots  two  brick  buildings  by  a  certain 
day,  or  to  pay  on  demand  $4,000;  it 
was  held  liquidated  damages.  In 
Farnham  v.  Ross,  2  Hall  (N.  Y.) 
167,    the   covenant    was   to    finish    a 


building  by  a  certain  day,  under  a 
"penalty  of  $30"  a  day  for  every  day 
thereafter  that  it  should  remain  un- 
finished, to  be  paid  as  "liquidated 
damages;"  it  was  held  liquidated 
damages.  See  Alalone  v.  Philadel- 
phia, 147  Pa.  St.  416,  23  Atl.  628, 
where  a  contract  for  erection  of  a 
bridge,  stipulating  that  the  contrac- 
tors pay  $50  for  each  day  they  were  in 
default,  was  held  to  provide  for  liqui- 
dated damages,  as  the  damages  were 
uncertain  and  not  capable  of  being 
ascertained  by  any  satisfactory  rule. 

'"  Wilcus  V.  Kling,  87  111.  107 ;  Kelly 
V.  Fejervary,  111  Iowa  693.  83  N.  W. 
791 ;  Condon  v.  Kemper,  47  Kans. 
126,  21  Pac.  829.  13  L.  R.  A.  671 
(erecting  a  party  wall  and  moving  a 
building)  ;  Spink  v.  Mueller,  11  Mo. 
App.  85;  Brennan  v.  Clark,  29  Xebr. 
385,  45  N.  W.  472  (building  a  house). 
Compare  In  re  White,  84  Law  T, 
594,  50  Weekly  Rep.  81,  where  a  pay- 
ment for  delay  on  a  building  con- 
tract, though  called  a  penalty,  was 
construed  to  be  liquidated  damages. 
In  Muldoon  v.  Lynch,  66  Cal.  536,  a 
statutory  rule  prevailed. 

"Clements  v.  Schuvlkill  River  E. 
S.  R.  Co.,  132  Pa.  St.  445,  19  Atl. 
274. 


§  1563 


CONTRACTS. 


854 


ings  which  are  intended  to  be  rented,  the  amount  of  damages 
ordinarily  would  be  the  loss  of  rent.^'* 

§  1563.  The  intention  of  the  parties  and  nature  of  the 
agreement — Controlling  guides. — The  question  whether  a 
sum  stipulated  for  in  a  written  contract,  to  be  paid  on  its  breach, 
is  a  penalty  or  liquidated  damages,  is  a  question  for  the  court,  to 
be  determined  by  the  intention  of  the  parties  as  drawn  from  the 
words  of  the  whole  contract,  examined  in  the  light  of  its  subject- 
matter  and  of  its  surroundings;  in  this  case  the  court  will  con- 
sider the  relation  which  the  sum  stipulated  bears  to  the  extent  of 
the  injury  which  may  be  caused  by  the  several  breaches  provided 
against,  the  ease  or  difficulty  of  measuring  a  breach  in  damages, 
and  such  other  matters  as  are  legally  or  necessarily  inherent  in 
the  transaction.^^    Where  there  was  an  agreement  for  the  sale  of 


"*  Cannon  v.  Hunt,  113  Ga.  501,  38 
S.  E.  983 ;  Brennan  v.  Clark,  29  Nebr. 
385,  45  N.  W.  472;  Bounds  v.  Hick- 
erson,  26  Tex.  Civ.  App.  608,  63  S. 
W.  887.  In  Cochran  v.  People's  R. 
Co.,  113  Mo.  359,  a  suit  at  law  for  a 
balance  on  a  building  contract,  where 
the  plaintiff  agreed  to  pay  $50  for 
every  day  that  the  building  was  de- 
layed after  a  certain  time,  the 
amount  fixed  not  being  denom- 
inated in  the  contract,  either  as  pen- 
alty or  liquidated  damages,  the  court 
held  it  a  penalty  to  compel  the  per- 
formance of  the  contract.  There 
was  a  delay  of  sixty-five  days  in  the 
completion  of  the  building.  The 
court,  per  Gantt,  J.,  said :  "Apply- 
ing to  this  case  the  ordinary  tests,  is 
it  or  not  unreasonable  as  liquidated 
damages?  Viewing  it  from  the  point 
of  an  investment,  the  capital  was 
$18,000,  and  for  sixty-five  days  this 
capital  yielded  no  income.  Allowing 
ten  per  cent — a  large  interest  on  so 
large  a  sum — and  we  find  $325  would 
compensate  for  the  use  of  the  money, 
as  a  loan  or  mere  investment.  *  *  * 
At  the  rate  stipulated  the  damages 
would  have  amounted  in  a  year  to  a 
sum  almost  as  large  as  the  capital  in- 
vested or  total  cost  of  the  building." 
In  re  Newman,  L.  R.  Ch.  D.  724 
(stipulation  held  a  penalty). 

"Reynolds  v.  Bridge,  717  Eng.  L. 
&  Eq.  122;  Magee  v.  Lavell,  L.  R.  9 


C.  P.  107;  Brooks  v.  Wichita,  114 
Fed.  297,  52  C.  C.  A.  209;  Radloff 
V.  Haase,  196  111.  365,  63  N.  E.  729; 
Robinson  v.  Board  of  Education  of 
Chicago,  98  111.  App.  100;  Kilbourne 
V.  Burt  &c.  Lumber  Co.,  Ill  Ky.  693, 
23  Ky.  L.  985,  64  S.  W.  631,  55  L. 
R.  A.  275 ;  Taylor  v.  Times  &c.  Co., 
83  Minn.  523,  86  N.  W.  760,  85  Am. 
St.  473 ;  Cochran  v.  People's  R.  Co., 
113  Mo.  359,  21  S.  W.  6;  Missouri- 
Edison  Electric  Co.  v.  M.  J.  Stein- 
berg Hat  &c.  Co.,  94  Mo.  App.  543, 
68  S.  W.  383;  Lansing  v.  Dodd,  45 
N.  J.  L.  525 ;  Colwell  v.  Lawrence, 
38  N.  Y.  71,  36  How.  Pr.  (N.  Y.) 
306;  Cotheal  v.  Talmage,  9  N.  Y.  551, 
61  Am.  Dec.  716,  Seld.  Notes  238; 
Knox  Rock-Blasting  Co.  v.  Grafton 
Stone  Co.,  64  Ohio  St.  361,  60  N.  E. 
563;  Emery  v.  Boyle,  200  Pa.  St. 
249,  49  Atl.  779 :  March  v.  Allabough, 
103  Pa.  St.  335;  Brown  Iron  Co.  v. 
Norwood  (Tex.),  69  S.  W.  253;  Jen- 
nings v.  McCormick,  25  Wash.  427, 
65  Pac.  764.  The  use  by  the  parties 
of  the  expression  "penalty"  or 
"liquidated  damages"  is  not  conclu- 
sive. The  distinction  between  penal- 
ties and  liquidated  damages  depends 
on  the  intention  of  the  parties  to  be 
gathered  from  the  whole  contract. 
If  the  intention  is  to  secure  per- 
formance of  the  contract  by  the  im- 
position of  a  fine  or  penalty,  then 
the  sum  specified  is  a  penalty;  but  if. 


855 


INTERPRETATION    AND    CONSTRUCTION. 


1564 


real  estate  which  contained  this  stipulation :  "The  parties  to  the 
above  agreement  doth  severally  agree  to  forfeit  the  sum  of  five 
hundred  dollars,  say  five  hundred  dollars,  in  case  either  party 
fail  to  comply  with  the  terms  of  this  agreement,"  the  word  "for- 
feit" was  held  to  mean  "to  pay,"  and  although  the  jury  found 
the  actual  damages  were  fifty  dollars,  one-tenth  the  stipulated 
sum,  the  court,  upon  the  point  reserved,  whether  the  defendant 
was  liable  for  the  penalty  or  for  only  the  actual  damages,  rendered 
judgment  for  the  penalty.*" 

§  1564.  Province  of  courts  and  jury  in  construing  contract. 
' — The  construction  of  a  written  contract  is  for  the  courts  and 
not  the  jury  when  the  evidence  establishing  the  agreement  is  not 
in  conflict,*^  and  this  is  true  notwithstanding  the  agreement  is 


on  the  other  hand,  the  intention  is 
to  assess  the  damages  for  breach  of 
the  contract,  it  is  liquidated  dam- 
ages. Per  Lopes,  L.  J.,  in  Law  v. 
Local  Board  (1892),  1  Q.  B.  127. 

'"Smith  V.  Dickenson,  3  Bos.  & 
Pul.  630;  Astley  v.  Weldon,  Bos.  & 
Pul.  346 ;  Kemble  v.  Farren.  6  Bing. 
141 ;  Streeper  v.  Williams.  48  Pa.  St. 
450;  Mathews  v.  Sharp,  99  Pa.  St. 
560;  Pennypacker  v.  Jones,  106  Pa. 
St.  lyi;  Dakin  v.  Williams,  17  Wend. 
(N.  Y.)  447,  aflfd..  22  Wend.  (N.  Y.) 
201.  The  conflict  in  the  decisions  on 
this  subject  is  due  to  the  fact  that 
each  case  presents  new  and  distinct 
considerations.  Sanders  v.  Carter, 
91  Ga.  450.  "The  subject-matter  of 
the  contract,  and  the  intention  of  the 
parties  are  the  controlling  guides. 
If,  from  the  nature  of  the  agree- 
ment, it  is  clear  that  any  attempt  to 
get  at  the  actual  damage  would  be 
difficult,  if  not  in  vain,  then  the 
courts  will  incline  to  give  the  relief 
which  the  parties  have  agreed  on. 
But  if,  on  the  other  hand,  the  con- 
tract is  such  that  the  strict  construc- 
tion of  the  phraseology  would  work 
absurdity  or  oppression,  the  use  of 
the  term  liquidated  damages  will  not 
prevent  the  courts  from  inquiring 
into  the  actual  injury  sustained,  and 
doing  justice  between  the  parties." 
Sedgwick  on  Damages  (8th  ed.),  § 
396. 

"Storm  v.  Montgomery,  79  Ark. 
172,  95  S.  W.  149;  Rheam  v.  Martin, 


26  App.  (D.  C.)  181;  Hull  &c.  Co. 
V.  Empire  &c.  (To.,  113  Fed.  256,  51 
C.  C.  A.  213;  McLelland  v.  Single- 
tary,  113  Ga.  601,  38  S.  E.  942;  Illi- 
nois Cent.  Co.  V.  Foulks,  191   111.  57, 

60  N.  E.  890;  Collins  &  Burgie  Co. 
V.  Silver,  150  111.  App.  430;  Robinson 
V.  Yetter,  238  111.  30.  87  N.  E.  363, 
affg.  143  111.  App.  172;  Zeigler  v.  Il- 
linois Trust  &  Savings  Bank.  245  III. 
180,  91  N.  E.  1041.  28  L.  R.  A.  1112n; 
Indiana  Fuel  Supply  Co.  v.  Indianap- 
olis Basket  Co.,  41  Ind.  App.  658.  84 
N.  E.  776;  Burton  v.  I.  M.  Yost  Mill- 
ing Co.,  6  Kans.  App.  921,  51  Pac. 
67;  N.  B.  Brown  &  Co.  v.  St.  John 
Trust  Co..  71  Kans.  134,  80  Pac.  11; 
Lexington  &  B.  S.  Rv.  Co.  v.  Moore, 

140  Kv.  514.  131  S.  W.  257;  Licking 
Rolling  Mill  Co.  v.  W.  P.  Snvder  & 
Co.,  28  Ky.  L.  357.  89  S.  W.  249; 
Schuster  v.  Snawder,  31  Ky.  L.  254, 
101  S.  W.  1194;  Emerv  v.  Owings,  6 
Gill    (Md.)    191;   Douglass   v.    Paine, 

141  Mich.  485,  104  N.  W.  781;  Mc- 
Clurg  v.  Whitney.  82  Mo.  App.  625; 
New  York  Life  Ins.  Co.  v.  Wolf  son, 
124  Mo.  App.  286,  101  S.  W.  162;  Mc- 
Cormick  Harvesting  &c.  Co.  v.  Davis, 

61  Nebr.  406,  85  N.  W.  390;  Peru 
Plow  &  Implement  Co.  v.  Johnson 
Bros.,  86  Nebr.  428,  125  N.  W.  595; 
Grueber  Engineering  Co.  v.  Waldron, 
71  N.  J.  Law  597,  60  Atl.  386;  Smith 
v.  United  Tract.  &c.  Co..  168  N.  Y. 
597,  61  N.  E.  1134.  affg.  49  App.  Div. 
(N.  Y.)  641,  63  N.  Y.  S.  665;  Whit- 
ney V.  Olean,  45  App.  Div.  (N.  Y.) 


1564 


CONTRACTS. 


856 


contained  in  several  writings,  such  as  letters  and  telegrams  ex- 
changed between  the  parties*^*  or  a  circular  of  a  building  and 
loan  association  upon  the  faith  of  which  stock  was  bought  in  the 
concern.*'  It  is  also  the  duty  of  the  court  to  interpret  the  mean- 
ing of  particular  words  except  in  cases  where  there  is  evidence 
that  a  particular  word  was  used  in  a  sense  peculiar  to  a  particular 
trade  or  business,  or  that  its  meaning  depends  on  the  usage  of  a 
particular  place."  If  a  doubt  arises  upon  the  construction  of  a 
phrase  in  a  written  instrument,  it  is  to  be  decided  by  the  court 
upon  inspection,  and  not  by  the  jury.**  Where  a  written  con- 
tract has  been  lost,  and  parol  evidence  of  its  contents  has  been 


435,  60  N.  Y.  S.  951 ;  Banks  v.  Blades 
Lumber  Co.,  142  N.  Car.  49,  54  S. 
E.  844;  El  Paso  &  S.  W.  R.  Co.  v. 
Eichel  &  Weikel  (Tex.  Civ.  App.), 
130  S.  W.  922.  In  Wason  v.  Rowe, 
16  Vt.  525,  it  is  said  that  it  is  a  wise 
and  well-established  rule  of  law  that 
the  true  construction  of  written  con- 
tracts is  to  be  declared  by  the  court, 
and  not  submitted  to  the  finding  of 
a  jury.  Veitch  v.  Jenkins,  107  Va. 
68,  57  S.  E.  574;  Dennis  v.  Monte- 
sano  Nat.  Bank,  38  Wash.  435,  80 
Pac.  764;  Southern  Flour  &  Grain 
Co.  V.  McGeehan,  144  Wis.  130,  128 
N.  W.  879;  Thomas  v.  Columbia  Pho- 
nograph Co.,  144  Wis.  470,  129  N.  W. 
522. 

"a  McDonough  v.  Williams,  11  Ark. 
261.  92  S.  W.  783,  8  L.  R.  A.  (N.  S.) 
452;  Mann  v.  Urquhart,  89  Ark.  239, 
116  S.  W.  219;  Cincinnati  Punch  & 
Shear  Co.  v.  Thompson,  80  Kans. 
467,  102  Pac.  848;  American  Jobbing 
Assn.  V.  James,  24  Okla.  460,  103 
Pac.  670;  Scanlan  v.  Hodges,  52  Fed. 
354,  3  C.  C.  A.  113;  Lindsay  v.  Ham- 
burg-Bremen Ins.  Co.,  115  N.  Car. 
212,  20  S.  E.  370;  De  Camps  v.  Car- 
pin,  19  S.  Car.  121 ;  Teasdale  v.  Man- 
chester Produce  Co.,  104  Tenn.  267, 
56  S.  W.  853;  Ranney  v.  Higby,  S 
Wis.  62,  6  Wis.  28.  See  also.  Bales 
V.  Northwestern  Consol.  Milling  Co., 
21  Okla.  421,  96  Pac.  599. 

*^Winiamson  v.  Eastern  Bldg.  & 
Loan  Assn.,  54  S.  Car.  582,  32  S. 
E.  765,  71  Am.  St.  822. 

"Simpson  v.  Margitson,  11  Q.  B. 
23 ;  Johnson  v.  London  Guar.  &c.  Co., 
115  Mich.  86,  72  N.  W.  1115.     The 


construction  of  a  contract,  unless 
there  is  something  peculiar  to  the 
words,  by  reason  of  the  custom  of 
the  trade  to  which  the  contract  re- 
lates, is  for  the  court.  Bowes  v. 
Shand,  2  L.  R.  App.  Cas.  455,  per 
Lord  Cairns.  Written  contract  to  be 
construed  by  the  court.  Phillips  v. 
Aflalo,  43  Eng.  C.  L.  436  (4  M.  &  G. 
846)  ;  Chicago  Cheese  Co.  v.  Fogg, 
53  Fed.  72;  Williams  v.  Waters,  36 
Ga.  454;  Nash  v.  Drisco,  51  Maine 
417;  Barton  v.  Gray,  57  Mich.  622, 
24  N.  W.  638;  State  v.  Lefaivre,  53 
Mo.  470;  Monadnock  R.  Co.  v.  Felt, 
52  N.  H.  379;  Dwight  v.  Germania 
Life  Ins.  Co.,  103  N.  Y.  341,  8  N. 
E.  654,  57  Am.  Rep.  729;  Brady  v. 
Cassidy,  104  N.  Y.  147,  10  N.  E. 
131 ;  Arnold  v.  Bailey,  24  S.  Car.  493; 
State  V.  Fort,  24  S.  Car.  510.  But 
where  the  making  of  the  contract  is 
in  dispute,  it  is  for  the  jury  to  say 
whether  it  is  established.  Folsom  v. 
Cook,  115  Pa.  St.  539,  9  Atl.  93. 

"  Rex  V.  Hucks,  1  Stark.  424 ;  Fos- 
ter V.  Chicago,  197  111.  264,  64  N.  E. 
322,  affg.  96  111.  App.  4 ;  Kerr  v.  Top- 
ping, 109  Iowa  150,  80  N.  W.  321; 
Watson  V.  Richardson,  110  Iowa  673, 
698,  80  N.  W.  407,  416;  Silver  Val. 
Min.  Co.  V.  North  Carolina  Smelting 
Co.,  122  N.  Car.  542,  29  S.  E.  940; 
Brite  v.  Mt.  Airy  Mfg.  Co.,  129  N. 
Car.  34,  39  S.  E.  634 ;  Smith  v.  United 
Tract.  &c.  Co.,  49  App.  Div.  (N.  Y.) 
641,  63  N.  Y.  S.  665,  affd.,  168  N.  Y. 
597,  61  N.  E.  1134;  Keefer  v.  School 
District  of  Sunbury,  203  Pa.  334,  52 
Atl.  245. 


857  INTERPRETATION    AND    CONSTRUCTION.  §    1 564 

received,  its  construction  is  still  for  the  court,  and  not  for  the 
jury,*^  and  such  loss  must  be  first  shown,*"  and  the  burden  of 
proof  is  upon  the  plaintiff  to  establish  the  execution  and  contents 
of  such  contract  or  promise  by  a  preponderance  of  proof.''^  In  an 
action  on  a  written  contract,  it  has  been  held  error  for  the  court 
to  allow  the  question  as  to  what  was  the  contract  to  go  to  the 
jury.'*'*  It  is  for  the  court  to  determine  the  legal  effect  of  a  prom- 
issory note,  and  it  is  error  to  leave  the  construction  to  a  jury.*" 
Where,  by  a  written  agreement,  the  plaintiff  undertook  to  do 
work  to  some  houses  of  the  defendant  in  South  street  and  South- 
ampton street,  and  it  was  proven  that  the  defendant  had  no 
houses  in  Southampton  street  at  the  time  of  the  agreement,  and 
the  judge  asked  the  jury  whether  the  parties  meant  to  describe 
houses  in  South  street  only,  and  whether  the  insertion  of  the 
word  "and"  in  the  agreement  was  a  mistake,  it  was  held  to  be  a 
misdirection  to  leave  it  to  the  jury  to  say  what  was  the  intention 
of  the  parties.^"  Where  the  contract  is  ambiguous  in  any  of  its 
terms,  and  the  ambiguity  can  be  solved  by  reference  to  other  parts 
of  the  contract,  or  surrounding  circumstances  which  are  uncon- 
troverted  by  the  evidence,  it  is  the  duty  of  the  court  to  solve  the 
ambiguity,  and  to  declare  the  true  meaning  of  the  contract.  But 
where  the  ambiguity  cannot  be  solved  by  reference  to  other  parts 
of  the  contract,  and  the  surrounding  circumstances  are  contro- 
verted, the  court  should  charge  the  jury  hypothetically  as  to  the 
true  interpretation  of  the  contract.^^ 

*»  Berwick  v.  Horsfall,  4  C.  B.  N.  S.  161;  Philadelphia  v.  Stewart,  201  Pa. 

450 ;  Wellman  V.  Jones,  124  Ala.  580,  St.    526,    51    Atl.    348;    Blaisdell    v. 

27  So.  416.  Davis,  72  Vt.  295,  48  Atl.   14;   Car- 

**  Watson  V.  Richardson,  110  Iowa  stens    v.    Earles,    26    Wash.    676,    67 

673,  698,  80  N.  W.  407,  416.  Pac.  404.    See   Ginnuth   v.   Blanken- 

*' Gallagher   v.    McBride,  63   N.   J.  ship    (Tex.    App.),    28    S.    W.    828, 

L.  422,  44  Atl.  203.  where   the   court   below  construed  a 

**  Miller  v.  Dunlap,  22  Mo.  App.  97.  provision    in    a    contract    which    was 

"Terry  v.    Shively,  64   Ind.    106.  near  the  border  line   of   uncertainty 

"Hitchin  v.  Grooin,  17  L.  J.  C.  P.  and  ambiguity,  and   in  its  charge  to 

145,  5  C.  B.  515.  the  jury  gave   it  a  certain   meaning. 

"Thorn  &   Hunkins  Lime  &c.   Co.  It    was    held    that    the    court    should 

V.  St.  Louis  Expanded  Metal  &c.  Co.,  have    left    the    construction    of_  the 

77  Mo.  App.  21 ;  Wilcox  v.  Baer,  85  contract  in  this   respect  to  the  jury. 

Mo.  App.   587;   Deutmann  v.   Kilpat-  The  uncertainty  or  ambiguity  did  not 

rick,    46    ]\Io.    .A.pp.    624;     Fruin    v.  arise   from  the  meaning  to  be  given 

Crystal  R.  Co.,  89  Mo.  397,  14  S.  W.  to  the  words  used,  but  sprung  from 

557;    Shickle    v.    Chouteau    &c.    Iron  the  fact  as  to  what  claims  or  persons 

Co.,  10  Mo.  App.  241,  affd.,  84  Mo.  were  embraced  or  not  embraced  with- 


§    1565  CONTRACTS.  858 

§  1565.    Province  of  court  and  jury  further  considered. — • 

It  is  the  duty  of  the  jury  to  take  the  construction  from  the  court, 
either  absohitely,  if  there  be  no  words  to  be  construed,  as  words 
of  art  or  phrases  used  in  commerce,  and  no  surrounding  circum- 
stances to  be  ascertained,  or,  conditionally,  when  those  words  or 
circumstances  are  necessarily  referred  to  them.°^  Where  a  writ- 
ing is  obscure  or  ambiguous  by  reason  of  its  containing  unfamil- 
iar abbreviations,  or  where  it  is  obscurely  written,  or  partially 
erased,  so  as  to  be  uncertain  and  ambiguous,  it  is  proper  to  leave 
it  to  the  jury  to  ascertain  its  meaning.^^  To  establish  a  lost  deed 
by  parol,  the  evidence  must  clearly  and  satisfactorily  show  the 
existence  and  execution  of  the  supposed  deed.°*  But  where  the 
ambiguity  of  the  writing  is  in  the  words  themselves,  the  court 
must  determine  the  meaning  if  it  can  be  done.'^''  When  written 
instruments  contain  technical  terms,  or  words  used  in  a  sense  pe- 
culiar to  some  particular  art,  trade,  or  business,  it  is  often  proper 
to  leave  it  to  the  jury  to  ascertain  and  determine  the  sense  in 
which  such  terms  are  employed."  It  has  been  held  that  when 
a  contract  employs  terms  of  art  and  those  having  knowledge  of 
the  art  differ  as  to  what  the  words  mean,  the  question  may  prop- 
in  the  meaning  of  the  expression,  535;  McAvoy  v.  Long,  13  111.  147; 
"excepting  those  subscribers  taking  Prather  v.  Ross,  17  Ind.  495;  Wil- 
stock,  etc.,"  and  the  ambiguity  being  Hams  v.  Woods,  16  Md.  220;  Eaton 
of  that  character,  evidence  showing  v.  Smith, 20  Pick.  (Mass.)  150;  Smith 
what  was  the  intention  of  the  parties  v.  Faulkner,  12  Gray  (Mass.)  251; 
was  required  to  move  it.  Rosenthal  v.  Ogden,  50  Nebr.  218,  69 

"Neilson  v.  Harford,  8  M.  &  W.  N.  W.  779;  Sellars  v.  Johnson,  65 
805  (action  on  the  case  for  the  in-  N.  Car.  104;  Goddard  v.  Foster, 
fringement  of  a  patent);  Butte  &c.  17  Wall.  (U.  S.)  123,  21  L.  ed.  589. 
Mining  Co.  v.  Montana  Ore  &c.  Co.,  In  Morrell  v.  Frith,  3  M.  &  W.  402, 
121  Fed.  524,  58  C.  C.  A.  634;  West-  Lord  Abinger,  C.  B.,  said :  "One  case 
ern  Mfg.  Co.  v.  Rogers,  54  Nebr.  in  which  the  effect  of  a  written  docu- 
456,  74  N.  W.  849 ;  Freston  v.  Law-  ment  must  be  left  to  a  jury  is,  where 
fence  Cement  Co.,  155  N.  Y.  220,  49  it  requires  parol  evidence  to  explam 
N.  E.  768.  't,  as  in  the  ordinary  case  of  mercan- 

'^  Holland  v.  Long,  57  Ga.  36 ;  tile  contracts,  in  which  peculiar  terms 
Paine  v.  Ringold,  43  Mich.  341,  5  N.  and  abbreviations  are  employed." 
W.  421 ;  Newberry  v.  Durand,  87  Mo.  The  use  of  the  word  "sell"  in  the 
App.  290.  memoranda  of  the  initiatory  part  of  a 

"Slipman  v.  Telschow,  24  Ohio  contract,  the  result  of  several  con- 
Cir.  Ct.  536.  ferences  and  conversations,  has  been 

"Morrell  v.  Frith,  3  M.  &  W.  402;  held  not  conclusive,  as  matter  of  law, 
Camp  V.  Wilson,  97  Va.  265,  33  S.  as  to  the  nature  of  the  contract.  Pa- 
E.  591.  cific    Export    Lumber    Co.    v.    North 

"Simpson  v.  Margitson,   11  Ad.  &     Pac.  Lumber  Co.,  46  Ore.  194,  80  Pac. 
E.  (N.  S.)  23,  63  Eng.  Com.  Law  21 ;     105. 
Hutchison    v.    Bowker,   5    M.    &    W. 


859 


INTERPRETATION    AND    CONSTRUCTION. 


§    1566 


erly  be  suljmltted  to  the  jury."  If  there  are  peculiar  expressions 
which  have,  in  particular  places  or  trades,  a  known  meaning  at- 
tached to  them,  it  is  for  the  jury  to  say  what  the  meaning  of  these 
expressions  is,  but  for  the  court  to  decide  what  the  meaning  of 
the  contract  is."  What  is  the  true  interpretation,  however,  of 
mercantile  phrases  in  commercial  correspondence  is  not  always 
a  question  of  law,  but  may  in  many  cases  be  properly  left  to  the 
jury  to  decide,  where  the  phrases  admit  of  different  meanings."* 

§  1566.  Oral  contracts. — Where  a  contract  is  oral,  the 
question  as  to  what  the  contract  is  must,  if  controverted,  be  tried 
by  the  jury  as  a  question  of  fact,  but  where  the  terms  of  a  contract 
are  undisputed,  its  construction  and  effect,  where  the  contract  is 
oral  as  well  as  where  it  is  written,  are  to  be  determined  by  the 
court.""    When  the  terms  of  a  parol  agreement  are  given,  and  are 


"  Burton  v.  Jennings,  185  Fed.  382, 
107  C.  C.  A.  438. 

"  Hutchison  v.  Bowker,  5  M.  &  W. 
535;  Brown  v.  Orland,  36  Maine  376; 
Burnham  v.  Allen,  1  Gray  (Mass.) 
496;  Eaton  v.  Smith,  20  Pick. 
(Mass.)  150;  Taliaferro  v.  Cundiff, 
33  Tex.  415.  Questions  as  to  the 
meaning  of  particular  words  used  in 
a  special  sense  in  a  written  instru- 
ment are  for  the  jury.  Pitney  v. 
Glen's  Falls  Ins.  Co.,  61  Barb.  (N. 
Y.)  335,  65  N.  Y.  6.  What  was  in- 
tended by  "a  first-class  long  raft-line" 
as  used  in  a  towing  contract  is  for 
the  jury.  Stevenson  v.  Michigan 
Log-Towing  Co.,  103  Mich.  412,.  61 
X.  W.  536. 

■*  Atlanta  Ace.  Assn.  v.  Alexander, 
104  Ga.  709,  30  S.  E.  939.  42  L.  R.  A. 
188 ;  Fagin  v.  Connoly,  25  Mo.  94,  69 
Am.  Dec.  450,  and  note.  Mr.  Justice 
Story,  in  delivering  the  opinion  of 
the  court  in  Brown  v.  McGran,  14 
Pet.  (U.  S.)  479.  10  L.  ed.  551.  said: 
"It  is  certainly  true,  as  a  general  rule, 
that  the  interpretation  of  written  in- 
struments properly  belongs  to  the 
court,  and  not  to  the  jury.  But  there 
certainly  are  cases  in  which,  from 
the  different  senses  of  the  words 
used,  or  their  obscure  and  indeter- 
minate reference  to  unexplained  cir- 
cumstances, the  true  interpretation  of 


the  language  may  be  left  to  the  con- 
sideration of  the  jury  for  the  pur- 
pose of  carrying  into  effect  the  real 
intention  of  the  parties.  This  is  espe- 
cially applicable  to  cases  of  commer- 
cial correspondence,  where  the  real 
objects  and  intentions  and  agree- 
ments of  the  parties  are  often  to  be 
arrived  at  only  by  allusions  to  cir- 
cumstances which  are  but  imper- 
fectly developed." 

*"  Moore  v.  Garwood,  4  Exch.  681 ; 
Morrell  v.  Frith.  3  M.  &  W.  402; 
Begg  V.  Forbes,  30  Eng.  L.  &  Eq. 
508;  Bradburv  v.  Marbury.  12  .Ala. 
520,  46  Am.  Dec.  264;  Guptill  v.  Da- 
mon, 42  Maine  271 ;  Globe  Works  v. 
Wright.  106  Mass.  207 ;  Perth  Amboy 
Mfg.  Co.  v.  Condit,  21  N.  J.  L.  659; 
Rogers  v.  Colt,  21  N.  J.  L.  704; 
Brown's  Admrs.  v.  Hatton,  9  Ired. 
L.  (N.  Car.)  319.  It  is  for  the  jury 
to  determine  in  what  sense  several 
terms  having  no  accepted  legal  sig- 
nification were  used  by  the  parties  in 
an  oral  agreement  for  a  sale.  Becker 
v.  Holm,  89  Wis.  86,  61  N.  W.  307. 
In  such  case  the  jury  passes  merely 
on  the  existence  of  the  contract. 
Manti  Citv  Sav.  Bank  v.  Peterson, 
30  Utah  475.  86  Pac.  414,  116  Am.  St. 
862,  33  Utah  114,  93  Pac.  566,  14 
L.  R.  A.   (N.  S.)   1043. 


§    1566  CONTRACTS.  860 

unambiguous,  its  interpretation  is  as  much  a  question  of  law  for 
the  court  as  the  interpretation  of  an  unambiguous  written  instru- 
ment.^^ Where  the  contract  is  oral  the  terms  of  the  agreement 
are  a  matter  of  fact,  and  if  those  terms  be  obscure,  or  equivocal, 
or  are  susceptible  of  explanation  from  extrinsic  evidence,  it  is 
for  the  jury  to  find  the  meaning  of  the  terms  employed,  but  the 
effect  of  a  parol  agreement,  when  its  terms  are  given  and  its 
meaning  fixed,  is  as  much  a  question  of  law  as  the  construction 
of  a  written  agreement.^^  Exceptional  cases  arise  where  the  con- 
tract rests  partly  in  correspondence  and  partly  in  oral  communi- 
cations, in  which  it  is  held  that  the  question  whether  or  not  there 
is  a  contract  is  a  question  for  the  jury.®^  Statements  and  conduct 
of  the  parties  subsequent  to  a  conversation  in  which  it  is  alleged 
that  a  contract  was  made  are  competent  only  as  they  tend  to 
show  what  was  their  real  understanding  as  to  that  transaction, 
and  not  for  the  purpose  of  controlling  or  in  any  way  changing 
the  effect  of  the  conversation.®* 

^  McCurdy  v.  Alaska  &c.  Commer-  *^  Spraggins  v.  White,   108  N.  Car. 

cial  Co.,  102  111.  App.  120;  Norton  v.  449,  13  S.  E.  171.    See  also,  Annadall 

Higbee,  38  Mo.  App.  467;  Young  v.  v.  Union  Cement  &  Lime  Co.,  165  Ind. 

Van  Natta    113  Mo.  App.  550,  88  S.  110,  74  N.  E.  893;  American  Towmg 

W    123;   Willard   v.   A.    Siegel    Gas-  &  Lightering  Co.  v.   Baker- Whiteley 

Fixture  Co.,  47  Mo.  App.  1.    Where  a  Coal  Co.,   Ill  Md.  504,  75  Atl.  341; 

contract    is    oral,    its    construction    is  Embry  v.  Hargadine,  McKittrick  Dry 

for   the   jury.     Holmes   v.   Chartiers  Goods  Co.,  127  Mo.  App.  383,  105  S. 

Oil  Co.,  138  Pa.  St.  546,  21  Atl.  231,  W.  777;  Kaley  v.  Van  Ostrand,  134 

21  Am.  St.  919.    The  construction  of  Wis.  443,  114  N.  W.  817. 

an  oral  contract  is  for  the  jury  where  ^  Scanlan  v.  Hodges,  52  Fed.  354, 

there  is  any   doubt  about  its  terms.  3  C.  C.  A.  113.     See  also,  Picard  v. 

The  province  of  the  jury  is  to  settle  Beers,  195  Mass.  419,  81  N.  E.  246. 

disputed    questions    of    fact.      If    no  **  Potter  v.  Phenix  Ins.  Co.,  63  Fed. 

such    disputed    facts    exist    there    is  382;  Byrd  v.  English,  117  Ga.  191,  43 

nothing  for  them  to  do,  and  it  is  for  S.  E.  419,  64  L.  R.  A.  94;  Belknap  v. 

the  court  to  determine  the  legal  ef-  Belknap,  20  S.  Dak.  482,  107  N.  W. 

feet  of  the  contract.    Elliott  v.  Wan-  692. 
amaker,  155  Pa.  St.  67,  25  Atl.  826. 


CHAPTER  XXXVI. 


COVENANTS  AND  CONDITIONS. 


i  1575.  Generally — When  words  con-    §  1595. 
strued     as     convenant     and 
when  as  condition.  1596. 

1576.  Kinds  of  covenants — Depend- 

ent   and    independent — Mu-       1597. 
tual.  1598. 

1577.  Time  of  performance. 

1578.  Covenants    construed    as    de-       1599. 

pendent.  1600. 

1579.  Examples    of    covenants   con- 

strued as  independent.  1601. 

1580.  Mutual     promises  —  Reliance 

on  remedy  or  condition.  1602. 

1581.  Conditions   in    insurance   poli- 

cies. 1603. 

1582.  Conditions   in   insurance  poli- 

cies— Suicide.  1604. 

1583.  Examples  of  conditions  prec- 

edent—  Vendor     and     pur- 
chaser. 1605. 

1584.  Examples    of    provisions   held 

not  conditions  precedent  in 

cases   of    vendor    and    pur-       1606. 

chaser. 

1585.  Vendor    and    purchaser — Mis-        1607. 

cellaneous. 

1586.  Conditions  as  to  arbitration —       1608. 

Waiver.  1609. 

1587.  Conditions  and  acts  to  be  per- 

formed in  sales  of  goods.  1610. 

1588.  Sales  of  goods — Conditions  to 

passing  of  title.  1611. 

1589.  Sale  of  goods  to  arrive. 

1590.  Sales   of    goods — Delivery   by 

instalments.  1612. 

1591.  Sales  —  Instalments — Review 

of  cases.  1613. 

1592.  Insolvency  of  buyer. 

1593.  Conditional  sales.  1614. 

1594.  Form  and  construction  of  con- 

tract of  conditional  sales- 


Transfer  of  rights  under  con- 
ditional sale. 

Conditional  sales — Rights  of 
the  parties  on  default. 

Waiver  of  forfeiture  and  title. 

Risk  of  loss — Destruction  of 
the  property. 

Recording. 

Miscellaneous  matters  con- 
cerning conditional  sales. 

Architect's  or  engineer's  cer- 
tificate of  approval. 

Architect's    certificate  —  Illus- 
trations- 
Promise  conditional  upon  ap- 
proval  of   promisor. 

Cases  holding  that  right  of 
approval  must  be  exercised 
reasonably. 

Cases  holding  right  of  ap- 
proval absolute  and  unqual- 
ified— Good  faith. 

Failure     to     fully     perform — 

Substantial  performance. 
Building    contracts — Substan- 
tial performance. 

Personal  services. 

Conditions  in  subscriptions 
generally. 

Conditions  in  subscriptions  to 
stock. 

Conditions  subsequent  i  n 
deed — Subsequent  defeas- 
ance. 

Surety's  bond  signed  under 
condition. 

Time  of  performance — Rea- 
sonable time. 

Waiver — Miscellaneous. 


§  1575.  Generally — When  words  construed  as  covenant 
and  when  as  condition. — Questions  so  frequently  arise  as  to 
the  interpretation  or  construction  and  the  operation  of  covenants 

86i 


§    1575  CONTRACTS.  862 

and  conditions  that  it  has  been  thought  advisable  to  devote  a  chap- 
ter to  this  particular  subject,  especially  as  many  of  the  general 
rules  already  found  are  well  illustrated  and  applied  in  such  cases, 
while  at  the  same  time  they  possess  some  peculiar  features  of 
their  own.  Particular  phases  of  the  subject  are  and  will  be 
treated  in  other  connections.  The  word  "covenant"  is  not  used 
here  in  its  restricted  sense  of  a  promise  under  seal,  nor  in  its 
widest  sense  as  including  contracts  in  general,  or  all  parts  of  a 
contract,  but  rather  as  referring  to  a  clause  or  stipulation  in  a 
contract  whereby  one  party  agrees  to  perform  or  give  something 
to  or  for  the  other,  or  stipulates  for  the  truth  of  certain  facts. 
No  attempt  will  be  made  to  classify  and  determine  the  effect  of  all 
the  various  kinds  of  covenants  nor  to  consider  at  length  matters 
that  will  hereafter  be  treated  under  the  special  topic  of  deeds,  but 
particular  attention  will  be  given  to  the  construction  of  certain 
provisions  regarded  as  covenants  and  more  especially  to  the  con- 
struction and  operation  of  conditions  in  various  kinds  of  con- 
tracts. Neither  express  words  of  covenant,  nor  any  particular 
and  technical  form  of  words  is  necessary  to  charge  a  party  with  a 
covenant,  and  even  words  of  proviso  or  condition  may  be  con- 
strued into  words  of  covenant  when  such  is  the  apparent  intention 
and  meaning  of  the  parties,  but  a  covenant  will  not  arise  unless 
it  can  be  collected  from  the  whole  instrument  that  there  was  an 
agreement  or  promise  or  engagement,  upon  the  part  of  the  per- 
son sought  to  be  charged,  for  the  performance  or  nonperform- 
ance of  some  act.^  Nor  is  any  set  form  of  words  necessary  to 
create  a  condition,^  although  certain  words  are  recognized  as  apt 

^  Hale  V.  Finch,  104  U.  S.  261,  26  liable.  See  also,  Graves  v.  Deterling, 
L.  ed.  732.  In  this  case  there  was  in  120  N.  Y.  447,  24  N.  E.  655 ;  Ball  v. 
terms  a  covenant  in  a  contract  for  Milliken,  31  R.  I.  36,  76  Atl.  789,  Ann. 
sale  of  a  steamboat  to  defend  the  Cas.  1912B  30;  Reisenbach  v.  Wash- 
title,  but  this  was  immediately  fol-  ington  Short  Line  R.  Co.,  10  Wash, 
lowed  by  a  provision  to  the  ef-  357,  38  Pac.  1026. 
feet  that  the  sale  was  upon  the  '  Sumner  v.  Darnell,  128  Ind.  38,  27 
express  condition  that  the  boat  N.  E.  162;  Rawson  v.  School  Dist.,  7 
should  not  be  used  on  certain  Allen  (Mass.)  125,  128,  83  Am.  Dec. 
waters  within  a  prescribed  time.  670;  Farnham  v.  Thompson,  34  Minn. 
It  was  held  that,  upon  a  breach  by  so  330,  26  N.  W.  9;  First  M.  E.  Church 
using  it,  or  permitting  it  to  be  used,  v.  Old  Columbia  &c.  Co.,  103  Pa-  St. 
while  the  vendee  might  lose  the  boat,  608,  613 ;  Jeffrey  v.  Graham,  61  Tex. 
there  was  no  covenant  on  his  part  482;  Horner  v.  Chicago,  M.  &c.  R. 
under  which  he  would  be  personally  Co.,  38  Wis.  165. 


863  COVENANTS    AND    CONDITIONS.  §    1 576 

and  customary.'  Indeed,  the  same  words  may  be  employed  to 
create  either  a  condition  or  a  covenant.*  In  determining  whether 
it  should  be  deemed  a  covenant  or  a  condition  the  endeavor  here, 
as  elsewhere,  is  to  get  at  and  carry  out  the  intention  of  the  par- 
ties, but  where  the  stipulation  would  destroy  an  estate  if  con- 
strued as  a  condition  the  courts  are  inclined,  in  doubtful  cases,  to 
construe  it  as  a  covenant  rather  than  as  such  a  condition. ° 

§  1576.  Kinds  oi  covenants — Dependent  and  independent 
— Mutual. — Covenants  are  variously  classified  on  different 
bases,  but  the  classification  that  immediately  concerns  us  here  is 
that  which  relates  to  their  relationship,  dependence  or  nonde- 
pendence  of  one  on  another,  or  time  or  condition  of  performance. 
Viewed  in  this  light  there  are  three  kinds  of  covenants  or  prom- 
ises :  I.  Such  as  are  called  mutual  and  independent,  where  either 
party  may  recover  damages  from  the  other  for  the  injury  he  may 
have  received  by  a  breach  of  the  covenant  in  his  favor,  and 
where  it  is  no  excuse  for  the  defendant  to  allege  a  breach 
of  the  covenant  on  the  part  of  the  plaintiff.  2.  There  are 
covenants  which  are  conditions  and  dependent,  in  which  the 
performance  of  one  depends  on  the  prior  performance  of  another 

'See     Brady     v.     Gregory      (Ind.  C.  C.  A.  27,  16  U-  S.  App.  253 ;  Boone 

App.),  97  N.  E.  452;  Gray  v.  Blanch-  v.  Clark,  129  111.  466,  501,  21   X.  E. 

ard,  8  Pick.  (Mass.)  284,  291 ;  Pasch-  850,  5  L.  R.  A.  276:  Brady  v.  Gregory 

all  V.  Passmore,  15  Pa.   St.  295,  307;  (Ind.  App.),  97  N.  E.  452  (But  stipu- 

Brown   v.    Caldwell,  23   W.  Va.    187,  lations  in  a  deed  for   support  of  grant- 

190,  48  Am.  Rep.  376.  or  are  not  subject  to  the  strict  rules 

*Ebion   Land   Co.   v.   South   &   N.  of     construction     against     conditions 

A.   R.   Co.,   100  Ala.  396,  405,   14  So.  subsequent     generally.);     Taylor     v. 

207;  Parmelee  v.  Osweco  &  S.  R.  Co.,  Campbell   (Ind.  App.),  98  N-  E.  657; 

6  N.  Y.  74,  80;  Hartung  v.  Witte,  59  Jeffersonville  &c.  R.  Co.  v.   Barbour, 

Wis.   285.    18   N.   W.    175.      See   also,  89     Ind.     375,     378;     Thompson     v. 

Brady  v-  Gregory  (Ind.  App.),  97  N.  Thompson,  9   Ind.   323,  330,   68   Am. 

E.  452.  Dec.    638;     Ruggles     v.     Clare,     45 

''Thornton    v.    Trammell,    39    Ga.  Kans.     662,     26     Pac.     25;     Kilpat- 

202-    Gallaher    v.     Herbert.     117     111.  rick    v.    Baltimore,    81    lid.    179.    31 

160,  169.  7  N.  E.  511;  Bradv  v.  Greg-  Atl.   805,   27   L.   R.   A.   643,   48   Am. 

cry  (Ind.  App.),  97  X.  E.  452;  Peden  St.   509;   Barrie  v.    Smith.   47    Mich. 

V.  Chicago,  R.  I.  &c.  R.  Co.,  73  Iowa  130.    10    N.    W.    168;    Studdard    v. 

328,  35   X.   W.  424,   5   Am.   St.   680;  Wells,  120  Mo.  25,  29,  25  S.  W.  201; 

Woodruff  V.  Woodruff,  44  N.  J.  Eq.  Graves  v.   Deterling.   120   X.   Y.  447, 

349.  16  Atl.  4.  1  L.  R.  A.  380;   Post  455,  24  X.  E.  655;  Lewis  v.  Henry's 

V.  Weil,  115  X.  Y.  361,  22  X.  E.  145,  Exrs.,    28    Gratt.     (Va.)     192,    203; 

5  L.  R.  A.  422,  12  Am.  St.  809;  Hart-  Brown   v.    Caldwell.  23  W.   Va.    187. 

ung  V.  Witte.  59  Wis.  285.  18  X.  W.  48  Am.  Rep.  376.  379.    For  additional 

175.     Such  conditions  are  not  favored  authorities   and   further  treatment   of 

and   are  strictly   construed.     Mahon-  this  phase  of  the  general  subject,  see 

ing  County  v.  Young,  59  Fed.  96,  8  vol.  iv,  of  this  work,  Tit.  Deeds. 


§    1577  CONTRACTS.  864 

and,  therefore,  until  this  prior  condition  is  performed,  the  other 
party  is  not  Hable  to  an  action  on  his  covenant.  3.  There  is  also 
a  third  sort  of  covenants,  which  are  mutual  conditions  to  be  per- 
formed at  the  same  time ;  and  in  these,  if  one  party  w^as  ready,  and 
offered  to  perform  his  part,  and  the  other  neglected,  or  refused, 
to  perform  his,  he  who  was  ready  and  offered  has  fulfilled  his  en- 
gagement, and  may  maintain  an  action  for  the  default  of  the 
other,  although  it  is  not  certain  that  either  is  obliged  to  do  the  first 
act.  The  dependence  or  independence  of  covenants  is  to  be  col- 
lected from  the  evident  sense  and  meaning  of  the  parties,  and, 
however  transposed  they  may  be  in  the  deed,  their  precedency 
must  depend  on  the  order  of  time  in  which  the  intent  of  the  trans- 
action requires  their  performance.^  There  is  also  another  kind 
of  covenant  that  may  be  included  here,  namely,  an  alternative  or 
disjunctive  covenant,  which  is  one  for  the  performance  of  one  or 
more  of  several  things  at  the  election  of  one  of  the  parties.'' 

§  1577.  Time  of  performance. — The  following  rules  of  con- 
struction as  to  the  intention  of  the  parties  have  been  deduced 
from  the  times  appointed  for  the  performance  of  the  respective 
promises:  If  a  day  be  appointed  for  payment  of  money  or  part 
of  it,  or  for  doing  any  other  act,  and  the  day  is  to  happen,  or  may 
happen,  before  the  thing  which  is  the  consideration  of  the  money, 

®  Stavers  v.  Curling,  3  Bing.  N.  C.  right  of  one  to  maintain  an  action 
355 ;  Cutter  v.  Powell,  6  T.  R.  320,  2  against  the  other  shall  be  conditioned 
Smith  L.  C.  1 ;  Pordage  v.  Cole,  1  or  dependent  upon  the  plaintiff's  per- 
Wms.  Saund.  319i;  Kingston  v.  Pres-  formance  of  covenants  entered  into 
ton,  cited  in  Jones  v.  Barkley,  2  on  his  part.  On  the  other  hand,  they 
Doug.  684.  In  Loud  v.  Pomona  Land  may  agree  that  the  performance  by 
&c.  Co.,  153  U.  S.  564,  38  L.  ed.  822,  one  shall  be  a  condition  precedent  to 
14  Sup.  Ct.  928,  932,  it  is  said :  "The  the  performance  by  the  other.  The 
question  whether  covenants  are  de-  question  in  each  case  is,  which  intent 
pendent  or  independent  must  be  de-  is  disclosed  by  the  language  employed 
termined  in  each  case  upon  the  proper  in  the  contract?"  Many  other  author- 
construction  to  be  placed  on  the  Ian-  ities  might  be  cited  to  the  effect  that 
guage  employed  by  the  parties  to  ex-  the  intention  of  the  parties  controls, 
press  their  agreement.  If  the  Ian-  Among  them  are  the  following:  Ful- 
guage  is  clear  and  unambiguous,  it  enwider  v.  Rowan,  136  Ala.  287,  34 
must  be  taken  according  to  its  plain  So.  975 ;  Hewitt  v.  Berryman,  5  Dana 
meaning  as  expressive  of  the  inten-  (Ky.)  162;  Couch  v.  Ingersoll,  2 
tion  of  the  parties,  and  under  the  set-  Pick.  (Mass.)  292;  Boulware  v. 
tied  rules  of  judicial  decision  should  Crohn,  122  Mo.  App.  571,  99  S.  W. 
not  be  controlled  by  the  supposed  in-  796;  Ink  v.  Rohrig,  23  S.  Dak.  548, 
convenience    or    hardship    that    may  122  N.  W.  594. 

follow  such  construction.     If  parties  ^  See    post,    chapter    41,    Perform- 

think  proper,  they  may  agree  that  the  ance. 


865  COVENANTS    AND    CONDITIONS.  §     1 578 

or  Other  act,  is  to  be  performed,  an  action  may  be  brought  for  the 
money,  or  for  not  doing  such  other  act,  before  performance;  for 
it  appears  that  the  party  rehed  upon  his  remedy,  and  did  not  in- 
tend to  make  the  performance  a  condition  precedent;  and  so  it  is 
where  no  time  is  fixed  for  performance  of  that  which  is  the  con- 
sideration of  the  money  or  other  act.*  When  a  day  is  appointed 
for  the  payment  of  money,  and  the  day  is  to  happen  after  the 
thing  which  is  the  consideration  of  the  money  is  to  be  performed, 
no  action  can  be  maintained  for  the  money  before  perform- 
ance." Where  two  acts  are  to  be  done  at  the  same  time,  as  where 
A  covenants  to  convey  an  estate  to  B  on  such  a  day,  and,  in  con- 
sideration thereof,  B  covenants  to  pay  A  a  sum  of  money  on  the 
same  day,  neither  can  maintain  an  action  without  showing  per- 
formance of,  or  an  offer  to  perform,  his  part,  although  it  is  not 
certain  which  of  them  is  obHged  to  do  the  first  act;  and  this 
apphes  to  all  cases  of  sales.'"  The  text  of  this  section  is  taken 
in  substance  from  the  note  of  Sergeant  Williams  in  the  leading 
case  of  Portage  v.  Cole,  first  cited.  The  note  referred  to  has 
been  very  generally  regarded  as  greatly  clarifying  the  law  upon 
the  subject  and  has  often  been  referred  to  and  followed." 

§  1578.  Covenants  construed  as  dependent. — The  question 
as  to  whether  a  stipulation  or  covenant  is  dependent  or  independ- 

» Pordage  v.  Cole,  1  Wms.  Saund.  Terry  v.  Duntze,  2  H.  Bl.  389 ;  Dicker 
319i  See  also,  Thorpe  V.  Thorpe,  12  v.  Jackson,  6  C.  B.  103;  Rolt  v. 
Mod.  455,  1  Salk.  171;  Eastern  Coun-  Cozens,  18  C.  B.  673;  Judson  v  Bow- 
ties  R.  Co.  V.  Philipson,  16  C.  B.  2;  den,  1  Exch.  162;  Peelers  v.  Opie.  2 
Devore  v.  Devore,  138  Mo.  181,  39  S.  Wms.  Saund.  350;  Doogood  v.  Rose. 
W.  68;  Acklev  v.  Richman.  10  N.  J.  9  C.  B.  132;  Giles  v.  Giles,  9  Q.  B. 
L.  304;  Undefhill  v.  Saratoga  &c.  R.  164;  Borders  v.  Rury,  91  111.  App.  1 ; 
Co.  20  Barb.  (N.  Y.)  455;  Edgar  v.  ^lartin  v.  Hurley,  84  Mo.  App  670; 
Boies,  11  Serg.  &  R.  (Pa.)  445;  ante,  Shinn  v.  Roberts,  20  X.  J.  L.  43o.  43 
§  1547  Am.  Dec.  636;   Ewing  v.   W  ightman. 

•Pordage  v.   Cole,   1  Wms.   Saund.  167  N.  Y.  107,  60  X.  E.  2,22;  Campbell 

319i;    Stone    v.    Cover,    1    Ala.    287;  v.    Gittings,    19  Ohio  347;    Powell   v. 

Southern    Pac.   R.   Co.   v.    Allen,    112  Davton,    S.  &c.   R.   Co..    12  Ore.  488, 

Cal    455,   44   Pac.   796;    Beau   v.  At-  8  Pac.  544;   Scott  v.   Smith.  58  Ore. 

water.  4  Conn.  3 ;  Couch  V.  IngersoU,  591,    115    Pac.    969;    Von    Roeder    v. 

2    Pick.    (Mass.)    292;    Ilusenetter  v.  Robson,  20  Tex.  754;   Stein  v.  Wad- 

GuUikson,  55  Xebr.  32.  75  N.  W.  41;  dell,  2,7  Wash.  634.  80  Pac.  184:  Lewis 

Dey  V.  Dox.  9  Wend.  (X.  Y.)  129,  24  v.   Wellard,   62  Wash.  590,   114  Pac. 

Am.  Dec.  137.  455.                                            ,  o      ^ 

"  Pordage  v.  Cole,  1  Wms.  Saund.  "  In  Loud  v.  Pomona  Land  &c.  Co., 

319i;  Thorpe  v.  Thorpe,   1  L.  Ravm.  153  U.  S.  564,  38  L.  ed.  822,  14  Sup. 

662;  Campbell  v.  Jones,  6  T.  R.  570;  Ct.  928.  932.  for  instance,  the  Su- 
preme Court  of  the  Lnited  States, 
55 — CoNTR.\cTS,  Vol.  2 


I57S 


CONTRACTS. 


866 


ent  must  usually  be  determined  from  the  terms  of  the  contract, 
but  the  courts  are  inchned  to  construe  such  covenants  as  depend- 
ent, the  rule  being  that  the  stipulation  or  covenant  will  be  con- 
strued as  dependent  unless  a  contrary  intention  appears.^"  As 
already  stated,  however,  the  intention  governs  and  whether  the 
requirements  of  a  contract  are  conditions  precedent  which  must 


quotes  from  said  note  and  refers  to 
it  as  the  "learned  note"  of  Sergeant 
Williams. 

^■Leonard  v.  Bates,  1  Blackf. 
Clnd.)  171,  176;  Robinson  v.  Har- 
bour, 42  Miss.  795,  97  Am.  Dec.  501, 
2  Am.  Rep.  671;  Glenn  v.  Rossler,  156 
N.  Y.  161,  50  N.  E.  785,  787;  Ink  v. 
Rohrig,  23  S.  Dak.  542,  122  N.  W. 
594;  Bank  of  Columbia  v.  Hagner,  1 
Pet.  (U.  S.)  455,  7  L.  ed.  219;  Stein 
V.  Waddell,  2,7  Wash.  634,  80  Pac. 
184.  In  Davis  v.  Jeffris,  5  S.  Dak. 
352,  58  X.  W.  815,  where  a  contract 
for  the  construction  of  a  creamery 
and  cold  storage  building — the  con- 
tractors agreeing  to  furnish  all  mate- 
rial and  labor,  and  the  cold  storage 
being  constructed  under  the  oSlcCray 
patent — it  was  held  that  a  stipulation 
by  which  the  contractors  "agree  to 
furnish  with  said  contract  a  patent 
deed  from  the  McCray  Refrigerator 
Company,  *  *  *  conveying  all  the 
rights  under  said  patents,"  is  a  de- 
pendent stipulation,  and  that  the  con- 
tractors could  not  recover  the  amount 
agreed  to  be  paid  by  the  subscribers 
to  the  contract,  in  the  absence  of 
proof  that  said  patent  deed  had  been 
furnished  or  tendered  to  the  sub- 
scribers. The  court  said:  "In  the 
early  case  of  President,  &c.,  v.  Hag- 
ner, 1  Pet.  (U.  S.)  455,  the  Supreme 
Court  of  the  United  States  states  the 
rule  as  follows :  'Admitting,  then, 
that  a  contract  was  entered  into  be- 
tween the  parties,  the  inquiry  arises 
whether  the  plaintiffs  have  shown 
such  performance  on  their  part  as 
will  entitle  them,  in  a  court  of  law,  to 
sustain  an  action  for  the  recovery  of 
the  purchase-money.  In  contracts  of 
this  description  the  undertakings  of 
the  respective  parties  are  always  con- 
sidered dependent  unless  a  contrary 
intention  clearly  appears.  A  different 
construction  would  in  many  cases 
lead  to  the  greatest  injustice,  and  a 


purchaser  might  have  payment  of  the 
consideration  money  enforced  upon 
him,  and  yet  be  disabled  from  prcjcur- 
ing  the  property  for  which  he  paid  it. 
Although  many  nice  distinctions  are 
to  be  found  m  the  books  upon  the 
question  whether  the  covenants  or 
promises  of  the  respective  parties  to 
the  contract  are  to  be  considered  in- 
dependent or  dependent,  yet  it  is  evi- 
dent the  inclination  of  the  courts  has 
strongly  favored  the  latter  construc- 
tion, as  being  obviously  the  most  just. 
The  seller  ought  not  to  be  compelled 
to  part  with  his  property  without  re- 
ceiving the  consideration,  nor  the 
purchaser  to  part  with  his  money 
without  an  equivalent  in  return. 
Hence,  in  such  cases,  if  either  a  ven- 
dor or  vendee  wish  to  compel  the 
others  to  fulfill  his  contract,  he  must 
make  his  part  of  the  agreement  prec- 
edent, and  cannot  proceed  against 
the  other  without  an  actual  perform- 
ance of  the  agreement  on  his  part,  or 
a  tender  and  refusal;  and  an  aver- 
ment to  that  effect  is  always  made 
in  the  declaration  upon  contracts  con- 
taining dependent  undertakings,  and 
that  averment  must  be  supported  by 
proof,  and  that  the  one  now  before 
the  court  must  be  considered  a  con- 
tract of  this  description  cannot  ad- 
mit of  a  doubt."  The  principles  there 
enunciated  have  since  been  generally 
followed  by  the  courts  of  the  country. 
I-'or  a  very  full  review  of  the  English 
and  American  descriptions  upon  this 
question,  see  Lester  v.  Jewett,  UN. 
Y.  453.  See  also.  Smith  v.  Lewis,  26 
Conn.  110;  Clark  v.  Weis,  87  III  438, 
29  Am.  Rep.  60;  Griggs  v.  Moors,  163 
Mass.  354,  47  N.  E.  128;  Kane  v. 
Hood,  13  Pick.  (Mass.)  281;  Swan 
v.  Drury,  22  Pick.  (Mass.)  485;  Will- 
iams V.  Healey,  3  Denio  (N.  Y.) 
363;  Grant  v.  Johnson,  5  N.  Y.  247; 
Parker  v.  Parmele,  20  Johns.  (N.  Y.) 
130,    11    Am.    Dec.    253;    Galvin    v. 


867  COVENANTS    AND    CONDITIONS.  §    1 578 

be  strictly  complied  with,  or  are  independent  stipulations  the 
failure  to  completely  perform  which  may  be  compensated  in 
damages,  is  to  be  determined  by  an  examination  and  fair  inter- 
pretation of  the  entire  contract.'^  Where  an  agreement  for  the 
sale  and  shipment  of  a  certain  amount  of  coke  was  expressly 
conditioned  on  the  ability  of  the  seller  to  induce  operators  to  build 
ovens  and  make  the  coke,  and  it  provided  for  notice  by  the  seller 
to  the  buyer,  at  specified  times,  as  to  how  much  of  the  entire  quan- 
tity of  coke  could  be  supplied  during  certain  periods,  it  was  held 
that  the  seller  was  bound  thereby  as  soon  as  he  induced  operators 
to  build  ovens  and  make  the  coke,  and  hence  the  agreement  was 
mutual.'*  Covenants  to  convey  "on"  payment  being  made,  "as 
soon"  as  it  is  made,  "when"  it  is  made,  and  the  like  are  held 
mutual  or  dependent  covenants.'''     The  rule  as  to  dependent  cove- 


Prentice,  45  N.  Y.  162,  6  Am.  Rep. 
58;  Dunham  v.  Pcttee,  8  N.  Y.  508, 
Seld.  Notes  154;  Brown  v.  Binz 
(Tex.  Civ.  App.).  50  S.  W.  483;  Coos 
Bay  Wagon  Co.  v.  Crocker,  6  Sawy. 
(U.  S.)  574,  4  Fed.  577;  ante,  §  1547. 
"  Howell  V.  James  Lumber  Co.,  102 
Ga.  595,  27  S.  E.  699;  Duncan  v. 
Charles,  5  111.  561;  Rothenberger  v. 
Click,  22  Ind.  App.  288,  52  N.  E.  811 ; 
Eddy  V.  Davis,  116  X.  Y.  247,  22  K 
E.  362;  Scarborough  v.  Arrant,  25 
Tex.  129;  Loud  v.  Pomona  Land  &c. 
Co.,  153  U.  S.  564,  38  L.  ed.  822,  14 
Sup.  Ct.  928,  932,  933.  In  Keller  v. 
Reynolds  (Ind.  App.),  40  N.  E.  76, 
280.  it  is  said:  "Whether  or  not  the 
performance  of  those  things  to  be 
done  by  appellee  is  to  be  regarded  as 
a  condition  precedent  is  to  be  deter- 
mined from  an  examination  of  the 
entire  contract,  giving  to  it  a  reason- 
able and  fair  interpretation.  Those 
matters  as  to  which  appellee  has 
failed  to  aver  performance  constitute 
but  a  part  of  the  consideration  for 
the  agreement  of  appellants  to  pay  to 
her  the  amounts  named ;  and  since 
the  agreement  has  been  in  an  essen- 
tial feature  performed  by  appellee 
and  the  benefit  of  such  performance 
received  by  appellants,  and  any  loss 
to  appellants  from  the  failure  to  com- 
pletely perform  may  be  compensated 
by  damages,  such  stipulations  will  be 
regarded  as  independent,  and  not  as 


constituting  conditions  precedent. 
Pickens  v.  Bozell,  11  Ind.  275;  Ilar- 
man  v.  Moore,  112  Ind.  221,  13  N.  E. 
718;  Cummings  v.  Pence,  1  Ind.  App. 
317,  27  N.  E.  031;  Boone  v.  Eyre,  1 
M.  Bl.  273,  note;  2  Parsons  on  Con- 
tracts (5th  ed.),  525-529.  There  are. 
of  course,  many  contracts  in  which 
the  requirements  must  be  regarded  as 
conditions  precedent  or  as  covenants 
interdependent,  performance  o  f 
which  must  be  alleged;  but,  when 
fairly  construed,  this  contract  is  not 
of  that  character.  It  would  be  mani- 
festly iniquitous  to  say  that  appel- 
lants should  receive  and  keep  appel- 
lee's $3,000  because  she  had  not  kept 
the  investment  up  to  that  amount 
continually,  or  because  she  had  failed 
to  perform  some  other  matters  called 
for  in  this  contract.  The  appellee 
furnished  appellants  this  $3,000. 
which  they  invested  in  teeth,  sold 
them,  and  collected  the  money,  which 
it  then  became  their  duty,  under  the 
contract,  to  pay  over  to  her  with  its 
profits,  or  otherwise  satisfactorily  ac- 
count to  her  therefor.  The  complaint 
alleges  a  clear  breach  of  this  obliga- 
tion, and  is  therefore  good  upon  de- 
murrer." 

"Sheffield  Furnace  Co.  v.  Hull 
Coke  Co..  101  Ala.  446,  14  So.  672. 

"Hill  v.  Grigsby,  35  Cal.  656; 
Tripp  v.  Smith.  180  Mass.  122.  61  N. 
E.  804;   Culver  v.  Burgher,  21   Barb. 


§    1579  CONTRACTS.  868 

nants  nas  oeen  held  to  require  only  that  a  tender  of  the  deed  pre- 
cede an  action  for  the  purchase-money/" 

§  1579.    Examples  of  covenants  construed  as  independent. 

— On  the  other  hand,  where  a  contract  provided  that  a  land  com- 
pany, "after  the  making  of  the  payment  and  full  performance 
of  the  covenants  hereinafter  to  be  made"  by  the  other  party, 
should,  in  consideration  thereof,  execute  a  deed  to  the  other  party, 
and  that  until  delivery  of  the  deed  or  tender  of  all  payments 
precedent  thereto,  no  title  should  pass,  equitable  or  otherwise,  it 
was  held  that  the  covenants  were  not  dependent  even  as  to  the  last 
instalment  of  the  price,  and  that  payment  or  tender  of  the  entire 
purchase-price  was  a  condition  precedent  to  the  right  to  a  con- 
veyance." In  a  Texas  case  wdiere  the  owner  of  land  made  an 
executory  contract  to  convey  when  one-half  the  price  was  paid  in 
monthly  instalments,  and  the  vendee  made  default,  it  was  held 
that  the  owner  might  declare  a  forfeiture  and  sue  to  recover  the 
land,  as  such  payment  was  a  condition  precedent  to  the  vesting 
of  title  in  the  vendee.^^  And  covenants  to  pay  at  a  fixed  time 
and,  on  the  other  hand,  to  convey  at  a  different  time  have  often 
been  held  so  far  independent  at  least  that  the  performance  of  the 
earlier  does  not  depend  upon  the  performance  of  the  later  cove- 
nant.'^ 

(N.  Y.)  324;  Smith  v.  Smith,  83  Hun  "Loud  v.  Pomona  Land  &c.  Co., 
(N.  Y.)  381,  64  N.  Y.  St.  756,  31  N.  153  U.  S.  564,  38  L.  ed.  822,  14  Sup. 
Y.  S.  924;  Hardy  v.  McKesson,  6  Ct.  928  (also  holding  that  the  land 
Jones  L.  (51  N.  Car.)  554.  See  also,  company  could  maintain  an  action 
Kessler  v.  Pruitt,  14  Idaho  175,  93  for  the  price  without  a  conveyance  or 
Pac.  965.  And  compare  Bailey  v.  actual  tender  thereof,  on  allegation 
Lay,  18  Colo.  405,  33  Pac.  407.  So  of  readiness  and  willingness  to  con- 
in  Glenn  v.  Rossler,  156  N.  Y.  161,  vey)  ;  Wilson  v.  Wittrock,  19  U.  C. 
50  N.  E.  785,  even  where  the  contract  Q.  B.  391.  Compare  also,  Eastern 
provided  that  defendants  should,  Oregon  Land  Co.  v.  Moody,  198  Fed. 
"after    the    payments    mentioned    are  7. 

fully   made,"    execute   and    deliver    a  "  Pell     v.      Chandos      (Tex.     Civ. 

good  and  sufficient  deed,  it  was  held  App.),  27  S.  W.  48;   Moore  v.  Gies- 

that  the  covenant  to  pay  the  last  in-  ecke,  76  Tex.  543,  13  S.  W.  290.    See 

stalment  and  to  deliver  the  deed  were  also,  Hubbard  v.  Chapman,  165  N.  Y. 

dependent    and   defendant    could    not  609,  58  N.  E.  1088,  affg.  34  App.  Div. 

require  payment  of  the  price  without  (N.  Y.)  252. 

tendering  such  a  deed.     But  see  au-  "  Sayre  v.  Craig,  4  Ark.  10,  37  Am. 

thorities   cited   in    first  two  notes  to  Dec.  757;  Carver  v.  Fennimore,  8  Ind. 

next  following  section.  135;  Davis  v.  Heady,  7  Blackf.  (Ind.) 

'"Suvdam  v.   Dunton,  84  Hun    (N.  261;    Battey  v.    Beebe,  22   Kans.   81; 

Y. )  506,  65  N.  Y.  St.  491,  32  N.  Y.  S.  Saunders    v.    Beal's    Admr.,   4    Bibb. 

333.  (Ky.)    342;   Augusta  Bank  v.   Ham- 


869  COVENANTS    AND    CONDITIONS.  §    1 580 

§  1580.  Mutual  promises — Reliance  on  remedy  or  condi- 
tion.— When  upon  consideration  of  liie  whole  instrument,  it 
is  clear  that  the  one  party  relied  upon  his  remedy,  and  not  upon 
the  performance  of  the  condition  by  the  other,  such  performance 
is  not  a  condition  precedent.  On  the  other  hand,  where  it  is  clear 
that  the  intention  was  to  rely  on  the  performance  of  the  condition, 
and  not  on  the  remedy,  the  performance  is  a  condition  prece- 
dent.■"  But  the  parties  to  a  contract  may,  if  they  think  proper, 
agree  that  any  matter  shall  be  a  condition  precedent;  and,  if 
words  are  used  in  the  contract  so  precise,  express  and  strong, 
that  such  intention,  and  such  intention  only,  is  compatible  with 
the  terms  employed,  however  inconsistent  it  may  be  with  general 
principles  of  reasoning,  a  court  can  only  give  effect  to  such  de- 
clared intention  of  the  parties.  The  only  question  in  every  par- 
ticular case  is,  whether  such  intention  is  so  declared. ^^  Parties 
may  think  some  matter,  which  is  apparently  of  very  little  import- 
ance, essential,  and,  if  they  sufficiently  express  an  intention  to 
make  the  literal  fulfilment  of  such  a  thing  a  condition  precedent, 
it  will  be  one ;  or  they  may  think  that  the  performance  of  some 
matter,  which  is  apparently  of  essential  importance,  and,  prima 
facie,  a  condition  precedent,  is  not  really  vital,  and  may  be  com- 
pensated for  in  damages;  and,  if  they  sufficiently  express  such 
intention,  it  will  not  be  a  condition  precedent. "- 

§  1581.  Conditions  in  insurance  policies. — The  conditions 
expressed  in  an  insurance  policy  are  a  part  of  the  contract  and  the 
insured  is  bound,  ordinarily  at  least,  to  take  notice  of  them.""^ 

blet,  35   Maine  491;   Wilcox  v.  Ten  East  295;  Greaves  v.  Legg,  11  Exch. 

Eyck,  5  Johns.  (N.  Y.)  78.    See  also,  641;   Seeger  v.   Duthie.  8  C.   B.    (N. 

Goldsiiorough  v.  Orr,  8  Wheat.    (U.  S.)  45;  Ellen  v.  Topp,  6  Exch.  424: 

S.)  217,  5  L.  ed.  600.  London  Gas-Light  Co.  v.  Chelsea,  8 

^Roberts  v.    Brett,    18  C.    B.  561;  C.    B.     (N.    S.)    215;    Poussard    v. 

Sheeren     v.     Moses,     84     111.     448;  Spiers.  L.  R.  1  Q.  B.  Div.  410.     See 

Moonev   v.   United    States    Industrial  also,  Griggs  v.  Moors,  168  Mass.  354, 

Co.,  27'lnd.  App.  407,  61  X.  E.  607.  47  N.  E.  128. 

^  Stavers  v.  Curling,  3  Bing.  N.  C.  ^  Quinlan  v.   Providence  Washing- 

355;   McElwain  v.   Jvletropolitan  Life  ton  Ins.  Co.,  133  X.  Y.  356,  31  N.  E. 

Ins.  Co.,  33  App.  Div.  (X.  Y.)  60,  53  31.  28  Am.  St.  645:  O'Brien  v.  Com- 

N.  Y.  S.  253.  mercial  Fire  Ins.  Co.,  63  X.  Y.  108; 

-  Bettini  v.  Gyc.  L.  R.  1  Q.  B.  Div.  P.ell   v.    Lycoming   Fire    Ins.    Co.,    19 

183.      See    following    cases    for    in-  Hun    (X.   Y.)    238;   Blossom   v.   Ly- 

stances  of  the  application  of  the  rules  coming  Fire  Ins.  Co.,  64  X.  Y.   162; 

above  given :  Ritchie  v.  Atkinson,  10  McDermott    v.    Lycoming    Fire    Ins. 


§  issi 


CONTRACTS, 


870 


And  the  fact  that  he  did  not  read  them  or  know  of  the  conditions 
is  generally  immaterial.-*  But  there  may  be  circumstances  under 
which  this  general  rule  should  not  be  applied  because  they  show 
tiiat  the  insured  or  applicant  for  insurance  was  misled  or  not 
negligent  in  failing  to  read  the  instrument  at  once  or  the  like."'' 
And  after  liability  actually  attaches  under  the  policy,  the  relation 
between  the  parties  is  changed  from  that  of  insurer  and  insured 
to  that  of  debtor  and  creditor ;  and  clauses  in  the  policy  which 
provide  that  certain  acts  or  omissions  prior  thereto  shall  invali- 
date it  are  inoperative.^**  If  an  insurance  company  is  in  the  habit 
of  demanding  payment  of  premiums,  its  failure  to  do  so  may 
estop  it  to  take  advantage  of  a  condition  forfeiting  a  policy  for 
nonpayment,  although  the  policy  provides  for  the  payment  at  cer- 
tain times.-'  And  it  has  also  been  held  that  if  a  company  take 
notes  in  payment  of  premiums  this  prevents  it  from  forfeiting  the 


Co.,  12  J.  &  S.  (N.  Y.)  221 ;  Edwards 
V.  Lycoming  &c.  ins.  Co..  75  Pa.  St. 
378;  Railway  Passenger  Assur.  Co.  v. 
Burwell,  44  Ind.  4G0;  Chamberlain  v. 
Prudential  Ins.  Co.,  109  Wis.  4,  85 
N.  W.  128,  83  Am.  St.  851.  See  gen- 
erally as  to  conditions,  Pulaski  Mut. 
Fire  Ins.  Co.  v.  Dawson,  87  111.  App. 
514;  Springfield  Steam  Laundry  Co. 
V.  Traders  Ins.  Co.  of  Chicago,  151 
Mo.  90,  52  S.  W.  238,  74  Am.  St.  521 ; 
Norris  v.  Hartford  Fire  Ins.  Co.,  55 
S.  Car.  450,  33  S.  E.  566,  74  Am.  St. 
765.  Where  the  policy  requires  in- 
sured, in  the  event  of  a  loss,  to  pro- 
duce his  books  and  invoices  for  ex- 
amination, he  must  do  so,  or  he  can- 
not recover ;  and  the  fact  that  he  kept 
no  books  is  not  a  legal  avoidance  of 
the  condition.  Judgment,  Forehand 
V.  Niagara  Ins.  Co.,  58  111.  App.  161, 
reversed.  Niagara  Fire  Ins.  Co.  v. 
Forehand,  169  111.  626,  48  N.  E.  830. 

^  Herndon  v.  Triple  Alliance,  45 
Mo.  App.  426;  Snider  v.  Adams  Ex- 
press Co.,  63  Mo.  376;  Palmer  v. 
Continental  Ins.  Co.,  31  Mo.  App. 
467;  Robinson  v.  Jarvis,  25  Mo.  App. 
421 ;  Rothschild  v.  Frensdorf,  21  Mo. 
App.  318;  Brown  v.  Wabash,  St.  L. 
&  P.  R.  Co.,  18  Mo.  App.  568;  Tay- 
lor v.  Fox,  16  Mo.  App.  527;  Quinlan 
V.  Providence  Washington  Ins.  Co., 
133  X.  Y.  356,  31  N.  E.  31,  28  Am.  St. 


645.     See  also,  Martin  v.  Smith,  116 
Ala.  639,  22  So.  917. 

^  Fitchner  v.  Fidelity  Mut.  Fire 
Assn.,  103  Iowa  276,  72  N.  W^  530; 
McMaster  v.  New  York  Life  Ins. 
Co.,  183  U.  S.  25,  46  L.  ed.  64,  22  Sup. 
Ct.  10,  revg.  99  Fed.  856,  40  C.  C.  A. 
119.  And  see  Cent.  R.  Co.  v.  Wie- 
gand,  79  Fed.  991,  25  C.  C.  A.  681; 
Hurt  V.  Wallace  (Tex.  Civ.  App.),  49 
S.  W.  675. 

^  Sevk  V.  Millers'  Nat.  Ins.  Co.,  74 
Wis.  67,  41  N.  W.  443,  3  L.  R.  A. 
523.  And  to  same  effect,  Concordia 
Fire  Ins.  Co.  v.  Koretz,  14  Colo. 
App.  386,  60  Pac.  191;  Union  Cas- 
ualty &c.  Co.  V.  Bragg,  63  Kans.  291, 
65  Pac.  272 ;  Harrington  v.  Fitchburg 
Ins.  Co.,  124  Mass.  126;  Browning  v. 
Home  Ins.  Co.,  71  N.  Y.  508,  27  Am. 
Rep.  86,  affg.  6  Daly  (N.  Y.)  522: 
Brown  v.  Roger  Williams  Ins.  Co.,  5 
R.  I.  394;  Dogge  v.  Northwestern 
Nat.  Ins.  Co.,  49  Wis.  501,  5  N.  W. 
889;  Alkan  v.  New  Hampshire  Ins. 
Co.,  53  Wis.  136,  10  N.  W.  91. 

^  Union  Cent.  Life  Ins.  Co.  v.  Cald- 
w^ell,  68  Ark.  505,  58  S.  W.  355 :  Har- 
rington V.  Home  Ins.  Co.,  128  Cal 
531,  58  Pac.  180;  Rife  v.  Union  Cent 
&'c.  Co..  129  Cal.  455,  62  Pac.  4 
Weisman  v.  Commercial  Fire  Ins 
Co.,  3  Pen.  (Del.)  224,  50  Atl.  93 
Mutual   Life   Ins.   Co.   v.   Logan,   87 


871 


COVEXAN'TS    AND    CONDITIONS. 


i;8l 


policy,  although  the  policy  expressly  stipulates  that  it  is  to  become 
void  for  nonpayment  of  premiimis,"'*  and  this  though  it  may  be 
shown  that  the  notes  were  unpaid  where  the  policy  contained  a 
provision  that  failure  to  pay  a  note  would  render  it  void."*  Where 
a  condition  in  a  policy  provided  that  the  ccjmpany  would  not  be 
liable  for  a  loss  by  "riot,"  it  was  held  that  the  breaking  of  five 
masked  men  into  a  house,  who  compelled  the  owner  to  leave  and 
then  burned  the  building,  was  a  "riot"  within  the  meaning  of  the 
policy.^"  Receiving  what  is  due  as  a  premium,  with  knowledge 
of  the  facts  after  the  condition  as  to  payment  has  been  broken,  is 
a  waiver  of  forfeiture. ^^     Conditions  for  the  benefit  of  the  in- 


Fed.  637.  31  C.  C.  A.  172;  Reese  v. 
P^idelity  Mut.  Life  Assn.,  Ill  Ga.  482, 
36  S.  E.  637;  Equitable  -Xcc.  Ins.  Co. 
V.  Van  Etten.  40  111.  App.  232;  Ross 
V.  Hawkeye  Ins.  Co.,  83  Iowa  586.  50 
N.  W.  47 ;  Beeman  v.  Farmers'  Pio- 
neer Mut.  Ins.  Assn.,  104  Iowa  83, 
n  N.  W.  597,  65  Am.  St.  424;  New- 
ton V.  Southwestern  Mut.  &c.  Assn., 
116  Iowa  311,  90  N.  W.  11;  Elgutter 
V.  Mut.  Reserve  &c.  Assn.,  52  La. 
Ann.  1733,  28  So.  289;  Conley  v. 
Washington  Casualty  Ins.  Co.,  93 
Maine  461,  45  Atl.  508;  Jacob  v. 
Omaha  Life  Assn.,  146  Mo.  523,  48 
S.  W.  462;  Stilwcll  v.  Covenant  Mut. 
Life  Ins.  Co..  83  Mo.  .\pp.  215;  An- 
drus  V.  Fidelity  Mut.  Life  Ins.  Assn., 
168  Mo.  151,  67  S.  W.  582;  Burnham 
V.  Royal  Ins.  Co..  75  Mo.  App.  394; 
Antes  V.  State  Ins.  Co.,  61  Xebr.  55, 
84  N.  \V.  412;  Houston  v.  Farmers' 
Ins.  Co..  64  Nebr.  138,  89  N.  W.  635 ; 
McDougall  V.  Provident  Sav.  &c. 
Soc,  64  Hun  (X.  Y.)  515,  46  X.  Y. 
St.  502,  19  X.  Y.  S.  481,  revd.  135  N. 
Y.  551,  12  X.  E.  251  ;  Lamb  v.  Pru- 
dential Ins.  Co.,  22  App.  Div.  (X.  Y.) 
552,  48  X.  Y.  S.  123;  Snvder  v.  Xed- 
crland  L.  Ins.  Co.,  202  Pa.  161.  51 
Atl.  744;  Oliver  v.  Mutual  Life  Ins. 
Co.,  97  Va.  134,  2>Z  S.  E.  536;  Monger 
V.  Rockincham  Home  &c.  Ins.  Co..  96 
Va.  442,  31  S.  E.  609.  Contra.  ^lan- 
hattan  Life  Ins.  Co.  v.  Savage's 
Admr.,  23  Ky.  L.  483.  63  S.  W.  278. 

^Jklichigan  Mut.  Life  Ins.  Co.  v. 
Bowes,  42  Mich.  19.  51  X.  W.  962. 

"  Leeper  v.  Franklin  Ins.  Co..  93 
Mo.  App.  602.  67  S.  \V.  941.  An  offer 
of  compromise  and  pleading  same  in 


the  answer  of  the  defendant  company 
is  a  waiver  of  a  condition.  W'ildey 
Casualty  Co.  v.  Sheppard,  61  Kans. 
351,  59  Pac.  651,  47  L.  R.  A.  656.  See 
also,  Concordia  Fire  Ins.  Co.  v. 
Koretz,  14  Colo.  App.  386,  60  Pac. 
191. 

^"Germania  Ins.  Co.  v.  Deckard,  3 
Ind.  App.  361,  28  X.  E.  868. 

"Arnott  v.  Prudential  Ins.  Co.,  63 
Hun  (X.  Y.)  628,  44  N.  Y.  St.  480. 
17  N.  Y.  S.  710.  To  similar  effect. 
Daft  V.  Drew.  40  111.  App.  266;  Conti- 
nental Ins.  Co.  v.  Miller,  4  Ind.  App. 
553,  30  X.  E.  718;  Morrow  v.  Des 
Moines  Ins.  Co.,  84  Iowa  256,  51  X. 
W.  3;  DeFrece  v.  Xational  Life  Ins. 
Co.,  64  Hun  (X.  Y.)  635,  46  X.  Y.  St. 
479,  19  X.  Y.  S.  8,  affd.  136  X.  Y.  144. 
2)2  N.  E.  556.  As  to  what  will  or  will 
not  constitute  a  waiver,  see  generally. 
Petit  v.  German  Ins.  Co.,  98  VftA.  80 J; 
Live  Stock  v.  Xorthwestern  Ins.  Co., 
7  Kans.  App.  179,  53  Pac.  784;  and 
compare  Shaffer  v.  Milwaukee  Mech. 
Ins.  Co.,  17  Ind.  App.  204,  46  X.  E. 
557.  It  has  been  held  that  an  insur- 
ance agent  authorized  to  solicit  busi- 
ness and  issue  policies  can  waive  for- 
feitures of  conditions  in  policy. 
W'oolpcrt  v.  Franklin  Ins.  Co..  42  W. 
Va.  647,  26  S.  E.  521.  But  this  is  not 
always  the  case.  See  post,  vol.  V, 
Tit.  Insurance.  The  following  rulings 
have  been  made  on  this  subject.  A 
condition  as  to  ownership  is  waived 
where  the  insurer  had  full  knowledge 
at  the  time  of  the  execution  of  the 
policy  of  the  true  situation  of  af- 
fairs as  to  the  ownership  of  the  prop- 
erty.    Graham  v.  American  Fire  Ins. 


§  iss^ 


CONTRACTS. 


872 


surer  providing  for  forfeiture  or  the  like  are  strictly  construed 
against  the  insurer. ^- 

§  1582.  Conditions  in  insurance  policies — Suicide. — There 
has  been  considerable  difference  of  opinion  as  to  the  effect  of  sui- 
cide when  the  insured  is  insane,  but  insurance  companies  have  re- 
cently inserted  in  the  conditions  of  their  policies  words  of  limita- 
tion touching  suicide,  so  that  the  company  will  not  be  liable  in  case 
the  insured  died  by  his  own  hand,  sane  or  insane.  This  takes  the 
subject  from  the  domain  of  controversy,  and  precludes  all  liability 
by  reason  of  the  death  of  the  insured  by  his  own  act,  whether 
he  was  at  the  time  a  responsible  moral  agent  or  not.^^  Thus  it 
has  been  held  that  one  who  shows  intelligence  enough  to  employ 
a  rope  and  hang  himself  cannot  be  said  to  be  so  unconscious  of 
the  result  as  to  prevent  the  operation  of  the  condition  to  his 
policy  which  nullifies  it  if  he  commits  suicide,  sane  or  insane  ;'* 


Co.,  48  S.  Car.  195,  26  S.  E.  323,  59 
Am.  St.  707.  A  condition  against  a 
change  of  ownership  does  not  apply 
to  a  mortgage  effected  upon  the  prop- 
erty insured  before  the  policy  was 
executed.  Cowart  v.  Capital  City 
Ins.  Co.  (Ala.),  22  So.  574.  A  con- 
dition that  petroleum  or  any  of  its 
products  shall  not  be  kept  upon  the 
premises  does  not  apply  to  the  use 
of  kerosene  in  an  oil  stove  for  cook- 
ing purposes.  Snyder  v.  Dwelling 
House  Ins.  Co.,  59  N.  J.  L.  544,  11 
Atl.  1022,  revg.  34  Atl.  931.  Where 
by  statute  it  is  required  that  no  in- 
surance shall  be  declared  forfeited 
except  by  a  notice  duly  addressed  and 
mailed  to  the  person  whose  life  is  in- 
sured, the  statutory  requirement  is 
complied  with  by  the  mailing  of  the 
notice  and  it  is  not  necessary  to 
show  that  it  was  received  by  the  in- 
sured. McConnell  v.  Provident  Life 
Assur.  Soc.  of  New  York,  92  Fed. 
769,  34  C.  C.  A.  663. 

""Xance  v.  Oklahoma  F.  Ins.  Co. 
(Okla.),  120  Pac.  948,  38  L.  R.  A. 
(N.  S.)  426,  and  note;  post,  vol.  v, 
Tit.  Insurance. 

"Zimmerman  v.  Masonic  Aid 
Assn.,  75  Fed.  236;  Breasted  v.  Farm- 
ers' Loan  &  Trust  Co.,  4  Hill.  (N. 
Y.)  n,  affd.  8  N.  Y.  299,  59  Am. 
Dec.  482,  Seld.  Notes  114;  Bigelow  v. 


Berkshire  Life  Ins.  Co.,  93  U.  S. 
284,  23  L.  ed.  918;  Pierce  v. 
The  Travelers'  Life  Ins.  Co.,  34  Wis. 
389.  See  generally,  Grand  Lodge  of 
Illinois  &c.  V.  Wieting,  168  111.  408, 
48  N.  E.  59,  61  Am.  St.  123 ;  Seller  v. 
Economic  Life  Assn.,  105  Iowa  87, 
74  N.  W.  941,  43  L.  R.  A.  537 ;  Camp- 
bell V.  Supreme  Conclave  Imp.  Order 
Heptasophs,  66  N.  J.  L.  274,  49  Atl. 
550,  54  L.  R.  A.  576 ;  Hall  v.  Mutual 
Reserve  Fund  Assn.,  19  Pa.  Super. 
Ct.  31 ;  Tritschler  v.  Keystone  Mut. 
Ben.  Assn.,  180  Pa.  St.  205,  36  Atl. 
734;  Parish  v.  Mutual  Benefit  Co.,  19 
Tex.  Civ.  App.  457,  49  S.  W.  153.  See 
also.  Mutual  Life  Ins.  Co.  v.  Leubrie, 
71  Fed.  843,  18  C.  C.  A.  332,  for  the 
rule  where  the  policy  does  not  con- 
tain a  "sane  or  insane"  clause.  Cady 
V.  Fidelity  &  Casualty  Co.,  134  Wis. 
322,  113  N.  W.  967,  17  L.  R.  A.  (N. 
S.)  260,  and  note. 

^Somerville  v.  Knights  Templars 
&c.  Assn.,  11  App.  (D.  C)  417,  25 
Wash.  Law  734;  Sabin  v.  Senate  of 
Nat.  Union,  90-  Mich.  177,  51  N.  W. 
202;  Streeter  v.  Western  Union  &c. 
Ace.  Soc,  65  Mich.  199,  31  N.  W.  779, 
8  Am.  St.  882.  Suicide  is  a  defense 
and  the  burden  of  proof  is  on  the  in- 
surer. Fidelity  &  Casualty  Co.  v. 
Weise,  80  111.  App.  499,  revd.  182  111. 
496,  55  N.  E.  540.     Compare  Cady  v. 


873 


COVENANTS    AND    CONDITIONS. 


1^82 


and  such  conditions  are  generally  held  to  preclude  a  recover\% 
although  the  insured  acts  in  obedience  to  an  insane  impulse  which 
has  overcome  his  will."  It  is  also  held  in  many  cases,  though 
there  is  some  conllict,  not  necessary  to  relieve  the  insurer  from 
liability  that  a  person  taking  his  own  life  was  conscious  of  the 
moral  quality  or  consequence  of  his  act  if  he  knew  he  was  about 
to  so  cause  his  death. ^^  But  it  has  been  held  that  the  condition 
does  not  apply  where  the  death  is  accidental,  and  where  the  in- 
sured dies  under  mysterious  circumstances  which  suggest  suicide, 
and  that  in  such  a  case  the  burden  of  proof  is  on  the  company  to 
prove  suicide,  the  presumption  being  that  accident  caused  death.^^ 
If  the  condition  as  to  suicide  omits  to  provide  for  an  insane  act, 
then  suicide,  while  insane,  does  not  prevent  recovery.^^     But  the 


Fidelity  &c.  Co.,  134  Wis.  2>22,  113 
X.  W.  967,  17  L.  R.  A.  (X.  S.)  260, 
and  note  where  the  cases  on  both 
sides  are  reviewed  and  other  cases 
supporting  the  text  are  cited. 

^'' Mutual  Life  Ins.  Co.  v.  Kelly,  114 
Fed.  268,  52  C  C.  A.  154;  Haynie  v. 
Knights  Templars'  &  Masons'  Life 
Indemnity  Co.,  139  Mo.  416,  41  S.  W. 
461 ;  Billinirs  v.  Accident  Ins.  Co ,  64 
Vt.  78,  24  Atl.  656,  17  L.  R.  A.  89,  Z2> 
Am.  St.  913.  See  also,  Riley  v.  Hart- 
ford Life  &c.  Ins.  Co.,  25  Fed,  315; 
Seitzinger  v.  Modern  Woodmen  &c., 
204  111.  58,  68  X.  E.  478:  Scarth 
V.  Security  Mut.  Life  Soc,  75 
Iowa  346.  39  X.  W.  658;  Hart  v. 
Modern  Woodmen,  60  Kans.  678,  57 
Pac  936,  72  Am.  St.  380;  Cooper  v. 
Mass.  Mut.  Ins.  Co.,  102  Mass.  227, 
3  Am.  Rep.  451;  Adkins  v.  Columbia 
Life  Ins.  Co.,  70  Mo.  27,  35  Am.  Rep. 
410;  De  Gogorza  v.  Knickerbocker 
Life  Ins.  Co..  65  X.  Y.  232 ;  Terry  v. 
Mutual  Life  Ins.  Co.,  1  Dill.  (U.  S.) 
403,  Fed.  Cas.  Xo.  13839,  affd.  15 
Wall.  (U.  S.)  580.  21  L.  ed.  236; 
Mutual  Life  Ins.  Co.  v.  Terry,  15 
Wall.  (U.  S.)  580,  21  L.  ed.  236; 
Chapman  v.  Republic  Life  Ins.  Co., 
6  Biss.  (U.  S.)  238.  "This  is  the  bet- 
ter rule,  in  that  it  gives  effect  to  the 
contract  made  by  the  parties,  and  the 
logical  conclusion  of  the  better  con- 
sidered cases."  Per  Taft,  J.,  in  liill- 
ings  V.  Accident  Co.,  64  Vt.  78,  24 
Atl.  656,  17  L.  R.  A.  89,  Zi  Am.  St. 
913. 


'*  Xelson  V.  Equitable  L.  Assn.  Soc, 
7Z  111.  App.  133;  Scherar  v-  Pruden- 
tial Ins.  Co.,  63  Xebr.  530,  88  X.  W. 
687,  56  L.  R.  A.  611. 

^''  IngersoU  v.  Knights  of  the  Gol- 
den Rule,  47  Fed.  272.  See  also, 
Home  Benefit  Assn.  v.  Sargent,  142 
U.  S.  691,  35  L.  ed.  1160,  12  Sup.  Ct. 
332.  See  as  to  effect  of  a  statute 
touching  suicide,  Knights  Templar 
&c.  Co.  V.  Berry,  50  Fed.  511,  1  C.  C. 
A.  561,  and  Berry  v.  Knights  Temp- 
lars &c.  Co.,  46  Fed.  439,  which  sus- 
tains validity  of  statute  making  void 
a  condition  of  forfeiture  for  suicide. 
Germania  Life  Ins.  Co.  v.  Ross-Lew- 
in,  24  Colo.  43,  51  Pac.  488,  65  Am. 
St.  215;  Carnes  V.  Iowa  State  Travel- 
ing Men's  Assn.,  106  Iowa  281,  76  X. 
W.  683,  68  Am.  St.  306;  Inghram  v. 
Xational  Union,  103  Iowa  395,  72  X. 
W.  559;  Travelers'  Ins.  Co.  of  Hart- 
ford V.  Xicklas,  88  Md.  470,  41  Atl. 
906;  Sackberger  v.  Xational  Grand 
Lodge  &c.,  7Z  Mo.  App.  2>%.  Compare 
Logan  V.  Fidelitv  &  Casualty  &c.  Co., 
146  Mo.  114,  47  S.  W.  948. 

^^  Mutual  Life  Ins.  Co.  v.  Leubrie, 
71  Fed.  843,  18  C.  C.  A.  2,2,2:  Equi- 
table Life  .Assur.  Soc.  v.  Patcrson,  41 
Ga.  338,  5  Am.  Rep.  535;  Hammers 
V.  Maccabees.  78  111.  App.  162;  Michi- 
gan Mut.  Life  Ins.  Co.  v-  Xaugle,  130 
Ind.  79.  29  X.  E.  393;  Xorthwestern 
Mut.  Life  Ins.  Co.  v.  Hazelett,  105 
Ind.  212.  4  X.  E.  582.  55  Am.  Rep. 
102;  Phillips  v.  Louisiana  Ins.  Co.  26 
La.  Ann.  404,  21  Am.  Rep.  549;  Mai- 


§     1583  CONTRACTS.  874 

word  "insane"  need  not  necessarily  be  used.  Thus  the  words 
"suicide  felonious,  or  otherwise"  have  been  held  equivalent  to 
"suicide  sane  or  insane,"  and  exempt  the  company  in  case  of 
insane  suicide.^"  The  word  "suicide"  lias  also  been  held  synony- 
mous with  "dying  by  one's  own  hand,"  in  insurance  policies,'*''  A 
full  treatment  of  this  general  subject  will  be  found  in  the  fifth 
volume  of  this  work  under  the  title  of  Insurance,  where  the  au- 
thorities are  more  fully  cited  and  reviewed  and  what  are  deemed 
to  be  the  correct  doctrines  or  rules  are  carefully  stated.  The 
purpose  here  has  been  to  merely  illustrate  or  throw  light  on  the 
general  subject  of  this  chapter  by  showing  some  of  the  rulings 
of  the  courts  in  regard  to  conditions  in  insurance  policies, 

§  1583.  Examples  of  conditions  precedent — Vendor  and 
purchaser. — In  contracts  for  the  sale  of  land,  the  conveyance 
of  the  estate  and  the  payment  of  the  purchase-money  are,  in  gen- 
eral, concurrent  acts  and  dependent  promises,  whether  a  particular 
day  be  appointed  for  completion  or  not ;  and  a  tender  or  readiness 
and  willingness  to  complete  on  either  side  is  a  condition  precedent 
to  liability  to  complete  on  the  other,"  Under  such  contracts 
the  vendor  can  usually  recover  the  purchase-price  when  he  ten- 
ders a  deed  of  the  land.^"  On  the  one  hand,  the  vendor  must  per- 

lory  V,  Travelers'  Ins.  Co.,  47  N.  Y.  "  Marsden  v.  Moore,  4  H.  &  N.  500; 

52,  7  Am.  Rep.  410;  Penfold  v.  Uni-  Manby   v.    Cremonini,   6    Exch.    808; 

versal  Ins.  Co.,  85  N.  Y.  317,  39  Am.  Laird  v.  Pirn,  7  M.  &  W.  474;  Heard 

Rep-  660;  Breasted  v.  Farmers'  Loan  v.    Wadham,    1    East   619;    Baum    v. 

&  Trust  Co.,  8  X.  Y.  299,  59  Am.  Dec.  Grigsby,    21    Cal-    172,    81    Am.    Dec. 

482;  Schultz  v.  Ins.  Co.,  40  Ohio  St.  153;   Bailey  v.  Lay,  18  Colo.  405,  33 

217,    48    Am.    Rep.    676;    Connecticut  Pac.  407;  Glos  v.  Wilson,  198  111.  44. 

Mut.  Life  Ins.  Co.  v.  Groom,  86  Pa.  64  N.  E.  734:   McDole  v.   Purdy,  23 

St.    92,    27    Am.    Rep.    689;    Phaden-  Iowa    277;     Phillips    v.     Skinner,    6 

hauer  v.   Germania   Life   Ins-   Co.,   7  Bush  (Ky.)  662;  Eckford  v.  Halbcrt, 

Heisk.     (Tenn.)     567,    19    Am.    Rep,  30  Miss-  273;   Ransom  v.  Brown,  63 

623n;    Mut.    Life   Ins.    Co.   v.    Terry,  Tox.    188;   Gilman  v.   Brown,   1   Mas. 

15  Wall.   (U.  S.)  580,  21  L.  ed.  236;  (U.  S.)  191,  Fed.  Cas.  No.  5441,  affd. 

Lycoming  Fire  Ins.  Co.  v.  Haven,  95  4  Wheat.    (U.  S.)   255,  4  L.  ed.  564; 

U.   S.  242,  24  L.  ed.  473;  ^Manhattan  Bayley  v.  Greenleaf,  7  Wheat.  (U.  S.) 

Life  Ins.  Co.  v.  Broughton,  109  U.  S,  46,  5  L.  ed.  393;  Baer's  Sons  Grocer 

121,  27  L.  ed.  878,  3  Sup.  Ct.  99.  Co.  v.  Cutting  Fruit-Packing  Co.,  42 

'''Bigelow    V.    Berkshire    Life    Ins.  W-  Va.  359,  26  S.  E.  191. 

Co.,   93    U.    S.   284,   23    L.    ed.   918;  "Banbury  v.   Arnold,  91   Cal,  606, 

Pierce  v.  Travelers'  Life  Ins.  Co.,  34  27  Pac.  934;  Smith  v.  Mohn,  87  Cal. 

Wis.  389.  489,  25  Pac.  696.     (An  averment  that 

*"  Borradaile  v.   Hunter,   5   Man.   &  the    vendor    duly    performed    all    the 

G.    639;    Bigelow    v.    Berkshire    Life  conditions  of  the  contract  to  be  per- 

Ins.  Co.,  93  U.  S,  284,  23  L.  cd.  918.  formed   by   him   up   to   the   time   of 


875  COVENANTS    AND    CONDITIONS.  §    1 583 

form  the  conditions  precedent  to  liis  right  to  demand  the  pur- 
chase-price,*^ and,  on  the  other  hand,  the  vendee  must  comply 
with  the  conditions  precedent  to  his  right  to  demand  a  convey- 
ance.''* Thus,  the  removal  of  encumbrances  upon  the  property 
may  be  a  condition  precedent  which  the  vendor  must  perform,*'^ 
and  the  acquisition  of  a  valid  title  was  likewise  held  such  a  condi- 
tion where  the  vendor  did  not  have  title  at  the  time  but  was  to 
procure  it  and  payment  was  to  be  made  when  he  was  "able  to 
convey  a  good  title."*"  So,  on  the  other  hand,  where  the  contract 
provided  that  the  purchaser  should  not  only  pay  a  certain  amount, 
but,  also,  give  security  for  the  balance  of  the  purchase-price,  it 
was  held  that  he  must  give  such  security  as  well  as  make  such  pay- 
ment in  order  to  be  entitled  to  a  conveyance.*"^  Where  a  lot  was 
orally  donated  to  a  person  for  the  purpose  of  erecting  a  boarding 
house  thereon,  with  an  express  oral  stipulation  that  there  should 
be  no  liquor  sold  on  the  premises,  after  the  boarding-house  was 
erected  and  the  party  demanded  a  conveyance,  although  there  was 
no  agreement  that  the  stipulation  touching  the  sale  of  liquor 
should  be  inserted  in  the  conveyance,  it  was  held  that  the  convey- 
ance should  contain  such  condition,  and  that  the  sale  of  liquor 
should  be  enjoined  until  the  party  should  accept  such  a  convey- 
ance.*^ So  where  a  written  option  was  given  to  sell  certain  real 
estate  for  a  specified  price,  conditioned  that  the  purchaser  would 
pay  his  note  given  to  the  vendor   for  merchandise  within  six 

bringing  suit  is  a  sufficient  averment  "  Walker  v.    Sawyer,  34  Ind.   App. 

of    tlie    performance    of    conditions  239,  70  X.  E.  540:  Appleton  v.  Chaste, 

precedent.);    Wilcoxson    v.    Stitt.    65  19   Maine  74;    Simpson  v.    Pease,  53 

Cal.  596,  4  Pac.  629,  52  Am.  Rep.  310;  ]Maine   497:    Erickson    v.    Brandt,    53 

Lyman    v.    Gedney,    114    III.    388,    29  Minn.  10,  55  X.  W.  62;  Parmentier  v. 

X.  E.  282.  55  Am.  Rep.  871 ;  Boston  Wheat,    33    Pa.    St.    192.      See    also. 

V.  Xichols,  47  111.  353 ;  Lynch  v.  Jen-  Stuvvesant  v.  Western  Mortgage  Co., 

nings.  43  Ind.  276.     (The  proceeding  22    Colo.   28,   43    Pac.    144.      But    see 

to  recover  the  price  where  a  deed  is  where   the  vendor   had    incapacitated 

tendered  is  an  equitable  suit  by  ven-  himself  from  performing  his  part  of 

dor    for    specific    performance.)     See  the  contract.     ^Miller  v.  Whittier,  32 

Beach  Modern  Equity  Jurisprudence,  Maine  203. 

§  566  et  seq.,  where  many  cases  are  *'^  McDonough    v.    Zacharie,    5    La. 

collected.  247 :  Xeglev  v.  Jefters,  28  Ohio  St.  90. 

"Horine    v.    Best,    2    Bibb.    (Ky.)  "  Saunders  v.  Curtis,  75  Maine  493; 

547;    McDonough  v.   Zacharie,  5  La.  Appleton  v.  Chase.  19  Maine  74. 

247;    Burwell    v.    Jackson,    9    X.    Y.  "a  Appleton  v.  Chase.  19  Maine  74. 

535,  Seld.  Xotes  243 ;   Xeglev  v.  Jef-  See  also.  Stuvvesant  v.  Western  Mort. 

fers.    28    Ohio    St.    90;    Tclfener    v.  &c.  Co..  22  Colo.  2i<.  43  Pac    144. 

Russ,  162  U.  S.  170,  40  L.  ed.  930,  16  "  Bad  River  Lumbering  &c.  Co.  v. 

Sup.  Ct.  695.  Kaiser,  82  Wis.  I60,  51  X.  W.  1100. 


§    1-84  CONTRACTS.  876 

months,  and  also  pay  the  purchase-price  within  a  given  time,  it 
was  held  a  condition  precedent  that  the  note  be  paid  within  the 
time/*  Where  plaintiff,  a  landowner,  gave  a  bond  to  con- 
vey on  condition  that  the  defendant  pay  the  notes  therein  men- 
tioned, it  was  held  that  as  the  vendor  has  the  right  of  posses- 
sion until  the  notes  are  paid,  his  act  of  resuming  possession  after 
the  vendee's  voluntary  abandonment  of  possession  of  the  land  has 
no  tendency  to  show  an  intention  to  waive  a  forfeiture  of  the 
bond,  but  his  seeking  to  enforce  payment  of  the  notes  does  so." 

§  1584.    Examples  of  provisions  held  not  conditions  prece- 
dent in  cases  of  vendor  and  purchaser. — Mere  matters  of  in- 
ducement, not  expressed  as  conditions,  will  not  ordinarily  be  con- 
strued or  given  effect  as  conditions  so  as  to  defeat  an  estate  or 
prevent  it  from  vesting.^"    Payment  by  the  purchaser  is  not  ordi- 
narily a  condition  precedent  where  the  covenants  as  to  payment 
and  conveyance  are  independent,"  or  where,   for  instance,  the 
conveyance  is  to  be  made  at  a  fixed  time  before  payment,  or 
the  like."^    So  it  has  been  held  that  where  the  vendor  gives  the 
purchaser  an  order  upon  a  third  person  for  a  deed,  such  third 
person  having  the  legal  title,  and  the  order  contains  no  condition 
as  to  payment,  the  deed  cannot  be  withheld  on  the  ground  that 
the  purchase-money  has  not  been  paid  f~  and  that  when  a  convey- 
ance is  to  be  made  "when  called  for,"  without  any  reference  to 
payment,  the  purchaser  may  demand  a  deed  before  making  pay- 
ment."    The  sajTie  rule  that  the  performance  of  one  covenant  is 
not  ordinarily  a  condition  precedent  to  performance  of  another 
on  the  other  side  when  they  are  independent  applies  in  favor  of 
the  vendor  and  a  conveyance  is  not  a  condition  precedent  to  a 
demand  of  payment  by  him  in  such  cases.^* 

^'Schields    v.    Holback,    30    Nebr.  note;     also     Granfield     v.     Rawlings 

536,  46  X.  W.  629.  doxya),  6  N    W.  31 ;  Buckingham  v. 

"Xiles  V.   Phinney,  90   Maine   122,  Ludlum,  40  N.  J.  Eq.  422,  2  Atl   26b. 

Z7  Atl   880  I'Ut  conveyance  may  be   a   condition 

^'Winton  V.  Fort,  58  X.   Car.  251.  precedent  to  payment  in  such  a  case 

See  also,  Ramsey  v.  Edgefield  &c.  R.  Huff  v^  Lawlor  45    "d   80;  Honne  v. 

Co    3  Tenn.  Ch.  170.  Best,  2  Bibb.    (Ky.)    547,  liurweii  v. 

"  Simonds    V.    Beauchamp,    1    Mo.  Jackson  9  X.  Y^  535. 

589;     Bennet    v.     Pixley's    Exrs.,     7  "  Owings  v.  Brown,  5  T-   B.  Mon. 

Johns.  (X.  Y.)  249.     See  also,  Hern-  (Ky.)  462. 

don  V.  Venable,  7  Dana  (Ky.)  371.  -  Simmons  y.  Spruill,  56  N    Car.  9^ 

"a  See  cases  cited  in  last  preceding  "  Perry  v.  Rice,  10  Tex.  367,  Bailey 


877 


COVENANTS    AND    CONDITIONS. 


§    1585 


§  1585.  Vendor  and  purchaser — Miscellaneous. — In  Eng- 
land it  is  customary  for  the  vendor  to  furnish  an  abstract  of 
title  and  this  may  be  a  condition  precedent."  But  it  is  said  that 
in  this  country,  in  the  absence  of  an  express  stipulation  to  the  con- 
trary, it  is  not  a  condition  precedent  that  the  vendor  furnish  an 
abstract  of  title,  and  that  contrary  to  the  English  rule,  the  pur- 
chaser furnishes  his  own  abstract  from  the  public  records. '''' 
This,  however,  is  not  the  rule  in  all  the  states, ^^  and  the  matter  is 
frequently  controlled  by  agreement,  under  which  the  vendor  is 
most  often  required  to  furnish  the  abstract.  In  such  cases,  the 
furnishing  of  an  abstract  by  him  showing  a  good  title  is  gener- 
ally made  a  condition  precedent.'**  After  a  conveyance,  the 
vendor  can  sue  at  law  to  recover  the  purchase-price. '**  And  the 
mere  recital  of  the  receipt  of  the  purchase-price  in  the  convey- 
ance is  not  contractual  in  its  character,  and  is  only  prima  facie 
evidence  of  the  payment  of  the  purchase-money,  which  may  be 
rebutted  by  parol  evidence.'^"  It  has  also  been  held  that  if  a  pur- 
chaser secures  possession  of  a  deed  by  fraud  and  claims  under 
it,  the  vendor  may  ratify  the  deed  and  bring  an  action  for  the  pur- 


V.  Clay,  4  Rand.  (Va.)  346.  See  also, 
generally,  Savre  v.  Craig,  4  Ark.  10, 
37  Am.  Dec.  757;  McRaven  v-  Crister, 
53  Miss.  542;  Andrews  v.  Moore, 
Tappan  (Ohio)   183. 

"  Pomerov  Specif.  Perform.,  §  413 
Williams  Real  Prop.  (5th  ed.)  448 
In  re  Ford,  L.  R.  10  Ch.  Div.  365 
In  re  Johnson,  L.  R.  30  Ch.  Div.  42 

"Warvelle  Vendors,  §§  289,  290; 
Easton  v.  Montgomery,  99  Cal.  307, 
27  Pac.  280,  25  Am.  St.  123;  Espy 
V.  Anderson,  14  Pa.  St.  308.  Com- 
pare Curtis  V.  Hawley,  85  111.  App. 
429.  It  has  been  held  that  vendee 
may  recover  back  payments  made  by 
him,  where  the  vendor  fails  to  fur- 
nish an  abstract  as  he  agreed  to  do 
though  his  title  is  perfect.  Des 
Moines  &  N.  W.  Real  Estate  &  Loan 
Co.  V.  Beale,  78  111.  App.  40. 

"  See  Chapman  v.  Lee's  Admr.,  55 
Ala.  616. 

"Taylor  v.  Williams.  2  Colo.  App. 
559,  31  Pac.  504:  Kessler  v.  Pruitt, 
14  Idaho  175,  93  Pac.  965;  Con- 
stantine  v.  East,  8  Ind.  App.  291,  35 


N.  E.  844.  See  also,  Allen  v.  Pock- 
witz,  103  Cal.  85,  36  Pac.  1039.  42 
Am.  St.  99  (title  to  be  approved  by 
attorney)  ;  Smith  v.  Tavlor,  82  Cal. 
538,  23' Pac.  217;  Kane  v.  Rippev,  24 
Ore.  338,  2,2>  Pac.  936.  But  compare 
Kelsey  v.  Crowther,  162  U.  S.  404, 
40  L.  ed.  1017,  16  Sup.  Ct.  808. 

''Laird  v.  Pim,  7  M.  &  W.  474; 
Smith  v.  Arthur,  110  N.  Car.  400,  15 
S.  E.  197;  Niland  v.  Murphy,  72> 
Wis.  326,  41  N.  W.  335.  See  also, 
Dikeman  v.  Arnold,  78  Mich.  455,  44 
N.  W.  407. 

~2  Warvelle  Vendors,  Ch.  34; 
Larkinsville  Mining  Co.  v.  Flippo, 
130  Ala.  361,  30  So.  358;  Harkless 
v.  Smith,  115  Ga.  350,  41  S.  E.  634; 
Smith  V.  Arthur,  110  N.  Car.  400, 
15  S.  E.  197;  Rice  v.  Carter's  Admr., 
33  N.  Car.  298;  Choat  v.  Wright,  2 
Dev.  (13  N.  Car.)  289;  .^Mexander  v. 
McDoniel,  56  S.  Car.  252,  34  S.  E. 
405.  Consideration  may  be  varied 
by  parol,  Langan  v.  Iverson,  78  Minn. 
299.  80  N.  W.  1051 :  Boren  v.  Boren, 
29  Tex.  Civ.  App.  221,  68  S.  W.  184. 


§    1585  CONTRACTS.  878 

chase-price.®^  As  long  as  a  contract  for  sale  of  land  remains  ex- 
ectitor}%  a  purchaser  may  reclaim  the  money  that  he  has  paid  for 
the  property  if  the  title  proves  defective,  or  he  may  defend  against 
a  claim  for  the  purchase-money.  But  when  it  is  once  executed 
and  the  deed  delivered,  then  the  purchaser  has  received  full  con- 
sideration for  his  promise.  That  consideration  is  such  title  as 
the  vendor  can  convey  to  him,  and  no  other,  and  ordinarilv,  at 
least,  he  is  absolutely  without  remedy  either  at  law  or  in  equity, 
unless  the  deed  contains  covenants  of  title.  He  cannot  reclaim 
money  that  he  has  paid  and  he  cannot  defend  against  a  claim  for 
the  purchase-price.*'-  Where  "at  the  time  of  the  purchase  of  a 
piece  of  real  estate  it  was  contemplated  by  the  purchaser  that  cer- 
tain municipal  improvements  then  going  on  might  cause  damage 
to  the  property,  therefore  a  conditional  note  for  part  of  the  pur- 
chase-money was  given,  payable  'provided  no  damage  be  done' 
to  the  property  at  any  time  prior  to  a  specified  date,"  it  was  held 
that  it  was  incumbent  on  the  vendor  to  show  affirmatively  that 
no  damage  was  done  to  the  property  by  the  improvements ;  that 
if  damage  was  done,  but,  on  the  whole,  the  property  was  increased 
in  value  at  the  expiration  of  the  period  during  which  the  note 
was  to  run,  the  plaintiff,  the  vendor,  was  entitled  to  recover,  and 
the  general  rise  of  property  in  the  neighborhood  was  not  to  be 
considered  in  deciding  whether  the  property  was  really  damaged 
or  benefited."^  As  a  general  rule,  if  the  purchase-money  is  to  be 
paid  upon  an  appointed  day,  and  the  time  appointed  for  the  con- 
veyance will  not,  or  may  not,  arrive  until  after  that  day,  the  con- 
veyance is  not  a  condition  precedent  to  the  payment,  and  it  is 
sufficient  that  the  vendor  be  able  and  willing  to  convey  according 
to  the  contract  to  entitle  him  to  claim  the  purchase-money.''* 

•^  Smith  V.  Arthur,  110  N.  Car.  400,  362,  35   S.   E.  715,  49  L.  R.  A.   176; 

15  S.  E.  197.  Turner  v.  Howell,  21  Ky.  L.  979,  53 

"'AIcLeod  V.  Barnum.  131  Cal.  605,  S.  W.  643;  Brokaw  v.  Duffy,  165  N. 

63  Pac.  924;  Bletz  V.  WilHs,  8  Mackey  Y.    395,    59    N.    E.    196;    Nathans    v. 

CD.    C.)    449;    Horner   v.   Lowe,    159  Steinmeyer,  57  S.  Car.  386,  35  S.  E. 

Ind.    406,   64    N.    E.    218;    Refeld    v.  72>i;    Renshaw    v.    First    Nat.    Bank 

Woodfolk,  22  How.    (U.   S.)   318,   16  (Tenn.),    63    S.    W.    194.     Contra    in 

L.  ed.  370;  Noonan  v.  Lee,  2  Black,  case    of    warranty    deed.      Swope    v. 

fU.  S.)  499.  17  L.  ed.  278;  Patton  v.  Missouri  Trust  Co.,  26  Tex.  Civ.  App. 

Taylor,  7  How.    (U.   S.)    132,   12  L.  133,  62  N.  W.  947. 

ed.   637.      See    also.    Fields   v.    Clay-  "=' Bletz  v.  Willis,   19  D.  C.  449. 

ton,  117  Ala.  538,  23  So.  530,  67  Am.  "^  Pordage  v.  Cole,  1  Wms.  Saund. 

St.    189;    Home   v.    Rogers,    110   Ga.  319i;    Yates    v.    Gardiner,    20   L.   J. 


879  COVEXANTS    AND    CONDITIONS.  §     1 586 

§  1586.  Conditions  as  to  arbitration — Waiver. — A  provi- 
sion in  a  contract  tor  the  i)aynK'nt  of  money  upon  a  conlin^'ency 
that  the  amount  to  be  paid  shall  be  submitted  to  arbitration,  and 
that  such  award  shall  be  final  as  to  the  amount,  is  a  valid  stipu- 
lation.*^^ And  there  are  many  cases  which  hold  that,  if  the  con- 
tract further  provides  that  no  action  shall  be  maintained  upon  it 
until  after  such  an  award,  then  the  award  becomes  a  condition 
precedent  to  the  right  of  action.''"  But  when  no  such  condition  is 
expressed  in  the  contract,  or  implied  from  its  terms,  the  author- 
ities are  agreed  that  a  provision  for  submitting  the  amount  to 
arbitration  is  collateral  and  independent ;  and  that,  while  a  breach 
of  such  a  provision  may  support  a  separate  action,  it  cannot  be 
pleaded  in  bar  to  an  action  on  the  principal  contract."^  There  is 
some  conflict  in  the  authorities  as  to  when  such  conditions  are 
precedent  or  merely  optional."®  But  the  authorities  are  agreed 
that  whether  such  conditions  be  absolute  and  precedent,  or  merely 
optional,  they  may  be  waived.  Thus,  in  an  action  on  a  policy 
providing  that,  in  case  of  disagreement  as  to  the  loss,  it  should  be 
ascertained  by  appraisers,  and  that  no  action  should  be  maintained 
until  after  full  compliance  with  the  policy,  it  appeared  that,  the 
appraisers  having  failed  to  agree,  the  company  adjusted  the  loss, 

Exch.   327;   Dicker  v.   Jackson,  6  C.  4  L.  R.  A.  (N.  S.)  288,  and  numerous 

B.  103;  Bolton  v.  Huling:.  91  111.  App.  other  cases  cited  in  opinion  and  note; 

350,  revd.   195  111.  384,  63  N.  E.   143.  Rounds  v.  Aiken  Mfg.  Co..  58  S.  Car. 

«Wood  Insurance  (2d  ed.),  §§  456,  299,   36   S.    E.   714;    Florida   Athletic 

457;  IVIay  Insurance  (4th  ed.),  §  493;  Club  v.   Hope  Lumber   Co.,    18  Tex. 

Poppers  V.  Knight,  69  111.  App.  578;  Civ.  App.  161,  44  S.  \V.  10;  Hamilton 

Wolff  V.  Liverpool  Ins.  Co..  50  N.  J.  v.  Liverpool  &c.  Ins.   Co.,   136  U.   S. 

L.    453,    14    Atl.    561;    Weggner    v.  242,  34  L.  ed.  419,   10  Sup.   Ct.  945; 

Greenstine,   114  Mich.  310,  72  N.  W.  Martinsburgh  &  P.  R.  Co.  v.  March, 

170;   Downing  v.   Lee,  98   Mo.   App.  114  U.  S.  549.  29  L.  ed.  255,  5  Sup. 

604,  73   S.   W.  721;   Grady  v.   Home  Ct.   1035;   United   States  v.   Robeson, 

Fire   Szc.   Ins.   Co.,  27   R.   I.   435,   63  9  Pet.   (U.  S.)  319,  9  L.  ed.  142. 

Atl.  173.  4  L.  R.  A.   (N.  S.)  288  and  "'Hamilton  v.  Home  Ins.   Co.,   137 

note;    United    States   v.    Robinson,   9  l\  S.  370,  34  L.  ed.  708,  11  Sup.  Ct. 

Pet.   (U.  S.)   319.  9  L.  ed.   142.    But  133. 

see  contra.  State  v.  North  .American  "^Wood     Insurance.     1015;     Kahn- 

Land  &c.  Co.,  106  La.  621,  31  So.  172.  weiler  v.   Phoenix   Ins.   Co.,  57   Fed. 

As    we    have    elsewhere    shown,    this  562,   revd.  67  Fed.  483,   14  C.   C.   A. 

doctrine  is  not  unlimited.     See  also,  485 ;    Nurnev    v.    Fireman's    &c.    Ins. 

vol.  v.  Tit.  Insurance.  Co.,  63   Mich.   633,   30   N.  W.  350,  6 

'"Gaither  v.  Douehertv,   18  Kv.  L.  Am.  St.  338;  Wright  v.  Susquehanna 

709,  38  S.  W.  2;  Fisher  v.  "Merchants'  &c.  Ins.  Co..   110  Pa.   St.  29.  20  .\tl. 

Ins.  Co.,  95   Maine  486,  50  Atl.  282.  716;  Phoenix  Ins.  Co.  v.  Badger,  53 

85  Am.  St.  428;  Gradv  v.  Home  Fire  AN'is.  283,  10  N.  W.  504. 
£:c.  Ins.  Co.,  27  R.  I.  435,  63  Atl.  173, 


§  I5S7 


CONTRACTS. 


880 


and  requested  plaintiff  to  make  proof  thereof  in  such  amount, 
which  request  was  compHed  with.  It  was  held  a  waiver  by  the 
company  of  the  provisions  for  appraisal. "^^  But  failure  of  arbi- 
tration without  fault  of  the  insurance  company  where  there  is 
nothing  to  show  that  it  could  not  be  had,  has  been  held  not  to 
abrogate  such  a  condition  precedent."" 

§  1587.  Conditions  and  acts  to  be  performed  in  sales  of 
goods. — In  contracts  for  the  sale  of  goods  the  delivery  of  the 
goods  and  payment  of  the  price  are  presumptively  intended  to  be 
concurrent  acts.  The  law  is  that  nothing  to  the  contrary  ap- 
pearing the  presumption  is  that  a  cash  sale  is  intended.^^  Readi- 
ness and  willingness  on  both  sides,  at  the  proper  time  for  com- 
pletion, to  perform  their  respective  parts  of  the  contract  are  mu- 
tual conditions  precedent.'"  It  is  not  necessary,  however,  that 
the  buyer  should  actually  tender  the  money,  or  that  the  seller 
should  make  an  actual  tender  of  the  goods,  in  order  to  satisfy 
the  condition  of  readiness  and  willingness  to  complete."^  But  if 
the  contract  expressly  provides  that  payment  is  to  be  after  deliv- 


**  Manchester  Assur.  Co.  v.  Koer- 
ner,  13  Ind.  App.  372,  40  N.  E.  1110, 
41  N.  E.  848,  55  Am.  St.  231.  See 
also,  Latrobe  v.  Winans,  89  Md.  636, 
43  Atl.  829.  Contra,  Bales  v.  Gil- 
bert, 84  Mo.  App.  675.  See  generally, 
vol.  V,  Tit.  "Insurance." 

'"Grady  v.  Home  Fire  &c.  Ins.  Co., 
27  R.  I.  435,  62,  Atl.  173,  4  L.  R.  A. 
/  V    c  ")  288 

'"'Staunton  v.  Wood,  16  Q.  B.  638; 
Bergan  v.  Magnus,  98  Ga.  514,  25  S. 
E.  570;  Hough  v.  Rawson.  17  111. 
588;  Morton  v.  Clark,  181  Mass.  134, 
63  N.  E.  409;  Rvder  v.  Hathaway,  21 
Pick.  (Mass.)  298;  McArthur  Co.  v. 
Old  Second  Nat.  Bank,  122  Mich.  223. 
81  N.  W.  92;  Carter  v.  Cream  o£ 
Wheat  Co.,  72  Minn.  315,  76  N.  W. 
55;  Whitman  &c.  Assn.  v.  National 
&c.  Assn.,  45  Mo.  App.  90;  South- 
western Freight  &  Cotton  Press  Co. 
V.  Stanard,  44  Mo.  71,  100  Am.  Dec. 
255;  Morris  v.  Rexford,  18  N.  Y. 
552;  Palmer  v.  Hand,  13  John.  CN. 
Y.)  434.  7  Am.  Dec.  392;  Haggerty 
V.  Palmer,  6  Johns.  Ch.  (N.  Y.)  437; 
Keeler  v.  Field.  1  Paige  (N.  Y.)  312; 
Simmons  v.  Green,  35  Ohio  St.  104; 


Faber  v.  Hougham,  26  Ore.  428,  59 
Pac.  547,  nil;  Fletcher  v.  Cole,  23 
Vt.  114._ 

"Benjamin  Sales  (6th  Am.  ed. 
Bennett),  §  707  and  cases  cited. 

'^  Waterhouse  v.  Skinner,  2  B.  & 
P.  447;  Boyd  v.  Lett,  1  C.  B.  222; 
Rawson  v.  Johnson,  1  East  203; 
Jackson  v.  Allawav,  6  C.  B.  942; 
Boiling  V.  Kirby,  90  Ala.  215,  7  So. 
914,  24  Am.  St.  789;  Hull  v.  Pitrat, 
45  Fed.  94;  Aultman  v.  Henderson, 
32  111.  App.  331;  Morgan  v.  East,  126 
Ind.  42,  25  N.  E.  867,  9  L.  R.  A.  558; 
Daugherty  v.  Fowler,  44  Kans.  628, 
25  Pac.  40,  10  L.  R.  A.  314;  Byam 
V.  Hampton,  57  Hun  (N.  Y.)  585,  32 
N.  Y.  St.  771,  10  N.  Y.  S.  372; 
Thompson  v.  Leslie,  60  Hun  (N.  Y.) 
579,  39  N.  Y.  St.  47.  14  N.  Y.  S.  472; 
Upham  Manufacturing  Co.  v.  Sanger, 
80  Wis.  34,  49  N.  W.  28.  As  else- 
where shown,  "tender"  in  this  con- 
nection is  used  in  a  somewhat  differ- 
ent sense  from  that  in  which  it  is 
used  where  an  actual  tender  of  money 
in  payment  of  an  ordinary  debt  is 
required.   See  post,  ch.  44. 


88l  COVENANTS    AND    CONDITIONS.  §    1 588 

ery,  it  has  been  held  that  an  actual  delivery,  and  not  mere  readi- 
ness and  willingness  to  deliver,  is  a  condition  precedent.^* 

§  1588.    Sales  of  goods — Conditions  to  passing  of  title. — 

It  has  been  held  that  where  personal  property  is  contracted  to  be 
sold  upon  condition  that  it  shall  be  delivered  at  a  particular  place, 
it  is  subject  to  attachment  at  the  suit  of  the  creditors  of  the  vendor 
until  it  is  delivered  in  accordance  with  the  condition  of  the  con- 
tract.'°  And  where  property  is  sold  on  approval,  it  is  generally 
a  condition  precedent  to  the  passing  of  title  that  the  buyer  in 
some  way  signify  his  approval  before  the  title  passes. "°  So, 
there  are  many  instances  where  goods  must  be  weighed,  measured 
or  the  like  before  the  property  will  pass."  Where  goods  are  to 
be  delivered  at  a  particular  place  by  the  seller,  delivery  to  a  carrier 
to  take  to  such  place  is  generally  considered  delivery  to  him  as  the 
seller's  bailee  or  agent  to  perform  for  him  the  act  of  delivery  in 
execution  of  his  contract,  and  until  delivery  is  consummated  in 
such  a  manner  as  to  be  effectual  between  seller  and  buyer,  the 
goods  are  at  the  seller's  risk.''*  But,  in  other  instances,  delivery  to 
the  carrier  for  the  buyer  is,  at  least,  prima  facie  deemed  to  be  a 
delivery  to  the  buyer. '^'^  The  carrier  is  not,  however,  the  buyer's 
agent  to  inspect  and  examine  the  goods  and  accept  them  as  com- 

'*  Benjamin     Sales     (Bennett's    6th  227;  Turley  v.  Bates.  2  H.  &  C.  200: 

Am.  ed.),  §  677;  Eppens  v.  McGrath,  Foster  v.  Ropes,  111   Mass.   10.     See 

18  N.  Y.  St.  927,  3  N.  Y.  S.  213.  vol.  v.  Tit.  Sales,  for  further  consid- 

" Johnson  v.  Bailey.  17  Colo.  59.  28  eration    and    citation    of    authorities; 

Pac  81;  Rhoades  v.  Cotton,  90  Maine  also  note  in  26  L.  R.  A.    CN.   S.)    1 

453.    38    Atl.    367.      But    see    Hill    v.  et  seq. 

Fruita   Mercantile  Co.,  42  Colo.  491,  "Benjamin    Sales    (Bennett's  ed.), 

94  Pac.  354,  126  Am.  St.  172   (where  §§   181.  693;  Devine  v.  Edwards.  101 

the   goods    were   sold   at    the    seller's  111.   138;  McXeal  v.   Braun.  53   X-  J. 

place  and  after  delivery  to  the  car-  L.  617.  23  .Atl.  687,  26  Am.   St.  441  : 

rier  were  held  subject  to  attachment  Bellefontaine  v.  Vassaux,  55  Ohio  St. 

as  goods  of  the  buyer).  223;  McLaughlin  v.  Marston,  78  Wis. 

"Ellis  V.  Mortimer,  1  B.  &  P.  (N.  670,  47  N.  W.  1058. 

R.)  257;  Glasscock  v.  Hazell.  109  N.  "Main  v.  Jarrett.  83  Ark.  426.  104 

Car.    145.    13    S.    E.    789.      See    also,  S.  W.  163.  119  Am.  St-  144;   Hill  v. 

Mowbrav  v.  Cadv.  40  Iowa  604;  Wil-  Fruita   Mercantile  Co..  42  Colo.   4^1, 

son  V.    Stratton.'47   Maine   120,   126;  94   Pac.    354.    126    Am.    St.    172.    175. 

Stone   V.    Browning,    68    N.    Y.    598;  citing  Elliott  R.  R.    (2d  ed.).  §  1414: 

Chamberlain  v.  Smith.  44  Pa.  St.  431 ;  State    v.    Rosenbertjer.    212    Mo.    648, 

Hall  &  Brown  Woodworking  &c.  Co.  Ill  S.  W.  5W,  126  .Am.  St.  580;  State 

V.  Brown.  82  Te.x.  469.  17  S.  W.  715 ;  v.  Mullin.  78  Ohio  St.  358,  85  N.  E. 

and  post.  vol.  v.  Tit.  Sales.  556.    18   L.    R.   A.    (N.   S.)    609,    125 

"  Ross  V.  Hannan,  19  Can.  Sup.  Ct.  Am.  St.  710. 

56 — CoNTR.^cTS,  Vol.  2 


§    I5S9  CONTRACTS.  882 

plying  with  the  contract,^"  and  in  a  contract  of  sale  by  sample,  it  is 
a  condition  precedent  implied  that  the  bulk  shall  correspond  with 
the  sample  and  that  the  buyer  shall  have  a  fair  opportunity,  by 
examining  the  goods,  to  satisfy  himself  that  they  are  in  accord- 
ance with  the  contract.**^ 

§  1589.  Sale  of  goods  to  arrive. — Contracts  for  the  sale  of 
goods  "to  arrive  by,"  or  "on  arrival  by,"  or  "expected  to  arrive 
by,"  a  certain  ship  named  are  held  conditional,  the  words  "to 
arrive,"  or  other  equivalent  words,  not  importing  a  warranty  that 
the  goods  will  arrive,  and  the  obligation  to  perform  the  contract 
by  an  actual  transfer  of  the  property  is,  therefore,  in  the  absence 
of  other  words  showing  a  contrary  intent,  contingent  upon  its 
arrival ;  and  the  condition  is  said  to  be  a  double  one,  namely, 
the  arrival  of  the  ship,  with  the  goods  on  board. *'^*  This  rule 
has  been  applied  in  Ohio*-  and  New  Jersey^^  in  leading  and  illus- 
trative cases.  In  the  former  case  there  was  a  sale  of  goods  "to 
arrive  by  the  15th  of  November."  This  was  held  to  create  a  con- 
dition precedent,  that  if  the  salt  did  not  arrive  there  was  no  sale, 

^•Keiwert  v.  Meyer,  62  Ind.  587,  30  ble  v.  Morgan,  1  Woods  (U.  S.)  406, 

Am.    Rep.   206;    Schwartz   v.   Church  Fed.  Cas.  3881;  The  Tybee,  1  Woods 

of  the  Holy  Cross,  60  Minn.   183,  62  (U.  S.)  358;  The  Barque  Iddo  Kim- 

N.  W.  266;   Salomon  v.  King,  63  N.  ball,  8  Ben.  (U.  S.)  297;  The  Eddy,  5 

J.    L.    39.    42    Atl.    745;    Pierson    v.  Wall.    (U.    S.)    481,    18    L.    ed.   486; 

Crooks,  115  N    Y.  539,  22  N.  E.  349,  Richardson  v.  Goddard,  23  How.  (U. 

12  Am.  St.  831;  Pope  v.  Allis,  115  U.  S.)    28,   16  L.  ed.  412.    And  compare 

S.  363,  29  L.  ed.  393,  6  Sup.  Ct.  69.  Graves    v.    Hartford    &c.    Steamboat 

See  also,  ante,  §  1338.  Co.,  38   Conn.    143,  9  Am.  Rep.  369 ; 

^^  Benjamin     Sales     (6th    ed.    Ben-  Moses  v.  Boston  &  M.  R.  Co.,  32  N. 

nett),  p.  563;  Startup  v.  MacDonald,  H.  523,  64  Am.  Dec.   381. 

6  Man.  &  G.  593;  Isherwood  v.  Whit-  "^  Rogers  v.  Woodruff,  23  Ohio  St. 

more,    11    M.   &   W.   347;    Magee   v.  632,   13   Am.   Rep.   276.     And  see  to 

BiHingsley,   3    Ala.    679;    McNeal    v.  same  effect,  Shields  v.  Pettee,  2  Sand. 

Braun,  53  N.  J.  L.  617,  23  Atl.  687,  (N.  Y.)  262,  affd.  4  N.  Y.  122;  Rus- 

26  Am.  St.  441;  Croninger  v.  Crocker,  sell  v.  Nicoll,  3  Wend.    (N.  Y.)    112, 

62   N.   Y.   151;    Luger   Furniture    Co.  20  Am.  Dec.  670;   Benedict  v    Field 

V.   Street,  6  Okla.  312,  50   Pac.   125;  16    N.    Y.    595;    Boyd    v.    Siffkin,   2 

Pope  V.  Allis,  115  U.  S.  363,  29  L.  ed.  Camp.  326;  Idle  v.  Thornton,  3  Camp- 

393,  6  Sup.  Ct.  69.     See  generally,  as  274;  Lovatt  v.  Hamilton,  5  M.  &  W. 

to  reasonable  time  for  the  examina-  639;     Alcwyn     v.     Pryor      Ryan     lS: 

tion  and  as  to  the  liability  of  the  car-  Moody  406.     The  words     to  arrive 

rier,  Bourne  v.  Gatliffe.  3  Man.  &  G.  and    "on    arrival     are    considered   as 

643;    Price  v.   Powell,   3   N.   Y.   322;  synonymous.    Johnson  v.  MacDonald, 

Dunham  v.  Boston  &  A.  R.   Co..  46  9  M.  &  W.  600. 

Hun  (N.  Y.)  245.  11  N.  Y.  St.  472;  "Rogers  v.  Woodruff,  23  Ohio  St. 

Miller  v.  Steam  Nav.  Co.,  10  N.  Y.  632,  13  Am.  Rep.  276. 

431.  Seld.  Notes  64T  Bradstreet  v.  ''  Neldon  v.  Smith,  36  N.  J.  L.  148. 
Heron,  Abb.  Adm.  (U.  S.)  209;  Dib- 


883  COVENANTS    AND    CONDITIONS.  §    1 59O 

although  not  to  come  by  ship.  The  latter  case  exempts  the  seller 
wlio  contracted  to  deliver  coal  "provided  he  could  secure  it" 
from  a  railroad  company  by  a  certain  date.  His  failure  to  ob- 
tain it  within  the  time  was  a  defense.  It  has  been  held  that 
where  the  evident  purpose  of  the  parties  is  that  a  shipment  of 
fruit  shall  be  made  at  a  particular  date  so  that  the  vendee  shall 
have  the  advantage  of  their  sale  during  the  holiday  season  ship- 
ment at  that  date  is  a  condition  precedent.*'*  And  where  the 
language  of  the  contract  asserts  the  goods  to  be  on  board  of  the 
vessel  named,  there  is  a  warranty  that  the  goods  are  on  board, 
and  if  the  vessel  arrives,  the  seller's  duty  to  deliver  is  fixed. *°  A 
sale  of  goods  "on  arrival  of"  a  ship  named  has  also  been  held  an 
absolute  one,  and  not  excused,  although  the  goods  are  not  on 
board.*"  In  sales  of  goods  "to  arrive"  the  condition  is  often 
made  that  the  Vendor  shall  give  notice  of  the  name  of  the  ship 
on  which  the  goods  are  expected  to  arrive  as  soon  as  it  becomes 
known  to  him;  and  it  is  held  that  the  naming  of  the  ship  is  then 
a  condition  precedent  to  the  liability  of  the  buyer  to  accept  the 
goods." 

§  1590.    Sales  of  goods — Delivery  by  instalments. — As  a 
general  rule,  although  there  is  some  conflict  among  the  author- 

**Ridlands  Orange  Growers'  Assn.  *'Hale  v.  Rawson,  4  C.  B.  (N.  S.) 

V.  Gorman,  76  Mo.  App.  184.     If  the  85;   Dike  v.   Reitlinger.  23   Hun    (N. 

ship   has   goods   on   board   consigned  Y.)    241.      See   Browne   v.    Paterson, 

to  another  person,   but   of  the   same  36  App.  Div.   (N.  Y.)    167.  55  N.  Y. 

description,  the  condition  is  not  satis-  S.  404,  revd.  165  N.  Y.  460,  59  X.  E. 

fied  and  there  is  no  sale.     Gorrisscn  296. 

V.  Tcrrin.  2  C.  B.   (N.  S.)  681.     The  "Busk    v.    Spence,    4    Camp.    329 

goods    must    answer   the    description,  (holding  a  delay  of  eight  days  after 

and   if   they   do  not  substantially   do  knowledge   of   name  by  vendor    dis- 

this.  although  of  the  kind  and  quan-  charged      buyer      from      contract)  ; 

titv,  the  buyer  may  reject.     Vernede  Graves  v.  Legg.  9  Exch.  709;  Gilkes 

v.'Weber,  1  H.  &  N.  311;  Shields  v.  v.  Leonino,  4  C.  B.   (N.  S.)  485.     In 

Pettee,  2  Sandf.  (N.  Y.)  262,  al?d.  4  contracts   to   ship  a  cargo  of   sugar 

N.   Y.    122.     If  the  buyer  takes   any  where   the   amount    of    the    cargo    is 

portion  and  consumes  it  before  dis-  specified   to  be    from   seven   hundred 

covering  that  the  goods  are  not  the  to    eight    hundred    tons,    it    has   been 

same  in  quality  bargained  for,  while  held    that    the    sellers,    the    price    of 

he  mav  rescind  the  contract,  he  must  sugar  having  advanced  after  the  sale, 

pay  for  the  portion  consumed.    Love  may   select    the    alternative   which    is 

V.    Barnesville    Mfg.    Co..   3    Pennew.  the   least   burdensome   to  themselves. 

(Del.)    152.   50   Atl.   536;    Shields    v.  and  deliver  seven  hundred  tons  only. 

Pettee.  2    Sandf.    (N.   Y.)    262,  affd.  although  the  vessel  was  loaded  with 

4  N.  Y.  122.  eight    hundred    and    forty-nine    tons. 

"Gorrisscn  v.  Perrin,  2  C.  B.   (N.  Standard  Sugar  Refinery  v.  Castano, 

S.)  681.  43  Fed.  279. 


I590 


CONTRACTS. 


884 


ities,  in  contracts  for  the  sale  and  delivery  of  goods  by  instal- 
ments at  stated  periods,  the  seller  is  bound  to  deliver  the  quantity 
stipulated,  and  has  no  right  either  to  compel  the  buyer  to  accept 
a  less  quantity  or  to  require  him  to  select  part  of  a  greater  quan- 
tity ;  and  a  default  in  delivery  of  an  instalment,  in  respect  of  quan- 
tity or  quality,  gives  the  buyer,  prima  facie  at  least,  the  right 
to  repudiate  the  whole  contract.^^  The  parties  can,  however,  by 
express  provisions,  stipulate  that  a  default  as  to  one  delivery  shall 
not  put  an  end  to  the  contract.^**  So,  on  the  other  hand,  the 
readiness  of  the  buyer  to  accept  an  instalment  has  been  said 


^'Norrington  v.  Wright,  115  U.  S. 
188,  29  L.  ed.  366,  6  Sup.  Ct.  12,  a 
leading  case  in  which  all  the  authori- 
ties are  reviewed.  A  contract  had 
been  made  to  sell  5,000  tons  of  iron 
rails,  the  same  to  be  shipped  from 
Europe  delivered  at  Philadelphia,  at 
the  rate  of  about  1,000  tons  per 
month.  One  month  400  tons  were 
shipped  and  another  885  tons  were 
shipped.  It  was  held  that  this  was 
a  sufficient  breach  of  the  contract 
by  the  seller  so  that  the  buyer  might 
repudiate  the  whole  contract.  "In  the 
contracts  of  merchants,  time  is  of 
the  essence.  The  time  of  shipment  is 
the  usual  and  convenient  means  of 
fixing  the  probable  time  of  arrival, 
with  a  view  of  providing  funds  to 
pay  for  the  goods,  or  of  fulfilling 
contracts  with  third  persons.  _  A 
statement  descriptive  of  the  subject- 
matter,  or  of  some  material  incident, 
such  as  the  time  or  place  of  shipment, 
is  ordinarily  to  be  regarded  as  a  war- 
ranty in  the  sense  in  which  that  term 
is  used  in  insurance  and  maritime 
law,  that  is  to  say,  a  condition  prec- 
edent, upon  the  failure  or  non-per- 
formance of  which  the  party  ag- 
grieved may  repudiate  the  whole 
contract."  Per  Gray,  J.,  203.  Cleve- 
land Rolling-Mill  v.  Rhodes,  121  U. 
S.  255,  30  L.  ed.  920,  7  Sup.  Ct.  882; 
Greenbrier  Lumber  Co.  v.  Ward,  36 
W.  Va.  573,  15  S.  E.  89.  (This  case 
also  holds  that  the  first  instalment 
may  be  returned  by  the  sellerif  the 
latter  deliveries  are  not  sufficient  in 
quantity  to  fulfil  the  contract  re- 
quirements.) See  Pope  v.  Porter, 
102  N.  Y.  366,  7  N.  E.  304,  a  sale  of 


iron  to  arrive,  "500  tons  of  Coltness 
pig-iron  *  *  *  to  be  due  here  in 
April  next;  500  tons  of  Caulder  pig- 
iron  *  *  *  to  be  due  here  in  March 
next."  PlaintifYs  made  default  in  the 
March  instalment,  but  were  ready  to 
perform  the  April  one.  It  was  held 
that  defendants  had  a  right  to  re- 
scind. To  the  same  effect.  Hill  v. 
Blake,  97  N.  Y.  216;  Russell  v.  Nic- 
oll,  3  Wend.  (N.  Y.)  112,  20  Am. 
Dec.  670;  Catlin  v.  Tobias,  26  N.  Y. 
217,  84  Am.  Dec.  183  (holding  that 
the  breach  not  only  justifies  repudia- 
tion of  contract  by  buyer,  but  that 
such  breach  is  a  bar  to  an  action  by 
the  vendor  for  the  price  of  the  goods 
delivered,  where  the  buyer  expends 
the  goods  delivered  in  the  business, 
thinking  that  the  seller  will  comply 
with  the  terms  of  the  contract,  a  cer- 
tain quantity  a  month)  ;  The  Elting 
Woolen  Co.  v.  Martin,  5  Daly  (N. 
Y.)  417;  King  Phihp  Mills  v.  Sam- 
uel Slater  &  Sons,  12  R.  I.  82,  34  Am. 
Rep.  603.  See  also,  Mersey  Steel  &c. 
Co.  V.  Naylor,  9  L.  R.  App.  Cas.  434 ; 
Bollman  v.  Burt,  61  Md.  415;  Win- 
chester V.  Newton,  2  Allen  (Mass.) 
492 ;  contra,  Jonassohn  v.  Young,  4 
B.  &  S.  296;  Coddington  v.  Pale- 
ologo.  L.  R.  (1867)  2  Ex.  193; 
Blackburn  v.  Reilly.  47  N.  J.  L.  290, 
1  Atl.  27,  54  Am.  Rep.  159;  Lucesco 
Oil  Co.  V.  Brewer,  66  Pa.  St.  351; 
Shinn  v.  Bodine,  60  Pa.  St.  182,  100 
Am.  Dec.  560;  Morgan  v.  McKee,  V 
Pa.  St.  228;  Scott  v.  Kittanning  Coal 
Co.,  89  Pa.  St.  231,  Zl  Am.  Rep.  753. 
*•  Simpson  v.  Crippin,  L.  R.  8  Q. 
B.  14. 


885 


COVEXANTS    AND    COXDITIOXS. 


§    1590 


to  be  a  condition  precedent  to  the  delivery  of  subsequent  instal- 
ments, and  his  failure  to  accept  one  instahnent  will  discharge  the 
seller  from  delivering  subsequent  instalments.'"'  And  certainly 
a  positive  refusal  of  the  buyer  without  cause  to  receive  or  pay 
for  an  instalment  to  be  separately  paid  for  ordinarily  relieves 
the  seller  from  forwarding  subsequent  instalments,"^  although, 
unless  a  different  intention  appears,  a  mere  omission  or  failure 
to  pay  for  an  instalment  at  the  proper  time  may  not  entitle  the 
seller  to  treat  the  contract  as  repudiated  if  there  is  nothing  to 
show  any  intention  to  repudiate  and  the  buyer  is  desirous  and  able 
to  complete  the  contract.""  If,  however,  a  default  in  payment  be 
made,  with  the  declared  intention  of  repudiating  the  contract, 
the  seller  is  discharged."^  Where  an  agreement  is  made  to  fur- 
nish an  article  of  a  given  description  and  the  description  is  neces- 
sary to  the  identity  of  the  article,  it  is  a  condition  precedent  and 
if  the  article  delivered  is  not  of  the  description  of  the  one  ordered, 


**' Haines  v.  Tucker  &  Co.,  SO  N. 
H.  307.  And  see  cases  in  preceding 
note,  which  support  the  converse  of 
this  proposition.  Hoare  v.  Rennie, 
5  H.  &  N.  19.  Contra,  Simpson  v. 
Crippin,  L.  R.  8  Q.  B.  14;  Roper  v.. 
Johnson,  L.  R.  8  C.  P.  167. 

"'  Withers  v.  Reynolds,  2  B.  &  Ad. 
882;  Bloomer  v.  Bernstein,  L.  R.  9 
C.  P.  588;  Edward  Hines  Lumber 
Co.  V.  Alley.  72,  Fed.  603,  19  C.  C. 
A.  599,  43  U.  S.  App.  169;  Bradley 
V.  King,  44  111.  339;  Stephenson  v. 
Cady,  117  Mass.  6;  Kokomo  Straw 
Board  Co.  v.  Inman,  134  N.  Y.  92,  31 
N.  E.  248.  See  also,  Hull  Coal  & 
Coke  Co.  V.  Empire  Coal  &c.  Co., 
113  Fed.  256.  51  C.  C.  A.  213;  Quar- 
ton  V.  American  Law  Book  Co.,  143 
Iowa  517.  121  N.  W.  1009,  32  L.  R. 
A.  (N.  S.)  1  and  note;  Ross  Mee- 
han  Foundry  Co.  v.  Rover  Wheel  Co., 
113  Tenn.  370,  83  S.  W.  167,  68  L. 
R.  A.  829,  3  Ann.  Cas.  898. 

"=  Mersey  Steel  &c.  Co.  v.  Naylor, 
9  App.  Cas.  434;  Freeth  v.  Burr,  L. 
R.  9  C.  P.  208;  Erwin  v.  Harris,  87 
Ga.  ZZX  13  S.  E.  513;  Hime  v. 
Klasey,  9  111.  App.  166;  Hansen  v. 
Consumers'  Steam-Heating  Co.,  7Z 
Iowa  77,  34  N.  W.  4^5;  Beatty  v. 
Howe  Lumber  Co.,  77  Minn.  272,  79 
N.  W.   1013;   Otis  V.  Adams,  56  N. 


J.  L.  38,  27  Atl.  1092;  Pierson  v. 
Duncan,  162  Pa.  St.  187,  29  Atl.  72>2, ; 
Norrington  v.  Wright,  115  U.  S.  188, 
210,  29  L.  ed.  366,  6  Sup.  Ct.  12.  See 
also,  Quarton  v.  .\merican  Law  Book 
Co..  143  Iowa  517,  121  N.  W.  1009, 
32  L.  R.  A.  (X.  S.)  1  and  note.  Gerli 
V.  Poidebard  &c.  Co.,  57  X.  J.  L. 
432,  31  Atl.  401,  30  L.  R.  A.  61,  51 
Am.  St.  611. 

"  See  Bloomer  v.  Bernstein.  L.  R.  9 
C.  P.  588,  where  it  is  held  that  it  is 
a  question  of  fact  whether  the  cir- 
cumstances of  nonpayment  are  such 
as  to  give  the  seller  reasonable 
ground  for  believing  that  the  buyer 
will  be  unable  to  pay  for  future  de- 
liveries, and,  if  so,  the  seller  may  re- 
scind. Keeler  v.  Clifford,  165  111 
544.  46  X.  E.  248;  Stephenson  v 
Cadv,  117  Mass.  6;  Star  Glass  Co.  v 
Morey.  108  Mass.  570;  Winchester 
V.  Xewton.  2  Allen  (Mass.)  492; 
Granite  Mills  v.  Keystone  Oil  Cloth 
Co.,  15  Mont.  Co.  Law  (Pa.)  36 
Webbv.  Stone,  24  X.  H.282;  Stocks 
dale  V.  Schuvler,  55  Hun  (X.  Y.) 
610.  29  X.  Y.  'St.  380,  8  X.  Y.  S.  813, 
aflfd.  130  X.  Y.  674,  29  X.  E.  1034; 
Fletcher  v.  Cole.  23  Vt.  114.  See 
also,  Peters  Grocery  Co.  v.  Collins 
Bag  Co.,  1'2  N.  Car.  174,  55  S.  E. 
90. 


§    1 591  CONTRACTS.  886 

the  purchaser  generally  has  the  right  to  reject  it  and  to  rescind 
the  contract  in  toto.  Thus,  where  an  order  is  given  for  a  monu- 
ment with  certain  inscriptions,  among  which  are  the  name,  date 
of  death  and  age  of  the  deceased,  and  the  manufacturer  omits 
from  the  inscription  the  age,  the  orderer  has  a  right  to  reject 
the  monument  and  absolutely  rescind  the  agreement.^* 

§  1591.  Sales — Instalments — Review  of  cases. — The  lead- 
ing case  in  point  is  Mersey  Steel  Company  v.  Naylor,°^  decided 
by  the  House  of  Lords,  to  the  effect  that  the  failure  of  the  buyer 
to  pay  for  the  first  instalment  of  the  goods  upon  delivery  does 
not,  unless  the  circumstances  evince  an  intention  on  his  part  to  be 
no  longer  bound  by  the  contract,  entitle  the  seller  to  rescind  the 
contract  and  to  decline  to  make  further  deliveries  under  it.®°  But 
the  opinion  of  the  Lords,  incidentally  in  deciding  the  case,  in 
substance  lays  down  the  rule  that  default  by  one  party  in  making 
particular  payments  or  deliveries  will  not  release  the  other  party 
from  his  duty  to  make  the  other  deliveries  or  payments  stipulated 
in  the  contract,  unless  the  conduct  of  the  party  in  default  be  such 
as  to  evince  an  intention  to  abandon  the  contract  or  a  design  no 
longer  to  be 'bound  by  its  terms.  This  rule  leaves  the  party  com- 
plaining of  a  breach  to  recover  damages  for  his  injury  on  the 
normal  principle  of  compensation,  without  allowing  him  the  ab- 
normal advantage  that  might  enure  to  him  from  an  option  to 
rescind  the  bargain.  It  also  accords  with  the  ancient  doctrine 
laid  down  by  Sergeant  Williams  in  his  notes  to  Pordage  v.  Cole," 
that  where  a  covenant  goes  only  to  part  of  the  consideration  on 
both  sides,  and  a  breach  of  such  covenant  may  be  paid  for  in 
damages,  it  is  an  independent  covenant,  and  an  action  may  be 
maintained  for  a  breach  of  the  contract  without  averring  per- 
formance.    It  is  inapplicable  where  the  parties  have  expressed 

**  American    White    Bronze    Co.    v.  '^'^  ^vTersey   Steel  &c.   Co.   v.   Naylor, 

Gillette,  88  Mich.  231,  50  N.  W.  136,  9  L.  R.  App.  Cas.  434. 

26  Am.  St.  286;  Benj.  Sales,  §   1349.  ""Cited  with  approval  on  the  pomt 

See  also,   Nichol  v.   Godts,   10  Exch.  decided    in    Norrington    v.    Wright, 

191;  Bowes  v.   Shand,  2  L.  R.   App.  115  U.  S.  188,  29  L.  ed.  366,  6  Sup. 

Cas.  455;  Gould  v.   Stein,   149  Mass.  Ct.  12. 

570,  22  N.  E.  47,  5  L.  R.  A.  213,  14  "Pordage  v.  Cole,  1  Wms.  Saund. 

Am.  St.  455;  note  in  38  L.  R.  A.  (N.  319i. 
S.)  539. 


88/  COVEXAXTS    AXD    COXDITIOXS.  §    1 592 

their  intention  to  make  performance  of  a  stipulation  toiicliing  a 
part  of  a  bargain  a  condition  precedent  to  the  continuing  obhga- 
tion  of  the  contract;  and  pecuhar  cases  might  arise  where  the 
courts  would  infer  such  an  intention  from  the  nature  and  cir- 
cumstances of  the  bargain  itself,  cases  in  which  the  courts  would 
see  that  the  partial  stipulation  was  so  important,  so  went  to  the 
root  of  the  matter,  to  use  a  ])hrase  of  Lord  Blackburn,"*  as  to 
make  its  performance  a  condition  of  the  obligation  to  be  proved 
in  the  contract.  Accordingly,  the  rule  as  laid  down  by  this  case 
has  been  approved  by  some  of  the  American  courts,  which  hold 
that  if  the  contract  is  not  entire,  a  failure  in  one  delivery  will  not, 
without  more,  justify  rescission.""  But  the  weight  of  authority 
in  America  is  that  the  doctrine  of  this  case  is,  in  some  respects, 
inapplicable  in  cases  of  deliveries  by  instalments,  and  it  is  gener- 
ally held  that  where  the  contract  is  entire,  default  either  in  de- 
livery or  acceptance  of  one  instalment  usually  or  prima  facie  gives 
cause  of  discharge  from  contract.^ 

§  1592.  Insolvency  of  buyer. — Insolvency  of  the  buyer 
may  justify  the  seller  in  refusing  to  deliver  any  instalments  until 
past  instalments  are  paid  for.-  But  the  mere  insolvency  of  one  of 
the  parties  to  a  contract  of  sale  is  not  equivalent  either  to  a  rescis- 
sion or  a  breach.  It  simply  relieves  the  seller  from  his  agreement 
to  give  credit,  and  payment  may  be  substituted.^  In  such  a  case 
it  has  been  held  that  the  seller,  notwithstanding  he  may  have 
agreed  to  allow  credit  for  the  goods,  is  not  bound  to  deliver  any 

"'Poussard   v.    Spiers,    L.    R.    1    Q.  cases    ir^    preceding    notes    and    also 

B    Div    410  compare   Blackburn   v.   Reillv,   47   X. 

'^"  Drake    v.    Goree,    22    Ala.    409;  J.  L.  290.  1  Atl.  27,  54  Am.  Rep.  159. 
More    V.    Bonnett,    40    Cal.    251.    and        =  Freeth  v.  Burr.  L.  R.  9  C.  P.  208; 

see  other  cases  collected  in  Norrins-  Bloomer  v.  Bernstein.  L.  R.  9  C.  P. 

ton  V.  Wright,  115  U.  S.  188,  198,  29  588;   New  England   Iron   Co.  v.   Gil- 

L.    ed.    366,   6    Sup.    Ct.    12;    Cole   v.  bert  (Metropolitan)   Elevated  R.  Co.. 

Cheovenda     4    Colo.    17;    Bradley   v.  91  N.  Y.  153;  Pardee  v.  Kanady,  100 

King,   44    ill.    339;    Dibol   v.    Minott.  N.  Y.  121,  2  N.  E.  885;  Mann  v.  Sals- 

9  Iowa  403;   Dwinel   v.   Howard,   30  berg.  17  Pa.  Super.  Ct.  280. 
Maine  258-    Dugan   v.    .Xnderson.   36        ^Pardee  v.  Kanadv,  100  N.  Y.  121, 

Md    %7    11    \m.  Rep.  500;   Allen  v.  2  X.  E.  885.     See  also,  Florence  Min. 

Mckibbi'n,    5    Mich.    449;    Dunlap    v.  Co.  v.   Brown,   124  U.    S.  385,  31   L. 

Petrie's  Exrs.,  35  Miss.  5^0;  Coleman  ed.  424,  8  Sup.  Ct.  531.  Contra,  Mor- 

V.  Hudson,  2'Sneed    (Tenn.)   463.  gan  v.  Bain,  L.  R.  10  C  P.  15.  Com- 

^Norrington  v.   Wright,   115   U.   S.  pare  Mess  v.  Duffus   (1901),  6  Com. 

188,  29  L.  ed.  366,  6  Sup.  Ct.  12.  See  Cas.  165. 


1593 


CONTRACTS.  888 


more  goods  under  the  contract  until  the  price  of  the  goods  not  yet 
delivered  is  tendered  to  him ;  and  if  a  debt  is  due  to  him  for  goods 
already  delivered,  he  is  entitled  to  refuse  to  deliver  any  more  till 
he  is  paid  the  debt  due  for  those  already  delivered.*  If  goods  are 
sold  on  credit,  it  is  an  implied  condition  of  the  contract  that  the 
buyer  shall  keep  his  credit  good,  and  the  seller  is  not  bound  to 
deliver  the  goods  if  the  buyer  is  insolvent;  and  the  fact  that  the 
buyer  has  given  his  note  for  the  price  does  not  change  the  rule.^ 
To  justify  a  seller  in  refusing  to  give  credit  and  to  deliver  instal- 
ments on  this  ground  the  buyer  must  be  insolvent.  By  the  term 
"insolvent"  is  usually  meant  inability  to  pay  debts  as  they  become 
due  in  the  ordinary  course  of  business.*'  But  it  is  said  that  a  man 
cannot  be  said  to  be  insolvent  merely  because  he  has  not  money 
enough  on  hand  to  meet  his  liabilities  as  they  fall  due  in  the 
course  of  trade.^ 

§  1593.  Conditional  sales. — A  conditional  sale  is  one  which 
depends  for  its  validity  or  is  to  take  effect  on  the  performance  or 
fulfilment  of  some  condition,  or,  more  specifically,  it  is  a  sort 
of  sale  in  which  the  transfer  of  title  to  the  thing  sold  to  the 
purchaser,  or  his  retention  of  it,  is  made  to  depend  upon  some* 
condition.®  A  sale  of  personal  property  on  credit,  with  delivery 
of  possession  to  the  purchaser,  under  a  distinct  agreement  that  the 
title  shall  not  pass  from  seller  to  buyer  until  the  price  is  paid,  is 

*Ex  parte  Chalmers,  L.   R.  8  Ch.  tin,    13    Wall     (U.     S.)     40,    20    L. 

App    289:   Fulton  v.   Gibiam,  98  Ga.  ed.  481;  Cunningham  v.  Norton,  125 

224      25     S.    E.     431;     Converse     v.  U.   S.   11,  31   L.   ed.  624.  8   Sup.   Ct. 

Sickles     17    Misc.     (N.    Y.)     169,    40  804;  Clarion  Bank  v.  Jones,  21  Wall. 

N     Y. 'S.   971,    modified    in    16   App.  (U.  S.)  325,  22  L.  ed.  542;  Buchanan 

Div    (N    Y)   49,  44  N.  Y.   S.   1080,  v.   Smith,   16  Wall.    (U.   S.)    277,  21 

affd   in  161  N.  Y.  666.  57  N.  E.  1107.  L.  ed.  280;  Wager  v.  Hall,  16  Wall. 

''Diem  V.  Koblitz,  49  Ohio  St.  41,  (U.  S.)   584,  21  L.  ed.  504;  Dutcher 

29  N.  E.  1124,  34  Am.  St.  531.     See  v.   Wright,  94   U.    S.  553,  24  L.   ed. 

also,  McKenzie  V.  Rothchild,  119  Ala.  130;    In    re   Bininger,   7   Blatch.    (U. 

419  24  So.  716;  Skinner  v.  Michigan  S.)   262. 

Hoop  Co.,  119  Mich.  467,  78  N.  W.        *  Smith  v.   Collins,  94  Ala.  394,   10 

547,    75    Am.    St.    413;    Gratton    &  So.  334. 

Knight   Mfg.    Co.   v.    Troll,    11    Mo.        "6  Am.  &  Eng.  Ency.  L.    (2d  ed.) 

App.   339;    Avery  v.    Dickson    (Tex.  437.     So    also,    Andrews    &    Co.    v. 

Civ.  App.),  49  S.  W.  662.  Colorado  Sav.  Bank.  20  Colo.  313,  46 

*in  re  Phoenix  Bessemer  Steel  Co.,  Am.  St.  295  and  note;  Gaar  v.  Nich- 

L.    R.   4   Ch.   Div.    108;    May  v.    Le  ols,  115  Iowa  223,  225,  88  N.  W.  382; 

Ciaire,    18  Fed.    164;    Syracuse  Knit-  Christensen   v.    Nelson,   38   Ore.   473, 

ting    Co.    v.    Blanchard,    69    N.    H.  (iZ  Pac.  648,  650. 
447,    43    Atl.    637;    Toof    v.    Mar- 


889 


COVEXAXTS    AXD    COXDITIOXS. 


§     1593 


valid."  And  the  buyer  cannot  convey  the  title  or  subject  it  to 
execution  for  his  own  debts,  where  the  bill  of  sale  is  recorded  or 
the  subsequent  encumbrancer  has  actual  notice  of  the  same,  until 
the  condition  governing-  the  agrccmert  to  sell  has  been  per- 
formed.^*^ 


"  Piedmont  Land  &  Imp.  Co.  v. 
Thomson-Houston  Motor  Co.  (Ala.), 
12  So.  768;  Hart  v.  Carpenter,  24 
Conn.  427 ;  Williams  v.  Connovvay,  3 
Houst.  (Del.)  63;  In  re  Gait,  120 
Fed.  64,  56  C.  C.  A.  470 ;  Johnston  v. 
Eichelbcrger,  13  Fla.  230;  Jowers  v. 
Blandy,  58  Ga.  2)19 ;  McGirr  v.  Sell, 
60  Ind.  249;  Keck  v.  State,  12  Ind. 
App.  119,  39  N.  E.  899;  Vaughn  v. 
Hopson,  10  Bush  (Ky.)  ZZl ;  Pink- 
ham  V.  Appleton,  82  Alaine  574,  20 
Atl.  237;  Walsh  v.  Taylor,  39  Md. 
592.  (This  case  justifies  a  trespass 
by  the  seller  to  obtain  possession 
after  breach  of  condition  by 
buyer.)  Nichols  v.  Ashton,  155  Mass. 
205,  29  N.  E.  519;  Dewes  Brewery 
Co.  V.  Merritt,  82  Mich.  198,  46  N. 
W.  379,  9  L.  R.  A.  270;  Marquette 
Mfg.  Co.  V.  JefTery,  49  Mich.  283; 
Ketchum  v.  Brennan,  53  ]\Iiss.  596; 
Sumner  v.  Cottey,  71  :\Io.  121 ;  King 
V.  Bates,  57  N.  H.  446;  Cole  v.  Berry, 
42  N.  J.  L.  308,  36  Am.  Rep.  511; 
Bean  v.  Edge,  84  N.  Y.  510;  Korne- 
gav  V.  Kornegav,  109  N.  Car.  188,  13 
S.'E.  770;  Call  v.  Seymour,  40  Ohio 
St.  670;  Skelton  v.  Manchester,  12 
R.  I.  326;  Talmadge  v.  Oliver,  14  S. 
Car.  522;  Bradshaw  v.  Thomas,  7 
Yerg.  (Tenn.)  497;  Christian  v. 
Bunker,  38  Tex.  234;  Segrist  v.  Crab- 
tree.  131  U.  S.  287,  ZZ  L.  ed.  125, 
9  Sup.  Ct.  687;  Harkness  v.  Russell, 
118  U.  S.  663,  30  L.  ed.  285,  7  Sup. 
Ct.  51 ;  Page  v.  Edwards,  64  Vt.  124, 
23  Atl  917.  As  will  hereafter  be 
shown,  however,  there  are  statutes 
in  most  jurisdictions  requiring  such 
contracts  to  be  recorded,  at  least,  in 
order  to  be  effective  against  those 
who  would  otherwise  be  bona  fide 
purcha.'Jcrs  or  the  like.  But  they  do 
not  fall  within  a  chattel  mortgage 
act  and,  in  the  absence  of  fraud,  are 
valid  as  to  third  persons  as  well  as 
between  the  parties.  Freed  Furni- 
ture &  Carpet  Co.  v.  Snrensen,  28 
Utah  419,  79  Pac.  564,  107  Am.  St. 
731  and  note. 

"Sears  v.  Shrout,  24  Ind.  App.  313, 


56  N.  E.  728;  Cole  v.  Berry,  42  N.  J. 
L.  308,  36  Am.  Rep.  511  (where  all 
the  cases  are  collected)  ;  Putnam's 
Sons  V.  Macleod,  23  R.  I.  ZIZ,  50 
Atl.  646;  Segrist  v.  Crabtree,  131 
U.  S.  287,  }>}>  L.  ed.  125,  9  Sup.  Ct. 
687;  Harkness  v.  Russell,  118  U.  S. 
663,  30  L.  ed.  285,  7  Sup.  Ct.  51. 
See  also,  Dresser  Mfg.  Co.  v. 
Waterston,  3  Mete.  (Mass.)  9;  Cog- 
gill  v.  Hartford  &c.  R.  Co.,  3  Gray 
(Mass.)  545,  15  Am.  L.  Rev.  380; 
Wadleigh  v.  Buckingham,  80  Wis. 
230,  49  N.  W.  745  ;  Kimball  Co.  v.  Mel- 
Ion.  80  W^is.  133,  48  N.  W.  1100.  And 
see  cases  in  preceding  note,  nearly 
all  of  which  arose  from  seller  assert- 
ing rights  against  bona  fide  pur- 
chasers from  buver.  Contra,  Van 
Duzor  V.  Allen,  90  111.  499;  Vaughn 
V.  Hopson,  10  Bush  (Ky.)  ZZl ,  over- 
ruling Patton  v.  McCane,  15  B.  Mon. 
(Ky.)  555;  Forrest  v.  Nelson  Bros., 
108  Pa.  St.  481.  In  Pennsylvania  a 
distinction  is  taken  between  delivery 
under  a  bailment,  with  an  option  in 
the  bailee  to  purchase  at  a  named 
price,  and  a  delivery  under  a  contract 
of  sale  containing  a  reservation  of 
title  in  the  vendor  until  the  contract- 
price  is  paid,  it  being  held,  that  in 
the  former  instance,  property  does 
not  pass  as  in  favor  of  creditors 
and  purchasers  of  the  bailee,  but  that 
in  the  latter  instance,  delivery  to  the 
vendee  subjects  the  property  to  ex- 
ecution at  the  suit  of  his  creditors 
and  makes  it  transferable  to  bona 
fide  purchasers.  Chamberlain  v. 
Smith,  44  Pa.  St.  431 ;  Rose  v.  Story, 
1  Pa.  St.  190,  44  Am.  Dec.  121 ;  Mar- 
tin V.  Mathiot.  14  Serg.  &  R.  (Pa.) 
214,  16  Am.  Dec.  491  :  Haak  v.  Lin- 
dcrman.  64  Pa.  St.  4^9.  3  Am.  Rep. 
612;  Lippincott  v.  Holden.  11  Pa. 
Super.  Ct.  15.  "This  distinction  is 
discredited  by  the  great  weight  of 
authority,  which  puts  possession  un- 
der a  conditional  contract  of  sale  and 
possession  under  a  bailment  on  the 
same  footing — liable  to  be  assailed  by 
creditors   and   purchasers    for   actual 


§  I, 


194 


CONTRACTS. 


890 


§  1594.  Form  and  construction  of  contract  of  conditional 
sales. — In  order  to  determine  whether  a  transaction  is  a  con- 
ditional sale,  it  is  essential  to  ascertain  the  character  of  the  agree- 
ment. To  do  this,  courts  look  to  the  purpose  of  the  parties  as 
evidenced  by  the  agreement  and  its  provisions,  and  by  applying 
the  law,  determine  the  real  character  of  the  transaction;  and  its 
construction  and  the  terms  and  essence  of  the  contract  are  the  test 
of  its  nature,  no  matter  what  its  framers  may  call  it.^^   An  agree- 


fraud,  but  not  fraudulent  per  se." 
Cole  V.  Berry,  42  N.  J.  L.  308,  315. 
And  as  to  how  difficult  it  is  in  Penn- 
sylvania to  cflfect  the  same  object  as 
a  conditional  sale  efifects  elsewhere, 
see  Forrest  v.  Nelson  Bros.,  108  Pa. 
St.  481,  which  inhibits  the  transac- 
tion from  being  done  under  the  guise 
of  a  bailment.  Where  the  mere  pos- 
session of  a  conditional  buyer  is 
held  to  warrant  a  purchaser  buying 
from  him,  and  thereby  getting  a  good 
title,  this  certainly  clothes  possession 
with  the  attributes  of  ownership,  a 
very  dangerous  doctrine. 

"  Hydraulic  Press  Mfg.  Co.  v. 
Whetstone,  63  Kans.  704,  66  Pac.  989 ; 
Chism  V.  Barnes,  104  Ky.  310,  20  Ky. 
L.  569,  47  S.  W.  22>2;  Blanchard 
V.  Cooke,  144  ^lass.  207,  11  N.  E. 
83 ;  Schermerhorn  Bros.  v.  Herold, 
81  Mo.  App.  461 ;  Singer  Mfg.  Co.  v. 
Gray,  121  N.  Car.  88,  28  S.  E.  257; 
Equitable  General  Providing  Co.  v. 
Eisentrager,  34  Misc.  (N.  Y.)  179,  68 
N.  Y.  S.  866;  Hervey  v.  Rhode  Island 
Locomotive  Works,  93  U.  S.  664,  2Z 
L.  ed.  1003;  Page  v.  Edwards,  64 
Vt.  124,  23  Atl.  917;  Davenport  v. 
Shants,  43  Vt.  546;  Buzzell  v.  Cum- 
mings,  61  Vt.  213,  18  Atl.  93.  In 
Sanders  v.  Wilson,  8  Mackey  (19  D. 
C.)  555.  the  contract  recited  that  the 
buyer  had  rented  a  piano  and  had 
agreed  to  pay  as  rent  certain  sums 
until  the  price  was  paid  and  then  the 
piano  was  to  be  buyer's.  Held,  a 
conditional  sale.  Nichols  v.  Ashton, 
155  Mass.  205,  29  N.  E.  519,  is  a  case 
in  which  the  transaction  or  written 
contract  recited  that  the  purchaser  had 
borrowed  and  received  certain  goods 
which  he  could  purchase  by  paying  a 
certain  sum  in  instalments,  but  that 
no  partial  payment  would  entitle  the 
purchaser  to  keep  the  goods  after 
demand  by  seller  for  default  in  pay- 


ment. There  was  a  mortgage  back 
to  the  seller  by  the  buyer.  It  was 
held  a  conditional  sale.  Wadleigh  v. 
Buckingham,  80  Wis.  230.  49  N.  W. 
745,  was  held  to  be  a  conditional  sale, 
although  there  was  a  provision  that 
the  chattel  should  be  at  risk  of 
buyer;  that  is,  if  lost  or  destroyed, 
the  buyer  bore  the  loss.  See  also, 
Johnson's  Exr.  v.  Clark,  5  Ark.  321 ; 
Stockton  Sav.  &  Loan  Soc.  v.  Pur- 
vis, 112  Cal.  236,  44  Pac.  561,  53  Am. 
St.  210;  Parke  &c.  Co.  v.  White  River 
Lumber  Co..  101  Cal.  i7,  35  Pac.  442; 
Case  V.  L'Oeble,  84  Fed.  582;  Havs 
v.  Jordon,  85  Ga.  741,  11  S.  E.  833, 
9  L.  R.  A.  2>7Z;  Fleury  v.  Tufts,  25 
111.  App.  101;  Gaar  v.  Nichols,  115 
Iowa  223,  88  N.  W.  382;  Smith  v. 
Aldrich,  180  Mass.  367,  62  N.  E.  381 ; 
Aultman  v.  Olsen,  43  Minn.  409,  45 
N.  W.  852;  Plarn  v.  Cernigilia,  72, 
Miss.  290,  18  So.  577;  Davis,  v.  Gid- 
dings,  30  Nebr.  209,  46  N.  W.  425; 
Pate  v.  Oliver,  104  N.  Car.  458,  10 
S.  E.  709;  Clark  v.  Hill,  117  N.  Car. 
11,  23  S.  E.  91,  53  Am.  St.  574;  Sho- 
shonetz  v.  Campbell,  7  Utah  46,  24 
Pac.  672;  McComb  v.  Donald's 
Admr.,  82  Va.  903,  5  S.  E.  558. 
Compare  Bridget  v.  Cornish,  1 
Mackey  (D.  C.)  29;  Cannon  v.  Mc- 
Michael,  6  Mackey  (D.  C.)  225.  In 
Farquhar  v.  McAlevy,  142  Pa.  St. 
233,  21  Atl.  811,  24  Am.  St.  497, 
where  machinery  was  delivered  under 
a  contract  termed  a  "lease,"  the 
lessee  promising  to  pay  a  certain 
sum  in  instalments,  as  hire  in  ad- 
vance for  the  said  machinery,  and 
when  the  whole  sum  was  paid  and 
$1  additional,  the  machinery  became 
the  buyer's,  it  was  held  a  condi- 
tional sale.  "It  lacked  the  essential 
feature  of  a  bailment,  viz.,  a  stipula- 
tion for  a  return  of  the  property  at 
the  end  of  the  term.    *    *    *    it  is  of 


891  COVEXAXTS    AXD    COXDITIOXS.  §    1 595 

ment  whereby  a  person  becomes  entitled  to  the  possession  of 
goods,  with  right  to  the  profits  by  retaihng  them,  and  is  to  pay  for 
them  in  instahnents  to  the  party  who  retained  the  title,  has  been 
held  a  conditional  sale.^"  There  is  some  conllict  among  the  deci- 
sions as  to  what  constitutes  a  conditional  sale,  and  this  is  par- 
ticularly true  where  property,  such  as  a  piano,  sewing-machine, 
or  article  of  furniture,  is  delivered  under  a  contract  that  the 
party  receiving  it  shall  pay  fur  it  in  weekly  or  monthly  instal- 
ments or  the  like,  and  that  when  so  paid  for  it  shall  become  his 
property,  but  that  in  the  meantime,  the  title  shall  remain  in  the 
original  owner  until  all  the  purchase-money  is  paid.  It  is  some- 
times difficult  to  determine  whether  contracts  of  this  general 
nature  are  conditional  sales  or  contracts  of  lease  or  hiring:  but  the 
weight  of  authority  is  that  they  are  conditional  sales." 

§  1595.  Transfer  of  rights  under  conditional  sale. — The 
seller  in  a  conditional  sale  may  transfer  his  rights  to  a  third 
person."  It  is  held  that  the  rule  that  the  agreement  is  valid  as 
against  third  persons  as  well  as  between  the  parties,  relates,  in  the 
absence  of  a  statute  requiring  contracts  of  conditional  sale  of 
chattels  to  be  recorded,  to  parties  dealing  with  it  as  a  chattel 

the    essence    of    a    contract    of    bail-  317,  9  Atl.   894;   A.   D.    Puffer   Mfg. 

ment    that    the   article    bailed   be    re-  Co.  v.  Lucas,   112  N.  Car.  Zll ,   17  S. 

turned,   in    its   own   or   some   altered  E.  174.  19  L.  R.  A.  682 ;  Carpenter  v. 

form,  to  the  bailor,  so  that  he  may  Scott,  13  R.  I.  477;    Cowan  v.  Smcrer 

have  his  own  asrain."    Gross  v.  Jor-  Mfg.    Co.,   92    Tenn.    Zld,   21    S.    W. 

dan,  83  Maine  380,  22  Atl.  250:  Col-  663;    Collender    Co.    v.    Marshall,    57 

lins  V.  Houston,   138   Pa.   St.  481,  21  Vt.    232;  Quinn    v.    Parke,    5  Wash. 

Atl.    234;    Dearborn    v.    Ravsor,    132  276,    31    Pac.    866.     See    also,    Kelley 

Pa     St.   231,    20    Atl.   690;    Summer-  Springfield      Road      Roller      Co.      v. 

son  V.  Hicks,  134  Pa.  St.  566,  19  Ad.  Schlimme,   220    Pa.    St.   413,   69    Atl. 

808-  Stephens  v.  Gifford,  137  Pa.  St.  867,   123  Am.   St.  707.     But  compare 

219    20    Atl.    542.  21    Am.    St.    868;  Standard      Sewing      :Mach.      Co.      v. 

Stadtfeld    v.    Huntsman.    92    Pa.    St.  P>ame,  2   Penn.    (Del.)    430,  48   Atl. 

hi    Z7   \m.  Rep.  661,  2  Ky.  L.  103.  188;   Fleet  v.   Hertz,  201    111.   594.  66 

'=  Richardson    Glove    Co.    v.    Ober-  N.  E.  858.  94  Am.  St.  192 ;  Powell  v. 

felder,  58  Nebr.  822,  80  N.  W.  50.  Eckler,  96   Mich.   538.   56  X.   \\".   1 ; 

"Hine    v.    Roberts,    48    Conn.    267,  Lippincott  v.   Scott,   198  Pa.   St.  283, 

40   Am    Rep.    170;    Sanders   v.   Wil-  47  Atl.  1115,  ^2  Am.  St.  801;  Lehigh 

son,  8  Mackey  (19  D.  C.)   555;  Met-  Co.  v.  Field,  8  Watts  &  S.  (Pa.)  232; 

ropolitan     Trust     Co.     v.     Railroad  Ludden  &c.   Music   House  v.  Dusen- 

Equipment   Co.,    108   Fed.  913.   48  C.  berry.  27  S.  Car.  464.  4  S.  E.  60. 

C    A.    135;    Havs   v.   Jordan.  85   Ga.  "Norton   v.    Pilcer.   30   Nebr.   860. 

741,    11    S.    E.   ^li,  9  L.    R.    A.   2>7i\  47   N.   W.  471;    San    Antonio   Prew- 

IMurch  V.  Wright,  46  Til.  487.  95  Am.  ing  Co.  v.  Artie  Tee  Co..  81  Tex.  00. 

Dec.  455:  Lucas  v.  Campbell.  88  Til.  16  S.  W.  7^7:  TCimbnll  Co.  v.  Mellon. 

447-    Gorham   v.    Holden,    79    Maine  SO  Wis.  133.  48  X.  Vv'.  1100. 


§    1596  CONTRACTS.  892 

and  does  not  apply  to  third  persons  without  notice  of  the  condi- 
tion where  the  character  of  the  property  as  to  them  has  been 
changed  to  realty  by  being  affixed  to  the  soil."  If  notes  have 
been  taken  for  the  price,  the  seller,  upon  rescinding  the  sale, 
must  generally  return  them  to  the  buyer.^''  And  the  seller  is 
bound  to  account  for  the  notes  he  may  have  taken  so  as  to  save 
the  buyer  harmless  before  he  can  recover  the  goods  or  the  price 
for  which  he  sold  them.  If  he  has  negotiated  the  notes  his 
rights  are  transferred  to  the  holder.^^  Where  an  agent  of  a  com- 
pany dealing  in  pianos  sold  an  instrument  under  a  written  con- 
tract of  conditional  sale,  and  transferred  this  contract  to  the  com- 
pany, but  also  took  from  the  purchaser  negotiable  notes  which 
recited  that  they  were  secured  by  the  piano  for  the  price,  which 
he  transferred  to  a  bona  fide  purchaser  for  value,  it  was  held 
that  the  holder  of  the  notes  was  entitled  to  enforce  their  payment 
out  of  the  piano,  in  preference  to  the  piano  company,  the  assignee 
of  the  non-negotiable  contract/**  Where  a  note  was  taken  for  the 
price  of  the  goods,  and  the  buyer  and  seller  agreed  that  the  goods 
might  be  disposed  of  or  traded  for  others  which  should  stand  in 
their  place  as  security  for  payment,  this  transaction  was  held 
valid,  even  against  a  third  person,  who  in  good  faith  purchased 
from  the  buyer.^® 

§  1596.  Conditional  sales — Rights  of  the  parties  on  de- 
fault.— Upon  default  in  the  payment  of  any  of  the  instal- 
ments, the  seller  may  resume  possession. -°    And  it  is  not  neces- 

"  Washburn  v.  Inter-Mountain  Min.  held    that    the    seller    could    enforce 

Co.,  56  Ore.  578,   109  Pac.  382,  Ann.  payment    of    the    note    against    the 

Cas.   1912C.  356.  horse,   ahhough    the   buyer   had   sold 

"Benjamin    Sales,    §    730;    Sumner  him  to  an  innocent  purchaser.       See 

V.  Woods,  67  Ala.   139,  42  Am.  Rep.  also,  Dedman  v.  Earle,  52  Ark.    164, 

104.  12^  S.  W.  330. 

"Benjamin     Sales,     §    730;     Hein-        ^"Benjamin    Sales    (Bennett's    ed.), 

bockel    V.    Zugbaum,   5    IMont.    344,   5  §   425,   and   authorities   c'lted ;    Shire- 

Pac.   897,   51    Am.   Rep.   59;    Kimball  man  v.  Jackson,   14  Ind.  459;   Orner 

Co.  V.  Mellon,  80  Wis.  133,  48  N.  W.  v.  Sattley  Mfg.  Co.,  18  Ind.  App.  122, 

1100.  47  N.   E.  644;   Smith  v.   Barber.   153 

"Kimball   Co.    v.    Mellon,   80   Wis.  Ind.  322,  53  N.  E.  1014  (or  treat  the 

133.  48  N.  W.  1100.  sale  as  absolute  and  sue  for  the  pur- 

"  Perry  v.  Young,  105  N.  Car.  463,  chase-pnce)  ;  Proctor  v.  Tilton,  65 
11  S.  E.  511,  where  a  mule  was  sold,  N.  H.  3,  17  Atl.  638.  See  also.  Scy- 
the parties  agreeing  to  trade  it  for  mour  v.  Farquhar.  93  Ala.  292,  8  So. 
a  horse,  the  horse  to  take  the  place  466;  Nattin  v.  Riley.  54  .Ark.  30,  14 
of  the  mule  as  to  security.     It  was  S.  W.  1100;  Campbell  Printing  Press 


893 


COVENANTS    AND    CONDITIONS. 


§    1597 


sary  that  there  be  an  express  provision  authorizing  the  vendor 
to  retake  possession.  In  every  conditional  sale,  his  right  is  im- 
plied.-^ Accordingly,  when  the  seller  resumes  possession,  this 
operates  as  a  rescission  of  the  sale.""  But  the  seller  has  the  option 
either  to  retake  possession  or  to  bring  an  action  for  the  price. "^ 
And  when  the  seller  elects  to  sue,  the  buyer  cannot  offer  to  rescind 
and  tender  back  the  goods."'' 

§  1597.  Waiver  of  forfeiture  and  title. — A  forfeiture  for 
nonpayment  may  be  waived  by  the  seller.  If,  after  an  instalment 
has  become  due  and  remains  unpaid,  the  vendee  is  still  permitted 
to  retain  possession,  and  the  vendor  receives  part  payment,  this 
is  an  assent  to  delay,  and  a  waiver  of  any  forfeiture  and  a  recog- 
nition of  the  right  of  the  vendee  to  acquire  title  by  payment  of 
the  residue  of  the  price,  which  right  continues  until  a  request  for 
such  payment,  and  a  refusal  of  the  vendee."     But  a  waiver  of 


&  Mfg.  Co.  V.  Henkle,  8  Mackey 
(19  D.  C)  95;  Snook  v.  Raglan,  89 
Ga.  251,  15  S.  E.  364;  Wiggins  v. 
Snow,  89  ^lich.  476,  50  N.  W.  991; 
Tufts  V.  D'Arcambal,  85  Mich.  185, 
48  N.  W.  497,  12  L.  R.  A.  446,  24 
Am.  St.  79;  Richardson  Drug  Co.  v. 
Teasdall.  52  Nebr.  698,  72  N.  W. 
1028;  Webber  v.  Osgood,  68  N.  H. 
234,  38  Atl.  730. 

=^  Wiggins  V.  Snow,  89  Mich.  476, 
50  N.  W.  991;  Tufts  v.  D'Arcambal, 
85  Mich.  185,  48  N.  W.  497,  12  L.  R. 
A.  446,  24  Am.  St.  79;  Adams  v. 
Wood,  51  Mich.  411.  16  N.  W.  788; 
Edwards  v.  Symons,  65  Mich.  348, 
32  N.  W.  796;  Gormullv  &  Jeffery 
Mfg.  Co.  V.  Catharine,  25  Misc.  (N. 
Y.)  338,  55  N.  Y.  S.  475. 

"  Hine  v.  Roberts,  48  Conn.  267, 
40  Am.  Rep.  170;  Cade  v.  Jenkins,  88 
Ga.  791.  15  S.  E.  292;  Snook  v.  Rag- 
lan, 89  Ga.  251,  15  S.  E.  364:  Blanch- 
ard  V.  Cooke,  147  Mass.  215,  17  N. 
E.  313;  Weil  v.  State,  46  Ohio  St. 
450,  21  N.  E.  643;  Hineman  v. 
Matthews.  138  Pa.  St.  204,  20  Atl. 
843,  10  L.  R.  A.  233;  Summerson 
V.  Hicks,  134  Pa.  St.  566,  19  Atl 
808;  Wvckoff  v.  Summerson  (Pa.), 
19  Atl.  809. 

**Appleton  V.  Norwalk  Library 
Corp.,  53  Conn.  4,  22  Atl.  681 :  Cade 
V.  Jenkins,  88  Ga.  791,  15  S.  E.  292; 


Turk  V.  Carnahan,  25  Ind.  App.  125, 
57  N.  E.  729,  81  Am.  St.  85;  Smith 
V.  Aldrich,  180  Mass.  367,  62  N.  E. 
381;  Dederick  v.  Wolfe,  68  Miss. 
500,  9  So.  350,  24  Am.  St.  283 ;  Mun- 
roe  V.  Williams,  Zl  S.  Car.  81 ;  Ben- 
singer  Self-.A.dding  Cash  Register  Co. 
V.  Cain  (Te.x.  App.),  18  S.  W._  136; 
Wing  V.  Thompson,  78  Wis.  256,  47 
N.  W^  606. 

-*Appleton  V.  Norwalk  Library 
Corp.,  53  Conn.  4,  22  Atl.  681 ;  Ben- 
singer  Self-Adding  Cash  Register 
Co.  V.  Cain  (Tex.  App.),  18  S.  W. 
136. 

=  0'Rourke  v.  Hadcock,  114  X.  Y. 
541,  22  N.  E.  ZZ;  Hutchings  v.  Mun- 
ger,  41  N.  Y.  155;  Lupin  v.  Marie.  6 
Wend.  (N.  Y.)  11,  21  Am.  Dec.  256; 
Smith  V.  Lvnes,  5  X.  Y.  41  :  Lawrence 
V.  Dale,  3  John.  Ch.  (X.  Y.)  23,  affd. 
17  Johns.  (X.  Y.)  437.  See  also.  Hill 
V.  Townsend,  69  Ala.  286;  Kentucky 
Chair  Co.  v.  Commonwealth,  105  Kv. 
455,  20  Ky.  L.  1279,  49  S.  W.  197; 
Fairbank  v.  Phelps,_22  Pick.  (Mass.) 
535 ;  Deyoe  v.  Jamison,  Z2)  Mich.  94. 
"The  vendor  may  waive  his  right  to 
a  forfeiture  for  prior  neglect  to  pay, 
by  seeking  afterward  to  collect  the 
balance  due,"  head  note.  Johnston 
V.  Whittemore,  27  Mich.  463 :  Giddey 
V.  Altman.  27  Mich.  206:  Preston  v. 
Whitney,  23  Mich.  260.    But  compare. 


§    1598  CONTRACTS.  894 

one  or  more  forfeitures  is  not  a  circumstance  tending  to  show  a 
waiver  of  subsequent  independent  defaults,  and  is  not  relevant 
evidence  therefor.-'^  The  taking  of  negotiable  notes  in  conditional 
payment  of  the  price  is  no  waiver  of  his  title  by  the  seller."^ 
Where  property  was  conditionally  sold  and  mortgaged  by  the 
buyer,  it  was  held  that  there  was  no  waiver  of  title  by  the  seller, 
although  he  advised  the  mortgagees  to  take  the  mortgage,  stating 
at  the  time  that  he  had  a  claim  thereon  which  he  would  not 
waive."^  To  constitute  a  waiver  of  title,  there  must  generally  be 
not  only  an  act  of  delivery,  but  an  intent  not  to  insist  on  immedi- 
ate payment  as  a  condition  of  title  passing.  Thus,  where  the 
seller  loaded  wheat  on  cars  designated  by  the  buyer  and  noted  in 
the  bill  that  it  was  to  be  put  "free  on  board,"  this  did  not  estop 
the  seller  from  reclaiming  the  property  from  a  bona  fide  pur- 
chaser from  the  buyer,  although  he  relied  on  the  recital  "free  on 
board"  in  the  bill.^' 

§  1598.    Risk  of  loss — Destruction  of  the  property. — The 

risk  of  loss,  according  to  the  weight  of  authority,  where  goods 
are  delivered  to  the  buyer  and  title  is  retained  by  the  seller  as 
security  for  unpaid  purchase-money,  is  the  buyer's.^"  Thus  where 

Hegler  v.  Eddy,  53  Cal.  597;  Quinn  pare,  Blackett  v.  Royal  Exch.  Co.,  2 

V.    Parke   &   Lacy   Machinery   Co.,   5  Cromp.  &  J.  244;    Brown  v.   Foster, 

Wash.  276,  31  Pac.  866.  113    Mass.    136,    18    Am.    Rep.    463; 

='Hill  V.  Townsend,  69  Ala.  286.  Dickinson  v.  Gay,  7  Allen  (Mass.)  29, 

"Benjamin  Sales,    §  730.     But  see,  83  Am.  Dec.  656;  Dodd  v.  Farlow,  11 

Vaughn    v.    McFaddyen,    110    Mich.  Allen  (Mass.)  426,  87  Am.  Dec.  726; 

234,  68  N.  W.  135.  Osborne    v.    Nelson    Lumber    Co.,    33 

=^Ames  Iron  Works  v.  Richardson,  Minn.   285,  22   N.  W.  540;    Paine   v. 

55  Ark.  642,  18  S.  W-  381.     See  also.  Smith,  33  Minn.  495,  24  N.  W.  305; 

Hervey  v.  Dimond,  67  N.  H.  342,  39  Thompson  v.  Ashton,  14  Johns.    (N. 

Atl.  331,  68  Am.  St.  673.  Y.)  316;  Frith  v.  Barker.  2  Johns.  (N. 

"» Globe  Milling  Co.  v.  Minneapolis  Y.)  327;  Barnard  v.  Kellogg,  10  Wall 

Elevator    Co.,    44   Minn.    153,   46   N.  (U.  S.)  383,  19  L.  ed.  987. 

W.  306;  Wolf  V.  DiLarenzo,  22  Misc.  '"Phillips  v.  Hollenberg  Music  Co., 

(N.  Y.)  323,  49  N.  Y.  S.  191.     Com-  82  Ark.  9,  99  S.  W.   1105;  Roach  v. 

pare   Pond   Mach.   Tool   Co.   v.  Rob-  Whitfield,    94    Ark.    448,    127    S.    W. 

inson,   38   Minn.   272,    37   N.   W.  99.  722,    140    Am.    St.    131;    Collcrd    v. 

The  first  case  cited  is  interesting  as  Tully,  78  N.  J.  Eq.  557.  80  Atl.  491, 

an  attempt  was  made  to  convert  by  Ann.    Cas.    1912C.    78;    Marion    Mfg. 

a    local    custom    a    conditional    sale  Co.  v.   Buchanan,    118  Tenn.   238,   99 

into  an  absolute  one.     "But  a  local  S.  W.  984,  8  L.  R.  A.   (N.   S.)   590, 

usage  cannot  be  proved  to  contradict  12   Am.   &   Eng.   Ann.    Cas.   707 ;   La 

a  contract.  *  *  *  If,  by  the  contract  Vallev    v.    Ravenna,    78   Vt.    152,    62 

for  the  sale  of  this  wheat,  it  was  for  Atl.  47,  2  L.   R.  A.    (N.   S.)   97.   112 

cash    on    delivery,    the    usage    could  Am.  St.  898;  Osborn  v.  South  Shore 

not  make  it  a  sale  on  credit."    Com-  Lumber  Co.,  91  Wis.  526,  65  N.  W. 


895 


COVENANTS    AND    CONDITIONS. 


1599 


there  is  a  conditional  sale,  it  is  generally  held  that  the  accidental 
destruction  of  the  property  by  fire  or  otherwise  does  not  relieve 
the  buyer  of  the  necessity  to  pay  the  purchase-price.'"  But  the 
parties  may  by  express  agreement  determine  upon  whom  the  loss 
shall  fall  in  case  of  destruction.^" 

§  1599.  Recording. — Statutes  making  it  necessary  to  re- 
cord conditional  sales,  in  the  absence  of  express  words  to  the  con- 
trary, are  construed  for  the  benefit  of  bona  fide  purchasers  and 
mortgagees,  and  a  failure  to  record  does  not  invalidate  the  sale 
between  the  parties  or  affect  in  any  manner  the  seller's  remedies 
against  the  buyer.^^  Where  the  statute  declared  a  conditional  sale 
invalid  for  want  of  registration  as  against  "subsequent  purchasers 
and  mortgagees,"  it  was  held  that  it  did  nut  apply  in  case  of  a 
pledge,  and  that  the  seller  under  an  unrecorded  conditional  sale 
might  regain  possession  from  the  buyer's  pledgee.^*     And  stat- 


184.  But  see.  Bishop  v.  Minder- 
hout,  128  Ala.  162,  29  So.  11,  52 
L  R.  A.  395.  86  Am.  St.  134;  Glisson 
V.  Heggie,  105  Ga.  30,  31  S.  E.  118. 

"' Roach  V.  Whitfield,  94  Ark.  448, 
127  S.  \V.  722.  140  Am.  St.  131; 
Burnley  v.  Tufts.  66  IMass.  48,  5  So. 
627,  14  Am.  St.  540;  Gould  v.  Murch, 
70  Maine  288,  35  Am.  Rep.  325; 
Thompson  v-  Gould,  20  Pick.  (Mass.) 
134;  Tufts  V.  Wvnne,  45  Mo.  App. 
42;  Tufts  V.  Griff'en,  107  N.  Car.  47, 
12  S.  E.  68,  10  L.  R.  A.  526,  22  Am. 
St.  863;  riarlev  v.  Stanley,  25  Okla. 
89,  105  Pac.  188,  138  Am.  St.  900, 
and  note  citing  many  other  cases- 
Compare  Vincent  v.  Cornell,  13  Pick. 
(Mass.)  294,  23  Am.  Dec.  683;  Xew- 
hall  V.  Kingsburj',  131  Mass.  445; 
Swallow  V.  Emerv,  111  Mass-  355; 
Snvder  v.  Murdock,  51  Mo.  .175; 
Walker  v.  Owen.  79  Mo.  563.  Con- 
tra, Randle  v.  Stone.  11  Ga.  501,  and 
cases  cited  at  end  of  preceding  note- 

"Bishop  V.  Mindcrhout,  128  Ala. 
162,  29  So.  11,  52  L.  R.  A.  305.  86 
Am.  St.  134;  Gould  v-  Murch,  70 
Maine  288.  35  Am.  Rep.  325 :  Thomp- 
son V.  Gould.  20  Pick.  (Mass.)  134; 
Burnlev  v.  Tufts.  66  Miss-  48.  5  So. 
627,  14  Am.  St.  540;  Tufts  v.  Wynne. 
45  Mo.  App.  42  (See  the  ingenious 
argument  of  defendant's  counsel  in 
this  case,  trying  to  place  the  loss  up- 
on the  party  who  had  title   at  the 


time)  ;  Tufts  v.  Grifiin,  107  X.  Car. 
47,  12  S.  E.  68,  10  L.  R.  A.  526,  22 
Am.  St.  863;  Wadleigh  v.  Bucking- 
ham, 80  Wis.  230,  49  N.  W.  745. 

=Mn  re  Wilcox  Co..  70  Conn.  220. 
39  Atl.  163;  Hudnall  v-  Paine,  39 
Fla.  67,  21  So.  791 ;  Mann  v.  Thomp- 
son, 86  Ga.  347;  Morton  v.  Prick  Co., 
87  Ga.  230,  13  S.  E.  463 ;  Harp  v.  Pat- 
apsco  Guano  Co.,  99  Ga.  752,  21  S. 
E.  181;  Welch  v.  National  Cash 
Register  Co..  103  Kv.  30,  19  Kv.  L. 
1664,  44  S.  W.  124 ;  Campbell  v.  Ath- 
erton,  92  Maine  66.  42  Atl.  232 ;  Hop- 
kins V.  Maxwell,  91  Maine  247,  39 
Atl.  573;  Mansur-Tebbetts  Imp.  Co- 
V.  Price,  81  Mo.  App.  243;  LoctHer  v. 
Damoree,  75  Mo.  App.  207;  D.  M. 
Osborne  v.  Piano  Mfg.  Co.,  51  Xebr. 
502.  70  X.  W.  1124;  Norton  v.  Pilger. 
30  Nebr.  860,  47  X.  W.  471;  Korn- 
egav  V.  Kornegav.  109  N.  Car.  188, 
13  S.  E.  770;  Hi'neman  v.  Matthews 
138  Pa.  St.  204.  20  Atl.  843,  10  L. 
R.  A.  233 ;  San  Antonio  Brewing 
Assn.  V.  Arctic  Ice  Mfg.  Co.,  81  Tex. 
99,  16  S.  W.  797 ;  Mershon  v.  Moores, 
76  Wis.  502.  45  N.  W.  95 ;  \\^ing  v. 
Thompson,  78  Wis.  256,  47  N.  W. 
606;  Kimball  Qo.  v.  Mellon.  80  Wis. 
133,  48  N.  W.  1100. 

"  Canton  Surgical  &  Dental  Co.  v. 
Webb,  42  N.  Y.  St.  187,  16  N.  Y.  S. 
932. 


§     l600  CONTRACTS.  896 

utes  requiring  chattel  mortgages  to  be  recorded  are  generally 
held  not  to  apply  to  conditional  sales. ^^  It  has  been  held, 
however,  that  a  statute  making  an  unrecorded  conditional 
sale  void  as  against  bona  fide  purchasers  and  creditors  applies 
to  creditors  before  the  sale  as  well  as  after,  and  a  creditor 
of  the  buyer  may  levy  on  the  chattel  although  his  debt  was 
contracted  before  the  sale.^°  And  it  has  been  held  that  the 
goods  are  liable  to  a  creditor's  claim,  although  he  knew  and 
had  actual  knowledge  that  the  sale  was  a  conditional  one."  But 
it  is  generally  held  that  actual  notice  is  equivalent  to  registration.^^ 
Where  the  statute  directs  that  the  contract  of  sale  shall  be  "sub- 
scribed by  the  parties,"  it  has  been  held  not  complied  with  when 
only  one  party — the  buyer — signs.^**  But  when  the  seller  brings 
suit  to  foreclose  his  lien  on  the  chattels,  this  is  notice  sufficient, 
and  a  failure  to  comply  with  the  registr}^  laws  cannot  thereafter 
be  taken  advantage  of  by  purchasers  or  creditors  of  the  buyer.*" 
Statutes  regulating  conditional  sales,  their  registry  and  the 
amount  of  money  to  be  refunded  by  seller  upon  retaking  goods, 
are  to  be  construed  as  applying  to  sales  made  after  their  passage. 
They  usually  are  not  retroactive." 

§  1600.  Miscellaneous  matters  concerning  conditional 
sales. — There  are,  in  some  states,  penal  statutes  punishing 
the  buyer  who  sells  goods  without  the  seller's  consent.  Where 
they  exist,  it  is  not  incumbent  upon  the  seller  to  keep  watch 

'=  Maxwell  v.  Tufts,  8  N.  Mex.  396,  463 ;    Batchelder    v.    Sanborn,   66    N. 

45  Pac.  979,  33  L.  R.  A.  854 ;  Grant  v.  H.  192,  22  Atl.  535. 

Skinner,  21  Barb.  (N.  Y.)  581;  Lima  ''See  last  two  cases   cited   in   pre- 

I^Iach.    Works   v.    Parsons,    10    Utah  ceding  note;   also  Larned   First   Nat. 

105    Z7   Pac.  244;   McComb  v.   Don-  Bank    v.    Tufts,    53    Kans.    710.    2,7 

aid's  Admr.,  82  Va.  903,  5  S.  E.  558 ;  Fac.  127 ;  Dyer  v.  Thorstad,  35  Minn. 

Kimball  Co.  v.  Mellon,  80  Wis.   133,  534,  29  N.  W.  345 ;  McPhail  v.  Gerry, 

48   N.   W.    1100.     But   see.   Bond   v.  55  Vt.   174- 

Brewer,  96   Ga    443,  23    S.    E.   421;  ^Kimball   Co.   v.   Mellon,   80   Wis. 

Daniels    v-    Thompson,    48    111.    App.  133,  48  N.  W.   1100;   Sheldon  Co.  v- 

393;  Gilbert  v.  Gere,  67  111.  App.  590;  Mayers,  81  Wis.  627,  51  N.  W.  1082. 

Heryford  v.  Davis,  102  U.  S.  235,  26  ""  San     Antonio     Brewing     Co.     v. 

L.  ed.  160,  2  Ky.  L.  95.  Arctic  Ice  Co.,  81  Tex.  99,  16  S.  W. 

^Collins  V  Wilhoit,  108  Mo.  451,  18  797. 

S.     W.     839,     overruling    Coover    v.  *"  Harrell    v.    Godwm,    102   N.    Car. 

Johnson,  86  Mo.  533.  330,  8  S.  E.  925.     See  also,  Bowen  v. 

"  Elliott  V.  Emerson  Piano  Co.,  80  Frick,  75  Ga.  786 ;  Moseley  v.   Shat- 

111.  App.  51;   Colhns  v.  Wilhoit,   108  tuck,    43    Iowa   540;    Standard    Imp. 

Mo.  451,  18  S.  W.  839.    Contra,  Mor-  Co.   v.    Parlin    &   Orendorff    Co.,    51 

ton    V.    Frick,    87  Ga.    230,  13  S.  E.  Kans.   544,   2,2,   Pac.  360;   Case  Mfg. 


897  COVENANTS    AND    CONDITIONS.  §    160I 

over  the  buyer  and  see  that  he  does  not  sell.  Even  the  failure  to 
comply  with  the  registry  laws  does  not  serve  as  an  excuse  to  vio- 
late the  penal  statute."  And  the  fact  that  the  buyer  is  actuated 
by  good  faith  and  ignorant  of  the  law  is  no  defense."  If  the 
buyer  wants  to  prevent  a  forfeiture  on  the  ground  that  he  ten- 
dered the  price,  it  has  been  held  that  he  must  keep  his  tender  good 
and  be  ready  to  pay  all  the  time.'*  Where  a  manufacturer  and 
wholesale  vendor  of  articles  or  personal  property  sells  upon  credit, 
and  delivers  a  lot  of  such  articles  to  a  retail  dealer  therein,  for  the 
apparent  or  implied  purpose  of  resale  by  such  vendee,  it  has  been 
held  that  the  doctrine  of  conditional  sales  does  not  apply  or 
govern  the  sale,  as  between  the  original  seller  and  the  purchaser 
thereof  from  the  original  buyer,  because  the  purposes  for  which 
the  possession  of  the  property  is  delivered  to  the  buyer  are  in- 
consistent with  the  continued  ownership  by  the  seller,  and  for  this 
reason  the  condition  upon  w^hich  the  sale  and  delivery-  are  made 
must  be  deemed  fraudulent  and  void  as  against  purchasers  from 
the  original  vendee.*^  But  it  is  competent  for  the  parties  as  be- 
tween themselves  to  make  a  conditional  sale  of  goods  to  be  re- 
tailed. And  a  contract  by  which  a  brewing  company  agrees  to 
ship  to  a  firm  all  beer  ordered  by  them  at  an  agreed  price  per 
barrel,  the  title  to  remain  in  the  company  until  the  beer  is  sold, 
has  been  held  valid  as  to  creditors  of  the  firm.*® 

§  1601.    Architect's  or  engineer's  certificate  of  approval. — 

The  subject  of  conditions  or  provisions  concerning  the  approval 

Co.   V.   Garven,  45    Ohio   St.   289,    13  jamin   Sales,   §   319;    Leigh   Bros.    v. 

N.^E.  493.  Mobile  &  O.  R.  Co..  58  Ala.  165.  Con- 

■**  Chambers  v.  State,  85  Ga.  220,  tra,  Lewis  v.  McCabe.  49  Conn.  141, 
11  S.  E.  653;  Weil  v.  State,  46  Ohio  44  Am.  Rep.  217;  Rogers  v.  White- 
st- 450,  21  X.  E.  643.  house.    71    Maine    222;    Burbank,    v. 

"Chambers    v.    State,    85    Ga.    220,  Crooker.  7  Gray  (Mass.)   158.  66  Am. 

11  S.  E.  653.  Dec.     470;     Sargent     v.     ]\letcalf.     5 

"Summcrson  v.  Hicks,  134  Pa.  St.  Grav  (Mass.)  306,  66  Am.  Dec.  368; 

566,  19  .'\tl.  808.  .\rmington   v-   Houston,   38   Vt.   448, 

•"Winchester  &c.  Co.  v.  Carman.  109  91  Am.  Dec.  366. 

Ind.  31,  9  X.  E.  707,  58  Am.  Rep.  382;  "Thompson    v.     Massey,    16    Mo. 

Ludden  v.  Hazen,  31  Barb.   (X.  Y.)  App.  197.     See  also,  Dewes  Brewery 

650;    Griswold    v.    Sheldon.    4  X.  Y.  Co.  v.   Merritt,  82   Mich.   198.   46   X. 

581,  1  Code  R.  (X.  S.)  261;  Fitzger-  W.   379,  9  L.   R.   A.  270.    Compare, 

aid  V.   Fuller.   19  Hun    (X.   Y.^    180;  Rawson    Mfg.    Co.    v.    Richards.    69 

Bowcn  V.  Lansing  Wagon  Works.  91  Wis.  643,  35  X.  W.  40.    See  the  fol- 

Tex.  385,  43  S.  W.  872.  See  also,  Ben-,  lowing  articles  on  conditional  sales : 

57 — CoxTR.vcTS,  Vol.  2 


§  i6oi 


CONTRACTS. 


898 


of  architects  and  the  like  will  be  treated  in  another  part  of  this 
work.  But  a  few  words  upon  the  general  subject  may  not  be  out 
of  place  here."*^  An  architect's  or  engineer's  certificate  of  ap- 
proval is  often  made  a  condition  precedent  to  the  payment  of 
work  done.  And  when  this  is  so,  the  procurement  of  the  cer- 
tificate required  by  the  contract  is  ordinarily  necessary  to  sustain 
an  action  for  compensation.*^  But  if  the  architect  arbitrarily  and 
unreasonably  refuses  to  give  to  the  contractor  his  certificate,  as 
required,  then  the  owner  cannot  justify  a  refusal  to  pay  for  lack 
of  a  certificate.'*^  Nor  is  the  decision  of  an  architect,  engineer, 
or  similar  umpire  final  and  conclusive  where  he  is  guilty  of  fraud 


10  L.  R.  A.  314,  620;  12  L.  R.  A.  446, 
700;  "Conditional  Sales,"  by  Judge 
A.  H.  Henn  in  24  Am.  L.  Rev.  64. 

*'  See  post,  ch.  41 ;  and  vol.  iv,  Tit. 
Building  Contracts. 

^^Tallv  V.  Parsons,  131  Cal.  516,  63 
Pac.  833 ;  Bush  v.  Jones,  144  Fed-  942, 
75  C.  C.  A.  582,  6  L.  R.  A.  (N.  S.) 
744  and  note;  International  Cement 
Co.  V.  Beifeld,  173  111.  179,  50  X.  E. 
716,  67  111.  App.  110;  Vincent  v. 
Stiles,  77  111.  App.  200;  McCone  v. 
Williams,  37  111.  App.  591 ;  Barney  v. 
Giles,  120  111.  154,  11  N.  E.  206;  Ohio 
&c.  R.  Co.  v.  Crumbo,  4  Ind.  App. 
456,  30  N.  E.  434 ;  Roy  v.  Boteler,  40 
Mo.  App.  213;  Neenan  v.  Donoghue, 
50  Mo.  493;  Yeats  v.  Ballentine,  56 
Mo.  530;  Dinsmore  v.  Livingston,  60 
]Mo.  241 ;  Wortman  v.  Montana  Cent. 
R.  Co.,  22  Mont.  266,  56  Pac.  316; 
O'Brien  v.  New  York.  65  Hun  (N. 
Y.)  112,  19  N.  Y.  S.  793,  47  N. 
Y.  St.  258;  Crouch  v.  Gutman,  45 
N.  Y.  St.  470;  Schultze  v.  Good- 
stein,  82  App.  Div.  (N.  Y.)  316,  81 
N.  Y.  S.  946 ;  Vanderhoff  v.  Shell,  42 
Ore.  578,  72  Pac.  126;  Barlow  v. 
United  States,  35  Ct.  CI.  (U-  S.)  514, 
affd.  184  U.  S.  123,  46  L.  ed.  463.  22 
Sup.  Ct.  468,  37  Ct.  CI.  (U.  S.)  547; 
Long  V.  Pierce  Countv,  22  Wash.  St. 
330,  61  Pac.  142:  McAlpine  v.  Trus- 
tees. 101  Wis.  468,  78  N.  W.  173. 

*' Davis  V.  Badders,  95  Ala.  348,  10 
So.  422;  Bush  v.  Jones,  144  Fed.  942, 
75  C.  C.  A.  582,  6  L.  R.  A.  (N.  S.) 
774  and  note;  North  American  R. 
Const.  Co.  V.  R.  E.  McMath  Survev- 
in?  Co..  116  Fed.  169.  54  C.  C.  A.  27; 
Elizabeth  v.  Fitzgerald,  114  Fed.  547, 
52  C.  C.  A.  321 ;  Crane  Elevator  Co. 


V.  Clark.  80  Fed.  705,  26  C.  C.  A.  100 ; 
^lichaehs  v.  Wolf,  136  111.  68.  26  N. 
E.  384;  Braun  v.  Winans,  37  111.  App. 
248;  McCone  v.  Williams,  37  111.  App. 
591 ;  Keating  v.  Neelson,  33  111.  App. 
357;  Fitts  v.  Reinhart,  102  Iowa  311, 
71  N.  W.  227;  Gillis  v.  Cobe,  177 
Mass.  584,  59  N.  E.  455 ;  Anderson  v. 
Imhoff,  34  Nebr.  335.  51  N.  W.  854; 
Thomas  v.  Stewart,  132  N.  Y.  580,  30 
N.  E.  577;  Flaherty  v.  Miner,  123  N. 
Y.  382,  25  N.  E.  418;  Smith  v-  Alker, 
102  N.  Y.  87,  5  N.  E.  791 ;  Nolan  v. 
Whitney,  88  N.  Y.  648;  Bowery  Nat. 
Bank  v.  New  York,  63  N.  Y.  336; 
Thomas  v.  Fleury,  26  N.  Y.  26 ;  Smith 
V.  Wetmore,  24  Misc.  (N.  Y.)  225, 
52  N.  Y.  S.  513,  affd.  41  App.  Div. 
(N.  Y.)  290,  58  N.  Y.  S.  402,  167  N. 
Y.  234,  60  N.  E.  419;  Collins  v. 
United  States,  34  Ct.  CI.  (U.  S.)  294. 
The  judgment  of  the  architect  or  en- 
gineer is  not  conclusive.  Whether  he 
was  justified  in  refusing  a  certificate 
is  for  the  jury.  Connecticut  Valley 
Granite  &  Mining  Co.  v.  New  York 
&  Brooklvn  Bridge,  32  App.  Div.  (N. 
Y.)  83,  52  N.  Y.  S.  667;  Flaherty  v. 
^liner,  123  N.  Y.  382,  25  N._  E.  418 
(where  the  jury  was  permitted  to 
say  as  a  question  of  fact  whether  the 
refusal  to  give  the  certificate  was  jus- 
tified) :  Perrv  v.  Levenson.  82  App. 
Div.  (N.  Y.)  94.  81  N.  Y.  S.  586, 
affd.  178  N.  Y.  559,  70  N.  E.  1104; 
Pittsburgh  Terra-Cotta  Lumber  Co. 
V.  Sharp,  190  Pa.  St.  256.  42  Atl.  685 ; 
Long  V.  Pierce  Countv,  22  Wash.  330, 
61  Pac.  142;  Childress  v.  Smith.  90 
Tex.  610,  38  S.  W.  518.  40  S.  W.  389; 
Linch  V.  Paris  Lumber  Co..  80  Texas 
23,    14   S.    W.   701,    15    S.    W.    208; 


899 


COVEXAXTS    AXD    COXDITIOXS. 


§    1602 


or  mistake  so  great  as  to  show  bad  faith  on  his  part/"  And  the 
owner  may  waive  the  architect's  certificate  or  his  failure  to  pass 
upon  a  certain  matter/^ 

§  1602.  Architect's  certificate — Illustrations. — As  a  gen- 
eral rule,  where  the  owner  is  charged  with  the  duty  of  obtaining 
the  certificate  the  lack  of  the  certificate  is  no  defense.^'  Where  a 
board  of  public  improvements  was  charged  with  the  duty  of  in- 
specting the  work  and  certifying  it  in  a  street  paving  contract, 
a  certificate  of  approval  by  such  board  was  held  conclusive  on  the 
city.°^  And  it  is  the  general  rule  that  when  an  architect  is  made 
judge  between  the  parties,  by  the  contract,  his  decision  and  cer- 
tificate are  final  in  the  absence  of  fraud  or  gross  mistake.^*  But 
his  decision  is  not  an  arbitration,  and  the  certificate  is  not  an 


Brown  v.  Winchill,  3  Wash.  St.  524, 
28  Pac.  1037. 

■"•Spaulding  v.  Coeur  D'Alene  R. 
&c.  Co..  5  Idaho  528.  51  Pac.  408; 
Edwards  v.  Hartshorn,  11  Kans.  19. 
82  Pac.  520,  1  L.  R.  A.  (N.  S.)  1050 
and  note;  Anderson  v.  Imhoff,  34 
Nebr.  335,  51  X.  W.  854;  Gonder  v. 
Berlin  Branch  R.  Co.,  171  Pa-  St.  492, 
Zi  Atl.  61;  Tetz  v.  Butterfield,  54 
Wis.  242,  11  N.  W.  531,  41  Am.  Rep. 
29.  See  also,  St.  Louis  &  P.  R.  Co.  v. 
Kerr.  48  111.  App.  406,  affd.  153  111. 
182.  38  N.  E.  638 ;  Baltimore  &c.  R.  Co. 
V.  Scholer.  14  Ind.  App.  524,  43  N.  E. 
156.  56  Am.  St.  307;  llounroth  v. 
Peters,  50  111-  App.  366;  Moran  v. 
Schmitt.  109  Mich.  282,  67  N.  W. 
323. 

"  Hunn  V.  Pennsylvania  Inst,  for 
Blind,  221  Pa.  St.  403,  70  Atl.  812, 
18  L.  R.  A.  (N.  S.)  1248n. 

"McKone  v.  Williams,  Zl  111.  App. 
591. 

"  Fitzgerald  v.  Walker,  55  Ark.  148, 
17  S.  W.  702. 

"  Scanlan  v.  San  Francisco  &c. 
R.  Co.  (Cal.).  55  Pac.  694;  Crumlish 
V.  Wilminc:ton  &c.  R.  Co.,  5  Del.  Ch. 
270:  Brcvman  v-  Ann  Arbor  R.  Co., 
85  Fed.  579;  Sanders  v.  Hutchinson. 
26  111.  App.  633;  Davis  v.  Gibson,  70 
111.  App.  273;  Ewins  v.  Fiedler,  30  111. 
^pp.  202-  Covint^ton  v.  Limerick,  19 
Kv.  L.  330,  40  S.  W-  254;  Welch  v. 
Hubschmitt  Building  &  Woodworking 
Co.,    61    X.    J.    L.    57,    38    Atl.   824; 


Whitehead  v.  Brothers  Lodge,  23  Ky. 
L.  29,  62  S.  W.  873;  Kelly  v.  Pul)lic 
Schools  of  Muskegon.  110  Mich.  529, 
68  N.  W.  282;  Langdon  v.  Northfield, 
42  Minn.  464.  44  N.  W.  984 ;  St.  Paul 
&c.  R.  Co.  V.  Bradbury,  42  Minn. 
222,  44  X.  W.  1 ;  Williams  v.  Chicago, 
S.  F.  &  C.  R.  Co.,  153  Mo.  487.  54 
S.  W.689;  Welch  v.  HubschmiU  Bldg. 
Co.,  61  X.  J.  L.  57.  38  Atl.  824 :  Jones 
V.  New  York,  11  Misc.  (X.  Y.)  211, 
65  X.  Y.  S.  747.  affd.  60  App.  Div. 
(X.  Y.)  161.  70  X.  Y.  S.  46;  Weeks  v. 
Rector,  56  App.  Div.  (X.  Y.)  laS.  «? 
N.  Y.  S.  670;  Sewer  Comrs.  v.  Sulli- 
van, 162  X.  Y.  594.  57  X.  E.  1123, 
affg.  11  App.  Div.  (X.  Y.)  472,  42  X. 
Y.  S.  358;  Lawrence  v.  Xew  York. 
162  X.  Y.  617,  57  X.  E.  1115,  affd.  29 
App.  Div.  (N.  Y.)  298.  51  X.  Y.  S. 
416;  Sweet  v.  Morrison.  116  N.  Y. 
19,  22  X.  E.  276,  15  Am.  St.  376, 
affd.  24  N.  E.  1097;  Harlow  v.  Home- 
stead. 194  Pa.  St.  57.  45  Atl.  87;  Seim 
V.  Krause.  13  S.  Dak.  530.  ^l  N.  W. 
583;  Brin  v.  :McGreKor  (Tex.  Civ. 
App.).  45  S.  W.  923;  Kennedv  v. 
United  States,  24  Ct.  CI.  (U.  S.)  122; 
United  States  v.  Gleason,  175  U.  S. 
588.  44  L.  ed.  284.  20  Sup.  Ct.  228,  35 
Ct.  CI.  (U.  S.)  625;  Driscoll  v.  United 
States,  34  Ct.  CI.  (U.  S.)  508;  Alle- 
ghanv  Iron  Co.  v.  Teaford.  96  Va. 
372,  31  S.  E.  525;  Ashland  Lime,  Salt 
i1-  Cement  Co.  v.  Shores  105  Wis. 
122,  81  X.  W.  136. 


§     l602  CONTRACTS.  9OO 

award/^  and  the  certificate  is  not  always  conclusive  on  the 
owner  who  may  in  a  proper  case  dispute  its  correctness  as  to  the 
amount  due.^"^  So  it  has  been  held  that  the  owner  may  show 
negligent  performance  in  the  work  despite  the  certificate  to  the 
contrary."  In  the  absence  of  a  waiver,  the  certificate  must  be 
substantially  such  as  the  contract  calls  for.  Where  the  contract 
requires  the  certificate  to  show  that  the  job  has  been  completed 
to  the  satisfaction  of  the  architects,  a  certificate  stating  only  the 
balance  due  the  contractor  is  insufficient.^^  A  mere  payment  is 
not  necessarily  a  waiver.  Thus  where  payments  were  made  with- 
out requiring  the  certificate,  this  was  held  no  waiver  of  the  cer- 
tificate for  the  remaining  instalments.^®  But  where  a  contract 
for  excavation  provided  for  payment  to  be  made  as  the  work 
progressed,  on  the  production  of  the  proper  engineer's  certificates, 
and  about  three-fourths  of  the  amount  earned  was  paid  without 
insisting  on  the  engineer's  certificates,  and  refusal  of  the  balance 
was  not  based  on  the  nonproduction  of  the  certificates,  it  was 
held  that  the  requirement  of  such  certificates  was  waived.^" 
Where  the  contract  gives  the  owner  the  election  to  finish  the 
building  at  the  contractor's  expense  in  case  of  his  refusal  to  com- 
plete the  work,  if  the  owner  elects  to  complete  the  work,  the  con- 
tractor is  entitled  to  the  certificate  of  the  architect."     The  cer- 

'"Wadsworth  v.  Smith,  L.  R.  6  Q.  Newark,  19  N.  J.  Eq.  Z16;  Newman 

B.  Z12 :  Sharpe  v.  San  Paulo  R.  Co.,  v.  Fowler,  Zl  N.  J.  L.  89. 
L.  R.  8  Ch.  App.  597.    Under  a  build-        ''  Roy  v.  Boteler,  40  Mo.  App.  213. 

ing  contract  providing  that  final  pay-  See  also,  Michaelis  v.  Wolf,   136  111. 

ment  should  be  made  when  the  build-  68,  26  N.    E.  384.    But  the    form  of 

ing  was  "completed,  and  accepted  by  the   certificate    is    not    essential    (O'- 

the    architect,"    a    certificate    of    the  Brien  v.  New  York,  15  N.  Y.  S.  520, 

architect  of  his  approval  of  the  work  affd.  65  Hun   (N.  Y.)    112,  47  N.  Y. 

was  not  necessary  to  enable  the  con-  St.  258,  19  N.  Y.  S.  793)  and  a_  parol 

tractor  to  maintain   an  action   for  a  approval  will  satisfy  the  condition  of 

balance    due   him,   as    the    matter    of  a  certificate  unless  a  written  one   is 

approval    was   one    of    fact.     Devlan  expressly  stipulated   for.     Roberts  v. 

V.  Wells,  65  N.  J.  L.  213,  47  Atl.  467.  Watkins,  14  C.  B.  (N.  S.)  592;  Wil- 

To  the  same  effect,  Young  v.  Wells  kens  v.  Wilkerson  (Tex.),  41  S.  W. 

Glass  Co.,  187  111.  626,  58  N.  E.  605;  178. 

Spink  V.   Mueller,   11  Mo.   App.   85;        '"Ashley  v.  Henahan,  56  Ohio   St. 

Chandley  v.   Cambridge   Springs,  200  559,  47  N.   E.  573;   Brown  v.  \yme- 

Pa    St   230    49  Atl    772.  hill,  3  Wash.  St.  524,  28  Pac.  1037. 

=- Schuler' v.  Eckert,  90  Mich.   165,         ""  Boden    v.    Maher,    105    Wis.    539, 

51  N   W   198  81  N.  W.  661. 

"Wagner  v.  Cawker,  112  Wis.  532,        "Crouch  v.   Gutman,  45  N.   Y.   S. 

88  N.  W.  599.     See  also,  Davidson  v.  470. 
Provost,  35   111.   App.   126;   Bond  v. 


901  COVENANTS    AND    CONDITIONS,  §    l602 

tificates  must  be  for  each  payment,  if  the  contract  requires  it, 
aUhough  tlie  building  is  completed.  Thus  where  there  was  to  be 
payment  in  six  instalments,  the  last  two  to  be  made  after  the  com- 
pletion of  the  building,  obtaining  a  certificate  for  the  fifth  instal- 
ment does  not  do  away  with  the  necessity  of  obtaining  one  for 
the  sixth  instalment.""  But  where  a  certificate  is  necessary  to 
obtain  part  payment  as  the  work  progresses,  this  is  not  necessarily 
construed  to  mean  that  the  certificate  is  essential  to  obtain  final 
payment  upon  completion."^  In  a  well-considered  Massachusetts 
case,  however,  where  a  building  contract  provided  that  the  pay- 
ments should  be  made  on  the  architect's  certificate,  and  that  the 
second  payment  would  be  due  when  all  the  work  was  completed, 
and  the  final  payment  thirty  days  later,  with  the  further  stipula- 
tion that  no  certificate  given,  except  that  for  the  final  payment, 
should  be  conclusive  evidence  of  the  performance  of  the  con- 
tract, it  was  held  that  a  certificate  for  the  second  payment  did  not 
dispense  with  the  necessity  for  the  final  certificate,  and  that  one 
who  assumes  a  building  contract,  and  agrees  to  pay  all  sums  due 
or  to  become  due  from  the  owner  thereunder,  ''according  to  the 
tenor  thereof,"  is  entitled  to  the  benefit  of  a  provision  in  the  con- 
tract that  the  final  payment  would  not  be  due  till  thirty  days  after 
the  completion  of  the  work,  and  would  be  paid  only  on  the  cer- 
tificate of  the  architect,  although  the  work  was  completed  when 
the  contract  was  assumed,  and  the  agreement  to  assume  stated 
that  there  was  then  due  a  sum  of  money  from  the  owner  to  the 
contractor."* 

^'Michaclis  v.  Wolf,  136  III.  68,  26  merit,    shall    be    conclusive    evidence 

N.  E.  384.  of  the  performance  of   this  contract, 

"  Braun    v.    Winans.    ?i7    111.     App.  either  wholly  or  in  part,  against  any 

248;    Childress   v.    Smith    (Tex.   Civ.  claim  of  the  owner.'  *  *  *  The  owner 

App.),  2)7  S.  W.  1076,  rcvd.  90  Tex.  'herebv  contracts  to  pav  the  same  at 

610,  38  S.  W.  518,  40  S.  W.  389.  the   time,    in   the   manner   and   upon 

"  In  Beharrell  v.  Quimby,  162  Mass.  the  conditions  above  set  forth.'  Xo 
571,  39  N.  E.  407,  the  several  pay-  later  certificate  was  given  than  that 
ments  were  to  be  made  "provided,  for  the  second  payment.  The  plaintiff 
that  in  each  of  the  said  cases  the  therefore  was  not  entitled  to  re- 
architect  shall  certify  in  writing  that  cover,  against  Orcutt,  the  final  pay- 
all  the  work  upon  the  performance  ment,  unless  sufficient  reason  or  ex- 
of  which  the  payment  is  to  become  cuse  for  not  furn'shing  such  a  certif- 
due  has  been  done  to  his  satisfaction,  icate  was  shown.  What  would 
*  *  *  'No  certificate  given  or  pay-  amount  to  such  sufficient  reason  or 
ment  made  under  this  contract,  ex-  excuse  has  been  often  considered, 
cept  the  final  certificate  or  final  pay-  both  in  England  and  in  this  country, 


§    l603  CONTRACTS.  902 

§  1603.    Promise  conditional  upon  approval  of  promisor, — 

Contracts  are  often  made  to  pay  for  work  or  the  like  upon  con- 
dition of  the  work  heing  done  to  the  satisfaction  or  approval  of 
the  promisor.*^^  This  subject  is  also  treated  elsewhere,  but  it 
may  be  well  to  consider  it  somewhat  briefly  in  this  connection."® 
Where  one  contracts  to  work  for  a  year  provided  his  work  is  to 
the  satisfaction  of  the  employer,  it  has  been  held  that  he  may  be 
discharged  at  any  time  without  the  need  of  the  employer  assigning 
any  reason  therefor.®^  So,  it  has  often  been  held  that  a  contract  to 
employ  an  agent  for  a  year,  or  the  like,  if  he  "could  fill  the  place 
satisfactorily,"  may  be  terminated  by  the  employer  when  in  his 
judgment  the  agent  fails  to  meet  that  requirement.*'^  And  it  is 
well  settled  that  in  such  cases  where  the  object  of  the  contract 
is  to  gratify  taste,  serve  personal  convenience,  or  satisfy  individ- 
ual preference,  the  party  for  whom  the  work  is  done  may  properly 
determine  for  himself  whether  it  shall  be  accepted.  Thus  where  a 
tailor  agreed  to  make  a  satisfactory  suit  of  clothes  and  they  were 
rejected  as  not  satisfactory,  no  recovery  was  allowed.''^  It  has 
also  been  held  that  a  sculptor  who  agrees  to  make  a  bust  to  the 
satisfaction  of  a  buyer  cannot  recover,  even  where  its  rejection 

as    appears    by    the    authorities  cited  280,    and    for    further    instances    see 

for  the  plaintiff  and  for  the  defend-  the    following    cases:     McCarren    v. 

ant,   to  which   may  be  added  Clarke  McNulty,  7  Gray   (Mass.)    139;  Gray 

V.  Watson,  18  C.  B.  (N.  S.)  287;  Bat-  v.   Central  R.   Co.,    11   Hun    (N.   Y.) 

terbury  v.  Vyse,  2  Hurl.  &  C.  42 ;  No-  70  (the  case  of  a  steamboat)  ;  Moore 

Ian  V.  Whitney,  88  N.  Y.  648 ;  United  v.    Goodwin,   43    Hun    (N.    Y.)    534, 

States  V.   Robeson,  9  Pet.  U.  S.  319,  7  N.  Y.  St.  154;  Singerly  v.  Thayer, 

327    9  L.  ed.   142;  Hudson  v.  Build-  108   Pa.   St.   291,  2  Atl.  230,  56  Am. 

ing'  Contracts,  265,  297-301."  Rep.  207;  McClure  v.  Briggs,  58  Vt. 

'^^  Church  V.   Shanklin,  95   Cal.  626,  82,    2    Atl.    583,    56    Am.    Rep.    557 

30   Pac.   789;   Brown   v.    Foster,    113  (where  an  organ  was  allowed  to  be 

Mass.   136,  18  Am.  Rep.  463;  Gibson  rejected). 

V    Cranage,  39  Mich.  49,  33  Am.  Rep.  "'See  Brown  v.   Foster,   113   Mass. 

351;  Doll  V.  Noble,  116  N.  Y.  230,  22  136,    18    Am.    Rep.    463,    where    the 

N.  E.  406,  5  L.  R.  A.  554,  15  Am.  St.  court  said:    "U  the  plaintiff  saw  fit 

398;    Russell  v.   Allerton,    108   N.   Y.  to  do  work  upon  articles  for  the  de- 

288.    15    N.    E.    391 ;    Duplex    Safety  fendant  and  to  furnish  the  materials 

Boiler  Co.  v.  Garden,  101  N.  Y.  387,  therefor,    contracting    that    the    ar- 

4  N.  E.  749,  54  Am.  Rep.  709;  Hart-  tides,  when  manufactured,  should  be 

ford  Mfg.  Co.  V.  Brush,  43  Vt.  528;  satisfactory  to  the  defendant,  he  can 

Tickler  v.  Andrae  Mfg.  Co.,  95  Wis.  recover  only  upon  the  contract  as  it 

352,  70  N.  W.  292.  was   made;   and   even   if  the  articles 

*°  See  post,  ch.  41 ;  also  vol.  iv,  Tit.  furnished  by  him  were  such  that  the 

"Building  Contracts."  other  party  ought  to  have  been  sat- 

^  Spring  V.  Ansonia  Clock  Co.,  24  isfied,    it    was    yet    in    the    power    of 

Hun    (N.  Y.)    175.  the    other    party   to    reject   them   as 

"^  Tyler  v.  Ames,  6  Lans.   (N.  Y.)  unsatisfactory." 


903 


COVENANTS    AND    CONDITIONS. 


§    1604 


is  caused  by  unreasonable  dissatisfaction,  and  although  the  bust 
is  a  masterpiece.'^"  So,  a  painter  who  agrees  to  paint  a  pic- 
ture to  one's  satisfaction  has  no  cause  of  action  for  the  price 
unless  the  buyer  is  satisfied,  however  good  the  picture  is/^  And 
where  a  contract  to  furnish  "good  wheat  bread"  gave  the  buyer 
the  right  to  cancel  the  contract  if  he  did  not  consider  the  bread 
good  it  was  held  that  the  contract  might  be  canceled  no  matter 
whether  the  bread  furnished  was  of  the  quality  contracted  for 
or  not." 


§  1604.  Cases  holding  that  right  of  approval  must  be  exer- 
cised reasonably. — There  is  considerable  difference  of  opin- 
ion as  to  the  exact  rule  where  the  object  of  the  contract  is  not 
to  gratify  taste,  or  satisfy  individual  preference,  and  some  courts 
hold  that  a  recovery  cannot  be  defeated  by  arbitrarily  and  unrea- 
sonably declaring  that  the  w^ork  is  not  done  to  the  satisfaction 
of  the  promisor."  Thus,  where  the  contract  provided  that 
the  work  was  to  be  done  in  the  best  workmanlike  manner  to  the 
entire  satisfaction  of  the  owner,  it  was  held  that  the  mechanic 
could  recover,  although  the  owner  was  dissatisfied,  if  he  should 


"Zaleski  v.  Clark,  44  Conn.  218,  26 
Am.  Rep.  446. 

"Gibson  v.  Cranage,  39  Mich.  49, 
33  Am.  Rep.  351;  Hoffman  v.  Gal- 
laher,  6  Daly  (N.  Y.)  42;  Walker  v. 
Edward  Thompson  Co.,  37  App.  Div. 
(N.  Y.)  536.  56  N.  Y.  S.  326;  Barrv 
V.  Rainey,  27  Misc.  (N.  Y.)  772,  57 
N.  Y.  S.  766;  Pennington  v.  How- 
land,  21  R.  I.  65,  41  Atl.  891.  79  Am. 
St.  774.  This  rule  applies  to  a 
teacher's  contract  that  his  instruction 
shall  be  satisfactory  in  everv  respect. 
Dermodv  v.  Flesher,  22  Misc.  (N. 
Y.)  348,'  49  N.  Y.  S.  150. 

'"Tavlor  v.  Trustees  of  Poor,  1 
Pennew.  (Del.)  555,  43  Atl.  613. 

^  See  Electric  Lighting  Co.  v.  El- 
der, 115  Ala.  138.  21  So.  983;  Silsby 
Mfg.  Co.  V.  Chico,  24  Fed.  893; 
Keeler  v.  Cliflford.  62  111.  App.  64, 
afifd.  165  111.  544,  46  N.  E.  248 ;  Wood 
&c.  Mach.  Co.  V.  Smith.  SO  Mich. 
565,  IS  N.  W.  906,  45  Am.  Rep.  57; 
Sax  V.  Detroit,  G.  H.  &  M.  R.  Co., 
125  Mich.  252,  84  N.  W.  314,  84  Am. 


St.  572;  Doll  V.  Noble,  116  X.  Y. 
230,  22  N.  E.  406,  5  L.  R.  A.  554,  15 
Am.  St.  398;  Russell  v.  Allerton,  108 
N.  Y.  288,  15  N.  E.  391;  Duplex 
Safety  Boiler  Co.  v.  Garden,  101  N. 
Y.  387,  4  X.  E.  749,  54  Am.  Rep.  709; 
Hummel  v.  Stern,  164  N.  Y.  603, 
58  X.  E  1088,  aflFg.  21  App.  Div.  (N. 
Y.)  544,  48  N.  Y.  S.  528;  Varian  v. 
Johnston,  108  N.  Y.  645,  15  X.  E. 
413;  Smith  v.  Brady.  17  N.  Y.  173, 
72  Am.  Dec.  442;  Johnson  v.  De- 
Peyster.  50  N.  Y.  666 ;  Phillip  v.  Gal- 
lant, 62  X.  Y.  256;  Woodward  v. 
Fuller,  80  N.  Y.  312;  Xolan  v.  Whit- 
ney, 88  N.  Y.  648 ;  Bowery  Xat.  Bank 
V.  "Xew  York.  63  N.   Y.  336;   Smith 

V  Alker.  33  Hun  (X.  Y.)  665,  afTd. 
102  X.  Y  87.  5  X.  E.  791 ;  Thomas  v. 
Gage,  156  N.  Y.  612,  51  X.  E.  307; 
Sinclair  v.   Tallmadge.  35  Barb.    (X. 

Y  )  602 ;  Singerlv  v.  Thayer.  108  Pa. 
St.  291,  2  Ati.  230.  56  Am.  Rep.  207; 
Knight  V.  United  States.  35  Ct.  CI. 
fU  S)  129;  McClure  v.  Briggs.  58 
\^t.  82,  2  Atl.  583,  56  Am.  Rep.  557. 


§    l604  CONTRACTS.  9O4 

have  been  satisfied.'*  In  another  case  a  charter  party  provided 
that  the  shipowners  should  furnish  ventilation  to  the  approval  of 
the  charterer,  a  cattle  shipper,  and  it  was  held  that  this  did  not 
confer  upon  the  charterer  the  right  to  refuse  to  load,  if  all  that 
could  reasonably  be  required  for  ventilation  was  furnished." 
Again,  a  contract  provided  that  a  passenger  elevator  "warranted 
satisfactory  in  every  respect"  should  be  put  in  a  building,  and 
it  was  held  that  the  elevator  could  not  be  rejected  for  mere 
caprice.'®  So,  where  the  contract  called  for  the  erection  of  a 
furnace  in  a  good  and  workmanlike  manner,  and  to  guarantee  the 
furnace  to  work  "satisfactorily"  in  melting  iron,  it  was  held  that 
the  word  "satisfactorily"  as  used  in  the  contract  did  not  mean 
that  the  workman  obligated  himself,  in  erecting  the  furnace,  to 
satisfy  any  whim  or  caprice  of  the  other  party,  but  it  meant  that 
he  should  do  the  work  reasonably  well.'^'  And  it  has  been  said 
broadly  that  in  contracts  w^hich  provide  for  work  to  be  done  to 
the  satisfaction  of  one  party,  or  the  like,  such  satisfaction  is  not 
an  arbitrary  or  capricious  one,  that  it  has  its  measure  by  which  it 
can  be  fulfilled,  i.  e.,  that  which  the  law^  shall  say  a  contracting 
party  ought  in  reason  to  be  satisfied  with,  the  law  will  say  he  is 
satisfied  with,  so  that  "the  law  in  this  case  will  determine  for  the 
defendant  wdien  he  ought  to  be  satisfied."'^ 

"Doll  V.  Noble,  116  N.  Y.  230,  22  jected    by    the    following    cases    and 

N.  E.  406,  5  L.  R.  A.  554,  15  Am.  St.  held  to  mean  satisfactorily  to  plain- 

398.    See  also.   Electric  Lighting  Co.  tiff:    Taylor   v.    Brewer,    1    INI.    &    S. 

V.  Elder,  115  Ala.  138,  21  So.  983.  290;  Campbell  Printing  Press  Co.  v. 

"Russell    V.    Allerton,    108    N.    Y.  Thorp,  36  Fed.  414,  1  L.  R.  A.  645; 

288,  15  N.  E.  391.    And  it  is  not  nee-  McCormick  Harvesting  ^vlach.  Co.  v. 

essary  to  show  that  the  shipper's  re-  Chesrown,    33    ISIinn.    32,    21    N.    W. 

fusal  to  load  was  in  actual  bad  faith.  846;  Singerlv  v.  Thayer,   108  Pa.  St. 

'^Singerly  v.    Thaver,    108    Pa.    St.  291,  2  Atl.  230,  56  Am.  Rep.  207. 

291,  2  Atl.  230,  56  Am.  Rep.  207.     In  '^  Folliard  v.  Wallace,  2  Johns.  (N. 

this  case  it  was  held  that  the  words  Y.)   395.     See  also,  McNeil  v.  Arm- 

"warranted  satisfactory  in  every  re-  strong,  81  Fed.  943,  27  C.  C.  A.  16; 

spect"  meant  the  promisor's  satisfac-  Keeler   v.    Clifford,    165    III.    544,    46 

tion ;  that  is,  the  buver's.    Schleicher  N.  E.  248;   Richison  v.   Mead,   11    S. 

V.  United   Security  &c.   Co.,   191   Pa.  Dak.  639,  80  N.  W.  131.     See  follow- 

St.  ,  477,    43    Atl.    380,    44    Week.    N.  ing    cases    where    the    question    was 

Cas.  188.  raised  as  to  whether  or  not  the  de- 

"  Pope  Iron  &c.  Co.  v.  Best,  14  Mo.  fendant    capriciously    refused    to    be 

App.  502.     This  case  also  holds  that  satisfied.     Worthington  v.  Given,  119 

the  meaning  of  the  term  "satisf actor-  Ala.  44,  24  So.  739,  43  L.  R.  A.  382; 

ily"     when     used     alone     is      satis-  Stockton  &c.   R.   Co.  v.   Stockton,  51 

factory    to    a    reasonable    and    fair-  Cal.  328;  Wood  v.   Strother,   76  Cal. 

minded    man,    who    is    an    expert    in  545,  18  Pac.  766,  9  Am.  St.  249;  Peo- 

such   matters,   which   meaning  is  re-  pie  v.  Alameda,  45  Cal.  395;  Logan 


905  COVENANTS    AND    CONDITIONS.  ^     1605 

^  1605.  Cases  holding  right  of  approval  absolute  and  un- 
qualified— Good  faith. — Sonic  of  the  broad  statements  men- 
tioned or  referred  to  in  the  last  preceding  section  undoubtedly 
go  too  far  and  some  of  the  decisions  cited  are  extreme  in  one 
direction.  So,  on  the  other  hand,  a  few  of  those  hereinafter 
referred  to  seem  extreme  in  the  other  direction  and  apparently 
allow  one  to  take  advantage  of  such  provisions  as  those  under 
consideration,  even  though  he  not  only  acts  somewhat  arbitrarily 
or  capriciously,  but  also  in  bad  faith.  The  weight  of  authority 
is  to  the  effect  that  the  parties  must  stand  to  their  contract  as 
they  have  made  it,  and,  if  the  one  party  has  agreed  to  do  some- 
thing that  shall  be  satisfactory  to  the  other,  he  constitutes  the  lat- 
ter the  sole  arbiter  of  his  own  satisfaction,"  at  least  so  long  as 
he  acts  in  good  faith  and  his  dissatisfaction  is  real  and  not  feigned 
or  a  mere  subterfuge.  Thus,  where  the  vendor  of  a  harvesting 
machine  gave  a  warranty  that  the  contract  of  purchase  should  be 
of  no  effect  unless  the  machine  worked  to  the  buyer's  satisfaction, 
it  was  held  that  the  purchaser  had  reser\'ed  the  absolute  right  to 
reject  the  machine,  and  that  his  reasons  for  doing  so  could  not 
be  investigated.^"     So,  where  the  agreement  was  that  a  certain 

V.    Berkshire    Apartment    Assn.,    46  satisfaction;    Manny  v.   Glcndinning, 

N.  Y.  St.  14,  18  N.  Y.  S.  164;  Heron  15  Wis.  50. 

V.  Davis,  3  Bosw.  (N.  Y.)  336;  Dag-  ""Campbell  Printing  Press  Co.  v. 
gett  V.  Johnson,  49  Vt.  345.  "Indeed,  Thorp,  36  Fed.  414.  1  L.  R.  A.  645; 
to  such  import  are  really  all  of  the  White  v.  Randall,  153  Mass.  394,  26 
authorities,  which  hold  simply  that  N.  E.  1071 ;  Sax  v.  Detroit  &c.  R.  Co., 
to  be  dissatisfied  in  such  a  case  is  125  Mich.  252,  84  N.  W.  314.  84 
sufficient  reason  to  refuse  the  pur-  Am.  St.  572;  Frary  v.  American  Rub- 
chase;  for  to  be  dissatisfied  is  a  fact,  ber  Co..  52  ]\linn.  264,  53  N.  W.  1156, 
and  must  be  a  veritv,  and  not  a  pre-  18  L.  R.  A.  644;  Adams  Radiator  & 
text.  It  is  not  'I  will  not  accept  it,—  Boiler  Works,  v.  Schnader,  155  Pa. 
will  not  have  it,'— but  'It  is  not  sat-  St.  394,  26  Atl.  745.  35  Am.  St.  893; 
isfactorv,'  or  'I  am  reallv  and  hon-  Barrett  v.  Raleigh  &c.  Coke  Co..  51 
estlv  dissatisfied  with  it.'  "This  is  im-  W.  Va.  416,  41  S.  E.  220.  90  Am. 
plied  in  the  verv  statement  of  the  St.  802.  See  also.  Ellis  v.  Mortimer, 
principle."  Per 'Orton,  J.,  in  Ex-  1  Bos.  &  Pul.  (N.  R.)  257;  Taylor 
haust  Ventilator  Co.  v.  Chicago,  M.  v.  Brewer.  1  M.  &  S.  290;  Barnes  v. 
&  St.  P.  R.  Co.,  66  Wis.  218,  28  N.  W.  Rawson,  111  Iowa  426,  82  X.  W^  947; 
343,  57  Am.  Rep.  257;  Hartford  Daniels  v.  Decatur  Countv,  99  Iowa 
&c.  Mfg.  Co.  V.  Brush,  43  Vt.  528.  440.  68  N.  W.  718;  Tyler  v.  Ames.  6 
See  Exhaust  Ventilator  Co.  v.  Chi-  Lans.  (N.  Y.)  280;  Spring  v.  An- 
cago  M  &  St  P.  R.  Co..  66  Wis.  sonia  Clock  Co..  24  Hun  (X.  Y.)  175; 
218.  '28  N.  W.  343.  57  Am.  Rep.  Hart  v.  Hart.  22  Barb.  (N.  Y.)  606; 
257,  which  holds,  also,  that  the  chat-  Rossiter  v.  Cooper.  23  Vt.  522. 
tel  must  be  properly  tested  and  tried  ""Wood  &c.  Mach.  Co.  v.  Smith, 
before  the  buyer  can  reject  for  dis-  50  :Mich.  565,  15  N.  W.  906,  45  Am. 

Rep.  57. 


§    i605  CONTRACTS.  9^0 

grain  binder  should  do  good  work  and  "give  satisfaction,"  it  was 
held  that,  unless  the  defendant  was  satisfied  with  the  machine, 
although  it  did  good  work,   he   was  not  bound  to  purchase/^ 
Where  there  was  a  guaranty  that  a  corn  binder  would  work  satis- 
factorily, it  was  held  that,  in  case,  upon  reasonable  trial,  it  did 
not  work  satisfactorily,  it  was  unnecessary  to  return  it,  but  it  was 
sufficient  for  the  buyer,  within  a  reasonable  time,  to  notify  the 
seller  that  it  did  not  work  to  his  satisfaction,  and  that  he  declined 
to  accept  it.*-    A  similar  ruling  was  made  with  regard  to  a  steam- 
boat;'^ with  regard  to  a  machine  for  generating  gasf*  with  re- 
gard to  a  fanning  mill  f^  with  regard  to  a  passenger  elevator  f^ 
and  in  the  case  of  a  printing  press."    This  rule  ought  not,  how- 
ever, to  apply  where  the  party  is  in  fact  satisfied  but  fraudulently 
and  in  bad  faith  feigns  dissatisfaction  to  obtain  an  advantage 
wdien  this  is  not  his  real  reason.^*     And  there  are  many  decisions 
to  the  effect  that  the  dissatisfaction  must  be  real,  and  not  feigned, 
and  that  the  party  is  not  at  liberty  to  say  he  is  dissatisfied  when, 
in  reality,  he  is  not.'"    The  same  cases,  however,  declare  the  rule 
that,  while  he  is  bound  to  act  honestly,  it  is  not  enough  to  show 
that  he  ought  to  have  been  satisfied,  and  that  his  discontent  was 
without  good  reason.^"    But  it  is  said  that  to  permit-  a  party  under 

^^  Piano  ^lanufacturing  Co.  v.  Ellis,  252,  84  N.  W.  314,  84  Am.  St.  572; 

68   Mich    101,  35   N.   W.  841.       See  Thomas  v.   Gage,   156  N.  Y.  612,  51 

also,    Piatt    V.    Broderick,    70    Mich.  N.   E.  307. 

577    38  N.  W.  579.  ^'  Campbell    Printing    Press    Co.    v 

*''McCormick      Harvesting      Mach.  Thorp,  36  Fed.  414,  1  L.  R.  A.  645 

Co    V    Chesrown,  33  Minn.  32,  21  N.  Adams  Radiator  &  Boiler  Works  v 

W'  846      See  also,  Thomas  v.  Gage,  Schnader,    155    Pa.    St.    394,    26    Atl 

156  N    Y    612    51    N.   E.  307,   revg.  745,  35  Am.   St.  893;  Hartford   Sor- 

84  Hun  (N.  Y.')  607.  Sum  Mfg.  Co.  v.  Brush.  43  Vt.  528; 

^Gray  v.   Central  R.   Co.,  11   Hun  Daggett  v.  Johnson,  49  Vt.  345;  Mc- 

(N    Y  )   70  Clure  v.  Briggs.  58  Vt.  82,  2  Atl.  583, 

**' Aiken  v    Hyde,  99  Mass.   183.  56  Am.  Rep.  557;  Exhaust  Ventilator 

"Singerly   v    Thayer,    108   Pa.    St.  Co.  v.  Chicago,  M.  &  St.  P.  R.  Co., 

291    2   Atl    230,   56   Am.    Rep.    207;  66  Wis.  218.  28  N.  W.  343,  57  Am. 

Howard  v.   Smedley,  140  Pa.   St.  81,  Rep.  257.     Where  a  vendor  sells  an 

21   Atl.  253.  article  subject  to  the  approval  of  the 

*°  Goodrich    v.    Van    Nortwick,    43  vendee,  he  constitutes  the  vendee  the 

jll    445,  judge   of   his   own    satisfaction,   pro- 

"  Campbell    Printing    Press    Co.    v.  vided  that,  if  the  vendee  claims  to  be 

Thorp,  36  Fed.  414,  1  L.  R.  A.  645.  dissatisfied,    his    dissatisfaction    must 

^  See    Silsby    Mfg.    Co.    v.    Chico,  be  real,  and  not  feigned.     Buckley  v. 

24  Fed    893.    (And  to  show  the  par-  Meidroth,  93  111.   App.  460. 

ty's  satisfaction,  his  declarations  ad-  ""Silsby  Mfg.  Co.  v.  Chico.  24  Fed 

mitting    satisfaction    are   admissible.)  893;  Lynn  v.  Baltimore  &c.  R.  Co.,  60 

Sax  V.  Detroit  &c.  R.  Co.,  125  Mich.  Md.  404,  45  Am.  Rep.  741 ;  Baltimore 


907  COVENANTS    AND    CONDITIONS.  §    1 606 

all  circumstances  to  refuse  to  pay  because  dissatisfied  and  at  the 
same  time  to  retain  the  fruits  of  the  agreement  is  an  unwarrant- 
able extension  of  the  doctrine  applied  to  machines  or  articles  of 
manufacture  which  can  be  rejected;  that  if  the  party  relies  upon 
dissatisfaction  as  a  defense  lie  must  rescind  the  agreement  and  re- 
store the  status  quo,  and  if  he  does  not  do  this,  or  is  unable  to, 
then  he  must  be  satisfied  if  in  reason  he  ought  to  be.  Thus, 
where  a  printing  press  was  unable  to  be  restored  the  buyer  was 
held  precluded  from  setting  up  as  a  defense  the  fact  of  his  dis- 
satisfaction."^ A  furnace  after  being  built  into  a  house  was  held 
subject  to  a  like  rule,  and  the  buyer's  only  remedy  was  said  to  be 
to  recoup  for  damages.^"  But  where  a  party  having  the  power  to 
rescind  the  contract  and  restore  the  chattel  elects  to  keep  it,  he 
must  pay  the  contract  price  and  cannot  recoup  damages,  because 
of  his  failure  to  be  satisfied  therewith,  in  an  action  for  the  price." 

§  1606.  Failure  to  fully  perform — Substantial  performance. 
— After  one  party  has  performed  a  contract  in  a  substantial  part, 
and  the  other  party  has  accepted  and  had  the  benefit  of  the  part 
performance,  the  latter  may  thereby  be  precluded  from  relying 
upon  the  performance  of  the  residue  as  a  condition  precedent  to 
his  liability;  and  may  be  required  to  perform  the  contract  on 
his  part  and  rely  upon  his  claim  for  damages  in  respect  of  the 
defective  performance.  "It  is  remarkable  that,  according  to  this 
rule,  the  construction  of  the  instrument  may  be  varied  by  matter 
ex  post  facto ;  and  that  which  is  a  condition  precedent  when  the 
deed  is  executed  may  cease  to  be  so  by  the  subsequent  conduct 
of  the  covenantee  in  accepting  less.  *  *  *  This  is  no  objec- 
tion to  the  soundness  of  the  rule,  which  has  been  much  acted 
upon.  But  there  is  often  a  difficulty  in  its  application  to  particu- 
lar cases,  and  it  cannot  be  intended  to  apply  to  every  case  in 

&c    R    Co.  V.  Brvdon,  65  Md.  198,  3  "^Campbell    Printing    Press    Co.    v. 

Atl.  306.  57  Am. "Rep.  318.     And  see  Thorp,  36  Fed.  414.   1  L.  R.  A.  645: 

the    remarks   of    Mr.    Justice    Brown  Vice  v.  Brown,  22  Ind.  App.  345,  53 

in    Campbell    Printing    Press    Co.    v.  N.  E.  776. 

Thorp,  36  Fed.  414,   1   L.  R.  A.  645,  "  Shupe  y.  Collender,  56  Conn.  489. 

where  many  of  the  cases  are  exam-  15   Atl.   405,    1    L.    R.   A.   339;    Pope 

ined.      See    also,    cases    collected    in  Iron    &    Metal    Co.    v.    Best,    14    Mo. 

Duplex  Safety  Boiler  Co.  v.  Garden,  App.  502. 

101   X.  Y.  387,  4  N.  E.  749,  54  Am.  "Campbell    Printing   Press    Co.    v. 

Rep.  709.  Thorp.  36  Fed.  414,  1  L.  R.  A.  645. 


CONTRACTS. 


908 


which  a  covenant  by  the  plaintiff  forms  only  a  part  of  the  con- 
sideration, and  the  residue  of  the  consideration  has  been  had  by 
the  defendant.  That  residue  must  be  the  substantial  part  of  the 
contract.""*  This  doctrine,  however,  is  not  fully  accepted  in  all 
jurisdictions,  and  is  not  to  be  indiscriminately  applied  without 
qualification  or  limitation.  .Where  a  building  is  erected  upon  and 
becomes  a  part  of  the  realty  of  the  owner,  and,  although  defective 
in  some  respects,  is  of  real  and  substantial  value  to  the  owner, 
it  has  often  been  held  that  the  contractor  can  recover  the  value 
of  his  work,  less  the  damages  to  the  other  party,  for  a  failure  to 
comply  with  the  terms  of  the  agreement.^'^  And  it  has  been  rea- 


"  Ellen  V.  Topp,  6  Exch.  424.  See 
also,  Graves  v.  Legg,  9  Exch.  709; 
Behn  v.  Burness,  3  B.  &  S.  751;  Ox- 
ford V.  Provand,  L.  R.  2  P.  C.  135; 
White  V.  Beeton,  7  H.  &  N.  42;  Car- 
ter V.  Scargill,  L.  R.  10  Q.  B.  564; 
Ritchie  v.  Atkinson,  10  East  295 
(Where  a  ship  owner  having  contract- 
ed to  load  a  complete  cargo,  sailed 
with  only  part,  it  was  held  that  the 
freighter  must  pay  freight,  and  re- 
cover damages  sustained  by  cross  ac- 
tion.) ;  Glaholm  v.  Hays,  2  ]M.  &  G.  257 
(holding  that  conditions  in  charter 
parties  that  the  ship  shall  be  ready 
for  loading  at  a  certain  day  or  a 
certain  place,  which  are  originally 
conditions  precedent  to  the  obliga- 
tion pf  the  charterer  to  load  are  con- 
verted into  mere  subsidiary  stipula- 
tions, remediable  in  damages,  after 
the  loading  and  sailing  of  the  ship)  ; 
Havelock  v.  Geddes,  10  East  555; 
Davidson  v.  Gwynne,  12  East  381 
(holding  that  a  promise  to  sail  by  the 
first  convoy,  although  at  first  a  con- 
dition precedent,  was  not  such  after 
the  voyage  had  actually  been  per- 
formed, although  not  by  the  first  con- 
vov,  and  the  freighter  was  held  lia- 
ble') ;  Pust  V.  Dowie,  5  B.  &  S.  20; 
People's  Bank  &  Loan  Assn.  v.  Rey- 
nolds, 17  Ind.  App.  453,  46  N.  E. 
1008 ;  Connelly  v.  Priest,  72  Mo.  App. 
673. 

•'Aetna  Iron  &  Steel  Works  v. 
Kossuth  County,  79  Iowa  40,  44  N. 
W.  215;  Wolf  V.  Gerr,  43  Iowa  339 
(contract  to  build  a  railroad)  ;  Jem- 
mison  v.  Gray,  29  Iowa  537;  McClay 
V.  Hedge,  18  Iowa  66;  Pixler  v.  Nich- 


olas, 8  Iowa  106,  74  Am.  Dec.  298; 
School  District  No.  2  v.  Boyer,  46 
Kans.  54,  26  Pac.  484;  Barnwell  v. 
Kempt  on,  22  Kans.  314;  Duncan  v. 
Baker,  21  Kans.  99;  Usher  v.  Hiatt, 
21  Kans.  548;  Nelson  Manufacturing 
Co.  v.  Mitchell,  38  Mo.  App.  321 
(building  a  boiler  in  a  house)  ; 
Fleischmann  v.  Miller,  38  Mo.  App. 
177  (a  valuable  case).  "It  is  plain 
that  this  was  in  the  nature  of  a  build- 
ing contract,  and  that  it  is  conse- 
quently governed  by  the  rule  in 
Yeats  v.  Ballentine,  56  Mo.  530.  Under 
this  rule,  although  the  plaintiff  may 
not  have  performed  the  contract  pre- 
cisely in  accordance  with  the  terms 
of  the  agreement,  he  can  recover  the 
reasonable  value  of  the  work  done, 
less  the  damages  which  the  defend- 
ant may  have  sustained  through  his 
failure  to  complete  the  contract  in 
accordance  with  its  terms."  Com- 
pare, Gruetzner  v.  Aude  Furniture 
Co.,  28  Mo.  App.  263,  and  Fox  v. 
Pullman  Palace  Car  Co.,  16  Mo.  App. 
122;  Gove  v.  Island  City,  etc.,  Co.,  19 
Ore.  363,  24  Pac.  521  (excepts  volun- 
tary abandonment)  ;  Carroll  v. 
Welch,  26  Tex.  147,  "The  doctrine 
of  the  earlier  decisions  to  the  effect, 
that  where  the  contract  in  cases  like 
the  present  is  entire,  the  performance 
by  the  employe  is  a  condition  prece- 
dent, and  he  has  no  remedy  until 
he  has  fully  performed  his  part,  is 
not  now  the  recognized  doctrine  of 
the  court.  *  *  *  According  to  the 
modern  decisions,  and  the  decisions 
of  this  court,  the  rule  appears  to  be, 
that    if    the    employe    abandons    his 


909  COVENANTS    AND    CONDITIONS.  §    1607 

soned  even  more  broadly  as  follows:  A  formal  acceptance  of  the 
work,  or  an  acquiescence  in  the  breach,  is  not  essential  to  recovery 
in  a  building  contract.  The  benefits  arising  from  the  services  ren- 
dered, the  materials  furnished,  and  labor  performed  in  erecting 
the  buildings,  are  the  owner's  without  acceptance.  He  has  no 
choice  but  to  use  and  enjoy  those  benefits,  although  but  a  part 
performance  of  the  contract.  The  benefits  derived  from  the  serv- 
ices he  cannot  restore.  The  building  becomes  a  part  of  the  realty. 
And  it  is  for  these  reasons  that  a  recovery  can  be  had  on  a  quan- 
tum meruit  where  the  contractor  confers  benefits  on  the  owner, 
although  he  has  not  complied  with  his  contract."" 

§  1607.  Building  contracts — Substantial  performance. — 
There  is  conflict  and  confusion  in  the  authorities  upon  the  sub- 
ject of  the  performance  of  building  contracts.  Some  authorities 
hold  that  the  contractor,  in  order  to  recover,  must  substantially 
perform  his  contract,  and  that,  if  he  fails  in  this  regard,  he  can- 
not recover  in  any  form  of  action  for  what  he  has  done  under 
the  contract,  no  matter  how  beneficial  it  may  be  to  the  owner. 
Under  this  rule,  it  is  possible  for  a  landowner  to  contract  for  the 
erection  of  a  building  (the  contractor  after  having  built  a  por- 
tion of  it  abandoning  the  contract  without  excuse),  and  have  the 
benefit  of  a  partial  performance  without  paying  anything  there- 
for. Such  seems  to  be  the  great  weight  of  authority  in  America. 
It  has  been  so  held  in  California,"'    in  Colorado,"*  Massachu- 

contract,  the  employer  shall  be  will  imply  a  promise  to  pay  for  it)  ; 
charged  with  only  the  reasonable  Allen  v.  Curies.  6  Ohio  St.  505.  A 
worth,  or  the  amount  of  benefit  he  contractor  who  before  the  building  is 
has  received  upon  the  whole  trans-  complete  ceases  to  work  upon  the 
action."  Hillvard  v.  Crabtree's  Admr.,  same  upon  notice  from  the  owner  that 
11  Tex.  264,  62  Am.  Dec.  475;  he  elects  to  complete  the  building  can- 
Compare  Linch  V.  Paris  Lumber  Co.,  not  recover  on  a  quantum  meruit  on 
80  Tex.  23,  14  S.  W.  701,  IS  S.  W.  the  grounds  that  the  owner  prevented 
208.  See  also,  next  following  sections  completion.  Beccher  v.  Schuback,  53 
and  note  in  24  L.  R.  A.  (N.  S.)  327.  N.  E.  1123,  affg.  1  App.  Div.  (N.  Y.) 
""^tna  Iron  &  Steel  Works  v.  Kos-  359,  72  N.  Y.  St.  511,  2>7  N.  Y.  S.  325, 
suth  County,  79  Iowa  40,  44  N.  W.  affd.  158  N.  Y.  687,  53  N.  E.  1123. 
215.  Contra,  Elliott  v.  Caldwell,  43  See  also,  Norwood  v.  Lathrop,  178 
Minn.  357,  45  N.  \V.  845,  9  L.  R.  A.  Mass.  208,  59  N.  E.  650. 
52  (holding  that  where  a  builder  fails  *' Harlan  v.  Stufflebeem,  87  Cal.  508, 
to  complete,  or  completes  in  a  manner  25  Pac.  686;  Griffith  v.  Happersberger, 
not  substantially  conforming  to  the  86  Cal.  605,  25  Pac.  137,  487;  Mar- 
contract,  the  mere  fact  that  it  remains  chant  v.  Hayes,  117  Cal.  669,  49  Pac. 
on  the  land,  and  the  owner  enjoys  the  840. 

benefit  of  it,  he  having  no  option  to  "■*  Cochran  v.  Balfe,  12  Colo.  App. 
reject  it,  is  not  such  an  acceptance  as 


§  i6o7 


CONTRACTS. 


910 


setts/^  ^Michigan/  ^Minnesota,"  New  Hampshire.^'  New  York,* 
North  Dakota/  Ohio,*'  Pennsylvania/  In  IHinois'  a  substantially 
equivalent  rule  seems  to  prevail,  so  in  Connecticut,"  Maryland,'** 
New  Jersey,"  Nevada,'-  and  Wisconsin.'^  But  some  cases  seem 
to  hold  that  notwithstanding  the  contractor  has,  either  wilfully 
or  without  excuse,  abandoned  his  contract,  or  performed  com- 
paratively little  work  he  may  recover  the  value  of  his  services, 
leaving  the  owner  to  recoup  damages  for  his  failure  to  perform 


his  contract.'* 

75,  54  Pac.  399  (no  recovery  even  on 
quantum  meruit  unless  there  has  been 
strict  performance). 

"*  Wiley  V.  Athol,  150  :\Iass.  426,  23 
N.  E.  311,  6  L.  R.  A.  342.  "It  seems 
that  the  performance  must  be  of  a 
substantial  part  of  the  contract,  and 
that  the  acceptance  must  be  under 
such  circumstances  as  to  show  that 
the  party  accepting  knew,  or  ought  to 
have  known,  that  the  contract  was  not 
being  fullv  performed." 

^  Scheible  v.  Klein,  89  Mich.  376,  50 
N.  W.  857. 

=  Elliott  V.  Caldwell,  43  Minn.  357, 
45  N.  W.  845,  9  L.  R.  A.  52. 

^Bailey  v.  Woods,  17  N.  H.  365 
(but  quaere).  The  same  rule  is  not 
applied  in  case  of  contracts  for  per- 
sonal services.  See  Britton  v.  Turner, 
6  N.  H.  481,  26  Am.  Dec.  713. 

*  Flaherty  v.  Miner,  123  N.  Y.  382. 
25  N  E.  418;  Whelan  v.  Ansonia 
Clock  Co..  27  Hun  (N.  Y.)  557,  affd. 
97  N.  Y.  293 ;  Nolan  v.  Whitney,  88  N. 
Y  648;  Heckmann  v.  Pinkney,  81  N. 
Y.  211 ;  Glacius  v.  Black,  50  N.  Y.  145, 
10  Am.  Rep.  449;  Lennon  v.  Smith, 
23  App.  Div.  (N.  Y.)  293,  48  N.  Y. 
S.  456;  MacKnight  Flintic  Stone  Co. 
V.  New  York,  31  App.  Div.  (N.  Y.) 
232,  52  N.  Y.  S.  747,  revd.  160  N.  Y. 
72,  54  N.  E.  661 ;  Spence  v.  Ham,  163 
N.  Y.  220,  57  N.  E.  412,  51  L.  R.  A. 
238. 

'  Braseth  v.  State  Bank,  12  N.  Dak. 
486,  98  N.  W.  79. 

*  Goldsmith  v.  Hand,  26  Ohio  St. 
101 ;  Allen  v.  Curies,  6  Ohio  St.  505. 

'  Moore  v.  Carter,  146  Pa.  St.  492, 
23  Atl.  243. 

*  Illingsworth  v.  Slosson,  19  111. 
App.  612 ;  Peterson  v.  Pusey,  237  111. 
204,  86  N.  E.  692. 

"  Smith    V.    Scott's    Ridge    School 


Dist.,  20  Conn.  312;  Pinches  v. 
Swedish  Evangelical  Church,  55  Conn. 
183,  10  Atl.  204. 

"'Gill  V.  Vogler,  52  Md.  663. 

"Trenton  v.  Bennett,  27  N.  J.  L. 
513,  72  Am.  Dec.  Z7i. 

"Virginia  &c.  R.  Co.  v.  Lyon  Coun- 
ty, 6  Nev.  68. 

"  Manitowoc  Steam  Boiler  Works 
V.  Manitowoc  Glue  Co.,  120  Wis.  1, 
97  N.  W.  515. 

"Fitzgerald  v.  LaPorte,  64  Ark. 
34,  40  S.  W.  261 ;  .^tna  Iron  &  Steel 
Works  v.  Kossuth  County,  79  Iowa 
40,  44  N.  W.  215;  School  District  v. 
Boyer,  46  Kans.  54,  26  Pac.  484; 
White  V.  Oliver,  36  Maine  92;  Busch- 
mann  v.  Bray,  68  !\Io.  App.  8;  West 
V.  Van  Pelt,  34  Nehr.  63,  51  N.  W. 
313;  Linch  v.  Paris  Lumber  Co.,  80 
Tex.  23.  15  S.  W.  208;  Carroll  v. 
Welch,  26  Tex.  147;  Taylor  v.  Will- 
iams, 6  Wis.  363 ;  but  the  rule  does 
not  obtain  in  the  contracts  of  personal 
service,  no  recovery  in  that  case  be- 
ing allowed.  See  Diefenback  v.  Stark, 
56  Wis.  462,  14  N.  W.  621,  43  Am. 
Rep.  719.  So  where  work  is  aban- 
doned by  a  contractor  and  the  owner 
completes  it  under  a  right  reserved 
in  the  contract,  the  work  is  deemed 
to  be  done  under  the  contract  and  the 
contractor  is  entitled  to  any  balance 
of  the  contract-price  above  the 
cost  of  completion.  White  v.  Liv- 
ingston, 174  N.  Y.  538,  66  N.  E.  1118, 
affg.  69  App.  Div.  (N.  Y.)  361,  75 
N.  Y.  S.  466.  See  also,  Davis  v.  Bad- 
ders,  95  Ala.  348,  10  So.  422;  Barn- 
well V.  Keating,  72  Conn.  732,  43  Atl. 
984;  Shepard  v.  Mills,  70  111.  App.  72, 
affd.  173  111.  223,  50  N.  E.  709;  Cnm- 
mings  V.  Pence,  1  Ind.  App.  317,  27 
N.  E.  631 ;  Masonic  Mutual  Benefit 
Assn.  V.   Beck,  77  Ind.  203,  40  Am. 


911  COVEXAXTS    AND    CONDITIONS.  §    1607 

The  following  rules  touching  building  contracts  have  been 
laid  down  by  the  Supreme  Court  of  the  United  States:  While 
the  special  contract  remains  executory,  the  contractor  must 
sue  upon  it.  When  it  has  been  fully  executed  according  to  its 
terms,  and  nothing  remains  to  be  done  but  the  payment  of  the 
price,  he  may  sue  on  the  contract,  or  indebitatus  assumpsit,  and 
rely  upon  the  common  counts.  In  either  case,  the  contract  will 
determine  the  right  of  the  ])arties.  When  the  contractor  has 
been  guilty  of  fraud,  or  has  wilfully  abandoned  the  work,  leav- 
ing it  unfinished,  he  cannot  recover  in  any  form  of  action.  Where 
he  has  in  good  faith  fulfilled,  but  not  in  the  manner  or  not  within 
the  time  prescribed  by  the  contract,  and  the  other  party  has  sanc- 
tioned or  accepted  the  work,  the  contractor  may  recover  upon  the 
common  counts.^' 

The  weight  of  authority  is  now  clearly  in  favor  of  allow- 
ing compensation  for  services  rendered  and  material  furnished 
under  such  a  contract,  though  not  in  entire  conformity  with 
it,  provided  that  the  deviation  from  the  contract  was  not  wil- 
ful, and  the  other  party  has  availed  himself  of,  and  been  bene- 
fited by,  such  labor  and  materials,  at  least  where  the  departure 
is  slight  and  comparatively  immaterial;  and  as  a  general  rule, 
the  amount  of  such  compensation  depends  upon  the  extent  of  the 
benefit  conferred,  having,  in  a  proper  case,  reference  to  the  con- 
tract-price for  the  entire  work,  or  the  contract-price  less  the  cost 
of  making  the  work  conform  to  the  contract. ^"^  In  those  states 
where  it  is  necessary  that  the  contractor  should  "substantially 
perform"  the  condition  precedent,  before  he  can  recover  anything, 

Rep.  295 ;  Taylor  v.  Almanda,  50  La.  is    substantial   and    draws   a   distinc- 

Ann.  351,  23  So.  365.  tion  as  to  the  measure  of  damages). 

"  Dermott  V.  Jones,  2  Wall.  (U.S.)  See    also.    Pinches    v.    The    Swedish 

1,    17  L.   ed.  762.  Church.   55    Conn.    183,    10   Atl.   264, 

"Jefferson     Hotel    Co.     v.    Brum-  citing  Havward  v.   Leonard.  7   Pick, 

baugh,  168  Fed.  867,  94  C.  C.  A.  279 ;  (Mass.)    '181,     19    Am.     Dec.     268; 

Pitcairn  v.  Philip  Hiss  Co.,  113  Fed.  Blakcslee  v.  Holt,  42  Conn.  226;  Wag- 

492.  51   C.  C.  A.  323;  Toher  v.  Lap-  geman   v.   Jamssen,    74    111.   App.   38; 

pine,  60  N.   Y.   St.  853.  9  Misc.    (N.  Corwin    v.    Wallace.     17     Iowa    374; 

Y.)  204,  29  N.  Y.  S.  603;  Hamburger  White  v.  Oliver.  36  Maine  92;  Smith 

V.    Rottenberg,    61    N.    Y.    St.    102,   9  v.      First     Congregational      ^leeting- 

Misc.   (N.  Y.)  477,  30  N.  Y.  S.  240;  House.  8  Pick.    (Mass.)    178:    Moul- 

Focller  v.  Hcintz,   137  Wis.   169,   118  ton  v.  IMcOwen,  103  Mass.  587;  Lucas 

N.  W.  543.  24  L.  R.  A.   (N.  S.)  327  v.    Godwin.    3    Bing.    N.    Cas.    737; 

and  note  (This  case  states  a  test  for  Kelly  v.    Bradford,   33   Vt.    35. 
determining    when    the    performance 


§    l607  CONTRACTS.  912 

substantial  performance  means  that  there  has  been  no  wilful  de- 
parture from  the  terms  of  the  contract,  and  no  omission  of  any 
of  its  essential  parts,  and  that  the  contractor  has  in  good  faith 
performed  all  of  its  substantive  temis.  If  so,  he  will  not  be  held 
to  have  forfeited  his  right  to  a  recovery  by  reason  of  trivial  de- 
fects or  imperfections  in  the  work  performed.  If  the  omission 
is  so  slight  that  it  cannot  be  regarded  as  an  integral  or  substantive 
part  of  the  original  contract,  and  the  other  party  can  be  compen- 
sated therefor  by  a  recoupment  for  damages,  the  contractor  does 
not  lose  his  right  of  action;  and  this  rule  is  peculiarly  applicable 
in  a  case  where  the  other  party  has  received  the  benefit  of  what 
has  been  done,  and  is  enjoying  the  fruits  of  the  work."  It  is 
the  sound  and  settled  rule  that  the  right  of  a  party  to  enforce  a 
contract  will  not  be  forfeited  or  lost  by  reason  of  technical  inad- 
vertence, or  unimportant  omissions  or  defects.  A  substantial 
performance  must  be  established,  in  order  to  entitle  the  party 
claiming  the  benefit  of  the  contract  to  recover;  but  this  does  not 
mean  a  literal  compliance  as  to  details  that  are  unimportant. 
There  must  be  no  wilful  or  intentional  departure,  and  the  defects 
of  performance  must  not  pervade  the  whole,  or  be  so  essential 
as  substantially  to  defeat  the  object  which  the  parties  intend 
to  accomplish.  Whether,  in  any  case,  such  defects  or  omissions 
are  substantial,  or  merely  unimportant  mistakes  that  have  been 
or  may  be  corrected,  is  generally  a  question  of  fact.^^ 

Where  the  plaintiff  contracted  to  build  a  house  for  the  defend- 
ant "and  charge  everything  at  the  exact  cost,  for  which  I  will  get 

"  Harlan  v.  Stufflebeem,  87  Cal.  508,  80  N.  Y.  312;  Heckmann  v.  Pinkney, 

25    Pac.    686.     See    following    cases  81  N.  Y.  211;  Dauchey  v.  Drake,  85 

where  it  was  held  that  performance  N.  Y.  407;  Van  Clief  v.  Van  Vech- 

was     sufficient.       VanClief     v.     Van  ten,   130   N.   Y.   571,  29  N.    E.    1017; 

Vechten,  130  N.  Y.  571.  29  N.  E.  1017;  Crouch  v.  Gutmann,  134  N.  Y.  45.  31 

Arndt  V.  Keller,  96  Wis.  274,  71   N.  N.  E.  271,  30  Am.  St.  608n ;   Miller 

W   651  V.   Northern   Imp.  Co.,  28  Misc.    (N. 

^'*  Miller  V.  Benjamin,  142  N.  Y.  613,  Y.)    762,  59  N.  Y.   S.  305;   Perry  v. 

n  N.  E.  631.     See  also,   Laidlaw  v.  Levenson,  82  App.  Div.   (N.  Y.)   94, 

Marye,  133  Cal.  170,  65  Pac.  391 ;  Pal-  81  N.  Y.  S.  586,  affd.  178  N.  Y.  559, 

mer  v.  Meriden  Britania  Co.,  188  111.  70  N.  E.  1104;  Rowe  v.  Gerry,  86  App. 

508,  59  N.  E.  247;  Franklin  v.  Schultz,  Div.   (N.  Y.)   349,  83  N.  Y.   S.  740; 

23  Mont.  165,  57  Pac.  1037;  Miller  v.  Ashley  v.  Henahan,  56  Ohio  St.  559, 

Benjamin,   142   N.   Y.   613,  Vl   N.   E.  47    N.    E.    573;    Jennings    v.    Wilier 

631;  Glacius  v.  Black.  50  N.  Y.  145,  (Tex.),   Z2   S.    W.   24,   375;    Rhodes 

10  Am.  Rep.  449;   Phillip  v.  Gallant,  v.  Clute,  17  Utah  137,  53  Pac.  990. 
62  N.  Y.  256;  Woodward  v.  Fuller, 


913  COVEXAXTS    AND    CONDITIONS.  §    iGo/ 

vouchers,"  for  a  consideration  to  he  paid  upon  completion  of  the 
building,  it  was  held  that  vouchers  furnished  to  defendant  were 
prima  facie  evidence  sufficient  to  show  performance,  and  plaintiff 
was  not  bound  to  prove  that  every  item  of  material  and  labor  was 
expended  in  the  building.'"  Where  it  appeared  that  the  plaintiff 
made  every  reasonable  effort  to  perform  a  building  contract  in 
the  required  time,  but  failed  to  do  so  in  some  minor  particulars, 
and  the  defendant  took  possession  of  the  building  when  com- 
pleted, and  used  it  for  the  intended  purpose,  for  which  it  was 
adequate,  it  was  held  that  plaintiff  could  recover  the  contract- 
price,  less  compensation  to  defendant  for  the  minor  imperfections 
and  omissions;  and  that  the  plaintiff  was  not  liable  for  delay  in 
the  completion  of  the  building  where  it  was  due  to  the  fact  that 
defendant's  architect  either  changed  the  plans  and  specifications, 
or  failed  to  furnish  necessary  lines  and  levels;  but  was  liable 
where  the  delay  resulted  from  the  condemnation  of  materials 
which  he  furnished,  and  on  which  the  architect  was  required  to 
pass  under  the  contract.-''  And  where  an  architect,  made  by  the 
building  contract  the  sole  arbiter  between  the  parties  of  mat- 
ters concerning  materials  and  character  of  work,  was  present, 
and  had  knowledge  of  the  character  of  the  materials  being  used, 
and  did  not  object  at  the  time,  it  was  held  that  this  amounted  to 
an  approval  of  the  same,  which  could  not  be  revised,  to  the  injury 
of  the  contractor,  and  that  any  delays  caused  by  the  wrongful 
withholding  of  a  monthly  estimate  were  excusable.-'  So,  it  has 
been  held  that  the  provision  of  a  building  contract  for  forfeit  of 
ten  dollars  for  each  day  the  building  remains  unfinished  after 
the  day  fixed  does  not  apply  to  delay  necessitated  by  changes 
in  the  material  ordered  by  the  owners,  although  the  contract  pro- 
vided that  any  change  in  the  plans,  "either  in  quantity  or  quality 
of  the  work,"  should  be  executed  by  the  contractor,   "without 

'"Blazo  V.   Gill,   143   X.  Y.  2Z2,  38  Y.     S.    308;     Chandler    v.     Wheeler 

N.  E.  101.  (Tenn.),  49  S.  W.  278. 

=" White  V.   Braddock  .School  Dist.,  "'Wright   v.    Meyer    (Te.x.),  25    S. 

159  Pa.  St.  201,  28  Atl.  136.    See  also,  W.   1122.    See  also,  Benson  v.  Miller, 

Chapman  v.  Kansas  City  &c.  R.  Co.,  56  Minn.  410,  57  X.  W.  943;  Sisters 

146  Mo.  481.  48  S.  W.  646;  Jones  v.  of  Charity  v.  Smith  (N.  J.).  46  Atl. 

Savage,  24  Misc.   (X.  Y.)    158,  53  X.  598. 

58 — CoNTR.\cTS,  Vol.  2 


§    l6o8  CONTRACTS.  914 

holding  the  contract  as  violated  or  void  in  any  other  respect."" 
The  doctrine  of  "substantial  performance"  of  building  contracts 
does  not  apply  when  the  omission  or  departure  from  the  contract 
is  intentional,  or  so  substantial  as  not  to  be  capable  of  remedy, 
and  where  an  allowance  out  of  the  contract-price  would  not  give 
the  owner  essentially  what  he  contracted  for.-^ 

§  1608.  Personal  services. — There  is  also  a  difference  of 
opinion  as  to  whether  one  who  has  agreed  to  work  for  a  certain 
time,  and  has  abandoned  his  work  without  cause,  can  still  recover 
the  value  of  his  services  rendered,  and  some  courts  which  have 
allowed  a  recovery  on  a  quantum  meruit  in  a  building  contract 
where  the  contractor  abandons  his  contract  have  refused  to  allow 
a  recovery  on  contracts  for  personal  services  where  the  condition 
is  not  substantially  performed.^*  Some  courts  declare  that  the 
weight  of  authority  at  the  present  time  is  against  the  doctrine 
that  where  a  contract  is  entire,  and  consequently  not  apportion- 
able,  and  has  been  only  partially  performed,  the  failing  party  is 
not  entitled  to  recover  or  receive  anything  for  what  he  has  ac- 
tually done;  and  it  is  held  that  if  the  doctrine  has  been  over- 
turned with  respect  to  all  contracts  except  those  for  personal 
services,  it  should  be  overturned  with  reference  to  those  also,  as 
the  acquiring  of  a  benefit,  which  is  the  reason  that  permits  a  re- 
covery in  other  cases  of  contract,  is  the  same  in  the  case  of  those 

"Lilly  V.  Person,  168  Pa.  St.  219,  to  complete  the  work  by  the  agreed 
32  Atl.  23.  In  Maher  v.  Davis  &c.  time  has  the  burden  of  showing  such 
Lumber  Co.,  86  Wis.  530,  57  N.  W.  failure.  Dunn  v.  Morgenthau,  175  N. 
357,  defendant  contracted  in  writing  Y.  518,  67  N.  E.  1081,  affg.  73  App. 
to  pay  plaintiff  a  certain  amount  for  Div.  (N.  Y.)  147,  76  N.  Y.  S.  827. 
drawing  lumber  to  defendant's  lum-  ^  Hoglund  v.  Sortedahl,  101  Minn, 
her  yard,  to  furnish  a  wagon  for  such  359,  112  N.  W.  408;  Elliott  v.  Cald- 
purpose,  and  to  pay  25  cents  addition-  well,  43  Minn.  357,  45  N.  W.  845,  9 
al  on  every  1,000  feet  if  all  should  be  L.  R.  A.  52;  Spence  v.  Ham,  27  App. 
delivered  within  a  specified  time.  It  Div.  379.  50  N.  Y.  S.  960,  affd.  163 
was  held  that  plaintiff  was  entitled  N.  Y.  220,  57  N.  E.  412,  51  L.  R.  A. 
to  recover  the  additional  pay,  al-  238;  Anderson  v.  Todd,  8  N.  D.  158, 
though  he  did  not  deliver  the  lumber  77  N.  W.  599.  See  also,  Leeds  v.  Lit- 
in  the  required  time,  if  the  delay  was  tie,  42  Minn.  414,  44  N.  W.  309;  Phil- 
caused  by  defendant's  refusal  to  fur-  lip^  v.  Gallant,  62  N.  Y.  256. 
nish  a  wagon,  and  his  failure  to  fur-  ^  Hanel  v.  Freund,  17  Mo.  App. 
nish  requisite  facilities  for  unload-  618;  Taylor  v.  Williams,  6  Wis.  363; 
ing  the  lumber  in  the  yard.  A  de-  Diefenback  v.  Stark,  56  Wis.  462,  14 
fendant  in  an  action  on  a  contract  N.  W.  621,  43  Am.  Rep.  719.  See 
who  counterclaims  liquidated  dam-  Story  on  Contracts  (9th  ed.),  §  23. 
ages  for  the  failure  of  the  contractor 


915 


COVEXAXTS    AXD    COXDITIOXS. 


§    1G08 


for  personal  services."  Other  courts  declare  that  the  weight  of 
authority  is  to  the  effect  that  there  can  be  no  recovery,  and  that 
the  reason  for  recovery  in  case  of  partial  performance  of 
other  contracts  does  not  exist  in  case  of  contracts  for  personal 
services;  and  that  to  allow  suit  in  such  cases  upon  a  quantum 
meruit  without  full  performance,  and  recoupment  of  damages, 
would  in  most  cases  be  quite  inadequate  to  indemnify  the  em- 
ployer under  the  ordinary  rule  of  such  damages.^"  The  doctrine, 
that  a  party  cannot  recover  ui)on  a  contract  for  personal  services, 
when  he  had  failed  to  perform  his  part  thereof,  where  the  ad- 
verse party  has  neither  waived,  prevented  nor  dispensed  with 
such  performance,  but  that  he  may  recover  for  services  per- 
formed under  such  contract  upon  the  quantum  meruit,  tlie  em- 
ployer having  the  right  to  set  up  against  the  same  any  damages 
sustained  by  reason  of  such  nonperformance,  has  been  approved 
and  recovery  allowed  in  Indiana,^^  lowa,"^  Kansas,-"  Nebraska,^" 
New  Hampshire,^^  North  Carolina,^^  Texas,^^  South  Dakota,*"* 


I 


^Duncan  v.  Baker,  21  Kans.  99; 
McKnight  v.  Bertram  Heating  &c. 
Co..  65  Kans.  859,  70  Pac.  345;  Mc- 
Millan V.  Malloy,  10  Nebr.  228,  4 
N.  W.  1004,  35  Am.  Rep.  471;  Par- 
cell  V.  McComber.  11  Nebr.  209,  7  N. 
W.  529,  38  Am.  Rep.  366.  '"And  so 
I  think  the  law  may  be  considered  to 
be  pretty  generally  settled  through- 
out the  western  States."  See  also, 
McClay  v.  Hedge,   18  Iowa  66. 

""  Diefenback  v.  Stark,  56  Wis.  462, 
14  N.  W.  621,  43  Am.  Rep.  719;  Lan- 
trv  V.  Parks.  8  Cow.  (N.  Y.)  63; 
Nelson  v.  Hatch.  174  N.  Y.  546,  67 
N.  E.  1085,  affg.  70  App.  Div.  (N.  Y.) 
206.  75  N.  Y.  S.  389.  And  compare 
Eldrid.ge  v.  Rowe,  2  Gilm.  (111.)  91,43 
Am.  Dec.  41. 

-"'Wheatley  v.  Miscal.  5  Ind.  142; 
Cummings  v.  Pence,  1  Ind.  App.  317, 
27  N.  E.  631 ;  but  quaere.  See  also, 
Pickens  v.  Bozell.  11  Ind.  275;  Fulton 
V.  Heflfelfinger,  23  Ind.  App.  104,  54 
N.   E.   1079. 

''McClav  V.  Hedge,  18  Iowa  66; 
Pixler  V.  Nichols,  8  Iowa  106,  74  Am. 
Dec.  298. 

^Duncan   v.    Baker,   21    Kans.   99, 


contains  an  elaborate  review  of  Brit- 
ton  V.  Turner,  6  N.  H.  481,  6  Am. 
Dec.  713. 

'"West  V.  Van  Pelt,  34  Nebr.  63, 
51  N.  W.  313;  Parcell  v.  McComber, 
11  Nebr.  209,  7  N.  W.  529.  38  Am. 
Rep.  366.  The  opinion  declares  the 
weight  of  authority  in  the  western 
states  is  in  favor  of  allowing  recov- 
ery. See  McMillan  v.  Mallov,  10 
Nebr.  228,  4  N.  W.  1004,  35  Am;  Rep. 
471. 

'^Britton  V.  Turner,  6  N.  H.  481, 
26  Am.  Dec.  713,  a  celebrated  and 
leading  case.  A  farm  laborer  agreed 
to  work  from  March,  1831.  to  ^larch, 
1832,  and  his  employer  was  to  give 
him  at  the  end  of  the  time  $120.  The 
servant  abandoned  the  work  without 
cause  in  December,  1831.  He  was  al- 
lowed to  recover  on  a  quantum  meruit 
the  value  of  his  services. 

*=Chamblee  v.  Baker,  95  N.  Car. 
98. 

^Hollis  V.  Chapman,  36  Texas  1; 
Riggs  v.  Horde.  25  Texas  Supp.  456, 
78  Am.  Dec.  584. 

'*  Bedow  V.  Tonkin,  5  S.  Dak.  432, 
59  N.  W.  222. 


:oo9 


CONTRACTS. 


916 


and  Vermont.^'*  On  the  other  hand,  the  courts  of  IlHnois,^°  Mis- 
souri,^' Ohio,^^  Pennsylvania,^'*  and  Wisconsin*"  allow  no  recov- 
ery pro  tanto  where  a  contract  for  personal  services  is  not  sub- 
stantially performed.  And  in  California,"  Connecticut,*^  Massa- 
chusetts,*^ ]Minnesota,**  New  York,  and  perhaps  several  other 
states*^  the  courts  also  deny  the  right  to  recover  in  such  cases.*" 
It  is  thus  seen  that  the  weight  of  authority  is  to  the  effect  that 
where  the  hiring  is  for  a  definite  time  under  an  entire  contract 
the  employe  who  thus  abandons  it  without  consent  and  without 
excuse  is  not  entitled  to  recover,  ordinarily  at  least,  for  what 
he  has  done. 

§  1609.    Conditions  in  subscriptions  generally. — Subscrip- 
tions to  various  enterprises  are  often  made  conditional.     In  so 


'»Fenton  v.  Clark,  11  Vt.  557.  But 
see.   Cahill  v.   Patterson,  30  Vt.  592. 

*"  Thrift  V.  Payne,  71  111.  408; 
Trawick  v.  Peoria  &  Ft.  C.  St.  R. 
Co.,  68  111.  App.  156;  American  Silica 
Sand  Co.  v.  McGarry,  68  111.  App. 
333. 

^'Hanel  v.  Freund,  17  Mo.  App. 
618;  Earp  v.  Tyler,  73  Mo.  617; 
Downs  V.  Smit,  15  Mo.  App.  583; 
White  V.  Wripht,   16  Mo.  App.  551. 

''"Larkin  v.  Buck,   11  Ohio  St.  561. 

'"  Shaw  V.  Lewistown  &  K.  Tpk. 
Co.,  2  Pen.  &  W.  (Pa.)  454;  Gillespie 
Tool  Co.  V.  Wilson,  123  Pa.  St.  19,  16 
Atl.  36,  but  quaere. 

*"Diefenback  v.  Stark,  56  Wis.  462, 
14  N.  W.  621,  43  Am.  Rep.  719. 

*^Hartman  v.  Rogers,  69  Cal.  643, 
11  Pac.  581,  but  quaere. 

"^Dayton  v.  Dean,  23  Conn.  99, 
affirms  principle,  but  evidence  showed 
waiver  by  employer. 

^  Stark  V.  Parker,  2  Pick.  (Mass.) 
267,  13  Am.  Dec.  425.  See  also,  Wiley 
V.  Athol,  150  Mass.  426,  23  N.  E. 
311,  6  L.  R.  A.  342. 

**  Peterson  v.  Maver,  46  Minn.  468, 
49  N.  W.  245 ;  Nelichka  v.  Esterly,  29 
Minn.  146,  12  N.  W.  457;  Kohn  v. 
Faendel,  29  Minn.  470,  13  N.  W.  904. 

*=  Goldstein  v.  White,  16  N.  Y.  S. 
860,  43  N.  Y.  St.  121.  See  also,  Law- 
rence v.  Miller,  86  N.  Y.  131;  Cun- 
ningham V.  Jones,  20  N.  Y.  486; 
Smith  V.  Brady,  17  N.  Y.  173,  72 
Am.   Dec.   442;   Waters  v.  Davies,  8 


N.  Y.  St.  162,  55  Super.  Ct.  (N.  Y.) 
39.  Unless  there  is  a  special  agree- 
ment to  the  contrary,  work,  whether 
measured  by  the  job  or  by  time, 
must  be  finished  in  order  that  there 
shall  be  a  right  to  pay  for  it.  Gold- 
stein V.  White,  16  N.  Y.  S.  860,  43  N. 
Y.  St.  121. 

^'See  Plawkins  v.  Gilbert,  19  Ala. 
54;  Dugan  v.  Anderson,  36  Md.  567, 
11  Am.  Rep.  509;  Olmstead  v.  Bach, 
78  Md.  132,  27  Atl.  501,  22  L.  R.  A. 
74,  44  Am.  St.  273;  Timberlake  v. 
Thayer,  71  Miss.  279,  14  So.  446,  24 
L.  R.  A.  231.  See  also,  following 
cases  more  or  less  discussing  the 
right  of  parties  to  recover  on  a 
quantum  meruit  when  they  have  not 
fulfilled  their  contracts :  Griffith  v. 
Happersberger,  86  Cal.  605,  25  Pac. 
137;  Ponce  v.  Smith,  84  Maine  266. 
24  Atl.  854;  Kriger  v.  Leppel,  12 
Minn.  6,  43  N.  W.  484;  Boteler  v. 
Roy,  40  Mo.  App.  234;  Globe  Light 
&  Heat  Co.  v.  Doud,  47  Mo.  App.  439; 
Oberlies  v.  Bullinger,  132  N.  Y.  598, 
30  N.  E.  999,  4  Silvernail  (N.  Y.) 
250;  Walden  v.  Eldred,  58  Hun  (N. 
Y.)  605,  11  N.  Y.  S.  856,  34  N.  Y.  St. 
398;  Dennis  v.  Walsh,  41  N.  Y.  St. 
103,  16  N.  Y.  S.  257;  Moore  v.  Car- 
ter, 146  Pa.  St.  492,  23  Atl.  243; 
Hughes  V.  Cameron,  1  Sneed  (Tenn.) 
622.  In  England  in  contracts  for 
work  and  labor,  the  work  is  a  con- 
dition precedent,  and  must  be  com- 
pleted Ijefore  the  payment  for  it  can 


917  COVENANTS    AND    CONDITIONS.  §    1609 

far  as  the  general  nature  of  such  contracts  or  the  consideration  is 
concerned  this  subject  has  already  been  treated,  but  we  have  here 
to  do  with  tlic  construction  and  effect  of  conditions.  The  general 
rule  of  interpretation  that  the  intention  of  the  parties  should  be 
ascertained  and  given  effect  applies  here  as  elsewhere.  I  f  the  sub- 
scription is  made  on  particular  terms  and  conditions  going  to  the 
whole  promise  these  usually  constitute  conditions  precedent  to 
liability  on  the  part  of  the  subscriber.*^  The  courts,  hov/ever,  are 
inclined  to  construe  conditions  in  stock  subscriptions  as  subse- 
quent when  it  can  properly  be  done  so  as  to  hold  the  subscription 
absolute/*  and  the  condition  subsequent  in  the  nature  of  a  sepa- 
rate contract  to  be  enforced  like  other  contracts."  And  in  a  case 
where  there  was  a  provision  in  a  subscription  for  the  location  of 
a  school  that  it  be  erected  within  the  state  and  under  the  patron- 
age of  a  certain  church,  the  court  said :  "The  agreement  did  not 
provide  that  it  should  be  located  at  any  particular  point,  nor  docs 
the  location  of  the  school  constitute  a  condition  precedent  to  the 
payment  of  the  money."""  A  substantial  compliance  with  con- 
ditions in  a  subscription  is  required  and  is  generally  sufficient 
without  an  absolutely  literal  compliance."  There  is  some  dif- 
ficulty and  some  conflict  of  decision  in  determining  when  time 
is  of  the  essence  in  such  cases,  but  if  no  time  is  fixed  in  the  con- 
tract the  general  rule  is  that  performance  may  and  must  be  within 
a  reasonable  time.°" 

be  claimed.    :\Iorton  v.  Lamb,  7  T.  R.  Paducah   &  M.   R.   Co.   v.   Parks,  86 

125.    Peeters  v.  Opie,  2  Wms.  Saund.  Tenn.   554,   8  S.   \V.  842.     See  also, 

345  Johnson  v.  Georgia  M.  &  G.  R.  Co., 

^'Cincinnati  &c.  R.  Co.  v.  Bensley,  81  Ga.  725.  8  S.  E.  531. 

51  Fed.  738.  2  C.  C.  A.  480,  6  U.  S.  'M  Elliott  R.  R.   (2nd  ed.),  §  111. 

App.   115,   19  L.  R.  A.  796;  Burling-  "'"Northwestern    Conference   &c.   v. 

ton  &c.  R.   Co.  V.  Boestler.   15  Iowa  Myers,  36  Ind.  375.     But   see   Roth- 

555:  First  M.  E.  Church  of  Pnirling-  enberger  v.   Click,  22  Ind.  App.  288, 

ton  V.  Swenv,  85  Iowa  627.  52  X.  W.  52  N.  E.  811. 

546;  Taggart  v.  Western  Md.  R.  Co.,  "1  Elliott  R.  R.   (2d  ed.),  §  117  et 

24    Md.    563,    89   Am.    Dec.    760    and  seq. ;  Johnston  v.  Ewing  Female  Uni- 

note;   Sickcls  v.   Anderson,  63  Mich,  versity,  35  111.  518;  Hall  v.  \'irginia, 

421,  30  N.  W.  78.     See  as  to  public  91  111.  535;  Cottage  Hospital  v.  Mer- 

aid  and  subscriptions  to  railroads,  as  rill,  92  Iowa  649,  61  N.  \V.  490;  Suit 

to  when  time  is  of  the  essence  and  v.  \\'arren  School  Twp.,  8  Ind.  App. 

what    is    sufficient    compliance    with  655,   36   N.    E.  291    (when   not    suffi- 

conditions  as  to  completion  of  road,  cient)  ;     McAuley     v.     Billcnger,     20 

2  Elliott  R.  R.   (2d  ed.).  §§  851-851b.  Johns.    (N.    Y.)    89.     But    see,    Bohn 

**  Belfast  &  M.  L.  R.  Co.  v.  Moore,  Mfg.  Co.  v.  Lewis,  45  Minn.  164,  47 

60  Maine  561 ;  Henderson  &c.  R.  Co.  X.  W.  652. 

V.   Leavell.    16   B.    Mon.    (Ky.)    358;  "Paddock  v.  Bartlett.  68  Iowa  16, 


§  i6io 


CONTRACTS. 


918 


§  1610.  Conditions  in  subscriptions  to  stock. — Subscrip- 
tions to  the  stock  of  a  corporation  prior  to  the  procurement  of 
its  charter,  in  order  to  obtain  the  amount  required  for  incorpora- 
tion must  be  absokite,  and  it  has  been  held  that  any  condition  at- 
tached thereto  is  void."  But,  after  incorporation,  a  person  may, 
in  his  subscription,  in  general,  impose  any  conditions  not  contrary 
to  public  policy  or  contrary  to  some  statute.^'*  Anything  which 
may  be  legally  done  by  the  corporation  may  be  made  a  condition 
to  a  subscription  for  stock,^^  Whether  conditions  in  subscrip- 
tions to  stock  are  precedent  or  subsequent  is  a  question  of  intent, 
to  be  determined  by  considering  the  words  both  of  the  clause  con- 
taining the  condition  and  of  the  whole  contract.^^     When  sub- 


25  X.  W.  906;  Waters  v.  Union  Trust 
Co.,  129  Mich.  640,  89  N.  W.  687; 
Green  v.  Dyersburg,  2  Flip.  (U.  S.) 
477,  Fed.  Cas.  No.  5756;  1  Elliott 
R.  R.  (2d  ed.),  §  116  (citing  cases 
as  to  time  being  essential  when 
fixed),  2  Elliott  R.  R.  (2d  ed.),  § 
851b. 

"  Boyd  V.  Peach  Bottom  R.  Co.,  90 
Pa.  St.  169;  Caley  v.  Philadelphia  &c. 
R.  Co.,  80  Pa.  St.  363  ;  Troy  R.  Co.  v. 
Tibbits,  18  Barb.  (N.  Y.)  297  (hold- 
ing the  subscription  void)  ;  Cham- 
berlain V.  Painesville  &  H.  R.  Co., 
15  Ohio  St.  225 ;  Morrow  v.  Nashville 
Iron  &  Steel  Co.,  87  Tenn.  262,  10 
S.  W.  495,  3  L.  R.  A.  Zl ,  10  Am.  St. 
658.  See  also,  Brand  v.  Lawrence- 
ville  Branch  R.  Co.,  11  Ga.  506,  1  S. 
E.^55;  Burke  v.  Smith,  16  Wall.  (U. 
S.)  390,  21  L.  ed.  361. 

"^  New  Albany  &  S.  R.  Co.  v.  Mc- 
Cormick,  10  Ind.  499,  71  Am.  Dec. 
Zyi\  McMillian  v.  Maysville  &c.  R. 
Co.,  15  B.  Mon.  (Ky.)  218,  61  Am. 
Dec.  181 ;  Skowhegan  R.  Co.  v.  Kins- 
man, n  Maine  370;  Kennebec  &  P. 
R.  Co.  V.  Jarvis,  34  Maine  360 ;  Bucks- 
port  &  B.  R..  Co.  V.  Buck,  65  Maine 
536;  Proprietors  of  City  Hotel  &c. 
V.  Dickinson,  6  Gray  (Mass.)  586; 
Lexington  &  W.  C.  R.  Co.  v.  Chand- 
ler, 13  Mete.  (Mass.)  311;  Penokscot 
&  K.  R.  Co.  v.  Bartlett,  12  Gray 
(Mass.)  244,  71  Am.  Dec.  753  ;  Boston, 
Barre  &  Gardner  R.  Co.  v.  Welling- 
ton, 113  Mass.  79;  Union  Hotel  Co. 
V.  Hersee,  15  Hun  (N.  Y.)  371,  revd. 
79  N.  Y.  454,  35  Am.  Rep.  536;  Bur- 
rows V.  Smith,  10  N.  Y.  550;  Ashta- 


bula &  N.  L.  R.  Co.  v.  Smith,  15  Ohio 
St.  328. 

"1  Elliott  R.  R.  (2d  ed.),  §  112; 
Penobscot  &  K.  R.  Co.  v.  Dunn,  39 
Maine  587;  Ticonic  Water  Power  & 
Mfg.  Co.  V.  Lang,  63  Maine  480; 
Hackett  v.  Northern  Pac.  R.  Co.,  36 
Misc.  (N.  Y.)  583,  IZ  N.  Y.  S.  1087; 
Ashtabula  &  N.  L.  R.  Co.  v.  Smith, 
15  Ohio  St.  328;  Hanover  Junction 
&  S.  R.  Co.  v.  Grubb,  82  Pa.  St.  36; 
Milwaukee  &  N.  L  R.  Co.  v.  Field,  12 
Wis.  340.  See  generally,  Smith  v. 
Tallassce  &c.  Co.,  30  Ala.  650;  Jacks 
V.  Helena,  41  Ark.  213;  People  v. 
Chambers,  42  Cal.  201 ;  Chattanooga 
R.  &  C.  Co.  V.  Warthen,  98  Ga.  599, 
25  S.  E.  988;  Mitchell  v.  Rome  R. 
Co.,  17  Ga.  574;  Isbester  v.  Murphy 
Mfg.  Co.,  95  111.  App.  105;  Paris  & 
D.  R.  Co.  V.  Henderson,  89  111.  86; 
Cooper  V.  McKee,  53  Iowa  239,  5  N. 
W.  121 ;  Swatara  R.  Co.  v  Brune,  6 
Gill.  (Md.)  41;  Detroit  &  C.  R.  Co. 
v.  Starnes,  38  Mich.  698;  Highland 
Co.  v.  McKean,  11  Johns.  (N.  Y.) 
98;  Moore  v.  Hanover  Junction  &c. 
R.  Co.,  94  Pa.  St.  324 ;  Caley  v.  Phila- 
delphia &c.  R.  Co.,  80  Pa.  St.  363; 
Woonsocket  R.  Co.  v.  Sherman,  8 
R.  I.  564.  But  compare  Butternuts  & 
O.  Turnpike  Co.  v.  North,  1  Hill  (N. 
Y.)  518;  Macedon  &c.  Plank  Road 
Co.  .V.  Snediker,  18  Barb.  (N.  Y.) 
317. 

°°  Beach  on  Private  Corporations, 
§  532,  citing  Bucksport  &  B.  R.  Co.  v. 
Brewer,  67  Maine  295;  Chamberlain 
V.  Painesville  &  H.  R.  Co.,  15  Ohio 
St.  225.     Compare  Chapman  v.  Vir- 


I 


919  COVENANTS    AND    CONDITIONS.  §     161O 

scriptions  are  made  to  take  stock  in  an  existing  corporation  upon 
a  condition  precedent,  as  for  example  upon  condition  that  a  speci- 
fied amount  of  subscriptions  shall  hereafter  be  obtained,  the  con- 
tract of  the  subscribers  is  twofold  in  character.  It  is  a  contract 
between  the  several  subscribers  and  it  is  also  a  continuing  offer 
to  the  corporation  to  take  and  pay  for  the  amount  of  stock  sub- 
scribed, upon  the  terms  proposed,  whenever  the  specified  amount 
of  subscriptions  shall  be  obtained.  The  obtaining  of  the  amount 
specified  within  a  reasonable  time  is  an  acceptance  of  the  offer 
by  the  corporation  and  the  contract  of  each  subscriber  then  be- 
comes absolute.'^'  The  subscriber  has  been  held  not  a  member 
of  the  corporation  until  the  conditions  prescribed  by  him  are  per- 
formed by  the  company.^^  A  subscriber  cannot,  ordinarily  at 
least,  withdraw  his  subscription  even  though  it  be  conditional, 
unless  unreasonable  delay  occurs  in  performing  the  condition.^* 
When  the  company  .obtains  solvent  subscribers  for  the  amount 
specified,  that  becomes  an  effectual  acceptance  of  the  offer  of  all 
those  who  have  previously  subscribed,  and  then  subscriptions  are 
no  longer  conditional,  but  become  absolute  and  are  thereafter 
payable,  according  to  the  terms  of  the  contract,  on  the  call  of  the 
board  of  directors. ^'^  The  subscribers  are  then  entitled  to  all  the 
rights  and  privileges  of  stockholders,  and  come  under  the  cor- 
relative obligations  and  duties  of  holders  of  stock  in  a  corpora- 
tion."^    Where  there  are  recitals  in  the  charter,  or  in  the  pros- 

ginia    Real    Estate    Inv.    Co.,   96   Va.  N.     Y.     451;     McClure     v.     People's 

177,  31   S.  E.  74.  Freight  R.  Co.,  90  Pa.  St.  269.    Com- 

"  Cravens  v.  Eagle  Cotton  ]Mills  pare,  however,  Junction  R.  Co.  v. 
Co.,  120  Ind.  600,  21  N.  E.  984,  fol-  Reeve,  15  Ind.  236;  Taggart  v.  West- 
lowing  120  Ind.  6,  21  N.  E.  981,  16  ern  Md.  R.  Co.,  24  Md.  563,  89  Am. 
Am.  St.  298;  Minneapolis  Threshing  Dec.  760;  Lowe  v.  Edgefield  &c.  R. 
Mach.  Co.  v.  Davis,  40  Minn.  110,  41  Co.,  1  Head  (Tenn.)  659;  and  see 
N.  W.  1026,  3  L.  R.  A.  796.  12  Am.  Broadbent  v.  Johnson,  2  Idaho  325, 
St.  701.  See  also,  1  Elliott  R.  R.  13  Pac.  83. 
(2d   ed.),   §    113.  ~  Beach    on    Private    Corporations, 

°*  Montpelier  &  W.  R.  Co.  v.  Lang-  §  532,  citing  New  Albany  &  S.  R.  Co. 

don,   46   Vt.   284.     See   also,   Monad-  v.     Pickens,    5    Ind.    247;     Estell    v. 

nock  R.   Co.  V.   Felt,  52  N.   H.  379;  Knightstown  &  M.  Turnpike  Co.,  41 

Burrows  V.  Smith,  10  N.  Y.  550;  Ash-  Ind.    174;    Beckncr   v.    Riverside    &c. 

tabula  &   N.  L.   R.   Co.   v.   Smith.   15  Turnpike  Co.,  65   Ind.  468;    Phoenix 

Ohio  St.  328;   Philadelphia  &  W.   C.  Warehousing    Co.    v.    Badger,   67    X. 

R    Co.  V.  Hickman,  28  Pa.  St.  318.  Y.    294,    and    see    Cravens    v.    Eagle 

"Garner  v.   Hall.    114  Ala.    166.  21  Cotton    Mills    Co..    120    Ind.    600,    21 

So.  835 ;  Johnson  V.  Wabash,  Mt.  Ver-  N.    E.  984,    following  120   Ind.  6,  21 

non    Plank    Road    Co.,    16    Ind.    389;  X.  E.  981.  16  Am.  St.  298. 

Lake  Ontario  &c.  R.  Co.  v.  Mason,  16  "  Butler    University   v.    Scoonover, 


i6io 


CONTRACTS. 


920 


pectus,  or  in  the  subscription  paper,  that  the  capital  stock  of  a 
company  which,  at  the  time,  has  not  commenced  active  opera- 
tions, shall  be  a  certain  amount,  there  is  an  implied  condition  that 
the  amount  of  stock  specified  shall  be  taken  before  the  subscribers 
shall  become  liable  on  their  contract,*'^  unless  a  contrary  intention 
appears  in  the  charter,  enabling  act,  articles  of  association  or 
contract  of  subscription.*^^  So  where  a  corporation,  incorpo- 
rated under  general  law  requiring  that  the  amount  of  its  stock 
be  stated  in  the  certificate  of  incorporation,  enters  into  active 
business  with  less  capital  stock  subscribed  than  the  amount  thus 
stated,  it  has  been  held  that  a  subscriber  cannot  be  held  to  his 
subscription.''*  A  substantial  performance  is  all  that  is  usually 
required.""  This  rule  applies  particularly  to  the  time  of  comple- 
tion, and  the  location,  termini,  and  the  method  of  building  a  rail- 
road,''"  but  what  is  necessary  to  constitute  performance  or  what 
may  be  regarded  as  a  reasonable  time  is  usually,  if  not  always,  a 
question  of  law."  The  question  as  to  whether  a  condition  has 
been  performed  is  usually  a  question  of  fact."^ 


114  Ind.  381,  16  N.  E.  642,  5  Am.  St. 
627. 

*=  Memphis  &c.  R.  Co.  v.  Sullivan, 
57  Ga.  240;  Temple  v.  Lemon,  112  111. 
51,  1  N.  E.  268;  Rockland  Mt.  D.  & 
S.  Steamboat  Co.  v.  Sewall,  80  :\Iaine 
400,  14  Atl.  939;  Haskell  v.  Worth- 
ington,  94  Mo.  560,  7  S.  W.  481; 
Contoocook  Val.  R.  Co.  v.  Barker,  32 
N.  H.  363;  Bray  v.  Farwell,  81  N.  Y. 
600. 

^  Beach  on  Private  Corporations, 
§  535  ;  Schloss  v.  jMontgomery  Trade 
Co.,  87  Ala.  411,  6  So.  360,  13  Am. 
St.  51;  Peoria  &  R.  I.  R.  Co.  v. 
Preston,  35  Iowa  115;  Musgrave  v. 
Morrison,   54  ^Id.   161. 

**  Haskell  v.  Worthington,  94  Mo. 
560,  7  S.  W.  481.  See  also.  Topeka 
Bridge  Co.  v.  Cummings,  3  Kans.  55 ; 
Hager  v.  Cleveland,  36  Md.  476; 
Hughes  V.  Antietam  Mfg.  Co..  34  Md. 
316;  Cabot  &  West  Springfield  Bridge 
V.  Chapin,  6  Cush.  (Mass.)  50; 
Stoneham  Branch  R.  Co.  v.  Gould,  2 
Grav  (Mass.)  277;  Sedalia  R.  Co.  v. 
Abell.  17  Mo.  App.  645. 

^  Paris  &  D.  R.  Co.  v.  Henderson, 
89  111.  86;  Des  Moines  Valley  R.  Co. 
V.  Graff,  27  Iowa  99,  1  Am.  Rep.  256; 


Springfield  R.  Co.  v.  Sleeper,  121 
:\iass.  29. 

'^  Beach  on  Private  Corporations, 
§  540,  citing  Missouri  Pac.  R.  Co.  v. 
Tygard,  84  Mo.  263,  54  Am.  Rep.  97 ; 
People  V.  Holden,  82  111.  93;  Des 
Moines  Valley  R.  Co.  v.  Graff,  27  Iowa 
99,  1  Am.  Rep.  256;  Detroit  &c.  R. 
Co.  V.  Starnes,  38  Mich.  698;  Cayuga 
Lake  R.  Co.  v.  Kyle,  5  Thomp.  &  C. 
(N.  Y.)  659,  affd.  64  N.  Y.  185; 
Moore  v.  Hanover  Junction  &c.  R. 
Co.,  94  Pa.  St.  324. 

*"  See  Garner  v.  Hall,  122  Ala.  221, 
25  So.  187;  Blake  v.  Brown,  80  Iowa 
277,  45  N.  W.  751;  Chicago  R.  Co.  v. 
Schewe,  45  Iowa  79 ;  Stevens  v.  Cor- 
bitt,  33  Mich.  458;  Chartiers  R.  Co. 
V.  Hodgens,  85  Pa.  St.  501 ;  LaCrosse 
Brown  Harvester  Co.  v.  Goddard,  114 
Wis.  610,  91  N.  W.  225. 

**  Jewett  V.  Lawrenceburgh  &  U.  M. 
R.  Co.,  10  Ind.  539;  St.  Louis  R.  Co. 
V.  Eakins,  30  Iowa  279;  Toledo  & 
Ann  Arbor  R.  Co.  v.  Johnson,  49 
Mich.  148,  13  N.  W.  492.  But  see 
Brand  v.  Lawrenceville  Branch  R. 
Co.,  77  Ga.  506,  1  S.  E.  255;  Eliza- 
beth City  Cotton  Mills  v.  Dunstan, 
121  M.  Car.  12,  27  S.  E.  1001,  61  Am. 
St.  654. 


921  COVEXAXTS    AXD    COXDITIOXS.  §     iGlI 

§  1611.  Conditions  subsequent  in  deed — Subsequent  de- 
feasance.— Conditions  in  deeds  will  be  treated  in  another 
volume,  but  a  word  or  two  upon  the  subject  of  conditions  in  deeds 
and  wills  may  not  be  out  of  place  here.  As  between  conditions, 
whether  precedent  or  subsequent,  and  covenants,  the  courts  favor 
the  latter  and  incline  to  a  construction  that  will  make  the  pro- 
vision a  covenant.''"  And  as  between  a  condition  precedent  and 
a  condition  subsequent  they  favor  the  latter  in  the  same  way.''** 
The  object  of  construction  here  as  elsewhere  is  to  get  at  and 
effectuate  the  intention,  and  certain  tests  have  been  suggested 
but  they  are  too  general  and  indefinite  to  be  of  much  use."  As 
a  genpral  rule  it  may  be  said  that  to  create  a  condition  subsequent 
in  a  deed,  the  intention  of  the  parties  to  the  deed  must  be  clearly 
expressed  in  some  words  importing  that  the  estate  is  to  depend 
upon  a  contingency  provided  for."  Where  the  condition  subse- 
quent in  a  deed  conveying  an  estate  in  fee-simple  was  the  pay- 
ment of  a  certain  annuity  by  the  grantee  to  the  grantor  on  a 
given  day  in  each  year  during  tlie  life  of  the  grantor,  it  was  held 
that  it  was  not  broken  so  long  as  the  annuity  was  not  in  arrears, 
and  until  the  conditions  were  broken  the  grantor  had  no  right  to 
re-enter  as  for  a  forfeiture,  and  no  cause  of  action  to  cancel  the 
deed  as  a  cloud  upon  his  title. "^  So,  it  has  been  held  that  where 
land  is  conveyed  in  payment  of  a  debt  by  deed  absolute  and  with- 
out any  agreement  for  a  defeasance,  a  subsequent  agreement  exe- 
cuted by  the  grantee,  stipulating  that  if  he  sells  the  land  he  will 
give  the  grantor  the  refusal  to  purchase  or  to  find  a  purchaser 
upon  the  same  terms  offered  to  others,  or  if  he  sells  a  portion  and 
realizes  enough  to  pay  the  debt  he  will  reconvey  the  property  to  the 

"Hawley  v.  Kafitz,  148  Cal.  393,  83         '=  Garcia  v.  Gunn.   119  Cal.  315,  51 

Pac.  248.  3  L.  R.  A.  (N.  S.)  741,  and  Pac.  684;  North  &  South  R.  S.  Co.  v. 

note    113   Am.    St.   282.     See  note   to  O'Hara,  73   111.  App.  691;    Brown  v. 

Ecrovd  V.  Coggeshall,  21  R.  I.   1,  41  Chicago.  &  N.  W.  R.  Co.   (Iowa).  82 

Atl.  260,  79  Am.  St    741  ;   Shreve  v.  N.  W.  1003 ;  Faith  v.  Bowles.  86  Md. 

Norfolk  &  W.  R.  Co..   109  Va.  706,  13.  37  Atl.  711.  63  Am.  St.  489;  An- 

64  S.  E.  972,  23  L.  R.  A.  (N.  S.)  771,  derson  v.  Gaines.  156  Mo.  664.  57  S. 

and  note.  W.  726:  Baker  v.  Mott.  78  Hun  (N. 

'"In  re  Sticknev's  Will.  85  ^Id.  79,  Y.)  141.  60  N.  Y.  St.  174.  28  N.  Y.  S. 

36  Atl.  654,  35  L.  R.  A.  693,  60  Am.  968.   affd.    152   N.   Y.   637.   46   N.    E. 

St.  308.  1144;  Ecrovd  v.  Coggeshall.  21  R.  I. 

"See  for  statement   of  these  tests  1,  41  Atl.  260.  79  Am.  St.  741. 
and  for  an  elaborate  note  on  the  sub-        "  Denham  v.  Walker,  93  Ga.  497,  21 

ject  of  conditions  precedent,  102  Am.  S.  E.  102. 
St.  3c6  et  scq. 


§     l6l2  CONTRACTS.  922 

grantor,  does  not  convert  the  fee  into  a  defeasible  estate.'*  While 
in  such  a  case  the  subsequent  agreement  may  not  be  read  with  the 
conveyance  for  the  purpose  of  establishing  the  latter  as  a  mort- 
gage, yet  where  the  two  instruments  were  executed  in  pursuance 
of  the  original  agreement  and  so  constitute  a  part  of  the  same 
transaction,  they  may  be  so  read  together,  although  they  were 
not  reduced  to  writing  at  the  same  time  and  do  not  bear  even 
date."^  Where  premises  had  never  been  used  for  the  purpose  for 
which  they  were  conveyed  and  many  years  had  elapsed,  it  was 
held  that  this  was  a  breach  of  condition  subsequent  for  which  the 
grantor  had  a  right  of  entry."® 

§  1612.  Surety's  bond  signed  under  condition. — Where  one 
signs,  as  surety,  a  bond,  which  in  form  is  a  joint  obligation,  upon 
condition  that  others  are  to  sign  the  same  with  him,  and  it  is  deliv- 
ered without  the  condition  having  been  complied  with,  the  instru- 
ment is  invalid  as  to  the  one  signing  as  surety,  unless  the  obligee, 
prior  to  the  delivery,  had  no  notice  of  such  condition,  or  the 
surety,  after  signing,  waived  the  condition. ^'^  It  is  equally  well 
settled  that,  when  such  a  bond  is  delivered  to  the  obligee  without 
being  signed  by  all  the  persons  named  in  the  body  thereof  as 
obligors,  it  is  sufficient  to  put  the  obligee  upon  inquiry  whether 
those  who  signed  consented  to  its  being  delivered  without  the 
signatures  of  the  others,  and  to  charge  the  obligee  with  notice,  if 
such  be  the  fact,  that  the  person  signing  did  so  upon  the  condition 
that  the  others  named  should  also  sign.^^ 

''^  Pond  V.  Harwood,  139  N.  Y.  Ill,  bond  cannot  be  enforced  against  the 

34  N.  E.  768.  one  so  signing  as  surety,  unless  the 

^'  Kraemer   v.   Adelsberger,   122   N.  obligee  had  no  notice  of   the  condi- 

Y.  467,  25  N.  E.  859.  tion,    or    it    be    established    that    the 

'*  Fav  V.   Locke,  201   Mass.  387,  87  surety,  after  signing,  waived  the  con- 

N.  E.  753,  131  Am.  St.  402.   As  to  how  dition.    Cutler  y.  Roberts,  7  Nebr.  4; 

advantage  may  be  taken  of  breach  of  Sharp    v.     United    States,    4    Watts 

condition     subsequent     see     note     to  (Pa.)  21;  Fletcher  v.  Austin,  11  Vt. 

Trustees   of    Union    College   v.   New  447;    Hall  v.    Parker,   37   Mich.   590; 

York,  173  N.  Y.  38,  65  N.  E.  853,  93  Lovett  v.  Adams,  3  Wend.   (N.   Y.) 

Am.    St.   569,   572.   See  also,    Spring-  380;    State    v.    Pepper,    31    Ind.    76; 

field   &c.    Trac.   Co.   v.    Warrick,   249  People  v.  Bostwick,  32  N.  Y.  445." 
111.  470,  94  N.  E.  933,  Ann.  Cas.  1912A,        "  Sacramento    v.    Dunlap,    14    Cat. 

187;  Ball  v.  Milliken.  31  R.  I.  36,  76  421;   People  v.   Hartley,  21   Cal.  585, 

Atl.  789,  Ann.  Cas.  1912B,  30.  82  Am.  Dec.   758;    Clements   v.   Cas- 

"  Spencer  v.  McLean,  20  Ind.  App.  sillv,  4  La.  Ann.  380;  Wood  v.  Wash- 

626.   50  N.   E.   769,   67  Am.   St.   271;  burn,  2  Pick.    (Mass.)    24;   Cutler  v. 

Mullen   V.   Morris,   43    Nebr.    596,  62  Roberts,  7  Nebr.  4,  29  Am.  Rep.  371  ; 

N.  W.  74,  per  Norval,  C.  J. :    "The  State  Bank  v.  Evans,  15  N.  J.  L.  155, 


9^3 


COVEXAXTS    AXD    COXDITIOXS. 


1613 


§  1613.  Time  of  performance — Reasonable  time. — Where 
an  option  is  to  be  exercised  or  a  condition  to  be  performed  in  a 
time  not  limited  by  the  agreement,  the  general  rule  is  that  it  must 
be  acted  upon  and  the  condition  performed  or  abandoned  within 
a  reasonable  time.'"  But  while  one  party  has  time  and  oppor- 
tunity to  comply  with  a  condition  precedent,  if  the  other  party 
does  or  says  anything  to  put  him  off  his  guard,  and  induce  the 
former  to  believe  that  the  condition  is  waived,  or  that  strict  com- 
pliance will  not  be  insisted  on,  the  latter  may  be  afterward 
estopped  from  claiming  nonperformance  of  the  condition.  Thus, 
where  bonds  were  purchased  with  the  understanding  that,  if  the 
customer  did  not  want  to  hold  them  the  broker  would  take  them 
off  his  hands  at  cost  price,  a  delay  on  the  part  of  the  customer  to 
exercise  his  option  was  held  not  to  deprive  him  of  his  right  to 
do  so,  where  the  broker  encouraged  him  to  hold  on  to  the  bonds 
by  predicting  better  prices. *°  So,  it  may  appear  from  the  terms 
of  the  contract  and  the  nature  of  the  transaction,  although  there 


28  Am.  Dec.  400;  Sharp  v.  United 
States,  4  Watts  (Pa.)  21;  Bean  v. 
Parker,  17  Mass.  591.  Is  there  any 
presumption  that  such  a  bond  is  in- 
complete and  unfinished  until  exe- 
cuted by  all  the  parties  whose  names 
appear  in  it  as  obligors?  Upon  this 
point  the  authorities  are  not  har- 
monious. The  following  cases  hold 
that  no  presumption  arises  that  such 
a  bond  was  not  considered  as  bind- 
ing until  the  signatures  of  all  the 
obligors  named  in  the  body  have 
been  obtained,  but,  on  the  contrary, 
its  execution  is  deemed  prima  facie 
complete,  and  it  is  for  the  defend- 
ants to  establish  that  they  signed  on 
the  express  condition  that  they  were 
not  bound  until  all  the  ol)ligors  named 
in  the  instrument  should  sign.  John- 
son V.  Weatherwax,  9  Kans.  75 ;  Ras- 
kins V.  Lombard,  16  Maine  140,  33 
Am.  Dec.  645 ;  Cutter  v.  Whittemore, 
10  Mass.  442;  Dillon  v.  Anderson. 
43  N.  Y.  231;  Johnson  v.  Baker,  4 
Barn.  &  Aid.  440.  Some  of  the  au- 
thorities which  hold  that  the  pre- 
sumption is  that  such  instrument  was 
not      to   be    delivered   until   all    had 


signed  are  Sharp  v.  United  States,  4 
Watts  (Pa.)  21;  Clements  v.  Cas- 
sillv.  4  La.  Ann.  380. 

•"Vvse  V.  Wakefield.  6  M.  &  W. 
442;  Catlin  v.  Green,  120  X.  Y.  441, 
24  N.  E.  941;  Fitzpatrick  v.  Wood- 
ruflf,  96  N.  Y.  561 ;  Wooster  v.  Sage. 
67  N.  Y.  67;  Johnston  v.  Trask,  40 
Hun  (N.  Y.)  415.  116  N.  Y.  136,  22 
N.  E.  377,  5  L.  R.  A.  630,  15  Am. 
St.  394.  And  the  question  as  to 
what  is  a  reasonable  time  is  held  one 
of  fact  for  the  jury  in  Campbell  v. 
Heney.  128  Cal.  109,'  60  Pac.  532.  See 
also,  Kentucky  Chair  Co.  v.  Common- 
wealth, 105  Ky.  455.  20  Ky.  Law,  1279, 
49  S.  W.  197;  Lind  v.  Apponaug 
Bleaching  &c.  Co.,  20  R.  L  344,  39 
Ad.  188;  Andrae  v.  Watson  (Tex. 
Civ.  App.).  73  S.  W.  991;  Lang  v. 
Menasha  Paper  Co.,  119  Wis.  1,  96 
N.  W.  393. 

^Johnston  v.  Trask.  40  Hun  (X. 
Y.)  415,  afTd.  116  X.  Y.  136.  22  X. 
E.  377,  5  L.  R.  A.  630,  15  Am.  St. 
394.  See  also.  Thompson  v.  Kvie, 
39  Fla.  582,  23  So.  12,  63  Am.  'St. 
193. 


iCi4 


CONTRACTS. 


924 


is  no  express  provision  as  to  time,  that  the  parties  must  have  in- 
tended that  it  might  not  be  completed  for  months  or  even  years. ^^ 

§  1614.  Waiver — Miscellaneous. — Full  performance,  time 
of  performance,  and  other  conditions  may  be  waived.^-  A  com- 
plaint alleging  that,  after  plaintiffs  became  the  owners  of  the  note 
in  suit,  defendant  admitted  to  them  that  it  was  due,  and  .agreed 
that,  in  consideration  of  an  extension  of  time  for  thirty  days,  he 
would  pay  it,  and  that  he  failed  to  do  so,  shows  a  waiver  by  de- 
fendant of  the  performance  of  a  condition  precedent  in  the  note.^^ 
The  acceptance  of  contract  work  bi-weekly  as  it  progresses,  by 
the  superintendent  of  a  corporation,  as  done  to  his  "satisfaction,'' 
in  compliance  with  the  terms  of  the  contract,  and  a  final  accept- 
ance of  the  whole  in  writing,  is  conclusive  on  the  company  as 
to  performance,  in  the  absence  of  fraud  or  mistake  on  the  part 
of  the  superintendent.^*  And  when  one  who  was  under  contract 
to  furnish  lamps  of  the  most  approved  form,  made  by  a  certain 
company,  in  good  faith  furnished  lamps  made  by  it  having  a  new 


"Fitch  V.  Windram,  184  Mass.  68, 
67  N.  E.  965. 

**  Three  States  Lumber  Co.  v. 
Bowen,  95  Ark.  529,  129  S.  W.  799; 
Westerveh  v.  Huiskamp,  101  Iowa 
196,  70  N.  W.  125 ;  Hanover  Junction 
&  S.-  R.  Co.  V.  Haldeman,  82  Pa.  St. 
36,  2  Chest.  County  (Pa.)  256;  An- 
derson V.  Middle  &c.  Tenn.  Cent.  R. 
Co.,  91  Tenn.  44,  17  S.  W.  803. 

^Johnson  v.  Bucklen,  9  Ind.  App. 
154,  36  N.  E.  176,  where  the  court 
said :  "The  performance  of  a  condi- 
tion precedent  may  be  waived  in 
many  ways.  A  person  who  made  a 
subscription  to  the  capital  stock  of 
a  railway  company  on  the  express 
condition  that  the  road  should  be  con- 
structed on  a  certain  line,  and  to 
within  a  certain  distance  of  a  given 
place,  after  the  road  had  been  con- 
structed on  another  line,  gave  his 
note  for  the  amount  of  his  subscrip- 
tion. This  was  held  to  be  a  waiver 
of  the  condition.  Evansville  &c.  R. 
Co.  V.  Dunn,  17  Ind.  603.  _  Where 
money  is  stipulated  to  be  paid  upon 
a  condition  expressed,  and  subse- 
quently a  promissory  note  is  given 
for  the  amount,  payable  without  con- 
dition,    the     condition     precedent     is 


waived.  Swank  v.  Nichols,  20  Ind. 
198,  24  Ind.  199.  See  also,  Hunter 
v.  Leavitt,  36  Ind.  141 ;  Masonic  &c. 
Assn.  v.  Beck,  77  Ind.  203,  207.  It 
was  at  the  option  of  the  pleader  to 
aver  performance  of  the  condition 
precedent,  or  to  aver  a  waiver  of 
the  condition.  Indiana  Ins.  Co.  v. 
Capehart,  108  Ind.  270,  273,  8  N.  E. 
285.  We  think  the  only  purpose  of 
the  averments  with  reference  to  the 
extension  of  the  time  of  the  maturity 
of  the  note  is  to  show  that  the  ap- 
pellant waived  a  strict  performance 
of  the  condition.  The  facts  alleged 
do  constitute  a  waiver."  See  also, 
Spreckels  v.  Bender,  30  Ore.  577,  48 
Pac.  418. 

"*  Sheffield  &  B.  Coal,  Iron  &  R. 
Co.  V.  Gordon,  151  U.  S.  285.  38  L. 
ed.  164,  14  Sup.  Ct.  343,  per  Brown, 
J. :  "It  is  difficult  to  see  what  effect 
should  be  given  the  acceptance  of 
the  work  by  the  superintendent,  if 
not  to  foreclose  the  parties  from 
thereafter  claiming  that  the  contract 
had  not  been  performed  according  to 
its  terms.  Martinsbureh  &  P.  R.  Co. 
v.  March,  114  U.  S.  .549.  29  L.  ed. 
255,  5  Sup.  Ct.  1035."  Bradv  v.  Cas- 
sidv,  145  N.  Y.  171,  39  N.  E.  814. 


925  COVENANTS    AND    CONDITIONS.  §    1614 

kind  of  burner,  it  was  held  that  the  purchaser  could  not  recover 
damages  on  the  ground  that  this  burner  was  a  failure,  and  that  it 
would  cost  three  dollars  per  lamp  to  exchange  it  for  the  old  kind, 
wiien  there  was  no  evidence  that  it  ever  made  any  such  change, 
or  paid  any  money  therefor,  or  sold  the  lamps  for  any  less  price 
on  account  of  the  burner,  or  how  much  less  the  lamps  were  worth 
with  the  new  burner  than  with  the  old.*'  Where  a  person  con- 
tracted to  build  a  gas  tank  for  a  company,  and  complete  it  by  a 
day  specified,  under  a  certain  penalty  per  day  for  failure  so  to 
complete,  provided  the  company  would  have  the  foundation  ready 
by  a  day  specified,  it  was  held  that  the  completion  of  the  founda- 
tion by  the  company  on  the  day  mentioned  was  a  condition  prece- 
dent, in  default  of  which  the  company  could  not  claim  the  penalty 
as  liquidated  damages.'"  And  where  a  bond  was  given  toward 
the  endowment  of  a  professorship,  it  was  held  that  the  establish- 
ment and  endowment  of  such  professorship  was  not  a  condition 
precedent  to  the  collection  of  the  bond."  A  stipulation  in  a  bond 
to  "secure"  land  for  a  railroad  company  for  its  depot  requires 
the  securing  of  a  good  title  to  the  land,  and  the  construction  of 
a  depot  is  not  a  condition  precedent  to  the  company's  right  to  re- 
cover on  the  bonds  for  defendant's  failure  to  secure  the  land.'' 

"^  Cincinnati    Siemens-Lungren  Gas  the  funds,  is  a  trust  assumed  by  the 

Co    V    Western   &c.    Co.,    152    U.    S.  acceptance    of    the    bond,    and    such 

200   38  L.  ed.  411,  14  Sup.  Ct.  523.  trusts,  as  we  have  already  seen,  may 

^'standard  Gas  Co.  v.  Wood,  61  be  enforced  upon  the  fadure  of  the 
Fed  74  9  C.  C  A.  362;  Dannat  v.  trustee  to  perform  them.  That  the 
Fuller  120  N  Y.  554,  24  N.  E.  815;  performance  of  the  trust  is  not  a  con- 
Mansfield  V.  New  York  Cent.  &c.  R.  dition  precedent,  see  Northwestern 
Co.,  102  N.  Y.  205,  6  N.  E.  386;  Der-  Conference  v.  Myers.  36  Tnd.  3/s 
mott  V.  Tones,  23  How.  (U.  S.)  *"  Rogers  v.  Galloway  Female  Col- 
2^0    16  L    ed    442  lege.  64  Ark.  627,  44  S.  W.  454,  30 

"Barnett   v.    Franklin    College.    10  L.   R.   A.  636;   Frey  v.   Fort   \\orth 

Tnd.   App.   103,  37  N.   E.  427.     "The  &c.  R.   Co.,  6  Tex.  Civ.  App.  29    24 

endowment    of    the    James    Forsyth  S.  W.  950,  revd.  86  Tex.  46o,  25  b. 

professorship,  like  the  application  of  W.  609. 


I 


CHAPTER  XXXVII. 


PAROL    EVIDENCE. 


§  1620.  Merger     of     negotiations     in  §  1639. 
written  contracts. 

1621.  Extrinsic  evidence  not  admis-  1640. 

sible   to   contradict   or   vary  1641. 

written     contracts — General  1642. 

rule.  1643. 

1622.  The    rule    illustrated — Trans- 

fers of  real  property.  1644. 

1623.  The     rule     illustrated — Insur-  1645. 

ance   contracts. 

1624.  Bills  and  notes,  promise  to  pay  1646. 

out  of  particular  fund.  1647. 

1625.  Contemporaneous    contracts — 

To  defeat  validity  or  legal  1648. 

effect  of  note.  1649. 

1626.  Contemporaneous      agreement  1650. 

to  pay  note  in  property   or  1651. 

work.  1652. 

1627.  Miscellaneous    illustrations.  1653. 

1628.  Rule   applies    to    what   is  im-  1654. 

plied  by  law  as  part  of  con- 
tract. 1655. 

1629.  Limitations   and    qualifications 

of  general  rule.  1656. 

1630.  Rule  does  not  ordinarily  apply  1657. 

to  strangers.  1658. 

1631.  Incomplete  writings. 

1632.  Existence  and  validity  of  con-  1659. 

tract. 

1633.  Collateral      and      independent  1660. 

agreements. 

1634.  Collateral       agreements — Evi-  1661. 

dence  held  admissible.  1662. 

1635.  Collateral      agreements — Evi- 

dence  held   inadmissible.  1663. 

1636.  Conditions  precedent.  1664. 

1637.  Conditions        precedent — Bills  1665. 

and  notes. 

1638.  Conditions       precedent — Sure- 

ties. 


Conditions  precedent  —  Rule 
further  illustrated. 

Subsequent  agreements. 

Object — Purpose — Intent. 

Consideration. 

One  contract  as  consideration 
for  another. 

Bills  of  lading. 

Evidence  to  connect  different 
writings. 

Resulting  trust. 

Showing  deed  to  be  a  mort- 
gage. 

Dates. 

Illegality. 

Fraud  and  duress. 

Fraud — llllustrative  cases. 

Mistake. 

Mistake — Illustrative  cases. 

Discharge  —  Performance  — 
Waiver. 

Parol  evidence  to  aid  interpre- 
tation. 

Patent    ambiguity. 

Latent  and  patent  ambiguity. 

Another  statement  as  to  pat- 
ent and  latent  ambiguity. 

Identification  of  subject-mat- 
ter. 

Identification  of  subject-mat- 
ter— Illustrative  cases. 

Meaning  of  words — Generally. 

Translations  and  illegible 
writings. 

Usage  and  custom. 

Identification  of  parties. 

Abbreviations,  technical  trade, 
and  local  terms. 


§  1620.  Merger  of  negotiations  in  written  contracts. — A 
written  contract  which  is  complete  in  itself  and  the  validity  of 
which  is  conceded  cannot  be  varied  by  showing  that  prior  or  con- 

926 


(^Zy  PAROL    EVIDENCE.  §    162O 

temporaneous  agreements  were  made  which  were  not  reduced 
to  writing  but,  in  accordance  with  the  understanding  of  the  par- 
ties thereto,  were  to  remain  in  full  force  and  effect/  The  prior 
mutual  understanding  of  the  prirtics  is  unimportant  when  they 
have  signed  a  contract  covering  the  subject-matter  thereof.  It  is 
well  settled  that  the  execution  of  a  contract  in  writing  supersedes 
and  merges  all  the  oral  negotiations  or  stipulations  concerning 
its  terms  and  the  suhjcct-niaUcr  which  ])recedcd  or  accompanied 
the  execution  of  the  instrument,  in  the  absence  of  accident,  fraud, 
or  mistake  of  facts;  and  in  action  on  the  contract  any  representa- 
tion made  prior  to  or  contemporaneous  with  the  execution  of  the 
written  contract  is  generally  inadmissible  to  contradict,  change  or 
add  to  the  terms  plainly  incorporated  in  and  made  a  part  of  the 
written  contract."  This  rule  is  equally  applicable  where  the  in- 
tention of  the  party  is  set  out  in  two  written  instruments  as  well 
as  where  it  is  contained  in  only  one.^ 

When  the  parties  of  their  own  volition  omit  certain  terms 
in  reducing  the  contract  to  writing,''  as  where  a  clause  pro- 
viding for  the  abatement  of  rent  is  voluntarily  omitted,^  the 
terms  thus  omitted  cannot  be  enforced.     Thus  where  a  woman 

^Abrey  v.  Crux,  L.  R.  5  C.  P.  11  \  63  N.  J.  Eq.  282.  49  At!    1081    aflfg. 

Woollam  V.    Hearn,   7   Ves.   Jr.  211;  60  N.  J.  Eq.  282,  47  Atl.  37 ;  Thomas 

Omerod  v.  Hardman.  5  Ves.  Jr.  722;  v.  Scutt.  127  N.  Y.  133,  27  N.  E.  961; 

Hildreth    v.    Hartford   &c.    Tramway  Travelers'  Ins.  Co.  v.  Myer,  62  Ohio 

Co.,  n  Conn.  631.  48  Atl.  963;  Quinn  St.  529,  57  N.  E.  458.  49  L.  R   A   /60: 

V.  Roath,  il  Conn.  16 ;  Sun  &c.  Asso-  Union    Central   &c.   Co.   v.   Hook,   bl 

ciation  V.  Edwards.  113  Fed.  445,  51  Ohio  St.  256.  56  N.  E.  906;  Philadel- 

C   C.  A.  279;  Rector  v.  Hartford  De-  phia  &  D.  C.  R.  Co.  v.  Conway.   17/ 

posit  Co.,  190  111.  380,  60  N.  E.  528;  Pa.    St.    364,   35    Ad.    716;    Heist   v. 

Tichenor    v.    Newman.    186    111.    264.  Hart,    11    Pa.     St.     286;     Gilbert    v. 

57  N.  E.  826;   Ehrsam  v.   Brown,  64  Stockman.  76  Wis.  62.  44  N    \\  .  845, 

Kans.    466.    67    Pac.    867;    Wight    v.  20  Am.  St.  23;  Umon  Mut    Life  Ins. 

Shelby  Countv  R.,  16  B.  Mon.  (Kv.)  4,  Co.   v.   Mowry,  96   U.   S.   544    24  L. 

63  \m    Dec    522;  Holmes  v.  Holmes,  cd.  674.    Contra,  under  the  California 

129  Mich    412    89  N.  W.  47,  95  Am.  statute.     Snyder    v.    Holt    Mfg.    Co., 

St.  444;   McCrav  Refrigerator  Co.  v.  134  Cal.  324,  66  Pac._  311 

Woods.  99  Mich.  269,  58  X.  W.  320.  "Wenzel   v.   Kieruj.    168  Mich.  92, 

41   Am.   St.   599:   Loth  v.   Frederick,  133   X.  W.  921;   McNinch  v.  North- 

95  Mich    598,  55  N.  W.  369;  Plumb  west    Thresher    Co.,    23    Okla.    386, 

V.  Cooper,  121  :^Io.  668,  26  S.  W.  678;  100  Pac.  524,  138  Am    St.  803. 

Largey  v.   Leggatt,  30   Mont.   148,  75  '  Harrison  v.  Tate,  100  Ga.  383,  J8 

Pac.    950;    Montana    Mining    Co.    v.  S.  E    227.                     ^,        ,           o 

Milling    Co.,    20    Mont.    304,    51    Pac.  '  Eleventh    Street    Church    y     Pen- 

8^4    afTd     171    U.    S.   650,   43   L.   ed.  nington.  18  Ohio  C.  C.  40b,  10  Ohio 

•320!    19    Sup.    Ct.    61 ;    Crawford    v.  C.  D.  74. 

Minnesota    &-c.    Imp.  '  Co.,    15    Mont.  "  Seitz    Brewing    Co.    y^  Ayers,   60 

153,  38  Pac.  713 ;  Russell  v.  Russell,  X.  J.  Eq.  190,  46  Atl.  535. 


§    l620  CONTRACTS.  928 

executed  a  written  instrument  whereby  she  abandoned  her 
claim  to  certain  horses  and  carriages  in  another's  possession 
until  such  other's  claim  for  board  was  paid  in  full,  it  was  held 
that  the  woman  could  not  show  a  contemporaneous  oral  agree- 
ment by  which  she  might  have  the  use  of  such  horses  in  the  ordi- 
nary course  of  her  business. °  And  in  case  the  law  grants  no 
priority  of  payment  between  notes  secured  by  one  mortgage  but 
falling  due  on  different  dates,  extrinsic  evidence  will  not  be  ad- 
mitted to  show  that  the  assignee  should  have  priority.^  Where 
four  notes  are  secured  by  a  mortgage,  extrinsic  evidence  is  inad- 
missible to  show  that  such  mortgage  was  to  be  released  upon  the 
payment  of  two  of  the  above-mentioned  notes.^  An  indorser  of 
one  of  several  notes  secured  by  mortgage  will  not  be  permitted  to 
show  that  by  an  oral  agreement  the  proceeds  of  the  mortgage 
were  to  be  applied  first  to  the  satisfaction  of  the  note  last  matur- 
ing.^ And  under  a  contract  by  which  one  agrees  to  pay  "all  of 
the  outstanding  indebtedness"  of  another,  "not  to  exceed  in  all 
one  hundred  thirty  thousand  dollars,"  extrinsic  evidence  is  inad- 
missible to  show  an  oral  contract  by  which  the  former  obli- 
gated himself  to  pay  only  a  part  of  the  latter's  debts."  A  con- 
tract to  supply  one  with  all  the  material  needed  by  him  cannot  be 
varied  by  parol  to  show  that  the  contract  was  to  furnish  only  a 
limited  amount."  When  a  contractor  by  a  written  agreement 
assumes  the  contracts  for  materials  already  made,  he  cannot  show 
that  there  was  a  contemporaneous  oral  understanding  between 
the  parties  that  he  should  in  fact  assume  only  a  certain  amount 
of  such  contracts  and  that  the  other  party  was  to  assume  the  ex- 
cess over  such  amount.^^  Evidence  is  inadmissible  to  show  that 
a  part  only  of  an  entire  indebtedness  was  to  be  paid  when,  under 
the  terms  of  the  written  agreement,  the  entire  indebtedness  was 
to  be  paid.^^    And  where  a  written  contract  for  the  sale  of  land 

"  Radigan  v.  Johnson,  174  ^lass.  68,  "  Bell  v.  Mendenhall,  78  Minn.  57, 

54  X.   E.  358.  80   N.   W.   843. 

'Jennings  v.  Moore,  83  Mich.  231,  "Dean  v.  Washburn  &c.  Mfg.  Co., 

47  X.  W.  127,  21  Am.  St.  601.  177  Mass.  137,  58  X.  E.  162. 

'First   National   Bank  v.   Prior,  10  "Bandholz   v.   Judge,  62   N.   J.   L. 

N.  Dak.  146,  86  N.  W.  362.  526.  41  Atl.  723. 

"  Schulty   V.    Plankinton    Bank,    141  '''  First  National  Bank  v.  Nashville 

111.  116,  30  N.  E.  346,  33  Am.  St.  290.  St.  R.   Co.    (Tenn.  Ch.  App.),  46  S. 

W.  312. 


929  PAROL   EVIDENCE.  §    1 62 1 

provides  for  the  payment  of  taxes  and  assessments,  parol  evidence 
is  inadmissible  to  show  an  agreement  on  the  part  of  the  vendor 
to  pay  the  taxes  thereon.^*  Nor  in  such  case  is  extrinsic  evidence 
admissible  to  show  that  certain  taxes  were  to  be  excepted  from 
the  operation  of  a  covenant  against  encumbrances."  It  cannot 
be  shown  under  a  written  permission  for  the  assignment  of  a 
lease  that  tlie  liability  of  the  lessee  was  to  end  with  such  assign- 
ment.^" Under  a  contract  whereby  one  of  the  parties  thereto  is 
to  furnish  castings  and  sink  a  well  for  a  given  sum  it  cannot  be 
shown  by  parol  that  he  was  also  to  furnish  the  tubing  and  pump 
for  the  same  price."  When  an  insurance  agent  is  employed  un- 
der a  contract  which  provided  that  it  could  be  ended  at  will  with- 
out liability  except  for  commissions  earned,  the  agent  will  not  be 
permitted  to  show  a  contemporaneous  oral  contract  giving  him 
commissions  on  future  renewals. ^^  Under  a  written  contract  for 
the  sale  of  machines,  complete  in  itself,  it  cannot  l>e  proved  by 
parol  that  the  machines  sold  were  to  be  set  up  by  the  agent. ^^ 

§  1621.  Extrinsic  evidence  not  admissible  to  contradict  or 
vary  written  contracts — General  rule. — \Miile  not  without  its 
limitations  and  exceptions,  the  general  rule  that  parol  evidence 
is  inadmissible  to  contradict  or  vary  the  tenns  of  a  valid  written 
contract  is  so  well  settled  that  it  cannot  be  a  proper  subject  of 
discussion.^"   In  general,  extrinsic  evidence  cannot  be  introduced 

"Gilbert  v.  Stockman,  16  Wis.  62,  Rigdon  v.  Conley,  141  111.  565,  30  X. 

44   N.   W.   845,  20   Am.   St.  23;   and  E.  1060;  Brunson  v.  Henry,  140  Ind. 

see   Garwood   v.   Wheaton,    128   Gal.  455,  39  N.  E.  256;  Diven  v.  Johnson, 

399,  60  Pac.  961.  117  Ind.  512,  20   N.  E.  428,  3  L.   R. 

"Stanisics  v.   McMurtry,  64  Nebr.  A.  308;  Smith  v.  Barber,  153  Ind.  Zll, 

761,  90  N.  W.  884.  53   N.   E.    1014;   Singer   Mfg.   Co.   v. 

"Rector  v.  Hartford  Deposit  Co.,  Forsvth,   108  Ind.  334,  9  N.   E.  2>12\ 

190  111.  380,  60  N.  E.  528.  Hunt  v.  Gray,  76  Iowa  268.  41  X.  W. 

"  Meader   v.   Allen,    110  Iowa  588,  14;    Johnson    v.    Zweigart,    114    Kv. 

81  N.  W.  799.  545,  24  Ky.  L.   1323.  71  S.  \V.  445: 

"  Stowell    V.    Greenwich    Ins.    Co.,  Muhlig   v.     Fiske,     131     Mass.     110: 

163  N.  Y.  298,  57  N.  E.  480.  Stackpole  v.   Arnold.   11   Mass.  27.  6 

"Dowagiac  Mfg.  Co.  v.  Corbit,  127  Am.    Dec.    150;    Cook    v.    First    Nat. 

Mich.  473,  86  N.  W.  954,  87  N.  W.  Bank,  90  Mich.  214.  51    N.  W.  206: 

886.  National    Gaslight   &c.   Co.   v.   Bixbv. 

="  Meres   v.   Ansell.    3    Wils.    275;  48  Minn.  Z2Z,  51  N.  W.  217;  Bavard 

Adams  v.  Wordley,  1  M.  &  W.  374;  v.    Malcolm.    1    Johns.    (N.    Y.)    453, 

Preston  v.   Merceau.  2  W.   Bl.   1249;  revd.   2  Johns.    (\.    Y.)    550.  3   Am. 

Coker  v.   Guy.  2   B.  &   P.   565;   Fer-  Dec.   450;    Societa    Italiana   di   Bene- 

guson  Cont.  Co.  v.  Manhattan  Trust  ficenza   v.    Sulzer.   138   \.   Y.  468,  34 

Co.,  118  Fed.  791,  55  C.   C.  A.  529;  N.  E.  193;  Bast  v.  First  Nat.  Bank. 

59 — Contracts.  Vol.  2 


1 62 1 


CONTRACTS. 


930 


to  contradict  or  vary  the  intention  of  the  parties  as  set  out  in  a 
written  contract  by  showing  the  existence  of  a  prior  or  contempo- 
raneous oral  understanding  contrary  to  the  terms  of  the  written 
contract."  A  written  contract  cannot  be  varied  by  an  oral  agree- 
ment made  substantially  at  the  same  time."  A  party  cannot  be 
relieved  from  express  and  definite  conditions  voluntarily  inserted 
in  a  written  contract,  on  the  mere  ground  that,  at  the  time  of 
executing  the  contract,  verbal  conditions  were  agreed  to,  con- 
tradicting the  writing.^^  The  rule,  that  where  the  parties 
finally  put  their  contract  in  writing  an  independent  contem- 
poraneous oral  agreement  relating  to  the  subject-matter  which 
is  inconsistent  with  the  terms  of  the  instrument  cannot  be  given 
effect  to  vary  or  modify  its  purpose,  does  not,  however,  conflict 
with  another  well-settled  rule  to  the  effect  that  for  the  purposes 
of  interpretation  and  application  of  the  terms  of  a  contract,  evi- 
dence showing  the  subject-matter  with  which  the  parties  dealt, 

S.  E.  466;  First  Nat.  Bank  v.  Cen- 
tral Chandelier  Co.,  17  Ohio  C.  C 
443,  9  Ohio  C.  D.  807;  Harley  v. 
Weber,  1  Ohio  C.  D.  360,  2  Ohio 
Cir.  Ct.  57;  Kaufmann  v.  Friday, 
201  Pa.  St.  178.  50  All.  942;  Ivery 
V.  Phillips,  196  Pa.  St.  1,  46  Atl.  133; 
Burwell  v.  Chapman,  59  S.  Car.  581, 
38  S.  E.  222;  Martin  v.  Mononga- 
hela  R.  Co.,  48  W.  Va.  542,  Zl  S.  E. 
563;  Coman  v.  Wunderlich,  122  Wis. 
138,  99  N.  W.  612;  Newell  v.  New 
Holstein  Canning  Co.,  119  Wis.  635, 
97  N.  W.  487. 

'"McGuinness  v.  Shannon  (1891), 
154  Mass.  86,  27  N.  E.  881.  "It  must 
therefore  be  treated  merely  as  an 
oral  agreement,  which  was  incon- 
sistent wjth  the  written  agreement, 
and  was' made  substantially  at  the 
same  time,  and  it  can  not  have  the 
effect  to  vary  it.  It  was  not  an  altera- 
tion of  the  written  contract  by  a  sub- 
sequent new  oral  agreement  between 
the  parties,  and  in  this  respect  it 
closely  resembles  Clark  v.  Hough- 
ton, 12  Gray  (Mass.)  38.  See  also, 
Doyle  V.  Dixon,  12  Allen  (Mass.) 
576;  Fitz  v.  Cormey,  118  Mass.  100; 
Frost  V.  Brigham,  139  Mass.  43,  29 
N.  E.  217." 

''St.  Vrain  Stone  Co.  v.  Denver 
&c.  R.  Co.,  18  Colo.  211,  32  Pac.  827. 


101  U.  S.  93,  25  L.  ed.  794;  The  Ga- 
zelle, 128  U.  S.  474,  32  L.  ed.  496,  9 
Sup.  Ct.  139;  DeWitt  v.  Berry,  134 
U.  S.  306,  Zl  L.  ed.  896,  10  Sup.  Ct. 
536;  Best  v.  Sinz,  11  Wis.  243,  41 
X.  W.  169;  Whitworth  v.  Brown,  85 
Wis.  375,  55  N.  W.  422.  Many  other 
authorities  might  be  cited  to  the  same 
effect,  but  a  sufficient  number  to  fully 
illustrate  the  rule  are  cited  in  subse- 
quent sections. 

'''Bomar  v.  Rosser,  131  Ala.  215, 
31  So.  430;  Adams  v.  Turner,  IZ 
Conn.  38,  46  Atl.  247;  Housekeeper 
Publishing  Co.  V.  Swift,  97  Fed.  290, 
38  C.  C.  A.  187;  Smith  v.  American 
Nat.  Bank,  89  Fed.  832,  32  C.  C  A. 
368;  American  Harrow  Co.  v.  Dol- 
vin.  119  Ga.  186,  45  S.  E.  983;  Carter 
V.  Williamson,  106  Ga.  280,  31  S.  E. 
651 ;  Maxwell  v.  Willingham,  101  Ga. 
55,  28  S.  E.  672;  Becker  v.  Dalby 
Howa),  86  N.  W.  314;  Crane  v. 
Williamson,  111  Ky.  271,  23  Ky.  L. 
689,  63  S.  W.  610;  White  v.  Will- 
iams, 105  Ky.  802,  20  Ky.  L.  1600,  49 
S.  W.  808;  St.  Landry  State  Bank 
V.  Mevers,  52  La.  Ann.  1769,  28  So. 
136;  Baylor  v.  Butterfass,  82  Minn. 
21,  84  X.  W.  640;  Ming  v.  Pratt,  22 
Mont.  262,  56  Pac.  279;  Aultman  v. 
Hawk,  4  Nebr.  582  (unof.),  95  N.  W. 
695;  Hoffman  v.  Standard  Life  & 
Accident    Co.,    127    N.    Car.    Ill,    37 


93 1  PAROL    E\^DENCE.  §    1 622 

and  the  object  which  they  sought  to  accompHsh,  as  shown  by  the 
preceding  negotiation,  is  competent,  not  to  vary  what  has  been 
reduced  to  writing,  but  to  aid  in  its  construction  and  to  make 
plain  in  what  sense  the  parties  used  and  understood  the  language 
they  employed.** 

§  1622.  The  rule  illustrated — Transfers  of  real  property. — 
Extrinsic  evidence  cannot  be  introduced  to  show  that  a  deed 
was  not  intended  as  a  transfer  of  land  therein  described,"  or  that 
it  was  intended  that  it  should  operate  only  as  a  power  of  attor- 
ney.^* Should  a  deed  be  deposited  in  escrow  to  be  delivered  on 
the  conditions  specified  in  a  written  contract  it  cannot  be  shown 
that  the  deed  was  intended  to  operate  as  a  gift.*^  A  contract  for 
the  ''purchase"  of  land  cannot  be  shown  to  be  a  contract  for  an 
easement.**  A  lessor  whose  title  was  in  dispute  agreed  by  a  writ- 
ten contract  to  indemnify  his  lessee  against  any  loss  that  might 
result  from  paying  rent,  in  case  such  lessor's  title  was  adjudged 
defective.  It  was  held  that  such  contract  could  not  be  contra- 
dicted by  a  contemporaneous  oral  contract  which  provided  for 
the  nonpayment  of  rent  until  the  title  was  settled.-®  Extrinsic 
evidence  is  inadmissible  to  contradict  or  vary  the  effect  of  a 
covenant  against  incumbrances.'" 

§  1623.  The  rule  illustrated — Insurance  contracts. — In 
case  a  contract  for  an  insurance  policy  provides  that  it  shall  not 
become  effective  until  the  acceptance  of  the  application  and  the 
policy  is  issued  and  delivered,  evidence  is  inadmissible  that  the 
policy  was  to  become  effective  immediately.^^  So  too  it  cannot 
be  shown  that  a  policy  of  insurance  which  by  its  terms  covered 
the  husband's  interest  alone  was  intended  to  cover  the  wife's  in- 
terest also.     Thus  a  clause  which  provided  that  the  policy  should 

**  DeFriest    v.    Bradlev,    192    Mass.  ""  Camden  &c.  Rv.  v.  Adams,  62  X. 

346,  78  N.  E.  467.   See  ante.  ch.  38.  J.  Eq.  656,  51  Atl.  24. 

"  Oliver  V.  Brown.  102  Ga.  157,  29  *  Proutv   v.    Adams,   141    Cal.   304, 

S.    E.    159;   Jacob   Tome   Institute  v.  74  Pac.  845. 

Davis,   87   Md.   591,  41   Atl.   166.  "'Smith    v.    .\bington    Sav.    Bank. 

"  Anderson  v.  Continental  Ins.  Co.,  171  Mass.  178.  50  N.  E.  545. 

112  Ga.  532,  Zl  S.  E.  766.  "  Chamberlain    v.    Prudential    Ins. 

"Hilgar  v.  Miller,  42  Ore.  552,  72  Co.,    109   Wis.   4,   85   N.   W.    128,   83 

Pac.  319.  Am.  St.  851. 


§    1624  CONTRACTS.  932 

be  inoperative  if  the  insured  conveyed  his  interest  appHes  where 
the  husband  conveys  to  his  wife,  notwithstanding  an  oral  provi- 
sion to  the  contrary/-  A  provision  to  the  effect  that  the  poHcy 
shall  become  inoperative  in  case  the  building  is  enlarged  without 
the  assent  of  the  insurer  cannot  be  varied  by  extrinsic  evidence 
showing  that  the  enlargement  was  agreed  upon  prior  to  the  issu- 
ance of  the  policy,  when  the  building  was  described  as  it  existed  at 
at  the  time  the  policy  was  issued. ^^  And  where  a  policy  was  made 
payable  to  a  granddaughter  as  beneficiary,  evidence  was  held  in- 
admissible to  show  that  it  was  issued  to  the  grandfather,  and  at 
the  latter's  request  made  payable  to  the  granddaughter.^*  Nor 
can  it  be  shown  by  parol  evidence  that  a  policy  of  insurance  which 
by  its  terms  is  made  payable  to  the  insured  was  in  fact  payable  to 

his  sister.^^ 

I 

§  1624.  Bills  and  notes,  promise  to  pay  out  of  particular 
fund. — Where  the  terms  of  a  note  constitute  a  plain  un- 
conditional promise,  on  a  stipulated  date,  to  pay  to  the  plaintiff  a 
given  sum  of  money  for  value  received,  evidence  of  a  contempo- 
raneous parol  agreement  is  inadmissible  to  contradict  or  vary  such 
provision  in  the  note.^®  A  contract  to  pay  money  which  by  its 
terms  imposes  a  general  liability  on  the  promisor  cannot  be  varied 
by  showing  that  it  was  a  contract  to  pay  out  of  a  particular 
fund,^^  as  out  of  profits  to  be  derived  from  the  transaction  in 
connection  with  which  the  written  promise  was  given,^^  or  from 
dividends  paid  on  the  stock  in  payment  for  which  the  note  was 
given.^^  When  a  note  is  payable  in  money,  a  parol  agreement  that 
it  is  to  be  paid  in  designated  bank  notes  which  were  not  a  legal  ten- 

*^ Walton  V.  Agricultural  Ins.   Co.,  ^"Rivers    v.    Brown   (Fla.),  56  So. 

116  N.  Y.  317,  22  N.  E.  443,  5  L.  R.  A.  553. 

677.  '^  Conner  v.  Clark,  12  Cal.  168,  73 

"^  Frost's  Detroit  Lumber  &c.  Works  Am.  Dec.  529;   Murchie  v.  Peck,  160 

V.  Millers'  &  Mfg.  Mut.  Ins.  Co.,  37  111.  175,  43  N.  E.  356;  Currier  v.  Hale, 

Minn.  300,  34  N.  W.  35,  5  Am.   St.  8  Allen  (Mass.)  47;  Harrison  v.  Mor- 

846.  rison,  39   Minn.   319,   40   N.   W.   66; 

"Burton   v.   Conn.   Mut.  Life  Ins.  Wilson    v.    Wilson,   26   Ore.   251,   38 

Co.,   119  Ind.  207,  21   N.  E.  746,   12  Pac.  185;  Ellis  v.  Hamilton,  4  Sneed 

Am.  St.  405.  (Tenn.)  512. 

"Union   Central   Life   Ins.    Co.   v.  ^* Lakeside  Land  Co.  v.  Dromgoole, 

Phillips,    102   Fed.   19,  41   C.   C  A.  89  Ala.  505,  7  So.  444. 

263.  ^Fuller  v.   Law,  207  Pa.   St.   101, 

56  Atl.  333. 


933  PAROL    E\qDENCE,  §    1625 

der  is  unen forcible.***  However  an  agreement  to  redeem  in  gold 
the  bank-bills  for  which  a  note  is  given  has  been  held  enforcible.** 
And  where  contracts  were  made  during  the  war  between  the 
states,  in  the  southern  states  the  weight  of  authority  holds  that  the 
parties  to  the  contract  had  a  right  to  show  that  they  intended  that 
payment  should  be  made  in  money  of  the  United  States/-  or  in 
confederate  money.*^ 

§  1625.  Contemporaneous  contracts — To  defeat  validity  or 
legal  effect  of  note. — In  the  absence  of  any  other  element 
making  the  note  invalid,  one  who  makes  a  promissory  note  will 
not  be  permitted  to  show  that  by  an  oral  understanding  between 
himself  and  the  payee  the  note  was  to  have  no  validity/*  Thus 
where  a  note  and  mortgage  were  given  to  a  bank  to  enable  the 
bank  to  use  them  as  apparent  collateral  security,  extrinsic  evidence 
has  been  held  inadmissible  to  show  this  fact.*°  The  same  has 
been  held  true  when  notes  are  given  a  bank  in  order  that  it  may 
exhibit  them  to  the  bank  examiner  as  assets.*'' 

Extrinsic  evidence  has,  however,  been  held  admissible  to  show 
that  a  written  contract  delivered  between  the  parties  was  in  fact 
never  intended  to  take  effect  and  that  its  delivery  was  merely  a 
matter  of  form.  Under  this  rule  it  has  been  held  that  wliere  one 
signed  a  contract  agreeing  to  take  a  certain  amount  of  street-car 
advertising  from  another  at  a  given  rate,  and  delivered  it  to  the 
latter's  agent,  the  former  could  show  in  an  action  on  the  con- 
tract that  the  real  contract  was  an  oral  agreement  for  a  less 
amount  at  a  lower  rate,  and  that  he  signed  the  written  contract 
so  that  his  order  might  be  shown  to  other  prospective  customers 

^'Baugh  V.  Ramsey,  4  T.  B.  Mon.  52  Pac.  655;  Henry  Wood's  Sons  Co. 

(Ky.)    155;    Racine   County  Bank  v.  v.  Schaefer,  173  Mass.  443,  53  N.  E. 

Keep,  13  Wis.  209.  881,  12>  Am.  St.  305 ;  Lillie  v.  Bates, 

^  Racine  County  Bank  v.  Keep,  13  2  Ohio  C.  D.  54.  3  Ohio  Cir.  Ct.  94. 

Wis.  209.  *°  Dominion  National  Bank  v.  Man- 

*"  Bryan    v.    Harrison,    76    N.    Car.  ning,  60  Kans.  729,  57  Pac.  949,  ques- 

360;  Stearns  V.  Mason,  24  Grat.  (Va.)  tioning  and  distinguishing  Higgins  v. 

484.  Ridgway,    153    N.   Y.    130.   47   X.    E. 

"In  re  Confederate  Note  Case,  19  2>2;  Breneman  v.  Furniss,  90  Pa.  186, 

Wall.  (U.  S.)  548,  22  L.  ed.  196;  Car-  35  Am.  Rep.  651. 

michael  v.  White,  11  Heisk.   (Tenn.)  "Mills    Countv    National    Bank    v. 

262;  Donlev  v.  Tindall,  2,1  Tex.  43,  5  Perrv,  12  Iowa  "IS,  ZZ  N.  W.  341,  2 

Am.  Rep.  234.  Am.  St.  228. 

"Leonard  v.   Miner,   120  Cal.  403. 


§    1625  CONTRACTS.  934 

without  disclosing  that  he  had  been  given  a  lower  rate.*^  This 
case  would  seem  to  practically  abrogate  the  rule  against  varying 
a  writing  by  parol  evidence. 

A  payee  of  a  note  who  assigns  it  by  signing  it  on  its  face 
under  the  name  of  the  maker  will  not  be  permitted  to  show  by 
parol  evidence  that  he  was  only  an  indorser.^^  The  same  is  true  of 
a  note  negotiable  in  form.  It  cannot  be  shown  that  it  was  intended 
to  operate  as  a  nonnegotiable  instrument.*^  And  where  a  check 
is  given  in  payment  of  a  subscription  to  a  monument,  the  maker 
cannot  show  an  agreement  with  the  payee  that  it  should  be  sur- 
rendered and  the  maker's  subscription  be  payable  at  a  later  time, 
or  that  it  should  be  taken  in  place  thereof.^"  Extrinsic  evidence 
is  inadmissible  to  show  that  a  written  subscription  was  given  in 
order  to  obtain  the  necessary  certificate  of  the  state  engineer  and 
that  the  amount  of  the  subscription  was  to  be  paid  by  the  town." 
A  son  received  property  from  his  father  and  gave  the  latter 
a  note  therefor.  It  was  held  that  evidence  to  show  that  the 
property  was  given  as  an  advancement  merely  and  that  the  note 
was  intended  as  a  receipt  was  inadmissible.^-  Other  authorities 
have  expressed  a  different  view  on  this  subject  and  it  would  seem 
that  the  only  ground  on  which  these  latter  cases  can  be  reconciled 
with  those  holding  to  the  contrary  is  upon  the  theory  that  the  note 
was  not  supported  by  a  consideration.^^  A  written  contract  for 
the  payment  of  a  designated  sum  of  money  cannot  be  varied  by 
evidence  showing  that  a  different  amount  from  that  specified 
was  to  be  paid.°*  Thus  where  a  written  contract  is  entered  into 
for  the  sale  of  milk,  it  cannot  be  shown  that  a  discount  of  four 
cents  a  can  was  to  be  given  to  be  applied  on  a  note  for  a  milk 
route.^^     And  in  case  it  is  agreed  that  royalties  shall  be  paid  at  a 

*'  Southern  &c.  Advertising  Co.  v.  "  Grand  Isle  v.  Kinney,  70  Vt.  381. 

Metropole  Shoe  Mfg.  Co.,  91  Md.  61,  41  Atl.  130. 

46  Atl    513  ^'Russell   v.   Smith,   115   Iowa  261, 

*«Cook  V.  Brown.  62  Mich.  473,  29  88  N.  W.  361. 

N.  W.  46,  4  Am.  St.  870   (there  be-  "Marsh  v.   Chown,   104  Iowa  556, 

ing  no  evidence  to  show  that  a  mis-  73  N.  W.  1046;  Brook  v.  Latimer,  44 

take  had  been  made  in  so  signing).  Kans.  431,  24  Pac.  946,   11   L.   R.   A. 

''"Mallory  v.  Fitzgerald's  Estate,  69  805,  21  Am.  St.  292. 

Nebr.  312.  95  N.  W.  601.  "  McLeod  v.  Hunt,   128  Mich.   124, 

"La     Fayette     County    Monument  87  N.  W.  101. 

Corporation  v  Magoon,  73  Wis.  627,  ''^  Kelley   v.    Thompson,    175    Mass. 

42  N.  W.  17,  3  L.  R.  A.  761.  427,  56  N.  E.  713. 


935  PAROL    EVIDENCE.  §    1 626 

certain  rate,  evidence  of  an  oral  contract  for  the  payment  of  a 
minimum  amount  is  inadmissible." 

§  1626.  Contemporaneous  agreement  to  pay  note  in  prop- 
erty or  work. — When  a  written  promise  to  pay  money  is 
given,  evidence  to  show  that  it  was  to  be  paid  in  property,"  such 
as  building  material,"  lots,"  corporate  stock,°°  or  by  surrendering 
to  the  promisee  accounts  against  a  third  person,"^  or  in  work,  is 
inadmissible.'*'  In  accordance  with  this  rule,  it  has  been  held  that 
in  an  action  to  recover  rent  under  a  lease,  it  cannot  be  shown 
that  a  part  of  the  rent  was  to  be  paid  by  the  lessees  boarding  the 
lessor.^^  The  same  is  true  in  an  action  on  a  note  where  it  is 
sought  to  be  shown  that  such  note  was  to  be  paid  by  the  maker's 
collecting  certain  claims  for  the  payee  on  a  commission,  which 
commission  was  to  be  applied  to  the  discharge  of  the  note.^* 
This  rule  also  applies  where  it  is  agreed  that  damages  due  the 
maker  of  a  note  and  arising  out  of  another  transaction  are  to  be 
credited  on  such  note  as  a  part  payment  thereof."'' 

§  1627.  Miscellaneous  illustrations. — A  warranty  cannot  be 
eliminated  by  extrinsic  evidence.*"  A  surety  will  not  be  permitted 
to  show  that,  according  to  his  contract  with  the  payee,  he  was  not 
to  be  held  liable  on  the  note."  One  cannot  show  that  he  signed  a 
bond  and  then  show  by  extrinsic  evidence  an  agreement  with  the 
obligee  to  the  effect  that  he  was  not  to  be  held  liable  thereon.'*' 
It  cannot  be  shown  that  one  receiving  wheat  received  it  merely  as 

"Standard  Fireproofing  Co.  v.  St.        "  Stull    v.    Thompson,   154  Pa.   St. 

Louis    Expanded    Metal    Fireproofing  43,  25  Atl.  890. 
Co    177  Mo.  559,  76  S.  W.  1008.  "  Singer     Mfg.     Co.    v.     Potts.    59 

"Clement  v.  Houck,  113  Iowa  504,  Minn.  240,  61  N.  W.  23.     See,  how- 

85  N    W    765  ever,  Johnston  v.   McCart,  24  Wash. 

**  Kimball   v.    Bryan,    56   Iowa  632,  19,  63    Pac.    1121    (enforcing   a   con- 

10  N    W    218  tract  of  this  character). 

»»Mosher   v    Rogers,    117    111.   446,        « Phelps   v.   Abbott,    114   Mich.   88, 

5  N.  E.  583.    .  72  X.  W.  3  •     ,       ^ 

~  Perry  v.  Bigelow,  128  Mass.  129.        *"  Arguimbau  v.  Germania  Ins.  Co.. 

"Bender    v.    Montgomer>',    8    Lea  106  La.  139,  30  So.  148. 
f  Tf-nn  )    586  "  Kulenkamp  v.  GrofT,  71  Mich.  675, 

"=  Stein    V. '  Fogartv,    4    Idaho    702,  40  N.  W.  57,  1  L.  R.  A.  594,  15  Am. 

43   Pac.  681:    Merrigan    v.    Hall,   175  St.  283.  ..   ^    ^ 

Mass   508   56  N.  E.  605;  Vradenburg        "^Wallace  v.   Langston,  52   S.  Car. 

V.  Johnson,  3  Nebr.    (unof.)   326,  91  133,  29  S.  E.  552. 
N.  W.  496. 


§    1627  CONTRACTS.  936 

a  bailee  when  a  receipt  with  a  promise  to  pay  therefor  is  given.®^ 
A  written  contract  which  shows  an  absolute  sale  of  a  machine 
cannot  be  varied  so  as  to  show  that  such  machine  was  merely 
rented  on  commission/"  A  written  release  of  mutual  rights  will 
not  be  defeated  by  the  fact  that  by  an  oral  contemporaneous 
agreement  such  release  was  to  have  no  validity.^^  A  release  by 
a  son  of  all  his  interest  in  the  estate  of  his  father,  given  him  by 
his  father's  will,  is  not  a  bar  to  an  action  by  the  son  against  the 
executor  on  a  promissory  note  given  the  son  by  the  father  in  his 
lifetime,  and  not  mentioned  in  the  release ;  and  oral  evidence  is  in- 
competent to  show  that  the  claim  in  such  an  action  was  under- 
stood at  the  time  to  be  embraced  in  the  settlement  and  release,^^ 
for  this  would  be  to  engraft  upon  the  written  contract  an 
additional  oral  stipulation  founded  upon  the  same  considera- 
tion and  entered  into  at  the  same  time,  and  would  be  con- 
trary to  settled  rules."  The  terms  of  a  railroad  ticket 
which  is  a  complete  contract  cannot  be  contradicted  by  ex- 
trinsic evidence  showing  that  it  was  to  operate  as  an  un- 
limited ticket  when  by  its  terms  it  was  limited.^*  Two  rail- 
road companies  entered  into  a  contract  whereby  all  the  trains 
of  one  company  were  to  have  a  priority  of  crossings.  Extrinsic 
evidence  was  held  inadmissible  to  show  that  this  provision  for 
priority  applied  only  to  certain  classes  of  trains.''^  A  contract 
which  by  its  terms  is  to  be  performed  in  the  alternative  cannot 
be  restricted  by  a  contemporaneous  oral  agreement  to  the  per- 
formance of  one  of  the  alternatives.  Thus  a  bill  of  lading  pro- 
vided that  the  carrier  should  deliver  the  goods  specified  therein  to 
a  connecting  railroad,  or  to  a  steamer.  Extrinsic  evidence  was 
held  inadmissible  to  show  that  the  actual  contract  was  to  deliver 
to  the  connecting  railroad,  and  not  to  the  steamer/"     And  where 

"^  Horn  V.  Hansen,  56  Minn.  43,  57  '*  Walker   v.    Price,   62    Kans.   327, 

N.  W.  315,  22  L.  R.  A.  617.  62   Pac.   1001,  84  Am.   St.  392. 

'"Price  V.  Marthen,  122  Mich.  655,  "Cornwall  R.  Co.  v.  Cornwall  &c. 

81  N.  W   551.  R.  Co.,  125  Pa.  St.  232,  17  Atl.  427, 

"Loth  V.  Frederick,  95  Mich.  598,  11  Am.  St.  889. 

55  N.  W.  369.  ™McEIveen    v.    Southern    R.    Co., 

-"  Frost  V.  Brigham,  139  Mass.  43,  109  Ga.  249,  34  S.  E.  281,  77  Am.  St. 

29  X.  E.  217.  371. 

''Doyle  V.  Dixon,  12  Allen  (Mass.) 
576. 


937  PAROL   EVIDENCE.  §    1 628 

a  contract  for  the  shipment  of  property  to  New  York  did  not 
specify  the  route  by  which  the  goods  were  to  be  sent,  it  could  not 
be  shown  by  parol  evidence  that  a  route  had  been  agreed  upon." 
On  the  other  hand,  it  has  been  held  that  where  the  bill  of  lading 
did  not  designate  the  route  over  which  the  goods  were  to  be 
shipped  an  oral  agreement  specifying  to  what  connecting  line  the 
initial  carrier  should  deliver  the  goods  might  be  shown. ''^  Parol 
evidence  is  not  competent  to  show  that  a  chattel  mortgage,"  or  bill 
of  sale^^"  of  personalty  was  not  intended  to  include  all  property  it 
purports  to  convey  or  that  under  a  written  contract  of  sale,  title 
was  to  remain  in  the  seller,®^  or  that  it  was  the  intention  of  the 
parties  that  a  written  contract  for  work  was  not  intended  to  cover 
work  therein  described.*""  Where  husband  and  wife  enter  into  a 
clear,  unambiguous  agreement  for  the  purpose  of  perpetuating  a 
parol  antenuptial  agreement,  such  written  agreement  will  be 
deemed  to  have  merged  all  their  parol  negotiations  made  at  and 
before  its  execution,  and,  not  having  been  questioned  by  them 
during  their  joint  lives,  will  not  be  modified  afterward.*^  And 
evidence  of  a  parol  agreement  and  understanding  antecedent  to 
or  contemporaneous  with  the  execution  of  an  instrument  under 
seal  is  not  admissible  to  vary  its  terms.^*  The  rule  that  the  true 
consideration  of  a  written  contract  may  be  shown  by  parol  does 
not  authorize  oral  stipulations  to  be  added  to  a  written  contract 
under  the  claim  that  such  oral  agreement  was  part  of  the  consid- 
eration.®' 

§  1628.  Rule  applies  to  what  is  implied  by  law  as  part  of 
contract. — It  is  said  that  the  law  enters  "as  a  silent  factor" 
into  every  contract.    That  which  is  implied  by  law  becomes  a  part 

"Webster  v.  Paul.  10  Ohio  St.  531.  ^  Claypool  v.  Jaqua,   135  Ind.  499, 

"Louisville  &  N.  R.  Co.  v.  Duncan,  35  N.  E.  285.     And  see  also.  McAn- 

137  Ala.  446.  34  So.  988.  nulty  v.   Mc Annuity.    120   111.  26,    11 

™Drumm-Flato  Commission  Co.  v.  X.  E.  397.  60  Am.  Rep.  552. 

Barnard,  66  Kans.  568,  72  Pac.  257;  "  Barnett  v.    Barnes,    72>    111.    216; 

Lawrence  v.  Comstock,  124  Mich.  120,  Winnesheik    Ins.    Co.    v.    Holzgrafe, 

82  N.  W.  808.  53    111.    516;    Strehl    v.    D'Evers,    66 

^'Hodson  V.  Varney,   122  Cal.  619,  111.  77;  Loach  v.  Farnum.  90  111.  368; 

55  Pac.  413.  Gable  v.   Wetherholt,   116  111.  313.   6 

^Finnigan  v.  Shaw,  184  Mass.  112,  N.  E.  453.  56  Am.  Rep.  774;  Wilson 

68  N.  E.  35.  V.  Deen.  74  X.  Y.  531. 

"Xorwood   V.   Lathrop.    178   Mass.  "  Brintnall  v.  Briggs,  87  Iowa  538, 

208.  59  N.  E.  650;  Daly  v.  Kingston,  54  N.  W.  531;   Mast    v.    Pearce,  58 

177  Mass.  312,  58  N.  E.  1019.  Iowa  579,  8  N.  W.  632. 


§  1 628 


CONTRACTS. 


938 


of  the  written  contract  the  same,  in  general,  as  if  it  were  written 
therein,  and  if  the  contract  is  thus  made  clear  and  complete  it 
can  no  more  be  varied  or  contradicted  by  parol  evidence  as  to  the 
matter  imported  into  it  by  law  than  it  can  in  any  other  respect.^* 
This  doctrine  is  frequently  applied  where  a  contract  is  silent  as 
to  the  time  of  performance.  The  general  rule  in  such  cases  is 
that  it  must  be  performed  within  a  reasonable  time  and  that  this 
implication  of  law  cannot  be  varied  by  parol  evidence,"  although 
such  evidence  may  be  admissible  to  show  what  is  a  reasonable 
time.^^  So,  while  there  is  much  conflict  among  the  authorities 
and  some  difference  of  opinion  as  to  what  the  legal  implication 
from  a  blank  indorsement  is,  that  implication  cannot,  ordinarily, 


*  Rector   v.   Bernaschina,   64   Ark. 
650,  44  S.  W.  222;  Godkin  v.  Mona- 
han,  83  Fed.   116,  27  C.  C.  A.  410; 
Powell  V.  Fraley,  98  Ga.  370,  25  S.  E. 
450;   Johnson  v.  Glover,  121  111.  283, 
12  N.   E.  257;    Long  v.   Straus,   107 
Ind.  94,  6  N.  E.  123,  7  N.  E.  763,  57 
Am.  Rep.  87;   Fawkner  v.  Smith,  &c. 
Wall.-Paper  Co.,  88  Iowa,  169,  55  N. 
W.  200,  45  Am.  St.  230,  revg.  49  N. 
W.  1003;    Hobbs  v.   Batory,  86  Md. 
68,   Zl  Atl.   713;    Daly   v.    Kingston, 
177  Mass.  312,  58  N.  E.  1019;   Liljen- 
gren  Furniture  &c.   Co.  v.   Mead,  42 
Minn.  420,  44  N.  W.  306;    Barry  v. 
Ransom,    12    N.    Y.    462;    Cauble    v. 
Worsham,  96  Tex.  App.  86,  70  S.  W. 
IZl,  97  Am.   St.  871,  revg.  69  S.  W. 
194;    The  Delaware  v.  Oregon  Iron 
Co.,  14  Wall.   (U.  S.)   579,  20  L.  ed. 
779.  Thus,    in    the    case    of    Long    v. 
Straus,  107  Ind.  94,  6  N.  E.  123,  7  N. 
E.  763,   57  Am.   Rep.  87,  it  is  said: 
"The  obligation  implied  by  law  from 
the  language  employed  is  as  much  a 
part  of  the  contract  as  though  what 
the  law   implies  had   been   fully  ex- 
pressed in  words.    *    *    *    The  law 
imported   into  the  contract  does  not 
create  an  independent  agreement,  but 
makes    the    instrument    express    the 
full  agreement  of  the  parties.    *   *   * 
All    contracts    have     imported     into 
them   legal   principles   which   can   no 
more    be    varied    by    parol    evidence 
than   the   strongest   and    clearest   ex- 
press stipulations.     We  have  already 
given  one  example,  that  of  the  days 
of  grace  added  by  force  of  law  to  a 


promissory  note.  A  more  striking 
example,  perhaps,  is  that  supplied  by 
the  contract  of  endorsement,  for,  in 
such  cases,  although  not  a  word  more 
than  the  name  of  the  endorser  is 
written,  the  contract  which  the  law 
implies  can  not  be  varied  by  parol." 
Nor  is  parol  evidence  ordinarily  ad- 
missible to  raise  an  implied  contract 
different  from  that  which  is  clearly 
expressed.  See  Dickson  v.  Zizinia, 
10  C.  B.  602,  70  E.  C.  L.  602 ;  Roddy 
v.  Fitzgerald,  6  H.  L.  Cas.  823 ;  Har- 
rell  V.  Durrance,  9  Fla.  490 ;  and  com- 
pare, St.  Landry  &c.  Bank  v.  Meyers, 
52  La.  Ann.  1769,  28  So.  136. 

"Greaves  v.  Ashlin,  3  Camp.  426; 
Jenkins  v.  Lykes,  19  Fla.  148,  45  Am. 
Rep.  19;  Atwood  v.  Cobb,  16  Pick. 
(Mass.)  227,  26  Am.  Dec.  657; 
Stange  v.  Wilson,  17  Mich.  342 ;  Coon 
V.  Spaulding,  47  Mich.  162,  10  N.  W. 
183 ;  Liljengren  Furniture  &c.  Co.  v. 
Mead,  42  Minn.  420,  44  N.  W.  306; 
Blake  Mfg.  Co.  v.  Jaeger,  81  Mo. 
App.  239;  Thompson  v.  Phelan.  22 
N  H-  339.  See  Boehm  v.  Lies,  18  N. 
Y.  S.  577,  46  N.  Y.  St.  26,  60  N.  Y. 
Super.  Ct.  436,  affd.  138  N.  Y.  609,  ZZ 
N.  E.  1082;  Irish  v.  Dean,  39  Wis. 
562.  We  are  not,  of  course,  refer- 
ring to  a  case  in  which  there  has  been 
a  waiver  of  a  new  contract. 

^  Ellis  v.  Thompson,  3  M.  &  W. 
445;  Coates  v.  Sangston,  5  Md.  121; 
Cocker  v.  Franklin  &c.  Bagging  Co., 
1  Story  (U.  S.)  332,  Fed.  Cas.  No. 
2931. 


939 


PAROL    E\^DENCE. 


§    1628 


be  varied  or  contradicted  by  parol  evidence.^'  Other  illustrations 
are  found  in  cases  in  which  it  is  held  that  an  agreement  to  per- 
form an  act  involves  an  undertaking  to  secure  the  necessary 
means  to  perform  it;*^"  that  a  bill  of  lading  silent  as  to  place  of 
stowage  imports  a  contract  to  stow  under  deck  and  parol  evidence 
to  show  an  agreement  to  stow  on  deck  is  not  admissible ;"  that  an 
agreement  to  pay  a  certain  sum  imports  or  implies  that  it  shall  be 
lawful  money  ;®'^  that  growing  crops  not  reserved  in  a  conveyance 
of  land  pass  to  the  vendee  and  a  parol  reservation  thereof  cannot 
be  shown  f^  and  that  a  quit-claim  deed  operates  upon  whatever 


■^Holt  V.  Moore,  5  Ala.  521;  Day 
V.  Thompson,  65  Ala.  269;  Thompson 
V.  McKee,  5  Dak.  172,  37  N.  W.  367; 
Levy  &c.  Co.  v.  Kauffman,  114  Fed. 
170,  52  C.  C.  A.  126;  Finley  v.  Green, 
85  111.  535 ;  Smythe  v.  Scott,  106  Ind. 
245,  6  N.  E.  145;  Brown  v.  Nichols 
&c.  Co.,  123  Ind.  492.  24  N.  E.  339; 
Cross  V.  Hollister,  47  Kans.  652,  28 
Pac.  693;  Cochran  v.  Atchison,  27 
Kans.  728;  Howe  v.  Merrrill,  5  Cush. 
(Mass.)  80;  Prescott  Bank  v.  Cav- 
erly,  7  Gray  (Mass.)  217,  66  Am. 
Dec.  473 ;  Bowler  v.  Braun,  63  Minn. 
32,  65  N.  W.  124,  56  Am.  St.  449; 
Bank  &c.  v.  Dunn,  6  Pet.  (U.  S.  51,  8 
L.  ed.  316;  Brown  v.  Wilev,  20  How. 
(U.  S.)  442,  15  L.  ed.  965;  Martin 
V.  Cole,  104  U.  S.  30,  26  L.  ed.  647. 
See  also,  Jenkins  v.  Shinn,  55  Ark. 
347,  18  S.  W.  240.  But  see  as  to  en- 
dorsement without  recourse,  Carroll 
V.  Nodine,  41  Ore.  412,  69  Pac.  51.  93 
Am.  St.  743;  and  for  authorities 
tending  to  show  that  the  legal  impli- 
cation from  a  blank  endorsement  may 
be  varied  as  between  the  parties  by 
parol  evidence,  Jaster  v.  Currie,  69 
Neb.  4,  94  N.  W.  995,  revd.  198  U.  S. 
144.  49  L.  ed.  988.  25  Sup.  Ct.  614. 

°"Godkin  V.  Monahan.  83  Fed.  116, 
27  C.  C.  A.  410 :  Meekins  v.  Newber- 
ry. 101  N.  Car.  17,  7  S.  E.  655. 

"The  Delaware  v.  Oregon  Iron 
Co.,  14  Wall.  (U.  S.)  579,  20  L.  ed. 
779.  So  as  to  place  of  delivery  where 
the  law  fixes  the  place.  La  Farge  v. 
Rickert,  5  Wend.  (N.  Y.)  l87,  21  Am. 
Dec.  209. 

*' Roane  v.  Greene.  24  Ark.  210; 
Stein  V.  Fogartv.  4  Idaho  702,  43  Pac. 
681;  Mosher  v.  Rogers,  117  111.  446, 
5  N.  E.  583 ;  Galena  Ins.  Co.  v.  Kup- 


fer,  28  111.  332,  81  Am.  Dec.  284; 
Lawrence  v.  Schmidt,  35  111.  440.  85 
Am.  Dec.  381 ;  Coapstick  v.  Bos- 
worth,  121  Ind.  6,  22  X.  E.  772;  Pack 
V.  Thomas,  13  Sm.  &  M.  (Miss.)  11, 
51  Am.  Dec.  135;  Stull  v.  Thompson, 
154  Pa.  St.  43,  25  Atl.  890.  It  must 
not  merely  imply  payment  out  of  a 
specific  fund.  Conner  v.  Clark.  12 
Cal.  168,  73  Am.  Dec.  529;  Gorrell  v. 
Home  Life  Ins.  Co..  63  Fed.  371.  11 
C.  C.  A.  240;  Mumford  v.  Tolman, 
157  111.  258.  41  N.  E.  617;  Tucker  v. 
Talbott.  15  Ind.  114.  See  also,  Wil- 
son V.  Wilson,  26  Ore  251,  38  Pac.  185. 
But  see  as  to  contracts  made  in  the 
seceding  states  during  the  war,  Neely 
V.  McFadden,  2  S.  Car.  169;  Stewart 
V.  Smith.  3  Baxt.  (Tenn.)  231;  Don- 
ley V.  Tindall,  32  Tex.  43,  5  Am.  Rep. 
234;  In  re  Confederate  Note  Case, 
19  Wall.  (U.  S.)  548.  22  L.  ed.  196; 
Meredith  v.  Salmon,  21  Gratt.  (Va.) 
762.  In  Richie  v.  Frazier,  50  Ark. 
393,  8  S.  W.  143,  the  law  authorized 
payment  in  warrants,  and  the  rule 
was  applied  to  exclude  parol  evidence 
that  payment  was  to  be  made  only 
in  money. 

"Gibbons  v.  Dillingham,  10  Ark.  9. 
50  Am.  Dec.  233;  Fiske  v.  Soule.  87 
Cal.  313.  25  Pac.  430;  Smith  v.  Price. 
39  111.  28,  89  Am.  Dec.  284 ;  Chapman 
V.  Veach,  32  Kans.  167.  4  Pac.  100; 
Brown  v.  Thurston.  56  Maine  126, 
96  Am.  Dec.  438;  Mcllvaine  v.  Har- 
ris, 20  Mo.  457,  64  Am.  Dec.  196; 
Austin  V.  Sawyer,  9  Cow.  (N.  Y.)  39. 
But  see.  Heavilon  v.  Heavilon,  29 
Ind.  509;  Kluse  v.  Sparks,  10  Ind. 
App.  444.  36  N.  E.  914,  37  N.  E.  1047 ; 
Hisey  v.  Troutman,  84  Ind.  115; 
Hendrickson  v.  Ivins,  1  N.  J.  Eq.  562. 


§    1629  CONTRACTS.  94© 

title  the  grantors  possess  at  the  time  and  an  intention  to  convey 
only  a  particular  interest  cannot  be  shown  by  parol.^* 

§  1629.    Limitations  and  qualifications  of  general  rule. — It 

is  said  in  Elliott  on  Evidence,  quoting  from  Taylor  on  Evidence,*"^ 
that  "  The  parol  evidence  rule  'applies  only  ( i )  between  the  par- 
ties; (2)  to  exclude  parol  evidence;  (3)  when  the  effect  is  to 
vary,  contradict  or  control;  (4)  when  the  purport  of  the  instru- 
ment has  been  ascertained;  (5)  and  provided  it  affirmatively  ap- 
pears that  the  parties  have  intended  to  have  the  instrument  em- 
body their  agreement  and  understanding.'  This  gives  a  fair  idea 
in  a  general  way,  of  the  scope  of  the  rule,  or,  rather,  of  the  limits 
within  which  it  may  be  applied ;  but  the  statement  is  not  to  be 
taken  entirely  without  qualification,  and  there  are  other  so-called 
exceptions  or  limitations.  Most  of  them,  however,  are  not  true 
exceptions.  They  tend  rather  to  define  the  limits  of  the  rule  or 
furnish  illustrations  of  classes  of  cases  in  which  the  rule  has  no 
application.  Thus,  if  the  writing  is  invalid  so  that  it  never  had 
any  legal  effect,  the  rule  has  no  application,  and  where  its 
validity  is  questioned  on  the  ground  of  fraud,  or  the  like, 
parol  evidence  going  to  that  question  is  generally  admis- 
sible. So,  if  the  writing  is  incomplete  and  not  intended  to  em- 
body the  entire  contract,  or  where  the  contract  is  partly  in  parol 
and  is  therefore  regarded  as  an  oral  contract,  parol  evidence  may 
be  admissible  as  not  within  the  rule."^* 

Flint  V.  Conrad,  61  N.  Car.   190,  93  v.  St.  Louis  &c.  R.  Co.,  29  Kans.  544; 

Am.   Dec.   588;    Baker  v.   Jordan,   3  Gorton  v.  Rice,  153  Mo.  676,  55  S.  W. 

Ohio   St.  438;    Backenstoss  v.   Stah-  241;  Conner  v.  Coffin,  22  N.  H.  538; 

ler's  Admrs.,  33  Pa.  St.  251,  75  Am.  La  Farge  v.   Richert,   5   Wend.    (N. 

Dec   592;    Merrill  v.  Blodgett,  34  Vt.  Y.)    187,  21  Am.  Dec.  209;    Jones  v. 

480  Timmons,   21    Ohio    St.    596;    Baer  s 

»*'Cauble  v.  Worsham,  96  Tex.  App.  Appeal,  127  Pa.  St.  360,  18  Atl.  1,  4 

86,  70  S.  W.  737,  97  Am.  St.  871,  revg.  L.  R.  A.  609;  Fuller  v.  Hapgood,  39 

69  S.  W.  194.     But  see  as  to  limita-  Vt.  617.                                             _ 

tion    to    particular    title    or    interest  *°  1  Elliott  on  Evidence  §  573,  citmg, 

where  the  intention   is   expressed   in  2  Taylor's  Ev.   (Chamberlayne's  Ed.) 

the  deed,  Plummer  v.  Gould,  92  Mich.  808. 

1   52  N   W.  146,  31  Am.  St.  567.    See  '^  In   Thomas  v.   Scutt,   127  N.   Y. 

further  in  support  of  the  general  rule  133,  27  N.  E.  961,  these  are  treated 

that  the  legal  import  can  not  be  con-  as  the  two  prmcipal   real  exceptions 

tradicted    by    parol    evidence.      Mer-  to  the  rule,  the  court   saying:   'The 

cantile  Bank  v.  Taylor,  L.  R.    (1893)  real    exceptions    may   be    grouped    in 

.'Xpp.  Cas.  317:    Ford  v.  Yates,  2  M.  two  classes,  the  first  of  which  in J.ades 

&  G.  549,  40  E.  C.  L.  738;    Hopkins  those  cases  in  which  parol  evidence 


941  PAROL   EVIDENCE.  §    1 629 

The  most  complete  statement  of  limitations  and  exceptions, 
or  matters  that  may  be  proved,  notwithstanding  the  parol  evi- 
dence rule,  is  that  found  in  Stephen's  Digest  of  Evidence,  as 
follows:  (i)  "Fraud,  intimidation,  illegality,  want  of  due 
execution,  want  of  capacity  in  any  contracting  party,  the  fact 
that  it  is  wrongly  dated,  want  or  failure  of  consideration,  or 
mistake  in  fact  or  law,  or  any  other  matter  which,  if  proved, 
would  produce  any  effect  upon  the  validity  of  any  document, 
or  of  any  part  of  it,  or  which  would  entitle  any  person  to  any 
judgment,  decree,  or  order  relating  thereto.  (2)  The  existence 
of  any  separate  oral  agreement  as  to  any  matter  on  which  a  docu- 
ment is  silent,  and  which  is  not  inconsistent  with  its  terms,  if 
from  the  circumstances  of  the  case  the  court  infers  that  the  parties 
did  not  intend  the  document  to  be  a  complete  and  final  statement 
of  the  whole  of  the  transaction  between  them.  (3)  The  exist- 
ence of  any  separate  oral  agreement,  constituting  a  condition 
precedent  to  the  attaching  of  any  obligation  under  any  such  con- 
tract, grant,  or  disposition  of  property.  (4)  The  existence  of 
any  distinct  subsequent  oral  agreement  to  rescind  or  modify  any 
such  contract,  grant,  or  disposition  of  property,  provided  that 
such  agreement  is  not  invalid  under  the  statute  of  frauds,  or 
otherwise.  (  5 )  Any  usage  or  custom  by  which  incidents  not  ex- 
pressly mentioned  in  any  contract  are  annexed  to  contracts  of 
that  description;  unless  the  annexing  of  such  incidents  to  such 
contract  would  be  repugnant  to  or  inconsistent  with  the  express 
terms  of  the  contract.  Oral  evidence  of  a  transaction  is  not 
excluded  by  the  fact  that  a  documentary  memorandum  of  it  was 
made,  if  such  memorandum  was  not  intended  to  have  legal  effect 
as  a  contract,  or  other  disposition  of  property.  Oral  evidence 
of  the  existence  of  a  legal  relation  is  not  excluded  by  the  fact  that 
it  has  been  created  by  a  document,  when  the  fact  to  be  proved  is 
the  existence  of  the  relationship  itself,  and  not  the  terms  on  which 

has  been  received  to  show  that  that  but  regard  it  as  incomplete,  either 
which  purports  to  be  a  written  con-  obviously,  or  at  least  possibly,  and 
tract  is  in  fact  no  contract  at  all  admit  parol  evidence,  not  to  contra- 
*  *  *.  The  second  class  embraces  diet  or  vary,  but  to  complete,  thd 
those  cases  which  recognize  the  writ-  entire  agreement,  of  which  the  writ- 
ten instrument  as  existing  and  valid,  ing  is  only  a  part." 


§    1629  CONTRACTS.  942 

it  was  established  or  is  carried  on.  The  fact  that  a  person  holds 
a  public  office  need  not  be  proved  by  the  production  of  his  written 
or  sealed  appointment  thereto,  if  he  is  Sjhown  to  have  acted  on 
it."" 

§  1630.    Rule  does  not  ordinarily  apply  to  strangers. — It 

has  often  been  laid  down  in  unlimited  terms  that  the  parol  evi- 
dence rule  is  applicable  only  in  suits  between  the  parties  to  the  in- 
strument. It  is  unquestionably  true  that  the  rule  does  not  oper- 
ate to  exclude  parol  evidence,  otherwise  admissible,  in  a  contro- 
versy between  strangers,  or  one  of  the  parties  and  strangers,  who 
are  not  representatives  or  privies  of  a  party  and  have  no  connec- 
tion with  the  instrument,  where  they  are  not  seeking  to  enforce  it 
as  effective  for  their  own  benefit,  or  the  like.  The  authorities 
to  this  effect  are  numerous."®  But  where  one,  although  not  a 
party  to  the  instrument,  bases  his  case  upon  it,  and  seeks  to  render 
it  effective  in  his  favor  as  against  the  other  party  to  the  action 
by  enforcing  a  right  originating  in  the  relation  established  by  it, 
or  which  is  founded  upon  it,  the  parol  e-vidence  rule  applies. "" 

§  1631.    Incomplete  writings. — A  contract  partly  in  wait- 
ing and  partly  oral  is  generally  regarded  as  a  parol  contract  to 

"'Stephen's  Dig.  Ev.,  art.  90.  51  N.  W.  657;  Libby  v.  Mt.  Monad- 

»'  King  V.  Cheadle,  3  B.  &  Ad.  833 ;  nock  &c.   Co.,  67  N.  H.  587,  32  Atl. 

Coleman  v.  Pike,  83  Ala.  326,  3  So.  772;    Plainfield    First    Nat.    Bank    v. 

755,  3  Am.  St.  746;    Walker  v.  State,  Dunn,  55  N.  J.  L.  404,  27  Atl.  908; 

117   Ala    42,   23    So.    149;    Powell   v.  Hankinson  v.  Vantine,  152  N.  Y.  20, 

Young,  51  Ala.  518;  Dunn  v.   Price,  46   N.    E.   292;    Lowell    Mfg.   Co.    v. 

112  Cal.  46,  44  Pac.  354;   O'Shea  v.  Safeguard   Ins.    Co.,   88   N.   Y.   591; 

New  York  C.  &  St.  L.  &c.  R.  Co.,  105  Bruce  v.  Roper  Lumber  Co.,  87  Va. 

Fed    559,  44  C.   C.   A.   601;    Central  381,  13  S.  E.  153,  24  Am.  St.  657.    As 


Coal  &c.  Co.  V.  Good,  120  Fed.  793 
57  C.  C.  A.  161;  Sigua  Iron  Co.  v 
Greene,  88  Fed.  207,  31  C.  C.  A.  477; 
Northern  Assur.  Co.  v.  Chicago  &c 
Ass'n,  198  111.  474,  64  N.  E.  979; 
Harts  V.  Emery.  184  111.  560,  56  N.  E 
865 ;  Burns  v.  Thompson,  91  Ind.  146 
Hubbard   v.   Harrison,   38    Ind.   323 


shown  by  these  authorities,  neither 
the  stranger  nor  a  party,  as  between 
himself  or  the  stranger,  is  precluded 
by  the  rule  from  showing  the  actual 
facts. 

'"Schultz  V.  Plankington  Bank,  141 
111.  116,  30  N.  E.  346,  33  Am.  St.  290; 
Minneapolis  St.  P.  &  S.  S.  M.  R.  Co. 


Livingston  v.   Stevens,   122   Iowa  62,  v.  Home  Ins.  Co.,  55  Minn.  236,  56  N. 

94  N.  W.  925;  Strader  v.  Lambeth,  7  W.  815,  22  L.   R.   A.   390;    Sayre  v. 

B.  Mon.  (Ky.)  589;  Ashley  v.  Ashley,  Burdick,  47  Minn.  367,  50  N.  W.  245; 

4  Gray  (Mass.)  197;  Clark  v.  Hough-  Schneider  v.  Kirkpatrick,  80  Mo.  App. 

ton,  12  Gray  (Mass.)  38;  Highstone  145;  Selchow  v.  Stymus,  26  Hun  (N. 

V.  Burdette,  61   Mich.   54,  27  N.  W.  Y.)    145;   Wodock  v.   Robinson,    148 

852 ;   National  Car  Locomotive  Build-  Pa.  St.  503,  24  Atl.  73.    See  also.  Clow 

er  V.  Cyclone  &c.  Co.,  49  Minn.  125,  v.  Brown,  134  Ind.  287,  33  N.  E.  1126. 


943 


PAROL   EVIDENCE. 


§    IO3I 


which  the  parol  evidence  rule  does  not  apply/  If  the  writing 
does  not  purport  to  be  complete,  but  is  a  mere  memorandum^  or 
merely  purports  to  contain  some  of  the  stipulations  between  the 
parties,  parol  evidence  is  clearly  admissible  to  show  such  addi- 
tional stipulations  as  are  not  inconsistent  with  the  writing.^  But 
most  of  the  authorities,  while  admitting  that  extrinsic  evidence  is 
admissible,  when  not  inconsistent  with  the  writing,  where  the 
contract  appears  to  be  a  mere  incomplete  memorandum  or  to  be 
partly  in  writing  and  partly  in  parol,  draw  a  distinction  and  hold 


*  Harris  v.  Rickett,  4  Hurl.  &  N.  1 ; 
Lafitte  V.  Shawcross,  12  Fed.  519;  Har- 
man  v.  Harman,  70  Fed.  894,  17  C.  C. 
A.  479;  Bacon  v.  The  F'oconoket,  70 
Fed.  640,  criticized  in  Godkin  v.  Mon- 
ahan,  83  Fed.  116,  27  C.  C.  A.  410; 
Mann  v.  Smvser,  76  111.  365;  Wood  v. 
Williams,  142  111.  269.  31  N.  E.  681, 
34  Am.  St.  79;  Tomlinson  v.  Briles, 
101  Ind.  538,  1  N.  E.  63;  Louisville  N. 
A.  &c.  R.  Co.  V.  Reynolds,  118  Ind. 
170,  20  N.  E.  711 ;  Stagg  v.  Compton, 
81  Ind.  171;  Bruce  v.  Pearsall,  59  N. 
J.  L.  62,  34  Atl.  982 ;  Chapin  v.  Dob- 
son,  78  N.  Y.  74,  34  Am.  Rep.  512; 
Selig  V.  Rehfuss,  195  Pa.  St.  200,  45 
Atl.  919;  Schwab  v.  Ginkinger,  181 
Pa.  St.  8,  Z7  Atl.  125;  Knowles  v. 
Rogers,  27  Wash.  211,  67  Pac.  572; 
Ballston  Spa  Bank  v.  Marine  Bank, 
16  Wis.  120.  In  other  words,  where 
the  original  contract  was  verbal  and 
entire,  and  a  part  of  it  only  is  re- 
duced to  writing,  the  parol  evidence 
rule  does  not  apply  to  prevent  the  en- 
tire contract  from  being  shown. 

•Bill  of  parcels  (Grant  v.  Frost,  80 
Maine  202.  13  Atl.  881;  Atwater  v. 
Clancy,  107  Mass,  369;  Filkins  v. 
Whyland,  24  N.  Y.  338;  Harris  v. 
Johnston,  3  Cranch.  (U.  S.)  311,  2  L. 
ed.  450;  Palmer  v.  Lawrence,  72  Vt. 
14,  47  Atl.  159)  ;  order  for  goods  not 
containing  complete  terms  (More- 
head  V.  Murrav,  31  Ind.  418;  Palmer 
V.  Roath,  86  Mich.  602,  49  N.  W.  590; 
Tufts  V.  Hunter,  63  Minn.  464,  65  N. 
W.  922)  ;  entries  in  account  books, 
(Rice  V.  Heath,  39  Cal.  609;  Mack  v. 
Adler,  22  Fed.  570;  Swift  v.  Pierce, 
13  Allen  (Mass.)  136;  Robinson  v. 
Mulder,  81  Mich.  75,  45  N.  W.  505; 
Park  V.  Miller.  27  N.  J.  L.  338;  Chap- 
in  V.  Cambria  Iron  Co.,   145  Pa.   St. 


478,  22  Atl.  1041.  But  see  Wiener  v. 
Whipple,  53  Wis.  298,  10  N.  W.  433, 
40  Am.  Rep.  775). 

^'\llen  V.  Pink,  4  M.  &  W.  140; 
Powell  V.  Thompson,  80  Ala.  51 ; 
Sayre  v.  Wilson,  86  Ala.  151,  5  So. 
157;  Guidery  v.  Green,  95  Cal.  630, 
30  Pac.  786;  Kreuzberger  v.  Wing- 
field,  96  Cal.  251,  31  Pac.  109;  Frank- 
lin County  V.  Lavman.  145  111.  138.  Zi 
N.  E.  1094;  Singer  Mfg.  Co.  v.  For- 
syth, 108  Ind.  334,  338,  9  X.  E.  Z72; 
Burton  v.  Morrow,  133  Ind.  221,  32 
N.  E.  921 ;  Gould  v.  Boston  &c.  Co.,  91 
Maine  214,  39  Atl.  554,  64  Am.  St. 
221;  MacDonald  v.  Dana,  154  Mass. 
152,  27  N.  E.  993;  Hutchinson  Mfg. 
Co.  V.  Pinch,  107  Mich.  12,  64  N.  W. 
729,  66  X.  W.  340;  O'Xeil  v.  Grain, 
67  Mo.  250;  Hurd  v.  Bovee,  134  X.  Y. 
595,  31  X.  E.  624;  Thomas  v.  Xelson, 
69  X.  Y.  118;Brigg  v.  Hilton,  99  X.  Y. 
517,  3  X.  E.  51,  52  Am.  Rep.  63;  Had- 
ley  V.  Clinton  County  Importing  Co., 
13  Ohio  St.  502,  82  Am.  Dec.  454.  As 
to  oral  evidence  of  time  of  payment 
where  contract  is  silent,  see,  Howell 
V.  Denton,  (Tex.  Civ.  App.)  68  S.  W. 
1002;  Horton  v.  Clark,  181  Mass.  134. 
63  X.  E.  409.  As  to  oral  evidence 
admitted  to  show  amount  to  be  paid, 
see,  Savre  v.  Wilson,  86  Ala.  151,  5 
So.  157;  Howell  v.  Denton.  (Tex. 
Civ.  App.)  68  S.  W.  1002;  Ireland  v. 
Spickard,  95  Mo.  App.  53,  68  S.  W. 
748.  In  De  Lassalle  v.  Guildford,  70 
L.  J.  K.  B.  533,  84  L.  T.  549.  a  parol 
warranty  was  held  collateral  to  a 
lease  and  admissible  in  evidence 
where  the  lease  was  silent.  See  also. 
Chapin  v.  Dobson,  78  X.  Y.  74,  34  Am. 
Rep.  512;  Hahn  v.  Doolittle,  18  Wis. 
196,  86  Am.  Dec.  757. 


§    1632  CONTRACTS.  944 

that  it  is  only  admissible  when  that  part  of  the  contract  sought  to 
be  thus  established  relates  to  some  matters  about  which  the 
writing  is  silent,  and  that  if  the  proposed  evidence  is  in  any  way 
inconsistent  with  the  terms  of  the  writing  such  evidence  is  inad- 
missible.* "Two  things,"  it  is  said  by  the  New  York  Court  of 
Appeals,  "however,  are  essential  to  bring  a  case  within  this  class : 
( I )  The  writing  must  not  appear,  upon  inspection,  to  be  a  com- 
plete contract,  embracing  all  the  particulars  necessary  to  make 
a  perfect  agreement,  and  designed  to  express  the  whole  arrange- 
ment between  the  parties,  for  in  such  a  case  it  is  conclusively  pre- 
sumed to  embrace  the  entire  contract.  (2)  The  parol  evidence 
must  be  consistent  with,  and  not  contradictory  of,  the  written 
instrument."^  The  question  as  to  whether  the  writing  is  the 
complete  contract  of  the  parties  is  usually  determined  from  the 
writing  itself,*'  but  it  may,  we  think,  at  least  in  case  of  ambiguity 
and  doubtful  completeness,  be  read  in  the  light  of  surrounding 
circumstances,  and  if,  when  so  read,  it  is  apparent  that  it  does  not 
embody  their  entire  contract,  parol  evidence  is  admissible,  in  a 
proper  case,  to  bring  the  entire  contract  before  the  court.^ 

§  1632.  Existence  and  validity  of  contract. — The  parol  evi- 
dence rule  presupposes  the  existence  of  a  valid  written  contract, 
and  when  the  execution  of  the  contract  is  the  very  question  in 
issue  the  rule  does  not  apply  to  that  issue.  In  other  words,  parol 
evidence  is  not  rendered  inadmissible  by  the  rule  when  it  relates 

Meffery  v.   Walton,    1   Stark.  213;  "Thomas  v.   Scutt   127   N.   Y.   133, 

West  V.  Kelly,   19  Ala.  353,  54  Am.  27  N.  E.  961. 

Dec  192;  Fawkner  v.  Lew  Smith  ^Hardwick  v.  McClurg,  16  Colo. 
Wall  Paper  Co.,  88  Iowa  169,  55  N.  App.  354,  65  Pac.  405;  Pierce  v. 
W  200  45  Am.  St.  230;  Blair  v.  Woodward,  6  Pick.  (Mass.)  206; 
Buttolph  72  Iowa  31,  33  N.  W.  349;  Dixon  v.  Blondin,  58  Vt.  689,  5  Atl. 
Hutchinson  Mfg.  Co.  v.  Pinch,  107  514;  Hei  v.  Heller,  53  Wis.  415,  10  N. 
Mich  12  64  N.  W.  729,  66  N.  W,  W.  620;  See  also,  Dennis  v.  Sly- 
340;  Thomas  v.  Scutt,  127  N.  Y.  133,  field,  117  Fed.  474,  54  C.  C.  A.  520; 
27  N  E  961 ;  See  also,  Whatley  v.  Union  Stockyards  &c.  Co.  v.  Western 
Reese,  128  Ala.  500,  29  So.  606;  Land  &c.  Co.  59  Fed.  49,  7  C.  C.  A. 
Chamberlain  v.  Lesley,  39  Fla.  452,  660;  Naumberg  v.  Young,  44  N.  J.  L. 
22  So.  736;  Horn  v.  Hansen,  56  331,  43  Am.  Rep.  380;  Seitz  v.  Brew- 
Minn  43,  57  N.  W.  315 ;  Gardner  v.  er's  &c.  Co.,  141  U.  S.  510,  35  L.  ed. 
Mathews,  81  Mo.  627;  Taylor  v.  837,  12  Sup.  Ct.  46. 
Hunt,  118  N.  Car.  168,  24  S.  E.  359;  '  Peabody  v.  Bement,  79  Mich.  47, 
Baltimore  &c.  S.  Co.  v.  Brown,  54  Pa.  44  N.  W.  416;  Wheaton  &c.  Mill  Co. 
St.  77,  and  dissenting  opinion  in  Har-  v.  John  T.  Noye  &c.  Co.,  66  Minn, 
man  v.  Harman,  34  U-  S.  App.  316,  156,  68  N.  W.  854.  See  also,  Eighmie 
70  Fed.  894,  17  C.  C.  A.  479.  v.  Taylor,  98  N.  Y.  288. 


945  PAROL    EVIDENCE.  §    1 633 

to  the  execution,  delivery  or  authenticity  of  the  alleged  written 
contract  in  question.*  It  is  frequently  necessary  to  show  the  exe- 
cution, delivery  or  acceptance  of  the  contract  by  parol,  and  the 
time,  place  and  circumstances  of  its  execution  may  usually  be  thus 
shown  as  independent  facts  in  support  of  the  existence  and 
validity  of  the  contract  and  not  as  contradicting,  adding  to  or 
varying  its  terms.**  Thus,  it  has  been  held  that  parol  evidence  is 
admissible  to  show  that  an  instrument  purporting  to  be  signed  by 
one  person  for  another  was  written  and  signed  in  the  presence  of 
the  latter  and  at  his  request.^''  So,  ordinarily,  where  the  validity 
of  the  contract  depends  upon  the  authority  of  an  agent  his  au- 
thority may  be  shown  by  parol." 

§  1633.  Collateral  and  independent  agreements. — Parol 
evidence  of  a  distinct,  valid,  parol  agreement  between  the  parties, 
although  prior  to  or  contemporaneous  with  a  written  contract,  is 
not  excluded  by  the  rule  in  question  where  it  does  not  in  any  way 
vary  or  contradict  the  writing,"  and  there  are  cases  in  which  this 
is  true,  although  the  parol  agreement  may  be  collateral  to  the 
written  contract  and  relate  in  some  way  to  the  same  subject- 

*Verzan  v.  McGregor,  23  Cal.  339;  25  Am.  Rep.  510.    So,  a  legal  relation 

Printup   V.    IMitchell,    17   Ga.   558,   63  may  be  thus  shown,  such  as  the  fact 

Am.  Dec.  258;  Lennon  v.  Goodspeed,  of  partnership,  but  not  the  terms  of 

89  111.  438;    Uhl  v.    Moorhouse,    137  the  instrument.     Alderson  v.  Clay,  1 

Ind.  445,  2,7  N.  E.  366;  Bank  of  North  Starkie  327;  Widdifield  v.  Widdfield. 

America  v.  Emburv,  21  How.  Pr.  (N.  2  Binney  (Pa.)  245;  Cutler  v.  Thom- 

Y.)  14;   Relph  v.  Gist,  4  xMcCord  (S.  as'   Estate,  25  Vt.  72,,  and  see   King 

Car.)  267;  Mitchell  v.  Allen,  69  Tex.  v.  Holy  Trinity,  7  B-  &  C.  611. 
App.  70,  6  S.  W.  745.  '°  Morton  v.  Murray,  176  111.  54,  51 

» See  Plunkett  v.  Dillon.  4  Del.  Ch.  N.  E.  767,  43  L.  R.  A.  529.  See  also. 
198;  Cheney  v.  Barge,  26  111.  App.  Cain  v.  Mack,  23  Texas  135. 
182;  Wilbur  v.  Stoepel,  82  Mich.  344,  "Chicago  v.  Gage,  95  111.  593.  35 
46  N.  W.  724,  21  Am.  St.  568.  See  also,  Am.  Rep.  182;  Bank  of  North  Amer- 
Abercombie  v.  Bradford,  16  Ala.  560;  ica  v.  Embun,-,  21  How.  Pr.  (N.  Y.) 
Rapley  v.  Price  &c.  Co.,  9  Ark.  428;  14;  Mechanics'  Bank  v.  Bank  of  Co- 
Pacific  Iron  Works  v.  Newhall,  34  lumbia.  5  Wheat.  (U.  S.)  326.  5  L. 
Conn.  67  (verbal  acceptance  of  writ-  ed.  100;  Coulter  v.  Blatchley,  51  W. 
ten  proposal)  ;  Chandler  v.  Alorey,  Va.  163,  41  S.  E.  133. 
195  111.  596  63  N.  E.  512;  Harris  v.  "Marshall  v.  Baker,  19  Maine  402; 
Doyle,  130  Mich.  470.  90  N.  W.  293;  Blackwood  v.  Brown.  34  Mich.  4; 
Huntoon  v.  O'Brien.  79  Mich.  227,  44  Dean  v.  Adams.  44  Mich.  117,  6  N.  W. 
N.  W.  601;  Boulevard  Globe  &  Lamp  229;  Chase  v.  Redfield  Creamerv  Co., 
Co.  V.  Kern  Incandescent  Gaslight  12  S.  Dak.  529,  81  N.  W.  951:  'Page 
Co.,  67  N.  J.  L.  279,  51  Atl.  704;  v.  Sheffield.  2  Curt.  (U.  S.)  277,  Fed, 
Western  Transportation  &•  Coal  Co.  Cas.  No.  10667:  Buzzell  v.  Willard,  44 
V.  Kilderhouse,  87  N.  Y.  430:  Philo-  Vt.  44.  See  also,  Mosier  v.  Kershow, 
math  College  v.  Hartless,  6  Ore.  158,  16  Colo.  App.  453,  66  Pac.  449 ;   Drake 

60 — Contracts,  Vol.  2 


§    1633  CONTRACTS,  946 

matter/^  at  least  where  the  writing  is  silent  upon  the  subject  and 
the  parol  agreement  does  not  appear  to  be  so  closely  connected 
with  the  matter  of  the  written  contract  that  it  should  be  deemed  to 
have  entered  into  the  negotiations  or  formed  a  part  of  the  trans- 
action or  matter  of  which  the  writing  was  intended  to  be  a  com- 
plete and  final  statement.  But  a  complete,  valid,  written  contract 
merges  all  prior  and  contemporaneous  negotiations  and  agree- 
ments within  its  purview,  and  if  the  parol  agreement  is  not  really 
collateral,  but  is  an  element  of  the  written  contract,  or  tends  to 
vary  or  contradict  the  same,  either  in  its  express  provisions  or  its 
legal  import,  it  is  inadmissible.^*  The  question  usually  is  as  to 
whether  the  parol  evidence  sought  to  be  introduced  contradicts 
or  alters  the  written  contract,  or  leaves  it  to  stand  unchanged 
and  simply  tends  to  establish  an  additional  collateral  agreement." 
It  is  often  difficult  to  determine  this  question,  and  there  is  much 
conflict  among  the  authorities.  The  form  in  which  the  question 
arises  may  sometimes  be  an  important  factor  in  determining  the 
admissibility  of  the  evidence,  and,  referring  to  leases,  it  is  said 
that  "A  part  of  the  apparent  conflict  in  the  decisions  may  be  ex- 

V.  Allen,  179  Mass.  197,  60  N.  E.  477 ;  agreement   to  give   plaintiff   a    com- 

Huffman  v.  Ellis,  64  Nebr.  623,  90  N.  mission  if  he  sold  property  and  that 

W.  552 ;  Gibbons  v.  Bush  County,  52  written  option  was  given  him  to  bet- 

App.  Div.    (N.  Y.)   211,  65  N.  Y.  S.  ter  enable  him  to  do  so).    See  also, 

215,  affd.  in  169  N.  Y.  574,  61  N.  E.  Page  v.  Lashley,  15  Ind.  152;  Zabel  v. 

1129;  Johnson  v.  East  Carolina  Land  Nyenhuis,  83  Iowa  756,  49  N.  W.  999; 

&  Railway   Co.,   116  N.   Car.  962,  21  Scott  v.   Baltimore  &c.   Co.,  93   Md. 

S.  E.  28 ;  Phillips  v.  Preston,  5  How.  475,   49   Atl.   327 ;     Many   illustrative 

(U.  S.)  278,  12  L.  ed.  152;    Green  v.  cases  are  given  in  §  1633. 

Randall,    51    Vt.    67;    Lonabaugh    v.  "Wilson  v.  Union  Distilling  Co.,  16 

Morrow,  11  Wyo.  17  70  Pac.  724.  Colo.  App.  429  66  Pac.   170;   Godkin 

"Weaver  v.  Fletcher,  27  Ark.  510;  v.  Monahan,  83  Fed.  116,  27  C.  C.  A. 

Savings  Bank  v.  Asbury,  117  Cal.  96,  410;   Sun  &c.  Assn.  v.   Edwards,   113 

48    Pac.    1081;    Sivers    v.    Sivers,   97  Fed.  445,  51  C.  C.  A.  279;    Tichenor 

Cal.  518,  32  Pac.  571    (time  of  pay-  v.  Newman,  186  111.  264,  57  N.  E.  826; 

ment)  ;     Basshor  v.   Forbes,   36    Md.  Robieson  v.  Royce,  63  Kans.  886,  66 

154;    Snow  v.  Alley,  151  Mass.  14,  23  Pac.  646;    Crane  v.  Williamson,   111 

N.   E.   576;   DeCamp   v.   Scofield,   75  Ky.  271,  23  Ky.  L.  689,  63  S.  W.  610; 

Mich.  449,  42  N.  W.  962;    Hersom  v.  Merritt  v.   Peninsular  Const.   Co.,  91 

Henderson,  21  N.  H.  224,  53  Am.  Dec.  Md.  453,  46  Atl.  1013 ;   Leffel  v.  Piatt, 

185;    Chapin  v.  Dobson,  78  N.  Y.  74,  126  Mich.  443,  86  N.  W.  65;  Engel- 

34  Am.  Rep.  512;    Weaver  v.  Wood,  horn  v.  Reitlinger,   122  N.  Y.  76,  25 

9   Pa.    St.   220;     Hamilton   v.    Clark,  N.  E.  297,  9  L.  R.  A.  548;    Eighmie 

CTex.  Civ.  App.)  26  S.  W.  515;   Red-  v.    Taylor,   98    N.    Y.    288;    Seitz    v. 

field  V.   Gleason,  61   Vt.   220,    17  Atl.  Brewers  &c.   Machine  Co.,  141  U.  S. 

1075,  15  Am.  St.  889;  Johnston  v.  Mc-  510,  35  L.  ed.  837,  12  Sup.  Ct.  46. 

Cart,  24  Wash.  19,  63  Pac.  1121  (how  "  Snowden  v.  Guion,  101  N.  Y.  458, 

payment  should  be  made)  ;  Riemer  v.  5  N.  E.  322. 
Rice,  88  Wis.  16,  59  N.  W.  450  (parol 


947  PAROL   EVIDENCE.  §    1634J 

plained,  if  we  observe  that  it  is  one  question  whether  such  a  col- 
lateral agreement  may  be  proved  for  the  purpose  of  sustaining  an 
action  for  its  breach ;  and  a  different  question  whether  it  may  be 
proved  for  the  purpose  of  defeating  an  action  on  the  written 
lease.'"*  Another  writer  suggests  the  following  test  for  deter- 
mining whether  a  parol  agreement  is  collateral  and  admissible: 
"If  it  interferes  with  the  writing  it  cannot  be  proved;  if  on  the 
other  hand  it  relates  to  a  matter  beyond  the  scope  of  the  written 
contract,  the  writing  does  not  affect  it.  *  *  *  In  each  case  it 
must  be  determined  from  the  character  of  the  writing  and  from 
the  circumstances  of  the  case  whether  the  parol  agreement  offered 
to  be  proved  was  in  regard  to  a  matter  which  it  is  reasonable  to 
infer  the  parties  thought  settled  by  the  terms  of  the  writing;  and, 
if  it  was,  evidence  to  show  it  should  be  excluded.  The  writing 
must  speak  just  so  far  as  it  is  fair  to  conclude  that  the  parties, 
acting  as  reasonable  men  and  using  intelligible  language,  intended 
it  should  speak,  and  no  farther."" 

§  1634.  Collateral  agreements — Evidence  held  admissible. 
— Parol  evidence  is  admissible  to  show  that  when  a  note  was  given 
to  a  bank,  the  maker  directed  that  any  deposit  he  should  make 
should  be  credited  on  the  note,  although  before  maturity,  as  tliis 
does  not  vary  or  contradict  the  note."  There  is  also  a  class  of 
cases  in  which  it  is  held  that  parol  evidence  of  a  collateral  con- 
temporaneous agreement  which  assumes  the  contract  as  indicated 
by  the  writing  and  undertakes  to  deal  with  some  contingency  or 
new  relation  of  the  parties  in  the  future  that  may  arise  under  the 
written  agreement,  is  admissible.^^     It  has  also  been  held  that 

'•Abbott's  Trial  Ev.    (2d  ed.)   649,  Trade  Cont..    §141.     See  also.    Seitz 

note.      A    comparison  of  the  follow-  v.  Brewers  &c.  Machine  Co.,  141  U.  S. 

ing  cases  will  show  the  truth  of  the  510,  35  L.  ed.  837,  12  Sup.  Ct.  46,  and 

general  proposition  that  the  form  of  compare      Puget      Sound     Iron     &c. 

the  issue  and  purpose  of  the  evidence  Works  v.  Clemmins,  32  Wash.  36,  72 

mav     have     an     important     bearing.  Pac.  465. 

Clinton  v.  Estes,  20  Ark.  216;    Rhine  **Roe   v.    Bank   of   Versailles,    167 

V.    Ellen,   36    Cal.   362;    Purinton    v.  Mo.  406, 67  S.  W.  303. 

Northern    111.    R.    Co.,    46    111.    297;  "See  Jeffery  v.   Walton,   1    Stark. 

Gardner   v.    Lightfoot.   71    Iowa   577,  213;    Erskine  v.  .Adcanc,  L.  R.  8  Ch. 

32  N.  W.  510;  Cunningham  v.  Dwyer,  App.  756;    Morgan  v.  Griffith.  L.  R.  6 

23  Md.  219;    Christopher  v.  Christo-  Exch.    70;    Battcrman    v.    Pierce     3 

pher.  64  Md.  583.  3  .A.tl.  296;  Ellinger  Hill  (N.  Y.)  171 ;   Johnson  v.  Oppen- 

V.  Crowl,  17  Md.  361.  heim.  55  N.  Y.  280.  reviewed  in  Eigh- 

"  Jones   Constr.   of   Commercial   &  mie  v.   Taylor,  98  N.   Y.  288,  where 


1 634 


CONTRACTS. 


948 


parol  evidence  is  admissible  to  show  an  agreement  as  to  the  time, 
place  or  manner  of  payment  or  performance  under  a  written  con- 
tract, which  is  silent  upon  the  subject  and  is  not  contradicted  or 
varied  thereby;*"  to  show  in  an  action  for  a  balance  due  on  a  lien 
note  for  a  horse,  that  at  the  time  of  the  sale  and  delivery  of  the 
note  it  was  agreed  that  the  horse  should  be  taken  on  trial  and 
returned  if  not  satisfactory;*^  to  show  an  agreement  of  war- 
ranty, or  the  like,  where  the  bill  of  sale  is  silent;"  to  show  an 
agreement  to  destroy  game,  rebuild  or  repair*^  as  collateral  to  a 
lease,  and  to  show  an  agreement  by  a  vendor  or  lessor  not  to  en- 
gage in  a  rival  or  competing  business.**  But  many  of  these  de- 
cisions are  of  questionable  soundness,  and,  as  shown  in  the  next 
^section,  the  weight  of  authority  is  against  some  of  them.  It  has 
also  been  held  that  parol  evidence  is  admissible  to  show  an  agree- 
ment by  a  grantor  to  pay  for  a  sewer  in  process  of  construction  at 
the  time  of  the  execution  of  the  deed ;  but  the  weight  of  authority 
is  to  the  effect  that  a  parol  warranty  cannot  be  shown  where  the 
bill  of  sale  or  other  written  contract  appears  to  be  complete,  when 


Chapin  v.  Dobson,  78  N.  Y.  74,  34 
Am.  Rep.  512,  is  sought  to  be  distin- 
guished on  this  ground.  See  also, 
Nickerson  v.  Saunders,  36  Maine  413 ; 
Clark  V.  Deshon,  12  Cush.  (Mass.) 
589;  Holbrook  v.  Holbrook,  30  Vt. 
432;  Kickland  v.  Menasha  Wooden 
Ware  Co.,  68  Wis.  34,  60  Am.  Rep. 
831 

'»' Lindley  v.  Lacey,  17  C.  B.  (N.  S.) 
578;  Si  vers  v.  Sivers,  97  Cal.  518, 
32  Pac.  571;  Ewaldt  v.  Farlon,  62 
Iowa  212,  17  N.  W.  487 ;  Gray  v.  An- 
derson, 99  Iowa  342,  68  N.  W.  790,  61 
Am.  St.  243;  Paul  v.  Owings.  32  Md. 
402;  Cummings  v.  Putnam,  19  N.  H. 
569;  Sowers  v.  Earnhart,  64  N.  Car. 
96;  Musselman  v.  Stoner,  31  Pa.  St. 
265;  Johnson  v.  Portwood,  89  Tex. 
235,  34  S.  W.  596;  Brent's  Exrs.  v. 
Bank  of  Metropolis,  1  Pet.  CU.  S.)  89, 
7  L.  ed.  65;  Johnston  v.  McCart,  24 
Wash.  19,  63  Pac.  1121;  Becker  v. 
Knudson,  86  Wis.  14,  56  N.  W.  192. 
Agreement  between  sureties,  Sloan 
V.  Gibbes,  56  S.  Car.  480,  35  S.  E.  408, 
76  Am.  St.  559,  and  numerous  author- 
ities there  cited. 

^  Gilman  v.  Williams,  74  Vt.  327,  52 
Atl.  428. 


^Hersom  v.  Henderson,  21  N.  H. 
224,  53  Am.  Dec.  185 ;  Chapin  v.  Dob- 
son,  78  N.  Y.  74,  34  Am.  Rep.  512; 
Boorman  v.  Jenkins,  12  Wend.  (N. 
Y.)  566,  27  Am.  Dec.  158;  Puget 
Sound  Iron  &c.  Works  v.  Clemmons, 
32  Wash.  2,6,  72  Pac.  465;  Hahn  v. 
Doolittle,  18  Wis.  196,  86  Am.  Dec. 
757.  See  also,  De  Lassalle  v.  Guild- 
ford, 70  L.  J.  K.  B.  533,  84  L.  T.  549; 
Allen  V.  Pink,  4  M.  &  W.  140 ;  Thom- 
as V.  Barnes,  156  Mass.  581,  31  N.  E. 
683 ;  Perrine  v.  Cooley's  Exrs.,  39 
N.  J.  L.  449.  Note  to  5_  Am.  St.  198. 
But  compare  authorities  cited  in 
§  1635. 

^Erskine  v.  Adeane.  L.  R.  8  Ch. 
App.  756;  Morgan  v.  Griffith,  L.  R.  6 
Exch.  70;  De  Lassalle  v.  Guildford, 
70  L.  J.  K.  B.  533, 84  L.  T.  549 ;  Vande- 
grift  V.  Abbott,  75  Ala.  487;  Gum- 
ming V.  Barber,  99  N.  Car.  332,  5  S. 
E.  903 ;  See  also,  Graffam  v.  Pierce, 
143  Mass.  386,  9  N.  E.  819;  Lewis  v. 
Seabury,  74  N.  Y.  409,  30  Am.  Rep. 
311  (agreement  as  to  fixtures)  ;  John- 
son V.  Blair,  126  Pa.  St.  426,  17  Atl. 
663.     But  see  §  1635. 

"Durham  v.  Lathrop,  95  111.  App. 
429;  Welz  v.  Rhodius,  87  Ind.   1,  44 


949 


PAROL    EVIDENCE. 


§    1^35 


it  contains  nothing  upon  the  subject  of  warranty,"  that  an  oral 
agreement  between  the  insurer  and  assured  that  the  former 
should  hold  the  policy  until  payment  of  the  first  quarterly  pre- 
mium, and  that  it  should  be  in  force  during  such  time  does  not 
contradict  the  terms  of  the  policy  requiring  payment  of  the  pre- 
mium in  advance;-*'  and  that  a  parol  agreement  that  a  grantor 
might  retain  possession  for  a  certain  time  is  admissible." 

§  1635.  Collateral  agreements — Evidence  held  inadmis- 
sible.— The  weight  of  authority  is  to  the  effect  that  a  parol 
warranty  cannot  be  shown  where  the  bill  of  sale  or  other  written 
contract  appears  to  be  complete,  when  it  contains  nothing  upon 
the  subject  of  warranty,-"*  as  well  as  when  it  contains  an  express 
warranty.^"  So,  contrary  to  decisions  referred  to  in  the  preceding 
section,  it  has  been  held  that  a  prior  or  contemporaneous  parol 
agreement  by  a  vendor  or  lessor  not  to  carry  on  a  competing 


Am.  Rep.  747;  Fusting  v.  Sullivan, 
41  Md.  162;  Pierce  v.  Woodward,  6 
Pick.  (Mass.)  206.  This  is  contrary 
to  the  weight  of  authority,  and  at 
least  one  of  these  cases  has  been 
practically  overruled. 

^'Carr  v.  Doolev,  119  Mass.  294; 
Cole  V.  Hadley,  162  Mass.  579,  39  N. 
E.  279.  See  also,  Robinius  v.  Lis- 
ter, 30  Ind.  142,  95  Am.  Dec.  674; 
Hopper  V.  Calhoun,  52  Kans.  703,  35 
Pac.  816,  39  Am.  St.  263;  Durkin  v. 
Cobleigh,  156  Mass.  108,  30  N.  E. 
474,  17  L.  R.  A.  270,  32  Am.  St.  436. 
But  compare  Flvnn  v.  Bourneuf,  143 
Mass.  277,  9  N.'E.  650,  58  Am.  Rep. 
135;  Stanisics  v.  McMurtry,  64  Nebr. 
761,  90  N.  W.  884. 

^  Prudential  Ins.  Co.  v.  Sullivan, 
27  Ind.  App.  30,  59  N.  E.  873.  But 
see  Insurance  Co.  v.  Mowry,  96  U.  S. 
544,  24  L.  ed.  674. 

="  Hersey  v.  Verrill.  39  Maine  271 ; 
Willis  v.  Hulbert,  117  Mass.  151; 
Quimby  v.  Stebbins.  55  N.  H.  420; 
Hamilton  v.  Clark  (Tex.  Civ.  App.), 
26  S.  W.  515;  Merrill  v.  Blodgett.  34 
Vt.  480.  See  also,  Farrar  v.  Smith, 
64  Maine  74.  For  other  illustrative 
cases  see,  Harman  v.  Harman,  34  U. 
S.  App.  316,  17  C.  C.  A.  479.  70  Fed. 
894;  Gould  v.  Boston  Excel.  Co.,  91 
Maine  214,  39  Atl.  554.  64  Am.  St. 
221 ;    Rackemann   v.   Riverbank   Imp. 


Co.,  167  Mass.  1,  44  X.  E.  990,  57 
Am.  St.  427;  Bretto  v.  Levine,  50 
Minn.  168.  52  X.  W.  525. 

=*McMillen  v.  DeTamble.  93  111. 
App.  65 ;  Conant  v.  Xational  State 
Bank,  121  Ind.  323,  22  X.  E.  250; 
}klast  V.  Pearce,  58  Iowa  579,  8  X.  W. 
632,  12  X.  W.  597,  43  Am.  Rep.  125 
and  note;  Ehrsam  v.  Brown,  64  Kans. 
466,  67  Pac.  867;  Diebold  Safe  &  Lock 
Co.  V.  Huston.  55  Kans.  104.  39  Pac. 
1035.  28  L.  R.  A.  53 ;  Lamb  v.  Crafts. 
12  Mete.  (Mass.)  353;  Hall  wood 
Cash  Register  Co.  v.  Millard.  127 
Mich.  316,  86  N.  W.  833;  McCray 
Refrigerator  &  Cold  Storage  Co.  v. 
AVoods,  99  Mich.  269.  58  X.  W.  320. 
41  Am.  St.  599  and  note;  Xaumberg 
v.  Young,  44  X.  J.  L.  331.  43  Am. 
Rep.  380;  Eighmie  v.  Tavlor.  98  X. 
Y.  288;  Reed  v.  Van  Ostrand.  1 
Wend.  (X.  Y.)  424.  19  Am.  Dec. 
529.  See  note  in  5  .\m.  St.  1O7-201. 
See  also.  Van  Winkle  v.  Crowell,  146 
U.  S.  42.  36  L.  ed.  880,  13  Sup.  Ct. 
18. 

*  Johnson  v.  Latimer.  71  Ga.  470; 
McCormick  Harvesting  Machine  Co. 
v.  Yoeman,  26  Ind.  App.  415.  59  X^. 
E.  1069;  Osborne  v.  Wigent.  127 
Mich.  624.  86  X.  W.  1022;  Cosgrove 
V.  Bennett.  32  Minn.  371.  20  X.  W. 
359;  Dewitt  v.  Berrv.  134  U.  S.  306,  33 
L.  ed.  896,  10  Sup.  Ct.  536. 


i635 


CONTRACTS. 


950 


business  is  inadmissible  where  the  written  contract  appears  to 
be  complete.^"  And  so  the  better  rule  is  that  an  oral  warranty 
of  the  condition  of  the  premises  or  agreement  on  the  part  of  the 
lessor  to  make  repairs  or  improvements  cannot  be  shown  in  such 
a  case.^^  It  has  also  been  held  that  oral  evidence  is  not  admis- 
sible to  show  that  rentals  on  a  railroad  lease  are  to  be  applied 
upon  a  construction  contract,  so  as  to  impose  upon  the  lessee  a 
new  burden  in  addition  to  payment  of  the  agreed  rent  when  the 
road  is  completed  and  accepted,  wliich  is  all  that  the  lease  pro- 
vides for.^'  So,  it  has  been  held  that  a  written  contract  to  erect 
a  tablet  with  a  certain  word  on  top  cannot  be  enlarged  by  a  con- 
temporaneous verbal  agreement  that  the  word  should  be  cut  in 
raised  letters  f^  that  a  prior  or  contemporaneous  parol  agreement 
that  only  one  of  several  notes,  absolute  on  their  face,  should  be 
paid,  and  that  there  should  then  be  no  liability  on  the  other,  can- 
not be  shown  f*  and  that  where  a  deed  or  other  writing  is  un- 
ambiguous and  purports  to  express  the  entire  contract,  stating 
the  consideration,  and  the  subject-matter,   and  the  conditions, 


'"  Walther  v.  Stampfli,  91  Mo.  App. 
398;  Smith  v.  Gibbs,  44  N.  H.  335; 
Costello  V.  Eddv,  58  Hun  N.  Y.)  605, 
34  N.  Y.  St.  565.  12  N.  Y.  S.  236, 
affd.  128  N.  Y.  650,  29  N.  E.  146; 
Scholz  V.  Dankert,  69  Wis.  416,  34 
N.  W.  394.  See  also.  Haycock  v. 
Johnston,  81  Minn.  49,  83  N.  W.  494, 
1118;  Gordon  v.  Parke  &  Lacy  Mach. 
Co.,  10  Wash.  18,  38  Pac.  755. 

^^  Roehrs  v.  Timmons,  28  Ind.  App. 
578,  63  N.  E.  481 ;  Diven  v.  Johnson, 
117  Ind.  512,  20  N.  E.  428,  3  L.  R.  A. 
308;  Tracy  v.  Union  Iron  Works  Co., 
104  Mo.  193,  16  S.  W.  203;  York  v. 
Steward,  21  Mont.  515,  55  Pac.  29, 
43  L.  R.  A.  125;  Hall  v.  Beston,  26 
App.  Div.  (N.  Y.)  105,  49  N.  Y.  S. 
811,  aflFd.  165  N.  Y.  632,  59  N.  E. 
1123;  Hartford  &  New  York  Steam- 
boat Co.  V.  New  York.  78  N.  Y.  1, 
affg.  12  Hun  (N.  Y.)  550.  See  also, 
Angell  V.  Duke,  32  L.  T.  320;  Nave 
V.  Berry,  22  Ala.  382;  Averill  v.  Saw- 
yer, 62  Conn.  560,  27  Atl.  73 ;  Rector 
V.  Hartford  Deposit  Co.,  190  111.  380, 
60  N.  E.  528;  Lerch  v.  Sioux  City 
Times  Co.,  91  Iowa  750.  60  N.  W. 
611;  Stevens  v.  Pierce,  151  Mass.  207, 
23  N.  E.  1006;  Grashaw  v.  Wilson, 
123  Mich.  364,  82  N.  W.  73 ;  McLean 


V.  Nicol,  43  Minn.  169,  45  N.  W.  15 ; 
Stoddard  v.  Nelson,  17  Ore.  417,  21 
Pac.  456;  Patterson  v.  Park,  166  Pa. 
St.  25,  30  Atl.  1041 ;  Johnson  v.  Witte 
(Tex.  Civ.  App.),  32  S.  W.  426; 
Richard  v.  Dana,  74  Vt.  74,  52  Atl. 
113. 

^'  Reynolds  v.  Louisville  N.  A.  & 
C.  R.  Co.,  143  Ind.  579,  40  N.  E. 
410.  See  also,  Harrison  v.  Howe,  109 
Mich.  476,  67  N.  W.  527. 

^Nelson  v.  Godfrey,  74  Vt.  470, 
52  Atl.  1037.  See  also.  Town  of 
Brewton  v.  Glass,  116  Ala.  629,  22  So. 
916;  Patek  v.  Waples,  114  Mich. 
669,  72  N.  W.  995;  Tuttle  v.  Bur- 
gett's  Admr.,  53  Ohio  St.  498,  42  N. 
E.  427,  30  L.  R.  A.  214,  53  Am.  St. 
649;  Dixon- Woods  Co.  v.  Phillips 
Glass  Co.,  169  Pa.  St.  167,  32  Atl. 
432;  Long  v.  Ferine,  41  W.  Va.  314, 
23  S.  E.  611. 

^  Barnard  State  Bank  v.  Fesler,  89 
Mo,  App.  217.  To  same  effect  where 
mortgage  secures  all  the  notes,  see. 
First  Nat.  Bank  v.  Prior,  10  N.  Dak. 
146.  86  N.  W.  362.  But  a  parol  agree- 
ment that  there  should  be  no  personal 
liability  on  notes  given  by  a  corpora- 
tion has  been  held  admissible.  Brown 
v.  Eastern  Slate  Co..  134  Mass.  590. 


951 


PAROL   EVaOENCE. 


1636 


Stipulations,  reservations,  and  acts  to  be  performed,  specifically 
and  in  detail,  it  is  more  than  a  mere  conveyance  or  act  in  carry- 
ing out  a  prior  or  contemporaneous  contract,  and  cannot  be  varied 
nor  contradicted  by  parol  evidence  of  such  alleged  contract.^'' 
And  there  are  many  authorities  in  which  it  is  held  that  where  a 
written  contract  appears  to  be  complete  and  unambiguous,  parol 
evidence  of  a  prior  or  contemporaneous  agreement,  even  as  to 
the  time  or  manner  of  performance  or  conditions  not  going  to 
the  validity  of  the  writing,  is  not  admissible.^" 

§  1636.  Conditions  precedent. — The  general  rule  which 
excludes  parol  evidence  when  offered  to  contradict  or  vary  the 
terms,  provisions  or  legal  effects  of  a  written  instrument,  is  sub- 
ject to  many  qualifications.  Among  these  qualifications  is  one 
to  the  effect  that  conditions  relating  to  conditions  precedent  may 
be  shown  by  extrinsic  evidence.  A  party  who  concedes  that  the 
instrument  evidencing  the  contract  was  placed  in  the  possession 
of  the  party  seeking  relief,  but  claims  that  the  latter  took  it  with 
the  understanding  that  it  was  not  to  go  into  effect  until  the  hap- 
pening of  some  other  or  further  event  and  that  such  event  has 


^  Moore  v.  Terry,  66  Ark.  393,  50 
S.  W.  998;  Arnold  v.  Scharbauer,  118 
Fed.  1008;  Godkin  v.  Monahan,  83 
Fed.  116,  27  C  C.  A.  410;  Sun  &c. 
Assn.  V.  Edwards,  113  Fed.  445,  51 
C.  C.  A.  279;  Haworth  v.  Norris,  28 
Fla.  763.  10  So.  18;  McEnery  v.  Mc- 
Enerv,  110  Iowa  718,  80  N.  W.  1071; 
Morris  v.  Morris,  2  Ribb.  (Kv.)  311; 
Tripp  V.  Smith.  180  Mass.  122,  61 
N.  E.  804;  Radigan  v.  Johnson,  174 
Mass.  68.  54  N.  E.  358;  Walker  v. 
Mack,  129  Mich.  527,  89  N.  W.  338; 
Putnam  v.  Russell,  86  Mich.  389,  49 
N.  W.  147 ;  ^lontgomerv  v.  Chase,  30 
Minn.  132.  14  N.  W.  586;  Sayre  v. 
Burdick,  47  Minn.  367.  50  N.  W.  245 ; 
Baum  V.  Lvnn,  72  Miss.  932,  18  So. 
428,  30  L.  R.  A.  441;  Hutchins  v. 
Hutchins,  98  N.  Y.  56;  Engelhorn  v. 
Reitlinger^  122  N.  Y.  76,  25  N.  E. 
297,  9  L.  R.  A.  548 ;  Milos  v.  Covace- 
vich,  40  Ore.  239,  66  Pac.  914;  Hop- 
kins V.  Woldert  Grocery  Co.  (Tex. 
Civ.  App.),  66  S.  \V.  63.  And  see 
authorities  reviewed  in  6  L.  R.  A.  33. 

"Hoare  v.  Graham,  3  Camp.  56; 
Rawson    v.    Walker,    1    Stark.    288; 


Campbell  v.  Hodgson,  1  Gow.  74; 
Preston  v.  Merceau,  2  W.  Bl.  1249; 
Bomar  v.  Rosser,  131  Ala.  215,  31 
So.  430;  Keith  v.  Parker,  115  Fed. 
397;  Ferguson  Contracting  Co.  v. 
Manhattan  Trust  Co.,  118  Fed.  791, 
55  C.  C.  A.  529;  Conant  v.  National 
State  Bank,  121  Ind.  323,  22  X.  E. 
250;  Hanson  v.  Stetson,  5  Pick. 
(Mass.)  506;  Allen  v.  Furbish,  4 
Grav  (Mass.)  504;  Hunt  v.  Adams,  7 
Mass.  518;  First  State  Bank  v.  Xoel, 
94  Mo.  App.  498,  68  S.  W.  235 ;  Rid- 
dell  v.  Peck  &c.  Ventilating  Co.,  27 
Mont.  44,  69  Pac.  241  ;  Armington 
V.  Stelle,  27  Mont.  13.  69  Pac.  115; 
Kistler  v.  McBride.  65  N.  J.  L.  553, 
48  Atl.  558;  First  Nat.  Bank  v.  Prior, 
10  N.  Dak.  146,  86  N.  W.  362;  Riley 
V.  Treanor  (Tex.  Civ.  .^pp),  25  S. 
W.  1054;  McAleer  v.  United  States. 
150  U.  S.  424.  37  L.  ed.  1130,  14 
Sup.  Ct.  160,  29  Ct.  CI.  560.  Agree- 
ment not  to  enforce  contract  as  writ- 
ten or  making  it  conditional :  Bar- 
nett  V.  Barnett.  83  Va.  504,  2  S.  E. 
733.  See  also,  Garner  v.  Fite.  93 
Ala.  405,  9  So.  367;  Osborne  v.  Tay- 


^^37 


CONTRACTS. 


952 


not  transpired  is  not  considered  as  one  seeking  to  vary  or  con- 
tradict a  written  contract,  but  as  one  endeavoring  to  show  that  no 
contract  between  the  parties  ever  in  fact  came  into  existence.  For 
this  reason,  evidence  of  such  conditions  precedent  is  held  admis- 
sible.^^ Cases  which  so  hold  merely  give  recognition  to  the  well- 
settled  rule  that  an  instrument  may  be  delivered  by  one  party  to 
another  to  take  effect  on  the  happening  of  a  contingency,  and 
that  by  such  collateral  agreement,  the  legal  operation  of  the  writ- 
ing is  merely  postponed  until  the  happening  of  the  contingency.^* 

§  1637.  Conditions  precedent — Bills  and  notes. — Thus  as 
between  the  parties  and  all  but  bona  fide  holders,  extrinsic  evi- 
dence may  be  introduced  to  show  that  a  note  in  the  possession  of 
the  payee  was  not  to  become  a  binding  obligation  until  the  hap- 
pening of  some  event  which  never  has  transpired.^®    Under  this 


lor,  58  Conn.  439,  20  Atl.  605 ;  Coap- 
stick  V.  Bosworth.  121  Ind.  6,  22  N. 
E.  772;  McCormick  Harvesting  Co. 
V.  Wilson,  39  Minn.  467,  40  N.  W. 
571 ;  Curtice  v.  Hokanson,  38  Minn. 
510,  38  N.  W.  694;  ^leekins  v.  New- 
berrv,  101  N.  Car.  17.  7  S.  E.  655. 

"  Pvm  V.  Campbell,  6  El.  &  Bl.  370; 
Walli's  V.  Littell,  11  C.  B.  (N.  S.) 
369 ;  Hurlburt  v.  Dusenberv,  26  Colo. 
240,  57  Pac.  860;  Bourke  v.  Van 
Keuren,  20  Colo.  95.  36  Pac.  882 ;  Mc- 
Farland  v.  Sikes,  54  Conn.  250,  7  Atl. 
408,  1  Am.  St.  Ill;  Tug  River  &c. 
Salt  Co.  V.  Brigel,  86  Fed.  818,  30 
C.  C  A.  415;  Price  v.  Hudson,  125 
111.  284,  17  X.  E.  817;  McCormick 
Harvesting  Mach.  Co.  v.  Morlan,  121 
Iowa  451,  96  N.  W.  976;  Reichart  v. 
Wilhelm.  83  Iowa  510,  50  N.  W.  19; 
Beall  V.  Poole,  27  Aid.  645 ;  Adams  v. 
Morgan,  150  Mass.  143,  22  N.  E.  708; 
Wilson  V.  Powers,  131  Alass.  539; 
Fulton  V.  Priddy,  123  Mich.  298,  82 
N.  W.  65,  81  Am.  St.  201 ;  Westman 
V.  Krumweide,  30  Minn.  313,  15  N. 
W.  255 ;  Harnickell  v.  New  York  Life 
Ins.  Co.,  Ill  N.  Y.  390,  18  N.  E. 
632,  2  L.  R.  A.  150;  Reynolds  v.  Rob- 
inson, 110  N.  Y.  654,  18  N.  E.  127, 
2  Silvernail  Ct.  App.  fN.  Y.)  99; 
Benton  v.  Martin,  52  N.  Y.  570; 
Sweet  V.  Stevens,  7  R.  I.  375;  Biss- 
enger  v.  Guitemen  Bros.,  6  Heisk. 
(Tenn.)  277;  Burke  v.  Dulaney,  153 
U.  S.  228,  38  L.  ed.  698,  14  Sup.  Ct. 


816;  Ware  v.  Allen,  128  U.  S.  590,  32 
L.  ed.  563,  9  Sup.  Ct.  174;  Gilman  v. 
Williams,  74  Vt.  327,  52  Atl.  428; 
Catt  v.  Olivier,  98  Va.  580,  36  S.  E. 
980;  Reiner  v.  Crawford,  23  Wash. 
669,  63  Pac.  516,  83  Am.  St.  848; 
Curry  v.  Colburn,  99  Wis.  319,  74  N. 
W.  778,  67  Am.  St.  860;  Nutting  v. 
Minnesota  Fire  Ins.  Co.,  98  Wis.  26, 
73  N.  W.  432.  "The  making  and  de- 
livering of  a  writing,  no  matter  how 
complete  a  contract  according  to  its 
terms,  is  not  a  binding  contract  if  de- 
livered upon  a  condition  precedent 
to  its  becoming  obligatory.  In  such 
case  it  does  not  become  operative  as 
a  contract  until  the  performance  or 
happening  of  the  condition  prec- 
edent." Cleveland  Refining  Co.  v. 
Dunning,  115  Mich.  238,  73  N.  W. 
239,  citing  Ware  v.  Allen,  128  U.  S. 
590,  32  L.  ed.  563,  9  Sup.  Ct.  174; 
Phelps  V.  Abbott,  114  Mich.  88,  72  N. 
W.  3. 

'^  Kelly  V.  Oliver,  113  N.  Car.  442. 
18  S.  E.  698;  Hughes  v.  Crooker,  148 
N.  Car.  318,  62  S.  E.  429,  128  Am. 
St.  606  and  note;  Reiner  v.  Crawford. 
23  Wash.  669,  63  Pac.  516,  83  Am.  St. 
848;  Golden  v.  Meier,  129  Wis.  14, 
107  N.  W.  27,  116  Am.  St.  935. 

*•  McFarland  v.  Sikes.  54  Conn.  250, 
1  Am.  St.  Ill,  7  Atl.  408;  Gilman  v. 
Williams.  74  Vt.  327,  52  Atl.  428; 
Catt  v.  Olivier,  98  Va.  580,  36  S.  E. 
980. 


953  PAROL   EVaDENCE.  §    1 637 

rule,  it  is  proper  to  show  that  a  note  given  for  the  purchase-price 
of  a  horse  was  to  take  effect  only  if  such  horse  was  warranted,*** 
or  that  the  note  was  to  become  a  binding  obligation  only  if  nego- 
tiated at  a  certain  place;**  or  that  a  note  given  for  a  policy  of 
insurance  was  conditional  upon  such  policy  being  satisfactory  to 
the  maker  of  such  note,*-  or  if  the  maker  did  not  demand  its  re- 
delivery by  a  certain  day,*^  or  that  it  was  given  on  condition  that 
the  transaction  of  which  it  was  a  part  should  be  approved  by  the 
maker's  attorney,**  or  that  when  given  for  the  purchase-price  of 
certain  property  it  was  not  to  become  binding  on  the  maker  until 
after  he  had  an  opportunity  to  examine  and  accept  the  property 
purchased. *°  However,  some  jurisdictions  hold  that  where  the 
maker  of  a  note  has  voluntarily  placed  it  in  the  hands  of  the 
payee,  the  former  cannot  show  that  the  instrument  was  not  to 
take  effect  until  some  other  person  or  persons  had  signed  it,  for 
the  reason  that  the  adverse  party  cannot  be  made  the  holder 
of  an  instrument  in  escrow.**'  In  conformity  with  this  latter  rule, 
if  a  mortgage*^  or  a  deed*®  is  voluntarily  surrendered  to  the  mort- 
gagee or  grantee,  it  cannot  be  shown  that  such  surrender  was  to 
be  inoperative  until  the  happening  of  a  contingency.  It  may  be 
shown  that  a  stock  subscription  contract  was  not  to  go  into  effect 
until  a  certain  nimiber  of  persons  had  signed  or  a  certain  amount 
of  the  stock  had  been  subscribed  for.*"  Testimony  of  this  char- 
acter does  not  contradict  the  terms  of  the  collateral  agreement 
postponing  its  legal  operation  until  the  happening  of  the  contin- 
gency.°° 

« Trumbull    v.    O'Hara,    71    Conn.  "Ware  v.  Allen,  128  U.  S.  590.  32 

172,  41  Atl.  546.  L.  ed.  563,  9  Sup.  Ct.  174. 

*^'United  States  Nat.  Bank  v.  Ewing,  "  Burke  v.  Dulaney,  153  U.  S.  228, 

131  N    Y.  506,  30  N.  E.  501,  27  Am.  38  L.  ed.  698.  14  Sup.  Ct.  816. 

St    615  "Findlev    v.    Means,    71    Ark.    289. 

"  Parker  v.  Bond,  121  Ala.  529,  25  73  S.  W.  iOl ;  Clanin  v.  Esterly  Har- 

So    898      See  also,  Mehlin  v.  Mutual  vestingr   Mach.    Co..    118  Ind.   372,   21 

&c.'  Life   Assn.,  2   Ind.  Ter.  396,  51  N.  E.  35,  3  L.  R.  A.  863. 

S  W   1063  "  Sargent  v.  Cooley,  12  N.  Dak.  1, 

"*»  McFarland  v.  Sikes.  54  Conn.  250,  94  X.  W.  576. 

7  Atl    708    1    \m    St.  111.    To  same  *M-Iubbard    v.    Greeley,    84    Mame 

effect,  Ada  Dairv  Assn.  v.  Mears.  123  340.  24  Atl.  799,  17  L.  R.  A.  511. 

Mich.  470,  82  N.'W.  258  (written  con-  *" Oilman  v.  Gross,  97  Wis.  224,  72 

tract  of  subscription  for  stock).     See  N.  W.  885. 

also,    Adams   v.    Morgan,    150    Mass.  ""Hughes  v.   Crooker,   148  X.   Car. 

143,  22  N.  E.  708.  318,  62  S.  E.  429,  128  Am.  St.  606  and 

note. 


§    1638  CONTRACTS.  954 

§  1638.    Conditions   precedent — Sureties. — One    who    has 

signed  as  surety  may  show  that  he  signed  with  the  understanding 
and  on  condition  that  he  was  to  be  Hable  only  upon  the  signature 
of  others  being  obtained  with  his.^^  However,  if  the  payee  of  a 
bill  or  note  has  no  knowledge  of  the  fact  that  the  surety  was  not 
to  be  held  liable  unless  others  signed  with  him,  the  surety  cannot 
avoid  liability  to  the  payee,  notwithstanding  the  principal  debtor 
delivered  such  bill  or  note  to  the  payee  in  violation  of  his  contract 
with  the  surety.  This  is  true  of  both  negotiable^^  and  nonnego- 
tiable  instruments.®^ 

§  1639.  Conditions  precedent — Rule  further  illustrated. — 
It  has  been  held  proper  to  show  that  a  written  contract  of  guar- 
anty was  conditioned  upon  the  purchase  of  a  certain  amount  of 
leather  by  the  party  for  the  benefit  of  whose  credit  the  guaranty 
was  executed,®*  or  that  a  policy  of  insurance  was  not  to  become 
effective  until  after  the  cancelation  by  the  insured  of  another 
policy  on  the  same  property  in  another  company;®®  or  that  a  writ- 
ten order  for  goods  was  to  take  effect  only  upon  condition  the  pur- 
chaser succeeded  in  obtaining  the  cancelation  of  a  written  order 
which  had  already  been  given  to  another  person  ;®^  or  that  a  lease 
for  certain  property  was  to  become  a  binding  obligation  only  in 
the  event  that  the  lessees  should  be  able  to  obtain  a  specified 
amount  of  money  from  another;®^  or  that  a  sale  of  mining  stock 

"'  Guild  V.  Thomas,  54  Ala.  414,  25  ■"  Carroll  v.  Ruggles,  69  Iowa  269, 
Am.  Rep.  703 ;  Hudspeth's  Admr.  v.  28  N.  W.  590,  58  Am.  Rep.  223.  "A 
Tyler,  108  Ky.  520,  22  Ky.  L.  221,  surety  on  a  bond  of  any  kind  cannot 
56  S.  W.  973 ;  Readfield  v.  Shaver,  50  defeat  his  liability  thereon  by  show- 
Maine  36,  79  Am.  Dec.  592;  Hessell  ing  that  it  was  delivered  in  viola- 
V.  Johnson,  63  Mich.  623,  30  N.  W.  tion  of  agreements  between  himself 
209,  6  Am.  St.  334;  Hall  v.  Parker,  and  the  principal,  or  any  other  co- 
7)1  Mich.  590,  26  Am.  Rep.  540;  Cut-  maker,  unknown  to  the  party  for 
ler  V.  Roberts,  7  Nebr.  4,  29  Am.  whose  benefit  it  was  given."  Rich- 
Rep.  371 ;  Dair  v.  United  States,  16  ardson  v.  Peoples'  Nat.  Bank,  57 
Wall.  (U.  S.)  1,  21  L.  ed.  491.  Ohio  State,  299,  48  N.  E.  1100. 

"^ Clark  V.  Bryce,  64  Ga.  486;  Whit-  '^Lennox  v.  Murphy,  171  Mass.  370, 

comb  V.  Miller,  90  Ind.  384 ;  Mickle-  50  N.  E.  644. 

wait  V.  Noel,  69  Iowa  344,  28  N.  W.  "  Moore   v.   Farmers'   Mut.    Insur- 

630;   Smith  v.   Moberly,   10  B.   Mon.  ance  Association,  107  Ga.   199,  Zl  S. 

(Ky.)   266,  52  Am.  Dec.  543;  Wyhe  E.  65. 

V.  Commercial  Nat.  Bank,  dl  S.  Car.  "^  Cleveland  Refining  Co.  v.  Dunn- 

406.  41   S.  E    504;  Lookout  Bank  v.  ing,  115  Mich.  238,  IZ  N.  W.  239. 

Aull,  93  Tenn.  645,  27  S.  W.  1014,  42  "  Hurlburt  v.  Dusenbery,  26  Colo. 

Am.  St.  934;  Farmers'  &  Mechanics'  240,  57  Pac.  860. 
Bank   v.    Humphrey,  36  Vt.   554,  86 
Am.  Dec.  671. 


955  PAROL   EVIDENCE.  §    164O 

was,  in  fact,  made  on  the  condition  that  the  vendor's  agent 
in  another  place  had  not  already  disposed  of  the  same  stock  ;'■*  or 
that  a  written  contract  of  sale  was  to  become  a  binding  obligation 
only  on  the  approval  of  the  purchase  by  the  vendee's  engineer;'^* 
or  that  a  policy  of  insurance  temporarily  in  the  custody  of  the 
insured,  but  subsequently  withdrawn  by  the  agent,  was  to  become 
effective  only  on  the  approval  of  the  insurance  company.'" 

§  1640.  Subsequent  agreements. — A  new  and  distinct 
agreement  based  on  a  new  consideration  may  usually  be  shown 
by  parol  evidence,  either  as  a  substitute  for  the  old  agreement, 
or  in  addition  to  it;°^  and  it  is  a  general  rule  that  an  executory 
bilateral  written  contract,  not  under  seal,  may,  before  breach 
thereof,  be  waived  or  annulled,  modified  or  varied  by  a  new  valid 
parol  contract,  even  though  it  is  to  be  taken  in  connection  with 
the  written  agreement  and  proved  partly  by  the  writing  and  partly 
by  the  new  parol  terms,  provided  the  statute  of  frauds  does  not 
require  it  to  be  entirely  in  writing."*  As  stated  by  Mr.  Freeman  : 
"The  rule  forbidding  the  introduction  of  parol  evidence  to  con- 
tradict, add  to,  or  vary  a  writing,  has  no  application  to  stipula- 

^  Reiner    v.    Crawford,    23    Wash.  58,  65,  27  E.  C.  L.  34;  Pecos  Valley 

669,  63  Pac.  516,  83  Am.  St.  848.  Bank  v.   Evans-Snider-Buel  Co.,   107 

'"  Pym  V.  Campbell,  6  El.  &  Bl.  370.  Fed.  654,  46  C.  C.  A.  534 ;   Spann  v. 

"Nutting    V.    Minnesota    Fire    Ins.  Baltzell,  1  Fla.  301,  46  .Am.  Dec.  346; 

Co.,  98  Wis.  26,  73  N.  W.  432.  Wilson  v.  McClenny,  32  Fla.  363,  13 

*^  Cerrusite  Mining  Co.  v.  Steele,  18  So.  873;  Bowman  v.  Cunningham,  78 

Colo.  App.  216,  70  Pac.  1091;  Toledo,  111.  48;  Loomis  v.   Donovan,   17  Ind. 

St.  L.  &  K.  C.  R.   Co.  V.  Levy,   127  198;  Illinois  Cent.  R.  Co.  v.  Manion, 

Ind.   168.  26  N.  E.   773;    IlubbcU  v.  113  Ky.  7,  23  Ky.  L.  2267,  67  S.  W. 

Ream,    31    Iowa   289;    McDonald    v.  40,    101    Am.    St.    345;    Thomas    v. 

Stewart,   18  La.  Ann.  90;  Janney  v.  Barnes,  156  Mass.  581,  31  N.  E.  683; 

Brown,   36   La.   Ann.    118;    Atwcll   v.  Cummings      v.      Arnold,      3      Mete. 

Miller.  11  Md.  348,  69  Am.  Dec.  206;  (Mass.)  486,  37  Am.  Dec.  155;  Chou- 

Richardson     v.     Hooper,     13     Pick,  teau   v.   Jupiter  Iron-Works,  94   Mo. 

(Mass.)    446;    Rand    v.    Mather,    11  388,  7  S.  W.  467 ;  Juilliard  v.  Chaffee. 

Cush.    (Mass.)    1.  59  Am.   Dec.   131;  92  N.  Y.  529;  Harris  v.  Murphy,  119 

Grafton  Bank  v.  Woodward,  5  N.  H.  N.  Car.  34,  25  S.  E.  708,  56  Am.  St. 

99,  20  Am.  Dec.  566;  Sharp  v.  Wyck-  656,    and    extended    note;    Oregonian 

off,  39  N.  J.  Eq.  376 ;  Coe  v.  Hobby,  R.  Co.  v.  Wright,  10  Ore.  162 ;  Hollo- 

72  N.  Y.  141,  28  Am.  Rep.  120;  Heath-  way  v.  Frick,  149  Pa.  St.  178.  24  Atl. 

erly  v.    Record.    12   Tex.   49;    Piatt's  201 ;  Bryan  v.  Hunt.  4  Sneed  (Tenn.) 

Admr.  v.  United  States.  22  Wall.  (U.  543,  70  Am.  Dec.  262;    Swain  v.  Sea- 

S.)  496,  22  L.  ed.  858.  10  Ct.  CI.  163;  mens.  9  Wall.  (U.  S.)  254,  271,  19  L. 

Brown  v.  Everhard.  52  Wis.  205,  8  N.  ed.  554;  Emerson  v.  Slater,  22  How. 

W.  725.     Compare  last  two  cases  on  (U.  S.)  28,  16  L.  ed.  360;  Bannon  v. 

question   as   to   whether   independent  Aultman,  80  Wis.  307,  49  N.  W.  967, 

consideration  is  necessary.  27  Am.  St.  37. 

"Goss  v.  Lord  Nugent,  5  B.  &  Ad. 


§    1 641  CONTRACTS.  956 

tions  or  agreements  made  between  the  parties  subsequent  to 
the  execution  of  the  written  instrument.  Agreements  not  by 
specialty,  whether  written  or  unwritten,  are  of  the  same  grade 
and  dignity  in  law,  and  are  denominated  simple  contracts.  Hence, 
it  follows  that  to  admit  evidence  of  a  subsequent  parol  agree- 
ment, for  the  purpose  of  showing  an  abandonment,  discharge, 
or  alteration  of  the  terms  of  a  previous  written  agreement  not 
under  seal,  would  not  be  to  affect  or  dissolve  the  agreement  by 
matter  of  an  inferior  nature.  And,  therefore,  it  is  generally  ad- 
mitted that  it  is  competent  for  the  parties  to  an  executory  written 
contract  not  under  seal,  at  any  time  before  breach  thereof,  by  a 
subsequent  verbal  agreement,  founded  on  a  sufficient  considera- 
tion, either  to  waive  altogether,  or  dissolve,  or  annul  the  previous 
written  agreement,  or  in  any  manner  to  add  to,  subtract  from,  or 
vary  or  qualify  the  stipulations  of  such  agreement,  and  thus  to 
make  a  new  or  different  contract,  which  may  be  proved  by  parol, 
whether  it  is  a  substitute  for  the  old,  or  in  addition  to,  or  beyond 
it."^^  If  the  parol  contract  was,  in  fact,  made  subsequent  to  the 
written  contract,  and  evidence  thereof  is  otherwise  unobjection- 
able, it  makes  no  difference  how  short  the  interval  may  have 
been.^*  But  a  new  contract  varying  the  terms  of  a  previous  bind- 
ing contract  upon  the  same  subject-matter  will  not  be  binding 
unless  supported  by  a  new  consideration.®' 

§  1641.  Object — Purpose— Intent. — As  said  by  the  Supreme 
Court  of  the  United  States :  "The  rule  which  excludes  parol  tes- 
timony to  contradict  or  vary  a  written  instrument  has  reference 
to  the  language  used  by  the  parties.  It  cannot  be  qualified  or 
varied  from  its  natural  import,  but  must  speak  for  itself.  The 
rule  does  not  forbid  an  inquiry  into  the  object  of  the  parties  in 
executing  and  receiving  the  instrument.'"'®     The  secret  intention 

*^Note  to   Harris  v.   Murphy,    119  L.  ed.  775,  approved  and  followed  in 

N.  Car.  34,  25  S.  E.  708,  56  Am.  St.  Brick  v.  Brick,  98  U.  S.  514,  25  L.  ed. 

656  662  256.    See  also,  Pierce  v.  Robinson,  13 

"Rogers    v.    Atkinson,    1    Ga.    12;  Cal.  116;  Couch  v.  Meeker,  2  Conn. 

Brewster   v.   Countryman,    12   Wend.  302,    7    Am.    Dec.   274;    Schindler   v. 

(N.  Y.)  446,  cited  in  note  referred  to.  Muhlheiser,   45   Conn.   153;   Crosman 

« Barlow    v.    Cottula     (Tex.     Civ.  v.  Fuller,  17  Pick  (Mass.)  171 ;  Davis 

App.),  141  S.  W.  292.  V.  Davis,  97  Mich.  419,  56  N.  W.  774; 

"Peugh  v.  Davis,  96  U.  S.  332,  24  revd.  100  Mich.   162,  58  N.  W.  651; 


957  PAROL    EVIDENCE.  §    164I 

of  the  parties  contrar>'  to  the  natural  import  of  the  language 
used  cannot,  ordinarily,  be  shown,  at  least  where  there  is  no 
ambiguity,  fraud,  or  mistake  f  but  when  the  purpose  for  which 
a  writing  was  executed  is  not  inconsistent  with  its  terms,  such 
purpose,  when  relevant  and  otherwise  admissible,  may  be  shown 
by  parol."**  There  are  many  instances  in  which  the  purpose  or 
object  that  the  parties  had  in  view  becomes  important,  and  may 
be  shown  without  in  any  way  contradicting  or  varying  the  terms 
of  the  written  instrument.  In  such  cases,  it  is  clear  that  the  parol 
evidence  rule  has  no  application  to  such  evidence.  There  are 
also  cases,  especially  in  equity,  in  which  the  true  nature,  purpose, 
or  object  of  the  transaction  may  be  shown  by  parol,  even  though 
it  may  apparently  contradict  the  writing  as  to  the  consideration, 
object  or  purpose  thereof  as  indicated  therein.''®  Thus,  as  else- 
where more  fully  shown,  parol  evidence  is  admitted  to  show  that 
a  deed  absolute  on  its  face,  was  intended  as  a  mortgage."  So, 
parol  evidence  is  admissible  to  show  that  the  purpose  of  a  writ- 
ten assignment  of  an  instrument,  although  absolute  in  terms,  was 
for  collateral  security,"  or  that  it  might  be  collected;"  and,  in 

Clark  V.  Ducheneau,  26  Utah  97,  72  Hughes    v.    Stanley,    45    Iowa    622; 

Pac.    331;    Wendlinger   v.    Smith,   75  Pond     v.     Eddy,     113     Mass.      149; 

Va.  309,  40  Am.  Rep.  727.  Matthews  v.  Sheehan,  69  X.  Y.  585; 

"  Shore   V.   Wilson,   9   Clark  &   F.  Robertson  v.  Dunn,  6  X.  Car.  133.  5 

355,  525 ;  Ford  v.  Yates,  2  Man.  &  G.  Am.  Dec.  525 ;  Walker  v.  McDonald, 

549;    Morris    v.    Robinson,    80    Ala.  49  Tex.  458. 

291;  Ward  v.  Campbell,  73  Ga.  97;  '"German  Ins.  Co.  v.  Gibe,  162 
Kurtz  V.  Hibner.  55  111.  514,  8  Am.  111.  251.  44  X.  E.  490;  Kitts  v.  Will- 
Rep.  665;  Allen  v.  Brvson,  67  Iowa  son,  130  Ind.  492,  29  X.  E.  401:  Coje 
591,  25  N.  W.  820,  56  Am.  Rep.  358:  v.  Gray,  139  Ind.  396,  38  X.  E.  8^6 
Chabot  V.  Blanc,  5  Mart.  (O.  S.)  (giving  the  reasons  for  the  rule  and 
(La.)  328;  Sargent  v.  Hutchings,  86  exception);  Beebe  v.  Wisconsm  Mtg. 
Maine  28,  29  Atl.  926:  American  Loan  Co.,  117  Wis.  328,  93  N.  W. 
Bible  Soc.  v.  Pratt,  9  Allen  (Mass.)  1103.  ,^  ^« 
109-  Drew  v  Swift,  46  X.  Y.  204;  ^  McCathern  v.  Bell,  93  Ga.  290,  20 
Davis  V.  King,  89  N.  Car.  441:  Best  S.  E.  315;  Ginz  v.  Stumph.  73  Ind. 
V.  Hammond,  55  Pa.  St.  409;  Phillips  209;  Pond  v.  Eddy.  113  Mass.  149; 
V  Jarvis    19  Wis.  204.  Reeve    v.    Dennett,    137    Mass.    315 ; 

*'  Baldwin  v.  Carter,  17  Conn.  201,  Hvler  v.  Nolan,  45  Mich.  357,  7  N.  W. 

42  Am.   Dec.  735;   Robinson  v.  Bar-  910;  Davis  v.  Crookston  Waterworks 

nett,   18  Fla.  602,  43  Am.   Rep.  327;  &c.  Co.,  57  Minn.  402,  59  X.  W.  482, 

Downes  v.  Union  Congregational  So-  47  Am.  St.  622 ;  Scharman  v.  Schar- 

cietv.  63  N.  H.  151:  Bell  v.   Shibley,  man.    38    Nebr.    39.    56    X.    W.   704j 

33   Barb.    (X.   Y.)    610:   Hutchins  v.  :Matthews  v.   Sheehan,  69  X.  Y.  585. 

Hebbard   34  N.  Y.  24 :  Brick  v.  Brick,  See  also.  Wcstheimer  v.  Thompson.  3 

98  U.  S.  514,  25  L.  ed.  256.  Idaho   560.   32   Pac.   205    (admissible 

'*  Avery  v  Miller.  86  Ala.  495.  6  So.  to  determine  intention  as  to  merger). 

38-    Locket    v.    Child,    11    Ala.    640;  '-Smith  v.  Childress.  27  Ark.  328; 

Ward  V.   Allen.  28  Ga.  74;   Stack  v.  McWhirt  v.  McKee,  6  Kans.  412, 
Beach,  74  Ind.  571,  39  Am.  Rep.  113; 


1642 


CONTRACTS. 


958 


some  instances,  the  same  rule  applies  to  indorsements  of  promis- 
sory notes.'^  It  has  also  been  held  that  parol  evidence  is  admis- 
sible to  prove  that  an  indorsement  by  the  payee  was  made  at  the 
request  of  the  plaintiff  to  show  that  the  note  had,. been  paid.^* 
Parol  evidence  has  likewise  been  held  admissible  to  show  that  a 
certificate  of  shares  issued  by  the  corporation  to  a  third  person 
at  the  request  of  a  stockholder  in  place  of  those  which  he  had 
held  and  which  were  surrendered  and  canceled  was  intended  as 
security  for  a  loan."  So,  where  a  note  has  been  delivered  con- 
ditionally, or  the  like,  and  the  obligation  performed  or  dis- 
charged, this  may  be  shown  as  between  the  parties.''* 

§  1642.  Consideration. — Parol  evidence  is  not  only  admis- 
sible, under  the  modern  rule,  to  show  the  real  consideration  when 
the  writing  is  silent  as  to  the  consideration,"  but  also,  as  a  gen- 
eral rule,  to  contradict  a  recital  of  the  consideration  in  the  in- 
strument."   So,  failure  or  original  want  of  consideration  of  an 


"  Dale  V.  Gear,  38  Conn.  15,  9  Am. 
Rep.  353 ;  Case  v.  Spaulding,  24 
Conn.  578;  Downer  v.  Chesbrough, 
36  Conn.  39,  4  Am.  Rep.  29;  Friend 
V.  Duryee,  17  Fla.  Ill,  35  Am.  Rep. 
89;  Carhart  Bros.  v.  Wynn,  22  Ga. 
24;  Tombler  v.  Reitz,  134  Ind.  9,  33 
N.  E.  789;  Stack  v.  Beach,  74  Ind. 
571,  39  Am.  Rep.  113;  Hazzard  v. 
Duke,  64  Ind.  220 ;  Ayer  v.  Hutchins. 
4  Mass.  370,  3  Am.  Dec.  232;  Church 
V.  Barlow,  9  Pick.  (Mass.)  547;  Hud- 
son V.  Wolcott,  39  Ohio  St.  618.  See 
also,  Jaster  v.  Currie,  69  Nebr.  4,  94 
N.  W.  995. 

"  Spencer  v.  Sloan,  108  Ind.  183,  9 
N.  E.  150,  58  Am.  Rep.  35.  See  also. 
Cole  V.  Smith,  29  La.  Ann.  551,  29 
Am.  Rep.  343. 

''^  Brick  V.  Brick,  98  U.  S.  514,  25  L. 
ed.  256. 

'"  McFarland  v.  Sikes,  54  Conn.  250, 
7  Atl.  408.  1  Am.  St.  Ill;  Benton  v. 
Martin,  52  N.  Y.  570;  Burke  v.  Du- 
laney,  153  U.  S.  228,  38  L.  ed.  698,  14 
Sup.  Ct.  816;  Clark  v.  Ducheneau,  26 
Utah  97.  72  Pac.  331. 

"Guidery  v.  Green,  95  Cal.  630,  30 
Pac.  786;  Warren  v.  Walker,  23 
Maine  453 :  Board  of  Trustees  &c.  v. 
Saunders,  84  Wis.  570,  54  N.jW.  1094. 

"Mason  v.  Buchanan,  62  Ala.  110; 


]\Iobile  Saving  Bank  v.  McDonnell, 
89  Ala.  434,  8  So.  137,  9  L.  R.  A.  645, 
18  Am.  St.  137;  Cheesman  v.  Nicholl, 
18  Colo.  App.  174,  70  Pac.  797 ;  How- 
ell V.  Moores,  127  111.  67,  19  N.  E. 
863;  Nichols  &c.  Co.  v.  Burch,  128 
Ind.  324,  27  N.  E.  737 ;  Hays  v.  Peck, 
107  Ind.  389,  8  N.  E.  274 ;  Poor's  Exr. 
V.  Scott,  (Ky.),  68  S.  W.  397;  Car- 
neal's  Heirs  v.  May,  2  A.  K.  Marsh 
(Ky.)  587,  12  Am.  Dec.  453;  Bourne 
V.  Bourne,  92  Ky.  211,  13  Ky.  L.  545, 
17  S.  W.  443;  Goodspeed  v.  Fuller, 
46  Maine  141,  71  Am.  Dec.  572; 
Hodges  V.  Healy,  80  Maine  281,  14 
Atl.  11,  6  Am.  St.  199;  Fusting  v. 
Sullivan,  41  Md.  162 ;  Miller  v.  Good- 
win, 8  Gray  (Mass.)  542;  Cardinal  v. 
Hadley,  158  Mass.  352,  33  N.  E.  575, 
35  Am.  St.  492;  Wood  Mowing  &c. 
Mach.  Co.  V.  Gaertner,  55  Mich.  453, 
21  N.  W.  885  ;  Bolles  v.  Sachs,  37  Minn. 
315;  Harrington  v.  Samples,  36  Minn. 
200,  30  N.  W.  671 ;  Aller  v.  Aller,  40 
N.  J.  L.  446;  McKinster  v.  Babcock, 
26  N.  Y.  378;  Barker  v.  Bradley,  42 
N.  Y.  316,  1  Am.  Rep.  521 ;  Hayden  v. 
Mentzer,  10  Serg.  &  R.  (Pa.)  329; 
Fullwood  V.  Blanding,  26  S.  Car.  312, 
2  S.  E.  565 ;  Lawrence  v.  Tucker.  23 
How.  (U.  S.)  14,  16  L.  ed.  474;  Har- 
wood   V.   Harwood's   Estate,   22   Vt. 


959  PAROL   EVIDENCE.  §    1 642 

unsealed  contract,  and,  in  many  jurisdictions,  of  a  sealed  instru- 
ment, may  usually  be  shown  in  the  same  way,  as  between  the 
parties/*  If  there  was  originally  no  consideration,  there  is  no 
binding  contract,  and  if  the  consideration  has  failed,  it  w'ould 
be  unjust  to  hold  a  party  to  its  performance  without  benefit  and 
at  his  loss.  So,  the  recital  of  consideration  in  a  writing  is  gen- 
erally a  mere  formal  matter,  which  is  regarded  as  in  the  nature 
of  a  receipt,  and  may  be  varied  or  contradicted  by  parol  evidence. 
But  when  these  reasons  do  not  apply  to  the  particular  written 
contract  in  question,  as,  for  instance,  when  the  consideration  is 
contractual,  parol  evidence  thereof  is  generally  inadmissible,  and 
the  right  to  introduce  parol  evidence  to  vary  the  consideration 
expressed  in  the  instrument  or  to  prove  that  it  was  never  paid 
does  not  authorize  the  introduction  of  such  evidence  to  defeat 
or  change  the  contract  itself.®"  A  case  decided  by  the  Supreme 
Court  of  Indiana,  which  is  not  far  from  the  line,  furnishes  an 
excellent  illustration.  It  was  an  action  against  a  railroad  com- 
pany for  damages  for  personal  injuries,  and  the  defendant 
pleaded  and  introduced  in  evidence  a  written  contract  releasing 
it  from  liability  in  consideration  of  the  agreement  on  its  part  to 
pay  certain  expenses  of  the  plaintiff,  in  addition  to  a  sum  of 
money  agreed  to  be  paid  and  recited  as  having  been  paid.  The 
court  held  that  the  consideration  was  contractual,  and  that  parol 

507;   Marks  v.   Spencer,  81   Va.  751.  30  N.  E.  7Z6.     See  for  a  review  of 

This  rule  is  most  frequently  applied  numerous     authorities     holding     that 

uhere  the  consideration  is  stated  only  parol    evidence    of    the   consideration 

in  general  terms,   and  that   is   some-  of  a  deed  is  admissible,  note  to  Velten 

times  said  to  be  the  test;   but  it  is  not  v.  Cormack,  23  Ore.  282,  31  Pac.  658, 

ahvavs  a  satisfactory  or  safe  one.  20  L.  R.  A.  101-114. 

■'•  Leifchild's  Case,  L.  R.  1  Eq.  Cas.        ^'Hendrick    v.     Crowley.    31     Cal. 

231 ;  Tull  V.  Parlett,  1  Moodv  &  M.  471 ;  Belden  v.  Seymour,  8  Conn.  304, 

472;  Cowan  v.   Cooper,  41   Ala.   187;  21  Am.  Dec.  661;  Schneider  v.  Turn- 

I.ufhurrow  v.  Henderson,  30  Ga.  482;  er,  130  111.  28,  22  N.  E.  497.  6  L.  R.  A. 

Dicken    v.    Morgan,    54    Iowa   684,   7  164;  Reistercr  v.  Carpenter,  124  Ind 

N    W    145;   Northwestern   Creamerv  30,  24  X.  E.  371;  Gelpcke  v.  Blake,  19 

Co    V.   Lanning.  83   Minn.    19,  85   N.  Iowa  263;  Ruggles  v.  Clare.  45  Kans. 

\V.    823;    Buckels   v.    Cunningham,   6  662,  26  Pac.  25;  Barter  v.  Greenleaf, 

Sm    &    M     (Miss.)    358;    Barbee   v.  65  Maine  405;   Stillings  v.  Timmms. 

Barbee,  109  N   Car.  299,  13  S.  E.  7^2;  152  l^Iass.  147,  25  X.  E.  50:  Baum  v. 

Wilfong  V.  Johnson,  41  W.  Va.  283,  Lvnn,  72  Miss.  932,  18  So.  428,  30  L. 

23  S.  E.  730.     But  see  Lasher  v.  Wil-  R.  A.  441 ;  Jackson  v.  Chicago  &c.  R. 

liamson,    55    N.    Y.    619;    Moore    v.  Co.,  54  Mo.  App.  636;  Morse  v.  Shat- 

Prentiss   Tool   &:    Snpplv    Co..   39   X.  tuck.  4  X.  H.  229.  17  Am.  Dec.  419; 

Y    St    361.  59  N.  Y.  Super.  Ct.  516,  McCrea   v.    Purmort,    16   Wend.    (N. 

15  N.  Y.  S.  150.  aflfd.  133  N.  Y.  144,  Y.)  460,  30  Am.  Dec.  103. 


§    1643  CONTRACTS.  960 

evidence  was  not  admissible,  under  a  plea  of  no  consideration,  to 
contradict  or  vary  the  contract.^^ 

§  1643.    One  contract  as  consideration  for  another. — It 

sometimes  happens  that  the  true  consideration  of  a  contract, 
either  in  whole  or  in  part,  is  another  contract.  Where  this  is 
true,  the  principle  stated  in  the  last  preceding  section  sometimes 
applies  to  permit  evidence  of  the  contract  constituting  the  real 
consideration  of  the  alleged  contract  in  question.^^  The  actual 
decision  in  many  cases  in  which  it  is  broadly  stated  that  the  parol 
evidence  rule  does  not  exclude  evidence  of  the  purpose  or  object 
of  the  parties  might  well  be  based  upon  this  principle  and  the 
fact  that  the  evidence  in  question  went  to  the  consideration  of 
the  contract.  So,  in  many  of  the  illustrative  cases  cited  in  the 
last  preceding  section  and  in  later  sections  having  to  do  with  the 
invalidity  and  discharge  of  contracts,  the  evidence  held  admissible 
really  went  to  the  consideration  of  the  contract.  Other  illustra- 
tions are  also  given  in  the  earlier  sections  on  collateral  contempo- 
raneous and  prior  agreements.  More  than  one  reason  may  exist 
for  the  admission  or  rejection  of  particular  evidence,  and  the  dif- 
ferent branches  of  the  subject  now  under  consideration  are  so  in- 

"St.  Louis  &  S.  F.  R.  Co.  V.  Dear-  v.  Lindsay,  114  Pa.  St.  166,  6  Atl.  332 
born,  60  Fed.  880,  9  C.  C.  A.  286;  In-  and  note;  (Pennsylvania  courts, 
dianapolis  &c.  R.  Co.  v.  Houlihan,  157  however,  go  farther  than  most  courts 
Ind.  494,  60  N.  E.  943,  54  L.  R.  A.  in  admitting  parol  evidence.)  Down- 
787,  distinguishing  Stewart  v.  Chica-  ey  v.  Hatter,  (Tex.)  48  S.  W.  32; 
go,  E.  L  R.  Co.,  141  Ind.  55,  40  N.  E.  See  also,  Moore  v.  Harrison,  26  Ind. 
67;  and  Pennsylvania  Co.  v.  Dolan,  6  App.  408,  59  N.  E.  1077;  American 
Ind.  App.  109,  32  N.  E.  802,  51  Am.  Building  &c.  Ass'n.  v.  Dahl,  54  Minn. 
St.  289.  See  also,  Jackson  v.  Chicago  355.  56  N.  W.  47 ;  Barnett  v.  Pratt,  37 
&c.  R.  Co.,  54  Mo.  App.  636 ;  But  Nebr.  349,  55  N.  W.  1050 ;  Keuka  Col- 
compare  Komp  v.  Raymond,  175  N.  lege  v.  Ray,  167  N.  Y.  96,  60  N.  E. 
Y.  102,  67  N.  E.  113;  Myron  v.  Union  325;  International  &c.  R.  Co.  v.  Daw- 
R.  Co.,  19  R.  I.  125,  32  Atl.  165.  son,  62  Tex.  260.   But  the  principle  is 

*^  Howard  v.  Stratton,  64  Cal.  487,  to  be  carefully  applied,  and  where  the 

2  Pac.  263 ;  Moffatt  v.  Bulson,  96  Cal.  contract  is  valid  and  complete  in  it- 

106,  30   Pac.    1022,   31   Am.    St.    192;  self,   parol   evidence  of   other   terms 

Hazzard  v.  Duke,  64  Ind.  220 ;  Singer  should    not    be    admitted    under    the 

Mfg.  Co.  V.  Forsythe,  108  Ind.  334,  9  guise   of   showing   the   consideration. 

N.    E.    372;    Dicken    v.    Morgan,    54  Diven  v.  Johnson,  117  Ind.  512,  20  N. 

Iowa  684,  7  N.  W.  145 ;  Andrews  v.  E.  428,  3  L.  R.  A.  308  and  note,  crit- 

Brewster,  124  N.  Y.  433,  26  N.  E.  1024;  icizing  Welz  v.  Rhodius,  87  Ind.  1,  44 

Breitenwischer  v.  Clough,   111   Mich.  Am.  Rep.  747,  which  is  also  expressly 

6,   69  N.   W.   88,   66  Am.    Rep.   372;  overruled     in     Western     Paving     & 

LaGrande    Nat.    Bank    v.    Blum,    26  Supply  Co.  v.  Citizens'  St.  R.  Co.,  128 

Ore.  49,  37  Pac.  48;  Thomas  v.  Loose,  Ind.  525,  26  N.  E.  188,  28  N.  E.  88,  10 

114  Pa.  St,  35,  6  Atl.  326;  Cullmans  L.  R.  A.  770,  25  Am.  St.  462. 


g6i 


PAROL   EVIDENCE. 


§    1643 


terlaced  that  it  is  difficult  to  separate  them  or  clearly  distinguish 
one  from  another.  So,  it  is  difficult  to  lay  down  general  rules  ap- 
plicable alike  to  all  instruments  in  all  cases.  Some  instruments, 
even  of  the  most  solemn  character,  are,  from  their  very  nature, 
adapted  to  merely  transfer  title  in  execution  or  consideration  of 
an  agreement-^  which  they  do  not  purport  to  show  rather  than  to 
state  the  entire  agreement,  and,  in  such  cases,  parol  evidence  is 
frequently  admitted  when  it  would  not  be  admissible  in  case  of  an 
instrument  in  which  the  provision  is  contractual  and  professing 
to  embody  the  entire  contract.  In  most  of  the  cases,  however,  in 
which  evidence  has  been  admitted  on  this  theory,  it  will  be  found 
that  the  evidence  went  to  the  consideration,  or  was  admissible 
under  some  other  exception  or  limitation  of  the  parol  evidence 
rule,  and  the  doctrine  should  not  be  unduly  extended,  even  under 
the  guise  of  permitting  parol  evidence  of  consideration.*** 


*^This  is  said  to  be  true  in  case  of 
deeds,  mortgages,  assignments,  bills 
of  sale,  leases  and  the  like.  Ludeke 
V.  Sutherland.  87  111.  481.  29  Am.  Rep. 
66  (deed).  See  also,  Davis  v.  Hop- 
kins. 18  Colo.  153,  32  Pac.  70  (deed)  ; 
De  St.  Aubin  v.  Field.  27  Colo.  414, 
62  Pac.  199  (bill  of  sale)  ;  Collins  v. 
Tillou's  Admr.,  26  Conn.  368.  68  Am. 
Dec.  398  (deed)  ;  Bever  v.  Bever,  144 
Ind.  157,  41  N.  E.  944  (deed)  ;  Green 
V.  Batson,  71  Wis.  54,  36  N.  W.  &49,  5 
Am.  St.  194  and  note;  Hahn  v.  Doo- 
little,  18  ^^'is.  196,  86  Am.  Dec.  757 
(assignment  rule  stated  as  covering 
all  of  the  above)  ;  Leases  and  mort- 
gages :  Equator  Min.  &c.  Co.  v.  Guan- 
ella.  18  Colo.  548,  33  Pac.  613;  Kidder 
V.  Vandersloot.  114  111.  133.  28  N.  E. 
460;  Keisselbrack  v.  Livingston,  4 
Johns.  Ch.  (N.  Y.)  144;  Gould  v. 
Conant,  66  Vt.  644.  30  Atl.  39;  Rey- 
nolds V.  Hassam,  56  Vt.  449.  But  see, 
generally,  Mast  v.  Pearce,  58  Iowa 
579,  8  N.  W.  632.  12  N.  W.  597,  and 
authorities  reviewed  upon  the  dis- 
puted question  as  to  proof  of  parol 
warranty.  Compare  Hersom  v.  Hen- 
derson. '21  N.  H.  224.  52  Am.  Dec. 
185.  See  also  authorities  in  last  note 
to  this  section. 

"Harrison  v.  McCormick,  89  Cal. 
.327,  26  Pac.  830,  23  Am.  St.  469;  Gal- 


pin  v.  Atwater,  29  Conn.  93 ;  White 
v.  Boyce,  21  Fed.  228;  McClure  v 
Jeffrey.  8  Ind.  79;  Pickett  v.  Green 
120  Ind.  584,  22  N.  E.  737;  Welch  v 
Morton,  73  Iowa  250,  34  X.  W.  840 
Shepherd  v.  Gilroy,  46  Iowa  193 
Willard  v.  Ostrander,  46  Kans.  591 ; 
26  Pac.  1017;  National  Cash  Register 
Co.  V.  Blumenthal.  85  Mich.  464.  48 
N.  W.  622;  Berthold  v.  Fox.  13  Minn. 
501,  97  Am.  Dec.  243;  Lear  v.  Durgin. 
64  N.  H.  618.  15  Atl.  128;  Durgin  v. 
Ireland.  14  N.  Y.  322;  Howard  v. 
Thomas,  12  Ohio  St.  201.  "It  is  true 
that  the  actual  consideration  of  a  con- 
tract may  be  shown  by  parol  evi- 
dence; but  it  is  not  true  that,  where 
the  acts  that  a  party  agrees  to  per- 
form are  expressly  and  specifically  set 
forth,  it  may  be  shown  by  parol  evi- 
dence that  he  agreed  to  do  other 
things.  Where  the  writing  states  spe- 
cifically the  acts  which  the  parties  are 
to  perform,  no  other  acts  can  be 
proved  by  parol,  except  in  cases  of 
fraud  or  mistake."  Conant  v.  Nat. 
State  Bank,  121  Ind.  323,  22  N.  E. 
250,  quoted  with  approval  in  Western 
Paving  &  Supply  Co.  v.  Citizens'  St. 
R.  Co.,  128  Ind. '525.  26  N.  E.  188,  28 
N.  E.  88,  10  L.  R.  A.  770,  25  Am.  St. 
462. 


61 — Contracts,  Vol.  2 


1 644 


CONTRACTS. 


962 


§  1644.  Bills  of  lading. — Bills  of  lading  usually  partake  of 
the  nature  of  a  contract  and  of  the  nature  of  a  receipt.®^  The 
general  rule  is  that,  in  so  far  as  they  are  contracts,  they  cannot 
be  contradicted  or  varied  by  parol  evidence,"**  but  in  so  far  as 
they  are  mere  receipts  they  may  be  contradicted  or  varied  by 
such  evidence.*^  Mere  recitals  of  the  receipt  of  goods  or  of  qual- 
ity, value  or  condition  of  the  property  received  for  carriage  come 
within  the  branch  of  the  rule  applicable  to  receipts  and  may  be 
contradicted  as  between  the  parties  by  parol  evidence  f^  and  it  is 
generally  held  that  the  carrier  may  show  that  no  goods  were  ac- 


•"4  Elliott  R.  R.  §1415. 

**  The  Delaware  v.  Oregon  Iron  Co., 
14  Wall.  (U.  S.)  579,  20  L.  ed.  779; 
Southern  Exp.  Co.  v.  Dickson,  94  U. 
S.  549,  24  L.  ed.  285.  See  also,  4 
Elliott  R.  R.  §  1423 ;  McTyer  v. 
Steele,  26  Ala.  487;  Louisville  &c.  N. 
R.  Co.  V.  Fulgham,  91  Ala.  555,  8  So. 
803;  Barber  v.  Brace,  3  Conn.  9,  8 
Am.  Dec.  149;  Jones  v.  Hoyt,  25 
Conn.  374;  O'Rourke  v.  Two  Hun- 
dred &  Twenty-One  Tons  of  Coal,  1 
Fed.  619;  Central  &c.  Banking  Co.  v. 
Hasselkus,  91  Ga.  382,  17  S.  E.  838,  44 
Am.  St.  37;  McElveen  v.  Southern 
R.  Co.,  109  Ga.  249,  34  S.  E.  281,  77 
Am.  St.  371 ;  Stewart  v.  Cleveland  &c. 
R.  Co..  21  Ind.  App.  218,  52  N.  E.  89; 
Pennsylvania  R.  Co.  v.  Clark,  2  Ind. 
App.  146,  27  N.  E.  586,  28  N.  E.  208 ; 
Cincinnati  &c.  R.  Co.  v.  Pearce,  28 
Ind.  502;  Louisville,  E.  &  St.  L.  R. 
Co.  V.  Wilson,  119  Ind.  352,  21  N.  E. 
341,  4  L.  R.  A.  244;  Burgher  v.  Chica- 
go &c.  R.  Co.,  105  Iowa  335,  75  N.  W. 
192;  Missouri,  K.  &  T.  R.  Co.  v.  Sim- 
onson,  64  Kans.  802,  68  Pac.  653,  57  L. 
R.  A.  765,  91  Am.  St.  248;  Wolfe  v. 
Myers,  3  Sandf.  (N.  Y.)  7;  Van  Et- 
ten  V.  Newton,  134  N.  Y.  143,  31  N.  E. 
334,  30  Am.  St.  630;  Morganton  Mfg. 
Co.  V.  Ohio  R.  &  C.  R.  Co.,  121  N. 
Car.  514,  28  S.  E.  474,  61  Am.  St.  679; 
St.  Louis  Southwestern  R.  Co.  v. 
Gates,  15  Tex.  Civ.  App.  135,  38  S.  W. 
648;  But  see  Illinois  Cent.  R.  Co.  v. 
Eblen,  114  Ky.  817,  24  Ky.  L.  1609,  71 
S.  W.  919. 

"4  Elliott  R.  R.  §§1419-1422,  and 
numerous  authorities  there  cited.  The 
Willie  D.  Sandhoval,  92  Fed.  286; 
Cunard  Steamship  Co.  v.  Kelley,  115 
Fed.  678,  53  C.  C.  A.  110;  Great  West- 


ern R.  Co.  V.  McDonald,  18  111.  172; 
Bissel  v.  Price,  16  111.  408;  Chapin  v. 
Chicago,  M.  &  St.  P.  R.  Co.,  79  Iowa 
582,  44  N.  W.  820 ;  Witzler  v.  Collins, 
70  Maine  290.  35  Am.  Rep.  327 ;  Mc- 
Fadden  v.  Missouri  Pac.  R.  Co.,  92 
Mo.  343,  4  S.  W.  689,  1  Am.  St.  721 ; 
Meyer  v.  Peck,  28  N.  Y.  590;  Bur- 
well  V.  Raleigh  &  Gaston  R.  Co.,  94 
N.  Car.  451.  So,  ambiguities  may  be 
explained  in  a  proper  case.  4  Elliott 
R.  R.  §  1423 ;  Mouton  v.  Louisville  & 
N.  R.  Co.,  128  Ala.  537,  29  So.  602; 
McClure  v.  Cox,  32  Ala.  617,  70  Am. 
Dec.  552;  Pickering  v.  Weld,  159 
Mass.  522,  34  N.  E.  1081;  Baltimore 
&  Phila.  Steamboat  Co.  v.  Brown,  54 
Pa.  St.  77.  And  it  may  be  shown  in 
a  proper  case  that  the  allowed  con- 
tract never  had  any  legal  existence, 
or  the  like.  Caldwell  v.  Felton,  21 
Ky.  L.  397,  51  S.  W.  575 ;  O'Malley  v. 
Great  Northern  R.  Co.,  86  Minn.  380, 
90  N.  W.  974,  and  authorities  cited; 
Mobile  &  M.  R.  Co.  v.  Jurey,  111  U. 
S.  584,  28  L.  ed.  527.  4  Sup.  Ct.  566. 

'M  Elliott  R.  R..  §§1419-1421; 
Berkley  v.  Watling.  7  Adol.  &  El.  29 ; 
Horsman  v.  Grand  Trunk  R.  Co.,  31 
U.  C.  Q.  B.  535.  30  Q.  B.  (Can.  U.  C.) 
130;  St.  Louis  A.  &  T.  R.  Co.  v.  Neel, 
56  Ark.  279,  19  S.  W.  963;  Mears  v. 
New  York,  N.  H.  &c.  R.  Co.,  75 
Conn.  171,  52  Atl.  610,  56  L.  R.  A. 
884,  96  Am.  St.  192;  Baird  v.  St. 
Louis  &c.  R.  Co.,  41  Fed.  592 ;  Cunard 
Steamship  Co.  v.  Kelley.  115  Fed.  678, 
53  C.  C.  A.  110;  Lake  Shore  &  M.  S. 
R.  Co.  v.  Nat.  &c.  Bank,  178  111.  506, 
53  N.  E.  326;  Baltimore  &c.  R.  Co.  v. 
Wilkins.  44  Md.  11,  22  Am.  Rep.  26; 
Lane  v.  Boston  &c.  R.  Co.,  112  Mass. 
455;  National  Bank  of  Commerce  v. 


963 


PAROL    EVIDENCE. 


§  i^j4: 


tually  received,  even  as  against  a  bona  fide  holder  of  the  bill,'"' 
although  the  authorities  are  not  unanimous  on  this  point/**  and 
there  are,  doubtless,  cases  in  which  the  carrier  may^have  become 
estopped  as  against  bona  fide  holders  frcjm  denying  that  any 
goods  were  received  or  even  that  they  were  of  the  condition, 
quality  or  value  specified. 

§  1645.  Evidence  to  connect  different  writings. — The  parol 
evidence  rule  does  not  exclude  parol  evidence  to  connect  contem- 
poraneous writings,  each  of  which  is  necessary  to  constitute  the 
complete  contract,  especially  where  one  refers  to  the  other."^  So, 
where  a  writing  refers  to  something  that  may  be  either  a  con- 


Chicago,  B.  &  N.  R.  Co.,  44  Minn. 
224,  46  N.  W.  342,  560,  9  L.  R.  A. 
263n,  20  Am.  St.  566;  Hazard  v.  Illi- 
nois Cent.  R.  Co.,  67  Miss.  3Z,  7  So. 
280;  Abbe  v.  Eaton,  51  N.  Y.  410; 
Ellis  V.  Willard,  9  N.  Y.  529,  Seld. 
Notes  (N.  Y.)  242;  Dean  v.  King,  22 
Ohio  St.  118;  Missouri  Pac.  R.  Co.  v. 
Fennell,  79  Tex.  448,  15  S.  W.  693; 
St.  Louis,  I.  M.  &  S.  R.  Co.  v.  Knight, 
122  U.  S.  79,  30  L.  ed.  1077,  7  Sup. 
Ct.  1132;  note  in  38  Am.  Dec.  410- 
426. 

"  Grant  v.  Nor\vay,  10  C.  B.  665.  70 
E.  C.  L.  665 ;  Jessel  v.  Bath,  L.  R.  2 
Exch.  267;  Brown  v.  Powell  &c.  Coal 
Co.,  L.  R.  10  C.  P.  562;  Hunt  v.  Mis- 
sissippi Cent.  R.  Co.,  29  La.  Ann.  446; 
Baltimore  &c.  R.  Co.  v.  Wilkens,  44 
Md.  11,  22  Am.  Rep.  26;  National 
Bank  v.  Chicago  B.  &  N.  R.  Co.,  44 
Minn.  224.  46  N.  W.  342,  560,  9  L.  R. 
A.  263n,  20  Am.  St.  566;  Black  v. 
Wilmington  R.  Co.,  92  N.  Car.  42.  53 
Am.  Rep.  450,  and  note ;  Pollard  v. 
Vinton,  105  U.  S.  7.  26  L.  ed.  998: 
Friedlander  v.  Texas  &c.  R.  Co.,  130 
U.  S.  416,  32  L.  ed.  991,  9  Sup.  Ct. 
570;  Missouri  Pac.  R.  Co.  v.  McFad- 
den,  154  U.  S.  155,  38  L.  ed.  944,  14 
Sup.  Ct.  990. 

°"  See  opinion  of  Finch,  J.  in  Bank 
of  Batavia  v.  New  York  &c.  R.  Co., 
106  N.  Y.  195,  60  Am.  Rep.  440.  See 
also.  Armour  v.  Michigan  Cent.  R. 
Co.,  65  N.  Y.  Ill,  22  Am.  Rep.  603; 
also,  St.  Louis  &  L  M.  R.  R.  Co.  v. 
Lamed,  103  111.  293 ;  Wichita  Savings 
Bank  v.  Atchison  &c.  R.  Co.,  20  Kans. 
519;    St.   Louis   &   S.   F.    R.   Co.   v. 


Adams,  4  Kans.  App.  305,  45  Pac. 
920;  Sioux  City  &c.  R.  Co.  v.  First 
Nat.  Bank,  10  Nebr.  556,  7  N.  W. 
311,  35  Am.  Rep.  488;  Brooke  v.  New 
York  &c.  R.  Co.,  108  Pa.  St.  529,  1 
Atl.  206.  56  Am.  Rep.  235. 

"  North-west  Transp.  Co.  v.  Mc- 
Kenzie,  25  Can.  Sup.  Ct.  38;  Tyrrell 
V.  Hope,  2  Atk.  558;  Smith  v.  Sur- 
man,  9  B.  &  C.  561,  17  E.  C.  L.  253; 
McGehee  v.  Rump,  37  Ala.  651 ;  Dren- 
nen  v.  Satterfield,  119  Ala.  84,  24  So. 
723;  Ransdel  v.  Moore,  153  Ind.  393, 
53  N.  E.  767,  53  L.  R.  A.  753 ;  Amos 
V.  Amos,  117  Ind.  19,  19  N.  E.  543; 
Myers  v.  Munson,  65  Iowa  423,  21  N. 
W.  759;  Wichita  University  v. 
Schweiter,  50  Kans.  672,  32  Pac.  352 ; 
Dillingham  v.  Estill,  3  Dana  (Ky.) 
21 ;  Cook  V.  Johnson,  165  Mass.  245, 
43  N.  E.  96;  Sutton  v.  Beckwith.  68 
Mich.  303.  36  N.  W.  79,  13  Am.  St. 
344;  Lynch  v.  Curfman,  65  Minn.  170, 
68  N.  W.  5;  Wilson  v.  Randall,  67 
N.  Y.  338;  Haag  v.  Hillemeier,  120 
N.  Y.  651,  24  N.  E.  807,  2  Silvernail 
(N.  Y.)  596;  Masterson  v.  Burnett, 
27  Tex.  Civ.  App.  370,  66  S.  W.  90; 
Lee  V.  Dick,  10  Pet.  (U.  S.)  482,  9  L. 
ed.  503;  Bradley  v.  Pike,  34  Vt.  215. 
But  see,  Hughes  v.  Wilkinson,  35  .Ma. 
453 ;  Cadwaladcr  v.  Nash,  73  Cal.  43, 
14  Pac.  385 :  Remolds  v.  Louisville, 
N.  A.  &  C.  R.  Co.,  143  Ind.  579,  40  N. 
E.  410;  Hcnncrshotz  v.  Gallairlier, 
124  Pa.  St.  1,  16  Atl.  518.  23  Wklv. 
N.  Cas.  280:  Dunlop  v.  Munroe.  7 
Cranch  (U.  S.)  242,  3  L.  ed.  329.  This 
principle  is  often  applied  where  a 
contract  is  made  by  correspondence. 


§    1646  CONTRACTS.  964 

versation  or  another  writing,  evidence  is  admissible,  in  a  proper 
case,  to  show  which  it  is,  and,  if  a  writing,  to  identify  and  con- 
nect it  with  the  writing  already  in  evidence  so  as  to  permit  it 
also  to  be  introduced."-  When  the  instruments  so  connected  and 
read  together  constitute  a  complete  and  unambiguous  contract, 
they  must  speak  for  themselves  f^  but,  on  the  other  hand,  parol 
evidence  may  be  admissible  to  explain  an  ambiguity  caused  by 
inconsistent  statements  in  them,°*  or  to  supply  omissions  apparent 
upon  their  face  when  read  together.®^ 

§  1646.  Resulting  trust. — The  rule  does  not  apply  to  ex- 
clude parol  evidence  of  facts  and  circumstances  establishing  an 
implied  or  resulting  trust.  The  theory  seems  to  be,  in  such  cases, 
that  the  evidence  does  not  contradict  the  writing  or  its  legal  im- 
port, but  simply  shows  facts  and  circumstances  from  which  the 
law  determines  that  the  title  or  legal  estate  created  or  evidenced 
by  the  instrument  must  be  held  in  trust,  or,  in  other  words,  that 
it  engrafts  a  trust  upon  the  legal  estate.®®  At  all  events,  it  is  well 
settled  that  such  evidence  is  admissible  to  establish  a  resulting 
trust  where  the  purchase-money  has  been  paid  by  one  person  and 
the  conveyance  taken  in  the  name  of  another,  or  where  the  money 

^  Ridgway  v.  Wharton,  6  H.  L.  Rifle  Mfg.  Co.,  31  Conn.  1.  But  com- 
Cas.  238,  3  De  G.  M.  &  G.  677 ;  Oliver  pare,  Wolfe  v.  McMillan,  117  Ind. 
V.  Hunting,  L.  R.  44  Ch.  D.  205,  59  L.  587,  20  N.  E.  509. 
J  Ch.  255;  Cave  v.  Hastings,  L.  R.  7  '^  Johns  v.  Church,  12  Pick.  (Mass.) 
Q  B.  Div.  125,  50  L.  J.  Q.  B.  Div.  557,  23  Am.  Dec.  651 ;  Thayer  v.  Tor- 
575.  See  also.  Lamb  v.  State,  66  Md.  rey,  37  N.  J.  L.  339;  Wilson  v.  Tuck- 
285,  7  Atl.  399;  Rutland  &c.  R.  Co.  v.  er,  10  R.  I.  578.  See  also,  Lyle  v. 
Crocker,  4  Blatchf.  (U.  S.)  179,  Fed.  Richards,  L.  R.  1  H.  L.  222,  35  L.  J. 
Cas.  No.  12176,  29  Vt.  540;  Young  v.  Q.  B.  Div.  214;  Stewart  v.  Chad- 
Young,  59  Vt.  342,  10  Atl.  528.  But  wick,  8  Iowa  463;  Hill  v.  Miller,  76 
compare  Lockwood  v.  Smith,  5  Day  N.  Y.  32. 
(Conn.)  309.  »*  Singer  Mfg.  Co.  v.  Forsyth,  108 

»^Drennen   v.    Satterfield,   119   Ala.  Ind.  334,  9  N.  E.  372;  Maxted  v.  Sey- 

84,  24  So.  723;  Isett  v.  Lucas,  17  Iowa  mour,  56  Mich.   129,  22  N.  W.  219; 

503,  85  Am.  Dec.  572  (Legal  effect  of  Wilson    v.    Tucker,    10    R.    I.    578; 

executing  two  mortgages  can  not  be  Thomas  Mach.  Co.  v.  Voelker,  23  R. 

ahered  or  varied  by  parol.)  ;  Mallory  I.  441,  50  Atl.  838;  Deery  v.  Cray,  10 

V.  Tioga  R.  Co..  42  N.  Y.  354,  3  Abb.  Wall.    (U.    S.)    263,    19   L.   ed.    887; 

Dec.  (N.  Y.)  139,  5  Abb.  Pr.  (N.  S.)  Beirne    v.    Rosser,    26    Gratt.    (Va.) 

(N.  Y.)   420,  36  How.  Pr.   (N.  Y.)  537. 

202;  Looney  v.  Rankin,  15  Ore.  617,  "' McGuire  v.  Ramsey,  9  Ark.  518; 

16   Pac.   660;    McFarland   v.    Boston  Boyd  v.  Boyd,  163  111.  611.  45  N.  E. 

&     L.     R.     Corp.,     115     Mass.     63;  118.  See  also,  Harvey  v.  Pennypack- 

Johnson  v.   Pierce,   16  Ohio   St.  472.  er,    4    Del.    Ch.    445;    Pritchard    v. 

See  also,  Parker  v.  Norman,  65  Ark.  Brown,  4  N.  H.  397,  17  Am.  Dec.  431 ; 

233,  46  S.  W.  134;  Rowan  v.  Sharps'  Collins  v.  Corson,  (N.  J.)  30  Atl.  862; 


965  PAROL   EVIDENCE.  §    1 647 

has  been  paid  by  several  and  the  conveyance  taken  in  the  name  of 
only  one.^^ 

§  1647.    Showing  deed  to  be  a  mortgage. — The   rule   is 

established  in  most  jurisdictions  that  parol  evidence  is  admissible 
to  show  that  an  instrument  in  the  form  of  a  deed  absolute  on  its 
face  is  a  mere  security  for  a  debt,  and  therefore  to  be  treated 
as  a  mortgage."^  In  a  leading  case  upon  the  subject,  it  is  said : 
"It  is  a»  established  doctrine  that  a  court  of  equity  will  treat  a 
deed,  absolute  in  form,  as  a  mortgage  when  it  is  executed  as  se- 
curity for  a  loan  of  money.  The  court  looks  beyond  the  terms 
of  the  instrument  to  the  real  transaction,  and  when  that  is  shown 
to  be  one  of  security,  and  not  of  sale,  it  will  give  effect  to  the 
actual  contract  of  the  parties.  As  the  equity,  upon  which  the 
court  acts  in  such  cases,  arises  from  the  real  character  of  the 
transaction,  any  evidence,  written  or  oral,  tending  to  show  this 
is  admissible.  The  rule  which  excludes  parol  testimony  to  con- 
tradict or  vary  the  written  instrument  has  reference  to  the  lan- 
guage used  by  the  parties."  It  "does  not  forbid  an  inquiry  into 
the  object  of  the  parties  in  executing  and  receiving  the  instru- 

*^ Willis  V.  Willis,  2  Atk.  12;  But-  Anthony  v.  Anthony,  23  Ark.  479; 
ler  V.  Shumaker,  4  Ariz.  16.  32  Pac  Holt  v.  Moore,  Zl  Ark.  145 ;  Raynor 
265 ;  Osborne  v.  Endicott,  6  Cal.  149,  v.  Lyons,  2,1  Cal.  452 ;  Davis  v.  Hop- 
65  Am.  Dec.  498 ;  Stewart  v.  Stevens,  kins,  18  Colo.  153,  32  Pac.  70 ;  Wash- 
10  Colo  440,  15  Pac.  786;  In  re  Corr's  burn  v.  Merrills,  1  Day  (Conn.)  139.2 
Appeal,  62  Conn.  403.  26  Atl.  478;  Am.  Dec.  59;  Franklin  v.  Ayer,  21 
Lofton  V.  Sterrett.  23  Fla.  565,  2  So.  Fla.  654;  Cole  v.  Gray.  139  Ind.  396, 
837;  Springer  v.  Kroeschell,  161  111.  38  N.  E.  856;  Mott  v.  Fiske.  155  Ind. 
358  43  N.  E.  1084 ;  Irwin  v.  Ivers,  7  597,  58  N.  E.  1053 ;  German  Ins.  Co.  v. 
Ind  308.  63  Am.  Dec.  420;  Mvers  v.  Gibe,  162  111.  251,  44  N.  E.  490;  Ens- 
Jackson,  135  Ind.  136,  34  N.  E.  810;  minprer  v.  Ensminger,  75  Iowa  89.  39 
Kringle  v.  Rhomberg,  120  Iowa  472,  N.  W.  208,  9  Am.  St.  462  and  note; 
94  N  W  1115.  The  evidence  in  such  Crutcher  v.  Muir's  Exr.,  90  Ky.  142, 
cases  often  takes  a  wide  range.  Bak-  11  Ky.  L.  989,  13  S.  W.  435,  29  Am 
er  V  Vining.  30  Maine  121,  50  Am.  St.  366;  Campbell  v.  Dearborn.  109 
Dec  617 ;  Witts  v.  Hornev.  59  Md.  Mass.  130.  12  Am.  Rep.  671 ;  Cullen  v. 
584;  De  Peyster  v.  Gould,  3  N.  J.  Eq.  Carey,  146  Mass.  50.  15  \.  E.  131; 
474  29  -\m  Dec  122,;  Foote  v.  Bry-  Tower  v.  Fctz,  26  Xebr.  706.  42  N. 
ant'  47  N  Y  544;  Llovd  v.  Woods.  W.  884.  18  Am.  St.  795;  Ryan  v.  Dox. 
176  Pa  St  63,  34  Atl.  926.  See  Kellv  34  X.  Y.  307,  90  Am.  Dec.  696  and 
V  Kelly  126  111  550.  18  X.  E.  785;  note;  Pancake  v.  Cauffman,  114  Pa. 
Bruce  v'  Roney,  18  111.  67;  Behm  v.  St.  113.  7  Atl.  67;  Nesbitt  v.  Cavcn- 
Mollv,  133  Pa.  St.  614,  19  Atl.  421;  der.  27  S.  Car.  1,  2  S.  E.  702;  Leuis 
Chambers  v.  Emery,  13  Utah  374,  45  v.  Bayliss,  90  Tenn.  280.  16  S.  W.  376 ; 
Pac    19?  Eckford  v.  Berrv.  87  Tex.  415.  28  S. 

"^Langton   v.    Horton.   5    Beav.   9;  W.  937;   Perkins  v.  West.  55  Vt.  265 ; 

Dixon   V     Parker,    2    Ves.    Sr.    219;  Gilchrist  v.  Beswick,  ZZ  W.  Va.  168; 


§  1648 


CONTRACTS. 


966 


ment."^*  So,  as  between  the  parties,  parol  evidence  has  been  ad- 
mitted to  show  that  an  instrument  in  the  form  of  a  bill  of  sale 
should  be  treated  as  a  chattel  mortgage;^  that  an  apparently  ab- 
solute assignment  of  a  note  was  intended  as  collateral  security;^ 
and  that  a  bond  was  given,  to  be  held  only  to  secure  the  obligee's 
support.^ 

§  1648.  Dates. — The  date  of  an  instrument,  like  a  recital 
of  consideration,  is  regarded  as  a  merely  formal  part  of  the  in- 
strument and  not  such  a  part  of  the  contract  itself  as  to  come 
within  the  rule  excluding  parol  evidence.*  Thus,  not  only  is  parol 
evidence  of  the  true  date  of  execution  admissible  in  case  of  fraud 
or  mistake,^  but  such  evidence  of  actual  date  of  execution  or  de- 
livery is  admissible  in  many  other  cases,  as,  for  instance,  where 
it  becomes  material  as  to  when,  if  at  all,  it  took  effect  in  order  to 
detennine  its  validity,  whether  the  statute  of  limitations  is  a 
bar,  whether  a  condition  had  been  performed  in  time,  or  the  like." 


10  S.  E.  371 ;  Beebe  v.  Wisconsin 
Mortgage  Loan  Co.,  117  Wis.  328,  93 
N.  W.  1103. 

~  Peugh  V.  Davis,  96  U.  S.  332,  24 
L.  ed.  775,  quoted  with  approval  in 
Brick  V.  Brick,  98  U.  S.  514,  25  L.  ed. 
256. 

^  Voorhies  v.  Hennessy,  7  Wash. 
243,  34  Pac.  931.  See  also,  Seavey  v. 
Walker,  108  Ind.  78,  9  N.  E.  347; 
Booth  V.  Robinson,  55  Md.  419;  Parks 
v.  Hall,  2  Pick.  (Mass.)  206.  But 
not  where  the  assignment  is  a  com- 
plete and  specific  contract  containing 
mutual  stipulations.  Marsh  v.  McNair, 
99  N.  Y.  174,  1  N.  E.  660. 

'McCathern  v.  Bell,  93  Ga.  290,  20 
S.  E.  315;  Pond  v.  Eddy,  113  Mass. 
149;  Scharman  v.  Scharman,  38  Nebr. 
39,  56  N.  W.  704;  Vickers  v.  Batter- 
shall.  84  Hun  (N.  Y.)  496,  65  N.  Y. 
St.  470,  2>2  N.  Y.  S.  314.  See  also, 
Jaster  v.  Currie,  69  Nebr.  4,  94  N.  W. 
995,  revd.  198  U.  S.  144,  49  L.  ed.  988, 
25  Sup.  Ct.  614. 

*  Davidson  v.  Young,  167  Pa.  St. 
265,  31  Atl.  557. 

*  Clayton's  Case,  5  Coke  la,  70a; 
Hall  V.  Cazenove,  4  East  477;  Steele 
V.  Mart,  4  Barn.  &  C.  272;  Oshey  v. 
Hicks,  Cro.  Jac.  263;  Gately  v.  Ir- 
vine, 51   Cal.   172;   Moody  v,  Hamil- 


ton, 22  Fla.  298;  Abrams  v.  Pom- 
eroy,  13  111.  133 ;  Clauss  v.  Burgess, 
12  La.  Ann.  142 ;  Partridge  v.  Swazey, 
46  Maine  414;  Mcllhargy  v.  Cham- 
bers, 117  N.  Y.  532,  23  N.  E.  561; 
Geiss  V.  Odenheimer,  4  Yeates  (Pa.) 
278,  2  Am.  Dec.  407 ;  Parke  v.  Neeley, 
90  Pa.  St.  52;  McCracken  v.  Ansley, 
4  Strob.  (S.  Car.)  1;  Erickson  v. 
Brookings  County,  3  S.  Dak.  434,  53 
N.  W.  857,  18  L.  R.  A.  347 :  Bruce  v. 
Slemp,  82  Va.  352,  4  S.  E.  692 ;  Moore 
V.  Smead,  89  Wis.  558,  62  N.  W.  426. 

^Briggs  V.  Fleming,  112  Ind.  313,  14 
N.  E.  86  (holding,  however,  that  the 
mistake  or  time  of  delivery  must  be 
alleged.  But  see  Black  v.  Sharkey, 
104  Cal.  279,  37  Pac.  939)  ;  Arberry 
V.  Noland,  2  J.  J.  Marsh.  (Ky.)  421; 
Stockham  v.  Stockham,  32  Md.  196; 
Breck  v.  Cole,  6  N.  Y.  Super.  Ct.  79; 
Parker  v.  Luffborough,  10  Serg.  &  R. 
(Pa.)  249. 

*Aldridge  v.  Branch  Bank,  17  Ala. 
45;  Mcintosh  v.  Lee,  57  Iowa  356,  10 
N.  W.  895 ;  Shaughnessey  v.  Lewis, 
130  Mass.  355;  Saunders  v.  Blythe, 
112  Mo.  1,  20  S.  W.  319;  Kincaid  v. 
Archibald,  72>  N.  Y.  189;  District  of 
Columbia  v.  Camden  Iron  Works,  181 
U.  S.  453,  45  L.  ed.  948,  21  Sup.  Cf. 
680 ;  Ordeman  v.  Lawson,  49  Md.  135. 


967 


PAROL    EVIDENCE. 


1O49 


So,  where  the  instrument  is  not  dated,  parol  evidence  is  admis- 
sible to  show  the  true  date  of  its  execution  and  delivery."' 

§  1649.  Illegality. — As  already  stated,  parol  evidence  is 
admissible  to  show  that  a  contract  never  had  any  legal  existence 
because  of  fraud  or  the  like  and,  upon  the  same  principle,  it  may 
also  be  shown  by  parol  that  it  is  illegal  for  other  reasons,  as  "it  is 
only  in  virtue  of  its  superior  obligation  that  a  written  contract  has 
the  effect  of  extinguishing  the  verbal  contract,  upon  which  it  is 
founded."*  Thus,  parol  evidence  is  admissible  to  show  that  the 
contract  is,  in  reality,  usurious ;°  or  that  it  was  in  furtherance  of 
an  unlawful  purpose,  such  as  an  adulterous  intercourse,  the  com- 
pounding of  a  felony,  or  the  like;^°  and,  in  short,  that  it  was  in 
furtherance  of  any  object  or  purpose  forbidden  by  statute,  com- 
mon law  or  public  policy,  by  which  it  is  rendered  illegal. ^^  So,  it 
may  likewise  be  shown  that  the  contract  had  no  legal  existence 
by  reason  of  the  incapacity  of  a  party  to  make  it.^^ 


*  Burditt  V.  Hunt,  25  Maine  419,  43 
Am.  Dec.  289;  Hewes  v.  Taylor,  70 
Pa.  St.  387;  Kincaid  v.  Archibald.  10 
Hun  (N.  Y.)  9,  affd.  IZ  N.  Y.  189; 
Perry's  Admr.  v.  Smith,  34  Tex.  277; 
Varner  v.  Dexter  &c.  Assn.  (Tex.), 
39  S.  W.  206.  See  also,  Blake  v.  Cole- 
man, 22  Wis.  415,  99  Am.  Dec.  53. 

*Lear  v.  Yarnel,  3  A.  K.  Marsh. 
(Ky.)  419;  See  also,  Levy  v.  Brown, 
11  Ark.  16;  Allen  v.  Hawks,  13  Pick. 
(Mass.)  79;  Kranich  v.  Sherwood, 
92  Mich.  397.  52  N.  W.  741. 

»  Roe  V.  Kiser,  62  Ark.  92,  34  S.  W. 
534,  54  Am.  St.  288;  Ferguson  v. 
Sutphen,  3  Gil.  (111.)  547;  Fenwick 
V.  Ratliff's  Representatives,  6  T.  B. 
Mon.  (Kv.)  154;  Hammond  v.  Hop- 
ping, 13  Wend.  (N.  Y.)  505;  Newsom 
V.  Thighen,  30  Miss.  414;  Chamber- 
lain V.  McClurg,  8  Watts.  &  S.  (Pa.) 
31;  See  also,  Koehler  v.  Dodge,  31 
Nebr.  328,  47  N.  W.  913.  28  Am.  St. 
518  and  note;  and  also,  note  to  Bank 
of  Newport  v.  Cook,  60  .^rk.  288.  30 
S.  W.  35,  29  L.  R.  A.  761,  46  Am.  St. 

171. 

"Friend  v.  Miller,  52  Kans.  139.  34 
Pac.  397.  39  Am.  St.  340;  Fletcher's 
Succession,  11  La.  Ann.  59;  Sherman 
V.  Wilder,  106  Mass.  537;  Worcester 
V.    Eaton,    11    Mass.    368;    Dale    v. 


Roosevelt,  9  Cow.  (N.  Y.)  307.  See 
also,  Pope  v.  St.  Leiger,  5  Mod.  13 
(for  gambling  debt). 

"  Pettit's  Admr.  v.  Pettit's  Distrib- 
utees, 32  Ala.  288;  Chandler  v.  John- 
son, 39  Ga.  85;  Friend  v.  Miller,  52 
Kans.  139,  34  Pac.  397.  39  Am.  St. 
340;  Snvdcr  v.  Willev.  12>  Mich.  483; 
Roby  v.' West.  4  N.  H.  285.  17  Am. 
Dec.  423;  Lindsay  v.  Smith,  78  X. 
Car.  328.  24  Am.  Rep.  463;  Martin 
V.  Clarke,  8  R.  L  389,  5  Am.  Rep. 
586;  United  States  Bank  v.  Owens,  2 
Pet.  (U.  S.)  527. 

"Intoxication  cases  (Prentice  v. 
Achorn.  2  Paige  Ch.  (X.  Y.)  30;  Bar- 
rett V.  Buxton,  2  Aik.  (Vt.)  167,  16 
Am.  Dec.  691)  ;  infancy  or  coverture 
(VanValkenburgh  v.  Rouk,  12  Johns. 
(X.  Y.)  Zyi;  Dale  v.  Roosevelt,  9 
Cow.  (X.  Y.)  307)  ;  mental  incapac- 
ity (Grant  v.  Thompson,  4  Conn. 
203,  10  Am.  Dec.  119:  Den  v.  Clark, 
10  N.  J.  L.  258:  Jackson  v.  King.  4 
Cow.  (X.  Y.)  207,  15  Am.  Dec.  354)  ; 
Mitchell  v.  Kingman.  5  Pick.  (Mass.) 
431.  See,  generallv,  Sutton  v.  Reag- 
an, 5  Blackf.  (Ind.)  217.  II  Am.  Dec. 
466;  Van  Deusen  v.  Sweet.  51  X.  Y. 
378;  Riggan  v.  Green.  80  X.  Car.  236, 
30  Am.  Rep.  11;  Farlev  v.  Parker,  6 
Ore.  105,  25  Am.  Rep.  504. 


i6;o 


CONTRACTS. 


968 


§  1650.  Fraud  and  duress. — Parol  evidence  is  always  ad- 
missible, in  a  proper  case,  to  prove  that  a>  contract,  whether  sealed 
or  unsealed,  never  had  any  legal  existence."  So,  when  fraud  or 
duress  is  charged,  a  wide  latitude  is  given  to  the  testimony  bearing 
on  the  circumstances  under  which  the  contract  was  executed, 
even  though  all  the  necessary  elements  of  a  contract  appear  in 
writing."  Testimony  may  be  given  in  such  cases^^  to  show  era- 
sures," omission,  insertion,"  or  misrepresentation^^  of  any  mate- 


"Waddell  v.  Glassell,  18  Ala.  561, 
54  Am.  Dec.  170;  Isenhoot  v.  Cham- 
berlain, 59  Cal.  630;  Benicia  &c. 
Works  V.  Estes,  98  Cal.  17,  32  Pac. 
938;  Hamilton  v.  Conyers,  28  Ga. 
276;  Hunter  v.  Bilyeu,  30  111.  228; 
Razor  v.  Razor,  39  111.  App.  527,  affd. 
142  111.  375,  31  N.  E.  678;  Catling  v. 
Newell,  9  Ind.  572;  Akin  v.  Drum- 
mond,  2  La.  Ann.  92;  Vicknair  v. 
Trosclair,  45  La.  Ann.  Z72,,  12  So. 
486;  Farrell  v.  Bean,  10  Md.  217; 
Holbrook  v.  Burt,  22  Pick.  (Mass.) 
546;  Thomas  v.  Scutt,  127  N.  Y.  133, 
27  N.  E.  961 ;  Sandford  v.  Handy,  23 
Wend.  (X.  Y.)  260;  Baltimore  & 
Phila.  Steamboat  Co.  v.  Brown,  54 
Pa.  St.  77;  Bottomley  v.  United 
States,  1  Story  (U.  S.)  135,  Fed. 
Cas.  No.  1688;  Starke's  Exr.  v.  Lit- 
tlepage,  4  Rand.  (Va.)  368.  See  note  6 
L.  R.  A.  45 ;  Webster  v.  Smith,  72  Vt. 
12,  47  Atl.  101. 

"Thweatt  v.  McLeod,  56  Ala.  375; 
Andrews  v.  Jones,  10  Ala.  460;  Ken- 
nedy's Heirs  v.  Kennedy's  Heirs,  2 
Ala.  571:  Hick  v.  Thomas,  90  Cal. 
289,  27  Pac.  208;  Tyler  v.  Anderson, 
106  Ind.  185,  6  N.  E.  600;  Hines  v. 
Driver,  72  Ind.  125;  Christ  v.  Diffen- 
bach,  1  Serg.  &  R.  (Pa.)  464,  7  Am. 
Dec.  624;  Chandler  v.  Von  Roeder, 
24  How.  (U.  S.)  224,  16  L,  ed.  633; 
Tvlorris  v.  Nixon,  1  How.  (U.  S.)  118, 
11  L.  ed.  69. 

"And  see  also,  as  to  fraudulent 
erasures,  insertions  and  the  like  in 
judicial  and  official  records :  Warren 
V.  Kimball,  59  Maine  264;  Common- 
wealth V.  Bullard,  9  Mass.  270 ;  Peo- 
ple V.  Townsend,  Z7  Barb.  (N.  Y.) 
520;  Lowry  v.  McMillan,  8  Pa.  St. 
157,  49  Am.  Dec.  501;  Randall  v. 
Collins,  58  Tex.  231 ;  Buford  v.  Bu- 
ford,  4  Munf.  (Va.)  241,  6  Am.  Dec. 
511.    See  also,   Russell   v.   Tuttle,   2 


Root.  (Conn.)  22;  Iowa  Falls  &c.  R. 
Co.  V.  Woodbury,  38  Iowa  498;  Mc- 
Gregor &  M.  R.  Co.  V.  Brown,  39 
Iowa  655;  Thome  v.  Traveler's  Ins. 
Co.,  80  Pa.  St.  15,  21  Am.  Rep.  89; 
Monti  V.  Barber,  1  Del.  Co.  (Pa.) 
222;  Eddy  v.  Wilson,  43  Vt.  362. 

"Davidson  v.  Cooper,  11  Mees.  & 
W.  778;  Gilmor's  Estate,  154  Pa.  St. 
523,  26  Atl.  614,  35  Am.  St.  855; 
United  States  v.  Spaulding,  2  Mason 
(U.  S.)  478,  Fed.  Cas.  No.  16365. 
See  Jones  v.  Crowley,  57  N.  J.  L. 
222,  30  Atl.  871;  Nelson  v.  State 
(Tex.),  75  S.  W.  502. 

"Waddell  v.  Glassell,  18  Ala.  561, 
54  Am.  Dec.  170;  Benicia  &c.  Works 
V.  Estes,  98  Cal.  17,  32  Pac.  938 
Isenhoot  v.  Chamberlain,  59  Cal.  630 
Hamilton  v.  Conyers,  28  Ga.  276, 
Hunter  v.  Bilyeu,  30  111.  228;  Razor 
V.  Razor,  39  111.  App.  527,  affd.  142 
111.  375,  31  N.  E.  678;  Catling  v.  New- 
ell, 9  Ind.  572;  Fuller  v.  Lamar,  53 
Iowa  477,  5  N.  W.  606;  Vicknair  v. 
Trosclair,  45  La.  Ann.  Z72,,  12  So.  486; 
Akin  V.  Drummond,  2  La.  Ann.  92; 
Farrell  v.  Bean,  10  Md.  217;  Hol- 
brook v.  Burt,  22  Pick.  (Mass.)  546: 
Thomas  v.  Scutt,  127  N.  Y.  133,  27 
N.  E.  961;  Sandford  v.  Handy,  23 
Wend.  (N.  Y.)  260;  Baltimore  & 
Philadelphia  Steamboat  Co.  v.  Brown, 
54  Pa.  St.  77;  Bottomley  v.  United 
States,  1  Story  (U.  S.)  135,  Fed.  Cas. 
No.  1688;  Stark's  Exr.  v.  Littlepage, 
4  Rand.  (Va.)  368. 

"  Cozzins  v.  Whitaker,  3  Stew.  & 
P.  (Ala.)  322;  Barficld  v.  South  Side 
Irr.  Co.,  Ill  Cal.  118,  43  Pac.  406; 
Summerour  v.  Pappa,  119  Ga.  1.  45 
S.  E.  713;  Kranich  v.  Sherwood,  92 
Mich.  397,  52  N.  W.  741 ;  Fleming  v. 
Slocum.  18  Johns.  (N.  Y.)  403,  9  Am. 
Dec.  224;  M'Farlane  v.  Moore,  1 
Overt.  (Tenn.)  174,  3  Am.  Dec.  752; 


969 


PAROL   EVIDENCE. 


§    1650 


rial  part."  But  unless  it  is  clear  that  fraud  or  duress  was  prac- 
ticed, the  written  contract  should  be  allowed  to  stand.  Verbal 
statements,  secret  agreements,  or  acts  made  or  done  on  or  before 
the  inception  of  a  contract,  if  they  were  material  and  were  relied 
upon,  are  generally  admissible  for  tlie  purpose  of  proving  the 
fraud,  notwithstanding  the  general  rule  excluding  parol  evidence ; 
for  the  law  does  not  always  conclusively  imply  that  the  written 
part  contains  the  whole  contract  ;^"  and  in  such  cases  the  rule  that 
all  prior  negotiations  are  merged  in  the  writing  does  not  apply.-^ 
Where  property  is  transferred  in  fraud  of  creditors  a  wide  latitude 
is  allowed  in  evidence  introduced  to  prove  it.^^  Duress  or  undue 
influence  may  be  shown,  as  in  cases  of  those  holding  public  office, 
a  fiduciary  relation   of  honor  and  trust,'^  in  the  case  of  a  bene- 


American  Cotton  Co.  v.  Collier,  30 
Tex.  Civ.  App.  105,  69  S.  W.  1021; 
Hurlbert  v.  T.  D.  Kellogg  Lumber 
&c.  Co.,  115  Wis.  225,  91  N.  \V.  673; 
McKesson  v.  Sherman,  51  Wis.  303, 
8  N.  W.  200;  Gross  v.  Drager,  66 
Wis.  150,  28  N.  W.  141  (where  the 
person  could  not  read  English). 

"Hazard  v.  Irwin,  18  Pick.  (Mass.) 
95;  Partridge  v.  Messer,  14  Gray 
(Mass.)  180;  Hoitt  v.  Holcomb,  23 
N.  H.  535;  Johnson  v.  Miln,  14 
Wend.  (N.  Y.)  195  (by  reason  of 
statute)  ;  Phillips  v.  Potter,  7  R.  I. 
289,  82  Am.  Dec.  598;  Hartshorn  v. 
Day,  19  How.  (U.  S.)  211.  15  L.  ed. 
605;  Chew  v.  Moflfett,  6  Munf.  (Va.) 
120;  Tomlinson's  Admr.  v.  Mason,  6 
Rand.   (Va.)    169. 

•^  Kennedy's  Heirs  v.  Kennedy's 
Heirs,  2  Ala.  571 ;  Hick  v.  Thomas, 
90  Cal.  289,  27  Pac.  208;  Scroggin  v. 
Wood,  87  Iowa  497,  54  N.  W.  437; 
Blanchard  v.  Moore,  4  J.  J.  Marsh 
(Ky.)  471:  Prentiss  v.  Russ,  16 
Maine  30 ;  Weslev  v.  Thomas,  6  Harr. 
&  J.  (Md.)  24:  Holbrook  v.  Burt,  22 
Pick.  (Mass.)  546:  Elliott  v.  Connell, 
5  Sm.  &  M.  (Miss.)  91;  State  v. 
Cass.  52  N.  J.  L.  77,  18  Atl.  972; 
Chetwood  v.  Brittan,  2  \.  J.  Eq.  438 ; 
Phyfe  V.  Warden.  2  Edw.  Ch.  (N. 
Y.)  47,  affd.  5  Paige  (X.  Y.)  268.  28 
Am.  Dec.  430;  ^lallory  v.  Leach,  35 
Vt.  156,  82  Am.  Dec.  625:  Dano  v. 
Sessions,  65  Vt.  79,  26  Atl.  585. 

^Hick  V.  Thomas,  90  Cal.  289.  27 
Pac.   208;    Hines   v.   Driver,   72   Ind. 


125;  Moore  v.  Harmon,  142  Ind.  555, 
41  N.  E.  599;  Scroggin  v.  Wood.  87 
Iowa  497,  54  X.  W.  437;  Prentiss  v. 
Russ,  16  Maine  30 ;  Holbrook  v.  Burt, 
22  Pick.  (Mass.)  546;  Leicher  v. 
Keeney,  98  Mo.  App.  394,  72  S. 
W.  145 ;  Gwaltney  v.  Provident  &c. 
Soc,  132  N.  Car.  925,  44  S.  E.  659; 
J^Iallory  v.  Leach,  35  Vt.  156,  82  Am. 
Dec.  625 ;  Dano  v.  Sessions,  65  Vt. 
79,  26  Atl.  585;  In  State  v.  Cass,  52 
X.  J.  L.  77,  18  Atl.  972.  evidence  of 
fraudulent  representations  was  re- 
ceived.^ although  there  was  a  written 
warrantv.  Lear  v.  Yarncll,  3  A.  K. 
Marsh.  (Kv.)  419;  Kranich  v.  Sher- 
wood. 92  j\iich.  397,  52  X.  W.  741. 

~  See  Shealy  v.  Edwards.  75  Ala. 
411;  Staton  v.  Commonwealth,  32  Ky. 
(2  Dana)  397:  Phinney  v.  Holt.  50 
Maine  570;  Snvder  v.  Free,  114  Mo. 
360,  21  S.  W.  847;  Russell  v.  Rogers, 
15  Wend.  (X.  Y.)  351;  Monell  v. 
Colden.  13  Johns.  (X.  Y.)  395,  7  Am. 
Dec.  390;  Gray  v.  Handkinson's  Exrs. 
1  Bay  (S.  Car.)  278;  Adams  v.  Wylie, 
1  Xott.  &  McC.  (S.  Car.)  78; 
Wright  v.  Linn.  16  Tex.  34:  Reming- 
ton V.  Linthicum.  14  Pet.  (U.  S.)  84, 
10  L.  ed.  364:  Ogden  State  Bank  v. 
Barker,  12  Utah  13,  40  Pac.  765; 
Flynn  v.  Jackson,  93  Va.  341.  25  S. 
E.  1;  Winner  v.  Hovt,  66  Wis.  227, 
28  X.  W.  380.  57  Am.'  Rep.  257. 

''  Allen  v.  Davis,  4  DeG.  &  S.  133 ; 
Wright  v.  Proud,  13  Ves.  136:  Xor- 
ton  V.  Rcllv.  2  Eden  286;  Lvon  v. 
Home,    16    Wklv.    R.    824;    Llbvd   v. 


§    1 65 1  CONTRACTS.  97° 

ficiary  under  a  will,**  or  in  the  case  of  those  employing  physical  or 
artificial  means  to  secure  a  contract  in  invitum,^'  or  in  further- 
ance of  something  forbidden  by  law.^" 

§  1651.  Fraud — Illustrative  cases. — Although  a  contract- 
ing party  is  usually  guilty  of  negligence  if  he  signs  the  written 
contract  without  reading  it,  and  cannot  ordinarily  rely  upon  the 
statements  of  the  other  as  to  its  contents  and  character, 
yet  if  their  relation  is  such  that  he  rightfully  reposes  a 
known  trust  and  confidence  in  such  person,  and  the  latter 
is  guilty  of  misrepresentation  and  fraud,  by  which  the  for- 
mer is  induced  to  execute  the  instrument  for  the  benefit 
of  the  latter,  believing  that  it  is  another  and  different  in- 
strument, relief  may  usually  be  had  and  parol  evidence  is 
admissible  to  show  such  facts.^^  So,  one  who  is  not  a  party  to  a 
written  instrument,  and  who  seeks  to  impeach  it  as  a  means 
adopted  by  his  adversary  to  defraud  him,  may,  in  a  proper  case, 
contradict  it  by  parol  evidence  showing  the  real  transaction.^^ 
Such  evidence  has  also  been  held  admissible  in  an  action  to  rescind 
an  insurance  contract  and  recover  a  premium  paid  before  knowl- 

Clark,  6  Beav.  309;  Lambert  v.  Lam-  Ga.   479;   Ewing  v.    Smith,    132   Ind. 

bert,  6  Brown  272;    Page  v.   Home,  205,  31  N.  E.  464. 

11    Beav.  227;   Coulson  v.  Allison,  2  '°  1    Smith's  Leading  Cas.    154,    168 

DeG.  F.  &  J.  521;  Sharp  v.  Leach,  31  note,    and    cases    there    cited;    Chitty 

Beav.     491;     Sturge    v.     Sturge,     12  Cont.  519,  527;  Collins  v.  Blantern,  2 

Beav.  229;   Sercombe  v.    Sanders,  34  Wils.  347;  Biggs  v.  Lawrence,  3  T.  R. 

Beav.  382;  Tate  v.  Williamson,  L.  R.  454;  Waynell  v.  Reed,  5  T.  R.  599; 

2   Ch.  App.  55;   Ferres  v.   Ferres,  2  Doe  v.  Ford,  3  Ad.  &  El.  649;  Catlin 

Eq.  Cas.  Abr.  532;  Willan  v.  Willan,  v.    Bell,    4    Camp.    183;    Norman    v. 

2   Dow   274;    Griffiths   v.    Robbins,   2  Cole,  3  Esp.  253;   Sinclair  v.  Steven- 

Madd.  105 ;  Anderson  v.  Elsworth,  3  son,  1  Car.  &  P.  582 ;  Commonwealth 

Giff.   154;   Grosvenor  v.   Sherratt,  28  v.  Pease,  16  Mass.  91. 

Beav.  659;  Terry  v.  Wacher,  15  Sim.  ^  Givan  v.  Masterson,  152  Ind.  127, 

447;    Rhodes   v.    Bate,    L.    R.    I.    Ch.  51  N.  E.  237.     See  also,  Beck  &  Pauli 

App.  252;  Cole  v.  Gibson,  1  Ves.  Sr.  Lithographing   Co.   v.    Houppert,    104 

503;  Whelan  v.  Whelan,  3  Cov.   (N.  Ala.  503,  16  So.  522,  53  Am.  St.  77; 

Y.)  537.  Barrie  v.   Frost,    105    111.    App.    187; 

'■•Bancroft  v.   Otis,  91   Ala.  279,  8  Trambly  v.    Ricard,    130    Mass.   259; 

So.  286,  24  Am.  St.  904 ;  Tyson  v.  Ty-  Van  Valkenburgh  v.  Rouk,  12  Johns, 

son,  37  Md.  567;  Wheeler  V.  Whipple,  (N.   Y.)    337;   Cutler  v.   Roanoke   R. 

44  N.  J.  Eq.  141,  14  Atl.  275,  affd.  45  &c.  Co.,  128  N.  Car.  477,  39  S.  E.  30; 

N.  J.   Eq.  367,    19  Atl.   621;    Post  v.  Hartshorn  v.  Day,  19  How.    (U.   S.) 

Mason,  91    N.   Y.   539,   43   Am.   Rep.  211,  15  L.  ed.  605;  Cameron  v.  Esta- 

689;    In   re   Smith's   Will,   95    N.   Y.  brooks,  73  Vt.  73,  SO  Atl.  638. 

516;    Mackall  v.   Mackall,    135   U.    S.  ''Burns  v.  Thompson,  91  Ind.  146. 

167,  34  L.  ed.  84,  10  Sup.  Ct.  705.  See  also,  Aleshire  v.  Lee  County  Sav. 

"^  Lyon  v.  Home,  L.  R.  6  Eq.  653 ;  Bank,  105  111.  App.  32. 
Adams'    Exrs.    v.    Jones'    Admr.,    39 


971  PAROL   EVIDENCE.  §    1 652 

edge  of  the  fraud,  on  the  ground  that  the  medical  examiner  of 
the  company  fraudulently  and  incorrectly  wrote  the  answers 
of  the  applicant,  so  that  the  poHcy  was  void.^°  It  is  said 
that  "it  is  always  competent  to  show  by  parol  that  a  given 
contract  was  entered  into  relying  upon  fraudulent  representa- 
tions; and,  when  a  written  contract  does  not  contain  the  entire 
agreement  between  the  parties,  it  is  competent  to  show  by  parol 
or  other  writings  executed  at  the  same  time  what  the  balance  of 
the  agreement  or  transaction  was."^"  This  statement,  without 
qualification,  is,  perhaps,  a  little  too  broad,  but  there  are  many 
cases  illustrating  the  general  doctrine  that,  notwithstanding  a  con- 
tract has  been  reduced  to  writing,  this  is  no  ground  for  excluding 
parol  evidence  that  one  of  the  parties  was  induced  to  execute  it  by 
the  false  and  fraudulent  representations  of  the  other,  and  that  the 
facts  may  be  shown  by  parol  in  a  proper  case.^^ 

§  1652.  Mistake. — In  cases  of  mistake  parol  evidence  is 
likewise  often  admitted.  The  ground  of  its  admission  in  such 
cases  has  been  said  to  be  that  it  would  operate  as  a  fraud  if  the 
alleged  mistake  could  not  be  corrected,  and  in  many  cases  it  could 
only  be  corrected  by  introducing  parol  evidence  ;  but  no  such  wide 
latitude  is  allowed  as  in  ordinary  cases  of  fraud.  Parol  evi- 
dence is  most  often  admitted  to  correct  mistakes  in  suits  in  equity 
brought  for  the  express  purpose  of  correcting  or  reforming 
written  instruments  where  there  has  been  a  mutual  mistake  of 
fact  in  reducing  them  to  writing.  As  has  been  said,  *'An  ob- 
jection that  the  plaintiff  cannot  have  relief  because  he  cannot 
prove  the  allegations  without  varying  the  terms  of  a  written  con- 
tract by  parol  is  scarcely  deserving  of  mention.  It  is  obvious 
that,  if  this  rule  was  applicable  to  cases  like  the  one  at  bar, 

=°  Bennett  v.  Massachusetts  &c.  Ins.  ell,  9  Ind.   572 ;   Conant  v.   National 

Co.,  107  Tenn.  371,  64  S.  W.  758.  State  Bank.   121   liid.   223,  22   N.   E. 

'Mliirlbert   v.    Kellogg   Lumber  &c.  250;  Scroggin  v.  Wood.  87  Iowa  497, 

Co.,  115  Wis.  225,  91  N.  W.  673.  54  N.  W.  437;  O'Donnell  v.  Clinton, 

''Wright  V.  Crookes.  1  Scott  X.  R.  145  Mass.  461,  14  X.  E.  747;  Rambo 

685;  Hotson  v.  Browne,  9  C.  B.   (X.  v.  Patterson,  133  Mich.  655,  95  X.  W. 

S.)    442,  99  E.   C.   L.  441;    Dobell  v.  722;  Bridgcr  v.  Goldsmith,  143  X.  Y. 

Stevens,  3  B.  &  C.  623,   10  E.  C.  L.  424,  38  X.  E.  458;  Foss  v.  Xewbury, 

283;   Harrell  v.  Hill,  19  Ark.   102,  68  20  Ore.  257,  25  Pac.  669;   Barrcda  v. 

Am.  Dec.  202;  Fox  v.  Tabel.  66  Conn.  Silsbee,  21   How.    (U.   S.)    146,   16  L. 

397,  34  Atl.  101;  Antle  v.  Sexton.  137  ed.  86;    Hartshorn  v.   Day,    19  How. 

III.  410,  27  X.  E.  691 ;  Catling  v.  Xew-  (U.  S.)  211,  15  L.  ed.  605. 


,§  1652 


CONTRACTS. 


972 


the  jurisdiction  *  *  *  to  reform  instruments  because  of 
fraud  or  mutual  mistake  would  be  entirely  defeated.  The  one 
purpose  of  such  actions  is  to  contradict  or  vary  the  terms  of  the 
written  agreement,  and  the  evidence  in  most  cases  is  mainly  or 
wholly  oral.  One  of  the  most  frequent  occasions  for  the  exercise 
of  this  jurisdiction  is  the  mistake  of  a  scrivener  in  reducing 
the  contract  to  writing,  and  the  inadvertent  signing  of  it  by  the 
(parties."^'*  So,  in  suits  to  compel  specific  performance  of  an  al- 
leged written  contract,  such  evidence  may  be  introduced  by  the  de- 
fendant to  show  that  by  reason  of  mistake,  the  alleged  agreement 
is  not  the  true  agreement,  and  that  in  fact  he  did  not  execute  it.^' 
Parol  evidence  may  also  be  admissible,  usually  upon  the  ground 
of  estoppel,  in  actions  upon  insurance  policies  to  show  mistakes 
in  the  applications  for  insurance,  especially  where  it  is  claimed 
that  the  insured  made  true  and  correct  answers,  and  that  the  agent 
of  the  insurance  company  wrote  them  incorrectly.^* 


''Story  V.  Gammell,  68  Nebr.  709, 
94  N.  W.  982.  The  alleged  mistake 
must  be  clearly  proved,  and  this  can 
not  ordinarily  be  done  without  show- 
ing by  parol  in  what  particulars  the 
true  agreement  differs  from  the  writ- 
ing. Silbar  v.  Ryder,  63  Wis.  106, 
23  N.  W.  106;  Hartford  &c.  Ore  Co. 
V.  Miller,  41  Conn.  112;  Nowlin  v. 
Pyne,  47  Iowa  293 ;  Linton  v.  Unex- 
celled Fire-Works  Co.,  128  N.  Y. 
672,  28  N.  E.  580,  3  Silvernail 
(N.  Y.)  565;  Canal  Co.  v.  Hewitt,  62 
Wis.  316,  21  N.  W.  216,  22  N.  W. 
588.  See  also,  as  to  the  necessity  of 
clearly  proving  the  mistake.  Brant- 
ley V.  West,  27  Ala.  542;  Habbe  v. 
Viele,  148  Ind.  116,  45  N.  E.  783,  47 
X.  E.  1 ;  Heavenridge  v.  Mondy,  49 
Ind.  434;  Tesson  v.  Atlantic  Mut. 
Ins.  Co.,  40  Mo.  33,  93  Am.  Dec.  293 ; 
^lead  V.  Westchester  Fire  Ins.  Co., 
64  X.  Y.  453;  Svlvius  v.  Kosek,  117 
Pa.  St.  67,  11  Ati  392,  2  Am.  St.  645; 
Simmons  Creek  Coal  Co.  v.  Doran, 
142  U.  S.  417,  35  L.  ed.  1063,  12  Sup. 
Ct.  239;  Fudge  v.  Payne,  86  Va.  303, 
10  S.  E.  7;  Fishack  v.  Ball,  34  W.  Va. 
644,  12  S.  E.  856.  Notes  in  6  L.  R.  A. 
46,  30  Am.  St.  642,  648. 

"*  Webster  v.  Cecil,  30  Beav.  62; 
Quinn  V.  Roath,  37  Conn.  16;  Goode 
V.  Riley,  153  Mass.  585,  28  N.  E.  228; 


Chambers  v.  Livermore,  15  Mich, 
381 ;  Fitschen  v.  Thomas,  9  Mont.  52, 
22  Pac.  450 ;  Ryno  v.  Darby,  20  N.  J. 
Eq.  231;  Gillespie  v.  Moon,  2  Johns. 
Ch.  (N.  Y.)  585,  7  Am.  Dec.  559; 
Best  V.  Stow,  2  Sandf.  Ch.  (N.  Y.) 
298;  Coles  v.  Bowne,  10  Paige  (N. 
Y.)  526;  Cathcart  v.  Robinson,  5  Pet. 
(U.  S.)  264,  8  L.  ed.  120;  Towner  v. 
Lucas,  13  Gratt.  (Va.)  705.  See  also, 
Newcomer  v.  Kline,  11  Gill  &  J. 
(Md.)  457,  37  Am.  Dec.  74. 

^  Lycoming  Fire  Ins.  Co.  v.  Jack- 
son, 83  111.  302,  25  Am.  "Rep.  386; 
Marston  v.  Kennebeck  Mut.  Life  Ins. 
Co.,  89  Maine  266,  36  Atl.  389,  56  Am. 
St.  412;  North  American  Fire  Ins. 
Co.  V.  Throop,  22  Mich.  146,  7  Am. 
Rep.  638;  Brown  v.  Metropolitan  &c. 
Ins.  Co.,  65  Mich.  306,  32  N.  W.  §'10, 
8  Am.  St.  894;  Planters'  Ins.  Co.  v. 
Myers,  55  Miss.  479,  30  Am.  Rep. 
521 ;  Flynn  v.  Equitable  Life  Ins.  Co., 
78  N.  Y.  568,  34  Am.  Rep.  561 ;  Grat- 
tan  V.  Metropolitan  Life  Ins.  Co.,  80 
N.  Y.  281,  36  Am.  Rep.  617,  92  N.  Y. 
274,  44  Am.  Rep.  372 ;  Plumb  v.  Cat- 
taraugus County  Mut.  Ins.  Co.,  18  N. 
Y.  392,  72  Am.  Dec.  526  and  note; 
Insurance  Co.  v.  Williams,  39  Ohio 
St.  584,  48  Am.  Rep.  474;  Moliere  v. 
Pennsylvania  Fire  Ins.  Co.,  5  Rawle 
(Pa.)  342,  28  Am.  Dec.  675;  Manhat- 


973  PAROL   EVIDENCE.  §    1 653 

§  1653.  Mistake — Illustrative  cases. — Cases  have  already 
been  cited  in  which  parol  evidence  of  a  mistake  is  admissible  in 
proceedings  to  reform  or  set  aside  a  written  instrument,^^  and, 
as  already  stated,  it  is  in  such  cases  that  evidence  of  mistake  is 
most  often  admitted.  But  suits  brought  expressly  for  reforma- 
tion or  cancelation  are  not  the  only  cases  in  which  such  evidence 
has  been  admitted.*"  Thus,  in  action  of  assumpsit  by  a  lessee 
to  recover  money  paid  to  his  lessor  as  rent  for  water  rights,  parol 
evidence  was  admitted  that  the  lease  was  taken  with  the  under- 
standing by  both  parties  that  the  premises  were  to  be  used  for  a 
certain  purpose,  and  that  this  understanding  was  based  on  a  mis- 
take as  to  the  true  facts  of  the  case,  there  being  a  mistake  as  to 
the  subject-matter."  In  another  case  oral  evidence  of  a  parol 
agreement  for  the  sale  of  land,  the  boundaries  of  which  were 
pointed  out  by  the  vendor  on  the  ground,  was  held  admissible  to 
show  that  the  deed  did  not  convey  the  entire  tract  paid  for.=^ 
So,  where  the  defendant  in  an  action  on  an  insurance  policy 
pleads  false  representations  in  the  application,  and  the  reply 
pleads  that  the  defendant's  agent  wrote  them  and,  without  the 
plaintiff's  knowledge,  did  not  correctly  write  his  answers,  it  has 
been  held  that  such  facts  may  be  shown  by  parol.'"  In  an  action 
on  a  promissory  note,  the  defendant  by  cross-complaint,  pleaded  a 
mistake  and  asked  to  have  the  note  reformed  to  express  the  real 
contract,  and  parol  evidence  was  held  admissible  to  sustain  the 
allegations  of  the  cross-complaint."  In  a  settlement  between  a 
county  treasurer  and  the  sheriff  as  tax  collector,  the  former  gave 
the  latter  a  receipt  for  certain  money,  and  afterward  discovering 

tan  Ins.  Co.  v.  Webster.  59  Pa.   St.  141  U.  S.  260,  35  L.  ed.  678,  11  Sup. 

227,  98  Am.  Dec.  332 ;  Planters'  Ins.  Ct.  972.              .,    ^     ,    ^ 

Co   V    Sorrels.  1  Baxt.   (Tenn.)   352,  ^  See,   Terrell    Coal   Co.   v.   Lacey 

25  Am.  Rep.  780;  iMcCall  v.  Phoenix  (Ala.).   31    So.    109. 

Mut   Life  Ins.  Co..  9  W.  Va.  237.  27  "Bedell  v.  Wilder.  65  Vt  406,  36 

Am.  Rep.  558.     See  also.  New  Jersey  Atl.  589,  36  Am.  St.  871. 

Mut.  Life  Ins.  Co.  v.  Baker,  94  U.  S.  »  Equitable  Trust  Co    vMilhgan, 

610  24  L.  ed.268.  But  compare  McCoy  31  Ind.  App.  20,  65  N    E    1044. 

V.    Metropolitan    Life    Ins.    Co..    133  '^  Parno   v.    Iowa   Merchants    Mut. 

Mass    82;   Franklin   Fire  Ins.  Co.  v.  Ins.  Co.,  114  Iowa  132.  8b  N.  \\.  210 

Martin   40  N.  J.  L.  568,  29  Am.  Rep.  See  also,   Snell  v.  Insurance  Co..  ya 

271  U.  S.  85.  25  L.  ed.  52,  and  last  note 

"See  last  preceding  section;    also,  to  last  preceding  section. 

Kee  V    Davis,   137  Cal.  456,  70  Pac.  "  Lawrence  County  Bank  v.  Arndt. 

294;  Brunson  v.  Henry.  140  Ind.  455,  69  Ark.  406,  65  S.  W.  1052. 
32   N.   E.  256;   Griswold   v.   Hazard, 


§    1654  CONTRACTS.  974 

a  discrepancy  he  demanded  a  return  of  the  receipt,  on  the  ground 
that  it  had  been  given  by  mistake ;  the  sheriff  denied  any  mistake, 
and  suit  was  brought  by  the  state  against  both  the  sheriff  and  the 
treasurer  and  their  sureties  for  the  money.  The  court  held  that 
parol  evidence  was  admissible  to  show  the  alleged  mistake/^  But 
parol  evidence  of  mistake  that  might  be  admissible  in  a  proper 
proceeding  under  proper  pleadings  may  be  inadmissible,  because 
the  proceeding  or  pleadings  are  such  that  it  is  not  admissible  in 
the  particular  case,'*-  and  there  are  cases  where  such  evidence  is 
not  admissible,  because  it  would  affect  the  interest  of  third  per- 
sons who  acquired  rights  under  the  written  instrument  in  good 
faith,  without  knowledge  of  the  mistake,  and  for  a  valuable  con- 
sideration, or  the  like.*^ 

§  1654.  Discharge  —  Performance  —  Waiver. — The  parol 
evidence  rule  does  not  exclude  oral  evidence  of  the  discharge  or 
performance  of  a  contract  in  a  proper  case,  and  as  a  general  rule 
evidence  of  a  subsequent  parol  agreement  to  extend  the  time, 
change  the  place  or  manner  of  performing  a  prior  unsealed  writ- 
ten contract,  or,  before  breach  thereof  and  for  a  new  considera- 
tion, to  waive,  annul  or  discharge  it  or  any  of  its  provisions,  is 
admissible.**     Thus,  it  is  competent  to  show  by  parol  evidence 

*^  Butler  V.   State,  81  Miss.  734,  33  C.  C.  A.  534;  Rhodes  v.  Thomas.  2 

So.  847.     So,  in  a  proper  case,  parol  Ind.  638;  Frick  Co.  v.  Western  Star 

evidence  of  mistake  is  admissible  to  Milling   Co.,    51    Kans.    370,    32    Pac. 

defeat   an   action   on   a   written    con-  1103;    Maysville   &    B.    S.    R.    Co.    v. 

tract  in  the  form  it  bears.     Ewing  v.  Pelham,  26  Ky.  L.  474,  20  S.  W.  384; 

Smith,    132   Ind.   205,  31    N.    E.  464;  Gardiner  v.  Bataille,  5  La.  Ann.  597; 

Ewing  V.  Wilson,  132  Ind.  223,  31  N.  Edson  v.  McGraw,  37  La.  Ann.  294; 

E   64   19  L.  R.  A.  767.  Cummings      v.      Arnold,      3      Mete. 

^'Nvstuen  v.  Hanson  (Iowa),  91  N.  (Mass.)  486,  37  Am.  Dec.  155;  Har- 

W.  1071;  Kreuger  v.  Nicola,  205  Pa.  ris  v.  Brooks,  21   Pick.   (Mass.)    195, 

38,  54  Atl.  494.    See  also,  Newcomer  32  Am.  Dec.  254;    Savage  v.  Blanch- 

V.  Kline,  11  Gill.  &  J.   (Md.)  457,  37  ard,    148    Mass.   348,    19   N.    E.   396; 

Am.  Dec.  74;  New  Idea  Pattern  Co.  Duplanty  v.  Stokes,  103  Mich.  630,  61 

V.  Whelan,  75  Conn.  455,  53  Atl.  953 ;  N.  W.   1015 ;   Levering  v.  Langley,  8 

Young  V.   Jacoway,  9  Smedes  &  M.  Gil.    (Minn.)   82;   Lee  v.   Hawks,  68 

(Miss.)  212.  Miss.  669,  9  So.  828,  13  L.  R.  A.  633, 

^  Kilpatrick  v.  Strozier,  67  Ga.  247 ;  and  note  on  parol  evidence  to  show 

Heilner  v.  Imbrie,  6  Serg.  &  R.  (Pa.)  waiver;    Buel  v.  Miller,  4  N.  H.  196; 

401 ;  Tabor  v.  Cilley,  53  Vt.  487.  Mairs  v.  Sparks,  5  N.  J.  L.  513;  Keat- 

"Goss  V.  Lord  Nugent,  5  Barn.  &  ing  v.  Price,  1  Johns.  Cas.  (N.  Y.)  22, 

Ad.  58;    Adler  v.  Friedman,   16  Cal.  1   Am.  Dec.  92;   Nicoll  v.  Burke,  78 

138;   O'Keefe  v.   Corporation   of   St.  N.  Y.  580,  8  Abb.  N.  Cas.    (N.  Y.) 

Francis'    Church,    59    Conn.    551,    22  213;    Hope  v.   Balen,  58  N.   Y.   380; 

Atl.  325;  Pecos  Valley  Bank  v.  Ev-  Harris  v.    Murphy,    119   N.    Car.  34, 

ans-Snider-Buel  Co.,  107  Fed.  654,  46  25  S.  E.  708,  56  Am.  St.  656,  an  ex- 


975 


PAROL    E\^DENCE. 


§    I  ^^54 


that  a  written  agreement  is  entirely  discharged  or  performed 
according  to  its  terms/^  So,  a  release  or  other  discharge  without 
performance  of  the  terms  of  the  original  written  contract  may  be 
shown  by  parol  in  a  proper  case."  And  a  waiver  of  particular 
provisions  may  be  similarly  shown  in  a  proper  case,  as,  for  in- 
stance, in  an  action  for  the  price  of  logs,  parol  evidence  has  been 
held  admissible  to  show  that  the  delivery  of  the  logs  at  a  place 
different  from  that  designated  in  the  written  contract  was  at  the 
request  of  the  defendant.*^  The  question  as  to  the  admissibility 
of  such  evidence  of  waiver  most  frequently  arises  in  insurance 
cases,  and  in  such  cases  it  is  generally  held  that  a  waiver  may  be 
shown  after  breach,  or,  in  other  words,  parol  evidence  is  generally 
held  admissible  to  show  a  waiver  of  a  breach  of  condition  or  war- 
ranty in  an  insurance  policy,  either  where  the  agent  has  knowledge 
of  the  facts  at  the  time  of  issuing  the  policy,  or  where  there  is 
such  subsequent  conduct  on  the  part  of  the  company  or  its  agents 
as  subjects  the  insured  to  expense  and  leads  him  to  believe  that 
the  breach  is  waived,  or  otherwise  amounts  to  a  valid  waiver  or 
estoppel.""^     Some  courts  have  also  admitted  proof  of  a  custom 

Raymond  v.  Krauskopf,  87  Iowa  602, 
54  N.  W.  432 ;  Levering  v.  Langley, 
8  Gil.  (Minn.)  82;  Conrad  v.  Fisher, 
2,7  Mo.  App.  352,  8  L.  R.  A.  147; 
Juilliard  v.  Chaffee,  92  X.  Y.  529; 
Parker  v.  Syracuse,  31  N.  Y.  376; 
Mead  V.  Parker,  111  X.  Y.  259,  18  N. 
E.  727;  Xeglev  v.  Jeffcrs.  28  Ohio  St. 
90;  Tata  v.  R'evnolds,  8  Watts.  &  S. 
(Pa.)  91;  Swain  v.  Seamans,  9  Wall. 
(U.  S.)  254.  19  L.  ed.  554.  But  see, 
Lindsay  v.  Garvin,  31  S.  Car.  259,  9  S. 
E.  862,  5  L.  R.  A.  219. 

"  Duplanty  v.  Stokes,  103  Mich. 
630,  61  X.  W.  1015.  See  also,  for 
other  illustrative  cases,  Herzog  v. 
Sawyer,  61  Md.  344;  Leathe  v.  Bul- 
lard.  8  Grav  (Mass.)  545;  Fleming  v. 
Gilbert,  3  Johns.  (X.  Y.)  528;  Brady 
V.  Cassidy,  145  X.  Y.  171,  39  X.  E. 
814;  Grove  v.  Donaldson,  15  Pa.  St. 
128. 

**  Sheldon  v.  Connecticut  Mut.  L. 
Ins.  Co.,  25  Conn.  207.  65  Am.  Dec. 
565 ;  Bevin  v.  Connecticut  &c.  Ins. 
Co.,  23  Conn.  244:  Xew  York  Life 
Ins.  Co.  v.  Baker.  83  Fed.  647.  27  C. 
C.  A.  658;  Mobile  Fire  Department 
Ins.  Co.  v.  Miller,  58  Ga.  420;  Home 


tended  note;  Walters  v.  Walters,  34 
N.  Car.  28,  55  Am.  Dec.  401;  Le 
Fevre  v.  Le  Fevre,  4  Serg.  &  R. 
(Pa.)  241,  8  Am.  Dec.  696;  Holloway 
V.  Frick,  149  Pa.  St.  178,  24  Atl.  201 ; 
Bryan  v.  Hunt,  4  Sneed  (Tenn.) 
543,  70  Am.  Dec.  262;  Clark  v. 
Ducheneau,  26  Utah  97,  72  Pac.  331; 
Perkins  v.  Adams.  30  Vt.  230. 

"Tucker  v.  Tucker,  113  Tnd.  272, 
13  X.  E.  710:  Isbell  v.  Brinkman.  70 
Ind.  118;  Baile  v.  St.  Joseph  &c.  Co., 
72,  Mo.  371;  payment,  (Vincent  v. 
Larson.  1  Idaho  241 ;  Ketcham  v. 
Hill,  42  Ind.  64;  Stewart  v.  McDon- 
ald, 18  La.  Ann.  194;  Thornton  v. 
Wood.  42  Maine  282)  ;  settlement 
under  account  stated  as  amount  due 
under  written  contract,  (Krueger  v. 
Dodge,  15  S.  Dak.  159.  87  X.  W. 
965)  ;  merchandise  agreed  to  be  tak- 
en, and  actually  delivered  in  payment 
of  note.  (Buchanan  v.  Adams.  49 
N.  J.  L.  636.  10  Atl.  662.  60  Am. 
Rep.  666).  See  also,  Howard  v. 
Stratton,  64  Cal.  487.  2  Pac.  263. 

"Katz  v.  Bedford,  77  Cal.  319.  19 
Pac.  523,  1  L.  R.  A.  826;  Worrell  v. 
Forsyth,    141    111.   22,   30   X.   E.   673; 


§    1655  CONTRACTS.  976 

among  insurance  companies  to  accept  premiums  after  they  are 
due.*®  This  phase  of  the  subject  is  treated  in  a  subsequent 
volume  under  the  title  of  Insurance/^^ 

§  1655.  Parol  evidence  to  aid  interpretation. — It  is  fre- 
quently said  that  a  contract  should  be  "read  in  the  light  of  sur- 
rounding circumstances,"  and  parol  evidence  is,  perhaps,  more 
often  received  to  aid  in  the  interpretation  of  written  instruments 
than  for  any  other  purpose  connected  with  such  instruments. 
The  courts,  in  order  to  get  at  the  true  meaning  of  the  language 
used  and  the  true  intent  of  the  parties,  although  such  intent  must 
not  be  different  from  that  expressed  in  the  instrument,  arc  fre- 
quently obliged  to  place  themselves  in  the  situation  of  the  parties 
and  consider  the  facts  and  circumstances  attending  its  execution, 
and  they  cannot  do  this  without  the  aid  of  extrinsic  evidence. 
It  is  difficult,  if  not  impossible,  to  formulate  a  general  rule  upon 
the  subject  which  shall  be  at  the  same  time  comprehensive  and 
strictly  accurate,  but  the  following  is,  perhaps,  as  comprehensive 
and  nearly  accurate  as  any  that  has  been  suggested :  "Parol  evi- 
dence is  admissible,  in  the  construction  of  contracts,  to  define  the 
nature  and  qualities  of  the  subject-matter,  the  situation  and  rela- 

Ins.  Co.  V.  Duke,  84  Ind.  253  (but  see  234,  24  L.  ed.  689;  Hartford  &c.  Ins. 

Havens  v.   Home  Ins.   Co.,   Ill    Ind.  Co.  v.  Unsell,  144  U.  S.  439,  36  L.  ed. 

90,  12  N.  E.  137,  60  Am.  Rep.  689)  ;  496,   12   Sup.  Ct.  671 ;   Oshkosh  Gas- 

Moffitt   V.    Phenix   Ins.    Co.,    11    Ind.  Light  Co.  v.  Germania  Fire  Ins.  Co., 

App.  233,  38  N.  E.  835;  Viele  v.  Ger-  71  Wis.  454,  Zl  N.  W.  819,  5  Am.  St. 

mania  Ins.   Co.,  26  Iowa  9,  96  Am.  233;    But    see    Batchelder    v.    Queen 

Dec.    83;    Hilt    v.    Metropolitan    &c.  Ins.    Co.,    135    Mass.    449;    Franklin 

Co.,   110  Mich.   517,  68   N.   W.   300;  Fire  Ins.  Co.  v.  Martin,  40  N.  J.  L. 

Aetna  &c.   Ins.   Co.  v.   Olmstead,  21  568,  29  Am.  Rep.  271 ;  State  &c.  Ins. 

Mich.  246,  4  Am.  Rep.  483 ;  Plumb  v.  Co.  v.  Arthur,  30  Pa.  St.  315.     Other 

Cattaraugus  County  Mut.  Ins.  Co.,  18  early  decisions  also  denied  that  there 

N,  Y.  392,  72  Am.  Dec.  526;    Rowley  could  be  any  such  waiver.  There  is 

V.   Empire   Ins.   Co.,   36   N.   Y.   550;  still  some  conflict  as  to  when,  if  at  all, 

Pechner  v.  Phoenix  Ins.  Co.,  65  N.  Y.  a  waiver  should  be  implied.    But  this 

195,  affd.  95  U.  S.  183,  24  L.  ed.  427;  is  a  matter  of  substantive  law  rather 

Titus  V.  Glens  Falls  Ins.  Co.,  81   N.  than  of  the  law  of  evidence. 

Y.  410;  Kiernan  v.  Dutchess  County  **  Busby    v.     North     America     &c. 

&c.  Ins.  Co.,  150  N.  Y.  190,  44  N.  E.  Ins.    Co.,   40   Md.   572,    17   Am.   Rep. 

698;    McFarland    v.    Kittanning    Ins.  634;  Baxter  v.  Massasoit  Ins.  Co.,  13 

Co.,  134  Pa.   St.  590,   19  Atl.  796,   19  Allen    (Mass.)    320;    Girard    L.    Ins. 

Am.  St.  723;  Imperial  Fire  Ins.  Co.  v.  Co.  v.  Mutual  L.  Ins.  Co.,  86  Pa.  St. 

Dunham.  117  Pa.  St.  460,  12  Atl.  668,  236.     See  also,  Candee  &  Co.  v.  Citi- 

2  Am.  St.  686;  Union  Mut.  Life  Ins.  zens'   Ins.    Co.,   4   Fed.    143;    Mutual 

Co.  V.  Wilkinson,  13  Wall.    (U.   S.)  Benefit  Life  Ins.  Co.  v.  Ruse,  8  Ga. 

222,    20    L.    ed.    617;     Knickerbock-  534. 

er  L.   Ins.   Co.  v.   Norton,  96  U.   S.  "^  Vol.  V,  tit.  10. 


977  PAROL   EVIDENCE.  §    1 656 

tions  of  the  parties,  and  all  the  circumstances,  in  order  that  the 
courts  may  put  themselves  in  the  place  of  the  parties,  see  how  the 
terms  of  the  instrument  affect  the  subject-matter,  and  ascertain 
the  signification  which  ought  to  be  given  to  any  phrase  or  term  in 
the  contract  which  is  ambiguous  or  susceptible  of  more  than  one 
interpretation ;  and  this,  although  the  result  of  the  evidence  may 
be  to  contradict  the  usual  meaning  of  terms  and  phrases  used  in 
the  contract ;  but  if  the  words  are  clear  and  unambiguous,  a  con- 
trary intention  may  not  be  derived  from  the  circumstances."''** 

§  1656.  Patent  ambiguity. — Lord  Bacon,  influenced  per- 
haps by  Lord  Cheney's  case,"  seems  to  have  originated  the  terms 
"ambiguitas  latens"  and  "ambiguitas  patens",  and  to  have  first 
clearly  laid  down  the  rule  that  a  latent  ambiguity  may  be  supplied 
by  extrinsic  evidence,  because  an  ambiguity  which  arises  out  of  a 
fact  maybe  removed  by  proof  of  the  fact  while  a  patent  ambiguity 
"is  never  holpen  by  averment."  In  commenting  upon  the  maxim, 
he  says:  "There  be  two  sorts  of  ambiguities  of  words;  the  one 
is  ambiguitas  patens  and  the  other  latens.  Patens  is  that  which 
appears  to  be  ambiguous  upon  the  deed  or  instrument ;  latens  is 
that  which  seemeth  certain  and  without  ambiguity,  for  anything 
that  appeareth  upon  the  deed  or  instrument ;  but  there  is  some 
collateral  matter  out  of  the  deed  that  breedeth  ambiguity.  Am- 
biguitas patens  is  never  holpen  by  averment ;  and  the  reason  is, 
because  the  law  will  not  couple  and  mingle  matters  of  specialty, 
which  is  of  the  higher  account,  w^ith  matters  of  averment,  which  is 
of  inferior  account  in  law;  for  that  we  were  to  make  all  deeds 
hollow  and  subject  to  averments,  and  so,  in  effect,  that  to  pass 
without  deed  which  the  law  appointeth  shall  not  pass  but  by  deed. 
Therefore  if  a  man  give  land  to  J.  D.  and  J.  S.  et  haeredibus.  and 
do  not  limit  whether  of  their  heirs,  it  shall  not  be  supplied  by 
averment  to  whether  of  them  the  intention  was  the  inheritance 
should  be  limited."  "But  if  it  be  ambiguous  latens  then  other- 
wise it  is :  as  if  I  grant  my  manor  of  S.  to  J.  F.  and  his  heirs,  here 
appeareth  no  ambiguity  at  all.  But  if  the  truth  be,  that  I  have  the 
manors  both  of  South  S.  and  North  S..  this  ambiguity  is  matter 

"» Browne  Parol  Ev.  179.  "  5  Co.  Lit.  68. 

62 — Contracts,  Vol.  2 


§    1657  CONTRACTS.  978 

in  fact ;  and  therefore  it  shall  be  holpen  by  averment,  whether  of 
them  it  was  that  the  party  intended  should  pass."°^  This  is  not 
far  wrong  in  the  sense  in  which  Lord  Bacon  meant  it  and  as  ap- 
plied by  him,  but  it  has  occasioned,  if  not  directly  caused,  much 
confusion  and  some  erroneous  decisions.  He  used  the  term  am- 
biguity in  a  limited  and  specific  sense  and  stated  the  rule  as 
one  of  pleading  rather  than  as  a  rule  of  evidence ;  but  in  one  of  the 
earliest  books  thereafter  published,^^  in  which  there  is  an  attempt 
to  state  the  law  of  evidence,  it  is  treated  as  a  rule  of  evidence; 
and  we  now  find  many  decisions,  some  of  them  right  upon  the 
facts  and  some  of  them  erroneous,  in  which  it  is  stated  as  a  rule 
of  evidence  in  general  terms  that  a  latent  ambiguity  can  be  ex- 
plained and  removed  by  extrinsic  evidence,  and  that  a  patent 
ambiguity  cannot  be.^* 

§  1657.  Latent  and  patent  ambiguity. — Written  instru- 
ments are  not  mere  abstractions,  to  be  considered  apart  from  the 
subject  and  objects  to  which  they  refer,  and  in  the  interpretation 
of  any  document  there  may  arise  from  the  mere  reading  of  it  a 
doubt  as  to  what,  if  any,  effect  it  can  be  given.  As  suggested  by 
Judge,  now  Mr.  Justice  Holmes,  "In  every  case  the  words  used 
must  be  translated  into  things  and  facts  by  parol  evidence,"^^  and 
this  very  process  of  necessary  translation  may  show  that  an 
uncertainty  or  ambiguity  which  apparently  exists  on  the  face  of 
the  instrument  does  not  in  reality  exist  as  well  as  it  may  show  that 
by  reason  of  extrinsic  facts  there  is  an  uncertainty  or  ambiguity 
not  apparent  upon  the  face  of  the  instrument.  It  is  doubtless 
true  that  a  writing  may  not  contain  a  "sufficient  expression" 
to  be  valid,  although  this  may  well  be  said  to  be  determined  by  the 
substantive  law  rather  than  by  the  law  of  evidence,  and  it  may  be 

"'See  Bacon's  Law  Tracts,  pp.  99,  (Tex.),  27  S.  W.  823,  revd.  88  Tex. 
100;  Bacon's  Max.  Reg.  23,  25;  120,  30  S.  W.  551.  See  also,  the  re- 
Broom's  Leg.  Max.  608  et  seq.  cent  case  of  Trustees  of   Southamp- 

"  Buller's    Nisi    Prius,    in    its    first  ton  v.  Jessup,  173  N.  Y.  84,  65  N.  E. 

edition  sometimes  called  Bathurst  on  949, 

Trials.  "Doherty   v.    Hill,    144  Mass.   465, 

"  Craven  V.  Butterfield,  80  Ind.  503 ;  11    N.    E.   581.    Language,   independ- 

Mudd  V.   Dillon,   166  Mo.    110,  65   S.  ent  of  the  subject-matter  or  the  au- 

W.  973;  Ferguson  v.   Staver,  33  Pa.  thor's     general     purpose,     is    usually 

411;  Pfeiffer  v.  Lindsay,  66  Tex.  123,  meaningless  and  obscure.     Kendall  v. 

1    S.    W.    264;     Curdy    v.    Stafford  Green,  67  N.  H.  557,  42  Atl.  178. 


979  PAROL   EVaDENCE.  §    1 657 

SO  defective  and  uncertain  that  whether  read  alone  or  with  the 
aid  of  extrinsic  evidence  it  could  convey  no  clear  idea  and  could 
not  be  carried  into  effect.'"  In  such  cases,  as,  for  instance, 
where  the  name  of  the  grantee  or  donee  is  left  blank,  or  the 
like,"  parol  evidence  may  be  inadmissible,  although  in  cases 
of  "equivocation,"  even  the  declarations  of  a  testator  as  to 
his  intention  may  be  received,  but  this  does  not  depend  upon 
any  distinction  between  patent  and  latent  ambiguity.'*  So,  by 
mistake,  the  description  or  other  parts  of  the  instrument,  with  or 
without  the  aid  of  extrinsic  evidence,  may  be  so  erroneous  as  to 
render  it  ineffective,  and  the  law  may  not  permit  extrinsic  evi- 
dence to  correct  it  in  the  case  of  a  will,  but  this  is  not  because 
there  is  either  a  latent  or  patent  ambiguity,  nor  is  it  because  there 
is  any  rule  of  evidence  excluding  such  evidence  in  all  cases  in 
which  there  is  no  latent  ambiguity.  "Generally  speaking,"  says 
Professor  Thayer,  "ambiguities,  or  any  other  difficulties,  patent 
or  latent,  are  all  alike  as  regards  the  right  and  duty  to  compare 
the  documents  with  extrinsic  facts,  and  as  regards  the  possibility 
that  they  may  vanish  when  this  is  done."°®  And  again  he  says: 
"In  truth  the  only  patent  ambiguity  that  was  not  open  to  explana- 
tion by  extrinsic  matter  was  one  that,  in  the  nature  of  things,  was 
not  capable  of  an  explanation."*"*     So,  a  text-writer  upon  the  spe- 

"See    Schattler    v.    Cassinelli,    56  297,  47  N.  E.  631,  46  L.  R.  A.   168, 

Ark.    172.    19   S.   W.   746;    Doyle   v.  62  Am.  St.  526. 

Teas,  4  Scam.  (111.)  202;  Herrick  v.  °*Doe  v.  Needs,  2  M.  &  W.  129;  F. 

Morrill,  Zl  Minn.  250,  2>Z  N.  W.  849,  V.  Hawkins  in  2  Jur.  Soc.  Pap.  324; 

5  Am.  St.  841 ;  United  Press  v.  New  Thayer's     Prelim.     Treaties    on     Ev. 

York    Press    Co.,    164   N.   Y.  406,   58  425-     A   fundamental  error  of   some 

N.    E.    527,   53   L.   R.    A.   288;    In   re  courts    is    in    treating    the    excluding 

Willey's   Estate,    105   Wis.   22.  80   N.  rule  as  applying  to  all  kinds  of  parol 

W.  102.  Apparently  meaningless  sym-  evidence  in  case  of  so  called  patent 

bols  were  explained  by  extrinsic  evi-  ambiguity    instead    of    confining    its 

dence  in   Kell  v.  Charmer,  23   Beav.  application    as    a    general    excluding 

195.  rule  to  evidence  of  declarations  of  in- 

"  Clayton  v.   Nugent,  13  M.  &  W.  tention.     The  case  of  "equivocation" 

200;  Hunt  v.  Hort.  3  Bro.  C.  C.  311;  would   then   be   an    exception   to   the 

Baylis    v.    Attorney-General,    2    Atk.  general  rule,  and  neither  would  nec- 

239;   Strode  v.   Russell,  2  Vern.  621-  essarily  depend  upon  any  distinction 

But   even  here  the  situation   may  be  between    patent    or   latent    ambiguity, 

practically    that    of    equivocation,    or  ""Thayer's  Prelim.  Treatise  on  Ev. 

the  beneficiary  may  be  so  designated  425. 

as  to  let  in  parol  evidence  of  identity  "^Thayer's  Prelim.  Treatise  on  Ev. 
and  render  the  instrument  effective.  424.  Professor  Thayer  carefully  re- 
Price  V.  Page,  4  Ves.  Jr.  679;  Marske  views  the  old  English  cases  and 
V.  Willard,  169  111.  276,  48  N.  E.  shows  the  history  and  development  of 
290;    Dennis   v.    Holsapple,    148   Ind.  the  doctrine. 


i657 


CONTRACTS. 


980 


cific  subjects  states  the  general  rule  in  terms  almost  the  opposite 
of  the  nile  as  stated  by  many  of  the  courts  that  have  extended 
and  misapplied  Lord  Bacon's  maxim.  "Parol  evidence,"  he  says, 
*'is  admissible  in  respect  to  the  subject-matter,  the  situation  and 
relation  of  the  parties  and  all  the  circumstances,  to  explain  any 
ambiguity  apparent  on  the  face  of  the  instrument;  but  mere  evi- 
dence of  intention,  except  as  derivable  from  such  proof,  is  incom- 
petent in  respect  to  such  patent  ambiguity.""^  Many  decisions  of 
the  courts  considering  the  question  and  criticizing  the  distinction 
and  the  statement  so  often  made  that  extrinsic  evidence  is  not  ad- 
missible to  explain  a  patent  ambiguity,  are  cited  below,*'^  where 
another  and  very  similar  exposition  of  the  subject  is  also  noted/'^ 


•*  Browne  on  Parol  Ev.  116,  435, 
reviewing  many  authorities. 

"  Colpoys  V.  Colpoys,  Jac.  451; 
Peacher  v.  Strauss,  47  Miss.  353; 
Schlottman  v.  Hoffman,  IZ  Miss.  188, 
18  So.  893,  55  Am.  St.  527;  Fish  v. 
Hubbard's  Admrs.,  21  Wend.  (N.  Y.) 
651 ;  Roberts  v.  Short,  1  Tex.  ZIZ. 
See  also,  Warner  v.  Marshall  (Ind.), 
75  N.  E.  582,  590,  citing  1  Elliott  Ev. 
§  600,  from  which  this  and  other 
sections    are    substantially   taken. 

*""It  is  believed  that  in  nearly  all 
cases  of  so-called  ambiguity  the  facts 
can  be  thrown  into  the  following 
classification :  I.  Where  the  docu- 
ment read  alone  or  with  the  aid  of 
extrinsic  evidence  has  no,  or  more 
than  one  equally  clear,  logical  mean- 
ing, n.  Where  the  document  read 
alone  apparently  has  no,  or  more  than 
one,  such  meaning;  but  proof  of 
some  extrinsic  fact  shows  it  to  have 
one,  and  only  one,  logical  meaning. 
HI.  Where  the  document,  however 
read,  has  such  a  meaning;  but  proof 
of  some  extrinsic  fact  shows  no,  or 
more  than  one,  way  in  which  to  ef- 
fect it.  IV.  Where  the  document, 
however  read,  has  such  a  meaning, 
and  proof  of  some  extrinsic  fact 
shows  no,  or  more  than  one,  way  in 
which  to  effect  it;  but  proof  of  ad- 
ditional facts  shows  that  one,  and 
only  one,  way  of  effecting  it  could 
have  been  meant.  A  close  examina- 
tion of  these  possible  combinations 
reveals  the  fact  that  there  are  really 
two  different  kinds  of  meaning  in- 
volved.    The  first  may  be  called  the 


logical ;  the  second,  the  executable 
meaning.  The  question  in  the  first 
instance  is,  does  the  document  con- 
vey any  idea ;  in  the  second,  granted 
that  it  does  convey  an  idea,  is  it  one 
which  can  be  carried  into  effect-  The 
first  is  obtained  by  reading  the  docu- 
ment generally,  as  language;  the  sec- 
ond, by  reading  it  particularly,  as 
language  applicable  to  certain  sub- 
jects and  objects.  Now  since  am- 
biguity may  signify  either  of  doubt- 
ful meaning  or  of  double  meaning, 
it  appears  that  from  the  two  kinds 
of  meaning  indicated  above  we  may 
derive  four  kinds  of  ambiguity,  viz. : 
(1)  Where  it  is  doubtful  whether  the 
document  has  any  logical  meaning  or 
not.  (2)  Where  there  is  a  question 
as  to  which  of  two  or  more  logical 
meanings  is  the  proper  one.  (3) 
Where  it  is  doubtful  whether  the 
document  has  any  executable  mean- 
ing or  not,  and  (4)  Where  there  is 
a  question  as  to  which  of  two  or 
more  executable  meanings  is  the 
proper  one.  Any  one  or  all  of  these 
questions  may  arise  in  the  determina- 
tion of  the  meaning  of  any  docu- 
ment; indeed,  the  first  and  the  third 
must  always  be  settled  in  the  affirm- 
ative before  the  document  can  be 
given  any  force.  They  may  be  an- 
swered unconsciously;  but  they 
must,  nevertheless,  be  ansvvered.  In 
any  one  of  these  cases  extrinsic  evi- 
dence may  be  admitted  for  the  pur- 
pose of  dispelling  the  ambiguity  in 
the  document.  *  *  *  Jt  would 
seem  that  if  anything  could  be  called 


98l  PAROL   EVIDENCE.  §    1658 

§  1658.  Another  statement  as  to  patent  and  latent  am- 
biguity.— The  rules  upon  this  subject  are  thus  summed  up  by 
a  writer  who  uses  the  terms  "patent  ambiguity"  and  "latent  am- 
biguity", but  at  the  same  time  shows  that  they  are  of  little  value  as 
generally  understood,  and  that,  with  one  exception,  the  governing 
rules  are  the  same:  "To  sum  up,  then,  extrinsic  evidence  may  be 
given  to  translate,  or  decipher,  or  to  show  the  facts  relating  to  the 
person  claiming  or  the  thing  claimed,  under  the  will.  Next,  where 
there  is  any  ambiguity,  that  is,  any  double  meaning,  it  is  either 
patent  or  latent.  If  patent,  the  underlying  facts  may  be  shown 
in  order  to  put  the  judge,  so  to  speak,  into  the  atmosphere  sur- 
rounding the  testator.  If,  in  the  light  of  these  facts  the  term 
used  is  sensible,  it  must  be  applied  without  any  direct  evidence  of 
intent;  if  insensible,  the  provision  must  fail.  If  latent,  then  in 
all  the  cases  the  underlying  facts  may  here  also  be  shown.  If 
in  their  light  the  meaning  is  sufficiently  clear  to  satisfy  the  mind 
of  the  judge,  it  must  be  applied;  if  still  insensible,  the  provision 
fails.  Thus  far  the  rules  concerning  latent  ambiguities  are  alike. 
In  the  one  particular  class  of  latent  ambiguities  known  as  equivo- 
cations, already  described,  further  extrinsic  evidence  of  intent  is 
admitted.    Thus,  it  appears  that  extrinsic  evidence  of  the  facts  is 

a  patent  ambiguity,  it  would  be  the  And  the  reason  for  this  hmitation 
contents  of  a  document  which  ap-  appears  clearly;  to  go  farther  is  not 
parently  had  no  logical  meaning  upon  to  derive  a  meaning  from  the  docu- 
its  face,  to  a  person  of  ordinary  in-  ment,  but  to  give  a  meaning  to  it.  To 
telligence.  *  *  *  But  it  has  been  restate  the  conclusion,  it  is  that  when 
shown  above  that  in  cases  answering  the  document  shows  on  its  face  that 
exactly  to  this  definition  extrinsic  in  the  light  of  all  possible  facts  it 
evidence  has  been  properly  admitted,  cannot  possibly  have  one  clear,  log- 
It  seems,  therefore,  that  the  rule  as  ical  meaning,  then,  and  then  only, 
ordinarily  stated  does  not  contain  a  may  it  be  said  to  be  'patently  ambig- 
valid  and  valuable  distinction,  when  uous,'  and  the  rule  of  exclusion  be 
it  makes  patency  and  latency  the  test  applied.  It  must  be  possible  to  say 
of  whether  extrinsic  evidence  shall  of  the  author  of  the  document,  'Quod 
be  admitted  or  not.  *  *  *  To  say  voluit  non  dixit-'  Then  the  court  will 
that  the  extrinsic  evidence  cannot  be  not  allow  other  facts  to  come  in  to 
admitted  because  the  ambiguity  ap-  aid  them  in  expressing  a  wish  for 
pears  on  the  face  of  the  instrument  him.  *  *  *  and  it  is  this  same  pos- 
is  going  too  far.  It  is  because  the  sibility  which  makes  it  questionable 
court  can  take  the  document  and  say  whether  any  expressions  of  the  au- 
of  it  that  no  matter  how  read,  or  thor's  intent,  dehors  the  document 
with  the  aid  of  whatever  evidence,  and  not  part  of  the  res  gestae,  should 
one  clear  logical  meaning  could  not  ever  be  admitted  in  evidence  to  ex- 
be  derived  from  it.  With  this  limita-  plain  the  document."  41  Am.  Law 
tion  alone,  it  is  submitted,  the  ex-  Reg.  (N.  S.)  304  et  seq. 
trinsic  evidence  should  be  admitted. 


§    1659"  CONTRACTS.  982 

admitted  in  all  cases  of  both  latent  and  patent  ambiguities,  while 
extrinsic  direct  evidence  of  intent  is  admissible  in  only  one  class 
of  latent  ambiguities.  And  this  is  all  there  is  in  the  rule  concern- 
ing latent  and  patent  ambiguities."*^*  So,  the  older  text-writers 
who  use  the  terms  and  insist  on  the  distinction  are  careful  to 
observe  that  words  cannot  be  said  to  be  ambiguous  merely  be- 
cause they  are  inaccurate  or  unintelligible  to  a  man  who  is  unin- 
formed, and  that  no  judge  should  pronounce  an  instrument  am- 
biguous or  too  uncertain  to  be  effective  until  he  has  brought  to  his 
aid  all  the  light  afforded  by  collateral  facts  and  circumstances. 
Some  of  the  writers  and  courts,  by  carefully  limiting  the  term 
"patent  ambiguity",  and  treating  every  so-called  ambiguity  that  is 
really  capable  of  explanation  and  thus  being  rendered  a  "sufficient 
expression"  of  intent  as  a  latent,  rather  than  a  patent,  ambiguity, 
have  brought  about  right  results;  and  others  have  introduced  a 
third  class  of  ambiguities,  which  they  call  intermediate  or  mixed 
ambiguities,  and  admit  parol  evidence  to  explain.®^  But  ambigu- 
ities treated  as  belonging  to  this  class  seem  to  be  such  as  fall 
fairly  within  the  ordinary  definition  of  patent  ambiguities,  and 
it  is  unnecessary  and  confusing  either  to  create  another  class  or  to 
call  them  latent  ambiguities.  Some  courts,  on  the  other  hand, 
perceiving  that  they  fall  within  the  definition  of  patent  ambigui- 
ties, have  committed  error  in  applying  to  them  the  supposed  rule 
that  parol  evidence  is  never  admissible  to  explain  a  patent  am- 
biguity, when,  in  truth,  there  is  no  such  general  rule.  It  seems 
to  us  that  the  simplest  solution  of  the  difficulty  is  to  discard 
these  uncertain  and  confusing  terms  altogether,  or,  at  all  events, 
to  recognize  the  fact  that  they  supply  no  certain  test  and  to  state 
the  rule  in  other  terms,  substantially  as  suggested  by  the  writers 
from  whom  we  have  quoted. 

§  1659.    Identification  of  subject-matter. — It  is  laid  down 
in  Stephen's  Digest  of  Evidence^^  that  "in  order  to  ascertain  the 

•*  Chaplin's   Principles  of  the  Law  Peisch  v.  Dickson,  1  Mason   (U.  S.) 

of  Wills,  as  quoted  in  Browne's  Parol  9,   Fed.   Cas.   No.   10911;   Ganson   v. 

Ev.  438.  Madigan,  15  Wis.   144,  82  Am.  Dec. 

••Moody  V.  Alabama  G.  S.  R.  Co.,  659. 
124  Ala.   195,  26  So.  952;   Chambers        "Stephen's    Dig.    of    Ev.,    art.   91. 

V.  Ringstaff,  69  Ala.   140;   Gentile  v.  See   also,    Castle   v.    Fox,   L.    R.    11 

Crossan,  7  N.  Mex.  589,  38  Pac.  247;  Eq.  542;  Doe  v.  Burt,  1  T.  R.  701; 


983  PAROL   EVIDENCE.  §    1 659 

relation  of  the  words  of  a  document  to  facts,  every  fact  may  be 
proved  to  which  it  refers,  or  may  probably  have  been  intended  to 
refer,  or  which  identifies  any  person  or  thin^  mentioned  in  it." 
Where  a  description  is  ambiguous,  parol  evidence  is  frequently 
admissible  to  show  the  extent  and  character  of  the  grantor's 
ownership  or  possession,^^  and  the  identity  or  location  of 
monuments  referred  to  in  the  written  instrument,**  but  not 
to  vary  or  contradict  those  clearly  stated  therein."'  So, 
where  the  property  or  family  of  a  grantor  or  testator  is 
referred  to  as  the  subject-matter  of  his  deed  or  will,  proper 
parol  evidence  is  admissible  to  identify  it.  Thus,  where 
a  testator  devises  or  bequeaths  to  one  all  his  property, 
or  all  his  property  in  a  certain  town,  or  all  his  household 
furniture,  or  the  house  he  lives  in,  or  his  farmhouse,  or  the  like, 
without  more  particularly  describing  it,  parol  evidence  is  neces- 
sary and  admissible  in  order  to  identify  the  property  and  apply 
the  language  of  the  instrument  to  the  subject-matter.^**     In  short. 

Doe  V.  Martin.  4  Barn.  &  Adol.  771;  S.  W.  796;  Harris  v.  Oakley,  130  X. 
Colpoys  V.  Colpoys,  Jac.  451;  Harri-  Y.  18,  28  N.  E.  530;  Wills  v.  Lev- 
son  V.  Barton,  30  L.  J.  Ch.  213;  In-  erich.  20  Ore.  168.  25  Pac.  398;  Ech- 
dianapolis  &c.  R.  Co.  v.  Reynolds,  erd  v.  Johnson,  126  N.  Car.  409,  35 
116  Ind.  356,  and  authorities  cited  on  S.  E.  1036;  McAfferty  v.  Connover's 
pages  358-360;  Madden  v.  Tucker,  Lessee,  7  Ohio  St.  99,  70  Am.  Dec 
46  Maine  367;  Warner  v.  Milten-  57;  Rapley  v.  Klugh,  40  S.  Car.  134. 
berger's  Lessee,  21  Md.  264,  83  Am.  18  S.  E.  680;  Minor  v.  Kirkland 
Dec.  573;  Aldrich  v.  Aldrich,  135  (Tex.),  20  S.  W.  932;  Wead  v.  St. 
Mass.  153;  Benham  v.  Hendrickson,  Johnsbury  &c.  R.  Co.,  64  Vt.  52.  24 
»32  N  J.  Eq.  441 ;  Hinneman  v,  Atl.  361 ;  Pickett  v-  Nelson,  79  Wis. 
Rosenback,  39  N.  Y.  98;  Brawley  v.  9,  47  X.  W.  936. 
United  States.  96  U.  S.  168,  24  L.  ed.  ^Guilmartin  v.  Wood,  76  Ala.  204; 
622,  13  Ct.  CI.  521;  Scraggs  v.  Hill,  Pride  v.  Lunt,  19  Maine  115;  Hall 
37  W.  Va   706,  17  S.  E.  185.  v.   Eaton.    139   Mass.   217,   29   X.    E. 

*"  Hereford    v.    Hereford,    134   Ala.  660;    Beardslev    v.    Crane,    52    Mmn. 

321,  32  So.  651;   Chambers  v.  Ring-  537,  54  X.  W.  740;  Dean  v.  Erskine, 

staff,  69  Ala.  140:  In  re  Frahm's  Es-  18  N.  H.  81;  Drew  v.  Swift.  46  X. 

tate.    120   Iowa    85,   94    X.    W.    444;  Y.  204;  Thayer  v.  Finton.  108  X.  Y. 

Flynn  v.   Holman,  119  Iowa  731.  94  394.  15  X.  E.  615;  Segar  v.  Babcock, 

N   W   447;  Baker  v.  Hall.  158  Mass.  18  R.  I.  203,  26  Atl.  257;   Parker  v. 

361      33     N      E      612;     Farwell     v.  Kane,  22  How.    (U.  S.)    1,  16  L.  ed. 

Mather,    10    Allen    (Mass.)    322,    87  286-     See  also.   Miller  v.  Travers.  8 

Am.  Dec.  641;   Hurley  v.  Brown,  98  Bing.   244;    Kurtz   v.   Hibner,   55    111. 

Mass.  545.  96  Am.  Dec.  671;  Bell  v.  514,  8  Am.   Rep.  665  and  note,  also 

Woodward     46    N.    H.    315;    Tinsley  discussion  pro  and  con  in  Am.  Law 

V.  Dowell  (Tex.),  24  S.  W.  928.  Reg.   (X.  S.)   94.  353. 

«« Putnam   v.    Bond.    100    Mass.    58.        '"Angel  v.    Simpson,  85   Ala.  53,  3 

1  Am    Rep    82-  Flagg  v.  Mason.  141  So.  758;  Towle  r    Carmelo  Land  &c. 

Mass.  64.  6  N.'e.  702;  Waterman  v.  Co..    99    Cal.     2><^7.     2,2,    Pac.     1126: 

Johnson,     13     Pick.      (Mass.)      261;  Hodges  v.   Kowing,  58  Conn.   12.    18 

Campbell  v.  Wood,   116  Mo.   196,  22  Atl.  979,  7  L.  R.  A.  87;  Maguire  v. 


i659 


CONTRACTS. 


984 


In  order  to  interpret  the  instrument  in  such  cases,  the  courts 
endeavor  to  put  themselves  in  the  position  of  the  parties,  and 
proper  oral  evidence  is  admissible  for  the  purpose  of  so  doing 
and  thus  applying  the  tenns  of  the  instrument  to  the  subject- 
matter."  Of  course,  an  instrument  that  is  absolutely  void  for 
uncertainty  cannot  be  made  good  by  parol  evidence,^^  but  in  the 
class  of  cases  referred  to  in  this  section,  the  courts  generally 
proceed  upon  the  ground  that  "that  is  certain  which  can  be  ren- 
dered certain,""  and  where  part  of  a  description  is  false  or  incor- 
rect, especially  where  the  instrument  is  a  will,  the  false  or  incor- 
rect part  may  be  rejected  if  enough  is  left  to  identify  the  subject- 


Baker,  57  Ga.  109;  Colerick  v. 
Hooper,  3  Ind.  316,  56  Am.  Dec.  505 ; 
Chambers  v.  Watson,  60  Iowa  339,  14 
N.  W.  336.  46  Am.  Rep.  70;  Mollis  v. 
Burgess,  2>1  Kans.  487,  15  Pac.  536; 
Moayon  v.  Moayon,  114  Ky.  855,  24 
Ky.  L.  1641,  72  S.  W.  Z2>,  60  L.  R. 
A.  415,  102  Am.  St.  303;  Benham  v. 
Hendrickson,  32  N.  J.  Eq.  441 ;  Willis 
V.  Fernald,  Zl  N.  J.  L.  206;  Cleverly 
V.  Cleverly,  124  Mass-  314;  Mead  v. 
Parker,  115  Mass.  413,  15  Am.  Rep. 
110;  Goodenow  v.  Curtis,  18  Mich. 
298;  Black  v.  Hill,  32  Ohio  St.  313; 
Raymond  v.  Coffev.  5  Ore.  132;  Doc- 
tor V.  Hellberg,  65  Wis.  415,  27  N. 
W.  176.  See  also.  Doe  v.  Holtom, 
4  Adol.  &  El.  76;  Doe  v.  Langton,  2 
Barn.  &  Adol.  680;  Vejar  v.  Mound 
City  &c.  Assn.,  97  Cal.  659,  32  Pac. 
713;  Peart  v.  Brice,  152  Pa.  St.  277, 
25  Atl.  537. 

"Guv  V.  Sharp.  1  Mylne  &  K. 
589;  VValsh  v.  Hill,  38  Cal.  481; 
Clark  v-  Crawfordsville  Coffin  Co., 
125  Ind.  277,  25  N.  E.  288 ;  Abbott  v. 
Abbott,  51  Maine  575;  Farwell  v. 
Mather,  10  Allen  (Mass.)  322,  87 
Am.  Dec.  641;  Baker  v.  Hall,  158 
Mass.  361,  ZZ  N.  E.  612;  Gregory  v. 
Lake  Linden,  130  Mich.  368,  90  N. 
W.  29;  Schneider  v.  Patterson,  38 
Nebr.  680.  57  N.  W.  398;  Richard- 
son V.  Palmer,  38  N.  H.  212;  Monnett 
V.  Monnett,  46  Ohio  St.  30,  17  N.  E. 
659;  In  re  Gilmor's  Estate,  154  Pa. 
St.  523,  26  Atl.  614,  35  Am,  St.  855  ? 
Minor  v.  Povi^ers  CTex.),  24  S.  W. 
710,  revd.  87  Tex.  83.  26  S.  W.  1071 ; 
Merriam  v.  United  States,  107  U.  S. 


437,  27  L.  ed.  531,  2  Sup.  Ct.  536,  18 
Ct.  CI.  760;  Gilmer  v.  Stone,  120  U. 
S.  586,  7  Sup.  Ct.  689,  30  L.  ed.  734. 

"Pearce  v.  Watts,  L.  R.  20  Eq. 
492;  Peck  v.  Halsey,  2  P.  Wms.  387; 
Schattler  v.  Cassinelli,  56  Ark.  172, 
19  S.  W.  746;  Higgins  v.  Carlton,  28 
Md.  115.  92  Am.  Dec.  666;  Sewell  v. 
Slingluff,  57  Md.  537;  Crooks  v. 
Whitford,  47  Mich.  283,  11  N.  W. 
159;  Knight  v.  Alexander,  42  Ore- 
521,  71  Pac.  657;  Wofford  v.  Mc- 
Kinna,  23  Tex.  36.  76  Am.  Dec.  53 
and  note.  See  also,  as  to  specific 
performance,  Farthing  v.  Rochelle, 
131  N.  Car.  563,  43  S.  E.  1.  See 
also,  to  the  efifect  that  property  to 
which  the  description  cannot  be  made 
to  apply  cannot  be  included  by  parol 
evidence  of  an  intention  to  include 
it.  Becker  v.  Dalby  (Iowa),  86  N. 
W.  314;  Madden  v.  Tucker,  46  Maine 
367;  Child  v.  Wells,  13  Pick.  (Mass.) 
121 ;  Drexel  v.  Murphy,  59  Nebr.  210, 
80  N.  W.  813;  VosburgK  v.  Teator, 
32  N.  Y.  561;  Norwood  v.  Byrd,  1 
Rich.  L.  (S.  Car.)  135,  42  Am.  Dec. 
406;  Goodsell  v.  Rutland  &c.  R.  Co., 
75  Vt.  375,  56  Atl.  7. 

''  Baldwin  v.  Boyce,  152  Ind.  46,  51 
N.  E.  334.  See  Turner  v.  Gonzales,  31 
Ind.  Ter.  649,  64  S.  W.  565;  Flvnn 
v.  Holman,  119  Iowa  731,  94  N.  W. 
447;  Graham  v.  Botner,  18  Ky.  L. 
637,  Zl  S.  W.  583 ;  Hurley  v.  Brown, 
98  Mass.  545,  96  Am.  Dec.  671 ;  Ab- 
bott v.  Coates,  62  Nebr.  247.  86  N. 
W.  1058;  Jenkins  v.  Sharpf.  27  Wis. 
472.  "Id  certum  est  quod  certum. 
reddi  potest." 


985  PAROL    EVIDENCE.  §    1660 

matter  of  the  description,  in  accordance  with  the  maxim,  falsa 
demonstratio  non  nocet.^* 

§  1660.  Identification  of  subject-matter — Illustrative  cases. 

— Statements  of  the  doctrine  of  the  last  preceding  section  and  il- 
lustrations of  its  application  are  found  in  many  recent  cases. 
Thus,  it  is  stated  in  broad  terms  that  "evidence  aliunde  is  admissi- 
ble in  all  cases  where  there  is  doubt  as  to  the  true  location  of  a 
survey,  or  a  question  as  to  the  application  of  a  grant  to  its  proper 
subject-matter."^"  Where  a  deed  describes  the  property  con- 
veyed as  situated  in  a  certain  town  and  known  on  the  plat  of  said 
town  as  "Lot  No.  30,  Block  7,"  the  identity  of  the  plat  may  be 
shown  by  parol  evidence."  Parol  evidence  has  been  held  admis- 
sible to  identify  a  spring  branch  mentioned  in  a  deed,'''  and  in  an- 
other case  it  was  held  that  ambiguity  in  a  deed  describing  the  land 
as  beginning  at  the  "north"  corner  of  a  certain  lot,  where  such 
lot  had  two  north  corners,  might  be  removed  by  parol  evidence 
that,  taking  the  northeast  corner  as  the  beginning  point,  land 
owned  by  the  grantor  would  be  included,  without  altering  de- 
scriptions, whereas,  by  taking  the  northwest  corner  land  not 
owned  by  him  and  not  in  his  possession  would  be  included."  So, 
where  a  contract  provided  for  the  sale  of  all  lumber  of  certain 
grades  "(estimated  to  be  about  four  million  feet,  more  or  less) 

'♦Lindgren    v.    Lindgren,    9    Beav.  v.    White,    117   U.    S.  210,  29  L.   ed. 

358;   Moslev  v.   Massev,  8  East   149;  860,  6  Sup.  Ct.  617;  Allen's  Lessee  v. 

Goodtitle  v.' Southern,  1  M.  &  S.  299;  Lyons,  2  Wash.  C  C.  475.     See  also, 

Decker    v.    Decker,    121    111.    341,    12  note  in  31  Am.  St.  29. 

N.   E.   750;    Binge!   v.   Volz.   142   111.  "  Peerv  v.  Elliott.  101   Va.  709.  44 

214,  31  X.  E.  13.  16  L.  R.  A.  321,  34  S.   E-  919,  quoting  from   Reusens  v. 

Am.    St.   64;   Whitcomb   v.   Rodman,  Lawson,   91   Va.   226,  235,   21    S.   E. 

156  111.   116.  40   X.   E.  553,  28  L.   R.  347. 

A    149.   47    Am     St.    181  :    Pocock   v.  '"  Snooks  v.   Wingfield.  52  W.  Va. 

Redinger,  108  Ind.  573,  9  N.  E.  473.  441,  44  S.  E.  277.    See  also.  Mann  v. 

58  Am.  Rep.  71;  Groves  v.  Gulp.  132  Bergmann.  203  111.  406.  67  X.  E.  814; 

Ind    186    31    X.    E.   569;   Lanman   v.  Warner  v.  Marshall,  166  Ind.  88.  75 

Crooker.'  97    Ind.    163,   49  Am.    Rep.  X.  E-  582;  Baker  v.  Hall.  158  Mass. 

437,    and    authorities   cited;    Eckford  361,   33   N.    E.  612;    Xoonan   v.   Lee, 

V.   Eckford,  91    Iowa  54,   58   X.   W.  2  Black.   (U.  S.)   499,  17  L.  ed.  278. 

1093,    26    L.    R.    A.    370;    Riggs    v.  See    also,    Konnerup    v.    Milspaugh 

Mvers.     20     Mo.     239;     Winklev    v.  (Wash.).  126  Pac.  939. 

Kaime   32  X.  H    268;  Peters  v.  Por-  "  Xew  River  Mineral  Co.  v.  Pamt- 

ter.  60  How.  Pr.   (X.  Y.)   422;   Mer-  er.  100  Va.  507.  42  S.  E.  300. 

rick  V.   Merrick.  37  Ohio  St.   126.  41  "Hereford   v.   Hereford,    131   Ala. 

Am.    Rep.   4^3;    Moreland   v.   Bradv.  573,  32  So.  620. 
8  Ore.  303    34  Am.  Rep.  581;  Patch 


i66i 


CONTRACTS. 


986 


obtained  from  about  six  million  feet  of  white  pine  saw  logs  now 
banked  and  being  banked  at  W,"  it  was  held  that  parol  evidence 
was  admissible  to  show  that  such  logs  were  banked  at  such  place 
and  the  amount  of  lumber  obtained  therefrom,  although  less  than 
the  amount  estimated/*  In  another  case  where  there  was  a  writ- 
ten contract  to  deliver  a  certain  number  of  "Cooley  Hay  Stack- 
ers," it  was  held  that  parol  evidence  was  admissible  to  identify 
the  kind  of  stackers  contracted  for,  and  thus  apply  the  contract  to 
its  subject-matter.*"  So,  in  many  other  cases,  parol  evidence 
has  been  held  admissible  for  this  purpose  in  mercantile  contracts,**^ 
and  it  is  also  admissible  in  a  proper  case  to  identify  the  property 
covered  by  a  chattel  mortgage,*=^  or  the  debt  secured  by  a  mort- 
gage.^' 

§  1661.  Meaning  of  words — Generally. — Parol  evidence  is 
generally  not  admissible  to  explain  or  contradict  words  and  ex- 
pressions in  a  written  instrument  that  have  a  common  and  well- 
known  meaning.^*    But  there  may  well  be  a  distinction  between 


"Rib  River  Lumber  Co.  v.  Ogilvie, 
113  Wis.  482,  89  N.  W.  483,  citing 
Ganson  v.  IMadigan,  15  Wis.  144,  82 
Am.  Dec.  659;  The  Janesville  Cotton 
Mills  V.  Ford,  82  Wis.  416,  52  N.  W. 
764,  17  L.  R.  A.  564,  and  other  Wis- 
consin cases  in  support  of  the  gen- 
eral rule.  See  also,  Wolfif  v.  Wells, 
115  Fed.  32,  52  C.  C  A.  626;  Barry 
V.  Bennett,  7  Mete.  (Mass.)  354; 
Gregory  v.  Lake  Linden,  130  Mich. 
368,  90  N.  W.  29. 

**  Clark  V.  Crawfordsville  Coffin 
Co.,   125  Ind.  277.  25   N.   E.  288. 

«^Heffield  v.  Meadows,  L.  R.  4  C 
P.  595;  Roots  v.  Snelling,  48  L.  T. 
216;  Doe  v.  Burt,  1  T.  R.  701;  Bain- 
bridge  V.  Wade,  20  L.  J.  Q.  B.  7; 
Sutton  V.  Bowker,  5  Gray  (Mass.) 
416;  Streeter  v.  Seigman  (N.  J.),  48 
Atl.  907;  Inglebright  v.  Hammond, 
19  Ohio  2,Z7,  53  Am.  Dec.  430;  Dorris 
V.  Kling  (Tenn.),  54  S.  W.  683; 
Lowry  V.  Adams,  22  Vt.  160;  Noyes 
V.  Canfield,  27  Vt.  79.  See  also, 
Broaddus  v.  Smith,  121  Ala.  335,  26 
So.  34,  77  Am.  St.  61  (to  identify 
property  levied  on  by  execution) ; 
Mtndi  Ins.  Co.  v.  Strout,  16  Ind.  App. 
160,  44  N.  E.  934;  Baldwin  v.  Boyce, 
152  Ind.  46,  51  N.  E.  334;  Boak  Fish 


Co.  V.  Manchester  Fire  Ins.  Co.,  84 
Minn.  419,  87  N.  W.  932  (to  show 
of  what  a  warehouse  covered  by  in- 
surance policy  consisted). 

^'Burditt  V.  Hunt,  25  Maine  419, 
43  Am.  Dec.  289 ;  Galen  v.  Brown,  22 
N.  Y.  2)7.  See  also,  Reinstein  v.  Rob- 
erts, 34  Ore.  87,  55  Pac.  90,  75  Am. 
St.  564;  Barker  v.  Wheelip,  5  Humph. 
(Tenn.)  329,  42  Am.  Dec.  432;  Weber 
v.  Illing,  66  Wis.  79,  27  N.  W.  834. 

^  Posey  V.  Decatur  Bank,  12  Ala. 
802;  Kiser  v.  Carrollton  Dry  Goods 
Co.,  96  Ga.  760,  22  S.  E.  303 ;  Stowe 
V.  Merrill,  77  Maine  550,  1  Atl.  684; 
Payson  v.  Lamson,  134  Mass.  593,  45 
Am.  Rep.  348;  Cutler  v.  Steele,  93 
Mich.  204,  53  N.  W.  521;  Swedish 
&c.  Bank  v.  Germania  Bank,  76  Minn. 
409,  79  N.  W.  399;  Fitzpatrick  v. 
School  Comrs.,  7  Humph.  (Tenn.) 
224,  46  Am.  Dec  76;  Thompson  v. 
Cobb,  95  Tex.  140,  65  S.  W.  1090,  93 
Am.  St.  820;  Blewett  v.  Bash,  22 
Wash.  536,  61  Pac.  770.  See  also, 
Martindale  v.  Parsons,  98  Ind.  174. 

**Nichol  v.  Godts,  10  Exch.  191; 
Bank  of  New  Zealand  v.  Simpson,  L. 
R.  App.  Cas.  (1900)  182;  Edward 
Lloyd  Limited  v.  Sturgeon  Falls  &c. 
Co.  Limited,  85  L.  T.  162;  Wikle  v. 


987 


PAROL    EVIDENCE. 


1661 


explaining  and  contradicting  a  writing;  and  where  the  language 
of  the  writing  is  such  that  the  court  cannot  otherwise  understand 
it,  especially  where  unusual  letters,  figures,  characters,  abbrevia- 
tions or  terms  are  used,  such  evidence  is  usually  admissible  to 
explain  it.**°  There  is  some  conflict  ajnong  the  authorities  in  the 
application  of  the  rule,  but  there  are  many  cases  in  which  it  has 
been  applied  and  parol  evidence  held  admissible,  even  where  the 
words  were  intelligible  in  themselves,  or  would  have  been  intelli- 
gible in  certain  connections,  but  were  unintelligible  or  am- 
biguous, without  the  aid  of  parol  evidence,  in  the  particular  in- 
strument or  without  knowing  the  connection  in  which  they  were 
used.  Thus,  parol  evidence  has  been  held  admissible  to  show 
the  meaning  of  the  word  "artesian"  in  the  written  contract  for 
the  digging  of  an  "artesian  well,"  where  it  appeared  that  the 
water  in  the  well  bored  by  the  plaintiffs,  who  sued  for  the  contract 
price,  did  not  overflow  under  natural  pressure  and  lacked  about 
sixteen  feet  of  coming  to  the  top.*"^  So,  parol  evidence  has  been 
held  admissible  in  certain  cases  to  explain  such  terms  as  "assist," 
when  used  in  regard  to  making  up  trains,"  "bale,"  in  a  certain 


Johnson  Laboratories,  132  Ala.  268, 
31  So.  715;  Bullock  v.  Consumers' 
Lumber  Co.  (Cal).  31  Pac.  367; 
Hutchinson  v.  Ulrich,  145  111.  336, 
34  N.  E.  556,  21  L.  R.  A.  391; 
Lowry  v.  Megee,  52  Ind.  107;  Spears 
V.  Ward.  48  Ind.  541;  Lantz  v.  Ry- 
man,  102  Iowa  348.  71  X.  W.  212; 
Violette  v.  Rice,  173  Mass.  82,  53  N. 
E.  144;  Doty  v.  Thomson,  39  Hun 
(N.  Y.)  243,  revd.  116  N.  Y.  515, 
22  N.  E.  1089;  Abraham  v.  Oregon 
&c.  R.  Co..  n  Ore.  495,  60  Pac.  899, 
64  L.  R.  A.  391.  82  Am.  St.  779:  The 
Delaware.  14  Wall.  (U.  S.)  579.  20 
L.  ed.  779.  So  where  the  meaning 
is  clear  from  the  entire  instrument. 
Adams  v.  Turner,  IZ  Conn.  38,  46 
Atl.  247,  and  authorities  cited. 

«» Roots  V.  Snelling,  48  L.  T.  (N. 
S.)  216;  Gorrissen  v.  Perrin,  2  C.  B. 
(N.  S.)  681  ;  Attornev-Gen.  v.  Clap- 
ham,  4  DeG.  M.  &  G.  591.  24  L.  J. 
Ch.  177;  Birch  v.  Depevster.  1  Stark. 
167;  Spicer  v.  Cooper,  1  Q.  B.  424. 
41  E.  C.  L.  608;  Drake  v.  Goree.  22 
Ala.  409;  Western  Assurance  Co.  v. 
Altheimer  Bros.,  58  Ark.  565,  25   S. 


W.  1067;  Hinote  v.  Brigman,  44  Fla- 
589,  ZZ  So.  303;  Savannah  F.  &  W. 
R.  Co.  V.  Collins,  n  Ga.  376,  3  S.  E. 
416,  4  Am.  St.  87;  Cole  v.  Leach. 
47  Ind.  App.  341.  344,  94  X.  E.  577, 
578,  citing  1  Elliott  Ev..  §§  605, 
607,  608;  Cameron  v.  Fellows.  109 
Iowa  534,  80  X.  W.  567;  Mau- 
rin  V.  Lvon.  69  Minn.  257.  12 
N.  W.  12,  65  Am.  St.  568;  Heirn  v. 
McCaughan,  32  Miss.  17.  66  Am.  Dec. 
588;  Thompson  v.  Thorne.  83  Mo. 
App.  241 ;  State  v.  Collins,  68  X.  H. 
299,  44  Atl.  495;  Behrman  v.  Linde. 
47  Hun  (X.  Y.)  530.  15  X.  Y.  St. 
129;  Long  v.  Davidson.  101  X.  Car- 
170.  7  S.  E.  758;  Bradstreet  Co.  v. 
Gill,  n  Tex.  115.  9  S.  W.  753.  2  L. 
R.  A.  405,  13  Am.  St.  768;  Clav  v. 
Field.  138  U.  S.  464.  34  L.  ed.  1044. 
11   Sup.  Ct.  419. 

^  Hattiesburg  Plumbing  Co.  v.  Car- 
michael,  80  Miss.  66.  31   So.  536. 

"  Memphis  &c.  R.  Co.  v.  Graham, 
94  Ala.  543,  10  So.  283.  So.  as  to 
"loading  off-shore."  and  "depart  with 
convoy-"  Lethulier's  Case,  2  Salk. 
443;   Johnson   v.   Xorthwestern    Xat. 


§  1 662 


CONTRACTS. 


988 


trade  or  business,^'  "British  weight,"'^  "Canada  money,""" 
"currency"  or  "current  funds,"^^  "cargo,"^^  "dollars,""^  "good 
custom  cowhide,""  "hard  pan,"**^  "months  and  weeks,"^°  "square 
inch  of  water,""  "thousand,"''  "winter  strained  lamp  oil,"'°  and 
the  Hke.^ 

§  1662.  Translations  and  illegible  writings. — An  instru- 
ment written  in  a  foreign  language  may  be  read  and  translated  by 
a  witness,  in  a  proper  case,  in  order  to  enable  the  court  to  under- 
stand it,^  and  if  a  writing  is  obscure  and  difficult  to  read,  parol 
evidence  may  be  resorted  to,  in  order  to  decipher  it.^  So,  if  it 
ihas  become  illegible  by  lapse  of  time  or  is  partly  obliterated  so  as 
to  become  illegible,  parol  evidence  may  likewise  be  resorted  to, 


Ins.  Co.,  39  Wis.  87.  See  also,  Dixon 
Iv.  Central  &c.  R.  Co.,  110  Ga.  173,  35 
S.  E.  369. 

'"Gorrissen  v.  Perrin,  2  C.  B.  (N. 
S.)  681.  So,  as  to  "cotton  in  bales," 
Taylor  v.  Briggs,  2  Car.  &  P.  524. 
So,  as  to  "barrels,"  Miller  v.  Stevens, 
100  Mass.  518,  97  Am.  Dec.  123,  1 
Am.  Rep.  139. 

*Goddard  v.  Bulow,  1  Nott.  & 
McC.   (S.  Car.)  45,  9  Am.  Dec.  663. 

'^Thompson  v.  Sloan,  23  Wend. 
(N.  Y.)  71,  35  Am.  Dec.  546.  So  as 
to  "Texas  money."  Roberts  v.  Short, 
1  Tex.  2>7Z. 

"'Huse  V.  Hamblin,  29  Iowa  501, 
4  Am.  Rep.  244;  Pilmer  v.  Branch 
of  State  Bank,  16  Iowa  321;  31  L. 
R.  A.  (N.  S.)  240  note.  But  see 
contra,  Marine  Bank  v.  Birney,  28 
111.  90,  92;  Butler  v.  Paine,  8  Minn. 
324. 

'^Allegre  v.  Maryland  Ins.  Co.,  2 
Gill.  &  J.  (Md.)  136,  20  Am.  Dec. 
424. 

''  Hightower  v.  Maull,  50  Ala.  495 ; 
Austin  V.  Kinsman,  13  Rich.  Eq.  (S. 
Car.)  259;  Donley  v.  Tindall,  32  Tex. 
43,  5  Am.  Rep.  234;  Thorington  v. 
Smith,  8  Wall.  (U.  S.)  1,  19  L.  ed. 
361 ;  Confederate  note  cases,  19 
Wall.  (U.  S.)  548,  22  L.  ed.  196;  31 
L.  R.  A.   (N.  S.)  241  note. 

•*Wait  V.  Fairbanks,  Brayt.  (Vt.) 
77.  "Horse  chains,"  Swett  v.  Shum- 
way,  102  Mass.  365,  3  Am.  Rep.  471. 

■*  Blair  v.   Corby,  Z7   Mo.   313. 

*"  Jolly  V.  Young,  1  Esp.  186;  Grant 
V.  Maddox,  15  M.  &  W.  736. 


"^Janesville  Cotton  Mills  v.  Ford, 
82  Wis.  416,  52  N.  W.  764,  17  L.  R. 
A.  564.  So  as  to  "square  yard"  or 
"foot."  Walls  V.  Bailey,  49  N.  Y.  464, 
10  Am.  Rep.  407.  See  also.  Ford  v. 
Tirrell,  9  Gray  (Mass.)  401,  69  Am. 
Dec.  297. 

^' Smith  V.  Wilson,  3  B.  &  Adol. 
728 

"^Hart  V.  Hammett,   18  Vt.   127. 

*  See  Whitney  v.  Boardman,  118 
Mass.  242;  Locke  v.  Rowell,  47  N. 
H.  46;  Coit  v.  Commercial  Ins.  Co., 
7  Johns.  (N.  Y.)  385,  5  Am.  Dec. 
282;  Astor  v.  Union  Ins.  Co.,  7  Cow. 
(N.  Y.)  202;  Ganson  v.  Madigan,  15 
Wis.  144,  82  Am.  Dec.  659.  See  notes 
6  L.  R.  A.  ZZ,  6  Am.  Rep.  678. 

"  Erusha  v.  Tomash,  98  Iowa  510. 
67  N.  W.  390 ;  Taylor  v.  Sotolingo,  6 
La.  Ann.  154;  Badart  v.  Foulon,  80 
Md.  579,  31  Atl.  513.  In  Republic 
of  Columbia  v.  Cauca  Co.,  106  Fed. 
337,  349  (affirmed  in  113  Fed.  1020, 
51  C.  C.  A.  604),  expert  testimony  was 
held  admissible  to  show  the  true 
meaning  of  the  words  in  a  submis- 
sion to  arbitration  written  in  a  for- 
eign language. 

^  Masters  v.  Masters,  1  P.  Wms. 
421 ;  Remon  v.  Hayward,  2  Ad.  &  El. 
666,  29  E.  C.  L.  309;  Jefferson  v. 
Savory,  2  Greene  (Iowa)  238;  Ha- 
ven V.  Brown,  7  Maine  421,  22  Am. 
Dec.  208;  Sheldon  v.  Benham,  4  Hill 
(N.  Y.)  129,  40  Am.  Dec.  271;  Arm- 
strong V.  Burrows,  6  Watts  (Pa.) 
266. 


989  PAROL    EVIDENCE  §    1G63 

SO  far  as  it  may  be  necessary,  to  decipher  and  understand  it.* 
And  the  same  is  true,  in  general,  where,  from  any  cause,  the  writ- 
ing is  unintelligible,''  unless  it  is  so  defective  that  it  is  impossible 
to  arrive  at  the  intention  of  the  parties  or  to  ascertain  the  legal 
effect  of  the  instrument. 

§  1663.  Usage  and  custom. — A  usage  or  custom  may  often 
be  shown  and  a  brief  discussion  of  the  subject  is  here  given.  It 
will  be  fully  treated  in  a  separate  chapter.  A  usage  or  custom  may 
be  proved  by  parol  evidence  for  the  purpose  of  explaining  the 
meaning  of  terms  used  in  a  written  contract  that  would  other- 
wise be  ambiguous."  Indeed,  under  the  modem  authorities,  it 
seems  that  such  evidence  is  admissible  in  a  proper  case  to  explain 
rather  than  to  contradict,  even  though  there  is  no  ambiguity 
upon  the  face  of  the  instrument.''  Such  evidence  is  held  admis- 
sible to  aid  the  court  in  interpreting  the  contract,*^  and,  in  a  proper 
case,  it  may  be  admitted  even  to  annex  incidents  or  stipulations 
as  to  the  time  and  manner  of  performance  not  expressed  in  the 
writing,"  or  to  give  words  used  therein  a  different  signification 

*  Goldsmith  v.  Picard,  27  Ala.  142;  728;    Mooney   v.    Howard    Ins.    Co., 

Walrath  V.  Whittekind.  26  Kans.  482 ;  138    Mass.    375,    52    Am.    Rep.    277; 

Fenderson    v.    Owen,    54    Alaine   111,  Soulier    v.    Kcllerman,    18    Mo.   509; 

92  Am.  Dec.  551 ;  Little  v.  Downing.  Barton    v.    McKelway,    22    N.    J.    L. 

Zl  N.  H.  355;  Arthur  v.  Roberts.  60  165;   Walls  v.   Bailey.  49  N.   Y.  464, 

Barb.  (X.  Y.)  580;  Fallis  v.  Griffith,  10  Am.   Rep.  407.     See  also.   Regma 

Wright    (Ohio)   303.  v.  Stoke-on-Trent.  5  Q.  B.  303;  Grant 

■^St.   Clair   County   Benev.    Soc.   v.  v.  Maddox,  15  M.  &  W.  736;  Hmton 

Fietsam,  6  111.  App.   151.  affd.  in  97  v.  Locke,  5   Hill    (X.  Y.)   437.     But 

111.  474;  Moulding  v.  Trussing,  70  111.  compare    Silberman   v.    Clark,   96   N. 

151-    F.    A.    Thomas    Mach.    Co.    v.  Y.   522;   Gibbon   v.   Young.  8  Taunt. 

Voelker,  23  R.  I.  441,  50  Atl.  838.  254;    Willmerling  v.    McGaughey,   30 

"Hinote   v    Brigman,   44   Fla.    589,  Iowa  205,  6   Am.   Rep.  673;   Randall 

ZZ  So.  303 ;  Van  Camp  Packing  Co.  v.  Smith,  63  Maine  105,  18  Am.  Rep. 

V    Hartman,   126  Ind.   177,  25    N.   E.  200;    Rogers    v.    Woodruff.    23    Ohio 

901;  Lvon  v.  Lenon,  106  Ind.  567,  7  St.  632,  13  Am.  Rep.  276:  Broadwell 

N.    E. '311;    Leiter    v.    Emmons.    20  v.  Butler,  6  McLean  (U.  S.)  296,  Fed. 

Ind.  App.  22.  50  N.  E.  40;  Williams  Cas.  No.  1910.  Xewb.  171. 
V.    Woods,    16    Md.    220;    Walls    v.        '  Everitt  v.   Indiana   Paper  Co..  2d 

Bailev,  49  N.   Y.   464.    10   Am.   Rep.  Ind.  App.  287,  57  X.  E.  281;  Cox  v. 

407,  and  authorities  cited  in  the  fol-  O'Riley,  4  Ind.  368,  58  Am.  Dec  633; 

lowing  notes;  Long  v.  Davidson,  101  Shaw  v.  Binkard.   10  Ind.  227. 
N.   Car.   170,   7  S.   E.   758.    See  also,        '  Hutton  v.  Warren,  1  M.  &  W.  46d. 

Cole    V.    Leach,    47    Ind.    App.    341,  474;     Wigglcsworth    v.     Dalhson.     1 

344,  94   N.   E    577,  578,   citing   1    El-  Doug.  201.  1  Smith  Lead.  Cas.    dlth 

liott  Ev    §  607  cd.)  545:  East  Tennessee,  V.  &  G.  R. 

'Brown  v    Bvrne.  3  El.  &  Bl.  703.  Co.  v.   Tohnston.  75  Ala.  5%.  51  Am. 

11  E    C.  L.  702;  Mvers  v.  Sari.  3  E.  Rep.  480;  Everingham  v.  Lord.  19  111. 

E.  306;  Smith  v.  Wilson,  3  B.  &  Ad.  App.  565;  Pittsburgh,  C.  &  St.  L.  R. 


1 663 


CONTRACTS, 


990 


from  that  commonly  aiiribiited  to  them.^"  But,  while  parol  evi- 
dence is  generally  competent  to  show  a  custom  or  usage  of  the 
business,  profession,  or  trade,  when  it  is  known  to  the  parties,  or 
so  general  and  well  settled  that  it  must  be  presumed  to  have  been 
known  to  them  and  they  must  be  deemed  to  have  contracted  with 
reference  thereto,^^  the  rule  is  otherwise  where  one  of  the  parties 
is  unfamiliar  with  the  usage,  and  it  is  not  of  such  a  general  or 
well-known  character  that  the  parties  will  be  presumed  to  have 
known  it  and  deemed  to  have  contracted  with  reference  to  it.^^ 


Co.  V.  Nash,  43  Ind.  423;  Mand  v. 
Trail,  92  Ind.  521,  47  Am.  Rep.  163 ; 
Hirchhorn  v.  Bradley,  117  Iowa  130, 
90  N.  W.  592;  Robinson  v.  United 
States,  13  \yall.  (U.  S.)  363,  20  L. 
ed.  653,  (evidence  admitted  of  usage 
to  deliver  grain  in  sacks)  ;  Gehl  v. 
Milwaukee  Produce  Co.,  116  Wis. 
263,  93  N.  W.  26.  So.  generally,  as 
to  the  mode  of  determining  or  meas- 
uring the  quantity  or  amount  of 
goods  or  material  furnished,  or  work 
done.  Soutier  v.  Kellerman,  18  Mo. 
509;  Price  v.  Mouat,  11  C.  B.  (N.  S.) 
508;  Thompson  v.  Brannin,  94  Ky 
490,  21  S.  W.  1057,  15  Ky.  L.  36; 
Patterson  v.  Crowther,  70  Md.  124, 
16  Atl.  531 ;  Jones  v.  Hoey,  128  Mass. 
585;  Merick  v.  McNally,  26  Mich. 
374;  Merchant  v.  Howell,  53  Minn. 
295,  55  N.  W.  131 ;  Hagan  v.  Domes- 
tic Sewing  Machine  Co.,  9  Hun.  (N. 
Y.)  7Z;  Walls  v.  Bailey,  49  N.  Y.  464, 
10  Am.  Rep.  407;  Newhall  v.  Apple- 
ton,  114  N.  Y.  140,  26  N.  E.  1107,  4 
Silvernail  (N.  Y.)  411.  But  see,  Ken- 
dall V.  Russell,  5  Dana  (Ky.)  501,  30 
Am.  Dec.  696;  Lowe  v.  Lehman,  15 
Ohio  St.  179;  Sweeney  v.  Thomason, 
9  Lea  (Tenn.)  359,  42  Am.  Rep.  676; 
Humphreysville  Copper  Co.  v.  Ver- 
mont Copper  Mining  Co.,  2)2>  Vt.  92. 
^"  Mooney  v.  Howard  Ins.  Co.,  138 
Mass.  375,  52  Am.  Rep.  277.  See  also, 
Spartali  v.  Benecke,  10  C.  B.  212; 
Brown  v.  Byrne,  3  El.  &  Bl.  703,  77  E. 
C.  L.  702;  Morningstar  v.  Cunning- 
ham, 110  Ind.  328,  11  N.  E.  593,  59 
Am.  Rep.  211 ;  Van  Camp  Packing  Co. 
V.  Hartman,  126  Ind.  177,  25  N.  E. 
901 ;  Southwestern  Freight  &c.  Co.  v. 
Stanard,  44  Mo.  71,  100  Am.  Dec.  255; 
Carter  v.  Philadelphia  Coal  Co.,  77 
Pa.  St.  286.    And,  see,  as  to  individ- 


ual usage,  Jaqua  v.  Witham  &c.  Co., 
106  Ind.  545,  7  N.  E.  314;  Marrett  v. 
Brackett,  60  Maine  524;  Warren 
Bank  v.  Parker,  8  Gray  (Mass.)  221; 
Grinnell  v.  Western  Union  Tel.  Co., 
113  Mass.  299;  Fabri  v.  Phoenix  Ins. 
Co.,  55  N.  Y.  129. 

^Humfrey  v.  Dale,  7  El.  &  Bl.  266; 
Corbett  v.  Underwood,  83  111.  324,  25 
Am.  Rep.  392 ;  Cole  v.  Leach,  47  Ind. 
App.  341,  94  N.  E.  577;  Lupton  v. 
Nichols,  28  Ind.  App.  539,  63  N.  E. 
477 ;  Howe  v.  Hardy,  106  Mass.  329 ; 
Baxter  v.  Massasoit  Ins.  Co.,  13  Allen 
(Mass.)  320;  Robertson  v.  National 
Steamship  Co.,  139  N.  Y.  416,  34  N. 
E.  1053;  Girard  Life  Ins.  Co.  v. 
Mutual  Life  Ins.  Co.,  86  Pa.  236. 

^^  So  held  as  to  local  usages,  espe- 
cially where  one  party  is  a  stranger. 
Ocean  S.  S.  Co.  v.  Aetna  Ins.  Co., 
121  Fed.  882;  Byrne  v.  Massasoit 
Packing  Co.,  137  Mass.  313;  Saw- 
telle  v.  Drew,  122  Mass.  228;  Insur- 
ance Co.  of  North  America  v.  Hi- 
bernia  Ins.  Co.,  140  U.  S.  565,  35 
L.  ed.  517,  11  Sup.  Ct.  909;  Chateau- 
gay,  Ore  &  Iron  Co.  v.  Blake,  144  U. 
S.  476,  2,6  L.  ed.  510,  12  Sup.  Ct.  731. 
So  as  to  parties  not  in  the  same 
trade.  Great  Western  Elev.  Co.  v. 
White,  118  Fed.  406,  56  C.  C.  A.  388; 
Pennell  v.  Delta  Transportation  Co., 
94  Mich.  247,  53  N.  W.  1049;  Van 
Hoesan  v.  Cameron,  54  Mich.  609, 
20  N.  W.  609;  Keavy  v.  Thuett,  47 
Minn.  266,  50  N.  W.  126;  Brown  v. 
Strimple,  21  Mo.  App.  338;  Long 
Bros.  v.  J.  K.  Armsby  Co.,  43  Mo. 
App.  253.  See  also,  in  support  of  the 
proposition  generally,  Kirchncr  v. 
Venus,  12  Moo.  P.  C.  361 ;  Isaksson 
v.  Williams,  26  Fed.  642;  Martin  v. 
Maynard,    16   N.   H.    165;    Harris   v. 


991 


PAROL   EVIDENCE. 


§    1664 


So,  parol  evidence  is  not  admissible  to  prove  a  custom  or  usage 
that  contradicts  the  written  contract  and  varies  its  express 
terms,"  nor  if  the  usage  or  custom  is  unreasonable,^*  nor  if  it  is 
in  conflict  with  a  sound  and  well  settled  rule  of  law." 

§  1664.  Identification  of  parties. — Parol  evidence  is  admis- 
sible to  identify  the  parties  to  a  written  instrument,^"  as,  for 
instance,  where  a  party  has  signed  it  by  a  wrong  or  fictitious 
name,"  or  where  it  is  signed  by  a  firm  name  and  does  not  show 
on  its  face  who  are  members  of  the  firm.^*  So,  a  legal  relation 
between  parties,  such  as  the  fact  of  partnership,  may  be  shown 


Tumbridge,  83  N.  Y.  92,  38  Am.  Rep. 
398;  Consumers'  Ice  Co.  v.  Jennings, 
100  Va.  719,  42  S.  E.  879.  But  com- 
pare Fleet  V.  Murton,  L.  R.  7  Q.  B. 
126. 

"Lonergan  v.  Courtney,  75  111.  580; 
Spears  v.  Ward,  48  Ind.  541 ;  Seavey 
V.  Shurick,  110  Ind.  494.  11  N.  E.  597; 
Scott  V.  Hartley.  126  Ind.  239,  25  N. 
E.  826;  Louisville  &c.  Packet  Co.  v. 
Rogers,  20  Ind.  App.  594,  49  N.  E. 
970;  Benson  v.  Gray,  154  Mass.  391, 
28  N.  E.  275,  13  L.  R.  A.  262 ;  Brown 
V.  Foster,  113  Mass.  136,  18  Am.  Rep. 
463;  Detroit  Advertiser  &  Tribune 
Co.  V.  Detroit,  43  Mich.  116,  5  N.  W. 
72;  Collcndcr  v.  Dinsmore,  55  N.  Y. 
200.  14  Am.  Rep.  224 ;  Deacon  v.  Mat- 
tison,  11  N.  Dak.  190,  91  N.  W.  35; 
The  Delaware.  14  Wall.  (U.  S.)  579, 
20  L.  ed.  779;  National  Bank  v.  Burk- 
hardt,  100  U.  S.  686,  692,  25  L.  ed. 
766;  Partridge  v.  Phoenix  &c.  Ins. 
Co.,  15  Wall.  (U.  S.)  573,  21  L.  ed. 
229;  Barnard  v.  Kellogg,  10  Wall. 
(U.  S.)  383,  19  L.  ed.  987. 

"Anderson  v.  Whittaker,  97  Ala. 
690,  11  So.  919:  Cook  v.  Hawkins,  54 
Ark.  423,  16  S.  W.  8;  Gallatin  v. 
Bradford.  1  Bibb.  (Ky.)  209;  Has- 
kins  V.  Warren,  115  Mass.  514;  ]\Ier- 
chants'  Ins.  Co.  v.  Prince,  50  Minn. 
53,  52  N.  W.  131,  36  Am.  St.  626. 

"  Sohn  V.  Jervis,  101  Ind.  578.  1  N. 
E.  73;  Cox  V.  O'Riley,  4  Ind.  368,  58 
Am.  Dec.  633 ;  Wheeler  v.  Newbould, 
16  N.  Y.  392;  Hopper  v.  Sage.  112  N. 
Y.  530.  20  N.  E.  350.  8  Am.  St.  771 ; 
See  also,  Noble  v.  Durcll.  3  T.  R.  271 ; 
Edie  V.  East  India  Co.,  1  W.  Bl.  205. 
2  Burr.  1216:  Raisin  v.  Clark,  41  Md. 
158,  20  Am.  Rep.  66;  Eager  v.  Atlas 


Ins.  Co.,  14  Pick,  (Mass.)  141,  25  Am. 
Dec.  363 ;  Koppitz  &c.  Brewing  Co.  v. 
Behm,  130  Mich.  649,  90  N.  W.  676; 
Wahers  v.  Senf..  115  Mo.  524,  22  S. 
W.  511;  Dunham  v.  Gould,  16  Johns. 
(N.  Y.)  367,  8  Am.  Dec.  323;  Inglc- 
bright  V.  Hammond,  19  Ohio  337,  53 
Am.  Dec.  430;  Barnard  v.  Kellogg, 
10  Wall.  (U.  S.)  383,  19  L.  ed.  987. 
But  there  are  of  course,  cases  in 
which  a  custom,  or  even  a  usage,  may 
be  proved,  if  not  contrary  to  public 
policy,  statute  or  good  morals,  not- 
withstanding a  different  result  would 
have  been  reached  under  the  princi- 
ples of  the  law  in  the  absence  of  any 
such  custom.  See  Lawson's  Usages 
and  Customs  465. 

"Trueman  v.  Loder,  11  Ad.  &  El. 
589;  Newell  v.  Radford,  L.  R.  3  C.  P. 
52;  Henderson  v.  Hacknev,  23  Ga. 
383,  68  Am.  Dec.  529;  S'canlan  v. 
Wright.  13  Pick.  (Mass.)  523,  25  Am. 
Dec.  344;  Burrows  v.  Turner,  24 
Wend.  (X.  Y.)  276,  35  Am.  Dec.  622; 
Clinton  v.  Hope  Ins.  Co.,  45  N.  Y. 
454;  Stokes  v.  Rilev.  29  Tex.  Civ. 
App.  373,  68  S.  W.  703;  Union  Pa- 
cific Co.  v.  Durant,  95  U.  S.  576,  24 
L.  ed.  391. 

"  Richardson's  Case,  L.  R.  19  Eq. 
588;  Simons  v.  Marshall,  3  Greene 
(Iowa)  502;  Rape  v.  Westcott,  18  N. 
J.  L.  244. 

"Lindsay  v.  Hoke,  21  Ala.  542; 
Saltmarsh  v.  Bower,  34  Ala.  613; 
Clark  V.  Houghton,  12  Grav  (Mass.) 
38:  Uhler  v.  Browning,  28  N.  J.  L. 
79;  Sullivan  v.  Visconti,  68  N.  J.  L. 
542,  53  Atl.  598,  affd.  69  N.  J.  L.  452, 
55  Atl.  1133;  See  De  Cordova  v. 
Korte,  7  N.  Mex.  678,  41   Pac.  526, 


§    1665  CONTRACTS.  992 

by  third  parties  by  parol/^  And  where  two  persons  have  the 
same  name,  parol  evidence  is  generally  admissible  to  show  which 
was  intended,  when  the  writing  does  not  show  it.*"  The  rule  ex- 
cluding parol  evidence  to  contradict  or  vary  a  written  contract 
does  not  exclude  parol  evidence  to  show  that  a  person  named  in  a 
written  contract  or  signing  the  same  was  the  agent  of  an  undis- 
closed principal  and  acted  with  the  latter's  authority  and  that  such 
principal  has  complied  with  the  terms  of  the  contract.^^  Such 
evidence  is  most  frequently  admitted  in  will  cases,  in  order  to 
identify  the  legatee  or  devisee  and  ascertain  the  object  of  the 
testator's  bounty.^'' 

§  1665.    Abbreviations,  technical  trade,  and  local  terms. — 

Parol  evidence  is  usually  admissible  to  explain  "mercantile  short- 
hand" and  other  abbreviations  that  are  not  common  and  generally 
understood.^^  But  if  they  are  so  generally  understood  that  the 
court  should  take  judicial  notice  of  them,  it  would  seem  that  parol 
evidence  should  not,  ordinarily,  be  received  to  give  them  a  con- 
trary meaning.  Thus,  it  has  been  held  that  such  abbreviations  as 
"C.  O.  D."  and  "F.  O.  B."  have  acquired  a  fixed  and  well  known 

affd.  171  U.  S.  638,  43  L.  ed.  315,  19  528,   38  L.   R.   A.    (N.   S.)   783  and 

Sup.  Ct.  35   (partnership  in  name  of  note. 

one  partner).    But  compare  Williams  "^  Chappell    v.    Missionary    Society 

V.  Gillies,  75  N.  Y.  197.  &c.,  3  Ind.  App.  356,  29  N.  E.  924,  50 

■  **  Alderson   v.    Clay,    1    Stark   327 ;  Am.  St.  276  and  extended  note ;  In  re 

Widdifield     v.     Widdifield,     2     Binn.  Gaston's   Estate,   188  Pa.   St.  374,  41 

(Pa.)  245;  Cutler  v.  Thomas'  Estate,  Atl.  529,  68  Am.   St.  874,  and  note; 

25  Vt.  IZ.  See  also,  Rex  v.  Holy  Trin-  Phillips  v.  Ferguson,  85  Va.  509,  17 

ity,  7  Barn.  &  C  611 ;  Russell  v.  Ir-  Am.  St.  78.   See  note  in  6  L.  R.  A.  43, 

win's  Admrs..  41  Ala.  292;  Keidan  v.  and    authorities    hereinafter    cited    in 

Winegar,  95  Mich.  430,  54  N.  W.  901,  this   section.     Nor   is  parol   evidence 

20  L.   R.   A.  705 ;    Bradley  Fertilizer  ordinarily    admissible    to    show    that 

Co.   V.    Caswell,   65   Vt.   231,   26   Atl.  the  grantee  named  in  a  deed  is  not 

956;    Riley   v.    Gregg,    16   Wis.    697;  the    one    intended    by    the    grantor. 

Northern    Nat.    Bank    v.    Lewis,    78  Whitmore  v.  Learned,  70  Maine  276, 

Wis.  475,  47  N.  W.  834.  283.    See  also,  Oliver  v.  Brown,   102 

^  Begg  V.  Begg,  56  Wis.  534,  14  N.  Ga.    157,   29   S.    E.    159 ;    Jackson   v. 

W.  602.  See  also,  Moseley's  Admr.  v.  Hart,   12  Johns.    (N.  Y.)   11,  7  Am. 

Mastin,  Z7  Ala.  216;   Coit  v.   Stark-  Dec.  280;  Jackson  v.  Foster,  12  Johns, 

weather,    8    Conn.    289;    Peabody    v.  (N.  Y.)  488,  490;  Crawford  v.  Spen- 

Brown,  10  Gray  (Mass.)  45;  State  v.  cer,  8  Cush.   (Mass.)  418. 

Weare,    38    N.    H.    314;    Diener    v.  "' Marshall  v.  Lynn,  6  M.  &  W.  109 ; 

Schley,  5  Wis.  483.  Goblet  v.  Beechev,  3  Sim.  24;  Mouton 

^Davidson    v.    Hurty,    116    Minn.  v.   Louisville  &  N.   R.   Co.,   128  Ala. 

280,  133  N.  W.  862,  39  L.  R.  A.   (N.  537,  29  So.  602;   Berry  v.  Kowalsk>' 

S.)   324  and  note   (contract   for  sale  (Cal),   27   Pac.   286;    Penn   Tobacco 

of  real  estate^.    See  also,  McLeod  v.  Co.  v.  Leman,  109  Ga.  428,  34  S.  E. 

Eshelman,    66    Wash.    683.    120    Pac.  679;  McChesney  v.  City  of  Chicago, 


993 


PAROL    EVIDENCE. 


§    1665 


'meaning,  and  that  parol  evidence  is  not  needed  to  explain  them,-* 
but  other  courts  have  taken  a  different  view."  At  all  events, 
when  their  meaning  is  shown  or  clearly  appears  and  all  ambiguity 
is  removed,  parol  evidence  is  not  further  admissible  to  vary  them 
in  ordinary  cases.*"  Where  a  writing  contains  technical  terms 
of  art  or  science  not  commonly  understood,  parol  evidence  is 
usually  admissible  to  explain  their  meaning,"  and  it  seems  that  it 
niay  be  shown,  in  a  proper  case,  that  they  were  used  in  a  technical 
sense,  even  though  they  may  also  have  a  popular  meaning  when 
used  in  another  connection.*^  So,  on  the  other  hand,  it  has  been 
held  that  it  may  be  shown  that  a  technical  term  used  in  a  con- 
tract drawn  by  a  layman  has  a  popular  meaning  as  well,  and  was 
used  in  its  popular  sense,""  at  least,  where  the  contract  would 
otherwise  be  meaningless.^"  The  rule  admitting  parol  evidence  of 
the  meaning  of  technical  terms  is  not  confined  entirely  to  terms 
of  art  or  science  in  the  strict  sense,  but  extends  in  proper  cases  to 
trade  terms, ^^  and  even  to  terms  peculiar  to  the  business  locality 


173  111.  75,  50  N.  E.  191;  Jaqua  v. 
Witham  &c.  Co.,  106  Ind.  545,  7  N. 
E.  314;  Barton  v.  Anderson,  104  Ind. 
578;  Western  Union  Tel.  Co.  v.  Col- 
lins, 45  Kans.  88.  25  Pac.  187,  10  L. 
R.  A.  515:  Springfield  First  Nat. 
Bank  v.  Fricke.  75  Mo.  178,  42  Am. 
Rep.  397;  White  v.  McMillan.  114  N. 
Car.  349,  19  S.  E.  234 ;  Davis  v.  Ham- 
bell  (Tex.  Civ.  App.),  24  S.  W.  972. 
See  also,  Cole  v.  Leach,  47  Ind.  App. 
341,  344,  345,  94  N.  E.  577,  578,  cit- 
ing 1  Elliott  Ev.,  §  608. 

'*  American  Merchants'  Union  Ex- 
press Co.  V.  Schier,  55  111.  140;  United 
States  Exp.  Co.  v.  Keefer,  59  Ind. 
263 ;  State  v.  Intoxicating  Liquors, 
73  Maine  278. 

''Collender  v.  Dinsmore,  55  N.  Y. 
200,  14  Am.  Rep.  224;  Silberman  v. 
Clark,  96  N.  Y.  522.  See  also.  Mc- 
Nichol  V.  Pacific  Exp.  Co.,  12  Mo. 
App.  401. 

="4  Elliott  R.  R..  §  1425;  Sheffield 
Furnace  Co.  v.  Hull  &c.  Co.,  101  Ala. 
446,  14  So.  672;  American  Exp.  Co. 
V.  Lesem,  39  111.  312;  Silberman  v. 
Clark.  96  N.  Y.  522. 

"  Hills  V.  Evans.  8  Jur.  (N.  S.)  525, 
31  L.  J.  Ch.  457:  Revnolds  v.  Jour- 
dan,  6  Cal.  108;  Mvers  v.  Tibbals.  72 
Cal.  278,    13   Pac.  695;   New   Jersey 

63 — CoNTR.vcTS,  Vol.  2 


Zinc  Co.  V.  Boston  Franklinite  Co., 
15  N.  J.  Eq.  418;  Stroud  v.  Frith,  11 
Barb.  (N.  Y.)  300;  Brauns  v. 
Stearns,  1  Ore.  367;  Weisenberger  v. 
Harmony  Fire  &c.  Co.,  56  Pa.  St. 
442;  Loom  Co.  v.  Higgins,  105  U.  S. 
580,  26  L.  ed.  1177. 

''Powell  V.  Horton,  2  Bing.  N. 
Cas.  668.  See  Clayton  v.  Gregson.  4 
Nev.  &  Man.  602;  Chaurand  v.  An- 
gerstein,  Peake  43 ;  Smith  v.  Wilson, 
3  B.  &  Ad.  728,  23  E.  C.  L.  319;  My- 
ers V.  Walker.  24  111.  133:  Hartwell 
V.  Camman,  10  N.  J.  Eq.  128,  64  Am. 
Dec.  448;  Collender  v.  Dinsmore,  55 
N.  Y.  200.  14  Am.  Rep.  224;  Caro- 
lina. C.  G.  &  C.  R.  Co.  V.  Seigler,  24 
S.  Car.  124. 

^Kohl  V.  Frederick,  115  Iowa  517, 
88  N.  W.  1055,  and  other  Iowa  cases 
then  cited. 

'"See  Stephen's  Dig.  Ev.  170;  Doe 
v.    Hiscocks,   5    M.   &  W.  363. 

"  Bradlev  v.  Newcastle  on  Tvne,  2 
El.  &  Bl.  427.  75  E.  C.  L.  427 ;  Taylor 
v.  Briggs.  2  C.  &  P.  525.  12  E.  C. 
L.  712;  Parker  v.  Ibbetson.  4  C.  B. 
(N.  S.)  346,  93  E.  C.  L.  346;  Mc- 
Clure  V.  Cox.  32  Ala.  617.  70  Am. 
Dec.  552;  Elgin  v.  Joslvn.  136  111. 
525,  26  N.  E.  1090;  Grasmier  v.  Wolf 
(Iowa),  90  N.  W.  813   (meaning  of 


1665 


CONTRACTS. 


994 


of  persons  using  them.^"  When  an  instrument  contains  terms 
called  "mercantile  shorthand"  it  is  proper  to  aver  extrinsic  facts 
and  to  receive  evidence  to  explain  such  terms.^^  Where  a  written 
contract  for  laying  bricks  is  silent  as  to  the  manner  in  which  the 
number  of  bricks  is  to  be  determined,  parol  evidence  is  admissible 
to  show  the  custom  by  which  such  a  matter  is  determined  and  in 
reference  to  which  the  parties  must  be  deemed  to  have  con- 
tracted.^* Many  other  illustrations  of  the  application  of  these 
rules  have  already  been  given.^^ 


"mixeo  cast  and  forged  iron"  among 
traders  in  old  iron)  ;  Seymour  v. 
Armstrong,  62  Kans.  720,  64  Pac. 
612;  Houghton  v.  Watertown  Fire 
Ins.  Co..  131  Mass.  300;  Dages  v. 
Brake,  125  Mich.  64,  83  N.  W.  1039, 
84  Am.  St.  556;  St.  Paul  &  Minne- 
apolis Trust  Co.  V.  Harrison,  64 
Minn.  300,  66  N.  W.  980;  Wilcox  v. 
Baer,  85  Mo.  App.  587  (meaning  of 
"traveling  expenses"  among  mer- 
chants) ;  Evans  v.  Western  Brass 
Mfg.  Co.,  118  Mo.  548,  24  S.  W.  175; 
Nelson  v.  Sun  Mutual  Ins-  Co.,  71 
N.  Y.  453;  Missouri  &c.  R.  Co.  v. 
De  Bord,  21  Tex.  Civ.  App.  691.  53 
S.  W.  587;  Hesser-Milton-Renahan 
Coal  Co.  V.  La  Crosse  Fuel  Co.,  114 
Wis.  654,  90  N.  W.  1094- 

^^  Shore     v.     Attorney-General,     9 
Clark  &  F.  355 ;  Mouton  v.  Louisville 


&  N.  R.  Co.,  128  Ala.  537,  29  So. 
602;  Cannon  v.  Hunt,  116  Ga.  452, 
42  S.  E.  734;  Jaqua  v.  Witham  &c. 
Co.,  106  Ind.  545,  7  N.  E.  314 ;  Prather 
V.  Ross,  17  Ind.  495;  Wood  v.  Allen, 
111  Iowa  97,  82  N.  W.  451  ("dry 
goods,"  meaning  in  the  particular  lo- 
cality) ;  Noyes  v.  Canfield,  27  Vt.  79. 

''Cole  V.  Leach,  47  Ind.  App.  341, 
349,  94  N.  E.  577,  578,  citing  1  Elliott 
Ev.,  §  608. 

^'Ford  V.  Tirrell,  9  Gray  (Mass.) 
401,  69  Am.  Dec.  297;  Hinton  v. 
Locke,  5  Hill  (N.  Y.)  437;  Walls  v. 
Bailey,  49  N.  Y.  464,  10  Am.  Rep. 
407;  Lowe  v.  Lehman,  15  Ohio  St. 
179;  Richlands  Glass  Co.  v.  Hilte- 
beitel,  92  Va.  91,  22  S.  E.  806. 

^  See  notes  to  this  section  and  the 
preceding  sections  of  this  chapter. 


CHAPTER  XXXVIII. 


CUSTOMS  AND  USAGES. 


1670.  Introductory.  §  1692. 

1671.  Usages    defined. 

1672.  Customs    defined.  1693. 

1673.  Local     customs     having     the 

force  of  laws.  1694. 

1674.  Caution  in  the  use  of  usages. 

1675.  Term    "laws"    in    treaties    in-        1695. 

eludes  customs  and  usages. 

1676.  Legislative    abolition    of    cus-        1696. 

toms  or  usages. 

1677.  Requisites  of  a  valid  custom       1697. 

or  usage. 

1678.  Custom  or  usage  must  be  uni-       1698. 

form  and  certain. 

1679.  Reasonableness  of  customs  or 

usages.  1699. 

1680.  Reasonableness  of  custom  or 

usage — Examples     of     cus-        1700. 
toms   invalid   for  unreason- 
ableness. 

1681.  Reasonableness     of     customs        1701. 

or  usages  —  Examples  of 
customs  held  not  unreason- 
able. 1702. 

1682.  Necessity  that  custom  should 

be  general.  1703. 

1683.  Effect  of  occasional  deviations       1704. 

from  general  custom. 

1684.  Necessity      that      custom      or 

usage  should  be  general — II-        1705. 
lustrations  of  principle. 

1685.  Individual     usages     or     prac-       1706. 

tices. 

1686.  Antiquity  as  element  of  cus-       1707. 

tom  or  usage. 

1687.  Antiquity   —    Illustration     of        1708. 

principle. 

1688.  Legality  of  custom  or  usage. 

1689.  Legality  of  customs  or  usages        1709. 

— Customs  which  contra- 
vene public  policy.  1710. 

1690.  Legality  of  customs  or  usages 

— Contravention     of     estab-        1711. 
lished    legal    principles. 

1691.  Legality  of  customs  or  usages 

— Contraventions  of  legal 
principles — Illustrations. 

995 


Legality  of  customs  or  usages 
— Contravention  of  statutes. 

Legality  of  railway  and  bank- 
ing customs. 

Effect  of  partial  illegality  of 
custom. 

Effect  of  adoption  of  usage 
by   courts. 

Knowledge  of  custom  or  us- 
age— Essential. 

Presumption  of  knowledge  of 
usage. 

Presumption  of  knowledge 
continued — As  to  railroads 
and  banks. 

Knowledge  of  established 
custom. 

Particular  usages  without 
binding  force  for  want  of 
knowledge. 

Necessity  of  knowledge  of  us- 
age giving  arbitrary  mean- 
ing to  words. 

Mississippi  doctrine  of  pre- 
sumption of  knowledge. 

Usage  in  violation  of  rules. 

Agent's  knowledge  imputed 
to  principal — Bill  of  lading 
— Charter  party. 

Custom  or  usage  to  explain 
contract. 

Custom  or  usage  to  show  in- 
tention of  parties. 

Construction  of  words  in  con- 
tract. 

Construction  of  words  of  con- 
tract— Unusual  and  techni- 
cal words. 

Contract  not  created  by  cus- 
tom or  usage. 

Incorporation  of  custom  or 
usage  in  contract. 

Incorporation  of  custom  in 
contract — Custom  as  to  pro 
rata  delivery  of  manufac- 
tured articles. 


CONTRACTS. 


996 


5 1712.  Custom    construed  —  Charter    §  1739. 
party — Demurrage. 

1713.  Express  contract  may  not  be 

varied    or    contradicted    by 
custom  or  usage.  1740. 

1714.  Test  of  variance. 

1715.  Customs  and  usages  may  not        1741. 

vary    express    contracts — Il- 
lustrations. 

1716.  Exclusion  of  custom  or  usage       1742. 

by  express  contract. 

1717.  Implied    exclusion    of   custom 

by  terms  of  contract. 

1718.  Cases  illustrating  the  rule  of        1743. 

implied    exclusion    of    cus- 
toms. 1744. 

1719.  Implied    exclusion   of    custom 

or  usage  where  controversy 

relates    solely    to    terms    of        1745. 

contract. 

1720.  Presumption   of  intent  to   in-        1746. 

elude  usage  in  contract. 

1721.  Custom   or    usage    to   explain       1747. 

matters  on  which  contract  is 

silent — Adding  to   terms  of        1748. 

contract. 

1722.  Illustrative     cases     of     added        1749. 

terms. 

1723.  Usage  to  explain  meaning  of        1750. 

unambiguous    terms    having        1751. 
a   peculiar   meaning. 

1724.  Test  to  determine  whether  in-        1752. 

strument    to    be    interpreted        1753. 
by  custom  or  usage. 

1725.  Warranty  may  not  be  added.        1754. 

1726.  Strict  construction  of  usage. 

1727.  Usages    relating    to    bills    of        1755. 

lading     and     shipping    con- 
tracts. 1756. 

1728.  Custom   making   bills   of  lad- 

ing negotiable.  1757. 

1729.  Effect  of   custom  on   liability        1758. 

of    connecting   carriers. 

1730.  Custom     as     to     delivery     of        1759. 

goods  to  carrier.  1760. 

1731.  Usage  as  to  capacity  of  cars. 

1732.  Custom  and  usage  as  to   de-       1761. 

livery  of  goods  by  carrier.        1752. 

1733.  Customs     as    to    delivery    of 

goods  by  carrier  by  water. 

1734.  Custom  as  to   notice  to  con-       1763. 

signee  of  arrival  of  goods. 

1735.  Custom  as  to  delivery  of  bag-        1764. 

gage  to  carrier.  1765. 

1736.  Usages     allowing     passengers       1766. 

to  carry  packages  on  trains. 

1737.  Usage    as    to     furnishing   re- 

frigerator cars.  1767. 

1738.  Guaranty  of   freight  bills. 


Effect  of  usage  on  transac- 
tion of  business  at  stock- 
holders' meeting — Usage  as 
by-law. 

Corporate  lien  on  stock  by 
usage  or  custom. 

Creation  and  amendment  of 
corporate  by-laws  by  cus- 
tom or  usage. 

Powers  of  president  of  cor- 
poration inferred  from 
usage,  custom  or  habit  of 
acting. 

Duties  of  treasurer  as  affected 
by  custom  or  usage. 

Effect  of  usage  or  custom  on 
right  of  corporate  officer  to 
compensation. 

Usages  as  to  ownership  of 
dividends. 

Insurance  customs  and  usages 
generally. 

Usage  as  to  authority  of  in- 
surance agents. 

Custom  to  notify  insured  of 
maturity  of  premium. 

Notice  of  cancelation  of  pol- 
icy. 

Customs  as  to  re-insurance. 

Custom  of  paying  losses  not 
covered  by  policy. 

Origin  of  banking  customs. 

Essentials  of  good  bank 
usage. 

Customs  and  usages  must  not 
be  unreasonable. 

Bank  usages  as  to  powers  and 
duties  of  officers. 

Cashier's  powers  and  duties 
affected  by  usage. 

Certification  of  checks. 

Custom  of  bank  to  pay  notes 
out   of   depositor's    funds. 

Interest    on    overdrafts. 

Local  custom  of  banks  as  to 
substituted  check. 

Customs  as  to  days  of  grace. 

Presumption  of  knowledge  of 
bank  custom  where  note 
payable   at  bank. 

Bank  usages  as  to  demand 
and  notice. 

Mailing  notice  of  protest. 

Collection  customs  of  banks. 

Collection  customs  of  banks — 
Custom  will  not  excuse 
negligence. 

Custom  of  sending  collection 
to  drawee  condemned. 


997 


CUSTOMS   AND   USAGES. 


§    1670 


§  1768.  Collection    customs  —  Remit-    §  1789. 
tance  of  proceeds. 

1769.  Value  of    foreign   money.  1790. 

1770.  Customs  and  usages  in  master 

and    servant    relation.  1791. 

1771.  Customs   and   usages   in   prin-        1792. 

cipal  and  agent  relation. 

1772.  Principal  and  agent — Authori- 

ty of  agent.  1793. 

1773.  Brokers  and    factors. 

1774.  Usage    of     brokers    to    treat       1794. 

stock  certificates  as  negoti- 
able paper.  1795. 

1775.  Use  of  stock  of  customer  by 

broker.  1796. 

1776.  Sale    of    collateral    securities 

to  enforce  pledge.  1797. 

1777.  Landlord    and   tenant. 

1778.  Measurements  and  weights. 

1779.  Partnership   customs   and   us-       1798. 

ages. 

1780.  Sales  of  goods.  1799. 

1781.  Charges  for  professional  serv- 

ices. 1800. 

1782.  Interest  on  contracts. 

1783.  Theatrical      and      amusement 

contracts.  1801. 

1784.  Custom   of   sending  telegraph 

message  by   telephone.  1802. 

1785.  General   custom   need   not   be 

specially  pleaded.  1803. 

1786.  Local     customs     and     usages 

must  be  pleaded. 

1787.  Customs    and    usages    as    evi-        1804. 

dence  need  not  be  pleaded. 

1788.  Technical    meaning    of    words        1805. 

need  not  be  pleaded. 


Pleading  local  usage  in  ac- 
tion  for  compensation. 

Judicial  notice  of  customs 
and   usages. 

Judicial    notice — Examples. 

Proof  preliminary  to  admis- 
sion of  evidence  of  usage  or 
custom. 

Burden  of  proof  of  custom  or 
usage. 

Presumption  of  knowledge  of 
usage. 

Character  of  evidence  to  es- 
tablish custom  or  usage. 

Opinion  evidence  as  to  cus- 
toms or  usages. 

Competency  of  experts  on 
question  of  custom  or 
usage. 

Number  of  witnesses  required 
to    establish    custom. 

Parol  proof  of  usage  or  cus- 
tom. 

Custom  or  usage  not  estab- 
lished by  proof  of  isolated 
instances. 

Evidence  of  knowledge  of 
custom  or  usage. 

Evidence  of  custom  of  prompt 
payment    or    collection. 

The  South  Carolina  rule  as 
to  evidence  of  custom  to 
vary  contract. 

Custom  or  usage  as  question 
of  law  or   fact. 

Knowledge  of  question  for 
jury. 


§  1670.  Introductory. — Some  confusion  has  crept  into  the 
cases  by  reason  of  the  use  of  the  terms  "custom"  and  "usage" 
as  meaning  the  same  thing.  In  some  of  the  cases  the  courts  have 
gone  so  far  as  to  expressly  declare  the  terms  to  be  synonymous.^ 
The  terms  have  distinct  meanings  based  on  different  characteris- 
tics and  the  purposes  they  fulfil. =  Most  of  the  decisions  on  the 
subject,  however,  have  to  do  with  local  or  trade  usages,  as  here- 
after defined  and  when  this  is  thoroughly  understood  there  is 
no  great  misunderstanding  in  the  use  of  the  terms  as  interchange- 
able. 


^Richmond  v.  Union  Steamboat 
Co.,  87  N.  Y.  240. 

=  Bvrd  v.  Beal.  150  Ala-  122,  43  So. 
749;  Currie  v.  Syndicate  Des  Culti- 
vators &c.,   104   ill.   App.  165;   Mor- 


ningstar  v.  Cunningham.  110  Ind.  328, 
11  N.  E.  593.  59  Am.  Rep.  211; 
American  Lead  Pencil  Co.  v.  Nash- 
ville &c.  R.  Co.,  124  Tenn.  57.  134 
S.  \V.  613.     "A  usage,  which  is  also 


§    1 67 1  CONTRACTS.  998 

§  1671.  Usages  defined. — A  usage  is  the  established 
method  of  dealing  adopted  in  a  particular  place  or  by  persons 
engaged  in  a  particular  vocation  or  trade  and  it  acquires  legal 
force  because  people  make  contracts  with  reference  to  it.  The 
term  is  synonymous  with  the  expression  "particular  custom".^ 
The  term  has  also  been  defined  to  be  "such  a  reasonable  and  law- 
ful public  custom  concerning  transactions  of  the  same  nature 
as  those  which  are  to  be  affected  thereby,  existing  at  the  place 
where  the  obligation  is  to  be  performed,  and  either  known  to  the 
parties,  or  so  well  established,  general  and  uniform,  that  they  are 
presumed  to  have  acted  with  reference  to  the  usage.  Usage  in  a 
particular  locality  is  something  which  exists  in  general  repute  in 
the  trade  affected  thereby  in  that  community,  and  all  residents  are 
supposed  to  know  of  its  existence  and  are  presumed  to  act  and 
contract  with  reference  to  it."*  The  term  is  thus  defined  in  the 
statutes  of  one  of  the  states:  "Usage  is  a  reasonable  and  lawful 
public  custom  concerning  transactions  of  the  same  nature  as  those 
which  are  to  be  affected  thereby,  existing  at  the  place  where  the 
obligation  is  to  be  performed,  and  either  known  to  the  parties  or 
so  well  established,  general  and  uniform  that  they  must  be  pre- 
sumed to  have  acted  with  reference  thereto."^  It  is  a  funda- 
mental principle  of  the  law  of  usage  that  the  usage  enters  into  and 
becomes  a  part  of  the  contract  of  the  parties.^  A  usage  of  this 
character  is  not  to  be  confused  with  a  mere  personal  habit  or 
practice,^  for,  "there  is  a  great  variety  of  things,  which,  in  the 

called   a    custom,    though    the    latter  Lowry  v.  Read,  3  Brewst.  (Pa.)  452. 

word   has   also   another    signification,  *  Miller   v.    Wiggins,    227    Pa.    564, 

is  a  long  and  uniform  practice,  ap-  1(i  Atl.  711. 

plied   to   habits,   modes,   and   courses  ''Rev.  Code  N.  Dak.,  §  5128;  First 

of   dealing.      It  relates   to   modes   of  Nat.    Bank   v.    Minneapolis    &c.    Ele- 

action,  and  does  not  comprehend  the  vator  Co.,  11  N.  Dak.  280,  91  N.  W. 

mere    adoption    of    certain    peculiar  436. 

doctrines  or  rules  of  law."  Dickinson  *  Currie  v.  Syndicate  Des  Culti- 
V.  Gay,  7  Allen  (Mass.)  29,  83  Am.  vators  &c.,  104  111.  App.  165. 
Dec.  656.  'Fisher  v.  Campbell,  9  Port.  (Ala.) 
"Byrd  V.  Beall,  ISO  Ala.  122,  43  So.  210;  Austill  v.  Crawford,  7  Ala.  335; 
749,  124  Am.  St.  60;  Wilmington  McClure  v.  Cox,  32  Ala.  617,  70  Am. 
City  R.  Co.  V.  White,  6  Pennew.  Dec.  552;  Gronstadt  v.  Witthoff,  IS 
(Del.)  363,  66  Atl.  1009;  Ames  Mer-  Fed.  265;  Currie  v.  Syndicate  Des 
cantile  Co.  v.  Kimball  S.  S.  Co.,  125  Cultivators  &c.,  104  111.  App.  165; 
Fed.  332;  Currie  v.  Syndicate  Des  Illinois  Masons'  Benev.  Soc.  v.  Bald- 
Cultivators  &c.,  104  111.  App.  165;  win,  86  111.  479;  Doughty  v.  Paige,  48 
Morningstar  v.  Cunningham,  110  Ind.  Iowa  483;  Farmers'  Bank  v.  Duvall. 
328,  11  N.  E.  593,  59  Am.  Rep.  211;  7  Gill.   &  J.    (Md.)    78;  Anewalt  v. 


999-  CUSTOMS   AND   USAGES.  §    1 672 

ordinary  transaction  of  business,  are  habitual  and  usual,  but  which 
are  in  no  sense  customs  which,  in  law,  are  incorporated  into  and 
become  parts  of  the  contract  entered  into."^  It  is  also  to  be  dis- 
tinguished from  the  understanding  of  a  community  or  of  a  class 
as  to  the  legal  effect  or  implication  of  existing  law."  Neither  is  it 
to  be  confused  with  acts  of  mere  accommodation,  or  courtesy,'" 
as,  where,  for  example,  the  officers  of  a  river  steamboat  carry 
valuable  packages  for  their  customers  without  charge,  as  a  matter 
of  accommodation  and  in  the  hope  that  the  beneficiaries  of  usage 
will  favor  the  boat  with  freight  shipments."  A  usage  is  something 
more  than  a  mere  exchange  of  customary  courtesies,"  and  the 
mere  fact  that  an  act  has  been  performed  repeatedly  for  the 
accommodation  of  a  party  is  not  enough  to  make  the  act  a  bind- 
ing usage.^*  "Many  things  are  done  in  the  course  of  trade,  by 
way  of  favor,  which  cannot  be  held  to  constitute  usage  entering 
into  contracts  of  the  parties.  The  fact  that  such  acts  have  con- 
stantly been  done,  not  in  obedience  to  duty  or  contract,  but  as 
matter  of  form,  cannot  compel  their  continuance."" 

§  1672.  Customs  defined. — The  term  "custom"  is  the 
larger  term  for  it  includes  usage.  There  may  be  usage  without 
custom  but  there  can  be  no  custom  without  usage  to  accompany  or 
precede  it.  Usage  may  be  termed  the  germ  which  by  constant 
repetition  and  general  use  and  great  antiquity  develops  into  cus- 
tom ;  and  custom  when  fully  developed  is  law.  A  custom  is  such 
usage  as  by  common  consent  and  uniform  practice  has  become  the 
law  of  the  place  where  it  exists  or  of  the  subject-matter  to  which 
it  relates.  Customs  are  binding  without  regard  to  the  assent  of 
the  parties."    "Strictly  speaking,  custom  is  that  length  of  usage 

Hummel.  109  Pa.  St.  271;  Carter  v.  Dec.  199;  Runyan  v.  Central  R.  Co.. 

Philadelphia    Coal    Co.,    11    Pa.    St.  64  N.  J.  L.  67,  44  Atl.  985.  48  L.  R. 

286.  A.  744. 

*Sawtelle  v.  Drew.   122  Mass.  228.  "Cincinnati  &  L.  Mail  Lme  Co.  v. 

•Haskins    v.    Warren,    115    Mass.  Boal.   15   Ind.  345. 

514;    Silliman    v.    Whitmer,    196    Pa.  "Pitch   Pine  Lumber  Co.  v.  Wood 

St.  363,  46  Atl.  489.  Lumber  Co.,  57  Fla-  140,  48  So.  993. 

*"  Madden  v.  Blain,  66  Ga.  49  (cus-  "Johnson  v.  Concord  R.  Corp..  46 

torn  of  free  treatment  between  physi-  N.  H.  213,  88  Am.  Dec.   199. 

cians)  :  Cincinnati  &  L.  Mail  Line  Co.  '*  Runyan  v.  Central  R.  Co..  64  N. 

V.  Boal,  15  Tnd.  345;  Norton  v.  Hey-  J.   L.   67.   44   Atl.   985,   48   L.    R.   A. 

wood,  20  iMaine  359;  Johnson  v.  Con-  744. 

cord  R.  Corp.,  46  N.  H.  213,  88  Am.  "  Barlow  v.  Lambert,  28  Ala.  704, 


§    16/2  CONTRACTS.  "'  lOOO 

which  has  become  Ia\v."^°  What  was  at  one  time  the  usage  of 
merchants  in  respect  to  notes  and  bills  became  an  established 
custom  and  hence  the  law  as  to  commercial  paper.  In  like  man- 
ner the  ancient  custom  in  the  county  of  Kent  in  England  for  all 
the  sons  to  succeed  to  the  father's  inheritance,  is  the  law  of  the 
county,  in  contradistinction  to  the  general  rule  in  England,  un- 
der which  the  eldest  son  alone  inherits.  This  custom  known 
as  the  custom  of  gavelkind  is  the  law  of  inheritance  for  that 
county.^^  It  is  said  in  this  connection  that  a  custom  to  become  a 
law  must  be  so  ancient  that  the  memory  of  man  runneth  not  to  the 
contrary,  but  a  usage  need  only  be  old  enough  to  be  well  estab- 
lished in  the  trade  or  place.^^  The  term  "custom"  as  thus  defined 
would  seem  to  describe  the  process  by  which  laws  become  a 
part  of  the  common  law,  and  when  they  become  a  part  of  the 
common  law  it  would  seem  improper  to  longer  designate  the 
subject-matter  as  a  custom.  A  better  classification  would  limit 
the  term  to  those  customs  which  have  passed  beyond  the  stage  of 
usages  and  stand  at  the  threshold,  waiting  recognition  as  laws. 
*Tt  may  well  be  questioned,"  says  one  of  the  courts,  "whether  any 
modern  custom  becomes  incorporated  in  the  common  law  until 
it  has  been  established  as  a  matter  of  fact  by  judicial  authority. 
The  change  of  the  status  of  such  a  question  from  one  of  fact  to 
one  of  law  is  by  gradual  and  almost  imperceptible  steps."" 

65    Am     Dec.    374;    Byrd    v.    Beall,  else."     Collins  v.  Chicago  &c.  R.  Co. 

150   Ala.    122,   43    So.   749,    124   Am.  (Wis.),   136  N.  W.  628.     A  custom 

St.    60;    Tyson    v.    Laidlaw,    18    La.  is  a  rule  of  action  having  the  force 

380;    The    Success.    18    La.    Ann.    1;  of  law  resulting  from  a  long  series 

Bank    of    Columbia    v.    Fitzhugh,    1  of  actions  constantly  repeated,  which 

Har.    &    G.    (Md.)    239;    McMasters  by    uninterrupted    acquiescence,    ac- 

V.    Pennsylvania    R.    Co.,    69    Pa.    St.  quires  its  force  by  common  consent. 

374     8     Am      Rep.     264;     Common-  Broussard  v.  Bernard,  7  La.  211. 

wealth   V.    Mayloy,    57   Pa.    St.    291 ;  "  Walls  v.  Bailey,  49  N.  Y.  464,  10 

Adams   v.    Palmer,   30    Pa.   St-   346;  Am.  Rep.  407. 

Adams  v.   Pittsburg  Ins.  Co.,  Id  Pa.  "  Currie    v.    Syndicate    Des    Culti- 

St    411 ;   American   Lead   Pencil   Co.  vators  &c.,  104  111.   App.  165. 

V.  Nashville  &c.  R.  Co.,  124  Tenn.  57,  ''  Currie    v.    Syndicate    Des    Culti- 

134    S.    W.   613;    Trott   v.   Wood,    1  vators  &c.,  104  ill.  App.  165;  Cole  v. 

Gall.     (U.    S.)    443,    Fed.    Cas.    No.  Skrainka.   Zl   Mo.   App.  427;    Sleght 

14190;  McGregor  v.  Insurance  Co.  of  v.  Hartshorne,  2  Johns.  (N.  Y.)  531; 

Pennsylvania,  1  Wash.  C.  C  (U.  S.)  Blin  v.  Mayo,  10  Vt.  56,  ZZ  Am.  Dec. 

39,   Fed.    Cas.   No.   8811.    "Popularly  175. 

the  word  custom  may  be  used   as  a  "  Bonham  v.   Charlotte  &c.  R.  Co., 

synonym   for   mode    or   practice,   but  13  S.   Car.  267. 
in   law   the   word    means    something 


lOOI  CUSTOMS   AND   USAGES.  §    1673 

§  1673.  Local  customs  having  the  force  of  laws. — In  Eng- 
land there  are  many  local  customs  which  have  the  force  of  laws 
in  particular  localities  by  reason  of  their  antiquity  and  uninter- 
rupted recognition.  These  laws  make  what  may  be  characterized 
as  the  local  common  law  of  districts  or  counties.  They  are  laws 
which  had  their  origin  before  the  time  of  legal  memory,  which  is 
generally  considered  as  antedating  the  time  of  Richard  1.^^°  "The 
custom  of  the  county  in  which  the  land  lies  is  as  much  the  law  of 
that  county  as  the  common  law  is  the  law  of  the  other  parts  of 
the  country  where  they  have  no  such  particular  custom.  The 
particular  custom  prevents  the  application  of  the  common  law  to 
the  county  or  district  in  which  the  custom  prevails,  by  showing 
that  the  common  law,  as  to  this  subject,  never  had  any  existence 
in  that  county  or  district.""  A  familiar  illustration  of  the  prin- 
ciple is  the  custom  of  gavelkind  which  is  the  local  common  law  of 
the  county  of  Kent  by  which  lands  descend  to  all  the  sons  and  not 
to  the  eldest  as  is  the  case  in  the  rest  of  England." 

§  1674.  Caution  in  the  use  of  usages. — The  courts  have 
long  recognized  the  danger  likely  to  result  from  an  indiscriminate 
resort  to  usages  in  the  construction  of  contracts.  This  danger 
lies  in  the  possibility  that  a  new  and  different  contract  may  be 
made  from  an  existing  written  contract  by  poorer  evidence  or 
that  there  may  be  the  entire  defeat  of  the  contract  actually  entered 
into  by  the  parties."  Said  Judge  Story,  who  early  saw  the  dan- 
ger from  this  source:  "I  own  myself  no  friend  to  the  almost  in- 
discriminate habit  of  late  years,  of  setting  up  usages  or  customs 
in  almost  all  kinds  of  business  and  trade,  to  control,  vary,  or 
annul  the  general  liabilities  of  parties  under  the  common  law,  as 
well  as  under  the  commercial  law.  It  has  long  appeared  to  me, 
that  there  is  no  small  danger  in  admitting  such  loose  and  incon- 
clusive usages  and  customs,  often  unknown  to  the  particular  par- 
ties, and  always  liable  to  great  misunderstandings  and  misinter- 

''Hammerton  v.  Honev,  24  W.   R.  18  Am.  Rep.  200;  Runyan  v.  Central 

603.                                      '  R.  Co.,  64  N.  J.  L.  67.  44  Atl.  985.  48 

=^  Harris  v.  Carson.  7  Leigh   (Va.)  L.  R.  A.  744;  The  Reeside.  2  Sumn. 

632,  30  Am.  Dec.  510.  (U.    S.)    567,   Fed.    Cas.    No.    11657: 

"Currie    v.     Syndicate    Des    Cuhi-  Donnell    v.    Columbian    Ins.    Co.,    2 

vators  &c..  104  111.  App.  165.  Sumn.    (U.   S.)    366,  Fed.   Cas.   No. 

*"  Randall  v.   Smith,  63  Maine  105,  3987. 


§    1675  CONTRACTS.  I002 

pretations  and  abuses,  to  outweigh  the  well-known  and  well- 
settled  principles  of  law,  and  I  rejoice  to  find,  that,  of  late  years, 
the  courts  of  law,  both  in  England  and  America,  have  been  dis- 
posed to  narrow  the  limits  of  the  operation  of  such  usages  and 
customs,  and  to  discountenance  any  further  extension  of  them."^* 

§  1675.  Term  "laws"  in  treaties  includes  customs  and 
usages. — The  word  "laws"  used  in  a  treaty  between  different 
nations  is  broad  enough  to  include  those  customs  and  usages 
which  have  the  force  of  laws.  The  term  is  not  limited  to  statu- 
tory enactments.  The  principle  is  important  in  our  jurispru- 
dence where  rights  of  property  are  involved  in  territory  taken 
over  by  our  government  from  other  nations  and  the  treaties  evi- 
dencing the  transfer  provide  that  property  and  contract  rights  ac- 
quired under  the  laws  of  the  ceding  sovereignty  are  preserved." 
In  a  case  involving  this  question  under  the  treaty  by  which  Flor- 
ida was  acquired,  the  Supreme  Court  of  the  United  States  said : 
"We  cannot  impute  to  congress  the  intention  to  not  only  authorize 
this  court,  but  to  require  it  to  take  jurisdiction  of  such  a  case, 
and  to  hear  and  determine  such  a  claim  according  to  the  princi- 
ples of  justice ;  by  such  a  solemn  mockery  of  it  as  would  be 
evinced  by  excluding  from  our  consideration  usages  and  customs 
(which  are  the  law  of  every  government)  for  no  other  reason 
than  that  in  referring  to  the  laws  and  ordinances  in  the  second 
section  congress  had  not  enumerated  all  the  kinds  of  laws  and 
ordinances  by  which  we  should  decide  whether  the  claim  would  be 
valid  if  the  province  had  remained  under  the  dominion  of  Spain. 
We  might  as  well  exclude  a  royal  order  because  it  was  not  called 
a  law."^« 

§  1676.    Legislative  abolition  of  customs  or  usages. — The 

legislature,  in  the  exercise  of  its  police  power,  has  an  undoubted 
right  to  abolish  a  custom  however  well  established  it  may  be.-' 

"♦The   Reeside,   2    Sumn.    (U.    S.)  ^United    States    v.    Arredondo,    6 

567,  Fed.  Cas.  No.  11657.  Pet.   (U.  S.)  691,  8  L.  ed.  547. 

"  United    States    v.    Arredondo,    6  ^'  Hospital  St.  Cross  v.  Howard,  6 

Pet.     (U.    S.)    691,    8    L.    ed.    547;  T.  R.  338;  Noble  v.  Durrell,  3  T.  R. 

Strother  v.   Lucas,    12   Pet.    (U.   S.)  271;     Harris    v.    Rutledge,    19    Iowa 

410,  9  L.  ed.  1137.  388,    87    Am.    Dec.    441;    House    v. 


I003 


CUSTOMS    AXD    USAGES. 


1677 


The  legislature  may,  for  example,  abolish  a  custom  or  usage  as  to 
what  shall  constitute  a  ton  or  other  unit  of  weight.^* 

§  1677.  Requisites  of  a  valid  custom  or  usage. — It  is  essen- 
tial to  the  validity  of  a  custom  or  usage  that  it  should  be  reason- 
able, uniform,  certain,  notorious,  general  and  so  well  established 
and  of  such  duration  that  persons  in  the  business  to  which  the 
custom  related  may  be  presumed  to  have  contracted  with  refer- 
ence to  it ;  and  it  must  be  legal,  by  which  is  meant  that  the  custom 
or  usage  must  not  conflict  with  public  policy  or  settled  legal  prin- 
ciples.'^'     Concerning  the  essentials  of  certainty,  uniformity,  gen- 


Mayes,  227  Mo.  617,  127  S.  W.  305 ; 
Green  v.  MofTett,  22  Mo.  529;  Evans 
V.  Myers,  25  Pa.  St.  114;  Mays  v. 
Jennings,  4  Humph.  (Tenn.)   102. 

^  House  V.  Maves,  227  Mo.  617, 
127  S.  W.  305. 

""  Herring  v.  Skaggs.  1Z  Ala.  446; 
Barlow  v.  Lambert,  28  Ala.  704,  65 
Am.  Dec.  374;  Wilkinson  v.  William- 
son, 76  Ala.  163 ;  East  Tennessee  &c. 
R.  Co.  V.  Johnston,  75  Ala.  596,  51  Am. 
Rep.  489;  Hass  v.  Heidmon.  83  Ala. 
174,  3  So.  302;  Antomarchi's  Exr.  v. 
Russell,  63  Ala.  356,  35  Am.  Rep.  40; 
Steele  v.  McTyer's  Admr.,  31  Ala. 
667,  70  Am.  Dec.  516;  Mobile  &c.  R. 
Co.  V.  Jay,  61  Ala.  247 ;  Smith  v.  Rice, 
56  Ala.  417;  Desha  v.  Holland.  12 
Ala.  513.  46  Am.  Dec.  261;  West  v. 
Ball,  12  Ala.  340;  Savage  v.  Pelton, 
1  Colo.  App.  148.  27  Pac.  948 ;  Sturges 
V.  Buckley,  32  Conn.  18;  Continental 
Coal  Co.  V.  Birdsall,  108  Fed.  882,  48 
C.  C  A.  124;  Chicago  M.  &  St.  P.  R. 
Co.  V.  Lindeman.  143  Fed.  946.  75  C. 
C.  A.  18 ;  Wheelwright  v.  Dyal.  99  Ga. 
247,  25  S.  E.  170;  Packer  v.  Pente- 
cost, 50  111.  App.  228;  Sweet  v. 
Leach,  6  111.  App.  212;  Turner  v. 
Dawson.  SO  111.  85;  Bissell  v.  Ryan. 
23  111.  566;  Dixon  v.  Dunham,  14  111. 
324;  Strange  v.  Carrington,  116  111. 
App.  410;  American  Ins.  Co.  v. 
France,  111  111.  App.  310;  Currie  v. 
Syndicate.  104  111.  App.  165 ;  Quinn  v. 
Herhold.  100  111.  App.  320;  Xewton 
Rubber  Works  v,  Home  Rattan  Co., 
100  111.  App.  421;  Mobile  Fruit  & 
Trading  Co.  v.  Judy.  91  111.  App.  82; 
Wallace  v.  Morgan,  23  Ind.  399;  Har- 
per V.  Pound,  10  Ind.  32 :  Rochester 
German  Ins.  Co.  v.  Peaslee-Gaulbert 


Co..  27  Ky.  L.  1155,  87  S.  W.  1115; 
Caldwell  v.  Dawson,  61  Ky.  121; 
Huston  V.  Peters,  1  Mete.  (Ky.) 
558;  Kendall  v.  Russell,  5  Dana 
(Ky.)  501,  30  Am.  Dec.  696;  Ran- 
dall v.  Smith,  63  Maine  105,  18 
Am.  Rep.  200;  Marrett  v.  Brackett, 
60  Maine  524;  Leach  v.  Perkins.  17 
Maine  462.  35  Am.  Dec.  268;  Hartley 
v.  Richardson,  91  Maine  424.  40  Atl. 
336;  Murray  v.  Spencer,  24  Md.  520; 
Citizens'  Bank  v.  Grafflin,  31  Md.  507, 
1  Am.  Rep.  66;  Shute  v.  Bills,  191 
Mass.  433,  78  N.  E.  96,  7  L.  R.  A. 
(x\.  S.)  965.  114  Am.  St.  631;  Butler 
V.  Charlestown,  7  Grav  (Mass.)  12; 
Cutter  v.  Howe.  122  Mass.  541 ;  Will- 
iams V.  Powell.  101  Mass.  467,  3  \m. 
Rep.  396;  Lincoln  v.  Shaw.  17  Mass. 
410;  Dwight  v.  Whitney,  15  Pick. 
.(Mass.)  179;  Goodenow  v.  Tyler.  7 
Mass.  36,  5  Am.  Dec.  22;  Porter  v. 
Hills.  114  Mass.  106;  Schurr  v.  Savig- 
ny.  85  Mich.  144.  48  X.  W.  547; 
Black  V.  Ashley.  80  Mich.  90,  44  X. 
W.  1120;  Ledyard  v.  Hibbard.  48 
Mich.  421.  12  X.  W.  637.  42  Am.  Rep. 
474;  Pennell  v.  Delta  Transp.  Co..  94 
Mich.  247.  53  X.  W.  1049;  Shackel- 
ford V.  Xew  Orleans  &c.  R.  Co..  n 
Miss.  202;  Ober  v.  Carson's  Exr.,  62 
Mo.  209;  Foye  v.  Leighton.  22  X.  H. 
71.  53  Am.  bee.  231 :  Farnsworth  v. 
Chase,  19  N.  H.  534,  51  Am.  Dec.  206; 
Palmer  v.  Harrison,  28  Misc.  (X'^. 
Y.)  180,  58  X.  Y.  S.  1107:  In  re 
Haves,  Zl  Misc.  (N.  Y.)  264,  75  X. 
Y.  S.  312:  Gough  v.  Davis.  24  Misc. 
(X.  Y.)  245,  52  N.  Y.  S.  947.  affd. 
30  App.  Div.  (N.  Y.)  639.  57  X.  Y. 
S.  1139;  Smith  v.  Milton.  169  X.  Y. 
583,  62  N.  E.  1100;  Miller  v.  Burke, 


§  1 677 


CONTRACTS. 


1004 


erality  and  notoriety,  it  has  been  well  observed :  "A  custom  has 
the  force  of  law  and  furnishes  a  standard  for  the  measurement  of 
many  of  the  rights  and  acts  of  men.  It  must  be  certain  or  the 
measurements  by  this  standard  will  be  unequal  and  unjust.  It 
must  be  uniform,  for,  if  it  vary,  it  furnishes  no  rule  by  which  to 
mete.  It  must  be  known,  or  must  be  so  uniform  and  notorious 
that  no  person  of  ordinary  intelligence  who  has  to  do  with  the 
subject  to  which  it  relates  and  who  exercises  reasonable  care 
would  be  ignorant  of  it ;  for  no  man  may  be  justly  condemned  for 
the  violation  of  a  law  or  a  custom  which  he  neither  knows  nor 
ought  to  know.  In  short,  a  binding  custom  must  be  certain,  defi- 
nite, uniform,  and  known,  or  so  notorious  that  it  would  have  been 
known  to  any  person  of  reasonable  prudence  who  dealt  with  its 
subject  with  the  exercise  of  ordinary  care."^"     The  question  of 


68  N.  Y.  615 ;  White  v.  Tripp,  125  N. 
Car.  523,  34  S.  E.  686 ;  Cope  v.  Dodd, 
13  Pa.  St.  33;  Robeson  v.  Pels,  202 
Pa.  St.  399,  51  Atl.  1028;  Saint  v. 
Smith,  1  Cold.  (Tenn.)  51;  Oriental 
Lumber  Co.  v.  Blades'  Lumber  Co., 
103  Va.  730,  50  S.  E.  270;  Sterling 
Organ  Co.  v.  House,  25  W.  Va.  64; 
Power  V.  Kane,  5  Wis.  265;  Hall  v. 
Storrs,   7   Wis.   253. 

"^  Chicago  M.  &  St.  P.  R.  Co.  v. 
Lindeman,  143  Fed.  946,  75  C.  C.  A- 
18.  "But  a  usage  repugnant  to  the 
terms  and  objects  of  a  written  con- 
tract is  not  competent  to  vary  or 
control  it;  as  a  usage  for  a  master 
cooper  to  send  his  apprentice  abroad 
on  a  whaHng  voyage,  and  receive  his 
earnings  on  such  voyage,  Randall  v. 
Rotch,  12  Pick.  109;  or  where,  by 
the  terms  of  a  contract  to  manufac- 
ture brick,  the  bricks,  when  made, 
were  the  joint  property  of  the  con- 
tracting parties,  that  one  of  the  par- 
ties had  no  interest  in  them.  Ma- 
comber  V.  Parker,  13  Pick.  181 ;  or, 
in  a  written  contract  for  the  manu- 
facture of  retorts,  that  founders,  in 
the  absence  of  an  express  agreement, 
should  not  be  held  to  warrant  their 
castings  against  latent  defects,  or,  in 
case  of  apparent  defects,  they  were 
entitled  to  have  the  castings  returned 
to  them  in  a  reasonable  time,  Whit- 
more  V.  South  Boston  Iron  Com- 
pany, 2  Allen  60;  or,  when  the  con- 
tract  of   pledge  of   stock  only  pro- 


vided that  it  might  be  transferred 
after  default,  that  it  might  be  trans- 
ferred at  the  pleasure  of  the  holder, 
Dyke  v.  Allen,  7  Hill  497;  or,  where, 
by  a  policy  of  insurance,  the  re-in- 
surer is  to  make  a  full  indemnity 
within  the  amount  of  risk  taken  by 
him,  that  he  is  chargeable  only  for 
such  proportion  of  the  loss,  as  the 
amount  of  re-insurance  bears  to  the 
original  policy.  Mutual  Safety  Ins. 
Co.  V.  Howe,  2  Comst.  241 ;  or,  for 
an  insurance  company  in  case  of  a 
total  loss  to  retain  two  per  cent,  per 
month  on  the  balance  of  the  premium 
notes  from  the  date  of  the  last  as- 
sessment, until  the  expiration  of  the 
terms  of  the  policy,  when  such 
usage  limits  and  controls  the  terms 
of  the  policy,  Swampscot  Co.  \1. 
Partridge,  5  Foster  (N.  H.)  369; 
Foye  V.  Leighton,  2  Id.  71 ;  Leach  v. 
Beardslee,  22  Conn.  404;  McGregor 
V.  Ins.  Co.  of  Penn.,  1  Wash.  Cir.  Ct. 
39;  Knox  v.  The  Nienta,  Crabbe, 
534. 

"So,  no  usage  can  be  sustained  in 
opposition  to  the  established  prin- 
ciples of  law,  as  a  usage  to  return 
a  portion  of  a  premium  note,  when 
the  insurance  is  effected  on  a  cargo 
from  a  particular  port  to  a  foreign 
port  and  back,  if  the  vessel  fails  to 
get  a  return  cargo.  Homer  v.  Dorr, 
10  Mass.  26;  or,  that  a  vessel  war- 
ranted to  be  neutral  is  not  neutral 
but  only  pretended  to   be,   Lewis  v. 


I005 


CUSTOMS    AXD    USAGES. 


1678 


the  existence  of  a  usage  is  always  a  matter  of  fact  and  not  of 
opinion  and  -s  to  be  established,  it  has  been  said,  only  by  proof 
of  a  series  of  acts  of  a  similar  character  performed  at  different 
times  by  different  persons."  It  is  of  a  higher  degree  than  a  mere 
mutual  exchange  of  courtesies  which  bind  neither  party  and 
which  do  not  become  of  binding  force  upon  a  contract  made  by 
the  parties.^^  The  different  elements  which  go  to  make  a  valid 
custom  or  usage  will  receive  a  separate  consideration  in  the  suc- 
ceeding sections. 

§  1678.  Custom  or  usage  must  be  uniform  and  certain. — 
A  custom  or  usage  in  order  to  be  controlling  and  change  the  rights 
and  liabilities  of  persons  arising  from  their  dealings  with  each 
other  must  be  certain  and  uniform.  This  requires  that  it  should 
be  uniform  in  its  application  to  the  class  affected  and  of  such 
certainty  as  to  be  capable  of  proof.  It  must  not  be  left  to  con- 
jecture or  dispute.^^     "Before  any  custom  can  be  admitted  in  the 


Thatcher,  15  Mass.  431 ;  or  to  short- 
en the  time  of  presentment,  de- 
mand and  notice  in  respect  to  prom- 
issory notes  within  that  fixed  by  law, 
applicable  to  such  a  class  of  notes, 
Mechanics'  Bank  v.  Merchants'  Bank, 
6  Mete.  13;  or  to  make  the  seller  of 
manufactured  goods,  by  sample,  lia- 
ble to  the  purchaser  for  damages  oc- 
casioned by  latent  defects  in  the 
goods  sold,  not  discoverable  either  in 
them  or  the  sample,  by  ordinary  care, 
Dickerson  v.  Gay,  7  Allen  29;  or,  for 
the  master  of  a  stranded  ship  to  sell 
the  cargo  without  necessity,  Bryant 
v-  Commonwealth  Insurance  Com- 
pany, 6  Pick.  131 ;  Walker  v.  Trans- 
portation Company,  3  Wall.  150; 
Thompson  v.  Riggs,  5  id.  663;  Dodd 
€t  al.  V.  Farlow,  11  Allen  430. 

"So,  also,  the  law  refuses  to  give 
its  sanction  to  a  usage  that  is  ab- 
surd or  unreasonable,  as  a  usage  of 
ship  owners  to  pay  the  seamen's  ad- 
vance wages  to  their  own  shipping 
agent  employed  to  procure  a  crew, 
and  for  him.  in  his  turn,  to  pay  the 
same  to  the  boarding-house  keeper 
who  brings  the  seamen  to  him.  Met- 
calf  V.  Weld.  14  Gray  210;  or  for 
merchants  of  a  particular  locality, 
engaged  in  the  whaling  trade,  to  ac- 
cept the  bills  of  their  masters  drawn 


for  supplies  furnished  abroad, 
Bowen  et  al.  v.  Stoddard,  10  Mete. 
380."  Randall  v.  Smith,  63  Maine 
105,  18  Am.  Rep.  200. 

"Ames  Mercantile  Co-  v.  Kimball 
S.  S.  Co.,  125  Fed.  332. 

"  Pitch  Pine  Lumber  Co.  v.  Wood 
Lumber  Co.,  57  Fla.   140,  48  So.  993. 

"Buford  v.  Tucker,  44  Ala.  89: 
Desha  v.  Holland.  12  Ala.  513.  46 
Am.  Dec.  261;  Crusoe  v-  Clark.  127 
Cal.  341,  59  Pac.  700;  Heistand  v. 
Bateman,  41  Colo.  20,  91  Pac.  1111; 
The  Gualala,  178  Fed.  402.  102  C.  C. 
A.  548 ;  Berrv  v.  Cooper.  28  Ga.  543 : 
Swern  v.  Churchill,  155  111.  App.  505; 
Strange  v.  Carrington,  116  111-  App. 
410;  Cincinnati  &c.  Mail  Line  Co.  v. 
Boal,  15  Tnd.  345;  Baltimore  Base 
Ball  Club  &c.  Co.  v.  Pickett,  78  Md. 
375,  28  Atl.  279.  22  L.  R.  A.  690.  44 
Am.  St.  304;  Foley  v.  Mason.  6  Md. 
37;  Citizens  Bank  v.  Grafflin.  31  Md. 
507.  1  Am.  Rep.  66;  Strong  v.  Grand 
Trunk  R.  Co..  15  Mich.  206.  93  Am. 
Dec.  184;  Xippolt  v.  Firemen's  Ins. 
Co.,  57  Minn.  275.  59  N.  W.  101; 
Ober  V.  Carson.  62  Mo.  200;  Fhrlich 
V.  ;Etna  Life  Ins.  Co.,  103  Mo  231. 
15  S.  W.  530;  Smith  v.  Gibh<;.  44  N. 
H.  335;  Palmer  v.  Harrison.  28  Misc. 
(N.  Y.)  180.  58  N.  Y.  S.  1107;  Eck- 
stein V.  Schleimer,  62  Misc.  (N.  Y.) 


§    1678  CONTRACTS.  IOO6 

law,  it  must  appear  that  the  usage  has  been  general  and  uniform, 
a  custom  peaceably  acquiesced  in,  and  not  subject  to  contention 
and  dispute."^*  "A  custom  must  be  general  and  uniform.  It  must 
be  certain,  reasonable,  and  sufficiently  ancient  to  afford  the  pre- 
sumption that  it  is  generally  known  *  *  *  and  must  not  be  in 
opposition  to  any  principle  of  general  policy,  nor  inconsistent 
with  the  terms  of  the  agreement  between  the  parties  or  against  the 
established  principles  of  law.  Besides  this,  it  must  be  gen- 
erally known  and  established,  and  so  well  settled  and  so  uniform- 
ly acted  upon  as  to  raise  a  fair  presumption  that  it  was  known  to 
both  contracting  parties,  and  that  they  contracted  in  reference  to 
it  and  in  conformity  with  it."^^  A  custom  which  is  uniform  and 
general  is  valid  though  not  uniformly  acquiesced  in,  for  this  would 
have  the  effect  of  annulling  customs  by  those  unwilling  to  abide 
by  them.^^  In  one  of  the  cases  where  the  contention  was  for  a 
usage  that  in  sales  of  large  lots  of  goods,  the  buyer  was  not  obli- 
gated if  the  variation  in  the  quantity  was  considerable  and  the  de- 
termination of  this  matter  rested  with  the  buyer  and  there  was  no 
well  recognized  definite  test  for  such  determination,  the  usage 
was  held  invalid  for  uncertainty.^^  So,  these  elements  are  lacking 
in  a  so-called  usage  of  clerks  on  steamboats  to  receive  and  carry 
packages  of  money  from  one  port  to  another  without  charge  in 
the  expectation  that  shippers  would  prefer  the  boat  to  other  boats 
in  making  shipments  of  their  ordinary  freight.^^  And  so  a  cus- 
tom was  held  not  to  be  enforced  which  allowed  an  intermediate 
carrier,  accepting  property  subject  to  charges,  to  deduct  from  the 
freight  earned  by  a  prior  carrier  the  value  of  any  deficiency  in 
the  freight  as  delivered  to  such  intermediate  carrier.^^  There 
can  be  no  comparative  degrees  of  certainty  and  hence  an  instruc- 

635,   116   N.   Y.    S.   7;    Cavanagh   v.  ^Cleveland.  C.  C.  &  St.  L.  R.  Co. 

O'Neill,   20    Misc.    (N.    Y.)    233,    45  v.  Jenkins,  174  111.  398,  51  N.  E.  811, 

N.  Y    S.  789;  United  States  v.  Du-  62  L.  R.  A.  922,  66  Am.  St.  296. 

val,  Gilp    (U.  S.)  356,  Fed.  Cas.  No.  "« Desha   v.    Holland,    12   Ala.   513, 

15015 ;  Oelricks  v.  Ford,  23  How.  (U.  46  Am.  Dec.  261. 

S)    49,    16    L.    ed.    534;    Nelson    v.  ^^  Kalamazoo  Corset  Co.  v.  Simon, 

Southern  Pac.  R.   Co.,   15  Utah  325,  129  Fed.  144,  affd.  129  Fed.  1005,  64 

49  Pac.   644;   Russell's   Exr.  v.   Fer-  C.    C.    A.    166. 

guson,  n  Vt.  433,  60  Atl.  802;  Lins-  '*  Cincinnati    &c.  Mail   Line   Co.   v. 

ley  V.  Lovely,  26  Vt.  123;  Angell  v.  Boal,  15  Ind.  345- 

Keith,  24  Vt.  371.  "*  Strong  v.  Grand  Trunk  R.  Co.,  IS 

"  Strong  V.   Grand   Trunk  R.   Co.,  Mich.  206,  93  Am.  Dec.  184. 
15  Mich.  206,  93  Am.  Dec.  184. 


1007 


CUSTOMS    AND    USAGES. 


§    1679 


tion  that  a  custom  must  be  as  "certain  as  the  business  to  which  the 
rule  applies  will  permit"  is  invalid/" 

§  1679.  Reasonableness  of  customs  or  usages. — A  custom 
Dr  usage  must  stand  the  test  of  reasonableness ;  for  it  is  one  of  the 
requisites  of  a  good  custom  that  it  must  be  reasonable.  A  custom 
or  usage  which  shocks  the  sense  of  fairness  cannot  be  upheld.*^ 
"A  custom  or  usage,  to  be  legal  and  valid,  must  be  reasonable 
and  consistent  with  good  morals  and  sound  policy,  so  that  the  par- 
ties may  be  supposed  to  have  made  their  contracts  with  reference 
to  it.  If  such  a  usage  is  shown  to  exist,  then  it  becomes  the  law 
by  which  the  rights  of  the  parties  are  to  be  regulated  and  gov- 


*°  Nelson  v.  Southern  Pacific  R. 
Co.,  15  Utah  325,  49  Pac.  644; 
Saunders  v.  Southern  Pacific  R.  Co., 
15  Utah  334.  49  Pac.  646. 

"Devonald  v.  Rosser,  93  L.  T.  274; 
Bvrd  V.  Deall,  150  Ala.  122,  43  So. 
749;  Stone  v.  Rice,  58  Ala.  95;  An- 
derson V.  Whittaker,  97  Ala.  690,  11 
So.  919;  Lindsay  v.  Cusimano,  12 
Fed.  504;  Liverpool  &  Great  West- 
ern Steam  Co.  v.  Suitter,  17  Fed. 
695;  Young  v.  One  Hundred  & 
Forty  Thousand  Hard  Brick,  78  Fed. 
149;  Central  R.  &c.  Co.  v.  Anderson, 
58  Ga.  393;  Wallace  v.  Morgan,  23 
Ind.  399;  Castleman  v.  Southern 
Mut.  Life  Ins.  Co.,  77  Ky.  197;  Leach 
V.  Perkins,  17  Maine  462,  35  Am. 
Dec.  268 ;  Rosenstock  v.  Tormev,  32 
Md.  169,  3  Am.  Rep.  125;  Second 
Nat.  Bank  v.  Western  Nat.  Bank,  51 
Md.  128,  34  Am.  Rep.  300;  Eager  v. 
Atlas  Ins.  Co.,  31  Mass.  141,  25  Am. 
Dec.  363 ;  Seccomb  v.  Provincial  Ins. 
Co..  92  Mass.  305:  Whitney  v.  Esson, 
99  Mass.  308,  96  Am.  Dec.  762;  Has- 
kins  V.  Warren,  115  Mass.  514; 
Strong  V.  Grand  Trunk  R.  Co.,  15 
Mich.  206,  93  Am.  Dec.  184;  Clark 
V.  Humphries,  25  Mo.  99;  Cole  v. 
Skrainka,  37  Mo.  App.  427;  Jacobs 
V.  Shorev,  48  N.  H.  100.  97  Am.  Dec. 
586;  Duguid  v.  Edwards,  50  Barb- 
(N.  Y.)  288:  Eckstein  v.  Schleimer. 
62  Misc.  (N.  Y.)  635.  116  N.  Y.  S.  7; 
Penland  v.  Ingle.  138  N.  Car. 
456.  50  S.  E.  850;  McMasters  v. 
Pennsylvania  R.  Co..  69  Pa.  St.  374. 
8  Am.  Rep.  264;  Horner  v.  Watson. 
79  Pa.  St.  242,  21  Am.  Rep.  55 ;  Con- 
solidated   Kansas    City   &c.    Refining 


Co.  V.  Gonzales,  50  Tex.  Civ.  App. 
79,  109  S.  W.  946;  Sterling  Organ 
Co.  V.  House,  25  W.  Va.  64.  "The 
courts  are  frequently  required  to  hold 
a  custom  unreasonable  and  void,  not- 
withstanding strong  reasons  urged  in 
favor  of  it  as  a  rule  of  convenience 
by  the  class  by  whom  it  has  been 
adopted,  and  where  the  hardships  in 
any  case  would  not  be  greater  than 
in  this.  The  case  of  Leuckhart  v. 
Cooper,  3  Bing.  N.  C.  99,  is  an  il- 
lustration of  such  cases.  The  usage 
given  in  evidence  there  was  for  pub- 
lic warehousemen  in  London  to  have 
a  general  lien  on  all  goods  from 
time  to  time  housed  with  them  for  and 
in  the  name  of  the  merchants  or  other 
persons  by  whom  they  were  em- 
ployed, for  all  moneys  or  balances 
due  from  such  merchants  or  persons 
for  expenses  incurred  about  goods 
consigned  from  abroad,  and  irre- 
spective of  the  ownership  of  the 
goods  upon  which  lien  was  claimed. 
In  Bryant  v.  Commonwealth  Ins.  Co., 
6  Pick.  131,  a  custom  for  the  master 
of  a  vessel  stranded  to  sell  the  cargo 
without  necessity  was  held  void.  In 
Bowen  v.  Stoddard.  10  Met.  380.  a 
custom  among  merchants  of  Xew 
Bedford  and  Fairhavcn  engaged  in 
the  whaling  trade,  to  accept  the  bills 
of  their  masters,  drawn  for  supplies 
furnished  abroad,  failed  to  receive 
the  sanction  of  the  court,  on  the 
ground  that  a  usage  could  not  be 
reasonable  which  put  at  hazard  the 
property  of  the  owner  at  the  pleas- 
ure of  the  master.  And  see  Jordan 
V.    Meredith,    3    Yeates    (Pa.)    318 


§    1679  CONTRACTS.  IOO8 

erned."*^  Thus,  a  usage  has  been  declared  invaHd  which  author- 
ized a  dealer  in  bonds  or  securities,  after  an  absolute  sale  and 
delivery  to  a  customer,  to  retain  a  right  to  represent  such  cus- 
tomer and  to  expend  money  without  an  express  contract  giving 
him  this  right.  In  a  case  of  this  character,  a  court  said :  "To 
hold  that  any  agency  for  the  purchasers,  or  right  of  control  over 
the  bonds  and  securities  so  sold  and  delivered,  remained  in  the 
vendor,  under  said  alleged  usage,  without  any  contract  or  agree- 
ment on  the  part  of  the  purchasers,  would  be  unreasonable.  Any 
usage  which  authorizes  and  empowers  a  vendor,  after  an  absolute 
sale  and  delivery  of  bonds  or  securities,  and  receipt  of  the  price, 
to  meddle  further  in  respect  to  them,  and  institute,  defend,  or  con- 
trol litigation  which  may  affect  their  values  and  validity,  at  the 
same  time  charging  the  purchasers  or  holders  of  such  bonds  or 
securities  with  the  costs,  disbursements  and  expenses  of  such  liti- 
gation, without  the  consent  or  agreement  of  such  purchasers  or 
holders,  is  contrary  to  the  plainest  principles  of  law,  and  to  the 
absolute  right  and  dominion  of  such  purchasers  and  holders  over 
their  own  property."*^  Parties  may  be  bound  to  act  in  reference 
to  a  reasonable  custom,  although  they  have  not  expressly  agreed 
to  do  so.**  If  the  custom  is  in  fact  reasonable,  it  is  not  invalid  on 

[2    Am.    Dec.    373],    and    Spear    v.  "Saunders    v.    Southern    Pac.    R. 

Newell,   referred   to    in   23   Vt.    159.  Co.,  15  Utah  334,  49  Pac.  646;   Nel- 

Some  of  the  cases  cited  were  more  son  v.  Southern  Pac.  R.  Co.,  15  Utah 

liable     to     work    injustice    generally  325,  49  Pac.  644.    In  Cleveland,  C.  C. 

than   the   present;   but   as  a   custom,  &  St.  L.  R-  Co.  v.  Zider,  61  Fed.  908, 

if  good  at  all,   is  compulsory  on  all  10  C.  C.  A.   151,  it  appeared  that  an 

cases   falling  within  it    (1   Bla.   Com.  employe  of  a  car  company,  working 

78),  we  are  not  at  liberty  to  regard  on  one  of  its  cars  placed  on  the  side 

it  exclusively  in  the  light  of  its  ef-  track  of  a  railroad,  was  killed  by  the 

fects  in  the  majority  of  cases.   Spe-  railroad   company's   switching  engme 

cial   customs   are   so   liable  to   create  running  into   the  car.     In   an   action 

confusion  of  legal  rules  in  directions  against  the   railroad  company  there- 

not   contemplated    in    their    adoption,  for,    the    complaint    alleged    that    the 

that  they  are  admitted   into  the  law  car    company's    unfinished   cars   were 

with  great  reluctance ;  and  it  is  not  accustomed    to    be    placed,    with    de- 

often  a  hardship  to  parties  to  reject  fendant's  knowledge  and  consent,  on 

a   custom    so    long   as   they   are   left  its    side  tracks,   to   be  there   finished 

free  to  make  their  own  bargains,  and  and    made    ready    for    shipment.      It 

can  incorporate  it  in  their  contracts  was  held  that  evidence  of  an  agree- 

if  they  see  fit  to  do  so."     Strong  v.  ment  between  the  companies  for  the 

Grand  Trunk  R.   Co.,   15  Mich.  206,  use  by  the  car  company  of  the  side- 

93  Am.   Dec.  184.  tracks   as   a   delivery   track,   but   not 

**Farnsworth  v.   Hammer.   1   Allen  for   constructing   or   completing   cars 

(Mass.)   494,  79  Am.  Dec.  756.  thereon,    was    immaterial,    as    it    was 

**  Municipal   Inv.    Co.   v.    Industrial  not  inconsistent  with  the  alleged  cus- 

&  General  Trust  Co.,  89  Fed.  254.  tom,  and  the  railroad  company  would 


I009  CUSTOMS    AND    USAGES.  §    1680 

the  ground  that  it  may  be  abused."  The  reasonableness  of  a 
custom  must  in  some  measure  depend  upon  the  place  where  the 
contract  is  made.*" 

§  1680.  Reasonableness  of  custom  or  usage — Examples  of 
customs  invalid  for  unreasonableness. — The  principle  which 
denies  validity  to  customs  or  usages  on  the  ground  of  unreason- 
ableness is  abundantly  illustrated  by  the  adjudicated  cases.  Thus 
a  usage  is  invalid  for  unreasonableness  where  the  whole  price 
of  stone  sold  at  a  certain  price  per  cubic  yard  is  to  be  com- 
puted by  measuring  the  stone  after  it  has  been  laid  in  a  solid 
wall  and  the  result  of  this  computation  would  be  to  double 
the  quantity  actually  sold."  And  it  has  been  so  held  as  to 
the  custom  of  brokers  to  charge  commission  to  both  parties 
without  informing  either  that  they  were  employed  by  the 
other.^^  So  as  to  the  usage  of  a  railroad  company  requiring 
claims  for  damages  for  loss  or  injury  to  shipments  to  be  made 
within  ten  days  after  delivery  at  the  station.*®  So  as  to  a  cus- 
tom which  allows  an  employe  to  carry  on  a  business  in  competi- 
tion with  his  employer.'*"  So  with  the  usage  of  plasterers  to  charge 
half  the  size  of  the  windows  at  a  price  agreed  on  when  that  price 
includes  the  cost  of  materials.^^  So  with  the  custom  that  a  tenant 
may  convert  his  landlord's  personal  property  found  on  the  prem- 
ises without  payment  therefor."  So  with  a  publishers'  usage  to 
insert  advertisements  until  ordered  discontinued  though  the  object 
of  the  advertisement  has  been  accomplished."  So  with  the  cus- 
tom that  an  agency  to  act  for  a  ship  in  distress  is  irrevocable.'^* 
So  with  the  custom  that  the  act  of  marking  or  staking  ice  on 
public  waters  was  a  sufficient  appropriation  of  the  same.''^     So 

be  bound  to  act  in  reference  to  such  **  Browning  v.  Long  Island  R.  Co., 

custom   whether   it   originated   in   an  2  Daly   (N.  Y.)   117. 

agreement  or  grew  up  independently.  ""  Stonev  v.    Farmers'   Transp.   Co., 

"Miller    v.    Eschbach.    43    Md.    1.  17  Hun  (X.  Y.)  579. 

See    also.    Charlotte    Oil    &c.    Co.   v.  "Jordan     v.     Meredith,     3     Yeates 

Hartog.  85  Fed.  150,  29  C.  C.  A-  56.  (Pa.)  318,  2  Am.  Dec.  373. 

"Fatman    v.    Thompson.    2    Disn.  "  Anewalt  v.  Hummerl,  109  Pa.  St. 

(Ohio)  482,  13  Ohio  Dec.  295.  271. 

"Rogers  v.   Hayden,  91   Maine  24,  "^ Thomas      v.      O'Hara,      1      Mill. 

39  Atl.  283.  Const.    (S.   Car.)    303. 

**Farnsworth  v.  Hemmer,  83  Mass.  "Minis  v.   Nelson,  43  Fed.  777. 

494,  79  Am.  Dec  756.  "Becker  v.  Hall.  116  Iowa  589.  88 


64 — Contracts,  Vol.  2 


N.  W.  324,  56  L.  R.  A.  573. 


§    i68l  CONTRACTS.  lOIO 

with  a  usage  binding  the  owner  of  property  to  pay  a  percentage 
to  an  architect  such  as  the  architect  might  figure  out  and  at  a  price 
which  he  puts  upon  the  probable  cost  of  the  building.^^    So  with 
the  custom  of  a  smehing  company  to  appropriate  to  its  own  use, 
without  payment,  ore  shipped  to  it  where  the  shipper  fails  to  give 
directions  within  fifteen  days  after  its  receipt  by  the  smelting  com- 
pany."    So  with  a  custom  or  usage  of  carpet  making  which 
would  give  the  color  mixer  an  exclusive  title  as  against  his  em- 
ployer to  the  various  combinations  and  shades  of  color  devised  by 
him  for  use  in  the  manufacture  of  carpets  in  his  employer's  mill.^^ 
And  so  with  a  usage  in  the  lumber  business  by  which  the  con- 
signor is  compelled  to  settle  for  shortage  on  an  unsworn  report 
of  the  consignee  transmitted  to  such  shipper  by  the  unsworn 
statement  of  the  party  ordering  the  lumber."^^     A  local  custom 
that  insurance  agents,  after  the  termination  of  their  agency,  may 
cancel  any  of  the  policies  issued  through  them,  and  transfer  the 
insurance  to  other  companies  represented  by  them,  is  also  unrea- 
sonable, and  subversive  of  the  principles  governing  the  relation  of 
principal  and  agent,  and  is  therefore  void  and  inadmissible  in 
evidence.^*' 

§  1681.  Reasonableness  of  customs  or  usages— Examples 
of  customs  held  not  unreasonable. — The  following  customs 
and  usages  have  been  upheld  as  against  the  objection  of  unrea- 
sonableness: a  custom  of  sawyers  to  retain  slabs  as  part  of  the 
compensation  for  sawing  f^  a  river  custom  allowing  persons  em- 
ployed on  steamboats  to  go  free  of  charge  f-  a  usage  which  forbids 
printers  to  print  private  copies  from  type  set  up  for  the  use  of  a 
customer  f^  a  custom  among  whalers  that  a  whale  belongs  to  the 

■^  Sully   V.    Pratt,    106    La.    601,    31  R.    A-    573;    Merchants'    Ins.    Co.    v. 

So    161  Prince,  50   Minn.   53,   52   N.  W.   131, 

"Consolidated  Kansas  City  &c.  Re-  36  Am.  St.  626;  Coleman  v^  Chad- 
fining  Co.  V.  Gonzales,  50  Tex.  Civ.  wick,  80  Pa.  St.  81.  21  Am.  Rep.  93 ; 
App   79    109  S.  W   946.  Tilley  v.  County  of  Cook,  103  U.  S. 

^•^bempsey  v.  Dobson,  184  Pa.  588,  155,  26  L.  ed.  374;  United  States  v- 

39  Atl.  493,  40  L.  R.  A.  550,  63  Am.  Buchanan,  8  How.   (U.  S.)  83,  12  L. 

St.  809.  ed.  997. 

"•Byrd   v    Beall,    150   Ala.    122,   43  "  Wyman  v.  Banton,  66  Mame  171. 

So    749        "  "'The     New    World    v.     King,     16 

"'Paxton  V.   Courtnay,  2  Foster  &  How.   (U.  S.)  469,  14  L.  ed.  1019- 

F    131-    Anderson   v.    Whittaker,  97  ""Williams    v.    Oilman,    3    Greenl. 

Ala.  690,  11  So.  919;  Becker  v.  Hall,  (Maine)   276. 
116  Iowa  589,  88  N.  W.  324,  56  L. 


lOII  CUSTOMS    AND    USAGES.  §    1681 

person  whose  lance  is  found  in  its  body  when  it  rises  f*  a  ware- 
house custom  which  allows  warehousemen  to  send  warehouse  cot- 
ton to  the  pickery  for  the  separation  of  damaged  cotton  from  that 
which  is  merchantable;"^  a  custom  of  real  estate  agents  to  receive 
commissions  only  on  sales  actually  made  and  to  receive  nothing  for 
services  when  no  sales  are  made ;°"  a  custom  to  deliver  at  the  port 
of  shipment  bills  of  lading  only  to  the  party  holding  the  receipt  of 
the  maker  or  agent  of  the  vessel;"^  a  usage  among  tobacco  dealers 
of  warranting  certain  kinds  of  tobacco  to  remain  sound  and  mer- 
chantable for  four  months  after  the  sale;"*  a  custom  of  the  river 
which  allows  the  captain  to  insure  the  boat  and  give  the  notes  of 
the  owners  for  the  premiums ;°"  a  local  custom  among  factors  to 
give  a  credit  of  six  months  on  sales  and  to  charge  the  amount  of 
sales  immediately  to  the  account  of  the  principal  and  charge  it  back 
in  case  of  the  failure  of  the  purchaser,  providing  the  factor  has 
not  been  negligent ;'°  a  custom  of  country  banks  to  send  valuable 
packages  by  the  captain  of  a  steamboat  once  a  week  instead  of 
sending  such  papers  by  mail  f'^  a  board  of  trade  usage  which  limits 
the  time  within  which  the  buyer  of  grain  by  sample  with  express 
warranty  must  object  to  the  quality."-  Evidence  to  show  that  an 
agreement  in  writing  to  serve  as  traveling  salesman  imposes 
upon  the  salesman  the  duty  of  making  up  samples  necessary  for 
his  business  is  admissible  in  an  action  for  breacli  of  such  con- 
tract.^^     In  an  action  on  a  contract  under  which  plaintiff  exca- 

**  Ghen  v.  Rich,  8  Fed.  159.  by  written  contract  to  furnish  to  de- 

""  Desha    v.    Holland,    12   Ala.    513,  fcndant  at   his    furnaces   fifteen   cars 

46  Am.   Dec.  261.  of  coke  per  day  for  si.x  months  at  an 

""  Green    v-    Wright,    36    Mo.    App.  agreed     price    per     ton.      The     coke 

298.  company,   however,   was   "not   to   be 

"  Blossom    V.    Champion,   37    Barb,  held    in    damages    for    the    railroad 

(N.  Y.)   554.  company's    failure    to    supply    trans- 

**  Fatman    v.    Thompson,    2    Disn.  portation."    It  was  held  that  the  con- 

(Ohio)   482.   13  Ohio  Dec.  295.  tract   was   subject   to   a   custom   pre- 

"".A.dams  v.  Pittsburgh  Ins.  Co.,  95  vailing  among  coke  producers  of  that 

Pa.   St.  348,  40  Am.   Rep.  662.  region,    and    known    to   both    parties. 

'"Dwight     V.     Whitney,     15     Pick,  to  distribute,  in  case  of  shortage  of 

(Mass.)    179.  cars,    all    the    cars    received    propor- 

"  Bridgeport     Bank    v.     Dyer,     19  tionately  among  the  orders  on  hand; 

Conn.    136.  and  defendant  had  no  ground  of  com- 

"  Everingham  v.  Lord,  19  111.  App.  plaint  if  he  received  his  proper  pro- 

565.  portion  of  cars  during  the  period  of 

"Brown  v.  Baldwin  &  Gleason  Co.,  shortage.    McKeefrev  v.  Connellsville 

13  N.  Y.  S.  893,  37  \.  Y.  St.  362.    A  Coke   Co..   56  Fed.   212.  5   C.   C.   A. 

coke  manufacturing  company  agreed  482,  and  see  Howard  v.  Walker,  92 


§    1 682  CONTRACTS.  1 01 2 

vated  earth  and  rock  from  defendant's  lots,  and  which  provided 
that  he  be  paid  on  estimates  made  by  a  surveyor,  it  was  not  error 
to  permit  plaintiff  to  prove  the  custom  of  surveyors  in  making 
allowances  to  excavators  on  their  being  obliged  to  excavate  below 
the  depth  mentioned  in  the  contract  to  reach  a  level,  where  such 
custom  was  a  reasonable  one,  and  known  to  both  parties  before 
entering  into  the  contract.''* 

§  1682.    Necessity  that  custom  should  be  general. — It  is 

essential  to  a  valid  usage  or  custom  that  it  be  general  or  notorious 
in  the  locality.  It  is  not  enough  that  the  act  has  been  frequently 
done.  It  must  be  shown  to  be  so  generally  known  and  recognized 
that  a  fair  presumption  arises  that  the  parties  entering  into  their 
contract  do  so  in  recognition  of  the  custom  or  usage  in  the  local- 
ity. In  other  words,  the  usage  must  be  so  general  as  to  furnish 
a  presumption  of  knowledge  thereof  by  both  parties,"  although 
it  has  been  held  that  a  usage  is  general  if  generally  recognized 
and  observed  by  those  engaged  in  the  kind  of  transactions  to 
which  it  applies  within  the  region  where  it  is  claimed  to  ex- 
ist and  that  it  is  not  essential  that  it  be  observed  in  every 

Tenn.  452,  21  S.  W.  897,  as  to  bank-  v.  Clark  (Maine),  83  Atl.  667;  Hart- 

ing  customs  in  collecting  drafts  for  ley  v.  Richardson,  91   Maine  424,  40 

customers.  Atl.  336;  Duling  v.   Philadelphia  &c. 

'*Pucci   V.    Barney,    Com.    Pi.    (N.  R.  Co.,  66  Md.  120,  6  Atl.  592;  Citi- 

Y.)   1893,  2  Misc.  (N.  Y.)  354,  51  N.  zens  Bank  v.  Grafflin,  31  Md.  507,  1 

Y    St    581,  21  N.  Y.  S.  1099.  Am.  Rep.  66;  Maryland  &c.  R.  Co.  v. 

"Florence  Wagon  Works  v.  Trin-  Brown,    109   Md.   304,   71   Atl.    1005; 

idad  Asphalt  Mfg.  Co.,  145  Ala.  677,  Barrie  v.  Quinby,  206  Mass.  259.  92 

40   So.   49;    Byrd   v.   Beall,    150   Ala.  N.   E.  451;    Martin  v.   Hall,  26  Mo- 

122  43  So  749,  124  Am.  St.  64;  West-  386;  Johnston  v.  Parrott,  92  Mo.  App. 

ern  R    Co    v.  Hart,  160  Ala.  599,  49  199;  Eckstein  v.  Schleimer,  62  Misc. 

So.   371;    Syson   v.   Hieronymus,   127  (N.  Y.)  635,  116  N.  Y.  S.  7;  Duguid 

Ala.   482,   28    So.   967;    Capital   Fire  v.   Edwards,  50  Barb.    (N.   Y.)   288; 

Ins.    Co    V.    Kaufman,   91    Ark.    310,  Hatch  v.  Luckman,  64  Misc.   (N.  Y.) 

121   S.   W.   289;    Merchants  Grocery  508,    118   N.   Y.    S.   689;    Fletcher   v. 

Co.  V.  Ladoga  Canning  Co.,  89  Ark.  Seekell,  1  R.  I.  267;   Standard  Paint 

591,    117    N.    W    l(il\    Southern    In-  Co.   v.    San   Antonio    Hardware    Co. 

diana   Express  Co.  v.  United   States  (Tex.   Civ.   App.),   136   S.   W.    1150; 

Express   Co.,    88    Fed.   659,   affd.   92  San    Antonio    Machine    &c.    Co.    v. 

Fed.  1022,  35  C.  C.  A.  172;  Whipple  Josey   (Tex.),  91   S.  W.  598;   Texas 

V.  Tucker,  123  111.  App.  223;  Mobile  Central  R.  Co.  v.  Waldie  (Tex.  Civ. 

Fruit   &c.   Co.   V.   Judy,  91   111.   App.  App.),    101    S.   W.   517;    Schumacher 

82;  Swern  v.  Churchill,  155  111.  App.  v.   Trent,    18  Tex.   Civ.   App.    17,   44 

505;    Currie    v.    Syndicate,    104    111.  S.  W.  460;  Southwest  Virginia  Min- 

App.   165;   National  Fire  Ins.  Co.  v.  eral  Land   Co.  v.   Chase,  95  Va.  50, 

Hanberg.  215  111.  378,  74  N.  E.  111%  27  S.  E.  826. 

Star  Mills  v.  Bailey,  140  Ky.  194,  130  ^'Traders'  Ins.  Co.  v.  Dobbins,  114 

S.  W.  1077,  140  Am.  St.  370;  Ireland  Tenn.  227,  86  S.  W.  383. 


IOI3  CUSTOMS    AND    USAGES.  §    1 682 

individual  transaction.''^  It  follows  that  a  custom  cannot  be 
established  by  proof  of  a  single  transaction.'^  Neither  can 
a  habit  be  said  to  constitute  usage.  The  habit  or  practice  of 
particular  persons,  or  of  persons  in  a  particular  trade,  does 
not  in  itself  constitute  usage.  It  is  only  when  the  practice  has 
come  to  have  the  essential  characteristics  of  usage  that  it  can 
be  considered  as  a  valid  usage."  It  is  sometimes  said  that  the 
custom  or  usage  to  have  the  force  of  law  must  be  universal  and 
that  a  general  but  not  universal  custom  is  not  sufficient  to  dis- 
place ordinary  legal  rights.'"  But  the  word  universal  in  this  con- 
nection is  intended  to  mean  universal  among  persons  engaged  in 
the  particular  business.*"  It  is  the  holding  of  some  of  the  cases 
that  the  custom  or  usage  must  be  coextensive  with  the  state  in 
order  to  be  general.®^  It  is  believed  to  be  the  better  statement  of 
the  principle  to  say  that  a  custom  or  usage  is  sufficiently  general 
to  satisfy  the  rule  where  it  is  so  general  and  notorious  in  the 
particular  locality  as  to  charge  persons  entering  into  contracts 
with  knowledge  thereof.  It  is  sufficient  that  the  custom  was 
generally  observed  in  the  region  where  it  was  claimed  to  exist.®* 
It  should  be  so  general  to  the  particular  trade,  and  so  well  estab- 
lished that  any  one  dealing  in  that  trade  will  be  presumed  to  know 
it.®^  But  the  rules  of  voluntary  organizations  in  a  business,  trade 
or  occupation  are  neither  law  nor  custom  and  cannot  be  permitted 
to  have  any  force  and  effect  as  such,  upon  the  community.  They 
are  valid  and  binding  upon  their  members,  but  cannot  ordinarily 
be  made  use  of  in  the  courts  to  affect  the  rights  of  others  than 
the  members.®* 

"Star  Mills  v.  Bailey,  140  Ky.  194,  215  111.  378,  74  N.  E.  277;  Spears  v. 

130   S.  W.   1077,   140  Am.   St.  370.  Ward.  48  Ind.  541 ;  Harper  v.  Pound, 

"  Sloss-Sheffield    Steel    &c.    Co.    v.  10  Ind.  32. 

Smith    (Ala.),  40   So-  91;   Currie  v.  *"  Rastetter   v.    Reynolds,    160    Ind. 

Syndicate,  104  111.  App.  165.  133,  66  N.  E.  612:  Wallace  v.  Mor- 

"  Dodge   V.   Hedden,  42   Fed.  446;  gan.  23  Ind.  399;  Traders  Ins.  Co.  v. 

Ulmer  v.  Farnsworth,  80  Maine  500,  Dobbins,    144    Tenn.    227,    86    S.    W. 

15  Atl.  65;  Scudder  v.  Bradbury,  106  383;      Southwest     Virginia     Mmeral 

Mass.  422:  Suittz  v.  Kennedy,  Riley  Land  Co.  v.  Chase,  95  Va.  50,  27  S. 

(S.   Car.)    218.  E.  826. 

*° Hartley  v.  Richardson,  91  Maine  ^Schumacher    v.    Trent,    18    Te.x. 

424.  40  Atl.  336;  Porter  v.  Hills,  114  Civ.  App.  17,  44  S.  \V.  460. 

Mass    106  "Swern  v.  Churchill,  155  111.  App. 

''Maffet    V.    Quine,   93    Fed.    347;  505. 
National  Fire  Ins.  Co.  v.  Hanberg, 


§    1683  CONTRACTS.  IOI4 

§  1683.  Effect  of  occasional  deviations  from  general  cus- 
tom.— A  custom  which  possesses  the  quality  of  generality  is 
not  rendered  less  general  by  the  fact  of  occasional  deviations. 
Where  there  is  evidence  that  a  certain  custom  is  "generally"  and 
"usually"  pursued  in  a  particular  manner  this  is  sufficient  to 
establish  a  custom  and  it  is  not  necessary  to  show  that  the  par- 
ticular manner  is  never  deviated  f  rom.^^ 

§  1684.  Necessity  that  custom  or  usage  should  be  general 
— Illustrations  of  principle. — To  make  an  underwriter's  cus- 
tom valid  it  is  essential  that  the  custom  should  have  been  known 
to  the  underwriters  as  well  as  to  the  insured.  The  principle  re- 
quires knowledge  on  the  part  of  both  parties  to  a  contract. ^^  It 
is  competent  to  prove  a  general  custom  among  insurance  com- 
panies to  refuse  a  risk  on  a  canning  factory  but  not  a  private  prac- 
tice of  a  single  company  of  which  the  insured  had  no  notice.^^  In 
another  insurance  case  it  was  held  not  necessary  in  order  to  show 
the  existence  of  a  custom  of  retail  hardware  dealers  to  keep  dyna- 
mite in  stock,  to  prove  the  existence  of  the  custom  throughout 
the  state,  but  it  was  sufficient  to  show  that  it  was  generally  ob- 
served in  the  particular  region  where  the  existence  of  the  custom 
was  claimed.^^  Proof  of  a  particular  habit  in  the  matter  of  doing 
a  particular  act  is  not  proof  of  a  local  custom,  but  of  a  particular 
method  or  system  of  doing  work.^^  Prices  customary  to  be 
charged  for  work  should  be  limited  to  a  general  custom."**  The 
test  as  to  a  custom,  it  is  said,  should  be  that  prevailing  among  well- 
conducted  similar  establishments.''^  It  is  not  necessary  to  show  a 
great  number  of  instances  provided  those  shown  satisfy  the  rule 
as  to  generality.  Thus,  for  example,  where  there  were  only  two 
stores  in  a  community  several  miles  from  a  railroad,  it  was  held 
that  the  custom  of  these  stores  as  to  the  hours  of  business  con- 
stituted the  custom."^    A  general  usage  may  be  established  by  the 

•'Glantz   V.    Chicago,    B.    &    Q.    R.  '*  Jones   v.   Herrick,    141   Iowa  615, 

Co.,  90  Nebr.  606,  134  N.  W.  242.  118  N.   W.  444. 

"■Martin    v.    Delaware    Ins.    Co.,    2  ""  Syson    v.    Hieronymus,    127    Ala. 

Wash.  C.  C.  254,  Fed.  Cas.  No.  9161.  482,  28  So.  967. 

"Catlin    V.    Traders'    Ins.    Co.,    83  °' Maryland   &c.   R.    Co.   v.    Brown, 

111.   App.   40.  109   Md.  304,  71   Atl.    1005. 

"Traders'  Ins.  Co.  v.  Dobbins,  114  "'Capital  Fire  Ins.  Co-  v.  Kaufman, 

Tenn.  227,  86  S.  W.  383.  91  Ark.  310,  121   S.  W.  289. 


I0I5  CUSTOMS    AND    USAGES,  §    1 685 

testimony  of  a  single  witness."^  A  port  custom  is  not  valid  unless 
it  is  shown  to  be  acted  on  by  the  whole  of  the  part  of  the  business 
community  which  it  affects."*  In  order  to  hold  a  railroad  com- 
pany liable  for  medical  services  rendered  to  employes,  it  must 
be  shown  that  the  custom  was  so  general  as  to  raise  the  presumi> 
tion  that  the  services  were  rendered  with  reference  to  it."''  So 
the  custom  of  physicians  treating  each  otlier  without  charge  will 
not  bind  in  a  particular  instance  in  the  absence  of  proof  that  it 
was  the  general  practice  of  persons  in  such  business  to  regard 
the  custom  as  established  and  contract  with  that  in  mind.®"  The 
fact  that  a  railroad  company  in  the  payment  of  its  employes  fol- 
lows the  custom  of  four  other  railroad  companies  does  not  show 
the  existence  of  a  general  custom  to  pay  in  that  particular  way."^ 
A  right  to  a  livery-stableman's  lien  is  not  shown  by  a  local  cus- 
tom in  the  particular  city  under  which  a  livery-stable  keeper  has 
a  lien  for  his  charges  on  horses  kept  by  him."^ 

§  1685.  Individual  usages  or  practices. — The  particular 
usage  or  practices  of  an  individual  or  a  small  number  of  individ- 
uals or  houses  do  not  make  a  trade  usage  in  the  proper  sense  of 
the  term,  for  the  reason  that  knowledge  of  them  cannot  be  pre- 
sumed and  they  lack  generality.  It  is  essential  to  a  binding  usage 
that  the  parties  to  the  contract  in  which  its  aid  is  invoked  must 
have  knowledge  of  the  existence  of  such  usage."®  Where,  how- 
ever, the  party  sought  to  be  bound  by  the  particular  usage  has 

"Barrie  v.  Quinbv,  206  Mass.  259,  561;  Marshall  v.  Perrv.  67  Maine  78; 

92  N.  E.  451.  "  Packard    v.    Earle,    113    Mass.    280; 

•*The  Bark  Innocenta,  10  Ben.   (U.  Luce    v.    Dorchester    Mut.    Fire    Ins. 

S.)   410.  Co..  105  Mass.  297,  7  Am.  Rep.  522; 

"Mobile  &c.  R.  Co.  v.  Jay,  61  Ala.  Stevens   v.    Reeves,  9   Pick.    (.Mass.) 

247.  198;    Collins   v.    New    England    Iron 

•*  Madden  v.   Blain.  66  Ga.  49.  Co.,   115   Mass.  23;  Johnson   v.   Con- 

"  Thompson  v.   Minneapolis  &c.  R.  cord  R.  Corp.,  46  X.  H.  213.  88  .^m. 

Co..  35  Minn.  428.  29  N.  W.  148.  Dec.   199;  Baker  v.  Drake.  66  X.  Y. 

"'Saint  V.   Smith.   1    Cold.    (Tenn.)  518,    23    Am.    Rep.   80;    Markham    v. 

51  Jaudon.    41     X.     Y.    235;    Miller    v. 

••Scott  V.  Irving.   1  B.  &  Ad.  605;  Burke,    68    N.    Y.    615;    Farmers'    & 

Bartlett  v.  Pentland.  10  B.  &  C.  760;  Mechanics'    Bank  v.    Sprague.   52   N, 

Gabay  v.  Lloyd.  3  B.  &  C.  793;  Glen-  Y.  605;    Hursli   v.   Xorth,  40  Pa.   St. 

dale    Woolen    Co.    v.    Protective    Ins.  241 ;    National    Bank    v.    Burkhardt. 

Co.,  21  Conn.  19.  54  Am.  Dec.  309n ;  100  U.  S.  686.  25  L.  ed.  766;  Boody 

Deshler  v    Beers.  32  111.  368.  83  Am.  v.    Rutland   &c.    R.   Co..   24   Vt.   06O; 

Dec.  274;    Indianapolis.   B.  &-   W.   R.  Stevens    v.    Smith.    21    Vt.    90.     But 

Co.  V.  IMurray,  72  111.  128;   \\'illiams  knowledge  may  be  imputed. 
V,    Niagara   Fire    Ins.    Co.,   50    Iowa 


§    1 686  CONTRACTS.  1 01 6 

knowledge  of  the  usage  of  the  other  party,  there  may  arise  a 
presumption  of  acquiescence  in  the  usage  that  will  authorize  the 
courts  to  construe  the  contract  with  reference  to  the  particular 
usage/  The  acquiescence  in  the  particular  practice  may  be 
shown  by  previous  dealings  between  the  parties  based  on  such 
usage  or  practice."  In  a  case  of  doubt  as  to  what  a  person  has 
done,  it  may  be  considered  more  probable  that  he  has  done  what 
he  has  been  in  the  habit  of  doing  than  that  he  has  acted  other- 
wise ;  hence,  it  has  been  held  that  the  particular  habit  or  custom 
of  an  individual  may  be  shown  where  there  is  conflicting  evidence 
as  to  whether  he  has  or  has  not  done  some  act  material  to  the 
issue.^ 

§  1686.  Antiquity  as  element  of  custom  or  usage. — A  com- 
mon-law custom  to  become  a  law  must  be  so  ancient  that  the 
memory  of  man  runneth  not  to  the  contrary.*  But  it  is  not  re- 
quired that  local  and  trade  usages  should  have  immemorial  an- 
tiquity of  recognition  back  of  them.  If  this  were  true  the  trades 
that  have  developed  in  modern  times  would  have  no  binding 
usages.  What  is  required  is  that  the  usage  should  be  uniform, 
general,  certain,  legal,  and  have  existed  for  such  a  length  of  time 
as  to  impute  knowledge  to  those  sought  to  be  affected.  An- 
tiquity is  not  important  where  the  evidence  shows  a  usage  which 
exists  throughout  the  entire  trade  at  the  time  and  place  of  the 

"■  Robinson  v.  Mollett,  L.  R.  7  H.  L.  kee  &c.  R.  Co.,  38  Iowa  100 ;  Kester 

802;   Walker  v.  Jackson,  10  M.  &  W.  v.    Reynolds,   6   Hun    (N.    Y.)    626; 

16U  Stewart  v.  Aberdein,  4  M.  &  W.  Gray  v.  Gannon,  4  Hun   (N.  Y.)   57, 

211-    :\Iarrett  v.    Brackett,   60   Maine  6  Thomp.  &  C.   (N.  Y.)   245;  Fabbri 

524;  Grinnell  v.  Western  Union  Tel.  v.   Phoenix   Ins.   Co.,  55   N.   Y.   129; 

Co.,  113  Mass.  299,  18  Am.  Rep.  485;  Russell    Mfg.    Co.    v.    New    Haven 

Warren    Bank    v.     Parker,    8    Gray  Steamboat  Co.,  50  N.  Y.  121 ;  Johns- 

(Mass.)  221;  Fabbri  v.  Phoenix  Ins.  ton  v.  Parker  Sav.  Bank,  101  Pa.  St. 

Co.,  55  N.  Y.  129;   Block  v.   Colum-  597;  Juniata  Bldg.  &c.  Assn.  v.  Het- 

bian  Ins.  Co.,  42  N.  Y.  393 ;  Gibson  v.  zel,  103  Pa.  St.  507. 

Culver,    17   Wend.    (N.   Y.)    305,   31  ^Lawson  on  Usages  and   Customs, 

Am.    Dec.   297;    Renner   v.    Bank   of  §  46;  Denver  Tramway  Co.  v.  Owens, 

Columbia,  9  Wheat.  (U.  S.)  581,  6  L.  20  Colo.    107,   36  Pac.   848;    State  v. 

ed    166;  Blin  v.  Mayo,  10  Vt.  56,  33  Manchester  &c.  R.  Co.,  52  N.  H.  528. 

Am   Dec.  175.  *Currie  v.   Syndicate,   104  111.  App. 

*  Brown   v.   Kough,   53   L.    T.   878;  165;  Ulmer  v.  Farnsworth,  80  Maine 

Lewis  v.  Great  Western  R.  Co.,  L.  R.  500,  15  Atl.  65;  Thomas  v.   Hooker- 

3  Q.  B.  Div.  195 ;  East  Tennessee  &c.  Colville    Steam    Pump    Co.,    28    Mo. 

R.   Co.  v.  Johnston.  75  Ala.   596,   51  App.  563;  Ocean  Beech  Assn.  v.  Brm- 

Am.    Rep.   489;    Bridgeport   Bank   v.  ley,  34  N.  J.  Eq.  438;  Society  for  Es- 

Dyer,  19  Conn.  136;  Green  v.  Milwau-  tablishing    Useful    Manufacturers    v. 


I0I7 


CUSTOMS    AND    USAGES. 


§    1686 


contract. °  Usage  need  only  be  old  enough  to  be  well  establisned 
in  the  trade  or  locality;  it  must  have  existed  for  a  length  of  time 
sufficient  to  acquaint  the  parties  with  the  knowledge  of  its  exist- 
ence at  the  time  the  contract  was  entered  into."  It  must  be  so 
well  established  that  the  parties  may  be  presumed  to  have  con- 
tracted in  reference  to  such  usage.''  The  true  test  is  its  having 
existed  a  sufficient  length  of  time  to  have  become  generally 
known,  and  to  warrant  the  jury  in  finding  that  the  contracts  were 
made  in  reference  to  it.*  If  the  usage  exists  as  a  general  usage 
of  the  trade  it  is  established  by  evidence  to  that  effect,  but  not 


Haight,  1  N.  J.  Eq.  393;  Hatch  v. 
Luckman,  64  Misc.  (N.  Y.)  508.  118 
N.  Y.   S.  689;    Silliman  v.  Whitmer, 

II  Pa.  Super.  Ct.  243 ;  Jones  v.  Wag- 
ner, 66  Pa.  St.  429.  5  Am.  Rep.  385; 
Harris  v.  Carson,  7  Leigh  (Va.)  632, 
30  Am.  Dec.  510. 

'Taylor  v.  Briggs,  2  C.  &  P.  525; 
Noble  V.  Kennoway,  2  Doug.  510; 
Smith  V.  Rice,  56  Ala.  417;  Cooper  v. 
Berry,  21  Ga.  526,  68  Am.  Dec.  468; 
Dorchester  &c.  Bank  v.  New  England 
Bank,  55  Mass.  177;  Matheson  v. 
Equitable  Ins.  Co.,  118  Mass.  209,  19 
Am.  Rep.  441 ;  Walker  v.  Barron,  6 
Gil.  (Minn.)  353;  Barton  v.  McKel- 
way,  2  N.  J.  L.  165;  Wall  v.  East 
River  Ins.  Co.,  3  Duer.  (X.  Y.)  264; 
Adams  v.  Pittsburg  Ins.  Co.,  95  Pa. 
St.  348.  40  Am.  Rep.  662. 

•  Edelstein  v.  Schuler,  87  L.  T.  204 ; 
Buford  V.  Tucker,  44  Ala.  89;  Ward 
Furniture  Mfg.  Co.  v.  Isbell,  81  Ark. 
549,  99  S.  W.  845;  Jilerchants  Groc. 
Co.  V.  Ladoga  Canning  Co.,  89  Ark. 
591,  117  S.  W.  767;  Beach  v.  Travel- 
lers' Ins.  Co.,  12)  Conn.  118,  46  Atl. 
867;  Crosby  v.  Fitch,  12  Conn.  410,  31 
Am.  Dec.  745 ;  Townsend  v.  Whitbv, 
5  Har.  (Del.)  55;  Mott  v.  Hall,  41 
Ga.  117;  .American  Ins.  Co.  v.  France, 

III  111.  App.  310;  Swern  v.  Church- 
ill, 155  111.  .App.  505;  People  v.  Chi- 
cago, N.  W.  R.  Co..  57  111.436;  Rastet- 
ter  V.  Reynolds,  160  Ind.  133.  66  N.  E. 
612;  Morning  Star  v.  Cunningham, 
110  Ind.  328.  11  N.  E.  593,  50  Am. 
Rep.  211 ;  Cox  v.  O'Reiley,  4  Ind.  368, 


58  Am.  Dec.  633;  Rafert  v.  Scrog- 
gins,  40  Ind.  195;  Warren  v.  Regis- 
tration Board,  12  Mich.  398,  40  X.  W. 
553,  2  L.  R.  .'\.  203n ;  Walker  v.  Bar- 
ron, 6  Gil.  (Minn.)  353;  Knowles  v. 
Dow,  22  X.  H.  387,  55  .\m.  Dec.  163; 
Lockney  v.  Police  Beneficiary  Assn., 
217  Pa.  568,  66  Atl.  844. 

'Templeman  v.  Biddle,  2  Har. 
(Del.)  75;  Blakcmore  v.  Heyman.  6 
Fed.  581 ;  Turner  v.  Dawson,  50  111. 
85;  Cahn  v.  Michigan  Cent.  R.  Co., 
71  111.  96;  Lvon  v.  Culbertson.  83  111. 
ZZ,  25  Am.  Rep.  349;  Oldershaw  v. 
Knoles,  4  111.  App.  63;  Ledoux  v.  Ar- 
mor, 4  Rob.  (La.)  381;  Walker  v. 
Barron.  6  Gil.  (Minn.)  353;  Phillips 
V.  Scott,  43  Mo.  86,  97  Am.  Dec.  369 ; 
Cole  V.  Skrainka,  Zl  Mo.  .\pp.  427; 
Knowles  v.  Dow,  22  X.  H.  387.  55 
Am.  Dec.  163;  Sipperly  v.  Stewart, 
50  Barb.  (N.  Y.)  62;  Minnesota  Cent. 
R.  Co,  V.  Morgan,  52  Barb.  (X.  Y.) 
217;  Adams  v.  Pittsburgh  Ins.  Co., 
95  Pa.  St.  348,  40  Am.  Rep.  662. 

"Crosby  v.  Fitch,  12  Conn.  410.  31 
.\m.  Dec.  745;  Beach  v.  Traveller's 
Ins.  Co.,  IZ  Conn.  118,  46  Atl.  867; 
Goette  V.  Lane,  111  Ga.  400,  36  S.  E. 
758;  Powell  v.  Bradlee,  9  Gill  &  J. 
(Md.)  220;  Burroughs  v.  Langley. 
10  Md.  248:  Johnson  v.  Parrott.  92 
Mo.  App.  199;  Smith  v.  Wright.  1 
Caines  (N.  Y.)  43,  2  Am.  Dec.  162; 
Treadwell  v.  Union  Insurance  Co.,  6 
Cow.  (X.  Y.)  270;  Bliven  v.  Xew 
England  Screw  Co.,  23  How.  (U.  S.) 
420,  16  L.  ed.  510. 


§    1687  CONTRACTS.  /018 

othenvise.^     The  evidence  must  clearly  establish  a  fixed  habit  or 
custom.^" 

§  1687,  Antiquity — Illustration  of  principle. — In  the  fol- 
lowing cases  the  usage  has  been  held  to  lack  the  element  of  suf- 
ficient duration:  a  custom  to  pay  debts  in  confederate  money  in 
force  for  only  four  years  ;^^  a  usage  existing  for  but  five  years 
^vhich  authorizes  the  masters  of  steamboats  to  give  bills  of  lading 
containing  an  exemption  of  losses  by  fire;^~  a  port  regulation 
Avhich  had  prevailed  for  less  than  six  years  ;^^  a  custom  in  New 
Jersey  that  the  widow  of  a  proprietor  of  lands  sold  by  him  in 
severalty  under  the  council  of  proprietors  was  not  entitled  to 
dower  where  the  custom  was  not  shown  to  have  existed  for  more 
than  fifty  years.^*  But  a  regular  usage,  uncontradicted  for 
twenty  years,  has  been  held  sufficient  to  warrant  a  jury  in  find- 
ing the  existence  of  an  immemorial  custom/^  In  another  case 
the  usage  was  held  of  sufficient  antiquity  where  it  had  existed  for 
over  fifty  years/^  A  custom  of  thirty  years'  standing  for  clerks 
of  steamboats  to  execute  notes  for  necessary  repairs  and  to  con- 
tract for  such  repairs  on  the  direction  of  the  captain  has  been 
held  of  sufficient  antiquity  to  create  a  valid  custom."  An  Eng- 
lish case  holds  valid  a  custom  enjoyed  from  time  immemorial 
and  continued  without  interruption,  for  all  the  fishermen  inhabi- 
tants of  a  parish,  to  dry  their  nets  on  a  particular  close  adjoining 
the  sea  which  belonged  to  a  private  owner.  The  custom  was  for 
the  benefit  of  the  public  and  was  held  not  unreasonable  because  it 
happened  to  be  prejudicial  to  the  interests  of  a  private  individual. 
The  variation  in  the  user,  arising  from  time  to  time  by  reason 

nVood  V.  Wood,  1  C.  &  P.  59;  Wash.  C.  C  254,  Fed.  Cas.  No.  9161. 
Howard  v.  Great  Western   Ins.   Co.,        "  Nocona     Nat.     Bank     v.     Bolton 

109  Mass.  384;  Porter  v.  Hills,  114  (Tex.  Civ.  App.),  143  S.  W.  242. 
Mass.  106;  Folsom  v.  Merchants'  "  Buford  v.  Tucker,  44  Ala.  89. 
Mut.  Marine  Ins.  Co.,  38  Maine  414;        "Cooper  v.  Berry,  21   Ga.  526,  68 

Chenery  v.  Goodrich,  106  Mass.  566;  Am.  Dec.  468. 

Martin  v.   Hall,  26  Mo.  386;   South-        "Clark   v.    Gifford,   7   La.   524,   26 

western   Freight  &c.   Co.   v.    Stanard,  Am.  Dec.  511. 

44  Mo.  71,  100  Am.  Dec.  255 ;  Dickin-        "  Ocean  Beach  Assn.  v.  Brmley,  34 

son  V.  Poughkeepsie,  75  N.  Y.  65 ;  Ad-  N.  J.  Eq.  438. 

ams  V.  Pittsburgh  Ins.  Co.,  95  Pa.  St.        ''  Knowles  v.  Dow,  22  N.  H.  387,  55 

348.  40  Am.  Rep.  662;  Cope  v.  Dodd,  Am.  Dec.  163. 

13  Pa.   St.  33 ;  United   States  v.  Bu-        "  Wood  v.  Watson.  53  Mame  300. 
chanan,  8  How.  (U.  S.)  83,  12  L.  ed.        "  Mott  v.  Hall,  41  Ga.  117. 
997;  Martin  v.  Delaware  Ins.  Co.,  2 


IOI9 


CUSTOMS    AND    USAGES. 


§    1688 


of  the  varying  exigencies  of  the  fishing  industry  and  the  require- 
ments of  improved  nets,  did  not  render  the  custom  void  for  un- 
certainty, notwithstanding  that  such  variation  entailed  longer 
periods  for  drying  and  an  increase  in  the  number  and  sorts  of  nets 
dried.  The  custom  was  also  held  to  extend  over  the  additional 
area  added  to  the  original  close  by  accretion  owing  to  the  reces- 
sion of  the  sea.^* 


§  1688.  Legality  of  custom  or  usage. — The  law  does  not 
recognize  the  validity  of  a  custom  or  usage  which  violates  its 
own  rules.  In  other  words,  the  custom  or  usage  must  be  legal 
and  cannot  be  sustained  where  it  violates  public  policy,"*  the 
established   principles   of   the   common   law""   or   the   maritime 


"Mercer  v.  Denne,  91  Law.  T.  513. 

"Lehman  v.  Marshall,  47  Ala.  362; 
Chilberg  v.  Lyng,  128  Fed.  899.  63  C. 
C.  A.  451 ;  Marsland  v.  The  Yosemitc, 
18  Fed.  331;  The  Hound.  Fed.  Cas. 
No.  6731 ;  Van  Camp  Packing  Co.  v. 
Hartman,  126  Ind.  177,  25  N.  E.  901 ; 
Bryant  v.  Commonwealth  Ins.  Co.,  23 
Pick.  (Mass.)  131;  Mussey  v.  Eagle 
Bank.  9  Mete.  (Mass.)  306;  Murphy 
V.  Callev.  1  Allen  (Mass.)  107;  Day 
V.  Holmes.  103  Mass.  306;  Wadley  v. 
Davis.  63  Barb.  (X.  Y.)  500;  Kedian 
V.  Hovt,  33  Hun  ( N.  Y.)  145;  Rapp 
V.  Palmer.  3  Watts.  (Pa.)  178; 
Brown  v.  Arrott,  6  Watts  &  S.  (Pa.) 
402;  Rumfield  v.  Neal  (Tex.),  46  S. 
W.  262;  Lamb  v.  Parkman,  1  Spr. 
(U.  S.)  343.  Fed.  Cas.  No.  8020. 

^National  Safe  Deposit  &c.  Co.  v. 
Hibbs.  32  App.  D.  C.  459;  Petty  v. 
Gavle,  25  Ala.  472;  Wilson  v.  Jerni- 
gan.  57  Fla.  277,  49  So.  44;  Miller  v. 
Moore.  83  Ga.  684.  10  S.  E.  360,  6  L. 
R.  A.  374.  20  Am.  St.  329 ;  Hatcher  v. 
Comer,  73  Ga.  418;  Entwhistle  v. 
Henke.  113  111.  App.  572,  affd.  211 
111.  273.  71  N.  E.  990.  103  Am.  St. 
196;  Western  Union  Cold  Storage 
Co.  V.  Winona  Produce  Co.,  94  111. 
App.  618.  revd.  197  111.  457.  64  N.  E. 
496;  McCurdv  v.  .Maska  &  Chicago 
Commercial  Co..  102  111.  App.  120; 
Webster  v.  Granger,  78  111.  230;  Marc 
V.  Kupfer.  34  111.  286;  Marine  Rank 
V.  Chandler.  17  Peck  (111.)  525.  81 
Am.  Dec.  249;  McCurdy  v.  Alaska  & 
Chicago  Commercial  Co.,  102  111.  .^pp. 
120;  Cox  V.  O'Rilcy,  4  Ind.  368,  58 


Am.  Dec.  633 :  Bauer  v.  Samson 
Lodge  No.  32,  K.  of  P.,  102  Ind.  262. 
1  N.  E.  571;  Williams  v.  Robb,  104 
Mich.  242,  62  X.  W.  352;  Grant  v. 
Robb,  71  Kans.  846.  80  Pac.  585; 
Clark  V.  Allaman,  71  Kans.  206,  80 
Pac.  571,  70  L.  R.  A.  971 ;  Carr  v.  Cal- 
laghan,  3  Litt.  (Ky. )  365;  Morrison  v. 
Hart,  2  Bibb.  (Ky.)4,4  Am.  Dec.  663; 
Gallatin  v.  Bradford.  1  Bibb.  (Ky.) 
209;  United  States  Bank  v.  Fleckner, 
8  Mart.  (O.  S.)  (La.)  309.  13  Am. 
Dec.  287;  Foley  v.  Bell.  6  La.  Ann. 
760;  Raisin  v.  Clark,  41  Md.^  158,  20 
.•\m.  Rep.  66;  Pickering  v.  Weld,  159 
Mass.  522,  34  X.  E.  1081 :  Haskins  v. 
Warren,  115  Mass.  514;  Dickinson  v. 
Gay,  7  Allen  (Mass.)  29.  83  Am.  Dec. 
656;  Lee  v.  Kilburn,  3  Gray  (Mass.) 
594;  Cabot  Bank  v.  Russell,  4  Grav 
(Mass.)  167;  Chicopee  Bank  v.  Eag- 
er, 9  Mete.  (Mass.)  583;  Strong  v. 
Bliss,  6  Mete.  (Mass.)  393;  McFar- 
lin  V.  Essex  Co.,  10  Cush.  (Mass.) 
304;  Commonwealth  v.  Chapin,  5 
Pick.  (Mass.)  199,  16  Am.  Dec.  386; 
Waters  v.  Lillev,  4  Pick.  (Mass.) 
145,  16  Am.  Dec.  333;  Shattuck  v. 
Woods,  1  Pick.  (Mass.)  171;  Eager 
V.  Atlas  Ins.  Co.,  14  Pick.  (Mass.) 
141,  25  Am.  Dec.  363 ;  Homer  v.  Dorr, 
10  Mass.  26 ;  Commonwealth  v.  Coop- 
er, 130  Mass.  285;  Richardson  v. 
Copeland,  6  Gray  (Mass.)  536.  66 
.■\m.  Dec.  424;  I^fechanics'  Bank  v. 
Merchants'  Bank,  6  Mete.  (Mass.) 
13;  Walker  v.  Osgood.  08  Mass.  348, 
93  Am.  Dec.  168:  Boardman  v. 
Spooner,   13   Allen    (Mass.)    353,   90 


§  1 688 


CONTRACTS. 


I020 


law,-^  or  plain  statutory"  or  constitutional  provisions.^'   "The  rule 


Am.  Dec.  196;  Koppitz-Melchers 
Brewing  Co.  v.  Behm,  130  Mich. 
649.  90  N.  W.  676;  Healy  v.  Mann- 
heimer.  74  Minn.  240,  76  N.  W.  1126; 
Dartt  V.  Sonnesyn,  86  Minn.  55,  90 
N.  \V.  115;  Merchants'  Ins.  Co.  v. 
Prince.  50  Minn.  53.  52  N.  W.  131,  36 
Am.  St.  626;  Johnson  v.  Gilfillan,  8 
Gil.  (Minn.)  352;  Hurt  v.  Jones,  105 
Mo.  App.  106,  79  S.  W.  486;  Fisher  v. 
Steward,  Smith  (N.  H.)  60;  Beach 
V.  Morgan,  67  N.  H.  529,  68  Am.  St. 
692,  41  Atl.  349;  Ackerman  v.  Shelp, 
8  N.  J.  L.  125;  Groat  v.  Gile,  51  N. 
Y.  431 ;  Markham  v.  Jaudon,  41  N.  Y. 
235,  revg.  2  Abb.  Prac.  (N.  S.)  (N. 
Y.)  286,  49  Barb.  (N.  Y.)  462;  Min- 
nesota Cent.  R.  Co.  v.  Morgan,  52 
Barb.  (N.  Y.)  217;  Wheeler  v.  New- 
bould,  16  N.  Y.  392;  Smith  v.  Lynes, 
3  Sandf.  (N.  Y.)  203;  Dykers  v.  Al- 
len, 7  Hill  (N.  Y.)  497.  42  Am.  Dec. 
87;  Miller  v.  Stern,  25  Misc.  (N.  Y.) 
690,  55  N.  Y.  S.  765;  Thomas  v. 
Guarantee  Title  &c.  Co.,  81  Ohio  St. 
432.  91  N.  E.  183,  26  L.  R.  A.  (N.  S.) 
1210;  Indianapolis  Rolling-Mill  Co. 
V.  Addy,  5  Ohio  Dec.  (Reprint)  588, 
6  Am.  Law  Rec.  764 ;  Silliman  v. 
Whitmer,  196  Pa.  St.  363,  46  Atl.  489; 
Newbold  v.  Wright,  4  Rawle  (Pa.) 
195;  Blythe  v.  Richards,  10  Serg.  & 
R.  (Pa.)  261,  13  Am.  Dec.  672;  Wa- 
ters-Pierce Oil  Co.  V.  Davis,  24  Tex. 
Civ.  App.  508,  60  S.  W.  453;  Ollen- 
heimer  v.  Foley,  42  Tex.  Civ.  App. 
252,  95  S.  W.  688;  Hudson  v.  Hen- 
derson, 1  White  &  W.  Civ.  Cas.  Ct. 
App.  (Tex.),  §  353;  Vermilye  v.  Ad- 
ams Exp.  Co.,  21  Wall.  (U.  S.)  138, 
22  L.  ed.  609;  Thompson  v.  Riggs,  5 
Wall  (U.  S.)  663,  18  L.  ed.  704; 
Reese  v.  Bates,  94  Va.  321,  26  S.  E. 
865 ;  Governor  v.  Withers,  5  Grat. 
(Va.)  24,  50  Am.  Dec.  95;  Coleman 
V.  McMurdo,  5  Rand.  (Va.)  51; 
Westfall  V.   Singleton,   1   Wash.  227. 

^Vans  V.  Higginson,  10  Mass.  29; 
Eager  v.  Atlas  Ins.  Co.,  14  Pick. 
(Mass.)  141,  25  Am.  Dec.  363;  Reed 
V.  Richardson,  98  Mass.  216,  93  Am. 
Dec.  155;  Warren  v.  Franklin  Ins. 
Co.,  104  Mass.  518;  Frith  v.  Barker, 
2  Johns.  (N.  Y.)  327;  Stillman  v. 
Hurd,  10  Tex.  109. 

^Hyde  v.  United  States,  35  App. 
D.  C.  451;  Jones  v.  McLean,  18  Ark. 


456;  Williamson  v.  Richardson,  Fed. 
Cas.  No.  17754;  Fleming  v.  King,  100 
Ga.  449,  28  S.  E.  239;  Marine  Bank 
V.  Chandler,  17  Peck.  (111.)  525,  81 
Am.  Dec.  249;  Healy  Ice  Mach.  Co. 
V.  Clow,  148  111.  App.  421 ;  Harrod  v. 
Lafarge,  12  Mart.  (O.  S.)  (La.)  21; 
D'Aquin  v.  Coiron,  3  La.  387;  Thom- 
son v.  Albert,  15  Md.  268;  Shattuck 
v.  Woods,  1  Pick.  (Mass.)  171;  Per- 
kins V.  Franklin  Bank,  21  Pick. 
(Mass.)  483;  Tremble  v.  Crowell,  17 
Mich.  493;  C^owgill  v.  Jones,  99  Mo. 
App.  390,  11  S.  W.  995 ;  Penn  v.  Old- 
hauber,  24  Mont.  287,  61  Pac.  649; 
Ettien  v.  Drum,  32  Mont.  311,  80  Pac. 
369;  Scribner  v.  Hollis,  48  N.  H.  30; 
Ocean  Beach  Assn.  v.  Brinley,  7 
Stew.  (N.  T.  Eq.)  438;  Dunham  v. 
Dey,  13  Johns.  (N.  Y.)  40,  affd.  16 
Johns.  (N.  Y.)  367,  8  Am.  Dec.  323; 
Dunham  v.  Gould,  16  Johns.  (N.  Y.) 
367,  8  Am.  Dec.  323 ;  New  York  Fire- 
men Ins.  Co.  V.  Ely,  2  Cow.  (N.  Y.) 
678;  Bank  of  Utica  v.  Nager,  2  Cow. 
(N.  Y.)  712,  afifd.  8  Cow.  (N.  Y.) 
398;  Bank  of  Utica  v.  Smalley,  2 
Cow.  (N.  Y.)  770,  14  Am.  Dec.  526, 
affd.  8  Cow.  (N.  Y,)  398;  Wyatt  v. 
Wanamaker,  58  Misc.  (N.  Y.)  429, 
110  N.  Y.  S.  900;  Gore  v,  Lewis,  109 
N.  Car.  539,  13  S.  E.  909;  Patapsco 
Guano  Co.  v.  Magee,  86  N.  Car.  350 ; 
Niagara  County  Bank  v.  Baker,  15 
Ohio  St.  68;  First  Nat.  Bank  v.  Eld- 
ridge,  26  Okla.  538,  109  Pac.  62 ;  Port- 
land Fish  Co.  V.  Benson,  56  Ore.  147, 
108  Pac.  122;  Godcharles  v.  Wige- 
man,  113  Pa.  St.  431,  6  Atl.  354; 
Greene  v.  Tyler,  39  Pa.  St.  361 ;  Com- 
monwealth V.  Ellis,  46  Pa.  Super.  Ct. 
72;  Smetz  v.  Kennedy,  Riley  (S. 
Car.)  218;  Mays  v.  Jennings,  4 
Humph.  (Tenn.)  102;  Cooper  v.  San- 
ford,  4  Yerg.  (Tenn.)  452,  26  Am. 
Dec.  239;  Mitchel  v.  United  States,  9 
Pet.  (U.  S.)  711,  9  L.  ed.  283;  Walk- 
er V.  Western  Transp.  Co.,  3  Wall. 
(U.  S.)  150,  18  L.  ed.  172;  Winter  v. 
United  States,  Hempst.  (U.  S.)  344, 
Fed.  Cas.  No.  17895;  United  States 
V.  The  Forrester,  Newb.  (U.  S.)  81, 
Fed.  Cas.  No.  15132;  Delaplane  v. 
Crenshaw,  15  Gratt.  (Va.)  457. 

^'  Manufacturers    Land    &c.    Co.   v. 
Camden  (N.  J.),  73  Atl.  11. 


1 02 1  CUSTOMS   AND   USAGES.  §    1689 

admitting  evidence  of  a  usage  is  always  subject  to  this  limitation, 
however,  that  proof  will  never  be  allowed  to  establish  a  usage 
which  is  repugnant  to,  or  which  controls,  displaces,  or  alters,  the 
legal  effect  of  any  of  the  express  terms  of  a  contract.  A  usage  can- 
not be  appealed  to  for  the  purpose  of  eliminating  terms  from  a  con- 
tract, and  ingrafting  upon  it  others  different  from  or  inconsistent 
with  those  displaced;  nor  will  proof  be  heard  of  a  usage  that  is 
contrary  to  public  policy,  or  good  morals,  or  to  the  common  or 
statutory  law."-*  And  even  "a  universal  usage  which  is  not  ac- 
cording to  law  cannot  be  set  up  to  control  the  law.""  It  is  to 
be  noted  in  this  connection,  however,  that  many  express  rules  of 
law  may  be  waived  by  the  parties  to  a  contract  and  there  are 
cases  which  hold  that  where  this  may  be  done  the  waiver  may  be 
by  usage  as  well  as  express  contract.^® 

§  1689.  Legality  of  customs  or  usages — Customs  which 
contravene  public  policy. — A  usage,  however  widely  recog- 
nized, is  invalid  which  violates  public  policy  and  the  tendency 
of  which  is  to  encourage  fraud  and  dishonesty.^^  Thus  a  custom 
in  the  Alaskan  mining  regions  whereby  brokers  in  claims  employ 
subagents  whose  commissions  are  paid  out  of  the  purchase-price, 
usually  by  an  increase  in  the  price  fixed  by  the  owner,  was  de- 
clared illegal  as  directly  leading  to  fraud  and  questionable  prac- 
tices.-* So  a  custom  is  void  which  allows  mining  lessees  to  de- 
stroy the  surface  support."''     So  with  a  river  usage  allowing 

"Van  Camp  Packing  Co.  v.  Hart-  Lowell    (U.   S.)    110,   Fed.   Cas.    Xo. 

man.  126  Ind  177.  25  X.  E.  901.  13696. 

=  Meyer  v.   Dresser,   16  C.   B.    (N.  ="  Marsland    v.    The    Yosemite.    18 

S.)    646;    Columbus   &c.   Coal   Co.   v.  Fed.  331:  Van  Camp  Packing  Co.  v. 

Tucker.  48  Ohio  St.  41.  26  X.  E.  633,  Hartman,  126  Ind.  177,  25  X.  E.  901 ; 

12  L.  R.  A.  577,  29  Am.  St.  528.    See  Bryant  v.  Commonwealth   Ins.  Co.,  6 

also,  Meyer  v.  Dresser,  16  C.  B.   (N.  Pick.  (Mass.)  131;  Murphy  v.  Calley, 

S.)  646:  Inglebright  v.  Hammond,  19  83  Mass.  107;  Southwest  Missouri  R. 

Ohio  337,  53  .-Xm.  Dec.  430;  Thomas  Co.  v.   Morning  Hour   Min.   Co..    138 

V.   Guarantee  Tide  &c.   Co.,  81   Ohio  Mo.  App.  129.  119  S.  W.  982;  Seagar 

St.  432,  91  N.  E.  183,  26  L.  R.  A.  (N.  v.  Sligerland.  3  Caines  (X.  Y.)  219; 

S.)   1210;  Stoever  V.  Whitman's  Les-  Hollis   v.   Wells.   3   Clark    (Pa.)    169 

see,  6  Bin.  (Pa.)  416.  (bundling)  ;  Rumfield  v.  Xeal  (Tex), 

="Grinman  v.  Walker,  9  Towa  426;  46  S.  W.  262. 

Williams      v.      Oilman,      3      Greenl.  ^Chilbcrg  v.  Lvng,  128  Fed.  899.  63 

(Maine)   276;  Kleekamp  v.  Meyer.  5  C.  C.  A.  451. 

Mo.    .A.pp,   444;    Adams    v.    Pittsburg  ^Southwest     Missouri     R.     Co.     v. 

Ins.  Co.,  95  Pa.  St.  348,  40  Am.  Rep.  Morning    Hour    Min.    Co.,    138    Mo. 

662;   Dabnev  v.  Campbell.  ^  Humph.  App.  129,  119  S.  W.  982. 
(Tenn.)    680;    Swift    v.    Gifford,    2 


§    1690  CONTRACTS.  1022 

Steamboat  men  to  sell  goods  entrusted  to  them  for  other  purposes 
than  those  indicated  by  the  contract.^"  So  with  a  usage  among 
brokers  to  buy  stock  themselves  at  thirty  days  and  deliver  it  to 
their  customers  at  the  end  of  sixty  days  at  an  increased  price  and 
interest,  besides  the  usual  commissions."  So  with  a  custom 
among  the  banks  of  a  certain  city  to  certify  that  checks  drawn  by 
their  customers  are  "good"  when  such  customers  have  no  money 
on  deposit  out  of  which  to  pay  such  checks.^^  So  with  a  custom 
whereby  a  person  employed  to  cut  staves  from  bolts  belonging 
to  another  takes  and  appropriates  to  his  own  use  not  only  the 
clippings  and  corner  pieces  but  the  culls  without  the  consent  of 
the  owner.^^  And  so  a  custom  has  been  held  against  public  policy 
as  tending  to  encourage  dishonesty  which  permitted  property  to 
pass  by  mere  delivery  of  a  warehouse  receipt  without  indorse- 
ment.^* 

§  1690.  Legality  of  customs  or  usages — Contravention  of 
established  legal  principles. — A  custom  or  usage  will  not  be 
permitted  to  prevail  which  contravenes  well-established  legal  rules 
or  principles  established  for  the  protection  of  the  rights  of  par- 
ties.^^  The  reason  for  the  rule  is  strong  where  the  rule  of  law 
is  established  not  merely  to  define  the  rights  of  parties  under  par- 
ticular circumstances  but  to  protect  these  rights  by  enforcing 

'"Rapp  V.    Palmer,  3   Watts    (Pa.)  54  So.  920;  Commonwealth  v.  Coop- 

178  cr,  130  Mass.  285 ;  Walker  v.  Osgood, 

=' Commonwealth     v.     Cooper,     130  98  Mass.  348,  93  Am.  Dec.  168;  Dartt 

Mass.  285.  v.   Sonnesyn,  86  Minn.  55,  90  N.  Vy. 

"Mussey   v.    Eagle    Bank,  9    Mete.  115;     Johnson     v.     Gilfillan,     8     Gil. 

(Mass)  306.  (Minn.)   352;   Merchants'  Ins.  Co.  v. 

"Wadley   v.    Davis,    63    Barb.    (N.  Prince,  50  Minn.  53,  52  N.  W.  131,  36 

Y  )  500  Am.  St.  626 ;  Beach  v.  Morgan,  67  N. 

'^  Lehman  v.  Marshall,  47  Ala.  362.  H.  529,  41  Atl.  349,  68  Am.  St.  692 ; 

*»  Wilson  V.  Jernigan,  57  Fla.  277,  Ackerman  v.  Shelp,  8  N.  J.  L.  125; 
49  So  44;  Miller  v.  Moore,  83  Ga.  Markham  v.  Jaudon.  41  N.  Y.  235; 
684,  10  S.  E.  360,  6  L.  R.  A.  374,  20  Sawyer  v.  Dean,  114  N.  Y.  469,  21  N. 
Am  St.  329;  Hatcher  v.  Comer,  73  E.  1012;  Thomas  v.  Guarantee  Title 
Ga.  418;  Geiselman  v.  Roddinghaus,  &c.  Co.,  81  Ohio  St.  432,  91  N.  E. 
158  111.  App.  316;  Entwhistle  v.  183,  26  L,  R.  A  (N.  S.)  1210;  SiUi- 
Henke,  113  111.  App.  572,  affd.  211  111.  man  v.  Whit.mer,  196  Pa.  St.  363,  46 
273.  71  N.  E.  990,  103  Am.  St.  196;  Atl.  489;  Ollenheimer  v.  Foley.  42 
Webster  v.  Granger,  78  111.  230:  Cox  Tex.  Civ.  App.  252,  95  S.  W.  688; 
V.  O'Riley.  4  Ind.  368.  58  Am.  Dec.  Thompson  v.  Riggs,  5  Wall.  (U.  S.) 
633;  Clark  v.  Allaman,  71  Kans.  206,  663,  18  L.  ed.  704;  Reese  v.  Bates.  94 
80  Pac.  571;  Gallatin  v.  Bradford,  1  Va.  321,  26  S.  E.  865;  Sauer  v.  Stem- 
Bibb.  (Ky.)  209;  Clement  v.  South  bauer,  14  Wis.  70. 
Atlantic  S.  S.  Line  Co.,  128  La.  399, 


I023  CUSTOMS    AND    USAGES.  §    169I 

good  faith  and  fair  dealing  between  them.'"'  "A  usage  in  con- 
flict with  plain,  well-established  rules  of  law,  is  not  admissible  in 
evidence  in  any  case,  and  must  be  disregarded.  We  may  be  per- 
mitted to  add  the  remark  that  were  the  courts,  by  their  decisions, 
to  encourage  the  growth  of  these  local  usages,  originating  gen- 
erally in  lax  business  practice  or  mistaken  ideas  of  law,  they 
might  become  as  great  an  evil,  a  source  of  as  much  want  of  uni- 
formity in  the  law,  as  was  the  local  legislation  of  the  past — an 
evil  supposed  to  be  eradicated  from  our  political  system  by  the 
new  constitution."^^  "A  custom,  to  be  valid,  must  be  as  old  as 
the  common  law;  it  must  be  immemorial.  And  if  the  particular 
custom  be  proved  to  be  immemorial  it  necessarily  excludes  tlie 
general  custom,  or  common  law ;  for  two  opposite  and  incon- 
sistent customs  cannot  have  immemorially  existed,  in  the  same 
place,  and  as  to  the  same  thing.  But  the  case  is  widely  different 
in  this  country.  Our  ancestors  brought  with  them  the  common 
law  or  general  customs  of  England,  but  none  of  the  particu- 
lar customs.  The  common  law  becajne  the  law  of  our  whole 
state,  and  gave  the  rule  to  every  part  of  it.  *  *  *  Any 
practice  or  usage,  however  general,  introduced  into  this  country 
since  its  settlement,  and  in  opposition  to  the  common  law,  can 
have  no  force  on  the  ground  of  custom — because  it  lacks  the  es- 
sential ingredient  of  a  good  custom — it  is  not  immemorial.  It  is 
clear  that  it  could  not  have  existed  any  time,  even  as  a  recent 
custom,  until  after  the  settlement  of  the  country,  and  after  the 
common  law  attached  to  every  part  of  it.  And  nolx)dy  will  con- 
tend that  a  recent  usage  or  practice,  however  general,  will  change 
the  common  law."^** 

§  1691.  Legality  of  customs  or  usages — Contraventions  of 
legal  principles — Illustrations. — Under  this  principle,  the  fol- 
lowing customs  and  usages,  among  others,  have  been  declared 
invalid  by  the  courts :  a  usage  that  a  factor  may  pledge  the  goods 
of  his  principal;^®  a  custom  of  brokers  to  collect  commissions 

"Merchants  Ins.  Co.  v.   Prince,  50  ^Harris  v.  Carson,  7  Leigh.  (Va.) 

Minn.  53,  52  N.  W.  131,  36  /\m.  St.  632,  30  .Aim.  Dec.  510. 

626  ^  Newhold     v.     Wright,     4     Rawle 

"  Cox  V.  O'Riley,  4  Ind.  368.  58  Am.  (Pa.)   195. 
Dec.  633. 


§    169I  CONTRACTS.  IO24 

from  both  parties  ;*"  the  payment  of  bank  obligations  in  depreci- 
ated currency;*^  a  usage  allowing  the  master  of  a  vessel  to  sell 
the  cargo  without  necessity ;"  a  custom  to  take  fish  from  a  navi- 
gable stream  on  the  premises  of  another  person;*^  a  custom  per- 
mitting insurance  agents,  after  the  termination  of  their  agency, 
to  cancel  policies  issued  through  them  and  transfer  the  insur- 
ance to  other  companies  represented  by  them  ;**  the  charging  of 
interest  where  the  statute  provides  none  shall  be  charged;*^  a 
custom  to  cut  timber  on  lands  without  first  obtaining  permission 
of  the  owner  ;*°  a  custom  which  would  relieve  a  purchaser  from 
the  obligations  imposed  on  him  by  the  doctrine  caveat  emptor;*^ 
a  usage  authorizing  a  landlord  to  re-enter  for  a  forfeiture  in  a 
manner  different  from  that  provided  by  law  ;*^  a  custom  author- 
izing another  without  authority  from  the  owner  of  lands  and 
without  his  consent  or  knowledge  to  sell  such  lands  on  the  ordi- 
nary terms  and  bind  the  owner  ;*^  a  general  custom  between  man- 
ufacturers and  purchasers  of  engines  and  boilers,  by  which  such 
property  when  attached  to  the  realty  is  still  to  be  regarded  as 
personal  property ;°°  a  usage  of  brokers  that  one  on  receipt  of  an 
order  to  buy  stock  on  a  margin  assumes  the  contract  himself 
instead  of  making  it  with  a  third  person  ;^^  a  local  custom  to  sell 
notes  and  drafts  pledged  as  security  at  private  sale  at  the  best 
price  obtainable  after  demand  of  payment  and  notes  f^  a  custom 
that  when  a  seller  of  goods  receives  the  consignee's  note  without 

"Raisin  v.   Clark,  41   Md.   158,  20  « Henry  v.   Risk,   1  Dall.    (U.   S.) 

Am.  Rep.  66;  Walker  v.  Osgood,  98  265,   1  L.  ed.   130. 

Mass.  348,  93  Am.  Dec.  168;  Dartt  v.  "Wilson  v.  Jernigan,  57  Fla.  277, 

Sonnesyn,    86    Minn.    55,    90    N.    W.  49  So.  44. 

115;    Kedian   v.   Hoyt,   2,2,   Hun    (N.  "  Dickinson  v.  Gay,  7  Allen  (Mass.) 

Y.)  145.  29,  83  Am.  Dec.  656;  Thomas  v.  Guar- 

"■  Marc  V.  Kupf er,  34  111.  286 ;  Ma-  antee  Title  &c.  Co.,  84  Ohio  St.  432, 

rine  Bank  v.  Chandler,  27  111.  525,  81  91   N.   E.   183,  26  L.   R.  A.    (N.   S.) 

Am.  Dec.  249.  1210;   Barnard  v-   Kellogg,    10  Wall. 

*' Bryant     v.     Commonwealth     Ins.  (U.   S.)   383,   19  L.   ed.  987. 

Co.,  6  Pick.  (Mass.)   131.  **  Stoever   v.    Whitman's  Lessee,   6 

"Waters  v.  Lilley,  4  Pick.  (Mass-)  Bin.    (Wis.)   416. 

145,    16    Am.     Dec.    2>2i2,;     Common-  ^^  Carr    v.    Callaghan,    13    Ky.     (3 

wealth    V.    Chapin,    5    Pick.    (Mass.)  Litt.)  365. 

199,   16  Am.   Dec.   386;    McFarlin   v.  '^Richardson  v.   Copeland,  6   Gray 

Essex  County,  10  Cush.  (Mass.)  304;  (Mass.)   536,  66  Am.  Dec  424. 

Beach  v.  Morgan,  67   N.  H.  529,  41  "Commonwealth    v.     Cooper,     130 

Atl.  349,  68  Am.  St.  692.  Mass.   285. 

**  Merchants  Ins.  Co.  v.  Prince,  50  "' Wheeler   v,    Newbold,    16   N.    Y. 

:\Tinn.  53,  52  X.  W.  131,  36  Am.  St.  392. 
626. 


1025  CUSTOMS    AND    USAGES.  §     1 692 

the  buyer's  indorsement,  the  latter  is  discharged  and  the  maker 
of  the  note  alone  is  responsible ;"  a  custom  of  trade  that  an  im- 
porter's order  for  goods  to  be  manufactured  abroad  is  not  sub- 
ject to  countermand;'*  a  custom  that  a  party  having  a  claim  for 
money  due  on  a  contract  may  not  pursue  the  usual  remedies  pro- 
vided for  its  enforcement  ;^"  a  custom  that  in  a  sale  of  goods  by 
sample  the  buyer  has  twenty-four  hours  in  which  to  examine  and 
reject  the  goods  as  inferior  to  the  sample.'"  The  principle  is  the 
same  where  the  usage  violates  a  well-established  principle  of 
maritime  law.'"'  The  fact  that  a  usage  is  universally  followed  in 
a  locality  will  not  make  it  valitl  if  it  is  in  violation  of  law.'^*  But 
it  has  been  held  that  the  general  custom  existing  in  the  District 
of  Columbia  whereby  holders  of  stock  certificates  assigned  in 
blank  are  regarded  by  persons  dealing  therein  as  the  owners  for 
the  purpose  of  selling  and  pledging  them  does  not  violate  this 
principle,  as  the  custom  rather  follows  established  law  than  sets 
up  a  new  and  independent  rule  governing  such  transactions." 
So  it  has  been  held  that  evidence  of  a  custom  to  sell  lumber  in  a 
certain  town  without  manufacturing  it  may  be  received  unless  it 
appears  that  the  lumber  in  question  is  such  as  the  law  requires 
to  be  manufactured  to  sell."*^ 

§  1692.  Legality  of  customs  or  usages — Contravention  of 
statutes. — A  custom  or  usage  is  without  validity  when  it  is 
in  conflict  with  an  express  statutory  provision.  One  is  not  to  be 
deprived  of  his  statutory  rights  by  local  customs,  unless  he  ex- 
pressly so  agrees."    "A  custom  sometimes  makes  the  law,  but  a 

"Prescott    V.    Hubbel,    1    McCord  8  Mart.   (O.  S.)    (La.)   309.   13  Am. 

(S.    Car.)    94.  Dec.  287.  . 

"Ollenheimer    v.    Folev.    42    Tex.        ""National  Safe  Deposit  &c.  Co.  v. 

Civ.  App.  2.52.  95  S.  \V.  688.  Hibbs.  32  App.  D.  C.  450. 

"Bauer  v.    Samson    Lodge    No.   32        ""Lee  v.   Kilburn,  3  Gray    (Mass.) 

K.  of  P..  102  Ind.  262.  1  N.  E.  571.  594. 

"Webster   v.    Granger.   78   111.  230.        "Jones    v.    McLean.    18    Ark.    456; 

"Vans  V.  Higginson.  10  Mass.  29;  Deadwyler  v.  Karow,  131  Ga.  227.  62 

Eager    v.    Atlas    Ins.    Co.,    14    Pick.  S.  E.  172.  19  L.  R.  A.  (N.  S.)   197n ; 

(Mass)   141    25  Am.  Dec.  363;  Reed  Fleming  v.   King.   100  Ga.  440.  28   S. 

V    Richardson.  Og  Mass.  216.  93  Am.  E.    239;    Marine    Bank    v.    Chandler. 

Dec     155-    Warren    v.    Franklin    Ins.  27  111.  525.  81  Am.   Dec.  249;    Healy 

Co     104  Mass    518;  Frith  v.  Barker.  Ice  Mach.  Co.  v.  Clow.  148  111.  .Xpp. 

2    fohns     (N     Y)    327;    Stillman   v.  421;  Clement  v.  South  .Atlantic  S.  S. 

Kurd    10  Tex.  109.  Line   Co..    128   La.   300.   54   So.   920; 

**  United   States  Bank  v.   Fleckner,  Thomson  v.  .-Mbert.  15  Md.  268;  Per- 

65 — Contracts,  Vol.  2 


1692 


COXTRACTS. 


1026 


custom  in  direct  conflict  with  positive  law  has  no  such  effect.  It 
is  nugatory  and  binds  no  one."""  It  is  the  first  requisite  of  a  good 
custom — as  opposed  to  a  usage, — that  it  shall  have  been  used  so 
long  that  the  memory  of  man  runneth  not  to  the  contrary.  It 
follows  that  no  custom  can  prevail  against  a  legislative  act,  since 
the  act  itself  constitutes  proof  of  the  time  when  such  custom  did 
not  exist. '^^  Under  the  main  principle,  a  local  usage  as  to  interest 
must  yield  to  the  usury  laws  of  the  state.*'*  So  a  local  custom 
to  pay  duties  in  depreciated  currency  is  without  force  where  an 
express  statute  forbids  the  practice.  "No  custom  can  compel  a 
creditor,  in  the  absence  of  a  special  agreement,  to  receive  any- 
thing but  the  constitutional  currency  of  the  country.  The  fact 
that  the  business  men  of  the  particular  place  have  been  in  the  habit 
of  receiving  depreciated  paper  money  in  the  payment  of  their  de- 
mands, by  no  means  proves  that  all  creditors  in  that  locality  have 
agreed  to  receive  the  same,  much  less  a  person  residing  hundreds 
of  miles  distant.  To  have  such  an  effect,  a  special  agreement  must 


kins  V.  Franklin  Bank,  21  Pick. 
(Mass.)  483;  Jones  v.  Hoey,  128 
Mass.  585;  Cowarill  v.  Jones,  99  Mo. 
App.  390.  17>  S.  W.  995;  Ettien  v. 
Drum,  32  Mont.  311,  80  Pac.  369; 
Commercial  Bank  v.  Varnum,  3 
Lans.  (N.  Y.)  86,  revd.  49  N.  Y. 
269;  Wyatt  v.  Wanamaker,  58  Misc. 
(N.  Y.)  429,  110  N.  Y.  S.  900; 
Patapsco  Guano  Co.  v.  Magee.  86  N- 
Car.  350;  Gore  v.  Lewis,  109  N.  Car. 
539,  13  S.  E.  909;  Niagara  County 
Bank  v.  Baker,  15  Ohio  St.  68;  First 
Nat.  Bank  v.  Eldridge,  26  Okla.  538, 
109  Pac.  62;  Portland  Fish  Co.  v. 
Benson,  56  Ore-  147,  108  Pac.  122; 
Pennsylvania  Coal  Co.  v.  Sanderson, 
94  Pa.'  St.  302,  39  Am.  Rep.  785 ;  Com- 
monwealth V.  Ellis,  46  Pa.  Super. 
Ct.  12,  79;  Cooper  v.  Sandford.  4 
Yerg.  (Tenn.)  452,  26  Am.  Dec.  239; 
Mays  V.  Jennings,  4  Humph.  (Tenn.) 
102;  Mitchell  v.  United  States,  34  U. 
S.  711,  9  L.  ed.  283;  Walker  v.  West- 
ern Transp.  Co.,  3  Wall.  (U.  S.) 
150,  18  L.  ed.  172;  Delaplanc  v.  Cren- 
shaw.  15  Gratt.    (Va.)    457. 

"'Cowgill  V.  Tones,  99  Mo.  App. 
390,  73  S.  W.  995. 

^^  Ocean  Beach  Assn.  v.  Brinley,  34 
N.  J.  Eq.  438;  Pennsylvania  Coal  Co. 


V.  Sanderson,  94  Pa.  St.  302,  39  Am- 
Rep.  785.  "Customs  similar  to  those 
of  gavelkind  and  borough-English, 
cannot  exist  here,  for  they  cannot 
have  the  antiquity  necessary  to  their 
validity.  To  be  recognized  by  the 
courts,  they  must  have  existed  im- 
memorially,  that  is,  before  the  be- 
ginning of  the  reign  of  Richard  the 
First.  This  country  was  not  dis- 
covered until  more  than  three  hun- 
dred years  after  the  commencement 
of  that  sovereign's  reign,  and  conse- 
quently no  custom  can  have  existed 
here  for  the  period  required  to  make 
it  legal."  Ocean  Beach  Assn  v. 
Brinley,  34  N.  J.  Eq.  438. 

"*  Jones  V.  McLean,  18  Ark.  456; 
Harrod  v.  Lafarge,  12  Mart.  (O.  S.) 
fLa.)  21;  D'Aquin  v.  Coiron,  3  La. 
387;  Cowgill  v.  Jones,  99  Mo.  App. 
390,  1Z  S.  W.  995;  Dunham  v.  Dey, 
13  Johns.  (N.  Y.)  40,  followed  in  16 
Johns.  (N.  Y.)  367.  8  Am.  Dec.  323; 
Dunham  v.  Gould,  16  Johns.  (N.  Y.) 
367,  8  Am.  Dec.  323;  New  York 
Firemen's  Ins.  Co.  v.  Elv,  2  Cow. 
(N.  Y.)  678;  Gore  v.  Lewis,  109  N. 
Car.  539,  13  S.  E.  909;  Niagara 
County  Bank  v.  Baker,  15  Ohio  St. 
68;  Greene  v.  Tyler,  39  Pa.  St.  361; 


1027  CUSTOMS  AND  USAGES.  §  1693 

be  proved.""'^  So  it  has  been  held  that  a  local  custom  is  invalid 
which  makes  ship  owners  liable  for  the  negli^^ence  of  their  agents 
in  cases  in  which  they  are  exempt  by  statute.""  So  usages  among 
merchants  to  give  preferences  to  accommodation  loans  cannot  be 
enforced  where  opposed  to  the  general  insolvent  law  of  a  state." 
So  with  a  custom  authorizing  a  notary  to  act  contrary  to  his 
statutory  duty.°^  So  with  a  custom  of  giving  2,268  pounds  for  a 
ton  of  coal  where  the  law  specially  provides  that  2,000  pounds 
shall  make  a  ton."°  So,  likewise,  with  a  neighborhood  custom 
as  to  the  ascertainment  of  the  quantity  of  corn  to  be  delivered  in 
barrels,  which  is  in  direct  conflict  with  the  statute  establishing 
the  standard  of  measurement.'"  So  of  a  local  custom  to  have 
the  agricultural  lien  on  crops,  to  be  grown,  signed  and  delivered 
after  supplies  have  been  furnished,  where  the  statute  authorizing 
such  lien  requires  that  the  agreement  should  be  executed  and 
delivered  before  the  advancements  are  made  and  the  supplies 
furnished.''^ 

§  1693.  Legality  of  railway  and  banking  customs. — A 
usage  or  custom  cannot  be  invoked  by  a  party  and  introduced  into 
a  contract,  as  an  element  of  it,  if  it  is  contrary  to  law.  Accord- 
inelv.  a  failure  to  complv  with  the  Texas  statute  requiring  rail- 
road  companies  to  deliver  freight,  upon  a  tender  by  the  owner 
of  the  freight  charges,  as  shown  by  the  bill  of  lading,  is  not  ex- 
cused by  the  refusal  of  the  owner  to  surrender  the  bill  of  lading, 
or  to  give  an  indemnity  bond  in  lieu  of  such  surrender;  and  it  is 
immaterial  that  there  is  a  general  custom  among  railroads  re- 
quiring the  surrender  of  the  bill  of  lading.^=  It  has  been  held 
in  Alabama  that  evidence  of  a  general  custom  of  passing  checks 

Smetz  V.   Kcnncdv,   Rilcv    (S.   Car.)  '"Mays     v.     Jennings,     4    Humph. 

218;    Cooper    v.    Sandford,    4   Yerg.  (Tenn.)  102. 

(Tenn  )  452.  26  Am.  Dec.  239.  ''  Patapsco  Guano  Co.  v.  McGee,  86 

"  Marine  Bank  v.  Chandler,  27  111-  N.  Car.  350. 

525.  81  Am.  Dec.  249.  '"Gulf  Coast  &  S.  F.  R.  Co.  v.  Mc- 

*" Walker  v.  Western   Transp.   Co.,  Cown   (Tex.).  25  S.  W.  435:    "Upon 

3  Wall    (U.  S.)   150.  18  L.  ed.  172.  both    points    the    court    was    correct- 

"Thomson   v.   Alhcrt,   15   Md.  268.  '^he  carrier  cannot   refuse  to  dehver 

^Commercial    Bank  v-    Varnum.   3  freipht    on    the   ground    that   the  bdl 

Lans    (N    Y  )  86,  revd.  4^  N.  Y.  269.  of  lading  is  not  surrendered  to  him. 

^^    Evans  v    Myers    25  Pa.  St.  114.  Dwver  v.  Gulf  &c.  R.  Co..  69  Texas 

See  also,  Godcliarles  v.  Wigeman,  113  707,  7  S.  W.  504.    Nor  can  he  require 

Pa.  St.  431    6  Atl.  354.  an   indemnity  bond   upon   failure   of 


§  1 693 


CONTRACTS. 


1028 


payable  to  an  existing  person  or  bearer,  by  delivery  only,  will  not 
affect  the  operation  of  the  Alabama  statute  providing  that  all 
bills  or  notes  payable  to  an  existing  person  or  bearer  must  be  con- 
strued as  if  payable  to  such  person  or  order."  It  has  also  been 
held  that  a  custom  cannot  make  a  contract  where  there  is  none, 
nor  prevent  the  eft'ect  of  settled  rules  of  law.'^*  A  party  cannot  in- 
voke and  have  the  benefit  of  a  local  usage  inconsistent  with  the  law 
merchant  which  he  himself  had  ceased  to  observe.  Thus,  plaintiffs 
doing  a  banking  business,  after  abandoning  a  practice  to  give  no- 
tice of  the  dishonor  of  notes  by  mail,  notwithstanding  that  the  in- 
dorser  and  holder  lived  in  the  same  town,  could  not  rely  on  such 
custom,  even  though  it  continued  to  prevail  among  other  banks; 
and  an  allegation  by  plaintiffs,  doing  a  banking  business,  that  a 
general  custom  prevailed  among  all  the  local  banks  to  give  notices 
of  dishonor  by  mail,  notwithstanding  that  the  indorser  and  holder 
lived  in  the  same  town,  is  not  supported  by  proof  of  a  practice 
prevailing  among  other  banks,  in  which  plaintiffs  did  not  par- 
ticipate.'^^   Where  a  check  is  payable  to  a  named  person  or  bearer, 


the  owner  to  surrender  it.  It  cannot 
coerce  the  owner  into  giving  in- 
demnity for  refusal  to  do  what  the 
law  declares  he  is  not  bound  to  do. 
The  law  protects  him  in  the  refusal, 
and  the  carrier  cannot  force  burdens 
upon  him  because  he  insists  upon  his 
rights.  As  to  custom :  It  cannot  de- 
prive one  of  a  legal  right  without 
his  consent  and  without  compensa- 
tion; it  cannot  make  contracts  for 
parties ;  it  can  in  some  cases  con- 
strue the  terms  used  in  a  contract, 
but  it  is  not  a  good  custom  if  it  is 
unreasonable,  or  contrary  to  law.  The 
custom  contended  for  cannot  be  en- 
forced. ]Missouri  &c.  R.  Co-  v.  Pa- 
gan, 12  Tex.  127,  9  S.  W.  749,  2 
Greenl.  Ev.  251." 

"First  Nat.  Bank  v.  Nelson,  105 
Ala.  180,  16  So.  707.  "It  has  been 
argued  that  by  the  general  custom, 
bank  checks,  when  payable  to  an  ex- 
isting person  or  bearer,  pass  from 
hand  to  hand  by  delivery  merely,  and 
are  payable  to  the  holder  without  in- 
dorsement, and  that  this  circum- 
stance shows  the  construction  which 
the  general  public  has  placed  upon 
this  statute, — a  fact,  as  urged,  which 
should  have  great  weight  with  courts 


in  determining  the  true  construction 
of  this  statute.  It  is  not  to  be  de- 
nied, that  if  the  meaning  of  words 
of  a  statute  be  uncertain,  usage  may 
be  resorted  to  for  the  purpose  of 
interpreting  them  (Lawson,  Usages 
&  Cust.  462,  §  223;  South  St.  Const., 
§  308)  ;  but  popular  disregard  of  a 
statute,  or  a  custom  opposed  to  it,  will 
not  repeal  it ;  and  a  custom  or  usage 
which  would  contradict  the  com- 
mands of  a  statute  ought  not  to  be 
considered."  Lawson,  Usages  & 
Cust,  §  216;  South  St.  Const,  §  137; 
Richmond  &c.  R.  Co.  v.  Hissong,  97 
Ala.  187,  13  So.  209;  Barlow  v.  Lam- 
bert, 28  Ala.  704.  65  Am.  Dec.  374; 
East  Tennessee  &c.  R-  Co.  v.  John- 
ston, 75  Ala.  596,  51   Am.   Rep.  489. 

'*  Adams  v.  Goddard,  48  Maine  212; 
Dykers  v.  Allen,  7  Hill  (N.  Y.)  497, 
42  Am.  Dec.  87;  National  Bank  v. 
Kurkhardt,  100  U.  S.  686,  25  L.  ed- 
766 ;  Bliven  v.  New  England  &c.  Co., 
23  How.  (U.  S.)  420,  16  L.  ed.  510; 
Thompson  v.  Riggs,  5  Wall.  (U.  S.) 
663.  18  L.  ed.  704;  Tilley  v.  Cook,  103 
U.  S.  155,  26  L.  ed.  374. 

'^Isbell  V.  Lewis,  98  Ala.  550,  13 
So.  335. 


I029  CUSTOMS    AND    USAGES.  §    1 693 

and  the  payee  indorses  it  in  blank  and  delivers  it  to  a  bank  and 
receives  credit  for  it,  in  an  action  by  the  indorsee  against  the 
maker,  evidence — that,  by  a  custom  among  bankers,  where  a  check 
is  drawn  on  a  bank  and  presented  to  another  bank,  it  is  passed 
to  the  credit  of  the  customer,  but  that  the  credit  so  given  is 
treated  as  a  receipt  for  the  check,  and  not  as  a  payment, — is  inad- 
missible, as  the  indorsement  and  check  evidence  the  agreement 
between  the  payee  and  indorsee,  and  the  transfer  of  the  check  is 
governed  by  the  law  merchant.'"  A  custom  on  the  part  of  a  car- 
rier or  of  carriers  generally  at  a  particular  place  to  deliver  goods 
to  one  other  than  the  consignee,  who  merely  holds  the  bill  of 
lading  without  any  indorsement,  does  not  justify  such  delivery, 
as  the  carrier  is  bound  by  law  to  deliver  only  to  the  person  who 
has  title  to  the  bill  of  lading.^'  Proof  of  a  custom  is  not  admis- 
sible to  enlarge  the  powers  of  officers  whose  authority  is  defined 
by  statute.''*  A  usage  of  trade  for  banks  to  take  pledges  from 
factors  as  security  for  the  payment  of  the  general  balance  of  ac- 
counts between  them,  for  goods  known  to  be  held  by  them  as  fac- 
tors, is  unlawful,  and  cannot  be  invoked  by  the  parties.'^" 

"  Shaw  V.  Jacobs.  89  Iowa  713,  55  ly  at  a  particular  place  to  make  de- 

N.  \V.  333,  56  X.  W.  684,  21  L.  R-  A.  liveries  to  persons  merely  in  posses- 

440,  48  Am.  St.  411.  sicn  of   the  bill   of   lading   is   a   bad 

"  Nebraska    Meal    Mills   Co.   v.    St.  custom,    and    cannot    be    adduced    in 

Louis    S.    \V.    R.    Co.,    64    Ark.    169.  evidence   to   exempt   such   carrier   or 

41    S.   W.   810,   38  L.    R.    A.   358,   62  carriers   from   liability   for  deliveries 

Am.    St.    183;    Raliegh    &c.    R.    Co.  to   wrong  persons."    Title   to   bill   of 

V.  Lowe.   101   Ga.  320,  28  S.  E.  867;  lading   may  pass  by  delivery  if   this 

St.    Louis    S.    W.    R.    Co.    V.    Elgin  is   the    intention   of   partv.     Hoffman 

Condensed    Milk    Co..    74    111.    App.  v.  Lake  Siiore  M-  S.  R.  Co.,  125  Mich. 

619.    affd.    175    111.    557,    51    N.    E.  201,  84  N.  W.   55.    A  bill  of  lading 

911,  67  Am.  St.  238;  Diamant  V.  Long  represents   the   property,   transfer   of 

Island  R.  Co..  30  Misc.   (X.  Y.)   444,  which     transfers     propertv.       White 

62  X.  Y.  S.  519;  Storey  v.  Hershev,  Live-Stock  &c.  Co.  v.  Chicago,  M.  & 

19  Pa.   Super.   Ct.  485.     Louisville  &  St.  P.  R.  Co.,  87  Mo.  App.  330. 

X.  R   Co.  V.  Barkhouse,  100  Ala.  543.  "MValters  v.  Senf,  115  Mo.  524.  22 

13  So.  534:     "A  bill  of  lading  does  S.   \V.   511;    Walters   v.   Brooks.    115 

not  pass  by  delivery,  and  the  posses-  Mo.  534.  22  S.   W.  514. 

sion  of  it  by  one  other  than  the  con-  "Allen  v.  St.  Louis  Xat.  Bank.  120 

signee  without  indorsement   will  not  U.   S.  20,  30  L.  ed.  573,   7    Sup.   Ct- 

authorize  or  justify  the  carrier  in  de-  460.  The  usage  "cannot  aid  the  plain- 

livering  the  consignment  to  such  per-  tiff;    *    *    *    because  it  was  contrary 

son.     ilutch.   Carriers,   §  344.  2  Am.  to  law.  in  that  it  undertook  to  alter 

&  Eng.  Enc.  Law.  pp.  230.  231.     The  the   nature   of    the    contract  between 

obligation  to  deliver  only  to  the  party  the  factors  and  their  principals  which 

having  title   to   the  bill  of   lading   is  authorizes    them    to   sell,   but    not    to 

imposed   by  law  on  the  carrier,  and  pledge,  and  in  that   it  would   sustain 

is   absolute.     Any   custom   of  a   par-  a   pledge   by   a    factor   of   the   goods 

ticular  carrier  or  of  carriers  general-  of    several   principals   to    secure    the 


§    1694  CONTRACTS.  IO3O 

§  1694.  Effect  of  partial  illegality  of  custom. — It  is  con- 
ceivable th:it  a  custom  or  usage  may  be  illegal  in  part  only.  In 
such  a  case,  the  rules  applicable  to  a  statute,  partially  invalid, 
govern.  If  a  part  of  a  custom  would  be  valid  if  it  stood  alone 
as  a  separate  and  independent  custom,  such  part  would  be  in- 
valid when  another  part  of  the  entire  custom  of  which  it  forms 
a  part  was  invalid,  unless  it  is  reasonably  certain  that  to  enforce 
the  former  as  a  separate  and  independent  custom  would  corre- 
spond with  the  intent  and  purpose  with  which  the  custom  as  a 
whole  was  established  and  used.^'' 

§  1695.    Effect  of  adoption  of  usage  by  courts. — Generally 

speaking  where,  in  the  absence  of  any  statutory  provision  on  the 
subject,  a  usage  has  been  adopted  by  a  court  of  last  resort  in  a 
state,  the  usage  will  thenceforward  be  presumed  to  conform  to 
such  rule  throughout  the  state;  and  this  presumption,  if  not  con- 
clusive, can  only  be  rebutted  by  clear  proof  of  a  uniform  and 
settled  usage  to  the  contrary.^^ 

§  1696.    Knowledge  of  custom  or  usage — Essential. — One 

is  bound  by  a  particular  local  custom  or  usage  only  where  he  has 
knowledge  of  its  existence.  This  knowledge,  however,  may  be  ac- 
tual or  it  may  be  constructive.  The  party  is  charged  with  con- 
structive knowledge  of  the  usage  where  it  is  so  certain,  notorious, 
uniformly  and  well  established  that  his  knowledge  of  its  existence 
will  be  conclusively  presumed  and  understood  by  him  in  entering 
into  the  contract.''-    The  reason  for  the  principle  is  that  it  is  the 

payment  of  his  own  general  balance  446;  Smith  v.  Rice,  56  Ala.  417;  East 

account  to  a  third  person."  Robinson  Tennessee  &c.  R.  Co.  v.  Johnston,  75 

V.   Mollett,  L.  R.  7  H.  L.  802;   Leh-  Ala.   596,  51  Am.  Rep.  489;   Marlatt 

man  v.  Marshall,  47  Ala.  362 ;  Leuck-  v.    Clary,   20    Ark.   251 ;    Arkadelphia 

hart  V.  Cooper,  3  Bing.  N.   Cas.  99;  Lumber   Co.   v.    Henderson,   84   Ark. 

Newbold   v.  Writ-ht,  4   Rawle    (Pa.)  382.  105  S.  W.  882;  McCarthy  v.  Mc- 

195;  Irwin  v.  Williar,  110  U.  S.  499,  Arthur,  69   Ark.   313,   63    S.   W.   56; 

28  L.  ed.  225,  4  Sup.  Ct.  160.  Bodcaw    Co.    v.    Ford.   82    Ark.    555, 

^Deadwvler  v.  Karow,  131  Ga.  227,  102  S.  W.  896;  Ward  Furniture  Mfg. 

62   S.   E.   172,   19  L.   R.  A.   (N.   S.)  Co.  v.   Isbell.  81  Ark.  549,  99  S.  W. 

197n.  845 ;  Corey  v.  Struve,  16  Cal.  App.  310, 

"Isham  V.  Fox,  7  Ohio   St.  317.  116   Pac.  975;   Isaksson   v.   Williams, 

'- German-.A.merican     Ins.     Co.     v.  26  Fed.  642;  Adams  v.  Manufactur- 

Commercial  Fire  Ins.  Co.,  95  Ala.  469,  ers'  &  Builders'  Fire  Ins.  Co..  17  Fed. 

11  So.  117,  16  L.  R.  A.  291;  Steele  v.  630;  Chilberg  v.  Lvng,  128  Fed.  899, 

McTver's  Admr.,  31  Ala.  667,  70  Am.  63   C.  C.  A.  451;   Chicago.   M.  &  St. 

Dec.  516;  Herring  v.  Skaggs,  IZ  Ala.  P.  R.  Co.  v-  Lindeman,  143  Fed.  946, 


I03I 


CUSTOMS    AND    USAGES. 


§    1696 


essence  of  a  contract  that  it  should  arise  out  of  the  intention  of 
the  parties  to  do  or  not  to  do  certain  things,  and  it  follows  that 


75  C.  C.  A.  18;  Great  Western  Ele- 
vator  Co.    V.    White,    118    1-cd.   406; 
Vaughan's    Seed    Store   v.    Stringfel- 
lovv,  56  Fla.  708,  48  So.  410 ;  Kelly  v. 
Kauffman  .Milling  Co,  92  Ga.  1U5,  18 
S.  E-  363 ;  Central  R.  &  Banking  Co. 
V.   Anderson,   58   Ga.  393;    McCall  v. 
Herrin,  118  Ga.  522,  45  S.  E.  442;  S. 
W.  Bacon  Fruit  Co.  v.  Blessing.  122 
Ga.  369,  50  S.  E.  139;    Hendricks  v. 
Middlel)rooks  Co.,  118  Ga-   131;  Lar- 
son V.  Johnson,  42  111.  App.  198 ;  Cor- 
rigin   v.    Herrin,    44    111.    App.    363; 
Bank  of  Commerce  v.  Miller,  105  111. 
App.   224;    International    Salt    Co.   v. 
Tennant,  144  111.  App.  30;  First  Nat. 
Bank   V.    iMackey,    157    111.   App.  408; 
Bradford  v.  Homestead  Fire  Ins.  Co., 
54  Iowa  598,  7  X.  W.  48;   Beatty  v. 
Gregory,   17   Iowa   109,  85  Am.  Dec. 
546;   Underwood  v.  Iowa   Legion  of 
Honor,  66  Iowa  134,  23  N.  W.  300; 
Graydon  v.  Patterson,  13  Iowa  257,  81 
Am.    Dec.    432;    Sherwood    v.    Home 
Saving  Bank,  131  Iowa  528,  109  N.  W. 
9;  Rake  v.  Townsend  (Iowa).  102  N. 
W.     499;     Citizens'     State     Rank    v. 
Chambers.   129  Iowa  414,   105  N.  W. 
692;   Sully  v.   Pratt,   106  La.  601,  31 
So.  161 ;  Niarshall  v.  Perry,  67  Maine 
78;    Norton  v.   University   of   ]\laine, 
106  Maine  436,  76  Atl.  912;   Denton 
Bros.   V.   Gill.    102   Md.   386.   62   Atl. 
627,  3  L.  R.  A.   (N.  S.)   465;  Raisin 
V.    Clark,  41    Md.    158.  20   Am.   Rep. 
66;  Bvrne  v.  Massasoit  Packing  Co., 
137  Mass.  313;  Packard  v.  Earle.  113 
Mass-  280;  Berkshire  Woolen  Co.  v. 
Proctor,  7  Cush.   (Mass.)  417;  How- 
ard  V.    Great   Western   Ins.    Co.,    109 
Mass.  384;   Warren  Bank  v.   Parker, 
8     Grav     (Mass.)     221;    Stevens    v. 
Reeves,  9  Pick.   (Mass.)   198;  Pierce 
V.  Butler.  14  ^lass.  303;  Luce  v.  Dor- 
chester Fire  Ins.  Co.,  105  Mass.  297, 
7  Am.  Rep.  522 ;  Barrie  v.  Quimhv,  206 
Mass.  259.  92   N.   E.  451  :   Brown   v. 
Foster,   113   Mass.   136.   18  Am.   Rep. 
463;    Eaton    v.    Gladwell.    108    Mich. 
678,    66    N.    W.    598;    Hutchings    v- 
Ladd.     16    Mich.     493;    Milligan     v. 
Slich   Furniture    Co..    Ill    ^Tich.   629. 
70  N   W.  133;  Blodgett  v.  Vogel.  130 
Mich.  479.  90  N.   W.  277;   Reynolds 
V.    Continental    Ins.    Co..    36    Mich. 
131;   Flatt  v.   Osborne,  33  Minn.  98, 


22  N.  W.  440;  Johnson  v.  Gilfillan, 
8  Gil.  (Minn.)  352;  Baxter  v.  Sher- 
man, 73  Minn.  434,  70  N.  W.  211,  72 
Am.  St.  631;  Globe  Milling  Co.  v. 
Minneapolis  Elevator  Co.,  44  Minn. 
153;    Paine  v.    Smith,  33    Minn.   495, 

24  N.  W.  305 ;  Hyde  v.  St.  Louis  Book 
&  News  Co.,  32  Mo.  App.  298;  Brown 
V.  Strimple,  21  Mo.  App-  338;  Steam- 
boat Keystone  v.  Moies,  28  Mo.  243, 
75  Am.  Dec.  123;  Fitzgerald  v.  Han- 
son, 16  Mont.  474,  41  Pac.  230;  Mil- 
waukee &  W.  Inv.  Co.  V.  Johnston, 
35  Nebr.  554.  53  N.  W.  475;  Gam- 
ble v.  Staubcr  Mfg.  Co.  (Nebr.).  69 
N.  W.  960;  Bixby  v.  Bruce,  69  Nebr. 
78,  95  N.  W.  34;  McKee  v.  Wild,  52 
Nebr.  9.  71  N.  W.  958;  Martin  v. 
Maynard,  16  N.  H.  165;  Goodall  v. 
New    England    Mut.    Fire    Ins.    Co., 

25  N.  H.  169;  Hilbrand  v.  Dininnv, 
73  App.  Div.  (N.  Y.)  511,  77  N.  Y. 
S.  317;  Hopper  v.  Sage,  112  N.  Y. 
530;  Higgins  v.  Moore,  34  N-  Y.  417; 
Child  v.  Sun  Mut.  Ins.  Co.,  3  Sandf. 
(N.  Y.)  26;  Weir  v.  Dwyer,  62  Misc. 
(N.  Y.)  7,  114  N.  Y.  S.  528;  Gough 
V.  Davis,  24  Misc.  (N.  Y.)  245.  52 
N.  Y.  S.  947,  affd.  39  App.  Div.  (N. 
Y.)  639,  57  N.  Y.  S.  1139;  Rickerson 
v.  Hartford  Fire  Ins.  Co.,  149  X.  Y- 
307,  43  N.  E.  856;  Robertson  v.  Na- 
tional Steamship  Co..  139  N.  Y.  416, 
34  N.  E.  1053;  Woodruff  v.  Acosta. 
11  N.  Y.  St.  286;  Flour  City  Nat- 
Bank  v.  Traders'  Nat.  Bank,  35  Hun 
(N.  Y.)  241;  Stoney  v.  Farmers' 
Transp.  Co.,  17  Hun  (N.  Y.)  579; 
Lawrence  v.  Gallagher.  42  N.  Y. 
Super.  Ct.  309.  affd.  73  N.  Y.  613; 
Johnson  v.  De  Pevster,  50  N.  Y.  666; 
Wadlev  v.  Davis.  63  Barb.  (N.  Y.) 
500;  Wheeler  v.  Newbnld.  12  N.  Y. 
Super.  Ct.  29,  affd.  16  N.  Y.  392; 
Holford  v.  Adams,  9  N.  Y.  Super. 
Ct.  471;  Wood  v.  Hickok.  2  Wend. 
(N.  Y.)  501;  Newhall  v.  Appleton. 
102  N.  Y.  133.  6  X.  E.  120;  Farmers' 
&  ^Mechanics'  Nat.  Bank  v.  Sprague. 
52  N.  Y.  605 ;  St.  John  v.  Van  Sant- 
voord.  25  Wend.  CN.  Y.)  660;  Gil- 
mer V.  Young.  122  N.  Car.  806.  29 
S.  E.  830;  Robbins  v.  Maher.  14  N. 
Dak.  228.  103  N.  W.  755;  Mathias 
Planing  Mill  Co.  v.  Hazen.  20  Ohio 
C.  C.  287,  11  Ohio  C.  D.  54;  Hart- 


1696 


CONTRACTS. 


1032 


one  cannot  be  held  to  have  contracted  to  do  or  not  to  do  some- 
thing of  which  he  neither  had  nor  is  presmxied  to  have  had  any 
knowledge  or  notice.®^  It  is  not  enough  that  one  of  the  parties 
to  the  contract  has  knowledge  of  the  usage,  but  the  principle 
requires  that  both  parties  should  have  this  knowledge.®*     The 


ford  Protection  Ins.  Co.  v.  Harmer,  2 
Ohio  St.  452,  59  Am.  Dec.  684 ; 
Lewis  V.  Gavlord,  1  Ohio  Dec.  12) ; 
Talbot  V.  Ma'ttox  &c.  Realty  Co.,  26 
Okla.  298,  109  Pac  128.  And  see 
Holmes  v.  Whitaker,  23  Ore.  319,  31 
Pac.  705;  Corcoran  v.  Chess,  131  Pa. 
St.  356,  18  Atl.  876;  Collins  v.  Alech- 
ling.  1  Pa.  Super.  Ct.  594.  38  Wklv. 
Notes  Cas.  235,  26  Pittsb.  Leg.  J.  (N. 
S.)  459;  Mc^klasters  v.  Pennsylvania 
R.  Co.,  69  Pa.  St.  374,  8  Am.  Rep. 
264;  Martin  v.  Western  Union  Tel. 
Co.,  81  S.  Car.  432,  62  S-  E.  833  (de- 
livery outside  free-delivery  limits)  ; 
Dabney  v.  Campbell,  9  Humph. 
(Tcnn.)  680;  Stozier  v.  Lewey,  3 
Willson  Civ.  Cas.  Ct.  App.  (Tex.), 
§  129;  Xeill  Bros.  v.  Biilingsley,  49 
Tex.  161 ;  ^Missouri  &c.  R.  Co.  v.  Mav- 
field,  29  Tex.  Civ.  App.  477,  68  S.  W. 
807;  Johnson  v.  Buchanan  (Tex.  Civ. 
App.),  116  N.  W.  875;  Chateaugav 
Ore  &  Iron  Co.  v.  Blake.  144  U.  S- 
476,  12  Sup.  Ct.  731,  36  L.  ed.  510; 
Bank  of  Alexandria  v.  Deneale,  2 
Cranch  (U.  S.)  488,  Fed.  Cas.  No. 
846;  Irwin  v.  Williar,  110  U.  S.  499, 
4  Sup.  Ct.  100,  28  L.  ed.  225 ;  Stevens 
V.  Smith,  21  Vt.  90;  Ferguson 
V.  Gooch,  94  Va.  1,  26  S.  E.  397.  40 
L.  R.  A.  234;  Hansbrough  v.  Neal, 
94  Va.  722.  27  S.  E.  593;  Bowles  v. 
Rice,  107  Va.  51,  57  S.  E.  575;  Con- 
sumers' Ice  Co.  v.  Jennings,  100  Va. 
719,  42  S.  E.  879;  Moritz  v.  Hersko- 
vitz,  46  Wash.  192,  89  Pac.  560; 
Power  V.  Kane,  5  Wis.  265 ;  Hall  v. 
Storrs,  7  Wis.  253;  Pickert  v.  Mars- 
ton,  68  Wis.  465,  32  N.  W.  550,  60 
Am.  Rep.  876;  Nagle  v.  Hake,  123 
Wis.  256,  101  N.  W.  409;  O'Brien 
Lumber  Co.  v.  Wilkinson,  123  Wis. 
272,  101  N.  W.  1050;  Brunnell  v.  Hud- 
son Sawmill  Co.,  86  Wis.  587,  57  N. 
W.  364.  A  Wisconsin  corporation, 
owning  a  cattle  ranch  in  W3^oming, 
appointed  an  agent  in  Wyoming,  with 
power  to  hire  and  pay  for  necessary 
help,  and  pay  current  expenses  with 
money  remitted  on  his  statement,  and 


to  care  for  and  round  up  the  cattle, 
and  ship  them,  when  fit  for  market, 
to  Chicago,  in  care  of  a  particular 
commission  house.  It  was  held,  in 
replevin  by  said  corporation  to  re- 
cover cattle  purchased  by  defendants 
from  the  agent,  that  evidence  that  it 
was  the  custom  or  usage  of  managers 
of  cattle  companies  doing  business  in 
Wyoming  to  sell  the  cattle  from  the 
ranches  of  such  companies  was  inad- 
missible, in  the  absence  of  proof  that 
the  plaintiff  had  knowledge  of  such 
usage.  ^Milwaukee  Tnv.  Co.  v.  Johns- 
ton. 35  Nebr.  554,  53  N.  W.  475. 

^^^  Currie  v.  Syndicate,  104  111.  App. 
165.  "It  would  seem,  however,  that 
upon  principle,  for  a  party  to  be 
bound  by  a  local  usage,  or  a  usage  of 
a  particular  trade  or  profession,  he 
must  be  shown  to  have  knowledge  or 
notice  of  its  existence.  For  upon 
what  basis  is  it  that  a  contract  is  held 
to  be  entered  into  with  reference  to, 
or  in  conformity  with,  an  existing 
usage?  Usage  is  engrafted  upon  a 
contract  or  invoked  to  give  it  a  mean- 
ing, on  the  assumption  that  the  par- 
ties contracted  in  reference  to  it; 
that  is  to  say,  that  it  was  their  inten- 
tion that  it  should  be  a  part  of  their 
contract  wherever  their  contract  in 
that  regard  was  silent  or  obscure. 
But  could  intention  run  in  that  way 
unless  there  was  knowledge  of  the 
way  to  guide  it?  No  usage  is  admis- 
sible to  influence  the  construction  of 
a  contract  unless  it  appears  that  it 
be  so  well  settled,  so  uniformly  acted 
upon,  and  so  long  continued,  as  to 
raise  a  fair  presumption  that  it  was 
known  to  both  contracting  parties, 
and  that  thev  contracted  in  reference 
thereto."  Walls  v.  Bailey,  49  N.  Y. 
464,  10  Am.  Rep.  407. 

^  Gould  V.  Gates  Chair  Co.,  147  Ala. 
629,  41  So.  675;  Corey  v.  Struve,  16 
Cal.  App.  310,  116  Pac.  975;  Sher- 
wood V.  Home  Savings  Bank,  131 
Iowa  528,  109  N.  W.  9;  Caldwell  v. 
Dawson,  4  Mete.   (Ky.)   121;  Norton 


1033  CUSTOMS    AND    USAGES.  §    1 697 

principle  is  broad  enough  to  cover  the  case  where  one  ignorant  of 
the  existence  of  a  custom  seeks  to  have  it  made  a  part  of  the 
contract  after  he  acquires  knowledge  of  its  existence.  It  is  his 
knowledge  at  the  time  of  entering  into  the  contract  and  not  after- 
ward which  makes  the  usage  binding."'^  And,  according  to  some 
of  the  decisions,  the  knowledge  must  be  personal  to  the  parties 
sought  to  be  charged  and  it  is  not  sufficient  that  the  knowledge 
was  possessed  by  an  agent.''"  But  it  is  believed  that  the  authori- 
ties do  not  generally  support  this  view  without  qualification." 
Again,  a  party  is  not  affected  with  knowledge  of  a  custom  pre- 
vailing in  a  particular  business  in  which  he  is  not  engaged.®^ 

§  1697.  Presumption  of  knowledge  of  usage. — Actual  or 
express  notice  of  a  custom  or  usage  is  not  absolutely  required.  A 
custom  which  is  uniform,  long  established  and  generally  acqui- 
esced in,*  and  so  widely  and  generally  known  as  to  induce  the 
belief  that  the  parties  contracted  with  reference  to  it,  is  binding, 
without  actual  notice  thereof  to  the  parties.  In  such  a  case,  knowl- 
edge of  the  custom  is  presumed.**®  In  other  words,  where  a  custom 
is  found  to  be  general  and  notorious,  and  to  have  the  other  requi- 
sites of  a  valid  custom,  it  is  a  conclusion  of  law  that  the  parties 
must  have  contracted  with  reference  to  it,  and  their  knowledge 

V.   University   of    Maine,    106   Maine  ^lich.  247.  53  N.  W.   1049;   Bernard 

436,  76  Atl.  912;  Gough  v.  Davis,  39  v.  Mott.  89  Mo.  App.  403;  Dabney  v. 

App.  Div.   (N.  Y.)  639,  57  N.  Y.  S.  Campbell,  5  Humph.   (Tenn.)  680. 

1139.  *"  Florence  Wagon  Works  v.  Trini- 

""It  necessarily  follows  that,   un-  dad  Asphalt  ]Mfg.  Co.,   145  Ala.  677, 

less  he  did  in  fact  have  such  knowl-  40  So.  49;    Smith  v.   National    Bank, 

edge,    and    actually    contracted    with  191   Fed.  226;   Isaksson  v.   Williams, 

reference  to  such  custom,   he  is  not  26    Fed.    642;     Ruger    v.    Fireman's 

in  a  position  to  assert  that  it  became.  Fund  Ins.  Co.,  90  Fed.  310:  Swern  v. 

by  implication,  a  part  of  a  contract  Churchill,    155   111.    App.   505 :    Morn- 

into   which   he  and   another   entered,  ingstar  v.  Cunningham,  110  Ind.  32S, 

whether   the   latter   had   or  had   not,  11  X.  E.  593,  59  Am.  Rep.  211;  Ever- 

in  prior  dealings   with   others,   given  ett  v.  Indiana  Paper  Co..  25  Ind.  App. 

recognition    to    the    custom."      Hen-  287,  57  N.  E.  281 ;   British  &c.   Mort- 

dricks  v.   Middlebrooks   Co.,   118  Ga.  gage  Co.  v.  Tibballs,  63  Iowa  468.  19 

131    44  S   E   835  X.  W.  319;  Xorton  v.  University  of 

^'Berrv  v.  Cooper,  28  Ga.  543;  Rob-  Elaine,   106  Maine  436.  76  Atl.  912; 

bins  V.  'Maher,   14  N.  Dak.  228,   103  Lyon  v.  George,  44  Md.  295:   Eaton 

N   W  755  V.  Crowe  Coal  &c.  Co.,  161  Mo.  App. 

"^ee  post    §  1704  30,  142  S.  W.  1107;  Hevworth  v.  Mil- 

^  Fleming' V.   Wells.   45   Colo.   255.  lor  Grain  Co..  174  Mo.  171,  73  S.  W. 

101  Pac   66:  Great  Western  Elevator  408;    Cameron    v.    McXair    &:c.    Real 

Co  V  White.  118  Fed.  406.  56  C.  C.  A.  Estate  Co..  76  Mo.  App.  366:  McKee 

388;  Packer  v.  Pentecost,  50  111.  App.  v.  Wild.  52  Xebr.  9,  71  N.  W.  958; 

228;  Pennell  v.  Delta  Transp.  Co.,  94  Union    Stockyards    Co.    v.    Westcott, 


§    1697  CONTRACTS.  IO34 

is  conclusively  presumed.'''  But  a  party  is  not  bound  where  he 
has  neither  actual  nor  constructive  knowledge  of  the  existence 
of  a  particular  usage.^'  It  is  the  duty  of  one  engaged  in  a  par- 
ticular trade  or  business  to  inform  himself  as  to  the  customs  and 
usages  of  the  business,  and  the  law  will  presume  that  he  has  per- 
formed this  duty  and  has  knowledge  of  the  custom.'''  One  is 
presumed  to  know  the  customs  and  usages  of  the  business  in 
which  he  is  engaged.'^^  Where  both  parties  to  a  contract  are  en- 
gaged in  the  same  trade  or  business,  they  will  be  presumed  to 
have  knowledge  of  the  customs  of  the  trade  or  business,  and  it 
is  not  necessary  to  prove  actual  knowledge  or  that  the  custom  is 
so  generally  or  universally  known  that  knowledge  may  be  pre- 

47  Nebr   300,  66  N.  W.  419;  Erie  R.  Am.  Rep.   199;  Walsh  v.  Mississippi 

Co    V.  Waite,  62  Misc.   (N.  Y.)   372,  Val.  Transp.  Co.,  52  Mo.  434;   Fitz- 

114  N    Y    S    1115:  Wadley  v.  Davis,  gerald   v.   Hanson,    16  Mont.   474,  41 

63  Barb    (N.  Y.)  500;  Botany  Wors-  Pac.  230;    Bixby  v.  Bruce,  69   Nebr. 

ted  Works  v.  Wendt,  22   Misc.    (N.  78,  95  N.  W.  34;  Steward  v.  Scudder, 

Y  )  156  48  N.  Y.  S.  1024:  Riddick  v.  24  N.  J.  L.  96;  Leach  v.  Hughes,  74 

Dunn.  145  N.  Car.  31,  58  S.  E.  439;  Misc.   (N.  Y.)  69    131  N.  Y    5^570; 

Gihner  v    Young.  122  N.  Car.  806.  29  Walls  v.  Bailey.  49  N.  Y.  464,  10  Am. 

S     E     830-    McMasters    v.    Pennsyl-  Rep.  407;  Wood  v.  Hickok,  2  Wend. 

vania  R.  Co.,  69  Pa.   St.  374,  8  Am.  (N.   Y.)    501;   Macklin  v.   New  Jer- 

Reo     264;    Hansbrough    v.    Neal,   94  sey   Steamboat   Co.,   7   Abb.    Pr.    (N. 

Va  7^2  27  S.  E.  593.  S.)    (N.  Y.)   229;   Talbot  v.   Mattox 

""Beach  v    Travellers'  Ins.   Co.,  73  &c.  Realty  Co.,  26  Okla.  298,  109  Pac. 

Conn    118.  46  Atl.  867;  Macy  v.  Per-  128;  Dabney  v.  Campbell,  9  Humph, 

ry  91  Fed   671    affd.  99  Fed.  1004,  40  (Tenn.)  680;   Bentlev  v.  Daggett.  51 

C   C   A   217-  McCurdy  v.  Alaska  &c.  Wis.  224,  8  N.  W.  155,  37  Am.  Rep. 

Commercial   Co.,    102   111.    App.    120;  827. 

Lupton  v    Nichols.  28  Ind.  App.  539,  '-  Deshler  v.   Beers,  32  111.  368,  83 

63  N    E    477;  Northern  Light  Lodge  Am.    Dec.    274;    Daniels    v.    Hudson 

v    Kennedv    7  N    D    146,  73   N.   W.  River  Fire  Ins.  Co.,  12  Cush.  (Mass.) 

524-  Hostet'ter  v    Park,  137  U.  S.  30,  416,  59  Am.  Dec.  192;  Dwight  v.  Whit- 

34  L.  ed.  568,  11  Sup.  Ct.  1;  And  see,  ney,  15  Pick  (¥^ss  )  179;  Gleason  v. 

also.  Parsons  Cont.   (7th  ed.)  675.  Mornson,  20  Misc    (N.  YO  320.  45  N^ 

"•West  v    Ball.  12  Ala.  340;  Great  Y.  S.  684;  Wall  v.  Howard  Ins.  Co..  14 

Western   Elevator  Co.  v.  White,   118  Barb.  (N.Y.)  383;  Hartshorn  v.  Mu- 

Fed.  406,   56  C.  C.  A.  388;   Chicago  tual  Ins.  Co    56  N^Y    172 ;  McCarty 

M    &  St    P    R    Co.  V.  Lindeman,  143  v.  New  York  &c.  R.  Co..  30   ha.   bt. 

Fed    946    75  C    C    A.  18;   Packer  v.  247:  Carter  v.  Philadelphia  Coal  Co., 

Pentecost,  50  111.  App.  228:  Smith  v.  77  Pa.  St.  286 ;  Hazard  v.  Nevv  Eng- 

Hess.  83  Iowa  238,  48  N.  W.   1030;  land   Marine  Co.,    1    Sumn.    (U.    S.) 

McSherry    v.    Blanchfield,    68    Kans.  218,  Fed    Cas^  No.  6282    revd.  8  Pet. 

310,  75  Pac.  121 ;  Caldwell  v.  Dawson,  (U.  S.)  557,  8  L.  ed.  1043. 

61   Ky.   121 ;  Folev  v.  Mason.  6  Md.  "'  Dwight     v.     Whitney,     15     Pick 

37:  Barker  v.  Borzone,  48  Md.  474;  (Mass.)    179;    Lowry    v.    Russell,    8 

Stevens   v.   Reeves,  9   Pick.    (Mass.)  Pick        (MassO       If^' ^^^fV^^rl 

198 ;   Howard  v.   Great  Western   Ins.  Quimby,  206  Mass.  259,  92  N ._  E.  4M  , 

Co     109  Mass.  384;   Johnson  v.  Gil-  Gleason    v.    Mornson    20    Misc.    (^. 

fillan.  8  Minn.  395;  Tavlor  v.   Muel-  Y.)  320,  45  N.  Y.  S.  684. 
ler,  30  Minn.  343,  15  N.  W.  413,  44 


I035  CUSTOMS    AND    USAGES.  §    1 697 

sumed.^*  A  person  dealing  at  a  particular  market  will  be  taken  to 
have  dealt  according  to  the  known  general  custom  and  usage  of 
that  market,  and,  if  he  employs  another  to  act  for  him  in  buying 
or  selling  at  such  market,  he  will  be  held  as  intending  that  the 
business  should  be  conducted  according  to  such  general  usage  and 
custom,  and  such  has  been  held  to  be  the  rule  whether  he,  in  fact, 
knows  of  the  custom  or  not."^  "Parties  who  are  engaged  in  a 
particular  trade  or  business,  or  persons  accustomed  to  deal  with 
those  engaged  in  a  particular  business,  may  be  presumed  to  have 
knowledge  of  the  uniform  course  of  such  business.  Its  usages 
may  therefore  in  the  absence  of  an  agreement  to  the  contrary, 
reasonably  be  supposed  to  have  entered  into  and  formed  part  of 
their  contracts  and  understandings  in  relation  to  such  business, 
as  ordinary  incidents  thereto.""*^  But  this  presumption  does  not 
obtain  where  the  party  sought  to  be  charged  was  not  in  the  same 
business  or  trade. ^^  It  is  well  settled  that  proof  of  local  usages  will 
not  raise  a  presumption  of  knowledge  of  their  existence  on  the  part 
of  one  who  is  engaged  generally  in  the  business  to  which  they 
pertain  in  a  certain  city,  at  least  where  the  domicil  of  the  party 
sought  to  be  charged  is  elsewhere;  or,  in  other  words,  in  order 
to  create  even  a  prima  facie  presumption  that  a  party  has  knowl- 
edge of  a  usage  incident  to  a  particular  business  about  which  he 
is  engaged,  the  usage  must  be  shown  to  be  a  general  one  in  that 
business,  in  such  sort  as  that  it  \vould  be  unreasonable  to  suppose 
he  was  ignorant  of  it.°^  Accordingly,  on  an  issue  as  to  the  exist- 
ence of  a  general  custom  in  a  certain  place,  as  claimed  by  plaintiff, 
and  as  to  its  effect  on  a  contract  between  plaintiff  and  defendant, 

"Smith  V.  Russell  Lumber  Co.,  82  Lonergan    v.     Stewart,    55     111.     44; 

Conn.  116.  72  Atl.  577.  Home    Ins.   Co.   v.    Favorite,   46    111. 

"Cleveland.  C.  C.  &  St.  L.  R.  Co.  233. 

V.  Jenkins.  70  III.  App.  415,  revd.  174  °^  Morningstar  v.   Cunningham,   110 

111.  398,   51   X.   E.  811,  62  L.   R.   A.  Ind.  328,  11  N.  E.  593,  59  Am.  Rep. 

912,   66    Am.    St.    296;    Pardrids;e   v.  211. 

Cutler,  68  111.  App.  569.  revd.  168  111.  "  Great    Western    Elevator    Co.    v. 

504,  48  X.  E.  125;  Union  Stock  Yard  White,  118  Fed.  406,  56  C.  C.  A.  388; 

Co.  V.   :\Iallorv  &c.  Co.,  157  111.  554,  Packer  v.  Pentecost,  50  111.  App.  228: 

41  N.  E.  888,  48  Am.  St.  341.  follow-  Pennell    v.    Delta    Transp.    Co.,    94 

ing  Samuels  v.  Oliver,  130  111.  73.  22  ^lich.  247.   53   X.   W.    1049;   Bernard 

N.  E.  499;  Hevworth  v.  Miller  Grain  v.  Mott.  89  Mo.  .App.  403;  Dabney  v. 

&c.  Co.,  174  Mo.   171,  73  S.  W.  498.  Campbell.  9  Humph.   (Tenn.)  680. 

And  also,  see.   Bailey  v.   Bensley,  S7  '■"  Gcrman-.American      Ins.     Co.     v. 

111.    556;    Doane   v.    Dunham.    79   111.  Commercial    Fire    Ins.    Co.,    95    Ala. 

131;  Lvons  v.  Culbertson,  83  111.  33;  469.  11  So.  117.  16  L.  R.  A.  291. 


§    1698  CONTRACTS.  IO36 

an  instniction  was  erroneous  which  ignored  all  inquiry  as  to  the 
length  of  time  the  custom  had  prevailed,  and  as  to  defendant's 
knowledge  of  its  existence,  or  opportunity  of  acquiring  such 
knowledge."^  The  presumption  may  be  rebutted  where  the  cus- 
tom or  usage  is  restricted  to  a  certain  locality  or  business,  though 
it  has  become  general  and  uniform  in  that  locality  or  in  that  par- 
ticular business/ 

§  1698.  Presumption  of  knowledge  continued — As  to  rail- 
roads and  banks. — It  appears  to  be  the  usage  in  this  country  for 
all  railroad  companies  receiving  cars  from  other  roads  to  make 
necessary  repairs  at  their  own  expense,  unless  the  car  is  inspected 
and  branded  as  defective  when  received.  In  consequence  of  such 
usage,  a  company  which  claims  cars  belonging  to  another  road, 
and  pending  a  judicial  determination  of  the  title  thereto.,  is,  by 
agreement,  permitted  to  retain  and  use  them  subject  to  a  rental 
in  case  the  decision  is  against  it,  cannot,  after  such  decision,  set 
off  against  the  rental  any  claim  for  the  cost  of  repairs.^  A  for- 
eign manufacturer  employing  an  agent  to  solicit  orders  is  bound 
by  a  general  custom  which  authorizes  such  agents  to  accept  orders 
without  conference  with  their  principals,  although  he  may  have 
no  actual  knowledge  of  the  custom.^  And  where  the  payee  of 
a  draft  selects  a  bank  as  his  collecting  agent,  he  is  presumed  to 
know  the  methods  by  which  such  transactions  are  effected 
through  general  banking  customs,  and  actual  ignorance  of  them 
does  not  avail  as  an  excuse.* 

§  1699.  Knovv^ledge  of  established  custom. — No  person  can 
be  made  liable  by  reason  of  a  custom  except  when  it  is  shown 
that  he  had  actual  or  constructive  knowledge  of  the  custom. 
In  cases  where  the  custom  is  a  limited  or  special  one,  actual 
knowledge  must  generally  be  proved,  and  every  custom  is 
a  limited  or  special  one  until  it  is  shown  to  have  existed  long 

'*Buyck  V.  Schwing,  100  Ala.  355,  343.  54  N.  W.  50.  34  Am    St  350; 

14  So   48  Springer  v.  Westcott,  166  N.  Y.  117, 

^Busch'v.  Tones,  94  Mich.  223,  53  59  N.  E.  693,  affg.  19  App.  Div.  (N. 

N    W    1051  Y.)  366,  46  N.  Y.  S.  589. 

'"-  Central  Trust  Co.  v.  Wabash,  St.        '  Howard  v.  Walker,  92  Tenn.  452, 

L.  &  P.  R.  Co.,  50  Fed.  857.  21  S.  W.  897. 

^Austrian    v.    Springer,    94    Mich. 


I037  CUSTOMS    AND    USAGES.  §    I /OO 

enough  to  sustain  the  test  above  stated."^  When,  in  an  ac- 
tion for  a  specified  contract  price  per  foot  for  drilhng  wells, 
plaintiff  claims  to  recover  under  a  custom  of  the  trade  for  drill- 
ing wells  that  were  started  and  abandoned  on  account  of  strik- 
ing solid  bottom,  in  addition  to  those  that  were  completed,  an 
instruction  that  some  evidence  was  offered  from  which  it  was 
claimed  that  the  jury  would  find  such  a  custom  existed,  and  that, 
if  they  found  there  was  such  a  known  and  established  custom  in 
the  trade,  the  parties  would  be  presumed  to  have  contracted  with 
the  custom  in  view,  and  they  might  allow  the  claim,  but  it  must 
be  a  universal,  certain  and  general  usage  and  custom  of  the  trade, 
is  erroneous  in  not  stating  what  must  be  proved  to  show  that  a 
custom  is  a  known  and  established  one,  and  in  treating  the  pre- 
sumption that  might  be  drawn  from  such  a  custom  as  one  of  law." 

§  1700.  Particular  usages  without  binding  force  for  want 
of  knowledge. — Among  other  cases  where  a  particular  usage 
was  held  without  binding  force  for  lack  of  knowledge  may  be 
mentioned  a  local  usage  of  brokers  to  charge  $io  per  car  on 
goods  bought  by  them  for  sale  from  shippers;^  a  schedule  of 
charges  obtaining  among  local  architects;^  a  trade  custom  requir- 
ing workmen  to  give  their  employers  notice  a  certain  number  of 
days  before  leaving  their  employment ;°  a  local  usage  of  an  in- 
surance company  to  charge  extra  premiums  upon  unoccupied 

■^  Syson    V.    Hieronymus,    127    Ala.  order    to    show    that    a    custom    is 

482,  28  So.  967;  Smith  v.  Phipps,  65  a   known    and    established    one,    and 

Conn.  302,  Z2  Atl.  367;  Great  West-  also     in     treating     the     presumption 

ern  Elevator  Co.  v.  White,   118  Fed.  which  might  be  drawn  from  such  a 

406.  56  C.   C.   A.  388;    Hendricks   v.  custom  as  one  of  law.    There  was  no 

IMiddlebrooks    Co.,    118    Ga.    131,    44  evidence  that  the  defendant  had  any 

S.  E.  835 ;  Bank  of  Commerce  v.  Mil-  actual  knowledge  of  the  custom,  and 

ler,  105  ill.  App.  224;  Currie  v.  Syn-  she  was  liable,  if  at  all,  by  reason  of 

dicate,  104  111.  App.  165 ;  Rastetter  v.  the  custom,  because  it  was  a  general, 

Reynolds,  160  Ind.  133,  66  N.  E.  612;  known,  and  established  one." 

Bernard  v.   Mott,  89  Mo.  App.  403;  '' S.  W.  Bacon  Fruit  Co.  v.  Blessing, 

Gamble    v.     Stauber    Mfg.    Co.,    50  122  Ga.  369,  50  S.  E.  139. 

Nebr.  463,  69  N.  W.  960;   Bixby  v.  *  Laver  v.  Hotaling  (Cal),  46  Pac. 

Bruce.   69   Xebr.   78.   95    N.   W.   34;  1070;  Sully  v.  Pratt,  106  La.  601.  31 

Gough   V.    Davis.   39   App.    Div.    (N.  So.  161. 

Y.)  639,  57  X.  Y.  S.  1139.  'Stevens      v.      Reeves,      9      Pick. 

'Smith  V.  Phipps.  65  Conn.  302,  32  (Mass.)  198;  Collins  v.  New  England 

Atl.  367.    "This  instruction  seems  to  Iron    Co.,    115    Mass.    23;    Birkshire 

us  to  have  been   insufficient   for  the  Woolen     Co.    v.     Proctor,    7    Cush. 

guidance  of  the  jury,  in  that  it  does  (Mass.)  417. 
not    state    what    must   be    proved    in 


S       TT, 


1 701  CONTRACTS.  IO38 


dwelHng-honses  ;*°  a  local  custom  which  allows  a  traveling  sales- 
man to  work  in  retail  stores  during  the  holiday  season ;"  a  usage 
of  dealers  in  a  certain  locality  to  settle  their  accounts  by  offset- 
ting all  outstanding  demands  between  them  without  regard  to 
whether  the  bills  are  due  to  or  from  them  as  factors  or  as  prin- 
cipals ;^-  a  custom  to  pay  the  board  of  workmen  where  the  place 
of  employment  is  remote  from  their  homes  ;^^  a  custom  of  brokers 
at  the  place  of  sale  of  grain  to  negotiate  sales  in  their  own  names 
without  disclosing  the  names  of  their  principals  and  to  assume 
personal  liability  ;^*  a  custom  of  an  exchange  by  which  commis- 
sion merchants  are  personally  liable  on  contracts  for  the  sale  of 
grain  entered  into  for  their  principals  and  may  supply  the  grain 
themselves  and  charge  it  to  their  principals  who  fail  to  meet  their 
engagements;^^  a  local  custom  to  pay  traveling  salesmen  for 
goods  purchased  by  merchants  in  the  town  f-^  a  local  mining  cus- 
tom to  return  notes  given  for  the  purchase  of  a  mining  claim 
where  the  claim  proves  unprofitable;^^  a  custom  of  insurance 
companies  to  allow  their  agents  to  consent  to  the  transfer  of  in- 
sured property  ;^^  a  custom  of  builders  to  use  timbers  less  in  size 
than  those  stipulated  for  in  the  contract.^® 

§  1701.  Necessity  of  knowledge  of  usage  giving  arbitrary 
meaning  to  words. — It  is  the  rule  that  a  trade  usage,  by 
which  words  are  given  an  unusual  or  arbitrary  significance  in  a 
particular  line  of  business  generally  or  in  the  locality  where  the 
parties  reside,  must  be  shown  to  be  of  such  definite  character  and 
such  general  acceptance  that  knowledge  thereof  by  both  parties 
may  be  reasonably  inferred.-**     A  private  custom  to  use  words 

"  Luce  V.  Dorchester  Mut.  Fire  Ins.  ^°  Simon  v.  Johnson,   101   Ala.  368, 

Co.,  105  Mass.  297.  7  Am.  Rep.  522.  13  So.  491. 

"  Milhgan   v.    Sligh   Furniture   Co.,  "  Leonard  v.  Peeples,  30  Ga.  61. 

Ill  Alich   629,  70  N   W.  133.  "Bradford  v.  Homestead  Fire  Ins. 

''  Baxter  v.  Sherman,  73  Mass.  434,  Co.,  54  Iowa  598,  7  N.  W.  48. 

76  \   W   211,  72  Am.  St.  631.  "Eaton  v.  Gladwell,  108  Mich.  678, 
"Scott  V.  Brown,  27  Misc.  (N.  Y.)  66  N.  W.  598. 

203,   57   N.    Y.    S.   763 ;    Hilbrand   v.  '"  Spartali  v.  Benecke,  10  C.  B.  212 ; 

Dininnv,  73  App.  Div.    (N.  Y.)    511,  Jaqua   v.    Witham   &c.    Co.,    106   Tnd. 

77  N.  Y.  S.  317.  545,  7  N.  E.  314;  Citizens'  State  Bank 
"  Robbins    v.    Maher,    14    N.    Dak.  v.  Chambers,  129  Iowa  414,  105  N.  W. 

228,  103  N.  W.  755  692;  Underwood  v.  Legion  of  Honor, 

"Irwin  V.  Williar,  110  U.  S.  499,  28     66  Iowa   134,   23   N.   W.  300;   Brad- 

L.  ed.  225,  4  Sup.  Ct.  160.  ford  v.  Homestead  Fire  Ins.  Co.,  54 


1039  CUSTOMS    AND    USAGES.  §    I7OI 

in  a  particular  or  restricted  sense  cannot  become  a  part  of  a  con- 
tract where  the  party  sought  to  be  charged  is  ignorant  of  the  cus- 
tom."^ There  was  a  case  of  this  character  where  an  agent  was 
employed  to  solicit  orders  for  publication  at  a  certain  amount  for 
each  order  and  the  employer  sought  to  read  into  the  contract  that 
the  orders  were  to  be  "approved  orders"  under  the  usage  of  the 
business,  but  this  right  was  denied  because  of  the  agent's  ig- 
norance of  such  custom. ^^  In  another  case  where  a  custom  that 
the  taking  of  a  bill  of  lading  by  a  seller  in  his  own  name  did  not 
reserve  the  right  of  disposition  of  the  goods  was  not  so  universal 
as  to  charge  the  buyers,  who  were  residents  of  a  foreign  country, 
with  knowledge  thereof,  and  actual  knowledge  of  the  custom  was 
not  shown  to  have  been  brought  home  to  them,  it  was  held  that 
the  custom  did  not  change  the  express  terms  of  the  contract.'^ 
A  custom  among  underwriters  in  New  York  City  to  class  certain 
stores  as  distinct  buildings  for  purposes  of  insurance,  and  to  in- 
sure them  severally  as  separate  risks,  is  not  binding  on  an  in- 
surance company  domiciled  in  Alabama,  without  proof  that  the 
latter  had  knowledge  of  such  custom  when  a  contract  was  made 
with  another  company  for  re-insurance  in  that  city.^*  So  also, 
a  steamboat  company,  in  contracting,  through  its  agent,  to  pay 
plaintiff  and  his  assistants  an  agreed  sum  per  day  to  clear  a  river 
of  snags  for  navigation  purposes,  is  not  chargeable  with  knowl- 
edge of  a  local  custom  existing  among  lumbennen  to  pay  the 
board  of  their  men  in  cleaning  out  streams  for  the  purpose  of 
running  logs,  even  though  the  agent  resided  in  that  vicinity.  In 
order  to  bind  the  company  in  such  a  case,  if  the  custom  was  not 
made  known  to  its  agent  when  the  contract  was  made,  it  must 

Iowa  598,  7  N.  W.  48 ;  Rake  v.  Town-  "  Xewhall   v.   Appleton,    102   N.   Y. 

send   (Iowa).   102  N.  W.  499;   ^lur-  133.  6  X.  E.  120. 

ray  v.  Brooks,  41  Iowa  45;  Rindskoff  "  Collicfnon    v.    Hammond    Milling 

V.    Barrett.    14   Iowa    101 ;    Beatty   v.  Co.,  68  Wash.  626.  123  Pac.  1083. 

Gregory,   17   Iowa   109,  85  Am.   Dec.  "'  German-American     Ins.     Co.     v. 

546;    Van    Hoesen    v.    Cameron,    54  Commercial    Fire    Ins.    Co.,    95    Ala. 

Mich.  609.  20  N.  W.  609;  Johnson  v.  469,  11  So.  117,  16  L.  R.  A.  291.   "Xo 

De   Pevster,  50  X.   Y.  666;   Irwin  v.  general  usage  is  proved,    *    *    *    and 

Williar,  110  U.  S.  499.  28  L.  ed.  225,  the  defendant  cannot  be  held  beyond 

4  Sup.  Ct.   160:   Brunnell  v.   Hudson  the  terms  of  its  compact  dissociated 

Saw  Mill  Co.,  86  Wis.  587,  57  X.  W.  from  anv  effect  of  the  alleged  usage." 

364.  Cobb  V.  Lime  Rock  &c.  Ins.  Co.,  58 

'^  Citizens'  State  Bank  v.  Chambers,  Maine  326. 
129  Iowa  414,  105  X.  W.  692. 


§     170 1  CONTRACTS.  IO4O 

appear  that  defendant  or  its  agent  had  been  engaged  in  a  busi- 
ness, before  the  contract  was  made,  in  some  manner  connected 
with  the  business  in  which  the  custom  is  sought  to  be  estab- 
Hshed.== 

In  an  action  for  the  price  of  goods  sold,  evidence  by  plain- 
tiff of  its  custom  of  dealing,  and  that  defendant  knew  it,  is 
admissible  to  show  the  meaning  of  the  term  "net"  weight."" 
AMiere  the  purchaser  of  Smyrna  canary  seed  refused  to  receive 
it  at  New  York,  not  because  of  its  deficiency  as  to  quantity  or 
quality,  but  simply  because  it  was  not  brought  by  the  specified 
steamer  of  shipment,  the  Aleppo,  but  by  the  Aurania,  to  which 
it  was  transferred  at  Liverpool,  it  was  held  on  appeal  to  be  error 
to  reject  the  seller's  offer  to  show  by  the  broker  who  negotiated 
the  sale  of  the  seed  that  there  were  not  at  the  time,  and  never  had 
been,  freight  steamers  sailing  direct  from  Turkey  to  New  York, 
and  that  the  invariable  custom  known  to  all  persons  engaged  in 
the  trade  was  to  carry  such  goods  to  Liverpool  and  there  trans- 
ship them  to  a  steamer  for  New  York.  It  was  also  held  on  ap- 
peal that  this  offered  evidence  was  not  contradictory  to  the 
broker's  note  of  sale,  but  rather  explained  it,  and  enabled  the 
court  to  choose  between  two  possible  constructions  of  it,  and 
therefore  should  have  been  admitted."^  But  in  an  action  for  a 
balance  due  for  work  as  trimmer  in  defendant's  sawmill,  evi- 
dence that  certain  trimmers  in  defendant's  employ  worked  under 
a  contract  containing  a  condition  that  a  part  of  their  wages  was 
to  be  retained  by  defendant,  and  forfeited  to  it  if  they  should 
leave  its  employ  before  the  end  of  the  sawing  season,  and  that 
it  was  defendant's  custom  to  retain  part  of  the  wages  of  all  its 
employes,  is  incompetent  to  show  that  plaintiff  worked  under 
such  a  contract,  in  the  absence  of  testimony  that  he  had  any 
knowledge  of  such  custom.^^ 

"Pennell  v.  Delta  Transp.  Co.,  94  Cas.  (Pa.)  537.    And  see,  McKeefrey 

Mich.  247,  53  N.  W.   1049.     And  see  v.  Connellsville  Coke  &c.  Co.,  56  Fed. 

also.    Van    Hoesen    v.    Cameron,    54  212,  5  C.  C.  A.  482. 

Mich.  609,  20  N.  W.  609.  ^  lasigi    v.    Rosenstein,    141    N.    Y. 

"^  Nonantum  Worsted  Co.  v.  North  414,  36  N.  E.  509. 

Adams   Mfg.   Co.,   156  Mass.  331,  31  =*Brunnell    v.    Hudson    Saw    Mill 

N.  E.  293;   Dempsey  v.  Dobson,   184  Co.,  86  Wis.  587,  57  N.  W.  364.  and 

Pa.  St.  588,  39  Atl.  493,  40  L.  R.  A.  see,  Kelley  v.  Schupp,  60  Wis.  76,  18 

550,  63  Am.  St.  809,  41  Wkly.  Notes  N.  W.  725.     In  Deane  v.  Everett,  90 


I04I 


CUSTOMS    AND    USAGES. 


1702 


§  1702.  Mississippi  doctrine  of  presumption  of  knowledge. 
— The  Mississippi  doctrine  is  that  a  custom  in  regard  to  a  certain 
business  existing  among  all  the  persons  engaged  therein  in  a  city 
is  a  general  custom,  with  reference  to  which  it  will  be  presumed, 
in  the  absence  of  rebutting  evidence,  that  contracts  touching  the 
business  were  entered  into.*" 


Iowa  242,  57  N.  W.  874.  it  is  said : 
"A  number  of  witnesses  were  called 
by  the  defendant  by  which  it  was 
sought  to  prove  that  there  was  a  cus- 
tom or  usa.ue  of  wholesale  merchants 
by  which  their  traveling  agents  were 
authorized  to  bind  their  principals  by 
fixing  the  price  of  goods  sold.  None 
of  these  witnesses  claimed  to  have 
any  knowledge  of  any  such  custom 
or  usage  in  the  sale  of  iron  safes. 
This  was  sufficient  ground  for  reject- 
ing the  evidence.  We  do  not  deter- 
mine whether  such  evidence  would 
be  competent  in  any  case." 

="Eddy  V.  Northern  S.  S.  Co.,  79 
Fed.  361 ;  Rurbridge  v.  Gumliel,  12 
Miss.  371,  16  So.  792.  "The  offer  of 
the  defendants  was  to  show  not  only 
that  it  was  the  custom  of  the  cotton 
factors  in  New  Orleans  market,  but 
also  the  custom  of  cotton  factors 
generally,  to  imply  instructions  as  to 
insuring  cotton  only  to  the  season 
or  cotton  year  in  which  such  instruc- 
tions w^ere  given.  *  *  *  The  testi- 
mony offered  was  to  show,  not  a 
purely  local  custom,  but  a  general 
one,  and  should  have  gone  to  the 
jury,  under  proper  charges.  Even  if 
the  offer  had  been  to  prove  only  the 
custom  of  the  cotton  factors  in  New 
Orleans,  the  testimony  should  have 
been  received.  Says  Mr.  Lawson,  in 
his  work  on  Customs  and  Usages 
(pages  40,  41.  §  17)  :  'Knowledge  of 
a  usage  is  necessary  in  every  case  in 
order  to  bind  a  person  by  its  terms. 
Sometimes  this  notice  must  be  ex- 
pressly proved,  and  sometimes  from 
its  generality  and  notoriety  the  law 
raises  the  presumption  that  it  was 
known.  It  is  therefore  only  as  affect- 
ing the  question  of  notice  that  the 
generality  of  the  usage  becomes 
material.  And  as  express  notice  is  dif- 
ficult to  prove,  because  in  the  major- 
ity of  cases  nothing  has  been  said  by 
the  parties  in  their  negotiations  about 

66 — CoNTR.vcTS,  Vol.  2 


the  usage,  it  is  obvious  that  in  the 
greatest  number  of  instances  it  be- 
comes absolutely  necessary  to  prove 
such  a  usage  as  the  law  will  presume 
the  party  intended  to  be  bound  by ; 
and,  consequently,  in  all  these  cases 
the  generality  of  the  custom  becomes 
vital,  and  the  rule  that  a  usage  must 
be  general  is  applied  by  the  courts 
with  rigor.  It  becomes,  therefore,  of 
importance  to  determine  what  the 
courts  understand  by  this  rule.  And, 
in  the  first  place,  it  is  settled  that  a 
usage  may  be  'general,'  as  this  term 
is  used  here,  notwithstanding  that  it 
is  confined  to  a  particular  city,  town, 
or  village.  It  may  be  generally 
known  in  that  city,  town,  or  village, 
and  be  understood  by  all  persons 
dealing  there,  and  yet  it  may  not 
exist  in  any  place  beyond.  *  *  * 
Again,  in  §  24,  the  author  quotes 
approvingly  from  Mavor  &c.  of 
Pittsburg  V.  O'Xeill,  1  'Pa.  St.  342: 
'All  trades  have  their  usages,  and, 
when  a  contract  is  made  with  a  man 
about  the  business  of  his  craft,  it  is 
framed  on  the  basis  of  its  usage, 
which  becomes  a  part  of  it,  except 
when  its  place  is  occupied  by  par- 
ticular stipulations' — and  refers  to 
many  instances,  illustrative,  where, 
'the  usage  being  proved,  it  was  held 
not  material  that  the  proof  did  not 
show,  in  addition,  that  the  party  to 
be  affected  by  it  has  express  notice  of 
it,'  but  'it  would  be  presumed'  that 
thev  had  notice.  Sewell  v.  Corp,  1 
Car.  &  P.  392;  Given  v.  Charron.  15 
Md.  502;  Lyon  v.  George,  44  Md.  295. 
In  Couch  v.  Watson  Coal  Co.,  46 
Iowa  17,  the  same  doctrine  is  ex- 
pressly stated,  saying:  'If  it  had  been 
shown  that  operators  of  mines  in 
this  state,  similarly  situated,  and  us- 
ing substantially  the  same  kind  of 
machinery,  generally  constructed 
cages  with  bonnets,  it  could  be  rea- 
sonably presumed  that  defendant  had 


§    1/03  CONTRACTS.  IO42 

§  1703.  Usage  in  violation  of  rules. — A  rule  promulgated 
by  an  employer  for  the  conduct  of  his  business  by  employes  may 
be  considered  as  abrogated  as  to  third  parties  by  a  long  usage  to 
the  contrary  of  which  the  employer  has  actual  or  constructive 
knowledge.  This  principle  finds  frequent  illustration  in  the  case 
of  rules  of  railroads  for  the  government  of  station  agents:  "The 
trading  public,  as  a  rule,  have  no  access  to  the  superintendent, 
and  can  only  know  the  station  agents  with  whom  they  have  deal- 
ings. They  can  have  no  control  of  the  business  regulations  of 
the  railroad,  and  have  no  power  of  appointment  or  removal. 
Whatever  regulation,  custom  or  usage  such  station  agent  adopts, 
or  permits  to  be  adopted,  the  public  must  either  conform  to  or 
will  feel  itself  justified  in  conforming  to.  The  rules  observed  by 
shippers  in  their  general  transactions,  if  continuous  or  frequent, 
although  not  universal,  grow  into  a  usage  which  would  authorize 
others  to  treat  it  as  the  proper  rule  and  as  an  element  of  the  con- 
tract of  affreightment.  This  constitutes  the  very  spirit,  the  in- 
tent of  a  usage  of  trade.  It  supplies  by  implication  an  unex- 
pressed fact,  or  link  in  the  chain  of  facts,  which  go  to  make  up 
and  prove  the  contract."^" 

§  1704.  Agent's  knowledge  imputed  to  principal — Bill  of 
lading — Charter  party. — As  a  general  rule,  a  principal  is  im- 
puted with  his  agent's  knowledge  of  usages  of  the  place  to  which 

knowledge  of  such  custom,'  etc.  So,  authorities  supra  and  the  following 
in  §  18,  Mr.  Lawson  says  that,  in  the  cases,  cited  in  note  1  to  §  17,  to  wit : 
case  of  particular  usages,  knowledge  Gleason  v.  Walsh,  43  Maine  397; 
'is  to  be  shown  by  express  proof  or  Thompson  v.  Hamilton,  12  Pick.  426; 
by  evidence  of  their  generality;'  us-  Perkins  v.  Jordan,  35  Maine  23,  and 
ing  the  word  'generality'  in  the  sense  Clark  v.  Baker,  11  Mete.  (Mass.) 
explained  by  him  in  §  17.  And  he  186)  from  a  custom  thus  general  in 
concludes  (§  24)  :  'If  a  party  closes  that  market  that  the  plaintiffs  (them- 
his  eyes  and  shuts  his  ears  to  what  selves  cotton  factors  in  that  market) 
is  universally  known  in  his  commu-  knew  of  that  custom,  and  contracted 
nity  by  others,  he  will  not  be  allowed  with  reference  to  it — a  presumption 
to  shelter  himself  under  a  plea  of  which  plaintiffs  might,  if  they  could, 
ignorance.'  If,  therefore,  defendants  rebut,  all  testimony  touching  which 
could  show  the  custom  of  the  cotton  custom,  in  all  its  aspects,  should  have 
factors  of  the  New  Orleans  market  been  submitted  to  the  jury,  the  triors 
to  be  as  insisted,  they  should  have  of  the  facts.  See  also,  note  to  Wig- 
been  allowed  to  do  so.  If  thev  sue-  glesworth  v.  Dallison,  1  Smith's 
ceeded  in  showing  such  established,  Lead.  Cas.  (9th  Am.  ed.)  842;  Adams 
uniform,  certain  custom  there,  among  v.  Otterback,  15  How.  539." 
other  cotton  factors  in  that  market,  a  ^"  Montgomery  &c.  R.  Co.  v.  Kolb, 
presumption  would  arise   (under  the  7Z  Ala.  396,  49  Am.  Rep.  54. 


I043  CUSTOMS  AND  USAGES.  §  1705 

the  agent  is  sent  on  business  for  his  principal.''^  A  bill  of  lading 
must  be  assumed  to  have  been  made  between  the  parties  to  it  with 
reference  to  a  settled  usage  of  trade  existing  at  the  place  where 
it  was  entered  into,  if  such  usage  does  not  contradict,  but  is  ex- 
planatory of  it.  In  such  a  case,  a  shipper  of  merchandise,  hav- 
ing knowledge  of  such  a  usage  when  he  receives  a  bill  of  lading, 
is  as  much  bound  by  it  as  he  would  be  if  it  were  written  in  the 
bill  of  lading;  and,  if  the  shipment  is  made  by  an  agent  of  the 
shipper,  the  agent's  knowledge  of  the  usage  is  to  be  imputed  to 
and  is  binding  upon  his  principal."  The  principle  has  been  ex- 
tended to  charter  parties.  Thus  where  a  usage  existed  in  a  cer- 
tain port  for  shipbrokers  to  execute  charters  without  reference 
to  the  master  of  the  vessel,  a  person  permitting  his  vessel  to  be 
chartered  by  brokers  at  such  port  would  be  regarded  as  contract- 
ing according  to  such  usage.^^ 

§  1705.  Custom  or  usage  to  explain  contract. — The  pri- 
mary inquiry  in  the  interpretation  of  any  contract  is  the  intent  of 
the  parties.  Where  this  is  clear,  the  construction  is  free  from 
difficulty  and  no  reference  may  be  had  to  customs  and  usages  to 
explain  the  meaning  of  the  contract,^*  for  no  rule  is  better  settled 
than  the  rule  that  customs  and  usages  cannot  operate  to  change 
an  express  contract.^*^     It  is  only  where  the  contract  is  ambigu- 

"  Guesnard  v.  Louisville  &c.  R.  Co.,  ^  Costikyan  v.  Sloan,  33  App.  Cas. 

76  Ala.  453;   Randall  v.   Sprague,  74  (D.  C.)  420;  Western  R.  Co.  v.  Hart, 

Fed.  247,  21  C.  C.  A.  334;  Pardridge  160   Ala.   599,   49   So.    371;    Glendale 

V.  Cutler,  168  111.  504,  48  X.  E.  125;  Woolen  Co.  v.  Protection  Ins.  Co..  21 

Taylor  v.   Bailey,   169  111.    181,  48  N.  Conn.  19,  54  Am.  Dec.  309;  Mulliner 

E.    200;    Biggs   v.    Langhammcr,    103  v.  Bronson,  14  111.  App.  355 ;  Randolph 

Ind.  94,  63  Atl.  198;  Long  v.  Armsbv,  v.   Halden.  44   Iowa  327;    Kimball  v. 

43  Mo.  App.  253;  Smith  v.  Clews.  114  Brawner,  47  Mo.  398;  Mutual  Safety 

X.  Y.  190,  21  N.  E.  160,  4  L.  R.  A.  Ins.  Co.  v.  Hone,  2  X.  Y.  235 ;  Wads- 

392,    11    Am.    St.   627:    Robertson   v.  worth  v.  Allcott.  6  X.  Y.  64;  Cooper 

National    Steamship   Co.,    139   X.   Y.  v.  Purvis,  46  X.  Car.  141 ;  Silver  Val- 

416,  34  N.  E.  1053;  First  Nat.  Bank  ley  Min.  Co.  v.  Xorth  Carolina  Smelt- 

v.   Xorthern   Pac.   R.   Co.,  28  Wash,  ing   Co..    122   N.   Car.   542.   29   S.   E. 

439,  68  Pac.  965.  940;    Tvson    v.    Belmont.    3    Blatchf. 

'=  First  Nat.  Bank  V.  Northern  Pac.  (U.    S.)    530.    Fed.    Cas.    No.    1281; 

R.   Co.,  28  Wash.   439,   68  Pac.  965.  Peyser   v.   Western    Dry   Goods   Co., 

But  see,  Houghton  v.  Todd.  58  Nebr.  53  Wash.  633,  102  Pac.  750. 

360.  78  N.  W.  634;  Robertson  v.  Na-  ^Abendpost   Co.   v.   Hertel,   67   111. 

tional  Steamship  Co.,  139  N.  Y.  416,  App.  501 ;  Meloche  v.  Chicago  &c.  R. 

34  X.  E.  1053.  Co..    116   Mich.   69,   74    X.    W.    301; 

"Biggs    V.    Langhammer,    103    Md.  Burnham  v.  Milwaukee,  100  Wis.  55, 

94,  63  Atl.  198.  75  N.  W.  1014. 


I  to; 


CONTRACTS. 


1044 


ous,  nnprecise,  incomplete,  or  inconsistent  that  the  search  for  the 
intent  may  be  aided  by  reference  to  customs  and  usages.^"  Here 
it  is  equally  well  settled  that  evidence  of  custom  or  usage  may  be 
received  to  explain  an  ambiguous  contract  or  instrument.  This 
evidence  has  its  legitimate  place  in  aiding  to  interpret  the  inten- 
tion of  the  parties  to  a  contract — the  real  character  and  purpose 
of  which  is  to  be  ascertained."'  In  the  interpretation  of  a  con- 
tract reference  may  always  be  made  to  a  custom  or  usage  con- 
sistent with  the  terms  of  the  contract,  peculiar  to  the  subject- 
matter  thereof,  known  to  the  parties,  and  probably  intended  to 
be  included  in  the  contract,  as  shown  by  their  situation  and  pur- 


^'  Sampson  v.  Gazzan,  6  Port. 
(Ala.)  123,  30  Am.  Dec.  578;  Amer- 
ican Can  Co.  V.  Agricultural  Ins.  Co., 
12  Cal.  App.  133,  106  Pac.  720;  Kil- 
gorc  V.  Bulkle\-,  14  Conn.  362 ;  Sey- 
mour V.  Page,  33  Conn.  61 ;  Lvon  v. 
Culbertson,  83  111.  33,  25  Am!  Rep. 
349;  Thompson  v.  Hamilton,  12  Pick. 
(:\Iass.)  425,  23  Am.  Dec.  619;  Day 
V.  Holmes,  103  Mass.  306;  Foye  v. 
Lcighton,  22  N.  H.  71,  53  Am.  Dec. 
231;  In  re  Hayes,  37  Misc.  (N.  Y.) 
264,  75  N.  Y.  S.  312;  Bradley  v. 
Wheeler,  44  N.  Y.  495;  Babcock  v. 
Mav,  4  Ohio  334:  Renner  v.  Bank  of 
Columbia.  9  Wheat.  (U.  S.)  581.  6  L. 
ed.  166;  United  States  v.  Macdaniel, 
32  U.  S.  (7  Pet.)  1,  8  L.  ed.  587; 
Linsley  v.  Lovelv,  26  Vt.  123 ;  Lamb 
V.  Klaus,  30  Wis.  94. 

""  Costikyan  v.  Sloan,  33  App.  Cas. 
(D.  C.)  420;  Barron  v.  Mobile  &  O.  R. 
Co.,  2  Ala.  App.  555,  56  So.  862;  Rose 
V.  Lewis,  157  Ala.  521,  48  So.  105; 
McClure  v.  Cox  &c.  Co.,  32  Ala.  617, 
70  Am.  Dec.  552;  Hibler  v.  McCart- 
ney, 31  Ala.  501 ;  Puritas  Laundry  Co. 
V.  Green,  15  Cal.  App.  654,  115  Pac. 
660;  Heistand  v.  Bakeman,  41  Colo. 
20,  91  Pac.  1111;  Knollin  v.  Western 
Live  Stock  Commission  Co.,  51  Colo. 
355,  117  Pac.  999;  Soper  v.  Tyler.  77  ■ 
Conn.  104.  58  Atl.  699 ;  Burton  v.  Jen- 
nings, 185  Fed.  382;  St.  Paul  Fire  & 
Marine  Ins.  Co.,  Balfour,  168  Fed. 
212 ;  Albion  Phosphate  Min.  Co.  v. 
Wyllie,  77  Fed.  541,  23  C.  C.  A.  276; 
The  Queen  of  the  East,  12  Fed.  165; 
United  States  v.  Kerr,  196  Fed.  503; 
Steidtmann  v.  Joseph  Lay  Co.,  234  111. 
84.  84  N.  E.  640;  Zibell  v.  Western 
Steel  Co.,  152  111.  App.  80;  Dixon  v. 


Dunham,  14  111.  324;  Leiter  v.  Em- 
mons, 20  Ind.  App.  22,  50  N.  E.  40; 
Todd  V.  Howell,  47  Ind.  App.  665,  95 
N.  E.  279;  Lyon  v.  Lenon,  106  Ind. 
567,  7  N.  E.  311;  Gandy  v.  Seymour 
&c.  Stave  Co.  (Ind.  App.),  90  N.  E. 
915;  Thomas  v.  Charles  (Ky.  App.), 
119  S.  W.  752;  Farrar  v.  Stackpole, 
6  Greenl.  (Maine)  154,  19  Am.  Dec. 
201 ;  Foley  v.  .Mason,  6  Md.  37;  Drury 
V.  Young,  58  Md.  546,  42  Am.  Rep. 
343;  Shaw  v.  Mitchell,  2  Mete. 
(Mass.)  65;  Floyd  v.  Mann,  146  IMich. 
356,  109  N.  W.  679;  Walker  v.  Syms, 
118  Mich.  183,  76  N.  W.  320;  Cronk 
V.  Mulvanev,  168  ^lich.  346,  134  N.  W. 
9;  Ledyard  v.  Hibbard,  48  Mich.  421, 
12  N.  W.  637,  42  Am.  Rep.  474; 
Harper  v.  Calhoun,  7  How.  (Miss.) 
203;  St.  Louis  v.  St.  Louis  &  S.  F. 
R.  Co.  (Mo.),  129  S.  W.  691;  Barton 
V.  McKelway,  22  N.  J.  L.  165 ;  Sewall 
V.  Gibbs,  1  N.  Y.  Super.  Ct.  663; 
Turner  v.  Burrows,  5  Wend.  (N.  Y.) 
541,  affd.  8  Wend.  (N.  Y.)  144;  Al- 
len V.  IMerchants'  Bank,  22  Wend. 
(N.  Y.)  215.  34  Am.  Dec.  289;  Hone 
V.  Mutual  Safety  Ins.  Co..  1  Sandf. 
(X.  Y.)  137;  McManus  v.  Donahue,  7 
Alb.  Law  J.  (N.  Y.)  411;  Fellows  v. 
New  York,  17  Hun  (N.  Y.)  249; 
Gring  V.  Vanderbilt,  13  N.  Y. 
St.  457,  47  Hun  (N.  Y.)  633;  Mallory 
V.  Commercial  Ins.  Co.,  22  N.  Y. 
Super.  Ct.  101 ;  Mangum  v.  Far- 
rington,  1  Daly  (N.  Y.)  236;  In- 
glebright  v.  Hammond,  19  Ohio  337, 
53  Am.  Dec.  430;  Manerud  v.  Eu- 
gene (Ore.).  124  Pac.  662;  Miller  v. 
Wiggins,  227  Pa.  564,  76  Atl.  711; 
Morris  v.  Supplee,  208  Pa.  St.  253.  57 
Atl.    566;    Burger   v.    Farmers'    Mut. 


I045  CUSTOMS    AXD    USAGES.  §    1 706 

poses,  the  nature  of  the  subject-matter,  and  the  attendant  circum- 
stances.^^ Such  evidence  is  pecuharly  apphcable  to  explain  the 
contract  where  the  parties  thereto  have  omitted  to  state  import- 
ant parts  of  their  agreement  and  the  usage  invoked  is  consistent 
with  the  express  terms  of  the  contract  and  the  usage  can  clearly 
be  presumed  to  have  been  intended  by  the  parties.^^  "Within 
bounds,  also,  known,  established,  and  general  usage  may  be  read 
into  the  contract  to  get  the  meaning  of  its  language,  when  a 
doubt  in  regard  to  that  meaning  fairly  arises  on  the  whole  instru- 
ment, keeping  always  steadily  in  mind  that  the  exposition  which 
springs  from  the  very  vitals  of  the  contract  is  the  fittest  and 
most  powerful."'*" 

§  1706.  Custom  or  usage  to  show  intention  of  parties. — 
Evidence  of  usage  or  custom  is  not  considered  in  the  nature  of 
parol  evidence  to  contradict  or  vary  the  legal  import  of  a  written 
agreement  but  is  received  for  the  purpose  of  ascertaining  the 
intent  and  understanding  of  parties,  by  their  contracts,  which  are 
made  with  reference  to  such  usage  or  custom.  The  use  of  such 
evidence  is  confined,  however,  to  cases  where  the  intent  is  not 
clearly  expressed  in  the  contract,"  for  it  is  to  be  remembered  that 

Ind.  Co.,  71  Pa.  St.  422;  American  (Ala.)  123,  30  Am.  Dec.  578;  Leach  v. 
Lead  Pencil  Co.  v.  Nashville  &  St.  Bcardslee,  22  Conn.  404;  Kilgore  v. 
L.  R.  Co.,  124  Tenn.  57,  134  S.  W.  Bulkley.  14  Conn.  362;  Seymour  v. 
613  •  Woldert  v.  Arledge,  4  Tex.  Civ.  Page,  33  Conn.  61  ;  Lonergan  v.  Stew- 
App  692,  23  S.  W.  1052;  Turnbull  art,  55  111.  44;  Off  v.  Inderrieden  Co., 
V.  Citizens'  Bank,  4  Woods.  (U.  S.)  74  III.  App.  105;  Fay  v.  Strawn,  32  111. 
193,  16  Fed.  145;  Anderson  v.  Daly  295;  Lyon  v.  Culbertson,  83  111.  33, 
I^Iining  Co.,  16  Utah  28,  50  Pac.  815;  25  Am.  Rep.  349;  Rindskoflf  v.  Bar- 
Salmon  Falls  Mfg.  Co.  V.  Goddard,  rett,  14  Iowa  101;  Leach  v.  Perkms, 
14  How.  (U.  S.)  446,  14  L.  ed.  493;  17  Elaine  462,  35  Am.  Dec.  268; 
National  Bank  v.   Burkhardt,  100  U.  Thompson     v.     Hamilton,     12     Pick. 

5  686,  25  L.  ed.  766;  Bowman  v.  First  (Mass.)  425,  23  Am.  Dec.  619;  Day 
Nat.  Bank,  9  Wash.  614,  38  Pac.  211,  v.  Holmes,  103  Mass.  306;  Cole  v. 
43  Am.  St.  870;  Lavcock  v.  Parker,  Skrainka,  37  Mo.  App.  427;  Foye  v. 
103  Wis.  161,  79  N.  W.  327;  Vollmar  Leighton.  22  N.  H.  71,  53  Am.  Dec. 

6  Below  Co.  V.  Bayfield  Mill  Co.,  146  231 ;  Smith  v.  Clayton,  29  N.  J.  L. 
Wis  412  131  N.  W.  899;  Gehl  v.  357;  Miller  v.  Ins.  Co.,  1  Abb.  N.  C. 
Milwaukee  Produce  Co.,  116  Wis.  (N.  Y.)  470;  Bradley  v.  Wheeler,  44 
263,  93  N.  W.  26.  N.  Y.  495;  Babcock  v.  May,  4  Ohio 

^Raleigh  Lumber  Co.  V.  Wilson,  69  334;   United   States  v.   Macdaniel,  32 

W.  Va.  598,  72  S.  E.  651.  U.  S.  (7  Pet.)  1,  8  L.  ed.  587;  Renner 

'"Corey  v.  Struve,  16  Cal.  App.  310,  v.  Bank  of  Columbia,  9  Wheat.    (U. 

116  Pac '975.  S.)    581,    6    L.    ed.    166;    Linsley    v. 

'"St.  Louis  V.  St.  Louis  &  S.  F.  R.  Lovely,  26  Vt.  123;  Lamb  v.  Klaus,  30 

Co.  (Mo.),  129  S.  W.  691.  Wis.  94.    In  construing  a  contract  for 

"  Sampson     v.     Gazzam,     6     Port,  the  sale  of  canned  goods  on  commis- 


§  1/07 


CONTRACTS. 


1046 


usage  cannot  make  a  contract  where  there  is  none/^  Where 
there  is  an  absence  of  clear  stipulations  in  contracts  the  usage 
may  be  proved  to  show  the  actual  intent  and  purpose  of  the  par- 
ties. General  usage  affecting  any  branch  of  business  furnishes 
good  evidence  of  what  is  regarded  as  right  and  reasonable  in 
that  respecf*^ 

§  1707.  Construction  of  words  in  contract. — The  words  of 
a  contract  are  to  be  understood  in  their  ordinary  and  popular 
sense/*  unless  by  the  usage  of  trade  or  otherwise,  they  have,  in 
respect  to  the  subject-matter,  acquired  a  peculiar  meaning;*^  and 
such  meaning  is  not  clearly  inconsistent  with  the  terms  of  the 


sion,  evidence  tending  to  show  gen- 
eral custom  prevailing  in  the  business 
of  selling  such  goods  for  future  de- 
livery is  competent  for  the  purpose 
of  determining  the  rights  and  obliga- 
tions of  the  parties  in  respect  to  mat- 
ters about  which  the  contract  is  silent. 
Off  V.  Inderrieden,  74  111.  App.  105. 

*^  Barnard  v.  Kellogg,  10  Wall.  (U. 
S.)  383,  19  L.  ed.  987;  First  National 
Bank  v.  Burkhart.  100  U.  S.  686,  25 
L.  ed.  766;  Bliven  v.  Screw  Co.,  23 
How.  (U.  S.)  433,  16  L.  ed.  514. 
"  Leach  v.  Beardslee,  22  Conn.  404. 
**Hall  V.  Rand,  8  Conn.  560; 
Stearns  v.  Sweet,  78  111.  446;  Stet- 
tauer  v.  Hamlin,  97  111.  312;  Gibbs  v. 
People's  Nat.  Bank.  198  111.  307,  64 
N.  E.  1060;  Willmering  v.  Mc- 
Gaughey,  30  Iowa  205,  6  Am.  Rep. 
673;  Cash  v.  Hinkle,  36  Iowa  623; 
Grant  v.  Dabney,  19  Kans.  388,  27 
Am.  Rep.  125;  Hawes  v.  Smith,  12 
Maine  429;  Bradshaw  v.  Bradbury, 
64  Mo.  334;  Lovelace  v.  Traveller's 
Protective  Assn.,  126  Mo.  104,  28  S. 
W.  877,  30  L.  R.  A.  209,  47  Am.  St. 
638;  Moore  v.  Phoenix  Ins.  Co.,  62 
N.  H.  240,  13 'Am.  St.  556;  Ripley  v. 
;Etna  Ins.  C6.,  30  N.  Y.  136,  86  Am. 
Dec.  362;  Schoonmaker  v.  Hoyt,  148 
N.  Y.  425,  42  N.  E.  1059;  Smith  v. 
Abington  Sav.  Bank,  171  Mass.  178; 
50  N.  E.  545;  Schuvkill  Nav.  Co.  v. 
Moore,  2  Whart.  CPa.)  476,  491 :  Mo- 
nongahela  Nav.  Co.  v.  Coons,  6  Watts. 
&  S.  (Pa.)  101;  Moran  v.  Prather, 
23  Wall.  (U.  S.)  492,  23  L.  ed.  121 ; 
Clark  V.  Lillie,  39  Vt.  405:  Williams 
v.  South  Penn.  Oil  Co.,  52  W.  Va. 
181,  43  S.  E.  214,  60  L.  R.  A.  795. 


« Callahan  v.  Stanley,  57  Cal.  476; 
Higgins  V.  California  &c.  Asphalt  Co., 
120  Cal.  629.  52  Pac.  1080 ;  In  re  Cur- 
tis-Castle Arbitration,  64  Conn.  501, 
30  Atl.  769,  42  Am.  St.  200;  Myers 
V.  Walker,  24  111.  133;  University  of 
Illinois  V.  Bruner,  175  111.  307,  51  N. 
E.  687;  Heath  &c.  Mfg.  Co.  v.  Na- 
tional &c.  Oil  Co.,  197  111.  632,  64  N. 
E.  12)2 ;  r\Iorningstar  v.  Cunningham, 
110  Ind.  328,  11  N.  E.  593,  59  Am. 
Rep.  211;  Rastetter  v.  Reynolds,  160 
Ind.  133,  66  N.  E.  612;  Wood  v.  Al- 
len, 111  Iowa  97,  82  N.  W.  451 ;  Sey- 
mour v.  Armstrong,  62  Kans.  720,  64 
Pac.  612;  Patterson  v.  Crowther,  70 
]Md.  124,  16  Atl.  531 ;  Miller  v.  Stev- 
ens, 100  Mass.  518,  97  Am.  Dec.  123, 
1  Am.  Rep.  139;  Mooney  v.  Ins.  Co., 
138  Mass.  375,  52  Am.  Rep.  277; 
Breen  v.  Moran,  51  Minn.  525,  53 
N.  W.  755;  Snoqualmi  Realty  Co.  v. 
Moynihan,  179  Mo.  629,  78  S.  W. 
1014;  Smith  &  Wallace  Co.  v.  Lunger, 
64  N.  J.  L.  539,  46  Atl.  623;  Hinton  v. 
Locke,  5  Hill.  (N.  Y.)  437;  Walls  v. 
Bailey,  49  N.  Y.  464,  10  Am.  Rep. 
407;  Atkinson  v.  Truesdell,  127  N. 
Y.  230,  27  N.  E.  844;  Long  v.  David- 
son, 101  N.  Car.  170,  7  S.  E.  758; 
Lowe  V.  Lehman,  15  Ohio  St.  179; 
Steele  Works  v.  Dewey,  il  Ohio  St. 
242 ;  McCulskv  v.  Klosterman,  20  Ore. 
108,  25  Pac.  '366,  10  L.  R.  A.  785n ; 
Brown  v.  Brooks,  25  Pa.  St.  210;  Mc- 
Cullough  v.  Ashbridge.  155  Pa.  St. 
166,  26  Atl.  10;  Morris  v.  Supplee, 
208  Pa.  253,  57  Atl.  566;  Dwver  v. 
Brenham,  70  Tex.  30,  7  S.  W.  598. 


I047 


CUSTOMS    AND    USAGES. 


1707 


contract."  The  terms  of  mercantile  contracts  are  to  be  under- 
stood in  the  sense  which  they  have  acquired  from  mercantile 
usage.  And  such  a  usage  will  be  considered  as  established  wiien 
it  is  uniform  and  has  existed  a  sufficient  length  of  time  to  have 
become  generally  known,  and  to  warrant  a  presumption  that  con- 
tracts are  made  with  reference  to  it."     This,  of  course,  excludes 


*"  Holloway  v.  McNear.  81  Cal.  154, 

22  Pac.  514;  Gilbert  v.  McGinnis,  114 
111.  28,  2^,  X.  K.  2,^2;  Lake  Shore  &c. 
R.  Co.  V.  Richards,  126  111.  448,  18 
N.  E.  794;  Scott  v.  Hartley,  126  Ind. 
239,  25  X.  E.  826;  Van  Camp  Pack- 
ing Co.  V.  Hartman,  126  Ind.  177,  25 
N.  E.  901;  Randolph  v.  Halden,  44 
Iowa  2)27  \  Rvan  v.  Dubuque,  112  Iowa 
284,  83  N.  W.  1073;  Baltimore  Base- 
ball &c.  Co.  V.  Pickett,  78  -Md.  375, 
28  Atl.  279-,  22  L.  R.  A.  690,  44  Am. 
St.  304;  Brown  v.  Foster,  113  Mass. 
136,  18  Am.  Rep.  463;  Menage  v. 
Rosenthal,  175  Mass.  358,  56  X.  E. 
579;  Lamb  v.  Henderson,  62  Mich. 
302,  29  N.  W.  72,2;  .Meloche  v.  Chi- 
cago &c.  R.  Co..  116  Mich.  69,  74  N. 
W.  301 ;  Globe  Milling  Co.  v.  Minne- 
sota Elevator  Co.,  44  Minn.  153,  46 
N.  W.  306;  Wolff  v.  Campbell,  110 
Mo.  114.  19  S.  W.  622;  Schenck  v. 
Griffin,  2,9,  X.  J.  L.  462;  Collender  v. 
Dinsmore,  55  X.  Y.  200,  14  Am.  Rep. 
224;  O'Donohue  v.  Leggett,  134  X. 
Y.  40.  31  N.  E.  269;  Beer  v.  Forest 
City  Mut.  Ins.  Co..  39  Ohio  St.  109; 
Birmingham  Fire  Ins.  Co.  v.  Kroe- 
gher,  83  Pa.  St.  64,  24  Am.  Rep. 
147;  Pittsburg  Ins.  Co.  v.  Frazee, 
107   Pa.    St.   521  ;    Moran  v.    Prather, 

23  Wall.  (U.  S.)  492,  23  L.  ed.  121; 
The  Gazelle,  128  U.  S.  474,  32  L.  ed. 
496.  9  Sup.  Ct.  139;  Dewitt  v.  Berrv, 
134  U.  S.  306,  2>Z  L.  ed.  896,  10  Sup. 
Ct.  536;  Southwest  Virginia  Mineral 
Co.  V.  Chase,  95  Va.  50,  27  S.  E.  826 ; 
Mowatt  V.  Wilkinson,  110  Wis.  176, 
85  X.  W.  661. 

"  Smith  V.  Phipps.  65  Conn.  302.  32 
Atl.  367;  Beach  v.  Travelers'  Ins.  Co., 
72  Conn.  118,  46  Atl.  867;  Knollin  v. 
Western  Live  Stock  Commission  Co., 
51  Colo.  355.  117  Pac.  999;  Bissell  v. 
Rvan.  23  III.  566;  Lvon  v.  Cul- 
bertson.  83  111.  22,  25  Am.  Rep.  349: 
Cleveland  &c.  Rv.  Co.  v.  Jenkins.  174 
111.  398.  51  N.  E.'811.  62  L.  R.  A.  922, 
66  Am.  St.  296;  Morningstar  v.  Cun- 
ningham, 110  Ind.  328,  11  N.  E.  593, 


59  Am.  Rep.  211;  McSherry  v. 
Blanchfield,  68  Kans.  310,  75  Pac. 
121;  Duling  v.  Philadelphia,  W.  &  B. 
R.  Co.,  66  Md.  120,  6  Atl.  592;  Balti- 
more Baseball  &c.  Co.  v.  Pickett,  78 
Md.  375,  28  Atl.  279,  22  L.  R.  A.  690, 
44  Am.  St.  304;  Howard  v.  Great 
Western  Ins.  Co.,  109  Mass.  384; 
Thompson  v.  Hamilton,  12  Pick. 
(Mass.)  425.  23  Am.  Dec.  619;  Hey- 
worth  v.  Miller  Grain  Co.,  174  Mo. 
171,  72  S.  W.  498;  McKee  v.  Wild,  52 
Xebr.  9,  71  X.  W.  958;  Smith  v. 
Weight.  1  Caines  (X.  Y.)  43,  2  Am. 
Dec.  162;  Rickerson  v.  Hartford  Fire 
Ins.  Co.,  149  X.  Y.  307,  43  X.  E.  856 ; 
Adams  v.  Pittsburg  Ins.  Co.,  95  Pa. 
St.  348,  40  Am.  Rep.  662;  Ambler  v. 
Philhps,  132  Pa.  167,  19  Atl.  71; 
Hansbrough  v.  Xeal,  94  Va.  722,  27 
S.  E.  593;  Vollmar  &  Below  Co.  v. 
Bavfield  Mill  Co.,  146  Wis.  412,  131 
X.  W.  899;  Lamb  v.  Klaus.  30  Wis. 
94.  Usage  of  trade  permissible  to 
show  that  sale  of  commodity  "sight 
draft  against  papers"  meant  that  the 
seller  should  ship  the  goods  and  re- 
ceive payment  only  on  presentation  of 
shipping  receipt  or  l^ill  of  lading 
showing  shipment.  Ellsworth  v. 
Knowles,  8  Cal.  App.  630,  97  Pac. 
690;  Gandv  v.  Sevmour  Slack  Stave 
Co.  (Jnd.  .App.),  90  X.  E.  915;  Steidt- 
manr^  v.  Joseph  Lay  Co.,  234  111.  84, 
84  X.  E.  640  ("f.  o.  b.  cars  at  place 
of  business")  ;  Birely  v.  Dodson,  107 
Md.  229,  68  Atl.  488  (invoice)  ;  Mc- 
Lean V.  Sanduskv  Lumber  &c.  Co., 
m  Mich.  324.  125  X.  W.  31 ;  Riley- 
Wilson  Grocer  Co.  v.  Sevmour  Can- 
ning Co.,  129  Mo.  App.  325.  108  S.  W. 
628.  In  an  action  on  a  contract  for 
the  sale  of  "all  patterns  that  are  sta- 
pleand  down  to  date,"  where  no  cri- 
terion was  fixed  by  which  to  deter- 
mine w-hat  patterns  came  within  that 
description,  it  was  error  to  exclude 
evidence  regarding  the  standard  usu- 
ally adopted  by  the  trade  in  selecting 
and  purchasing  such  patterns.    Hay- 


§    1707  CONTRACTS.  IO4S 

the  individual  customs  of  one  of  the  parties.  Accordingly,  in 
a  case  where  a  mortgage  provided  that  it  should  be  void  on 
payment  of  the  note  thereby  secured  according  to  its  "tenor  and 
effect,"  and  the  note  required  payment  of  a  certain  sum  by  a  spe- 
cified date,  without  providing  for  interest,  a  custom  of  the  mort- 
gagee to  charge  interest  on  such  notes  cannot  be  shown  to  ex- 
cuse a  refusal  to  enter  a  satisfaction  after  payment  of  the  amount 
of  the  note.'*^  The  word  "mackerel"  may  be  shown  by  custom  to 
mean  clear  and  not  rusty  mackerel.*"  In  a  contract  for  the  sile 
of  lumber  which  excludes  "waney"  stock,  evidence  is  admissible 
of  the  meaning  of  the  term  and  the  amount  of  such  stock  as 
w^ould  warrant  the  rejection  of  the  shipment.^"  A  provision 
in  a  contract  requiring,  "brick  to  be  laid  close,  and  the  joints 
thoroughly  flushed  with  mortar,"  may  be  controlled  by  a  custom 
among  bricklayers  of  the  locality  which  gives  meaning  to  the 
term  "flushed. "^^  And  so,  when  the  sellers  of  logs,  and  those 
who  have  a  right  to  collect  toll  on  them,  after  stipulating  for 
measurement  by  "board  measure,"  do  not  choose  to  express  their 
intention,  in  the  contract,  as  to  the  mode  of  establishing  the 
board  measure,  custom  and  usage  will  be  admitted  to  supply 
the  omission.^^  In  an  action  on  an  account  for  polished  marble 
slabs,  ordered  by  defendant  to  be  of  a  specified  thickness,  plain- 
tiff may  show  that  in  the  marble  trade  such  an  order  means  slabs 
of  the  stated  thickness  as  they  come  from  the  saw,  and  does  not 
require  them  to  be  of  such  thickness  when  prepared  for  use. 
And  this  admission  of  evidence  as  to  usage  is  not  inconsistent 

den   V.   Frederickson,    55    Nebr.    156,  one    hundred   bales,    interest   added" 

75  N.  W.  530.    Term  "winter  season"  means   under   trade   usage   that    pur- 

in    policy   permitting    sawmill    to    re-  chaser   could   pay   either   in   cash   or 

main      idle     during     winter     season  by  note  drawn  to  his  order  and  in- 

means  under  Michigan  usage  the  pe-  dorsed   by   him.     Morris   v.    Supplee, 

riod  between  closing  mill  in  fall  and  208  Pa.  St.  253,  57  Atl.  566. 

the  arrival  of  logs  in  spring.    Barker  ^^Thomason    Grocery    Co.    v.    Mit- 

V.    Citizens'    &c.    Fire    Ins.    Co.,    136  chell,  114  Ala.  315,  21  So.  461. 

Mich.   626,   99   N.    W.    866.     Calumet  '"Procter  v.  Atlantic  Fish  Co.,  208 

Const.  Co.  V.  Board  of  Education,  78  Mass.  351,  94  N.  E.  281. 

N.  J.   L.  676.   76   Atl.  970    (meaning  ""Burton  v.  Jennings,  185  Fed.  382. 

of  term  "rigidly  attached"  in  concrete  "Laycock  v.  Parker,  103  Wis.  161, 

instruction   contract).    Rule   specially  79  N.  W.  327. 

applicable  to  technical  terms.    Soper  "'Destrehan    v.    Louisiana    Cvpress 

V.  Tyler,   11   Conn.    104,  58  Atl.  699.  Lumlier  Co.,  45  La.  Ann.  920,  13  So. 

Expression  "cash  basis,  note  at  sixty  230,  40  Am.  St.  265;  Hansbrough  v. 

days  from  date  of  shipment  of  each  Neal,  94  Va.  122,  21  S.  E.  593. 


I049 


CUSTOMS    AND    USAGES. 


1708 


with  the  general  rule  that  a  written  contract  is  not  to  be  con- 
tradicted or  varied  by  parol  evidence.^^ 

§  1708.  Construction  of  words  of  contract — Unusual  and 
teohnical  words. — Resort  may  be  had  to  established  usages 
to  explain  and  illustrate  the  meaning  of  new  and  unusual  words 
used  in  a  technical  or  peculiar  sense,  provided  the  usage  does  not 
vary  or  contradict  the  meaning  of  the  contract.^*     But  evidence 


"Evans  v.  Western  Brass  Mfg.  Co., 
118  Mo.  54S,  24  S.  W.  175.  "The 
general  rule  undoubtedly  is  that  pa- 
rol evidence  cannot  be  admitted  to 
contradict,  add  to,  or  vary  a  written 
contract;  and  it  is  the  duty  of  the 
court  to  construe  the  writing.  Bunce 
V.  Beck,  43  Mo.  266;  Black  River 
Lumber  Co.  v.  Warner,  93  Mo.  374, 
6  S.  W.  374 ;  State  v.  Hoshaw,  98  Mo. 
358,  11  S.  W.  759.  But  it  is  equally 
well  settled  that  proof  of  usage  is 
often  admitted  to  interpret  the  mean- 
ing of  the  language  used,  for  under 
many  circumstances  the  parties  may 
be  supposed  to  contract  with  refer- 
ence to  a  usage  or  custom,  as  they  are 
presumed  to  use  words  in  their  ordi- 
nary signification.  1  Greenleaf  Ev..  § 
292.  'The  courts,'  says  Starkie,  'have 
long  allowed  mercantile  instruments 
to  be  expounded  according  to  the  us- 
age and  customs  of  merchants,  who 
have  a  style  and  language  peculiar  to 
themselves,  of  which  usage  and  cus- 
tom are  the  legitimate  interpreters.' 
Starkie  Ev.  (10th  ed.),  p.  701.  Hence 
it  has  been  held  by  this  court  that  it 
may  be  shown,  by  way  of  a  general 
and  well-established  custom,  that  two 
packs  of  shingles  of  a  certain  size 
constitute  a  thousand.  Soutier  v.  Kel- 
lerman,  18  Mo.  509.  See  also,  Blair 
v.  Corby,  11  Mo.  314;  Kimball  v. 
Brawner.  47  Mo.  398;  Fruin  v.  Crvs- 
tal  R.  Co.,  89  Mo.  402,  14  S.  W.  557; 
Wolff  V.  Campbell.  110  Mo.  119,  19 
S.  W.  622 ;  Robinson  v.  United  States. 
13  Wall.  363.  It  is  true,  as  some  of 
the  cases  just  cited  show,  that  usage 
cannot  be  permitted  to  control  the 
terms  of  a  special  contract  by  intro- 
ducing sometliing  which  is  repugnant 
to  or  inconsistent  with  the  contract. 
But  it  does  not  follow  that  evidence 
of  usage  can  only  be  received  where 
the  words  of  the  contract  are  ambigu- 


ous. Such  evidence  is  often  received 
to  show  that  words  are  used  in  a 
sense  different  from  their  ordinary 
meaning,  as  in  Soutier  v.  Kellerman, 
18  Mo.  509.  Such  evidence  is  received 
on  the  theory  that  the  parties  knew 
of  the  usage  or  custom,  and  con- 
tracted in  reference  to  it,  and  in  such 
cases  the  evidence  does  not  add  to  or 
contradict  the  language  used,  but  sim- 
ply interprets  and  explains  its  mean- 
ing. It  was  therefore  competent  for 
the  plaintiffs  to  show  that  in  the  mar- 
ble trade  an  order  for  slabs  of  a 
specified  thickness,  prepared  for  use, 
means  slabs  of  the  stated  thickness 
as  they  come  from  the  saw ;  and,  the 
evidence  being  admissible,  there  was 
no  error  in  refusing  to  instruct  it 
out  of  the  case,  for  that  is  what  the 
refused  instruction  seeks  to  do.  A 
custom  or  usage,  to  be  of  any  avail, 
ought  to  be  shown  to  be  w-ell  estab- 
lished, but  the  defendant  did  not  seek 
to  have  this  matter  explained  by  in- 
structions. We  do  not  know  what  the 
evidence  of  the  alleged  custom  and 
usage  was,  for  very  little  of  it  is  pre- 
served in  the  bill  of  exceptions. 
Though  such  evidence  ought  to  be 
admitted  with  care,  still  we  cannot 
say  the  court  erred  in  admitting  the 
evidence  or  in  refusing  the  instruc- 
tion." 

"Barlow  v.  Lambert.  28  Ala.  704, 
65  Am.  Dec.  374;  Callahan  v.  Stan- 
ley, 57  Cal.  476;  Johnston-Woodbury 
Hat  Co.  v.  Lightbodv,  18  Colo.  App. 
239,  70  Pac.  957;  Lindsav  v.  Cusi- 
mano,  10  Fed.  302,  12  Fed.  503 ;  Bul- 
lock v.  Finley,  28  Fed.  514;  Allcgre's 
Admrs.  v.  ^^arv1and  Ins.  Co.,  2  Gill. 
S:  T.  C^ld.)  136.  20  Am.  Dec.  424: 
Williams  V.  Woods,  16  Md.  220; 
Fatnn  V.  Smith.  20  Pick.  ("Mass.)  150; 
AMiitmarsh  v.  Conwav  Fire  Ins.  Co., 
16  Gray    (:\Iass.)   359,  11  Am.  Dec. 


§     lyOg  CONTRACTS.  IO5O 

of  this  character  is  improper  in  cases  where  the  meaning  of  such 
terms  is  clear  and  free  from  doiibt.^^  On  the  theory  that  words 
and  terms  were  used  in  an  unusual  sense,  resort  has  been  had  to 
usage  to  determine  the  meaning  of  such  expressions  as  "week- 
ly" in  a  theatrical  salary  contract  for  a  season  with  the  conclusion 
that  it  excluded  the  period  when  the  actor  was  not  at  work  after 
the  regular  season  had  closed;^"  the  quality  of  grain  intended  by 
the  term  "prime  barley"  in  a  contract  for  the  sale  of  barley;" 
the  meaning  of  "old  style  tin"  in  a  roofing  contract;^"  the  mean- 
ing in  the  oil  trade  of  the  expression  "buyers'  option,  ten  days  and 
five  days  notice"  f^  the  term  "yearling"  meaning  cattle  born  at 
any  time  from  January  first  to  June  first  of  the  year  previous  f'' 
the  meaning  of  the  words  "six  per  cent,  off  for  cash"  indorsed 
on  a  bill  of  goods  f^  that  a  sale  of  a  grade  of  paper  of  "fifty-three 
pounds  weight"  includes  the  wrapping  necessary  for  transporta- 
tion f-  that  the  word  "noon"  in  a  policy  which  expires  at  "noon" 
of  a  fixed  date  means  solar,  and  not  standard  noon,  according 
to  the  usage  of  the  locality  ;^^  that  the  term  "dry  goods"  in  a 
contract  for  the  sale  of  dry  goods  does  not  include  clothing,  hats, 
and  caps,  according  to  the  usages  of  the  particular  locality.^* 

§  1709.  Contract  not  created  by  custom  or  usage. — Usage 
or  custom  cannot  create  or  bring  a  contract  into  being 
where  without  it  no  contract  exists.  The  contract  arises  out 
of  the  intention  of  the  parties  to  do  or  not  to  do  certain  things 

414;  Nonantum  Worsted  Co.  v.  North  15  L.  ed.  656;  Moran  v.  Prather,  23 

Adams   Mfg.   Co.,  156  Mass.  331,  31  Wall.  (U.  S.)  492,  23  L.  ed.  121. 

N.   E.  293;   Coit  v.   Commercial   Ins.  '"  Leavitt  v.  Kennicott,  157  111.  235, 

Co.,  7  Johns.  (N.  Y.)  385,  5  Am.  Dec.  41  N.  E.  737. 

282;  Mead  v.  Northwestern  Ins.  Co.,  "  Whitmore  v.  Coates,  14  Mo.  9. 

7  N.  Y.  530;  Seld.  Notes  (N.  Y.)  21 ;  ■>«  Storck  v.  Mesker,  55  Mo.  App.  26. 

Brunold  v.  Glasser.  25  Misc.  (N.  Y.)  '°  Hackett  v.  Smith,  4  Wkly.  Notes 

285,  53  N.  Y.  S.  1021 ;  Long  v.  David-  Cas.  (Pa.)  475. 

son,  101  N.  Car.  170,  7  S.  E.  758;  Gor-  ™  Parks  v.  O'Connor,  70  Tex.  377, 

don  V.  Little,  8  S.  &  R.  (Pa.)  533,  11  8  S.  W.  104. 

Am.  Dec.  632;  Morris  v.  Supplee.  208  '^Linsley  v.  Lovely,  26  Vt.  123. 

Pa.  253,  57  Atl.  566;  Harris  v.  Nich-  "^Everett  v.  Indiana  Paper  Co.,  25 

olas.  5  Mumf.  (Va.)  483.  Tnd.  App.  287,  57  N.  E.  281. 

"Pedersen  v.  Eugster,  14  Fed.  422;  "^Rochester    German     Ins.     Co.    v. 

Branch  v.  Palmer,  65  Ga.  210;  Galena  Peaslee-Gaulbert  Co.,  120  Ky.  752,  27 

Ins.  Co.  V.  Kupfer,  28  111.  332,  81  Am.  Ky.  L.  1155.  87  S.  W.  1115,  1  L.  R. 

Dec.   284;    Macomber   v.    Parker,   13  A.  (N.  S.)  364. 

Pick.  (Mass.)  175;  Garrison  v.  Mem-  «*Wood  v.  Allen,  111   Iowa  97,  82 

phis  Ins.  Co.,  19  How.  (U.  S.)  312,  N.  W.  451. 


IO5I  CUSTOMS    AND    USAGES.  §    1 710 

and,  of  course,  they  cannot  be  held  to  have  contracted  to  do  or 
not  to  do  some  tilings  of  which  tliey  neither  had,  nor  are  pre- 
sumed to  have  had  knowledge  or  notice.  In  other  words,  usage 
or  custom  cannot  make  a  contract  when  the  parties  themselves 
have  made  none.""  Thus,  upon  an  issue  in  an  action  between 
two  real  estate  brokers  as  to  whether  there  was  an.  agreement 
between  them  to  divide  commissions  for  a  certain  sale,  evidence 
of  a  usage  among  real  estate  brokers  that  two  making  a  sale 
divide  the  commission  equally  unless  a  different  arrangement  is 
made  is  not  admissible,  for  the  existence  of  such  a  usage  would 
not  suggest  a  presumption  that  the  brokers  did  or  did  not  make 
a  special  arrangement  for  the  division  of  the  commission  earned. "*' 
So,  a  custom  of  attorneys  in  a  certain  county  to  become  responsi- 
ble for  sheriffs'  fees  in  their  cases  would  not  render  an  attorney 
liable  for  such  fees  in  the  absence  of  express  agreement,  since  the 
custom  of  certain  persons  to  make  express  contracts  is  not  suffi- 
cient to  establish  a  contract  with  others  by  implication.^^  So, 
proof  of  a  custom  of  a  bank  to  receive  from  its  stockholders  their 
stock  in  payment  of  their  debts  to  the  bank  may  not  be  shown 
to  establish  an  implied  contract  to  do  so  in  a  particular  case.^^ 

§  1710.  Incorporation  of  custom  or  usage  in  contract. — 
Generally  speaking,  persons  who  deal  with  each  other  in  a  busi- 
ness in  which  certain  customs  or  usages  are  firmly  established 
are  presumed  to  deal  in  reference  to  such  usages  and  regulations, 

^  Salomon  v.  McRae,  9  Colo.  App.  Dec.  87 ;  Thomas  v.  Guarantee  Title 

23,  47  Pac.  409;  Municipal  Inves.  Co.  Co.,  81   Ohio  St.  432.  91  X.   E.   183; 

V.   Industrial  &c.  Trust  Co.,  89   Fed.  Albright  v.  Bedford  Co..  106  Pa.  St. 

254;  Cooper  v.  Berry,  21  Ga.  526,  68  582;  Colcock  v.  Louisville  C  &  C.  R. 

Am.  Dec.  468;  Latimer  v.  Alexander,  Co.,  1  Strob.  (S.  Car.)  329;  Guggen- 

14  Ga.  259;  Hedenberg  v.  Seeberger,  heim  v.   Rosenfeld,  9  Baxt.    (Tenn.) 

140  111.  App.  618;  McSherry  v.  Bland-  533;  National  Bank  v.  Burkhardt,  100 

field,  68  Kans.  310,  75  Pac.  121 ;  Wat-  (U.  S.)  686,  25  L.  ed.  766;  Thompson 

kins'  Heirs  v.  Eastin,  1  A.  K.  Marsh,  v.  Riggs,  5  Wall.    (U.  S.)  663,  18  L. 

(Ky.)  402;  Davis  V.  Turnbull,  7  Mart.  ed.    704;    Tillev   v.    Cook.    103    U.    S. 

(O.  S.)    (La.)  228;  Ulmer  v.  Earns-  155,  26  L.  ed.'374;   Savings  Bank  v. 

worth,    80    Maine    500.    15    Atl.    65;  Ward,  100  U.  S.  195.  25  L.  ed.  721. 

Smith  V.  Barringer,  37  Minn.  94,  33  "Smith  v.  Barringer,  37  Minn.  94. 

N.  W.  116;  Schenck  v.  Griffin,  38  N.  33   N.  W.   116.    See  also,  Hedenberg 

J.  L.  462;  Dobson  v.  Kuhnla.  66  Hun  v.  Seeberger,  140  111.  App.  618. 

(N.  Y.)  627,  49  N.  Y.  St.  735.  20  N.  "'Doughty  v.  Paige.  48  Iowa  483. 

Y.  S.  771 ;  Collender  v.  Dinsmore,  55  •"  Harper     v.     Calhoun,     7     How. 

N.  Y.  200.  14  Am.  Rep.  224;  Dvkers  (Miss.)  203. 
V.  Allen,  7  Hill  (N.  Y.)  497,  42  Am. 


§  i/io 


CONTRACTS. 


1052 


and  such  customs  and  usages  become  a  part  of  their  contracts, 
unless  an  intention  to  exckide  them  is  clearly  shown  by  the  con- 
tract itself.  It  is  another  statement  of  the  principle  to  say  that 
the  parties  to  a  contract  are  presumed  to  contract  with  reference 
to  uniform,  continuous,  and  well  settled  customs  and  usages 
pertaining  to  the  subject-matter  of  the  contract,  where  the 
customs  and  usages  are  not  in  opposition  to  well  settled  principles 
of  law,  and  are  not  unreasonable  and  not  in  contradiction  of  the 
express  terms  of  the  contract,  oral  or  in  writing.'^''  And  where  this 
custom  or  usage  is  general  and  well  established,  it  usually  be- 


**  Humfrey  v.  Dale,  7  EI.  &  Bl.  266, 
90  E.  C.  L.  266 ;  Heywood  v.  Picker- 
ing, 43  L.  J.  Q.  B.  145;  Robertson 
V.  Jackson,  2  C.  B.  412,  52  E.  C.  L. 
412;  Leidemann  v.  Schultz,  14  C.  B. 
38,  78  E.  C  L.  38;  Russian  Steam 
Nav.  Trading  Co.  v.  Silva,  13  C.  B. 
(N.  S.)  610,  106  E.  C.  L.  610;  Syers 
V.  Jonas,  2  Exch.  Ill;  Rushforth  v. 
Hadfield,  6  East  519;  Mallan  v.  May, 
13  M.  &  W.  511;  Phillipps  v.  Briard, 
1  H.  &  X.  21 ;  Crawshav  v.  Homfray, 
4  Barn.  &  Aid.  50,  6  E.  C.^  L.  385 ; 
Wiltshire  v.  Sims,  1  Camp.  258;  Dick- 
inson V.  Lihvall,  4  Camp.  279;  Ezell 
V.  Miller.  6  Port.  (Ala.)  307;  Samp- 
son V.  Gazzam,  6  Port.  (Ala.)  123. 
30  Am.  Dec.  578;  Ezell  v.  Miller,  6 
Port.  (Ala.)  307;  Mobile  Marine 
Dock  &c.  Ins.  Co.  v.  McMillan,  27 
Ala.  77;  Waring  v.  Gradv's  Exr.,  49 
Ala.  465,  20  Am.  Rep.  286;  Vulcan 
Iron  Works  v.  Cook,  15  Cal.  App. 
410,  114  Pac.  995:  Halsey  v.  Brown, 
3  Dav  (Conn.)  346;  Smith  v.  Russell 
Lumber  Co.,  82  Conn.  116,  72  Atl. 
577;  Bragg  v.  Bletz.  7  D.  C.  105; 
Ward  V.  Vosburgh,  31  Fed.  12;  The 
Venezuela.  173  Fed.  834;  Hostetter 
V.  Grav,  11  Fed.  179,  affd.  137  U.  S. 
30.  34'  L.  ed.  568,  11  Sup.  Ct.  1; 
Wheelwright  v.  Dyal.  99  Ga.  247,  25 
S.  E.  170;  :\Iunn  v.  Burch.  25  111.  35; 
McCurdy  v.  Alaska  &c.  Commercial 
Co.,  102  111.  120;  Steidtmann  v.  Jo- 
seph Lav  Co.,  234  111.  84.  84  N.  E. 
640;  Doane  v.  Dunham,  79  111.  131; 
United  States  Life  Ins.  Co.  v.  Ad- 
vance Co.,  80  III.  549;  Oldershaw  v. 
Knoles.  4  111.  App.  63;  Swern  v. 
Churchill,  155  111.  App.  505;  Collins 
Ice-Cream  Co.  v.  Stephens.  189  111. 
200.  59  N.  E.  524;  Chisholm  v.  Rea- 
man  Machine  Co.,  160  111.  101,  43  N. 


E.  796,  affg.  57  111.  App.  344;  Leavitt 
V.  Kennicutt,  157  111.  235,  41  N.  E. 
737;  Todd  v.  Howell.  47  Ind.  App. 
665,  95  X.  E.  279;  Cole  v.  Leach,  47 
Ind.  App.  341,  94  X.  E.  577;  Lupton 
V.  Xjchols,  28  Ind.  App.  539,  63  X. 
E.  477;  Morningstar  v.  Cunningham, 
110  Ind.  328,  11  X.  E.  593,  59  Am. 
Rep.  211;  Postal  Telegraph-Cable  Co. 
V.  Louisville  Cotton  Oil  Co.,  136  Ky. 
843,  122  S.  W.  852 ;  Thompson  v.  Pack- 
wood,  2  La.  Ann.  624;  Bodfish  v.  Fox, 
23  Maine  90,  39  Am.  Dec.  611;  Mer- 
chants' Mut.  Ins.  Co.  V.  Wilson.  2 
'Md.  217;  Appleman  v.  Fisher,  34  ]\Id. 
540;  ^Marrett  v.  Brackett.  60  Maine 
524;  Birely  v.  Dodson.  107  Aid.  229, 
68  Atl.  488;  Clark  v.  Baker,  11  Mete. 
(Mass.)  186,  45  Am.  Dec.  199; 
Mooney  v.  Howard  Ins.  Co.,  138 
Mass.  375,  52  Am.  Rep.  277;  Kar- 
wick  V.  Pickands  (Mich.),  137  X.  W. 
219;  Burbridge  v.  Gumbel,  72  ]Miss. 
371,  16  So.  792;  Soulier  v.  Keller- 
man,  18  Mo.  509;  Staroske  v.  Pu- 
litzer Pub.  Co.,  235  Mo.  67,  138  S.  W. 
36;  Lebanon  v.  Heath,  47  X.  H.  353; 
Whitehouse  v.  Moore,  13  Abb.  Pr. 
(X.  Y.)  142;  Esterlv  v.  Cole,  3  Const. 
(X.  Y.)  502;  Dalton  v.  Daniels,  2 
Hilt.  (X.  Y.)  472;  Walls  v.  Bailey, 
49  X.  Y.  464,  10  Am.  Rep.  407;  Alil- 
ler  V.  Fischer,  142  App.  Div.  (X.  Y.) 
172,  126  X.  Y.  S.  996;  Weir  v.  Dwver, 
62  Misc.  (X.  Y.)  7,  114  X.  Y.  S.  528; 
]\Iotlev  V.  Elmenhorst.  142  App.  Div. 
(X.  Y.)  830,  127  X.  Y.  S.  625;  Pul- 
lan  v.  Cochran.  6  Ohio  Dec.  (reprint) 
1070,  10  Am.  Law  Rec.  184.  6  Vv'kly. 
Law  Bui.  390;  Adams  v.  Palmer.  30 
Pa.  .St.  346;  Conner  v.  Robinson,  2 
Hill  Law  (S.  Car.)  354;  Consoli- 
dated Kansas  Citv  S:c.  Refinin?T  Co. 
V.  Gonzales,  50  Tex.  Civ.  App.  79,  109 


1053 


CUSTOMS    AND    USAGES. 


s  1710 


comes  a  part  of  the  contract  whether  the  party  knows  of  the  cus- 
tom or  not.''"  The  principle  finds  frequent  application  in  the  cus- 
toms and  usages  of  banks  as  to  the  discount  and  protest  of  com- 
mercial paper,''  in  port  customs,"  the  customs  which  relate  to  the 
sale  of  commodities  through  boards  of  trade,"  the  customs  which 
pertain  to  contracts  having  to  do  with  charter  parties,^*  and  con- 
tracts for  the  transportation  of  goods  by  water."  So,  a  general 
usage  of  merchants  which  fixes  a  period  at  which  book  accounts 
bear  interest  is  impliedly  made  a  part  of  a  contract  in  a  locality 
for  the  sale  of  goods."  So  with  the  usage  as  to  what  constitutes 
a  season's  employment  in  a  particular  trade,"  and  similarly  as  to 
trade  customs  as  to  inspection,^**  and  delivery  of  goods.'"  The 
principle  must  always  be  understood  with  the  qualification  that 
the  custom  or  usage  satisfies  the  definition  of  a  good  usage  or 
custom.  A  particular  trade  usage  will  not  bind  a  party  having 
no  knowledge  of  its  existence.***^  The  custom  or  usage  is,  of 
course,  binding  where  the  contract  expressly  provides  for  its 


S.  W.  946;  Bliven  v.  New  England 
Screw  Co.,  23  How.  (U.  S.)  420.  16 
L.  ed.  510;  Keogh  v.  Daniel!,  12  Wis. 
163. 

™  Steidtmann  v.  Joseph  Lav  Co., 
234  111.  84,  84  X.  E.  640;  Samuels  v. 
Oliver,  130  111.  7i.  22  X.  E.  499;  Tay- 
lor V.  Bailey,  169  111.  181,  48  X.  E. 
200;  Lyon  v.  Culbertson,  83  111.  ZZ, 
25  Am.  Rep.  349;  Doane  v.  Dunham, 
79  111.  131 ;  Bailey  v.  Bensley,  87  111. 
556. 

"Bridgeport  Bank  v.  Dyer.  19 
Conn.  136;  Bank  of  Statesville  v. 
Pinkers,  S3  N.  Car.  2,77;  Fowler  v. 
Brantlev,  14  Pet.  (U.  S.)  318,  10  L. 
ed.  473.' 

'"The  Glover,  1  Brown  Adm.  166; 
Charlotte  Oil  &c.  Co.  v.  Hartog,  85 
Fed.  150.  29  C  C  A.  56. 

"  Corbett  v.  l^nderwood.  83  Til.  324, 
25  Am.  Rep.  :502 ;  Tavlor  v.  Bailev, 
169  111.  181,  48  N.  E.  200;  Whitehouse 
v.  Moore,  13  Abb.  Pr.  CX.  Y.)  142. 
But  see  Grcelev  v.  Doran  Wright  Co., 
148  Mass.  116.' 18  X.  E.  878.  ^ 

"Weber  v.  Kingsland.  21  N.  Y. 
Super.    Ct.   415;    Lamb   v.    Parkman, 


1  Sprague  (U.  S.)  343,  Fed.  Cas. 
Xo.  8020. 

"=  Walsh  V.  Frank.  19  Ark.  270; 
Barber  v.  Brace,  3  Conn.  9.  8  Am. 
Dec.  149;  Miller  v.  Fischer,  142  App. 
Div.  (N.  Y.)  172,  126  X.  Y.  S.  996. 
A  party  to  a  contract  to  furnish  a 
tug  and  booms  for  towing  logs  may 
.=how  that  the  contract  was  made  with 
reference  to  the  custom  that  the  re- 
Fponsibility  for  loss  of  logs  was  on 
the  adverse  partv.  Karwick  v.  Pick- 
ands  rMich.).  137  X.  W.  219. 

'"Adams  v.  Palmer.  30  Pa.  St.  346; 
Koons  V.  Miller,  3  Watts  &  S.  (Pa.) 
271. 

"  Johnston- Woodburv  Hat  Co.  v. 
Lightbodv,  18  Colo.  App.  239,  70  Pac. 
957. 

"Hanson  v.  Wittenberg-.  205  Mass. 
319.  91  X.  E.  383 :  Rhodesia  Mfg.  Co. 
V.  Tombacher.  129  X.  Y.  S.  420. 

"Smith  V.  Russell  Lumber  Co..  82 
Conn.  .116,  72  Atl.  577:  Loewenstein 
&  Co.  V.  Bennet.  19  Ohio  C.  C.  616, 
10  Ohio  C.  D.  530. 

^  McDonoueh  v.  Evans  'Marble  Co., 
112  Fed.  634,  50  C.  C.  A.  403. 


S    1 71 1  CONTRACTS.  IO54 


recognition.^^     The  parties  will  not  be  presumed  to  have  intended 
to  incorporate  into  the  contract  an  obsolete  or  inapplicable  usage/'" 

§  1711.    Incorporation  of  custom  in  contract — Custom  as 
to  pro  rata  delivery  of  manufactured  articles. — The  principle 
of  implied  incorporation  of  a  custom  into  a  contract  has  been 
held  to  apply  to  the  custom  of  a  manufacturer  to  deliver  a  pro 
rata  portion  of  his  product  to  his   customers.     Concerning  a 
contention  to  this  effect,  the  Supreme  Court  of  the  United  States 
has  said :    *Tt  may  also  be  safely  admitted  that  the  custom  of  a 
party  to  deliver  a  part  of  a  quantity  of  goods  contracted  to  be 
delivered,  though  invariable,  cannot  excuse  such  party  from  a  full 
compliance  with  his  contract,  unless  such  custom  is  known  to  the 
other  contracting  party,  and  actually  enters  into  and   forms  a 
part  of  the  contract.     Mere  knowledge  of  such  a  usage  would  not 
be  sufficient,  but  it  must  appear  that  the  custom  actually  consti- 
tuted a  part  of  the  contract.     But  when  it  appears  that  such 
custom  was  well  known  to  the  other  contracting  party  as  neces- 
sarily incident  to  the  business,  and  actually  formed  a  part  of  the 
contract,  then  it  may  furnish  a  legal  excuse  for  the  nondelivery 
of  such  a  proportion  of  the  goods  as  the  general  course  of  the 
business  and  the  usage  of  the  seller  authorize,  for  the  reason 
that  such  general  usage,  being  a  part  of  the  contract,  has  the 
effect  to  limit  and  qualify  its  terms."^^ 

§  1712.    Customconstrued— Charter-party— Demurrage.— 

The  construction  of  a  custom  as  to  the  discharge  of  merchandise 
from  a  vessel,  which  affects  the  payment  of  demurrage  for  a 
delay  of  a  vessel,  is  not  to  be  governed  by  another  usage  in  rela- 
tion to  the  sale  of  the  merchandise ;  thus,  in  a  charter-party  the 
words  "to  discharge  with  customary  despatch,  *  *  *  cargo  to 
be    =K    *    *    discharged  according  to  the  custom  of  the  port,"  do 

«^  Smith  V.  Lawrence,  26  Conn.  468;  (U.  S.)  299;  Jupiter  Min.  Co   v.  Bo- ^ 

Xordaas    v    Hubbard,    48    Fed.   921;  die    Consolidated    Min.    Co.,    11    Fed.  • 

Clem  V    Martin,   34   Tnd.   341;   Law-  666,  7  Sawy.   (U.  S.)  96;  Johnson  v. 

rence  v.  Gallagher,  10  Jones  &  S.  (N.  Concord  R.  Corp.,  46  N.  H.  213,  88 

Y.)    309,  affd.  73   N.  Y.  613;   Union  Am.  Dec.  199. 

Bank   v.    Union   Ins.    Co.,   Dud.    (S.        ^Bliven    v.    New    England    Screw 

Car.)   171.  Co.,  23  How.   (U.  S.)  420.  16  L.  ed. 

*"  North  Noondav  Min.  Co.  v.  Ori-  510. 
ent   Min.   Co.,   1   Fed.   522,  6   Sawy. 


I055  CUSTOMS   AND   USAGES.  §    1713 

not  include  a  custom  whereby  all  cargoes  of  fruit  are  sold  at  auc- 
tion by  one  firm,  not  more  than  one  cargo  being  sold  in  one  day, 
and  no  cargo  being  discharged  until  it  has  been  thus  sold,  since 
such  custom  manifestly  has  its  origin  in  the  sale,  and  not  in  the 
discharging  of  cargoes;  and  for  demurrage  caused  by  such  a  cus- 
tom, the  cargo  is  liable.***  A  custom  of  the  port  of  Mobile,  by 
which  vessels  taking  on  additional  cargo  at  a  deeper  anchorage 
bear  the  cost  of  lightering,  although  not  so  notorious  or  so  acqui- 
esced in  as  to  have  the  force  of  law,  is  binding  on  a  vessel  whose 
charter-party  provides  that  the  custom  of  the  port  is  to  be  ob- 
served in  all  cases  not  especially  provided  for.^^  A  charter-party 
of  a  vessel  to  a  safe  port  cannot  be  controlled  by  evidence  of  a  cus- 
tom to  consider  safe  a  particular  port  which,  in  fact,  is  not  rea- 
sonably safe,  because  to  admit  such  custom  in  evidence  would 
contradict  the  charter-party  and  would,  therefore,  be  incompetent 
as  matter  of  law.*^"  In  an  action  against  a  propeller  for  a  contract 
to  make  as  many  trips  as  possible,  because  she  towed  more  than 
two  vessels,  the  construction  of  the  contract  cannot  be  varied  by 
evidence  of  a  custom  for  propellers  of  her  class  to  tow%  at  times, 
as  many  as  five  vessels,  where  it  is  not  shown  that  they  always 
tow  more  than  one  or  two.^^ 

§  1713.    Express  contract  may  not  be  varied  or  contra- 
dicted by  custom  or  usage. — No  principle  of  the  law  is  better 

settled  than  the  one  that  an  express  contract  embodying  in  clear 
and  positive  terms  the  intention  of  the  parties  cannot  be  varied 
nor  contradicted  by  evidence  of  usage  or  custom.  The  usage 
must  be  consistent  with  the  contract.^^     The  office  of  the  custom 

"  Milburn     v.     Thirty     &c.     Boxes  Eddy  v.  Northern  Steamship  Co.,  79 

Oranges  &  Lemons,  57  Fed.  236,  6  C.  F"ed.  361. 

C.  A.  317 ;  Liverpool  &c.  G.  W.  Steam  "  Nordaas  v.  Hubbard.  48  Fed.  921 ; 

Co.  V.   Suitter,   17   Fed.  695,  affd.  22  Donnell   v.   Amoskeag   Mfg.   Co.,   118 

Fed.    560;    Lindsav   v.    Cusimano.    10  Fed.  10,  55  C.  C  A.  178. 

Fed.  302,  12  Fed.  503.    Parol  evidence  *"  Hayton  v.  Irwin.  L.  R.  5  C.  P.  D. 

of  a  usage   whereby  lake  navigation  130;   The  Gazelle,   128  U.   S.  474,   32 

is    considered    as    closing    November  L.   ed.  406,  9  Sup.   Ct.   139;   Barnard 

30th  each  year  is  admissible  to  show  v.  Kellogg,  10  Wall.    (U.  S.)   383,  19 

the    termfnation    on    that    date    of    a  L.  ed.  987. 

charter  which   requires  the  vessel  to  "  The    Oregon    v.    Pittsburgh    Iron 

carry  as  many  cargoes  as  she  can  be-  Co..  55  Fed.  666.  5  C.  C.  A.  220. 

tween  the  date  of  the  charter  and  the  ^  Joinson  v.   Hunt.  93  L.  T.   470: 

"close  of  navigation  for  the  season."  Florence  Wagon  Works  v.  Trinidad 


1/13 


CONTRACTS. 


10^6 


or  usage  is  to  explain  the  meaning  of  words  and  phrases  used 
in  a  written  contract  and  to  annex  thereto  certain  incidents  which 
circumstances  indicate  the  parties  intended  when  the  words  used 

Castleman  v.  Southern  Life  Ins.  Co., 
14  Bush  (Ky.)   197;  Crook  v.  Tensas 
Basin    Levee    District,    51    La.    Ann. 
285,  25  So.  88;   Norton  v.  University 
of  Maine,  76  Maine  436,  76  Atl.  912; 
Ripley  v.  Crooker,  47  Alaine  370,  74 
Am.    Dec.    491;    Bodfish    v.    Fox,    Z3 
Maine -90,  39  Am.  Dec.  611;   Denton 
Bros.   V.   Gill,    102   Md.   386,   62   Atl. 
627,  3  L.  R.  A.   (N.   S.)   465;   Foley 
v.    Mason,   6    Md.   37;    Hammond   v. 
American   Express  Co.,  106  Md.  295, 
68  Atl.  496 ;  IMcnage  v.  Rosenthal,  175 
Mass.  358,  56   N.   E.  579;   Boardman 
V.  Spooner,  13  Allen   (Mass.)  353,  90 
Am.   Dec.    196;    Grinnell   v.    Western 
Union  Tel.  Co.,  113  Mass.  299,  18  Am. 
Rep.  485;  Brown  v.  Foster,  113  Mass. 
136,  18  Am.  Rep.  463;  Potter  v.  Smith, 
103  Mass.   68;   Macomber  v.    Parker, 
13    Pick.     (Mass.)     175;    Randall    v. 
Rotch,   12   Pick.    (Mass.)    107;   John- 
son v    Norcross.  209  Mass.  445,  95  N. 
E.  833;  Harvev  v.  Cadv.  3  Mich.  431; 
Ledyard  v.  Hibbard,  48  Mich.  421,  12 
N:  W.  637,  42  Am.  Rep.  474;   Pitts- 
burgh Coal  Co.  V.  Northy,  158  Mich. 
530,   123  N.  W,  47;   Meloche  v.   Chi- 
cago &c.  R.  Co.,  116  Mich.  69,  74  N. 
W.  301 ;  Torpey  v.  Murray,  93  Mmn. 
482,    101    N.    W.    609;    Globe    Milling 
Co.  V.   Minneapolis   Elevator   Co..  44 
Minn.    153,    46    N.    W.    306;     Postal 
Telegraph-Cable    Co.     v.    Willis,    93 
Miss.  540,  47  So.  380;  Miller  v.  Dun- 
lap,    22    Mo.    App.    97;    Goodfellow 
Exrs.  v.  Meegan,  32  Mo.  280^  Keller 
V.    Meyer,    74    Mo.    App.   318:    New 
Hampshire    Mut.     Fire    Tns.    Co.    v. 
Rand,  24  N.  H.  428 ;  Swamscot  Mach. 
Co.  V.  Partridge,  25  N.  H.  369,  Bar- 
ton  v.    McKelwav,   22  N.  J.  L.    165; 
Schenck  v.   Griffin,  38  N.  J.  L.  462; 
Deacon  v.  Mattison,  11  N.  Dak.  190, 
91  N.  W.  35 ;  American  Steara-Boiler 
Tns.  Co.  V.  Anderson,  57  N.  Y-,  Sup. 
Ct   179.  25  N.  Y.  St.  814,  6  Nw  Y.  S. 
507;  Coates  v.  Harvev,  17  N.  Y    St. 
389.  2  N.  Y    3~  5 ;  Hopper  v.   Sage, 
15  Jone.=  &  S.  77;  Farmers'  &  Mer- 
chants' Nat.  Bank  v.  Logan.  74  N.  Y. 
568;  Bank  of  Commerce  v.  Bissell.  72 
N,   Y.  615;   Holmes  v.   Pfttingill.  60 
N   Y.  6-16;  ColVuder  v.  Dinsmore.  55 
N.  Y.  200,  14  Am.  Rep.  224;  Bradley 


Asphalt  Co.,  145  Ala.  677,  40  So.  49; 
Mobile  &c.  R.  Co.  v.  Bay  Shore  Lum- 
ber Co.,  165  Ala.  610,  51  So.  956,  138 
Am.  St.  84;  Corwin  v.  Patch,  4  Cal. 
204;  First  Nat.  Bank  v.  Londonderry 
Min.  Co.,  50  Colo.  85,  114  Pac.  313; 
Hirsch  v.  Georgia  Iron  &c.   Co.,  169 
Fed.  578,  95   C.   C.  A.  76;   Smith  v. 
National    Bank,    191    Fed.   226;    The 
Gran  Canaria.  16  Fed.  868;  Turnbull 
V.    Citizens'    Bank,    16    Fed.    145,    4 
Woods  (U.  S.)   193;  Kalamazoo  Cor- 
set Co.  V.  Simon,  129  Fed.  144,  afifd. 
129  Fed.  1005,  64  C.  C.  A.  166 ;  Hunt 
V.   Fidelity  &c.   Co.,  99  Fed.  242,  39 
C.    C.    A.    496;    Lillard   v.    Kentucky 
Distilleries    &    Warehouse    Co.,    134 
Fed.  168,  67  C.  C.  A.  74;  Chilberg  v. 
Lyng.  128  Fed.  899,  63  C.  C.  A.  451; 
Smith    V.    National    Bank    of    D.    O. 
Mills  &  Co.,  191  Fed.  226;  Hirsch  v. 
Georgia   Iron   &   Coal   Co.,    169   Fed. 
578,  95  C.  C.  A.  76;  Lima  Locomotive 
&  Machine  Co.  v.  National  Steel  Cast- 
ings Co.,  155  Fed.  77.  83  C.  C.  A.  593, 
11  L.  R.  A.  (N.  S.)  713;  Williams  v. 
Continental    Ins.    Co.,    24    Fed.    767; 
Proctor  &  Gamble  Co.  v.  Blakely  Oil 
&  Fertilizer  Co.,  137  Ga.  407,  73  S.  E. 
378;  Park  v.  Piedmont  &c.  Life  Ins. 
Co.,  48  Ga.  601 ;  Fleming  v.  King.  100 
Ga.  449,  28  S.  E.  239;   Mobile  Fruit 
&c.    Co.    V.    Judy,    91    111.    App.    82; 
Maver  v.  Lawrence,  58  111.  App.  194; 
Illinois  Masons  Benev.  Soc.  v.  Bald- 
win,  86   111.   479;    Corbett  v.   Under- 
wood, 83  III.  324.  25  Am.   Rep.  392; 
Sigsworth   v.   Mclntvre.    18   111.    126; 
Cadwell  v.  Meek,  17  111.  220;  Whip- 
ple   V.    Tucker,    123    111.    App.    223; 
Abendpost  Co.  v.  Hertel.  67  111.  App. 
501 ;    Shedd    v.    American    Credit-In- 
demnitv   Co.    (Tnd.   App.).  95   N.   E. 
316-    Hitz   V.   Warner,   47   Ind.    App. 
612,  93  N.  E.  1005;   Atkinson  v.  Al- 
len. 29  Ind.  375 ;  Van  Camn  Packing 
Co.  V.  Hartman,  126  Ind.  177.  25  N. 
E.  901;    Seavev  v.   Shurick.  110  Tnd. 
494.  11  N.  E    ^^"7-  Atkinson  v.  Allen. 
29  Tnd.  375;  Gladstein  v.  T^evine  (Tnd. 
App.),  97  N.  E.  184;  Marks  v.  Cass 
County   Mill   &c.   Co..   43   Towa    146; 
Duncan  v.  Green.  43  Tnwa  679;  Steele 
V.  Andrews.  144  Iowa  .360.  121  N.  W. 
17;  Graham  v.  Trimmer,  6  Kans.  230; 


I057 


CUSTOMS   AND   USAGES. 


§    ^7^Z 


do  not  necessarily  exclude  the  operation  of  such  custom  or  usage 
but  they  may  not  be  used  to  contradict  nor  vary  the  plain  meaning 
of  the  contract.®'*     "Usage  may  be  admissible  to  explain  what  is 


V.  Wheeler,  44  N.  Y.  495;  Simmons 
V.  Law,  42  N.  Y.  217,  4  Abb.  Dec. 
(N.  Y.)  241;  Howell  v.  Dimock.  15 
App.  Div.  (N.  Y.)  102,  44  N.  Y.  S. 
271;  Goulds  Mfg.  Co.  v.  Muncken- 
beck.  20  App.  Div.  (N.  Y.)  612,  47 
N.  Y.  S.  325;  Mctz  v.  Miller,  113  N. 
Y.  S.  527;  Beer  v.  Forest  City  Mut. 
Ins.  Co.,  39  Ohio  St.  109;  Babcoch 
V.  May,  4  Ohio  334;  Savage  v.  Salem 
Mills  Co.,  48  Ore.  1.  85  Pac.  69; 
Manerud  v.  Eugene  (Ore.),  124  Pac. 
662;  Pittsburg  Ins.  Co.  v.  Frazee,  107 
Pa.  St.  521 ;  Stokes  v.  Fenner,  30  Leg. 
Ins.  (Pa.)  84,  10  Phila.  (Pa.)  14; 
Coxe  V.  Heisley,  19  Pa.  St.  243 ;  Por- 
ter V.  Patterson,  15  Pa.  St.  229; 
Maust  V.  Creasy.  42  Pa.  Super.  Ct. 
633;  Fairly  v.  Wappoo  Mills,  44  S. 
Car.  227,  22  S.  E.  108,  29  L.  R.  A. 
215;  American  Lead  Pencil  Co.  v. 
Nashville  &  St.  L.  R.  Co.,  124  Tenn. 
57,  134  S.  W.  613;  Henry  v.  Green 
Ins.  Co.  of  America  (Tex.  Civ. 
App.),  103  S.  W.  836;  Moore  v.  Ken- 
nedy, 81  Tex.  144,  16  S.  W.  740; 
Meaher  v.  Lufkin,  21  Tex.  Z9>2); 
Thompson  v.  Riggs,  6  D.  C.  99,  affd. 
5  Wall.  (U.  S.)  663,  18  L.  ed.  704; 
Hearne  v.  Marine  Ins.  Co.,  20  Wall. 
(U.  S.)  488,  22  L.  ed.  395;  Stagg  v. 
Connecticut  Mut.  Life  Ins.  Co..  10 
Wall.  (U.  S.)  589,  19  L.  ed.  1038; 
Anderson  v.  Daly  Min.  Co.,  16  Utah 
28,  50  Pac.  815 ;  Linsley  v.  Lovely,  26 
Vt.  123 ;  Harris  v.  Carson,  7  Leigh 
(Va.)  632,  30  Am.  Dec.  510;  Swadling 
V.  Barneson,  21  Wash.  699,  59  Pac. 
506;  Mcnz  Lumber  Co.  v.  McNeeley, 
58  Wash.  223,  108  Pac.  621,  28  L.  R. 
A.  (X.  S.)  1007;  Detwiler  v.  Green, 
1  W.  Va.  109;  Exchange  Bank  v. 
Cookman,  1  W.  Va.  69;  Burnham  v. 
Milwaukee,  100  Wis.  55,  75  N.  W. 
1014;  Mowatt  v.  Wilkinson,  110  Wis. 
176,  85  N.  W.  661. 

**Lima  Locomotive  &  Machine  Co. 
V.  National  Steel  Castings  Co.,  155 
Fed.  77,  83  C.  C.  A.  593,  11  L.  R.  A. 
(N.  S.)  713;  Whipple  v.  Tucker.  123 
111.  App.  223 ;  Mobile  Fruit  &c.  Co.  v. 
Judy,  91  111.  App.  82;  Fowler  Utilities 
Co.  V.  Chaffin  Coal  Co..  43  Ind.  App. 
438,  87  N.  E.  689.  "Another  principle 
ty  which  usages  are  limited  is,  that 

67 — Contracts,  Vol.  2 


they  are  void  if  they  contradict  the 
terms  of  a  contract,  or  the  legal  in- 
terpretation or  effect  of  a  contract. 
This  principle  has  been  recognized  in 
many  cases  in  this  state.  Among  them 
is  Lewis  v.  Thatcher.  15  Mass.  431, 
in  which  a  usage  by  which  a  warranty 
in  a  policy  of  insurance  that  a  ves- 
sel was  neutral  was  understood  to 
mean  that  she  merely  pretended  to  be 
so,  but  was  not  so  in  fact,  was  held 
void,  because  it  was  contradictory  to 
the  import  of  the  contract.  The  case 
of  Bryant  v.  Commonwealth  Ins.  Co., 
6  Pick.  (Mass.)  131,  in  which  a  usage 
allowing  the  master  of  a  stranded 
vessel  to  sell  the  cargo  without  neces- 
sity was  held  void,  rests  on  the  prin- 
ciple that  it  is  contrary  to  his  im- 
plied authority,  and  also  on  the  prin- 
ciple that  it  is  contrary  to  the  rule 
of  law.  The  cases  of  Randall  v. 
Rotch,  12  Pick.  (Mass.)  107;  Ma- 
comber  V.  Parker,  13  Pick.  (Mass.) 
175;  Atkins  v.  Howe,  18  Pick. 
(Mass.)  16;  Eaton  v.  Smith,  20  Pick. 
(Mass.)  150;  Taunton  Copper  Co.  v. 
Merchants'  Ins.  Co..  22  Pick.  (Mass.) 
115;  Mechanics'  Bank  v.  Merchants' 
Bank,  6  Mete.  (Mass.)  13;  Bowen  v. 
Stoddard,  10  Mete.  (Mass.)  375;  Ma- 
comber  v.  Howard  Ins.  Co..  7  Gray 
(Mass.)  256;  Miller  v.  Pendleton.  8 
Gray  (Mass.)  547;  Parsons  v.  Mar- 
tin, 11  Gray  (Mass.)  112;  Farns- 
worth  V.  Hemmer.  1  Allen  (Mass.) 
494,  79  Am.  Dec.  756;  Ware  v.  Hay- 
ward  Rubber  Co.,  3  Allen  (Mass.) 
84,  and  Codman  v.  Evans,  5  Allen 
(Mass.)  308,  furnish  instances  of  the 
application  of  one  or  both  of  these 
principles  in  various  ways.  So  a  us- 
age by  which  a  manufacturer  is  held 
not  to  warrant  against  latent  defects, 
where  the  law  implies  such  a  war- 
ranty, is  held  void:  Whitmore  v. 
South  Boston  Iron  Co..  2  Allen 
(Mass.)  52.  But  some  of  our  cases 
appear  at  first  sight  to  be  inconsist- 
ent with  these  principles.  The  most 
prominent  of  them  is  Clark  v.  Baker. 
11  Mete.  (Mass.)  186,  45  Am.  Dec. 
199.  The  case  arose  out  of  the  sale 
of  a  cargo  of  com  in  the  ship,  the 
quality  of  which  was  warranted.  The 


§    1 71 3  CONTRACTS.  IO58 

doubtful:  it  is  never  admissible  to  contradict  what  is  plain. ""^^ 
"This  rule,"  says  Mr.  Justice  Harlan,  "is  based  upon  the  theory 
that  the  parties,  if  aware  of  any  usage  or  custom  relating  to  the 
subject-matter  of  their  negotiations,  have  so  expressed  their  in- 
tention as  to  take  the  contract  out  of  the  operation  of  any  rules 
established  by  mere  usage  or  custom."®^  "The  proper  office  of 
a  custom  or  usage  in  trade,"  says  Mr.  Justice  Davis,  "is  to  ascer- 
tain and  explain  the  meaning  and  intention  of  the  parties  to  a 
contract,  whether  written  or  in  parol,  which  could  not  be  done 
without  the  aid  of  this  extrinsic  evidence.  It  does  not  go  beyond 
this,  and  is  used  as  a  mode  of  interpretation  on  the  theory  that  the 
parties  knew  of  its  existence,  and  contracted  with  reference  to  it. 
It  is  often  employed  to  explain  words  or  phrases  in  a  contract  of 
doubtful  signification,  or  which  may  be  understood  in  different 
senses,  according  to  the  subject-matter  to  which  they  are  applied. 
But  if  it  be  inconsistent  with  the  contract,  or  expressly  or  by  nec- 
essary implication  contradicts  it,  it  cannot  be  received  in  evidence 
to  affect  it."^^  On  the  question  of  the  right  of  one  to  invoke  a 
custom  or  usage  to  vary  or  contradict  an  express  contract  it  was 
said  by  Mr.  Justice  Story:  "The  true  and  appropriate  office  of 
usage  or  custom  is  to  interpret  the  otherwise  indeterminate  in- 
tentions of  the  parties  and  to  ascertain  the  nature  and  extent 

purchaser  had  paid  a  part  of  the  pur-  the  court  say  that  'local  usages  have 
chase-money,  and  then  proceeded  to  been  held  admissible  by  the  judicial 
take  a  portion  of  the  corn.  A  part  tribunals,  as  competent  to  explain  and 
of  it  did  not  answer  the  warranty,  qualify  the  contract,  and  give  to  it  an 
and  he  refused  to  take  any  more,  but  effect  materially  different  from  that 
did  not  return  that  which  he  had  which  the  general  law  would  have 
taken,  and  which  was  good.  He  done  in  the  absence  of  all  evidence 
brought  his  action  to  recover  back  the  of  such  usage.'  And  though  they  re- 
balance of  the  money  which  he  had  garded  the  usage  as  being  in  contra- 
paid  over  and  above  the  price  vention  of  the  rules  of  the  common 
of  the  corn  he  had  taken,  law  in  relation  to  rescinding  a  con- 
It  had  already  been  decided  tract  of  sale  accompanied  by  a  war- 
that  he  could  not  recover  it  by  the  ranty  or  false  representation,  yet  they 
rules  of  the  law,  because  he  had  not  sustained  it  as  reasonable."  Dicken- 
returned  the  whole  of  the  corn,  and  son  v.  Gay,  7  Allen  (Mass.)  29,  83 
so   had   not    rescinded   the   contract:  Am.  Dec.  656. 

Clark  V.  Baker,  5  Mete.  ("Mass.)  452.  '"Blackett  v.   Royal  Exchange  As- 

But  he  proved  on  a  new  trial  that  sur.  Co.,  2  Cromp.  &  J.  244. 

there  was  a  usage  by  which  the  pur-  '^  Grace   v.    American   Central   Ins. 

chaser  in   such  cases  kept  the  prop-  Co.,   109  U.   S.  278,  27  L.  ed.  932,  3 

erty  so  far  as  it  answered  the  war-  Sup.  Ct.  207. 

ranty,  and  returned  onlv  the  residue.  °^  Barnard  v.  Kellogg,  10  Wall.   (U. 

This  usage  was  held  to  be  good.  And  S.)  383,  19  L.  ed.  987. 


1059  CUSTOMS    AND    USAGES.  §    I714 

of  their  contracts,  arising  not  from  express  stipulations,  but  from 
mere  implications  and  presumptions,  and  acts  of  a  doubtful  or 
equivocal  character.  *  *  *  But  I  apprehend,  that  it  can  never 
be  proper  to  resort  to  any  usage  or  custom  to  control  or  vary  the 
positive  stipulations  in  a  written  contract,  and,  a  fortiori  not  in 
order  to  contradict  them.  An  express  contract  of  the  parties 
is  always  admissible  to  supersede  or  vary,  or  control,  a  usage  or 
custom;  for  the  latter  may  always  be  waived  at  the  will  of  the 
parties.  But  a  written  and  express  contract  cannot  be  controlled, 
or  varied,  or  contradicted  by  a  usage  or  custom ;  for  that  would 
not  only  be  to  admit  parol  evidence  to  control,  vary,  or  contradict 
written  contracts;  but  it  would  be  to  allow  mere  presumptions 
and  implications,  properly  arising  in  the  absence  of  any  positive 
expressions  of  intention,  to  control,  vary,  or  contradict  the  most 
formal  and  deliberate  declarations  of  the  parties."®^ 

§  1714.  Test  of  variance. — The  principle  of  the  foregoing 
section  is  that  in  order  to  read  a  usage  into  a  contract  it  must  be 
consistent  with  the  terms  of  the  writing  and  not  repugnant  there- 
to.®* "To  fall  within  the  exception,  therefore,  of  repugnancy,  the 
incident  must  be  such  that  if  expressed  in  the  written  contract 
would  make  it  insensible  or  inconsistent."®^ 

§  1715.  Customs  and  usages  may  not  vary  express  con- 
tracts— Illustrations. — The  rule  which  forbids  proof  of  cus- 
toms or  usages  to  vary  the  terms  of  a  clearly  expressed  contract  is 
frequently  invoked  in  the  cases  of  contracts  for  the  sale  of  goods 
which  contain  warranties,  and  the  holding  is  invariable  that  the 
warranty  may  not  be  varied  nor  contradicted  in  this  manner."" 
So,  where  a  contract  of  sale  names  a  price  "f.  o.  b.  cars"  at  a  cer- 
tain place,  although  evidence  is  admissible  to  show  what  these 
letters  mean,  it  cannot  be  shown  by  proof  of  custom  or  otherwise 

"The    Reeside,   2   Sumn.    (U.    S.)  "*  Humf rey  v.  Dale,  7  El.  &  Bl.  266. 

567.   See  also,  Yates  v.  Pym,  6  Taunt.  "  Florence  Wagon  Works  v.  Trini- 

446.  dad  Asphalt  Co.,  145  Ala.  677,  40  So. 

**  Denton  Bros.  v.  Gill,  102  Md.  386,  49;  Steele  v.  Andrews,  144  Iowa  360. 

(2  Atl.  627.  3  L.  R.  A.   (N.  S.)  465;  121  N.  W.  17;  Lewis  v.  Thatcher,  15 

Capital  Gas  &c.  Co.  v.  Gaines.  20  Ky.  IMass.  431 ;  Higgins  v.  Livermore,  14 

L.   1464,  49  S.  W.  462;   New  Roads  Mass.  106. 
Oilmill  &  Mfg.  Co.  V.  Kline,  154  Fed. 
296,  83  C.  C.  A.  1. 


§    1 71 5  CONTRACTS.  IO60 

that  these  letters  have  a  meaning  or  effect  different  from  what 
would  have  attached  to  the  full  words  "free  on  board"  if  they 
had  been  inserted  in  the  contract.®'  So  the  terms  of  an  insurance 
policy  may  not  be  varied  by  the  customs  of  a  particular  commu- 
nity. Thus  an  agent's  custom  to  give  short  credits  on  first  pre- 
miums may  not  be  shown  to  vary  the  express  terms  of  the  policy 
that  it  shall  not  go  into  effect  until  the  premiums  are  paid.®^  So 
an  explicit  provision  in  the  policy  requiring  watchmen  during  all 
the  hours  of  the  night,  may  not  be  varied  by  a  local  custom  which 
allows  watchmen  to  go  home  at  midnight  on  Saturday  nights.""* 
So,  likewise,  of  a  provision  against  the  storage  of  rags  in  a 
country  store.^  So  a  requirement  that  the  insured  keep  a  set  of 
books  showing  sales  and  purchases,  may  not  be  varied  by  evidence 
that  merchants  in  a  particular  locality  keep  their  records  on  slips 
of  paper.'  So  a  custom  or  usage  may  not  be  shown  to  fix  a  differ- 
ent maturity  from  that  which  plainly  appears  on  the  face  of  the 
draft.^  So  in  a  case  where  the  contract  provided  in  plain  and 
unequivocal  terms  for  a  certain  number  of  shingles  5x16,  it  was 
held  improper  to  show  that  by  the  custom  and  usage  among 
shingle-cutting  mill  men  a  shingle  5x16  inches  counted  one  and 
a  quarter  shingles.*  So  where  the  sale  of  goods  was  absolute 
and  unconditional,  the  buyer  could  not  show  a  custom  of  the 
community  giving  him  the  right  to  return  goods  unsold  and  re- 
ceive a  credit  therefor.^  So  where  the  contract  explicitly  prO' 
vided  for  the  delivery  of  a  stated  number  of  barrels  of  a  com- 
modity, each  barrel  of  which  was  to  contain  a  certain  number 
of  pounds,  it  was  held  that  this  contract  could  not  be  varied  by 

'     »'  United  States  Exp.  Co.  v.  Keef er,  "  Glendale  Woolen  Co.  v.  Protec- 

59    Ind.    263.     See    also,     Moseley's  tion  Ins.  Co.,  21  Conn.  19, 54  Am.  Dec. 

Admr.  v.  Mastin,  11  Ala.  216;  Shef-  309. 

field   Furnace  Co.   v.   Hull  &c.   Coke  ^  Macomber   v.    Howard    Fire   Ins. 

Co.,  101  Ala.  446,  14  So.  672;  Amer-  Co.,  7  Gray  (Mass.)  257. 

ican  Exp.  Co.  v.  Lesem,  39  111.  312;  'Henry   v.    Green    Ins.    Co.    (Tex. 

Mobile  Fruit  &c.  Co.  v.  Judy,  91  111.  Civ.  App.),  103  S.  W.  836. 

App.  82;  United   States  Exp.  Co.  v.  'Hammond   v.    American    Express 

Keefer,  59  Ind.  263;  State  v.  Intoxi-  Co.,   107   Md.  295,  68  Atl.   496.    See 

eating  Liquors,  11  Maine  278;  Keller  also.  Auto  &c.  Mfg.  Co.  v.  Merchants' 

V   Meyer,  74  Mo.  App.  318;  Adamant  Nat.  Bank,  116  Md.  179,  81  Atl.  294. 

Mfg.  Co.  V.  Bach,  168  N.  Y.  555,  57  *  Birmingham  &  A.  R.  Co.  v.  Mad- 

N.   E.   1103;   Collender  v.  Dinsmore,  dox,  155  Ala.  292,  46  So.  780. 

55  N.  Y.  200,  14  Am.  Rep.  224.  'Gladstein  v.  Levine    Clnd.   App.), 

»*  Smith    V.    Provident    &c.    Assur.  97  N.  E.  184.   See  also.  Savage  v.  Sa- 

Soc,  65  Fed.  765,  13  C.  C.  A.  284.  lem  Mills  Co.,  48  Ore.  1,  85  Pac.  69. 


I06l  CUSTOMS  AND  USAGES.  §  I716 

a  usage  to  deliver  less  than  this  number  of  pounds  for  a  barrel.^ 
So  where  the  amount  of  the  compensation  for  work  is  fixed,  this 
is  final  and  a  usage  to  allow  more  cannot  be  shown.^  Proof  of 
custom  is  not  admissible  to  show  that  an  absolute  written  contract 
to  furnish  all  coal  needed  between  certain  dates  was  not  binding 
in  case  of  a  strike.^  In  an  action  for  a  breach  of  a  warranty  upon 
a  sale  of  baled  cotton,  a  usage  of  the  trade  as  to  a  buyer's  re- 
turning cotton  found  defective,  and  as  to  the  notice  required  to 
lay  a  claim  for  damages,  is  not  admissible  for  the  purpose  of 
showing  that  the  conduct  of  plaintiff,  who  knew  of  such 
usage,  was  not  consistent  with  the  existence  of  the  claim  made  by 
him  in  the  action."  Where  a  sale  of  coffee  was  in  writing,  and 
no  mention  made  of  samples,  the  seller  could  not  show  a  custom 
making  it  the  duty  of  buyers  of  coffee  to  accept  or  reject  it  im- 
mediately after  the  receipt  of  overland  samples,  and  that,  con- 
sequently, the  buyer  had  accepted  the  coffee  by  retaining  such 
samples  for  two  days,  because  to  allow  the  admission  of  such  a 
custom  would,  in  effect,  alter  the  contract  in  a  particular  material 
to  defendants'  rights/"  .Where  a  contract  to  build  a  house  calls 
for  a  good  three-coat  plastering,  it  is  not  admissible  to  show,  in  an 
action  for  the  balance  due  on  the  contract,  that  it  is  the  custom  of 
plasterers  in  that  vicinity  to  slight  their  work,  and  do  "drawn 
work,"  which  is  two-coat  work,  when  three-coat  work  is  con- 
tracted for." 

§  1716.    Exclusion  of  custom  or  usage  by  express  contract. 

—It  goes  without  saying  that  the  parties  to  a  contract  may  ex- 
pressly stipulate  that  the  contract  shall  be  construed  without 
reference  to  existing  customs  or  usages.    When  there  is  in  the 

•Richard  v.  Haebler,  36  App.  Div.  'Ryan  v.  Dubuque,  112  Iowa  284,  S3 

(N  Y  )  94  55  N   Y.  S.  583.  N.  W.  1073 ;  Richard  v.  Haebler,  36 

'Jefferson  v.  Burhaus,  85  Fed.  949,  App.  Div.    (N.  Y.)   94,  55   N.   Y.   S. 

29  C.  C.   A.  481;    Rvan   v.   Dubuque,  583;    Gage    Mfg.    Co.   v.   Woodward, 

112  Iowa  284,  83  X.  W.  1073;  Norton  17  R.  I.  464,  23  Atl.  16.   And  see  The 

V.    University    of    Maine,    106    Maine  Reeside,  2   Sumn.    (U.   S.)    567,  Fed. 

436,  76  Atl.  912;  Davis  v.  New  York  Cas.  No.  11657. 

Steam  Co.,  33  App.  Div.  (N.  Y.)  401,  ^"O'Donohue  v.  Leggett.  134  N.  Y. 

54  N.  Y   S.  78.  40.  31  N.  E.  269. 

•  Covington   v.    Kanawha    Coal   &c.  "  Cook  v.  Hawkins,  54  Ark.  423,  16 

Co.,   121   Kv.  681,  28  Kv.  L.  636.  89  S.  W.  8. 
S.  W.  1126,'  3  L.  R.  A.  248,  123  Am. 
St.  219. 


§  I7I7 


CONTRACTS. 


1062 


writing  a  distinct  provision  expressly  denying  a  right  claimed 
under  the  custom,  the  term  in  the  writing  prevails  and  the  custom 
goes  for  nothing.  It  is  optional  with  the  parties  to  exclude  the 
usage  if  they  think  fit  and  to  frame  their  contract  so  as  to  be  re- 
pugnant to  its  operation.^^  The  parties  may,  of  course,  agree  to 
be  bound  by  existing  usages.^' 

§  1717.    Implied  exclusion  of  custom  by  terms  of  contract. 

— The  general  rule  is  that  a  custom  or  usage,  however  well 
established,  cannot  be  incorporated  into  a  contract  if  it  is  incon- 
sistent with  the  clear  intention  of  the  parties.  And  an  express 
exclusion  is  not  necessary:  it  is  sufficient  that  the  custom  or 
usage  is  excluded  by  necessary  implication."  A  custom  may 
only  be  considered  where  it  adds  to  the  contract  an  incident  which 
by  virtue  of  such  custom,  is  tacitly^  contained  therein,  and  not 
when  it  is  inconsistent  with  the  contract  and  its  effects  contradic- 


"New  Roads  Oil  Mill  &c.  Co.  v. 
Kline,  154  Fed.  296,  83  C.  C.  A.  1 ; 
Vardeman  v.  Penn  Mutual  Life  Ins. 
Co.,  125  Ga.  117,  54  S.  E.  66;  Dixon 
V.  Dunham,  14  111.  324;  Deshler  v. 
Beers,  32  111.  368,  83  Am.  Dec.  274; 
Rennell  v.  Kimball,  5  Allen  (Mass.) 
356. 

"Western  Union  Tel.  Co.  v.  Bow- 
man (Ala.),  2n  So.  493  (extra  charge 
for  delivery  of  messages  by  telegraph 
company). 

"Wilkinson  v.  Williamson,  Id  Ala. 
163 ;  Smith  v.  Russell  Lumber  Co.,  82 
Conn.  116,  72  Atl.  577;  Wiggin  v. 
Federal  Stock  &c.  Co.,  11  Conn.  507. 
59  Atl.  607;  Brent  v.  Lilly  Co..  174 
Fed.  877;  Hammett  v.  Chase,  158  Fed. 
203;  Jenkins  S.  S.  Co.  v.  Preston. 
186  Fed.  609,  108  C  C  A.  473 ;  Em- 
pire Warehouse  Co.  v.  The  Brooklyn, 
46  Fed.  132;  The  Chntonia,  104  Fed. 
92;  Delaware  &c.  Canal  Co.  v.  Mit- 
chell. 113  111.  App.  429,  affd.  211  111. 
379,  71  N.  E.  1026;  Currie  v.  Syndi- 
cate, 104  111.  App.  165;  Independent 
Torpedo  Co.  v.  J.  E.  Clark  Oil  Co. 
rind.),  95  N.  E.  592;  Randolph  v. 
Halden,  44  Iowa  327;  Smyth  v. 
Ward's  Exrs.,  46  Iowa  339;  Bowell 
V.  Draper,  149  Iowa  725.  129  N.  W. 
54;  Independent  School  District  v. 
Swearngin,  119  Towa  702.  94  N.  W. 
206;   Camp  v.  Baldwin-Melville  Co., 


123  La.  257,  48  So.  927;  Caldwell  v. 
Dawson,  4  Mete.  (Ky.)  121;  Capital 
Gas  &c.  Co.  V.  Gaines,  20  Ky.  L.  1464, 
49  S.  W.  462;  Lewis  v.  Thatcher,  15 
Mass.  431 ;  Rennell  v.  Kimball,  5  Al- 
len (Mass.)  356;  Boardman  v. 
Spooner,  13  Allen  (Mass.)  353,  90 
Am.  Dec.  196;  Boruszewski  v.  Mid- 
dlesex Mut.  Assur.  Co.,  186  Mass.  589, 
72  N.  E.  250;  Brigham  v. 'Martin,  103 
Mich.  150,  61  N.  W.  276;  Houghton 
V.  Bradley,  113  Mich.  599,  71  N.  W. 
1112;  Manufacturers'  Society  v. 
Haight,  1  N.  J.  Eq.  393;  Howell  v. 
Dimock,  15  App.  Div.  (N.  Y.)  102,  44 
N.  Y.  S.  271;  Cappel  v.  Weir,  45 
Misc.  (N.  Y.)  419,  90  N.  Y.  S.  394; 
Goulds'  Manufacturing  Co.  v.  Munck- 
enbeck,  20  App.  Div.  (N.  Y.)  612,  47 
N.  Y.  S.  325 ;  Richard  v.  Haebler,  36 
App.  Div.  (N.  Y.)  94.  55  N.  Y.  S. 
583;  Diamant  v.  Long  Island  R.  Co., 
30  Misc.  (N.  Y.)  444.  62  N.  Y.  S. 
519;  Spotav.  Hays,  36  Misc.  (N.  Y.) 
532,  Ti  N.  Y.  S.  959;  Mcintosh  v. 
Pendleton,  75  App.  Div.  (N.  Y.)  621, 
78  N.  Y.  S.  152;  Sweet  v.  Jenkins.  1 
R.  I.  147,  Ze  Am.  Dec.  242;  Bedford 
V.  Flowers.  11  Humph.  (Tenn.)  242; 
Greer  v.  First  Nat.  Bank  (Tex.).  47 
S.  W.  1045;  Bowers  Hydraulic 
Dredging  Co.  v.  United  States,  211 
U.  S.  176,  53  L.  ed.  136,  29  Sup.  Ct. 
11;  Williams  v.  Ninemire,  23  Wash. 


I06;j  CUSTOMS    AND    USAGES.  §    I718 

tory  to  the  provisions  of  sucli  contract."  "When  parties  in  un- 
mistakable terms  fix  the  duration  of  a  contract,  it  must  be  pre- 
sumed that  they  did  not  intend  to  follow  the  usage  or  custom 
in  that  regard,  if  there  be  such,  and  in  the  absence  of  proper  alle- 
gations or  proof,  parties  cannot  be  permitted  to  depart  from  the 
terms  of  the  contract  in  this  regard  any  more  than  in  any  other. 
These  principles  are  elementary."^"  But  consideration  of  the 
custom  or  usage  will  not  be  refused  unless  the  language  employed 
by  the  parties  is  plainly  irreconcilable  with  the  usage  or  custom 
invoked."  An  intent  to  exclude  custom  or  usage  may  be  shown 
by  parol. ^® 

§  1718.  Cases  illustrating  the  rule  of  implied  exclusion  of 
customs. — The  rule  that  customs  and  usages  may  not  be  con- 
sidered wiiere  they  are  impliedly  excluded  by  the  contract  has 
been  frequently  applied.  Thus,  for  example,  where  a  charter 
particularly  provided  for  the  delivery  of  the  cargo  alongside, 
within  reach  of  the  vessel's  tackles,  it  was  held  that  there  could 
be  no  charge  against  the  vessel  for  the  cost  of  piling  the  cargo 
beyond  the  reach  of  the  tackles,  though  a  custom  of  the  port 
authorized  such  charge.^**  So  where  the  parties  to  an  employ- 
ment contract  agreed  on  a  definite  term,  evidence  of  usage  in  sim- 
ilar cases  was  held  irrelevant  for  such  usage  could  not  be  substi- 
tuted for  the  express  will  of  the  parties.*"  So  a  general  or  local 
custom  may  not  be  shown  to  contradict  the  express  or  implied 
terms  of  a  transportation  contract."^  So  a  contract  for  the  sale 
of  grain  at  the  rate  of  a  fixed  number  of  pounds  to  the  bushel  may 
not  be  changed  by  proof  that  this  was  not  the  customary  number 
of  pounds  for  a  bushel  recognized  in  the  locality.**     So  where  an 

393,  63  Pac.  534;  Peyser  v.  Western  "Union   Trust   Co.   v.   Whiton,   97 

Dry   Goods   Co.,   53   Wash.   633.    102  N.  Y.  172. 

Pac.   750 ;   Exchange  Bank  v.   Cook-  "  Hammett  v.  Chase,  165  Fed.  1005, 

man,  1  W.  Va.  69;  Detwiler  v.  Green,  91  C.  C.  A.  663,  affg.  158  Fed.  203. 

1  W.  Va.  109.  =»Camp  v.  Baldwin-Melville  Co.,  123 

"Jenkins  S.  S.  Co.  v.  Preston,  186  La.  257,  48   So.  927   (theatrical   con- 
Fed.  609,    108  C.   C.   A.  473.  tract)  ;    Connell    v.    Averill,    8    App. 

"California    Pine   Box   &c.    Co.   v.  Div.  (N.  Y.)  524,  75  N.  Y.  St.  247,  40 

Wasatch    Orchard    Co.    (Utah),    117  N.  Y.  S.  855. 

Pac.  35.  ^Browning    v.    McNear.    158    Cal. 

"Lillard  v.  Kentucky  Distilleries  &  525,  111  Pac.  541:  Cappel  v   Weir  45 

Warehouse  Co.,   134  Fed.   168,  67  C.  Misc.   (N.  Y.)   410.  qq  X    Y    S    304. 

C.  A.  74.  -  Brent  v.  Lilly  Co.,  174  Fed.  877. 


§  lyig  CONTRACTS.  11064 

express  contract  between  the  landlord  and  tenant  fixes  the  divi- 
sion of  the  crops,  evidence  is  inadmissible  which  goes  to  show 
a  general  custom  in  the  neighborhood  fixing  a  different  propor- 
tion."' So  where  the  contract  fixed  the  price  of  picking  cotton, 
the  court  properly  refused  evidence  as  to  the  reasonable  and  cus- 
tomary price  for  such  work  in  the  neighborhood.^*  So  where  the 
parties  to  a  contract  for  the  shipment  of  cattle  expressly  agreed 
on  the  place  of  delivery,  it  was  held  that  evidence  was  inadmis- 
sible showing  a  custom  for  a  delivery  at  another  place.^^  So 
where  the  covenants  of  a  lease  were  unambiguous  as  to  the  duty 
to  make  repair,  the  lessor  could  not  be  compelled  to  make  such 
repairs  because  of  a  custom  or  usage  to  that  effect  in  the  local- 
ity.^® So  where  there  is  a  contract  between  the  parties  but  a 
dispute  as  to  some  of  its  terms,  this  dispute  may  not  be  deter- 
mined by  reference  to  customs  and  usages  governing  in  like 
matters."^  So  where  the  contract  calls  for  the  delivery  of  a  spe- 
cified weight  of  an  article,  evidence  is  inadmissible  to  show  a 
usage  to  deliver  a  less  weight.^^  So  where  the  contract  with  the 
master  of  a  vessel  specially  excluded  liability  of  the  owner's 
riding  bills,  the  master  was  not  entitled  to  charge  these  expenses 
though  they  were  usual  and  proper  in  the  port  at  which  the 
charges  were  made.^^ 

§  1719.  Implied  exclusion  of  custom  or  usage  where  con- 
troversy relates  solely  to  terms  of  contract. — As  a  general 
rule,  when  an  agreement  has  been  made  upon  a  particular  point 
and  controversy  is  as  to  the  terms  of  that  agreement,  such  terms 
cannot  be  shown  by  proof  of  the  usage  respecting  them.  The 
special  agreement  excludes  the  usage.^**     "It  is  only  where  a  con- 

**  Turner  v.  Morris,   142  Mo.  App.  =^  Richard  v.  Haebler,  36  App.  Div. 

60,  125  S.  W.  238.  (N.  Y.)  94,  55  N.  Y.  S.  583. 

"Mullanax    v.    Pyron     (Tex.    Civ.  '' Rennell     v.      Kimball,     5     Allen 

App.),  123  S.  W.  1139.  (Mass.)  356. 

^Williams  v.   Ninemire,  23  Wash.  ""Boon  v.   Belfast,  40  Ala.   184,  88 

393,  63  Pac.  534.  Am.  Dec.  761 ;  Wilkinson  v.  William- 

"» Healy  v.  Tyler,  150  Iowa  169,  129  son,  76  Ala.  163 ;  Currie  v.  Syndicate, 

N.  W.  802.  104  111.  App.    165;    McGraw  v.    Stur- 

""  Currie  v.  Syndicate,  104  HI.  App.  geon,   29   Mich.   426;    Smith   v.   Bar- 

165;  Mcintosh  v.  Pendleton,  75  App.  ringer,  Z7  Minn.  94,  ZZ  N.  W.   116; 

Div.    (N.  Y.)   621,  78  N.  Y.   S.   152;  Holmes  v.   Pettingill,  60  N.  Y.  646; 

Peyser  v.  Western  Dry  Goods  Co.,  53  Mcintosh  v.  Pendleton,  75  App.  Div. 

Wash.  6ZZ,   102  Pac.  750.  (N.  Y.)  621,  78  N.  Y.  S.  152;  Sim- 


1065  CUSTOMS    AND    USAGES.  §    I72O 

tract  is  silent  in  some  particular  or  is  ambiguous  that  proof  of 
custom  is  admissible,  and  such  proof  is  then  admissible  only  for 
the  purpose  of  finding  out  what  the  contract  really  was,  and  not 
to  overthrow  it.  Proof  of  custom  is  received  in  such  cases 
upon  the  assumption  that,  as  to  those  matters  not  covered  by 
express  stipulations  in  the  agreement,  the  parties  are  presumed  to 
have  made  their  contract  with  reference  to  the  established  custom 
and  usage  of  that  place;  and  these  the  law  will  incorporate  into 
the  contract  in  order  to  explain  or  complete  it.  But  it  is  always 
within  the  power  of  the  parties  to  exclude  custom  from  their 
dealings  by  their  express  agreement."^^  The  principle  was  ap- 
plied in  a  recent  case  of  a  commission  contract  with  a  traveling 
salesman  where  the  controversy  was  as  to  the  right  of  the  sales- 
man to  commissions  for  sales  made  by  others  in  his  territory  and 
there  was  no  controversy  as  to  the  fact  of  the  contract.  The  court 
held  that  evidence  was  not  to  be  received  showing  a  general  cus- 
tom among  wholesale  dealers  as  to  the  payment  of  commissions 
for  sales  made  in  the  territory  of  a  salesman  by  other  persons.'^ 

§  1720.  Presumption  of  intent  to  include  usage  in  contract. 
— Where  a  contract  is  made  with  reference  to  a  particular  busi- 
ness, it  is  presumed  it  was  made  with  reference  to  the  ordinary 
course  of  such  business  and  it  is  proper  to  consider  the  general 
and  known  course  of  such  business.  While  it  is  true  that  usage 
cannot  control  an  express  contract,  yet,  where  a  contract  is  ambig- 
uous, the  presumption  is  that  it  was  made  with  reference  to  the 
known  usage  or  general  course  of  the  particular  business.^' 
"When  such  a  contract  becomes  the  subject  of  litigation,  the  pre- 
sumption is  indulged,  if  the  parties  have  not  expressed  a  contrary 
intention,  that  they  intended  to  incorporate  therein  a  usage  known 
to  them;  and  evidence  of  such  is  admissible,  not  to  vary  or  con- 

mons  V.  Lawe,  3  Keys.  (N.  Y.)  217,  ^^ Williams  v.   Ninemire,  23  Wash. 

4  Abb.  Dec.  (N.  Y.)  241;  Barnard  v.  393,  63  Pac.  534. 

Kellog.   10  Wall.   (U.  S.)   383,  19  L.  "  Pevser    v.    Western    Drv    Goods 

ed.    987 ;    Williams    v.    Ninemire.    23  Co..  53  Wash.  633,  102  Pac.  750. 

Wash.  393,  63   Pac.   534;  Vollrath  v.  ""  Heistand  v.  Bateman,  41  Colo.  20, 

Crow.    9    Wash.    374,    37    Pac.    474;  91   Pac.   1111;  Leiter  v.  Emmons,  20 

Swadling  v.  Barneson,  21  Wash.  699,  Ind.  App.  22,  SO  N.  E.  40;  Van  Du- 

59  Pac.  506;  Peyser  v.  Western  Dry  sen-Harrington   Co.   v.   Jungeblut,   75 

Goods  Co.,  53  Wash.  633,   102  Pac.  Minn.  298,  77  N.  W.  970,  74  Am.  St. 

750.  463n. 


§    1 72 1  CONTRACTS.  I066 

tradict  the  terms  of  the  contract,  but  to  interpret  it,  as  it  was 
understood  by  the  parties  at  the  time  it  was  made."^* 

§  1721.  Custom  or  usage  to  explain  matters  on  which  con- 
tract is  silent — Adding  to  terms  of  contract. — Where  a  cus- 
tom does  not  contradict  or  is  not  inconsistent  with  the  terms  of 
a  contract,  it  may  be  invoked  to  introduce  a  new  element  not 
expressly  employed  in  the  contract  and  in  reference  to  which  the 
parties  are  presumed  to  have  contracted.  The  reason  is  that 
where  there  is  nothing  in  a  contract  to  exclude  the  inference,  the 
parties  will  be  presumed  to  have  contracted  in  reference  to  cus- 
toms and  usages  prevailing  in  the  particular  business  and  applic- 
able to  the  contract  in  question. ^°  In  other  words  a  custom  or 
usage,  consistent  with  the  terms  of  the  contract,  peculiar  to  the 
subject-matter  thereof,  known  to  the  parties,  and  probably  in- 
tended to  be  included  in  the  contract,  as  shown  by  their  situation 
and  purposes,  the  nature  of  the  subject-matter  and  the  attendant 
circumstances  may  be  shown  as  an  aid  to  the  interpretation  of  a 
contract.^®  It  is  in  this  sense  that  a  custom  or  usage  may  add  new 
terms  to  contracts,^^  for  the  settled  rule  is  that  a  custom  or  usage 
is  not  allowed  to  alter  or  modify  the  contract  between  the  parties ; 

**  Hiestand  v.  Bateman  41  Colo.  20,  61   Md.  192 ;  Foley  v.  Mason,  6  Md. 

91   Pac.   1111.  Zl;   Kraft  v.   Fancher,  44   Md.   204; 

"Proctor  V.  Atlantic  Fish  Co.,  208  Haskins  v.   Warren,    115   Mass.   514; 

Mass.   351,  94  N.    E.  281;   Barrie  v.  Lowry   v.    Russell,   8   Pick.     (Mass.) 

Quimby,  206  Mass.  259,  92  N.  E.  451;  360;    Loveland   v.    Burke,    120   Mass. 

Standard   Paint   Co.   v.   San   Antonio  139,  21    Am.   Rep.  507;    Parkhurst  v. 

Hardware  Co.   (Tex.  Civ.  App.),  136  Gloucester  Mut.  Fishing  Ins.  Co.,  100 

S.  W.   1150;  Bowles  v.  Driver   (Tex.  Mass.  301,  100  Am.  Rep.  105;  Kield- 

Civ.  App.),   112  S.  W.  440.  sen    v.    Wilson,   11    Mich.    45,    43    N. 

=^  Raliegh  v.  Wilson,  69  W.  Va.  598,  W.    1054 ;   Atchison   &   N.   R.   Co.   v. 

n  S.  E.  651.  Miller,  16.  Nebr.  661,  21  N.  W.  451; 

"Adams     v.     Insurance     Co.,     11  Boorman  v.   Jenkins,   12   Wend.    (N. 

Pittsb.    Leg.    J.    265;    Stone   v.    Van  Y.)  566,  27  Am.  Dec.  158;  Mercantile 

Nort.  3  L.  T.    (N.   S.)   84;   Smith  v.  Mut.   Ins.   Co.  v.   State   Mut.   Fire  & 

Mobile  Nav.  &  Mut.  Ins.  Co.,  30  Ala.  Marine   Ins.    Co.,   25   Barb.    (N.   Y.) 

167;  Alabama  &  T.  R.  R.  Co.  V.  Kidd,  319;     Simmons    v.     Law,    21     N.    Y. 

29  Ala.  221 ;   Barlow  v.  Lambert,  28  Super.  Ct.  213,  afifd.  3  Keyes  (N.  Y.) 

Ala.   704,   65   Am.   Dec.  374;   Candee  217,  4  Abb.  Dec.    (N.  Y.)   241;  Bla- 

V.  Citizens'  Ins.  Co.,  4  Fed.  143 ;  Bui-  lock    v.    Clark,    137   N.    Car.    140,    49 

lock  v.  Finley,  28  Fed.   514;   Illinois  S.  E.  88;  Corcoran  v.  Chess,  131  Pa. 

Mut.  Fire  Ins.  Co.  v.  O'Neile,  13  111.  St.  356,  18  Atl.  376;  Kirby  v.  Phoe- 

89;   Gilbert  v.   McGinnis.   114  111.  28,  nix   Ins.    Co.,    13   Lea    (Tenn.)    340; 

28   N.   E.   382;   Morningstar  v.    Cun-  White   v.    San    Antonio   V/aterworks 

ningham.  110  Ind.  328.  11   N.  E.  593,  Co.,  9  Tex.  Civ.  App.  465,  29  S.  W. 

59  Am.  Rep.  211;  Jackson  v.  Beling,  252;   Oelricks  v.  Ford.  23  How.    (64 

22   La.   Ann.   Zll  \   Gibney  v.   Curtis,  U.  S.)   49,   16  L.  ed.  534;   Partridge 


1067  CUSTOMS   AND   USAGES.  §    1722 

its  office  is  to  explain  a  part  of  it  which  would  otherwise  be  in- 
definite and  ambiguous.^^  "Proof  is  admissible  in  the  absence  of 
expressed  stipulations,  or  where  the  meaning  of  the  parties  is  un- 
certain upon  the  language  used,  and  where  the  usage  of  the  trade 
to  which  the  contract  relates,  or  with  reference  to  which  it  was 
made,  may  afford  explanation,  and  supply  deficiencies  in  the 
instrument.  Technical,  local,  or  doubtful  words  may  be  thus  ex- 
plained. So,  where  stipulations  in  the  contract  refer  to  matters 
outside  of  the  instrument,  parol  proof  of  extraneous  facts  may  be 
necessary  to  interpret  their  meaning.  As  a  general  rule,  there 
must  be  ambiguity  or  uncertainty  upon  the  face  of  the  written 
instrument,  and  arising  out  of  the  terms  used  by  the  parties,  in 
order  to  justify  the  extraneous  evidence,  and  when  admissible,  it 
must  be  limited  in  its  effect  to  the  clearing  up  of  the  obscurity. 
It  is  not  admissible  to  add  to  or  engraft  upon  the  contract  new 
stipulations,  nor  to  contradict  those  which  are  plain."^° 

§  1722.  Illustrative  cases  of  added  terms. — Where  a  con- 
tract by  its  terms  is  silent  as  to  the  mode  of  delivery,  this  omis- 
sion may  be  supplied  by  evidence  of  the  custom  of  the  community 
as  to  delivery.*"  So  where  a  contract  for  the  sale  of  logs  did  not 
specify  the  length  the  logs  should  be  cut,  it  was  proper  to  show 
the  existence  of  a  custom  in  the  community  that  logs  were  usually 
cut  in  even  numbers  from  10  to  20  feet  in  length.*^  So,  where 
a  contract  for  the  sale  of  goods  is  silent  as  to  the  mode,*^  or  time 
of  payment,  reference  may  be  had  to  a  custom  or  usage  in  these 

V.    Phoenix    Mut.    Life    Ins.    Co.,   82  W.  752;   Remy  v.   Healy,   161    Mich. 

U.  S.  573,  21   L.  ed.  229;  Turner  v.  266,  126  N.  W.  202,  29  L.  R.  A.   (X. 

Yates,    16    How.    (57    U.    S.)    14,    14  S.)    139n ;   Hayward   v.   Wemple,    136 

L.   ed.   824;   Van    Ness   v.    Pacard,   2  N.  Y.  S.  625;  Thompson  v.  E.\um.  131 

Pet.    (U.  S.)    137.  7  L.  ed.  374;   Na-  X.  Car.  Ill,  42  S.  E.  543;  Cleveland 

tional  Bank  v.  Burkhardt,   100  U.  S.  Oil  &c.   Co.  v.   Norwich   Union   Fire 

686.  25  L.  ed.  766;  Ruan  v.  Gardner,  Ins.   Co.,  34   Ore.  228.   55   Pac.   435; 

1   Wash.    C.    C.    145.    Fed.    Cas.    No.  Watkins   v.   Green,   22   R.    I.   34,   46 

12100;  Johnson  v.  Burns.  39  W.  Va.  Atl.  35. 

658,  20  S.  E.  686;  John  O'Brien  Lum-  ^Oelricks   v.    Ford.   23   How.    (U. 

ber   Co.  v.  Wilkinson.  123  Wis.  272,  S.)  49.  16  L.  ed.  534. 

101   N.  W.  1050.  *°  Robinson    v.    United    States.    13 

"« Kendall  v.  Russell.  5  Dana  (Ky.)  Wall.  (U.  S.)  363.  20  L.  ed.  653. 

501.  30  Am.  Dec.  696;   Covington  v.  "Thomas  v.  Charles   (Ky.),  119  S. 

Kanawha  Coal  &c.  Co..  121   Kv.  681,  W.   752. 

28  Ky.  L.  636.  89  S.  W.   1126.  3  L.  "  Blalock  v.  Clark,  137  N.  Car.  140, 

R.  A.  (N.  S.)  248.  123  Am.  St.  219;  49  S.  E.  Sa 
Thomas    v.    Charles     (Ky.),    119    S. 


§    1722  CONTRACTS.  IO68 

respects  in  the  particular  trade  and  community."     So,  where  a 
broker's  contract  for  the  sale  of  real  estate  was  silent  as  to  the 
amount  of  the  commission,  this  defect  was  supplied  by  references 
to  the  usage  in  this  respect  in  the  particular  community/*     So, 
likewise  where  the  omission  related  to  the  rate  of  interest.*^    So, 
where  a  contract  of  sale  requires  the  buyer  to  furnish  a  confirmed 
bank  credit,  and  is  silent  as  to  the  time  when  this  should  be  done, 
a  general  custom  in  the  business  may  be  shown  to  supply  the 
omission."     So,  where  an  insurance  policy  was  to  expire  at  noon 
of  a  given  day,  evidence  of  the  local  custom  as  to  the  observance 
of  solar  time  was  held  admissible  to  show  when  the  policy  actual- 
ly expired.*^     So,  where  a  contract  of  carriage  failed  to  fix  the 
amount  to  be  carried  in  a  car,  evidence  was  admissible  to  show 
the  usage  as  to  the  weight  to  be  carried  as  a  carload.**     So,  a  cus- 
tom may  govern  where  the  contract  is  silent  as  to  the  time  for 
delivery  of  goods  sold.*^  So,  where  a  building  contract  is  silent  as 
to  the  disposition  of  the  debris,  recourse  may  be  had  to  customs 
prevailing  in  the  community  as  to  the  matter.^"  So,  where  a  partial 
contract  of  insurance  omitted  to  indicate  the  time  when  it  should 
become  operative,  evidence  of  other  insurance  companies  in  this 
respect  was  held  competent.^^     So,  where  a  lease  is  silent  as  to  its 
duration,  this  defect  may  be  cleared  by  reference  to  usage  in 
such  cases  in  the  particular  community.^^     So,  where  a  contract 
was  silent  as  to  the  place  of  weighing,  it  was  competent  to  show 
the  custom  among  dealers  in  the  community  at  the  place  of  deliv- 
ery as  to  the  place  where  weights  should  be  taken.^^     In  a  case 
where  a  building  contract  required  the  work  to  be  performed 
in  a  workmanlike  manner  according  to  specifications,  describing 
the  kind  of  materials  without  designating  the  same  as  new,  or 

**Mand   v.    Trail,   92    Ind.   521,   47  **  Goode  v.  Chicago  &c.  R.  Co.,  92 

Am   Rep.  163;  Barrie  v.  Quimby,  206  Iowa  371,  60  N.  W.  631. 

Mass.  259,  92   N.   E.  451;   Hayes  v.  ^'Kriete  v.  Myer,  61  Md.  558. 

Union  Mercantile  Co.,  27  Mont.  264,  '"Cooper   v.   Kane,    19  Wend.    (N. 

70  Pac    975  Y.)   586,  32  Am.  Dec.  512. 

"  Hansbrough  v.  Neal,  94  Va.  722,  "  Cleveland  Oil  &c.  Co.  v.  Norwich 

27  S    E    593.  Union    Fire    Ins.    Co.,    34    Ore.    228, 

^  Knobloch  v.  Romeis,  34  111.  App.  55  Pac.  435. 

577  ''- Brincefield  v.  Allen,  25  Tex.  Civ. 

«Rose  V.  Lewis,   157  Ala.  521,  48  App.  258,  60  S.  W.  1010. 

So    105  "Gehl  v.   Milwaukee  Produce  Co., 

"Globe  &c.  Ins.  Co.  v.  David  Mof-  116  Wis.  263,  93  N.  W.  26. 
fat  Co.,  154  Fed.  13,  83  C.  C  A.  91. 


1069  CUSTOMS    AND    USAGES.  §    1 723 

providing  that  secondhand  materials  shall  be  used,  and  providing 
for  the  making  of  a  large  window  sash  specified  by  the  architect, 
and  requiring  the  owner  to  furnish  the  materials,  it  was  held 
proper  to  show  a  common  usage  in  the  vicinity  to  furnish  new 
material  and  mill-made  sash,  where  not  otherwise  specified,  to 
aid  in  construing  the  contract  without  modifying  it."  In  an- 
other case  where  a  contract  for  the  cutting  of  hay  by  one  on 
the  land  of  another  was  silent  as  to  the  pay  for  the  ser\'ices, 
evidence  was  held  admissible  as  to  the  custom  of  paying  in  that 
neighborhood.'*'' 

§  1723.  Usage  to  explain  meaning  of  unambiguous  terms 
having  a  peculiar  meaning. — There  are  cases  where  usage  is 
admissible  to  show  the  meaning  of  words  which  are  used  in  a 
sense  different  from  their  ordinary  meaning.  This  occurs  where, 
by  some  usage  of  trade,  words  have  acquired  a  peculiar  meaning 
distinct  from  the  popular  meaning  of  the  same  words,  or 
where  the  context  evidently  shows  that  they  must  be  under- 
stood   in    some    other    special    and    peculiar    sense.'*"       Under 

"  Todd  V.  Howell,  47  Ind.  App.  665,  one    place   than    in    another.      In    2 

95  N.  E.  279.  Parsons    on    Contracts,    the    author 

"  Cronk    v.    Mulvaney,    168    Mich,  says  that,  custom  'may  give  to  words 

346,   134  N.  W.  9.  of  number  an  entirely  diflferent  sense 

"'Ocean  Steamship  Co.  v.  Aetna  from  that  which  they  usually  bear.' 
Ins  Co,  121  Fed.  882;  Peet  v.  Peet,  He  cites  numerous  cases  to  that  ef- 
229  111  341,  82  N.  E.  376,  13  L.  R.  feet.  Among  them  are  3  B.  &  Ad. 
A.  (N.  S.)  780;  Louisville  &c.  728,  where  '1,000  rabbits'  was  held 
Packet  Co.  v.  Rodgers,  20  Ind.  App.  to  mean  1,200  rabbits,  by  the  custom; 
594,  49  N.  E.  970;  Walker  v.  Syms,  and  Hinton  v.  Locke,  where  '12 
118  Mich.  183,  76  N.  W.  320;  Soutier  shillings  per  day'  was  made  to  mean 
V.  Kellerman,  18  Mo.  509;  Evans  v.  12  shillings  per  10  hours,  or  V/i  days 
Western  Brass  I\Ifg.  Co.,  118  Mo.  for  every  day  on  which  12^4  hours' 
548  24  S  W.  175 ;  Brunold  v.  Glasser,  work  was  done.  But  it  is  useless  to 
25  Misc.  (N.Y.)  285,  53  N.  Y.  S.  1021;  multiply  authorities.  The  reason 
Lowe  v.  Lehman,  15  Ohio  St.  179.  and  necessity  of  the  rule  lies  at  the 
"Neither  do  we  think  that  proof  of  foundation  of  all  language.  It  is  as 
this  custom  is  objectionable,  on  the  true  now  as  it  was  in  the  time  of 
ground  that  it  contradicts  the  con-  Horace,  that  custom  is  at  once  the 
tract.  Authorities  to  support  this  arbiter  and  standard  of  language- 
view  are  numerous  and  almost  uni-  'usus,  quem  pene  et  jus  et  norma 
form,  and  the  rule  is  of  every-day  loquendi.'  It  belongs  to  the  imper- 
application.  It  is  applied  to  shingles,  fection  of  language,  that  while  much 
to  printers'  ems,  to  lumber,  etc.  It  is  the  larger  part  of  its  words  become, 
applied  to  measures  and  weights  of  by  usage,  fixed  and  universal  in  their 
numerous  commodities.  A  ton  of  meaning,  yet  some  of  them  must 
one  article  often  contains  over,  and  always  be  left  subject  to  the  changes 
sometimes  under,  2.000  pounds,  and  and  variations  necessarily  occasioned 
not    unfrequently    more   pounds    in  by  local  usages  and  the  customs  of 


§    1723^  CONTRACTS.  IO7O 

this  rule,  evidence  is  admissible  to  explain  the  meaning  but 
not  to  contradict  an  instrument  and  this,  though  no  ambiguity 
exists  on  the  face  of  the  instrument.^'  "Such  evidence  is  re- 
ceived on  the  theory  that  the  parties  knew  of  the  usage  or  cus- 
tom, and  contracted  in  reference  to  it,  and  in  such  cases  the 
evidence  does  not  add  to  or  contradict  the  language  used,  but 
simply  interprets  and  explains  its  meaning."^^  Thus  where  a 
contract  is  for  brick-laying  at  so  much  a  thousand,  a  well-known 
custom  prevalent  in  the  business  and  in  the  locality  may  be  proved 
to  show  that  a  thousand  is  estimated  according  to  the  cubic  foot 
of  masonry  of  laid  brick  and  of  one-half  the  openings  in  the  build- 
ing, rather  than  the  actual  count  of  the  brick  laid.^**  So,  as  to  the 
custom  in  measuring  brick  walls  of  counting  the  openings  made 
by  doors  and  windows  as  part  of  the  solid  wall.®"  So,  in  a  sale 
of  silk  thread  it  was  held  competent  to  show  that  ten  ounces  of 
silk  thread  signified,  between  dealers,  not  a  full  pound,  but  a  trade 
pound.*'^  So,  a  provision  in  a  building  contract  for  the  use  of 
San  Domingo  mahogany  was,  according  to  usage,  satisfied  by  the 
substitution  of  a  good  figured  mahogany  equal  in  density  to  the 
San  Domingo  variety.®^  And  so  a  well-known  custom  or  usage 
that  the  weight  of  bales  of  cotton  is  500  pounds,  has  been  held 
sufficient  to  remove  ambiguity  in  a  contract  for  the  sale  of  a 
stipulated  number  of  bales  of  cotton.®^  In  the  following  cases, 
proof  of  custom  was  admitted  to  change  the  plain  meaning  of 
expressions  in  the  contract :  where  the  word  "thousand"  was 
used  in  a  lease  of  a  rabbit  breeding  establishment,  evidence  of  a 

trades."    Lowe  v.   Lehman,   15   Ohio  make  a  contract  or  to  add  a  new  ele- 

St.   179.     See  also.  Walker  v.   Syms,  ment   to   the   terms  of   the   contract 

118  Mich.   183,  76  N.  W.  320.  previously     made     by     the     parties." 

"Peet  V.   Peet,  229  111.  341,  82  N.  Louisville  &c.   Packet  Co.  v.  Rogers, 

E.    376,    13    L.    R.    A.    (N.    S.)    780.  20  Ind.  App.  594,  49  N.  E.  970. 
"Evidence  of  the  usage  and  custom        °*  Evans    v.     Western     Brass    Mfg. 

of  trade  is  admissible  in   mercantile  Co.,  118  Mo.  548,  24  S.  W.  175. 
contracts  to  prove  that  the  words  in        "  Brunold  v.  Glasser,  25  Misc.   (N. 

which  they  are  expressed   in  a  par-  Y.)  285,  53  N.  Y.  S.  1021. 
ticular   trade   to   which   the   contract        *"  Walker  v.   Syms,   118  Mich.   183, 

refers  are  used  in  a  particular  sense,  'Ki  N.  W.  320. 

and  different  from  the  sense  that  "Baer  v.  Glaser,  90  Mo.  App.  289. 
they   ordinarily   import,    and    in    cer-        ®^  Snoqualmi   Realty  Co.  v.   Moyni- 

tain  cases  for  the  purpose  of  annex-  han,   179  Mo.  629,  78   S.  W.   1014. 
ing  incidents  to  the  contract  in  mat-        "Ellis  v.  Casey  (Ala.  App.),  58  So. 

ters    upon     which     the     contract    is  724, 
silent;  but  it  is  never  admitted  to 


lO/I  CUSTOMS    AND    USAGES.  §    1 724 

custom  was  admitted  to  show  that  "twelve  hundred"  was  meant  f* 
where  the  word  "barrel"  was  used  in  a  contract,  evidence  was  ad- 
mitted to  show  that  the  word  meant  a  vessel  of  a  certain  capacity 
and  not  the  statute  measurement  of  capacity;*"*  where  shingles 
were  sold  by  the  thousand,  evidence  was  admitted  to  show  that 
two  packs  were  regarded  as  one  thousand  without  regard  to  the 
actual  quantity;®"  where  the  contract  specified  "feet"  as  the  basis 
of  measurement,  proof  of  a  custom  to  reject  fractions  of  a  foot 
was  received."^ 

§  1724.  Test  to  determine  whether  instrument  to  be  inter- 
preted by  custom  or  usage. — The  test  of  the  completeness  of 
an  instrument  to  determine  whether  it  is  to  be  aided  by  reference 
to  customs  or  usages  is  the  instrument  itself.  If  this  shows  care- 
ful preparation  and  a  deliberate  regard  for  the  questions  which 
would  naturally  arise  out  of  the  contract,  and  it  is  reasonable  to 
conclude  from  the  instrument  that  the  parties  have  therein  clearly 
expressed  their  final  intentions  in  regard  to  the  matters  covered  by 
the  instrument,  then  it  will  be  deemed  a  complete  statement  of 
these  intentions  and  it  may  not  be  aided  by  reference  to  customs 
and  usages.  But  it  is  said  the  language  of  the  instrument  should 
be  unambiguous  and  so  complete  in  its  provisions  as  to  show 
an  intention  to  exclude  customs  and  usages.®^  Where  the 
instrument  shows  its  informality  on  its  face,  there  will  arise  no 
presumption  that  it  contains  all  the  terms  of  the  contract  and 
when  this  is  the  case,  parol  evidence  is  admissible  to  give  the  con- 
tract the  meaning  intended  by  the  parties.®* 

§  1725.  Warranty  may  not  be  added. — The  doctrine  of 
caveat  emptor  cannot  be  changed  by  a  usage  of  trade.  It  is 
fundamental  that  the  principles  of  the  common  law  cannot  be 
altered  by  local  usage.     It  follows  that  where  the  common  law 

•♦  Smith  V.  Wilson,  3  B.  &  Ad.  729.  S.)  578;  White  v.  Bovce.  21  Fed.  228; 

"  Miller  v.  Stevens,  100  Mass.  518,  Smith  v.  Dallas,  35  Ind.  255;  Button 

97  Am.  Dec.  123,   1  Am.  Rep.   139.  v.  Gerrish.  63  Mass.  89,  55  Am.  Dec 

"Soutier    v.     Kellerman,     18    Mo.  45 ;  Helmrichs  v.  Gehrke,  56  Mo.  79 

509.  Eighmie    v.    Tavlor.   98    N.    Y.    288, 

"  Merrick  v.  McNally,  26  Mich.  374.  Marsh  v.  McNair.  99  X   Y   174    1  N 

"Eighmie  v.  Tavlor.  98  N.  Y.  288;  E.   660.   revg.  25  Hun    ("N    Y  )"  314- 

Filkins  v.  Whvland.  24  N.  Y.  338.  Wilson  v.  Deen,  74  N  Y  531 

••Lindley  v.'Lacey,    17   C.   B.    (N. 


§    1726  CONTRACTS.  IO72 

does  not,  on  the  admitted  facts,  imply  a  warranty  of  goods  sold, 
a  custom  in  the  trade  of  the  particular  article  will  not  as  a 
general  rule  at  least,  be  admitted  to  imply  such  a  warranty.^" 
If  there  is  a  warranty,  in  fact,  a  trade  custom  may  be  shown  to 
explain  its  extent,  but  such  custom  cannot  create  a  warranty  in 
the  first  instance."  The  principle  is  not  apphed  in  the  case  of  a 
sale  by  sample  because  there  is  no  opportunity  of  a  personal 
examination  of  the  bulk  of  the  commodity  which  the  sample  is 
shown  to  represent.  In  such  a  case,  there  is  an  implied  warranty, 
the  extent  of  which  may  be  shown  by  custom  or  usage.'^^ 

§  1726.  Strict  construction  of  usage. — Usages  in  deroga- 
tion of  the  common  law  are  strictly  construed  and  operate  only  on 
cases  clearly  covered  by  them.  The  usage  is  allowed  to  be  proved 
only  because  it  forms  a  part  of  the  contract  of  the  parties  and 
hence  it  may  not  extend  further  than  to  make  clear  what  the 
contract  of  the  parties  actually  was.  Great  care  should  be  exer- 
cised in  allowing  a  custom,  usage  or  practice  to  change  contracts 
expressly  entered  into  or  implied  at  common  law.^^  The  proof 
of  a  custom  has  been  held  improper  if  it  does  not  tend  to  prove 
any  material  fact  in  controversy.'* 

§  1727.  Usages  relating  to  bills  of  lading  and  shipping  con- 
tracts.— Here,  as  elsewhere,  the  rule  against  the  use  of  a  cus- 
tom to  vary  an  unambiguous  contract  prevails.  Thus,  where  a 
bill  of  lading  explicitly  provides  that  the  liability  of  the  carrier 
shall  terminate  on  the  arrival  of  the  goods  at  their  destination 

^"Baird     v.     Matthews,     6     Dana  nard   v.   Kellogg,   10  Wall.    (U.    S.) 

(Ky.)  129;  Whitmore  v.  South  Bos-  383,  19  L.  ed.  987.   See  Vol.  V,  Tit.  15. 

ton   Iron    Co.,   2   Allen    (Mass.)    52;  "Leigh  &  Smith,  1  Car.  &  P.  638; 

Rice    V.    Codman,    1    Allen    (Mass.)  Currie    v.    Syndicate,    104    111.    App. 

Zn ;     Dickinson     v.     Gay,     7     Allen  165 ;  Leggat  v.  Sands'  Ale  Brwg.  Co., 

(Mass.)     29,     83     Am.     Dec.     656;  60  111.  158;  Metcalf  v.  Weld,  14  Gray 

Thompson  v.  Ashton,  14  Johns.   (N.  (Mass.)    210;    Thornton    v.    Suffolk 

Y.)  316;  Wetherill  v.  Neilson,  20  Pa.  Mfg.     Co.,    10    Cush.     (Mass.)    376; 

St.  448,  59  Am.  Dec.  741;  McKinney  Overman  v.  Hoboken  City  Bank,  30 

V.    Fort,    10    Tex.    220 ;    Barnard    v.  N.  J.  L.  61 ;  Runyan  v.  Central  R.  Co., 

Kellogg,  10  Wall  (U.  S.)  383,  19  L.  64  N.  J.  L.  67,  44  Atl.  985,  48  L.  R. 

ed.  987.     But  see  Sumner  v.  Tyson,  A.  744;   Oelricks   v.   Ford,   21   How. 

20  N.  H.  384.  fU.    S.)    49,    16  L.   ed.   534;   South- 

"  Baird  v.  Matthews,  6  Dana  (Ky.)  west  Virginia  Mineral  Co.  v.  Chase, 

129.  95  Va.  50,  27  S.  E.  826. 

"Boorman    v.    Jenkins,    12    Wend.  '*  Smith    v.    Cleveland   &c.    R.    Co., 

(N.  Y.)  556.  27  Am.  Dec.  158;  Bierne  149  111.  App.  348. 
V.  Dord,  2  Sandf.   (N.  Y.)  89;  Bar- 


1073  CUSTOMS    AND    USAGES.  §    1 728 

and  the  bill  of  lading  was  assented  to  by  the  shipper,  such  ship- 
per cannot  show  the  existence  of  a  custom  which  will  allow  him 
more  than  a  reasonable  time  for  the  removal  of  his  goods." 
Where,  however,  the  terms  used  in  a  bill  of  lading  have,  by  usage, 
acquired  a  particular  meaning,  the  parties  will  be  presumed  to 
have  used  them  in  that  sense."     Again,  a  custom  may  be  inter- 
posed where  that  is  essential  to  get  at  the  intention  of  the  parties. 
Thus,  where  a  seller  of  goods  takes  a  bill  of  lading  to  his  own  or- 
der, he  thereby  reserves  prima  facie  right  of  disposition,  and  evi- 
dence of  a  custom  to  the  contrary  has  been  held  admissible  to  de- 
termine the  intention  of  the  parties.'^^  There  is  no  uniform  custom 
which  would  reasonably  read  into  a  contract  of  shipment  a  bill  of 
lading  not  assented  to  or  read  by  the  shipper.''®     It  would  seem 
clear  that  custom  to  change  or  alter  dates  on  bills  of  lading,  at  the 
time  of  and  prior  to  the  issuance  thereof,  to  make  the  date  on 
the  bills  conform  to  the  true  date  of  issue,  would  be  without 
force  where  it  would  change  the  date  of  the  true  instrument.'® 
In  a  case  where  a  lumber  shipping  contract  provided  for  stoppage 
en  route  for  dressing,  and  the  lumber  was  burned  while  at  the 
planing  mill,  it  was  held  proper  to  show  the  general  custom  in 
shipping  lumber,  when  dressing  in  transit  arrangements  are  al- 
lowed, not  to  vary  or  control  the  contract  but  to  enable  the  court 
to  arrive  at  the  real  meaning  of  the  parties,  who  are  presumed  to 
have  contracted  in  conformity  with  the  established  usage.®" 

§  1728.  Custom  making  bills  of  lading  negotiable.—Bills 
of  lading  may  not  be  made  negotiable  instruments  as  against  a 
carrier  by  general  or  local  custom  of  others  to  use  them  as  col- 
lateral security  and  thereby  make  the  carrier  liable  to  the  indorsee 
in  the  same  way  that  he  would  be  if  he  had  drawn  negotiable  bills 

"Tallassee     Falls     Mfg.     Co.     v.  "^Vayne  v.  The  General  Pike,   16 

Western  R.  of  Ala.,  128  Ala.  167,  29  Ohio  421. 

So.  203.   Where  a  bill  of   lading  of  "  Collignon    v.    Hammond    Millmg 

stock  provided   for   delivery  to   con-  Co.,  68  Wash.  626,    123   Pac.   1083. 

signees    at    Ft.    Worth,    it    was    held  "Cleveland,  C.  C.  &  St.  L.  R.  Co. 

competent  to  show  a  general  custom  v.  Potts,  33  Ind.  App.  564,  71  N.  E. 

to  deliver  all  stock  consigned  to  such  685.                                                    n  1  • 

consignees  at  the  stockvards  in  North  '*  Merchants'    Nat.    Bank  v.    Balti- 

Ft    Worth.    Houston  &  T.  C.  R.  Co.  more  &c.  Steamboat  Co.,  102  Md.  573, 

V.  Hill   (Tex.  Civ.  App.),  128  S.  W.  63  Atl.  108. 

445  «« Baron  v.  Mobile  &c.  R.  Co.  (Ala. 

App.),  56  So.  862. 

68 — Contracts,  Vol.  2 


§    1729  CONTRACTS.  [[O74 

of  exchange.®^  Says  an  authoritative  writer  on  the  subject  of  col- 
lateral securities :  "A  bill  of  lading  is  merely  a  receipt  by  the  car- 
rier for  the  merchandise  received  for  transportation  and  evidence 
of  a  contract  with  a  shipper  to  carry  the  merchandise  to  its  desti- 
nation. The  carrier's  liability  would  be  the  same  if  he  received 
the  goods  and  undertook  to  transport  them  without  issuing  a 
bill  of  lading.  The  carrier's  contract  is  with  the  shipper  and  with 
no  one  else.  If  the  shipper  indorses  his  contract  to  any  one  else, 
the  indorsee  acquires  only  the  rights  of  the  shipper,  and  it  is  not 
for  the  interest  of  commerce  that  he  should  acquire  any  other 
rights.  The  common  law  makes  it  no  part  of  the  duty  of  a  car- 
rier to  issue  bills  of  lading  which  shall  have  the  effect  of  negotia- 
ble securities  as  against  him ;  though  it  holds  him  rigidly  to  the 
performance  of  his  contract  as  a  carrier.  While  merchants  have 
from  time  immemorial  treated  bills  of  lading  as  convenient  sym- 
bols or  instruments  of  title,  which  they  have  transferred  by  in- 
dorsement, and  have  thus  given  them  a  quasi-negotiability  or 
capacity  to  pass  from  hand  to  hand,  this  custom  of  merchants  is 
one  wholly  for  their  own  benefit,  and  is  one  which  does  not  bene- 
fit the  carrier  or  in  any  way  concern  him,  unless  it  be  to  make  him 
liable  to  the  indorsee,  instead  of  the  shipper,  for  the  delivery  of 
the  goods."«^ 

§  1729.    Effect  of  custom  on  liability  of  connecting  carriers. 

— Usage  or  custom  may  often  exert  an  important  influence  upon 
the  relative  rights,  duties  and  liabilities  of  the  different  carriers  as 
among  themselves,  particularly  in  regard  to  delivering  and  receiv- 
ing goods,  which,  unknown  to  the  shipper,  and  not  such  as  he 
ought  to  take  notice  of,  would  not  affect  the  rights  of  the  ship- 
per.^^  Carriers  may  sometimes  be  held  liable  to  a  shipper  as 
partners,  when,  as  between  themselves,  they  are  not  partners,  and 
private  arrangements  between  themselves  may  bind  them  without 

*^ Robinson  V.  Memphis  &c.  R.  Co.,  other,       insufficient);       Wallace     v. 

9  Fed.  129.  Rosenthal,    40    Ga.    419;    Condon    v. 

''Jones  Col.  Sec,  f  250.  Marquette  &c.  R.  Co.,  55  Mich.  218, 

^'Southern    Indiana      Exp.    Co.    v.  21  N.  W.  321,  54  Am.  Rep.  367;  Mc- 

United  States  Exp.  Co.,  92  Fed.  1022,  Donald  v.  Western  R.  Co.,  34  N.  Y. 

35   C.   C   A.    172    (custom  to   receive  497;    Conkey    v.    Milwaukee    &c.    R. 

goods  without  prepayment  of  charges  Co.,  31  Wis.  619,  11  Am.  Rep.  630. 

and  to  advance  back  charges  to  each 


I075  CUSTOMS   AND   USAGES.  §    I73O 

in  any  way  binding  the  shippers  or  affecting  their  duties  and  lia- 
bilities to  him." 

§  1730.  Custom  as  to  delivery  of  goods  to  carrier. — A  car- 
rier may  not  be  charged  with  the  loss  of  property  unless  it  has 
been  delivered  to  him  or  his  agent  for  transportation  but  the  law 
does  not  demand  an  actual  delivery.  A  delivery  in  accordance 
with  the  usage  and  custom  of  the  carrier  will  ordinarily  suffice.*" 
"It  is  well  settled  by  a  series  of  adjudications,  of  high  authority, 
that  if  a  uniform  custom  is  established  and  recognized  by  the  car- 
rier, and  is  known  to  the  public,  that  property  intended  for  car- 
riage may  be  deposited  in  a  particular  place,  without  express 
notice  to  him,  that  a  deposit  of  property  for  tliat  purpose  in  ac- 
cordance with  the  custom  is  constructive  notice,  and  would  ren- 
der any  other  form  of  delivery  unnecessary.  The  rule  is  founded 
in  reason;  as  the  usage,  if  habitual,  is  a  declaration  by  the  carrier 
to  the  public,  that  a  delivery  of  property  in  accordance  with  the 
usage  will  be  deemed  an  acceptance  of  it  by  him  for  the  purpose 
of  transportation.  To  allow  a  carrier,  when  property  is  thus  de- 
livered, to  set  up  by  way  of  defense  the  general  rule,  which  re- 
quires express  notice,  would  operate  as  a  fraud  upon  the  public, 
and  lead  to  manifest  injustice."*^  But  the  party  relying  upon  a 
usage  of  this  character  must  bring  himself  strictly  within  its 
terms.*^  In  one  of  the  cases,  a  sufficient  delivery  was  shown 
according  to  the  usage  of  the  business  where  goods  were  left  on 
the  dock  near  the  boat  with  express  notice  to  the  master,  but  there 
were  more  goods  left  there  than  the  master  was  notified  of,  and 
it  was  held  that  the  owners  of  the  vessel  were  not  liable  for  the 

**  Block   V.    Fitchburg   R.    Co.,    139  v.  Norwich  &  New  York  Transp.  Co., 

Mass.  308.   1    N.   E.  348;    Hill   Mfg.  33  Conn.  166;  Illinois  Central  R.  Co. 

Co.  V.  Boston  &c.  R.  Co.,  104  Mass.  v.   Smvser,  38   111.  354.  87  Am.  Dec. 

122,  6  Am.  Rep.  202;  Wyman  v.  Chi-  301;    Ford    v.    Mitchcl,    21    Ind.    54; 

cago    &c.    R.    Co.,   4    Mo.    App.    35;  Green  v.   Milwaukee  &c.   R.   Co.,  38 

Champion  V.  Bostwick,  18  Wend.  (N.  Iowa    100;    Wright    v.    Caldwell,    3 

Y.)    175,  31   Am.   Dec.  376;   Pattison  Mich.    51;    Blanchard    v.     Isaacs.    3 

V.  Blanchard,  5  N.  Y.  186.  Barb.   (N.  Y.)   388;   Packard  v.  Get- 

^'Buckman  v.   Levi,   3   Camp.   414;  man,   6   Cow.    (N.    Y.)    757,    16  Am. 

O'Bannon  v.    Southern    Exp.   Co.,   51  Dec.  475;   Freeman  v.   Newton,  3  E. 

Ala.    481;    Hickox   v.    Naugatuck   R.  D.  Smith   (N.  Y.)   246. 

Co.,  31  Conn.  281,  83  Am.  Dec.   143;  *>  Wright   v.   Caldwell.   3   Mich.   51. 

Merriam  v.   Hartford  &c.  R.  Co..  20  ''Leigh  v.  Smith,  1  Car.  &  P.  638; 

Conn.  354,  52  Am.  Dec.  344;  Converse  Wright  v.  Caldwell,  3  Mich.  51. 


§    1 73 1  CONTRACTS.  IO76 

excess/®  Delivery  of  letters  to  boats  engaged  in  river  navigation 
will  be  governed  by  common  usage  to  receive  and  carry  such 
letters  although  the  letters  are  delivered  to  a  clerk  and  carried 
without  charge.®^  Although  usage  will  make  that  a  delivery 
which  without  it  would  not  have  been  a  sufficient  delivery,  yet  it 
will  not  make  an  actual  delivery  insufficient  until  something  fur- 
ther has  been  done.^° 

§  1731.  Usage  as  to  capacity  of  cars. — Where  the  question 
involved  in  an  action  for  breach  of  a  contract  for  furnishing 
commodities  in  carload  lots  is  the  capacity  of  a  car,  it  is  proper 
to  receive  evidence  as  to  the  usage  among  railroad  men  and 
shippers  in  respect  to  the  commodity  involved.  Such  evidence  is 
received  to  explain  and  not  to  vary  the  contract."^ 

§  1732.  Custom  and  usage  as  to  delivery  of  goods  by  car- 
rier.— Custom  frequently  exerts  an  important  influence  in 
determining  the  time,  place  and  manner  of  delivery  of  goods  by 
a  carrier.®^  A  general  custom  of  the  business  or  a  well  estab- 
lished usage  at  the  place  of  delivery  usually  becomes  a  part  of  the 
contract  and  governs  as  to  the  place,  time  and  mode  of  making 
the  delivery.®^  Thus,  carriers  have  been  held  liable  for  loss 
occasioned  by  departing  from  an  established  custom,^*  and  so, 

«« Packard  v.  Getman,  6  Cow.    (N.  Tenn.  239,  79  S.  W.  124,  64  L.  R.  A. 

Y.)  757,  16  Am.  Dec.  475.  443. 

«•  Hosea  v.  McCrory,   12  Ala.  349 ;  "'  Loveland  v.  Burke,  120  Mass.  139, 

Garey  v.  Meagher,  33  Ala.  630 ;  Knox  21  Am.  Rep.  507 ;    Arthur  v.  St.  Paul 

V.   Rives,   14  Ala.  249,  48  Am.   Dec.  &c.   R.   Co.,  38   Minn.  95.  35  N.   W. 

97  718;  New  York  Cent.  R.  Co.  v.  Stand- 

■^Hickox  V.   Naugatuck  R.  Co.,  31  ard  Oil  Co.,  87  N.  Y.  486;  Gibson  v. 

Conn.  281.  83  Am.  Dec.  143;  Illinois  Culver,    17    Wend.    (N.    Y.)    305,    31 

Cent.  R.  Co.  v.   Smyser,  38  111.  354,  Am.    Dec.   297;    Louisville   &    N.    R. 

87  Am.  Dec.  301 ;     Freeman  v.  New-  R.  Co.  v.  United  States  Fidelity  &c. 

ton,  3  E.  D.  Smith   (N.  Y.)   246.  Co.  (Tenn.),  148  S.  W.  671;  Richard- 

■^Good  V.   Chicago  &c.   R.   Co.,  92  son  v.  Goddard,  23  How.  (U.  S.)  28, 

Iowa  371,   60   N.   W.   631;   Floyd   v.  16   L.    ed.    412;    Higgins    v.    United 

Mann,  146  Mich.  356,  109  N.  W.  679.  States  &c.  Steamship  Co.,  3  Blatchf. 

°=  Chicago,  I.  &  L.  R.  Co.  v.  Rey-  (U.    S.)    282,    Fed.    Cas.    No.    6469; 

man   (Ind.).  73   N.   E.   587,   166  Ind.  Blossom  v.  Smith,  3  Blatchf.   (U.S.) 

278,  76  N.  E.  970;   Sleade  v.  Payne,  316,  Fed  Cas.  No.   1565;  Farmers'  & 

14  La.  Ann.  453;  Bachant  v.  Boston  Mechanics'      Bank      v.      Champlain 

&c    R.  Co.,  187  Mass.  392,  73  N.  E.  Transp.  Co.,  16  Vt.  52,  42  Am.  Dec. 

642,    105    Am.    St.    408;    Shelton    v.  491. 

Merchants'    Transp.    Co.,    59    N.    Y.  »*  Southern    Exp.    Co.    v.    Everett, 

258,  48  How.  Pr.  (N.  Y.)  257;  Weed  37     Ga.    688;    Richmond     v.    Union 

V.  Barney,  45  N.  Y.  344,  6  Am.  Rep.  Steamboat  Co.,  87  N.  Y.  240. 
96  Pennsylvania  R.  Co.  v.  Naive,  112 


I077  CUSTOMS    AND    USAGES.  §    1 733 

on  the  other  hand,  they  have  been  reHeved  from  further  hability 
by  complying-  with  such  a  custom.  It  has  been  held,  however, 
that  if  the  carrier  relies  on  a  custom  or  upon  the  instructions  of 
the  consignee  as  to  the  manner  of  delivery  of  the  goods,  it  must 
show  that  it  has  fully  complied  with  such  custom  or  instructions.*"* 
An  example  of  the  influence  of  custom  is  found  in  a  recent 
case.  It  was  shown  that  the  carrier  had  been  accustomed  to 
deliver  goods  to  an  independent  warehouseman  whose  custom  it 
was  to  notify  the  consignee  and  that  the  consignee  was  aware  of 
this  custom  and  had  long  acquiesced  in  it.  The  court  held  that  the 
liability  of  the  carrier  ended  with  the  delivery  of  the  goods  to  the 
warehouseman  and  that  it  was  not  liable  for  the  loss  of  the  goods 
by  fire  while  in  the  warehouse.""  So,  it  has  been  held  that  where 
there  are  two  places  in  the  same  town  for  the  delivery  of  freight, 
one  being  the  depot  proper  and  the  other  a  platform  where  heavy 
and  bulky  articles  were  usually  deposited,  the  usage  of  the  place 
as  to  which  would  be  the  proper  point  for  delivering  cotton  bales 
may  be  shown  where  neither  is  specifically  designated."^  As  a 
general  rule,  however,  unless  the  course  of  dealing  between  the 
parties  has  been  such  as  to  render  proof  of  a  general  custom  un- 
necessary,^" the  usage  must  be  lawful,  general,  uniform  and  cer- 
tain, or,  at  least,  such  that  the  parties  should  have  known  it  and 
must  be  presumed  to  have  contracted  or  dealt  with  reference  to 
it  for  no  usage  can  override  a  valid,  express  and  specific  contract."" 

§  1733.  Customs  as  to  delivery  of  goods  by  carrier  by 
water. — The  mode  of  delivery  of  goods  transported  by  water 
depends  much  upon  the  usage  of  the  place  where  that  delivery  is 
to  be  made  and  parties  to  shipping  contracts  are  presumed  to 
know  the  usages  and  laws  of  the  port  where  the  contract  is  to  be 

•'Hibler  v.  McCartney.  31  Ala.  501;  Loveland  v.  Burke,  120  Mass.  139,  21 

Baldwin    v.    American    Exp.    Co.,    23  Am.  Rep.  507. 

111.  197,  74  Am.  Dec.  190 ;  Haslam  v.  '*  Powell  v.  Thompson.  80  Ala.  51 ; 

Adams    Exp.    Co.,    19   N.    Y.    Super.  Georgia  R.  Co.  v.  Pound,  111  Ga.  6, 

Ct   235  36  S.   E.  312;  Wevand  v.  Atchinson 

"  Black  V.  Ashley,  80  Mich.  90,  44  &c.  R.  Co.,  75  Iowa  573,  39  N.  W. 

N.  W.   1120.  899,  1  L.  R.  A.  650,  9  Am.  St.  504; 

"Homesly  v.  Elias,  66  N.  Car.  330.  Benson  v.  Gray,  154  Mass.  391,  28  N. 

See  also,  INIcMasters  v.  Pennsylvania  E.  275,   13  L.   R.   A.  262;   Dickinson 

R.   Co.,  69  Pa.   St.  374,  8  Am.  Rep.  v.  Gay.  7  Allen   (Mass.)   29.  83  Am. 

264.  Dec.  656;   Collender  v.  Dinsmore,  55 

•*  Barnes   v.    Foley,   5    Burr.   2711;  N.  Y.  200,  14  Am.  Rep.  224. 


§    1733  CONTRACTS.  1078 

performed  and  to  contract  with  reference  to  them.*  But  it  has 
often  been  held  to  be  within  the  legitimate  and  proper  scope  of  a 
usage  of  trade  to  regulate  the  time,  place  and  manner  of  the  de- 
livery of  a  cargo,  when  there  is  no  express  contract  upon  the 
subject;  and,  under  such  circumstances,  the  usage  is  deemed  to 
enter  into  and  form  a  part  of  the  contract.^  "According  to  all 
the  decisions,  the  rules  of  law  which  would  otherwise  exist  as  to 
the  beginning  or  end  of  the  liability  of  a  carrier  may  be  modified 
to  some  extent  by  the  course  and  usages  of  trade  and  business, 
though  there  may  be  a  difficulty  in  defining  by  a  general  state- 
ment how  far  such  modification  may  go."^  It  is  the  general 
usage  that  a  carrier  by  water  must  convey  from  port  to  port  or 
from  wharf  to  wharf.  He  is  not  bound  to  deliver  goods  at  the 
warehouse  of  the  consignee.  It  is  the  duty  of  the  consignee  to 
receive  his  goods  out  of  the  ship  or  upon  the  wharf,*  and  it  is  held 
that  the  vessel  is  not  obliged  to  deliver  freight  at  a  pier  nearest  to 
the  address  of  the  consignee  as  given  in  the  bill  of  lading.^  The 
delivery  must  be  made  within  such  parts  of  the  port  as  have  be- 
come fixed  by  established  usage  if  a  customary  berth  can  be  ob- 
tained within  a  reasonable  time.^  Where  the  general  laws  of 
the  country  change  the  place  of  delivery  in  cases  of  quarantine, 

■'    '  Shepherd  v.  Lanfear,  5  La.  336,  25  *  Pickering  v.  Weld,  159  Mass.  522, 

Am.  Dec.    181;  Jameson  v.  Sweeney,  34   N.   E.    1081;    Miller  v.   Mansfield. 

32  Misc.  (N.  Y.)  645,  66  N.  Y.  494;  112   Mass.   260;    Robinson  v.   United 

Ankeny  v.  Young,  52  Wash.  235,  100  States,   13  Wall.   (U.   S.)   363,  20  L. 

Pac.    736.      Where    a    charter    party  ed.  653 ;  Hostetter  v.  Park,  137  U.  S. 

provides  for  lay  days  for  loading  in  30,  34  L.  ed.  568,  11  Sup.  Ct.  1. 

specific    terms,    the    contract    cannot  'Judson  v.  Railroad  Corp.,  4  Allen 

be  afifected  by  any  custom  of  the  port.  (Mass.)    520;    Mansur  v.   New   Eng- 

The    Mary    S.    Bradshaw,    155    Fed.  land  &c.  Ins.   Co.,   12  Gray    (Mass.) 

696.     Where   a   broker's    notes   of    a  520;    Haskins   v.   Warren,    115    Mass. 

sale  of  canary   seed   recited  "March  514;    Reed   v.    Richardson,   98   Mass. 

steamer      shipment      from      Turkey,  216,  93   Am.   Dec.    155;    Pickering  v. 

*   *   *   goods  to  be  taken  from  dock  Weld,  159  Mass.  522,  34  N.  E.  1081; 

on    arrival    of    steamer,"     indorsed,  Richardson  v.  Goddard,  23  How.  (U. 

"Name  of   steamer   reported   Aleppo.  S.)   28,   16  L.  ed.  412. 

No   arrival,   no   sale," — a  delivery  in  *  Kohn   v.    Packard,   3   La.  224,  23 

New   York   by   the    Aleppo   was   not  Am.    Dec.    453;     Moore    v.     United 

required,  it  appearing  that  no  steamer  States,  196  U.  S.  157,  49  L.  ed.  428, 

ever  took  goods   directly   from  Tur-  25  Sup.  Ct.  202,  40  Ct.  CI.  513;  Dib- 

key  to  New  York,  but  that  the  uni-  ble  v.  Morgan,  1  Woods  (U.  S.)  406, 

versal  custom,  known  to  the  parties.  Fed.  Cas.   No.  3881. 

was  to  transship  at  Liverpool.  lasigi  "Western   Transp.   Co.  v.   Hawley, 

V.   Rosenstein,  3  App.   Div.    (N.  Y.)  1  Daly  (N.  Y.)  327. 

500,  73  N.  Y.   St.  679,  38  N.  Y.  S.  "  The  Port  Adelaide,  38  Fed.  753. 
354,  aflfd.  158  N.  Y.  678,  52  N.  E.  1124. 


I079  CUSTOMS    AND    USAGES.  §    1 734 

then  it  is  the  duty  of  the  consignee  to  receive  the  goods  at  the 
place  designated  by  the  law."^ 

§  1734.  Custom  as  to  notice  to  consignee  of  arrival  of 
goods. — The  adjudged  cases  recognize  the  force  of  usage 
and  custom  and  affirm  that  custom  may  require  notice  or  may  dis- 
pense with  notice  of  the  arrival  of  goods.®  A  well  known  local 
custom  that  a  carrier  of  goods  shall  notify  the  consignee  of  their 
arrival  is  to  be  considered  a  part  of  the  agreement  of  transporta- 
tion." On  the  other  hand,  notice  to  the  consignee  of  the  arrival 
of  goods  may  be  dispensed  with  by  a  well  recognized  custom 
at  the  point  of  destination.^" 

§  1735.    Custom  as  to  delivery  of  baggage  to  carrier. — 

What  is  a  sufficient  delivery  of  baggage  to  a  carrier  is  often  de- 
termined by  custom  or  usage.  The  delivery  need  not  always  be 
made  to  the  persons  specially  authorized  to  care  for  the  bag- 
gage; it  may  sometimes  be  made  to  the  ticket  agent  or  other 
agent  who  is  permitted  to  hold  himself  out  as  authorized  to  re- 
ceive baggage  and  does  actually  receive  baggage,  especially  where 
such  is  the  custom."  Thus,  when  it  is  customary  to  take  baggage 
to  a  railway  station  and  deposit  it  in  the  carrier's  depot,  the  car- 
rier may  become  liable  although  the  attention  of  the  agent  was  not 
specially  called  to  the  baggage.'^     In  England,  it  is  customary  for 

'Shepherd  v.  Lanfear,  5  La.  336,  25  ^"Gibson  v.  Culver,  17  Wend.   (N. 

Am.   Dec.   181.  Y.)    305,  31   Am.   Dec.  297;  Atlantic 

'  Richmond  &c.  R.  Co.  v.  White,  88  Nav.  Co.  v.  Johnson,  27  N.  Y.  Super. 

Ga.    805,    15    S.    E.    802;    Briant    v.  Ct.     475;     Farmers'     &     Mechanics' 

Louisville  &c.   R.    Co.,  9  Ky.   L.  47;  Bank   v.    Champlain   Transp.   Co.,   16 

Bachant   v.    Boston   &c.    R.    Co.,    187  Vt.  52,  42  Am.  Dec.  491. 

Mass.  392,  72  N.  E.  642,  105  Am.  St.  "  Chicago,    R.    I.    &    P.    R.    Co.    v. 

408;  Herf  &c.  Chemical  Co.  v.  Lack-  Clayton,   78   111.  616;   Jordan   v.   Fall 

awanna  Line.   100   Mo.   App.   164,   73  River  R.   Co.,   59   Mass.  69,  51   Am. 

S.  W.  346;  Burlington  &c.  R.  Co.  v.  Dec.  44;   Rogers  v.  Long  Island  &c. 

Arms,   15   Nebr.   69.    17  N.  W.   351;  R.   Co.,  38   How.   Pr.    (N.   Y.)    289; 

Gibson  v.  Culver,  17  Wend.   (N.  Y.)  Camden  &  Amboy  R.  Co.  v.  Belknap, 

305,  31  Am.  Dec.  297;  Russell  Mfg.  21   Wend.    (X.  Y.)    354;   Witbeck  v. 

Co.    V.    New   Haven    Steamboat    Co.,  Schuyler,   44   Barb.    (N.   Y.)    469.   31 

52  N.  Y.  657;  Pennsylvania  R.  Co.  v.  How.  Pr.    (N.  Y.)   97;   International 

Naive,   112  Tenn.  239,  79  S.  W.  124,  &c.  R.  Co.  v.  Folliard.  66  Tex.  603, 

64  L.  R.  A   443.  1  S.  W.  624.  59  Am.  Rep.  632. 

•Herf     &c.     Chemical     v.     Lacka-  "Green   v.    Milwaukee   &c.   R.   Co.. 

wanna  Line,  100  Mo.  App.  164,  73  S.  38  Iowa  100;   Wright  v.  Caldwell,  3 

W    346-  Roth  Clothing  Co.  v.  Maine  Mich.  51;  Freeman  v.  Newton,  3  E. 

Steamship  Co..  44  Misc.  (N.  Y.)  237,  D.  Smith  (N.  Y.)  246. 
88  N.  Y.  S.  987. 


§    1736  CONTRACTS.  IO80 

porters  to  receive  baggage  for  the  company  and  it  is  held  that  the 
HabiHty  of  the  carrier  attaches  as  soon  as  the  baggage  is  placed 
in  their  hands  for  the  purpose  of  transportation/^  but  not  where  it 
is  placed  in  their  hands  merely  for  custody  and  deposit."  The 
mere  deposit  of  baggage  on  the  platform  of  the  carrier  or  the 
vehicle  without  calling  the  attention  of  any  one  to  the  fact  is  not  a 
sufficient  delivery,  at  least,  in  the  absence  of  a  custom  or  an  ar- 
rangement to  that  effect.^'  Where  baggage  is  delivered  to  the 
carrier  and  accepted  by  him  liability  attaches  at  that  time  al- 
though the  baggage  is  not  checked  until  later.  'The  custom  of 
checking  can  have  no  effect  upon  the  character  of  the  delivery. 
That  custom  did  not  necessarily  qualify  the  delivery  and  accept- 
ance. The  check  is  in  the  nature  of  a  receipt,  and  may  be  given 
and  received  at  any  time  when  the  convenience  and  custom  of  the 
company  dictate.  It  is  not  the  contract,  but  evidence  of  the 
ownership,  delivery,  and  identity  of  the  baggage.  It  is  the  de- 
livery and  acceptance,  the  abandonment  of  all  care  of  the  baggage 
by  the  passenger,  and  the  assumption  of  it  by  the  agents  of  the 
carriers,  expressly  or  impliedly,  for  the  purpose  of  transportation, 
which  fix  the  liability  of  the  latter  as  such,  and  that  liability 
begins  when  the  baggage  is  delivered  to  the  agent  of  the  company 
for  carriage."^® 

§  1736.  Usages  allowing  passengers  to  carry  packages  on 
trains. — A  usage  which  would  bind  a  carrier  to  allow  passen- 
gers to  carry  packages  with  them  on  trains  must  be  so  general, 
certain,  uniform  and  notorious,  and  must  be  so  clearly  proved, 
that  it  can  be  concluded  that  the  officers  and  agents  of  such  com- 
pany possessed  knowledge  of  such  usage,  and  acquiesced  therein, 
in  such  manner  that  it  became  a  part  of  the  contract  of  carriage. 
A   habit   of    one    particular    passenger   to    carry    packages    of 

"Lovell  V.  London  &c.  R.  Co.,  45  R.  Co.,  127  Iowa  431,  103  N.  W.  343; 

L.  J.  Q.  B.  476.  Rider  v.  Wabash  &c.  R.  Co.,  14  Mo. 

"  Great  Western  R.  Co.  v.  Bunch,  App.  529 ;  Ball  v.  New  Jersey  Steam- 
57  L.  J.  Q.  B.  361,  13  App.  Cas.  31;  boat  Co.,  1  Daly  (N.  Y.)  491;  Greg- 
Welch  V.  London  &c.  R.  Co.,  34  ory  v.  Webb,  40  Tex.  Civ.  App.  360, 
Wkly.   Rep.    166.  89  S.  W.  1109. 

"Kerr  v.  Grand  Trunk  R.  Co.,  24        '*  Hickox  v.   Naugatuck  R.  Co.,  31 

U.  C  C.  P.  209 ;  Wright  v.  Caldwell,  Conn.  281,  83  Am.  Dec.  143. 
3  Mich.  51 ;  Lennon  v.  Illinois  Cent. 


I08l  CUSTOMS    AND    USAGES.  §    1 737 

merchandise  into  the  cars  and  with  him  on  his  journey  will  not 
constitute  the  usage  or  practice  which  can  be  relied  on  by  passen- 
gers as  a  general  regulation  of  the  railroad  company." 

§  1737.  Usage  as  to  furnishing  refrigerator  cars. — Custom 
and  usage  exert  an  important  influence  upon  the  question  of  the 
duty  of  a  railroad  carrier  to  provide  itself  with  suitable,  safe  and 
proper  cars  and  equipments  for  carrying  property  of  a  perishable 
nature  or  property  which  requires  for  its  preservation  peculiar 
means  and  methods.  Thus  it  is  probably  true  that  where  a  rail- 
road company  accepts  a  charter  to  operate  a  railroad  in  a  locality 
where  the  business  involves  the  transportation  of  goods  from 
points  and  markets  where  perishable  fruits  and  the  like  are  the 
ordinary  and  usual  commodities  of  commerce,  there  is  an  implied 
duty  to  provide  itself  with  suitable  and  proper  cars  and  equip- 
ments for  the  transportation  of  that  kind  of  property,  and  it  may 
be  that,  under  modern  conditions  and  methods,  most  railroad 
companies  in  this  country  would  be  required  to  furnish  refriger- 
ation according  to  the  established  custom.^^ 

§  1738.  Guaranty  of  freight  bills. — A  guarantor  of  the  pay- 
ment of  freight  bills,  which  may  become  due  to  a  railroad  com- 
pany from  a  certain  shipper,  is  not  relieved  from  any  part  of  his 
liability  because  the  company  failed  to  enforce  against  such  ship- 
per its  custom  of  collecting  its  bills  weekly." 

§  1739.  Effect  of  usage  on  transaction  of  business  at  stock- 
holders' meeting — Usage  as  by-law. — Where  the  custom  or 
usage  is  well  established,  special  business  may  be  transacted  at 
the  regular  meeting  without  special  notice  to  that  effect.-"  Thus, 
where  a  charter  provided  that  the  president  should  annually  give 

"Runvan  v.  Central  R.  Co.,  64  N.  *»  Philadelphia  &  R.  R.  Co  v  Snow- 

J    L    67    44   Atl.  985,   48   L.   R.   A.  don.  166  Pa.  St.  236.  30  Atl.  1129 

744  •  Bullock  V.  Delaware  &c.  R.  Co.,  ""  Sampson     v.      Bowdoinham     &c. 

60  >s'    J    L.  24,  36  Atl.  Ill,  11  L.  R.  Mill  Corp..  36  Maine  78;  Mutual  Fire 

\  417 •*  Ins.  Co.  V.  Farquhar.  86  Md.  668.  39 

"Johnson   v.    Toledo    R.    Co.,    133  Atl.  527;  Miller  v.  Eschbach,  43  Md. 

Mich    596    95    N.   W.   724,    103   Am.  1 ;    .Atlantic    Mut.    Fire    Ins.    Co.    v. 

St    464-   Popham  v.  Barnard,  11  Mo.  Sanders,   36    N.    PI.   252;    Warner   v. 

App  619-  New  York  P.  &  N.  R.  Co.  Mower,  11  Vt.  385;  State  v.  Conklm, 

V.    Cromwell,  98   Va.   227,   35    S.    E.  34  Wis.  21. 
444   49  L.  R.  A.  462,  81  Am.  St.  112. 


§    1739  CONTRACTS.  IO82 

notice  of  the  meeting  for  the  election  of  directors,  this  did  not 
prevent  the  meeting  then  held,  being  made,  by  custom,  an  occa- 
sion for  the  transaction  of  general  business.  This  had  been  the 
unbroken  custom  of  the  corporation  for  many  years.  The  court 
said:  "It  cannot  be  doubted  that  all  the  members  understood 
and  must  be  regarded  as  having  agreed  that  at  these  meetings, 
not  only  were  the  directors  to  be  elected,  but  that  any  other  mat- 
ters in  which  the  company  was  concerned  could  be  taken  up,  con- 
sidered, and  definitely  passed  upon.  A  custom  or  usage  so  long 
continued  and  so  invariably  pursued  has  the  force  of  a  by-law, 
and  not  being  repugnant  to  any  provision  of  the  charter,  is 
valid."^^ 

§  1740.    Corporate  lien  on  stock  by  usage  or  custom. — 

Under  some  of  the  authorities  the  right  of  a  corporation  to  a  lien 
on  stock  may  rest  upon  a  general  usage  or  course  of  business. 
Thus,  it  has  been  held  that  a  usage  of  a  corporation  not  to  permit 
stock  to  be  transferred  while  the  holder  is  indebted  to  it  will  bind 
the  stockholder,  who  becomes  its  debtor  with  knowledge  of  such 
usage,  and  neither  he  nor  his  voluntary  assignee  with  notice  can 
maintain  an  action  for  a  refusal  to  transfer  the  stock  without 
payment  of  the  debt."  But  this  principle  would  not,  of  course, 
apply  as  against  bona  fide  purchasers  of  the  stock  without  notice 
of  such  custom  or  usage." 

§  1741.  Creation  and  amendment  of  corporate  by-laws  by 
custom  or  usage. — Great  formality  is  not  required  in  the  en- 
actment of  a  by-law,  and  a  jury  may  find  a  by-law,  its  terms  and 
adoption  from  the  usage  of  the  corporation,  in  the  absence  of 
other  evidence  where  no  particular  form  of  adoption  is  pre- 
scribed." The  repeal  of  a  by-law  may  be  proved  by  showing  a 
course  of  conduct  inconsistent  therewith,  in  a  manner  similar  to 
that  by  which  its  adoption  is  shown  by  usage."     Where  the  mode 

=^  Mutual  Fire  Ins.  Co.  V.  Farquhar,  ^Fairfield     T.    Co.    v.     Thorp,    13 

86  Md.  668,  39  Atl.  527.  Conn.   173;  Langsdale  v.   Ronton,   12 

^Morgan    v.    Bank,   8   Serg.    &   R.  Ind.  467;  McCabe  v.  Fountain  Coun- 
(Pa  )   Ti    11  Am.  Dec.  575;  Brent  v.  ty,  46  Ind.  380;  Union  Bank  v.  Ridge- 
Bank  of  Washington,  10  Pet.  (U.  S.)  ly,   1   Har.   &  G.    (Md.)    324. 
596,  9  L    ed.  547.  ^Attorney-General  v.   Middleton,  2 

""Fitzhugh  V.  Bank,  3  T.  B.  Mon.  Ves.    Sr.    Zll .      See    also,    Henry    v. 

(Ky.)   126,  16  Am.  Dec.  90.  Jackson,  11  Vt.  431. 


1083  CUSTOMS   AND   USAGES.  §    1 742 

of  action  of  directors  is  prescribed  by  by-laws,  these  rules  may  be 
varied  by  usage,^"  at  least,  where  the  by-laws  are  made  by  the 
directors  themselves."  And,  generally,  a  person  dealing  with  the 
corporation  will  not  be  held  to  so  strict  a  knowledge  of  limitations 
and  restrictions  upon  the  general  authority  of  the  directors  con- 
tained in  the  by-laws  as  of  those  contained  in  public  statutes.^^ 

§  1742.  Powers  of  president  of  corporation  inferred  from 
usage,  custom  or  habit  of  acting. — Generally  speaking,  the 
president  of  a  corporation  possesses  such  powers  as  he  habitually 
exercises  in  dealing  with  the  public,  and  the  public  in  dealing  with 
the  corporation  have  the  right  to  assume  that  he  is  in  the  rightful 
possession  of,  and  properly  exercising,  such  powers.^"  The  au- 
thority of  the  president  in  any  or  all  matters  may  generally  be 
implied  from  long  usage. ^^  Where  the  officers  act  openly  and 
publicly  in  the  execution  of  contracts  on  behalf  of  the  corporation, 
with  the  full  knowledge  and  acquiescence  of  the  directors,  it  is  not 
necessary  to  show  that  authority  was  expressly  conferred  by  reso- 
lution or  otherwise.^^  If  a  president  has  been  held  out  as  a 
general  agent,  or  as  having  a  special  authority  which  he  does  not 
in  fact  possess,  then  persons  dealing  with  him  are  not  required  to 
know  the  limitations  upon  his  power.^^  Persons  who  deal  with  the 
president  in  the  usual  manner  and  within  the  scope  of  the  power 
which  he  has  been  accustomed  to  exercise,  not  ultra  vires  of  the 
corporation,  have  the  right  to  assume  that  he  has  been  actually 
invested  with  those  powers. ^^  Where  a  corporation  held  out  a 
person  as  its  officer,  it  was  held  bound  by  acts  apparently  within 

*  Pittsburgh  &c.   R.  Co.  v.  Clarke,  v.  Fitzgerald,  137  U.  S.  98,  34  L.  ed. 

29  Pa.  St.   146.  608,  11  Sup.  Ct.  36;  First  Nat.  Bank 

"  In   re  Royal  British  Bank,  26  L.  v.  Kimberlands,  16  W.  Va.  555. 

J.    Ch.    545 ;    Samuel   v.    HoUadav,    1  *°  Estes   v.    German    Nat.    Bank,  62 

Woolw.  (U.  S.)  400,  McCahon  214,  1  Ark.   7,  34   S.   W.  85;   Missouri   &c. 

Kans.     [Dass.    Ed.]    612,    Fed    Cas.  R.  Co.  v.  Sidell,  67  Fed.  464,  14  C.  C. 

12288.  A.  477. 

^  Bissell  V.   Michigan   Southern   R.  "  Sherman    Center    Town     Co.    v. 

Co.,  22  N.  Y.  258.  Swigart,  43   Kans.   292.   23    Pac.   569. 

"  Ceeder  v.  Loud  &c.  Lumber  Co.,  19   Am.    St.    137;    Chambers   v.    Lan- 

86  Mich.  541,  49  N.  W.  575,  24  Am.  caster.  160  N.  Y.  342,  54  N.  E.  707. 

St.    134;   Olcott  V.   Tioga   R.   Co.,  40  "==  Fitzhugh    v.    Franco-Texas    Land 

Barb.    (N.    Y.)    179.    affd.    27    N.    Y.  Co..  81  Tex.  306.  16  S.  \V.  1078. 

.546.  84  Am.  Dec.  298 :  Citv  Nat.  Bank  "Berlin    v.    Cusachs,    114    La.   744, 

V.    Parke    Nat.    Bank.    32    Hun    (N.  38  So.  539. 
Y.)    105;    Fitzgerald   &c.    Const.    Co. 


§    1743.  CONTRACTS.  IO84 

the  scope  of  his  authority,  notwithstanding  limitations  on  his 
power  unknown  to  the  party  dealing  with  him.^*     Authority  to 
contract  for  the  corporation  on  the  part  of  the  president  may 
arise  from  his  having  assumed  and  exercised  the  power  in  the 
past,  and  being  invested  with  such  authority,  he  may  enter  into 
such  contracts  as  pertain  to  the  regular  course  of  the  corporate 
business  under  his  direction.^^     The  power  of  the  president  of  a 
manufacturing  corporation  to  borrow  money  and  give  the  notes 
of  the  corporation  therefor  may  be  inferred  from  the  fact  that  he 
had  long  been  accustomed  without  interference  to  conduct  the 
entire  business  of  the  corporation.^^     So,  where  a  president,  with 
the  concurrence  of  the  board  of  directors,  as  shown  by  a  long  con- 
tinued custom,  has  assimied  the  powers  of  a  general  manager  of 
the  affairs  of  the  corporation,  and  in  such  capacity  has  transacted 
its  affairs,  and  executed  contracts  or  notes  in  the  conduct  of  the 
business,  his  acts  in  such  cases  have  been  held  binding  upon  the 
corporation."     In  one  of  the  cases  a  bank  was  held  liable  for 
overdrafts  made  by  the  president  and  secretary,  where  they  had 
for  a  long  time  signed  checks  which  had  been  paid  by  the  bank.^* 
But  where  for  five  years  the  president  contributed  from  the  funds 
of  his  corporation  to  the  payment  of  taxes  on  the  real  estate  pf  a 
third  person,  it  was  held  to  be  no  evidence  of  an  agreement  on  the 
part  of  the  corporation  to  continue  such  payment.^^ 

§  1743.    Duties  of  treasurer  as  affected  by  custom  or  usage. 

— The  corporation  may  enlarge  the  authority  of  the  treasurer 
and  usage  may  so  extend  the  scope  of  his  authority  as  to  carry  it 
beyond  that  which  is  inherent  in  the  office  itself.  By  continued 
usage  the  power  of  the  treasurer  may  be  enlarged  and  he  may 
bind  the  corporation  by  acts  performed  within  the  scope  of  the 

"Johnson  v.  Waxelbaum  Co.,  1  Ga.  vernail   (N.  Y.)   155,  affd.  125  N.  Y. 

App.  511,  58  S.  E.  56;  Cake  v.  Potts-  695.  26  N.   E.  751.  ^^       .^     ,     _.  ^., 

ville   Bank,    116   Pa.    St.   264,  9  Atl.  "  Libby  v.  Union  Nat.  Bank,  99  111. 

302,  2  Am.  St.  600.  622;  Fitzgerald  &  Mallory  Construc- 

*Meating  v.  Tigerton  Lumber  Co.,  tion  Co.  v.  Fitzgerald.  1^/    U.  b.  y», 

113  Wis.  379,  89  N.  W.   152.  34  L.  ed.  608,  11  Sup.  Ct.  36. 

« Martin  v.  Niagara  Falls  Paper  ^Mahoney  Mining  Co.  v.  Anglo- 
Co.,  44  Hun  (N.  Y.)  130,  8  N.  Y.  California  Bank,  104  U.  S.  192,  Zd 
St.  265,  affd.   122  N.  Y.   165,  25  N.  L.   ed.  707. 

E.  303;     Marine  Bank  v.  Butler  Col-  =»Freifeld  v.   Groh    116  App.  Div. 

liery  Co.,   52   Hun    (N.   Y.)    612,   23  (N.  Y.)  409,  101  N.  Y.  S.  863. 
N.  Y.  St.  318,  5  N.  Y.  S.  291,  1  Sil- 


1085  CUSTOMS   AND   USAGES.  §    1 744 

agency  created  or  sanctioned  by  usage.*"  It  has  been  held  that 
drafts  accepted  by  the  treasurer  are  presumed  to  be  properly  ac- 
cepted.*^ The  treasurer  of  a  corporation  has  no  power  as  such 
to  confess  judgment  for  it  ;*•  nor,  as  a  rule,  can  he  conduct  litiga- 
tion for  the  corporation.  It  is  held,  however,  that  he  has  author- 
ity to  compromise  a  disputed  claim  which  he  is  authorized  to 
collect.*''  While  the  general  rule  is  that  the  treasurer,  by  virtue 
of  his  office,  has  no  authority  to  conduct  litigation  for  the  corpo- 
ration, yet  such  authority  may  be  implied  in  particular  instances ; 
thus,  if  a  promissory  note  is  placed  in  his  hands  for  collection, 
he  may  cause  suit  to  be  brought  upon  it.**  Unless  the  authority 
to  execute  accommodation  paper  is  specially  conferred  upon  the 
treasurer  or  is  vested  in  him  by  usage,  he  cannot  bind  the 
corporation  by  the  execution  of  such  paper.*** 

§  1744.  Effect  of  usage  or  custom  on  right  of  corporate 
officer  to  compensation. — The  right  of  an  officer  to  claim  or 
recover  compensation  may  depend  largely  on  the  usage  and  cus- 
tom of  the  corporation  in  this  respect  and  proof  of  such  custom  or 
usage  is  proper  and  admissible.  Whether  or  not  there  was  such 
a  usage  in  any  given  case  is  a  matter  of  fact  and  not  a  conclusion 
either  of  the  law  or  of  a  witness.  It  may  be  presumed  that  if  there 
had  been  no  salary  paid,  and  no  contract  in  reference  thereto,  this 
would  determine,  largely,  the  expectations  of  officers  rendering 
services.  If  an  officer  knew  of  the  existence  of  a  custom  or 
usage  by  which  the  corporation  gave  no  compensation  for  the 
particular  services,  the  inference  would  naturally  be  that  he  ac- 
cepted the  office  and  performed  its  duties  without  expectation  of 
being  compensated  for  his  services.  And  if  any  usage  in  fact  ex- 
isted, either  as  to  the  payment  of  compensation  or  that  no  com- 
pensation was  paid  for  the  particular  services,  the  position 
of    the    officer    as    a   member   and    officer   of    the    corporation 

"Page   V.    Fall   River   &c.    R.   Co.,  *^  Stevens  v.   Carp  River  Iron  Co., 

31  Fed.  257;    Lester  v.  Webb.  1  Allen  57  Mich.  427,  24  N.  W.  160. 

(Mass.)    34;    Merchants'    State   Bank  "  Gafford    v.    American    Mortgage 

V.  State  Nat.  Bank,  10  Wall.  (U.  S.)  &c.  Co..  77  Iowa  736,  42  N.  W.  550. 

604,  19  L.  ed.  1008.  **  North     Brookfield     &c.     Bank     v. 

"Credit  Co.  v.  Howe  Machine  Co.,  Flanders.  161  Mass.  335.  37  N.  E.  307. 

54  Conn.  357,  8  Atl.  472,  1  Am.  St.  "  Usher  v.  Raymond  Skate  Co.,  163 

123  Mass.   1,  39  N.   E.  416. 


§    1745  CONTRACTS.  I086 

would  be  sufficient,  prima  facie,  to  charge  him  with  knowledge 
of  the  existence  of  such  usage,  and  might  therefore  be  binding 
on  him  on  the  one  hand,  or  on  the  corporation  on  the  other.** 
In  an  action  by  a  secretary  to  recover  the  value  of  services  upon 
an  implied  promise  it  was  held  competent  for  the  corporation  to 
show  that  by  the  usage  and  custom  of  the  corporation  no  com- 
pensation was  chargeable  for  such  services ;  and  the  secretary  was 
presumed  to  have  knowledge  of  such  custom,  and  the  inference 
was  indulged  that  he  accepted  the  office  and  performed  its  duties 
without  accepting  compensation.*^  An  officer's  salary,  though 
fixed  by  a  by-law,  may  be  changed  by  usage  and  the  corporation 
bound  by  acquiescence.^^ 

§  1745.  Usages  as  to  ownership  of  dividends. — A  dividend 
belongs  to  the  owner  of  stock  at  the  time  it  is  declared,  even 
when  it  is  made  payable  at  a  future  date,  and  this  rule  cannot  be 
displaced  or  overcome  by  evidence  showing  a  usage  of  the  stock 
exchange  to  the  contrary.*^ 

§  1746.    Insurance  customs  and  usages  generally. — In  the 

construction  of  an  insurance  policy  the  language  must  be  con- 
strued according  to  its  natural  and  popular  sense  unless  it  has  a 
different  meaning  under  some  well-known  trade  usage.^**  The  in- 
surance company  is  bound  to  know  the  customs  of  a  place  where 
it  transacts  business  and  it  will  be  presumed  to  have  made  its  con- 
tracts in  reference  to  such  customs.^^    But  the  local  customs  or 

**Fraylor   v.    Sonora    Min.    Co.,   17  Maine  326;  Coit  v.   Commercial   Ins. 

Cal.    594;    McCarthy    v.    Mount   Te-  Co.,   7   Johns.    (N.   Y.)    385,   5   Am. 

carte  Land  &c.  Co.,  Ill  Cal.  328,  43  Dec.   282;    Rankin   v.    American    Ins. 

Pac.  956.  Co.,  1  N.  Y.  Super.  Ct.  682;  Burger 

"  Fraylor   v.    Sonora   Min.    Co.,    17  v.  Farmers'  Mut.  Ins.  Co.,  71  Pa.  St. 

Cal.  594;  Barstow  v.  City  R.  Co.,  42  422;  Hearn  v.  New  England  Ins.  Co., 

Cal.  465.  3   Cliff.    (U.   S.)    318,   Fed.   Cas.   No. 

"Bowler   v.    American    Box    Strap  6301;    Hancox    v.    Fishing    Ins.    Co., 

Co.,  22  Misc.  (N.  Y.)  335,  49  N.  Y.  S.  3  Sumn.   (U.  S.)    132,  Fed.  Cas.  No. 

153.  6013. 

"Hopper  V.   Sage,   112   N.   Y.  530,        "Joyce  on  Insurance,  §  50;  May  on 

20  N.  E.  350,  8  Am.  St.  771;  Board-  Insurance     (4th    ed.),    §§   23b,    582; 

man  v.  Lake  Shore  &c.  R.  Co.,  84  N.  Ruger   v.    Fireman's    Fund    Ins.    Co., 

Y.   157;   Jermain   v.   Lake   Shore  &c.  90  Fed.  310;  Lauchheimer  v.  Jacobs, 

R.   Co.,   91    N.    Y.   483;    In   re   Ker-  126  Ga.  261,  55  S.  E.  55;  Hardeman 

nochan.  104  N.  Y.  618,  11  N.  E.  149.  v.  English.  79  Ga.  387,   5   S.   E.   70; 

*"Red    Wing    Mills    v.    Mercantile  Todd  v.  German  American   Ins.  Co., 

Mut.   Ins.   Co..   19  Fed   115;    Cobb  v.  2  Ga.  App.  789,  59  S.  E.  94;  Yost  v. 

Lime    Rock    Fire    &c.    Ins.    Co..    58  Anchor  Fire  Ins.  Co.,  38  Pa.  Super. 


1087  CUSTOMS    AND    USAGES.  §    1 747 

usages  in  a  particular  locality  cannot  affect  contracts  entered  into 
in  other  localities."  The  insurance  company  is  presumed  to  know 
the  usages  of  trade  which  have  given  a  limited  or  peculiar  mean- 
ing to  terms  used  in  the  policy."  But  this  peculiar  meaning  cannot 
be  imposed  on  the  company  in  the  face  of  a  judicial  construc- 
tion of  the  term  giving  it  a  different  meaning.'^*  Usage  or  cus- 
tom may  be  invoked  where  the  policy  is  ambiguous,"  as  where  it 
is  silent  as  to  the  time  it  is  to  become  operative,"^"  but  not  where 
the  terms  of  policy  are  clear  and  explicit."  A  clear  require- 
ment of  the  policy  that  the  insured  shall  keep  a  set  of  books 
showing  sales  and  purchases  is  not  to  be  negatived  by  a  local 
custom  of  merchants  not  to  keep  such  books  but  to  keep  such 
records  upon  slips  of  paper.^^ 

§  1747.  Usage  as  to  authority  of  insurance  agents. — A 
well-defined  local  usage  whereby  marine  insurance  agents  can 
make  binding  contracts  to  take  effect  on  the  day  of  application, 
without  consulting  their  superiors,  is  presumably  known  to  a  for- 
eign company  engaged  for  years  in  insurance  business  at  the  place 
where  the  usage  obtains  and  is  sufficient  to  prevail  over  the  private 
instructions  of  such  agents  when  the  insured  is  in  ignorance 
thereof,  and  is  without  notice  of  fact  sufificient  to  put  him  upon 
inquiry.^'*    An  offer  to  show  a  general  custom  by  which  general 

Ct.   594;   Lebanon   ^lut.    Ins.   Co.   v.  "  Runyan  v.  Runyan  (Ark.),  142  S. 

Hoover,  113   Pa.  St.  591.  8  Atl.  163,  W.  519. 

57  Am.  Rep.  511.  "*  Henry  v.   Green   Ins.    Co.    (Tex. 

■>=  Mason  v.  Franklin  Fire  Ins.  Co.,  Civ.  App.),  103  S.  W.  836. 
12  Gill  &  J.  (IVld.)  468;  Parkhurst  "Greenwich  Ins.  Co.  v.  Waterman, 
V.  Gloucester  Mut.  Fishing  Co.,  100  54  Fed.  839.  4  C.  C.  A.  600,  per  Taft, 
Mass.  301,  97  Am.  Dec.  100,  1  Am.  J.:  "If  such  a  definite  usage  m  re- 
Rep.  105;  Natchez  Ins.  Co.  v.  Stan-  spect  to  local  agents  of  foreign  m- 
ton,  2.  Sm.  &  M.  (Miss.)  340.  41  Am.  surance  companies  had  been  proven, 
Dec.  592;  Child  v.  Sun  Mut.  Ins.  Co.,  the  Greenwich  Insurance  Company 
5  N    Y.  Super  Ct.  26.  would  have  been  charged  with  notice 

'"'Wall    v.     Howard    Ins.    Co.,    14  of   it,   and  by   establishing   Ward    as 

Barb.   (N.  Y.)   383.  its    local    agent   the    company    would 

"  Bargett  v.   Orient  Mut.  Ins.  Co.,  have    given    him    apparent    authority 

16  N.  Y.  Super.  Ct.  385.  to   bind    it   in   accordance   with   that 

■"New     York    Belting    &c.    Co.    v.  usage,    if    reasonable.    Goodenow    v. 

Washington   Fire  Ins.   Co.,  23  N.  Y.  Tvler,  7  Mass.  31 ;  Fisher  v.  Sargent, 

Super     Ct.    428;    Fabbri    v.    Phoenix  10  Cush.  250;  Graves  v.  Legg.  2  Hurl. 

Ins.    Co..  55   N.   Y.    129;    Johnson  v.  &  N.  210;  Mechem,  Ag.  sec.  281.  The 

Northwestern  Ins.  Co.,  39  Wis.  87.  evidence     discloses    that    the     Green- 

"*  Cleveland  Oil  &c.  Co.  v.  Norwich  wich    Insurance    Company    had    been 

Fire  Ins.   Co.,  34  (3re.   228,   55    Pac.  doing  a  marine  insurance  business  in 

435.  Detroit  for  ten  years  at  least,  and  it 


§    1748  CONTRACTS.  IO88 

agents  of  life  insurance  companies  exercised  an  authority  to  grant 
short  credits  on  first  premiums,  without  offering  to  show  that  the 
custom  prevailed  in  the  issuance  of  a  policy  which  provided  that 
it  should  not  go  into  effect  until  the  premium  had  actually  been 
paid,  and  expressly  stated  that  the  agent  could  not  waive  the  stip- 
ulation, is  properly  rejected  in  the  case  of  such  a  policy.^"  Where 
it  is  doubtful  from  the  evidence  whether  an  agent  of  an  insurance 
company  and  the  plaintiff  had  entered  into  a  parol  agreement  of 
insurance  or  a  parol  agreement  for  the  issue  of  a  written  policy, 
evidence  has  been  held  admissible  of  the  custom  of  other  insur- 
ance companies  as  to  matters  of  this  character.^^  The  customer 
of  a  warehouseman  is  liable  for  his  proportionate  share  in  the 
expenses  incurred  by  the  warehouseman  in  prosecuting  suits  for 
the  recovery  of  insurance  money  for  goods  destroyed  in  the  ware- 
house, where  the  customer  is  chargeable  with  knowledge  of  a 
general  custom  of  warehousemen  to  keep  a  customer's  goods  in- 
sured in  open  policies,  in  favor  of  the  warehouseman,  on  goods 
held  in  trust,  and  to  charge  each  customer  for  such  insurance  at 
a  certain  monthly  rate  on  his  goods  covered  by  such  policies.^^ 

§  1748.    Custom  to  notify  insured  of  maturity  of  premium. 

< — There  is  a  lack  of  harmony  in  the  cases  on  the  question  of 
whether  a  habit  of  an  insurance  company  to  notify  policy-holders 

could    be    fairly    presumed    that    the  °"  Smith    v.     Provident    Sav.    Life 

company  was  familiar  with  any  local  Assur.  Soc,  65  Fed.  765,  13  C.  C.  A. 

usage    obtaining   there   in    the   insur-  284.     And    see   also,    Greenwich   Ins. 

ance  business.     If,  as  testified  by  sev-  Co.  v.  Waterman,  54  Fed.  839,  4  C. 

eral  witnesses,  millions  of  dollars  of  C.   A.  600;    Sternaman  v.   Metropoli- 

insurance  were  placed  on  the  day  of  tan  Life  Ins.   Co.,  49  App.  Div.    (N. 

sailing,  it  would  be  extraordinary  if  Y.)   473,  63  N.  Y.  S.  674.     Under  a 

vessel    owners   would   consent   to   an  charter  fixing  the  rate  of  demurrage 

arrangement   by  which  no   insurance  to  be  paid  by  the  charterer  at  "cus- 

should    be    binding    on    their    vessels  tomary"  dollars  per  day,  the  rate  re- 

until  time  enough  had  elapsed  after  coverable  for  delay  in  discharging  in 

the  day  of  sailing  for  their  applica-  New    York  is   not    governed    by  the 

tions  to  be  forwarded  to  the  general  rules  of  the  maritime  association  of 

agents  of  the  insurance  companies  at  that    port    in    the    absence    of    proof 

distant  points,  and  by  them  approved,  that    the    rate    thereby    fixed    is    the 

with  the  arbitrary  right  thus  secured  customary   rate.    Randolph   v.  Wiley, 

to  the  insurance  companies,  in  case  of  118  Fed.  IT . 

a   loss    meantime,   to    reject   the   ap-  "^  Aetna   Ins.   Co.   v.   Northwestern 

plication.      A    usage   by    which    local  Iron   Co.,  21  Wis.  458. 

agents    could    make   binding   prelimi-  "^Buyck  v.  Schwing,   100  Ala.  355, 

nary  contracts  for  the  company  would  14  So.  48. 
seem  to  us,  therefore,  to  be  reason- 
able." 


1089  CUSTOMS   AND   USAGES.  §    1 749 

of  the  maturity  of  premiums  becomes  a  part  of  the  contract. 
Some  of  the  slates  have  laws  which  require  this  to  be  clone.  It 
is  believed  that  the  weight  of  authority  makes  such  a  usage  a  part 
of  the  contract,  even  in  the  absence  of  such  a  statute,  and  this 
more  particularly  where  the  failure  to  pay  the  premium  at  matur- 
ity was  solely  due  to  the  want  of  the  customary  notice  and  the 
premium  was  ready  and  tendered  as  soon  as  notice  was  given.*'' 
The  rule  is  applied  to  the  somewhat  common  custom  of  sending 
collectors  to  the  home  of  the  assured  to  collect  the  premiums  on 
his  policy.**  But  the  rule  requires  diligence  on  the  part  of  the 
insured  to  find  out  the  reason  for  failure  to  send  the  notice.*' 
On  the  other  hand,  there  are  numerous  cases  which  hold  that  the 
mere  fact  that  an  insurance  company  is  in  the  habit  of  sending  its 
premium  receipts  to  an  agent  for  collection  does  not  make  this  a 
custom  binding  on  the  company  so  as  to  make  it  a  part  of  the  con- 
tract of  insurance.** 

§  1749.  Notice  of  cancelation  of  policy. — A  local  usage 
that  notice  of  cancelation  of  a  policy  shall  be  given  to  the  broker 
by  whom  it  was  obtained  will  not  prevail  where  the  policy  stipu- 
lates that  notice  shall  be  given  directly  to  the  insured.  A  usage 
cannot  be  availed  of  to  contradict  the  express  or  implied  terms  of 
SO  plain  a  contract  provision.*^ 

"Equitable     Accident    Ins.    Co.    v.  **  Sterling  Life  Ins.   Co.  v.   Rapps, 

Van  Etten,  40  111.  App.  232;  Supreme  130  111.  App.  121;  Goedecker  v.  Met- 

Council  Catholic  Knights  v.  Winter's  ropolitan  Life  Ins.  Co.,  30  Mo.  App. 

Admr.,  108  Ky.   141,  21   Ky.  L.   1583,  601;    Carey    v.    John    Hancock    Mut. 

55  S.  W.  908;  Gunther  v.  New  Orleans  Life  Ins.  Co.,  114  App.  Div.  (N.  Y.) 

&c.  Mut.  Aid  Assn.,  40  La.  Am.  776,  769,  100  N.  Y.  S.  289. 

5    So.   65,   2   L.    R.  A.    llBn,  8   Am.  "'Grant  v.  Alabama  Gold  Life  Ins. 

St.  554;  Elgutter  v.  ^Mutual  Reserve  Co.,    76    Ga.    575     (delay    of    eight 

Fund  Life   Assn.,  52  La.   Ann.    1733,  months  too  long). 

28  So.  289;  Attorney-General  v.  Con-  '"Webb  v.  Mutual  Fire  Ins.  Co.,  63 

tinental    Ins.    Co.,    33    Hun    (N.    Y.)  Md.  213 ;  Mandego  v.  Centennial    Mut. 

138;  Union   Central  Life  Ins.   Co.  v.  Life   Assn.,  64   Iowa    134.    17   N.    W. 

Poettker,   33   Ohio    St.   459,    31    Am.  656,  19  N.  W.  877;  Mutual  Fire  Ins. 

Rep.  555;  Helme  V.  Philadelphia  Life  Co.    v.    ]\Iiller    Lodge,    58    Md.    463; 

Ins.    Co..    61    Pa.    St.    107,    100    Am.  Riley  v.  Pennsylvania  I^Iut.  Life  Ins. 

Dec.     621;     Kavanagh     v.     Security  Co.,    189    Pa.    St.    307,   42   Atl.    191; 

Trust    Co.,    117   Tenn.   33,   96   S.    W.  Girard  Life  Ins.  Co.  v.  Mutual  Life 

499,  7  L.  R.  A.   (N.  S.)  253n ;  Hart-  Ins.  Co..  97  Pa.  St.  15;  Thompson  v. 

ford  Life  Ins.  Co.  v.  Hvde,  101  Tenn.  Knickerbocker  Life  Ins.   Co.,  104  U. 

396,  48  S.  W.  968;   New  York  Life  S.  252,  26  L.  ed.  765. 

Ins.  Co.  V.  Eggleston,  96  U.  S.  572.  24  "  Mutual   Assur.    Soc.   v.    Scottish- 

L.  ed.  841;  Knoebel  v.  North  Ameri-  Union    &c.    Ins.    Co.,    84   Va.    116,    4 

can  Ace.  Co.,   135  Wis.  424,   115   N.  S.  E.  178,  10  Am.  St.  819. 
W.  1094,  20  L.  R.  A.  (N.  S.)  1037n. 

69 — Contracts,  Vol.  2 


§    1750  CONTRACTS.  IO9O 

§  1750.  Customs  as  to  re-insurance. — The  re-insurance 
contract  binds  the  re-insurer  to  pay  the  re-insured  the  whole  loss 
sustained  in  respect  to  the  subject  insured  to  the  extent  for  which 
the  company  is  re-insurer.  The  contract  is  one  of  indemnity  and 
is  solely  for  the  benefit  of  the  insurer  and  not  of  the  policy- 
holders who  have  no  interest  therein. "^^  The  practice  is  common 
and  the  policy  of  re-insurance  is  not  invalid  in  the  absence  of 
usage  or  stipulations  to  the  contrary.®"  Among  the  underwriters 
of  the  city  of  New  Orleans  there  is  a  custom  with  respect  to  re- 
insurance by  which  the  risk  is  divided  and  the  re-insurer  does  not 
take  the  whole  of  it,  and  when  the  application  is  silent  this  is 
understood  in  that  city."  In  New  York  re-insurance  is  held  to 
be  a  valid  contract  both  as  to  fire  and  marine  policies.  The  risk 
assumed  by  the  first  insurer  gives  him  such  an  insurable  interest 
as  to  make  the  re-insurance  a  valid  contract.^^  A  policy  of  re- 
insurance executed  in  one  city  and  sent  to  another,  and  taking 
effect  by  the  acceptance  of  the  risks  under  it,  by  the  agent  of  the 
insurer  in  that  state,  is  not  affected  by  a  local  usage  of  the  place 
where  the  policy  was  executed."  Here  as  elsewhere  a  custom  is 
inadmissible  to  vary  or  contradict  the  specific  provisions  of  an 
express  contract.  Thus  where  under  a  written  contract  between 
two  insurance  companies  the  method  of  ceding  to  defendant 
company  a  surplus  for  re-insurance  was  clearly  defined,  it  was 
held  that  evidence  of  the  custom  between  insurance  companies 
as  to  the  manner  of  ceding  such  insurance  was  inadmissible  to 
contradict  the  express  terms  of  the  written  contract.''^ 

§  1751.    Custom  of  paying  losses  not  covered  by  policy. — 

The  law  does  not  allow  the  payment  by  mutual  insurance  com- 

^  Eagle   Ins.   Co.   v.   Lafayette  Ins.  ™  Egan  v.  Fireman's  Ins.  Co.,  27  La. 

Co.,  9  Ind.  443;  Barnes  v.  Hekla  Fire  Ann.  368;  Louisiana  Mut.  Ins.  Co.  v. 

Ins.  Co.,  56  Minn.  38,  57  N.  W.  314,  New  Orleans   Ins.   Co.,    13   La.   Ann. 

45  Am.  St.  438.  246. 

"*  Manufacturers'  Fire  &c.  Ins.  Co.  '' Herckenrath  v.  American  Mutual 

V.  Western  Assur.  Co.,  145  Mass.  419,  Ins.   Co.,   3   Barb.    Ch.    (N.   Y.)    63; 

14    N.    E.    632;    Merry   v.    Prince,   2  Delaware    Ins.    Co.    v.    Quaker    City 

Mass.  176;  Herckenrath  v.  American  Ins.  Co.,  3  Grant  Cas.  (Pa.)  71. 

Mut.   Ins.   Co.,  3  Barb.   Ch.    (N.  Y.)  "Insurance  Co.  of  North  America 

63;    Delaware    Ins.    Co.     v.     Quaker  v.   Hibernia  Ins.   Co.,   140  U.   S.  565, 

City  Ins.  Co..  3  Grant  Cas.  (Pa.)  71;  35  L.  ed.  517,  11  Sup.  Ct.  909. 

Insurance   Co.  of   North   America  v.  "  Northwestern    Fire    Ins.    Co.    v. 

Hibernia  Ins.  Co.,   140  U.  S.  565,  35  Connecticut  Fire  Ins.  Co.,  105  Minn. 

L.  ed.  517,  11  Sup.  Ct.  909.  483,  117  N.  W.  825. 


IO9I  CUSTOMS   AND   USAGES.  §    1 752 

panics  of  claims  not  covered  by  their  policies.  Thus,  recovery  for 
loss  of  a  barn  by  being  knocked  down  by  lightning  but  not  burned 
cannot  be  had  under  a  policy  in  a  mutual  company  insuring 
against  loss  by  fire  only,  and  this  although  the  custom  has  been 
to  pay  such  losses  and  to  levy  assessments  therefor  on  the  policy- 
holders. Such  payment  would  amount  to  a  misappropriation 
of  the  funds  by  the  company.'^* 

§  1752.  Origin  of  banking  customs. — It  may  be  said  gen- 
erally that  a  very  large  portion  of  the  banking  law  of  the  country 
has  been  derived  from  usages  in  the  conduct  of  the  banking  busi- 
ness which  have  from  time  to  time  incorporated  themselves  with, 
and  have  finally  become  settled  rules  of,  the  common  law."  "The 
usage  of  merchants  has  established  the  great  body  of  the  law  in 
reference  to  bills  of  exchange.  It  gave  grace  to  such  bills,  and 
thus  changed  the  contract.  It  has  settled  the  particular  time  of 
demand  by  the  notary.  The  rule  of  law  that  requires  a  protest 
of  a  foreign  bill  is  wholly  founded  upon  the  customs  of  mer- 
chants."^^ Thus  as  to  the  custom  governing  checks  on  bankers. 
The  general  rule  in  the  relation  of  debtor  and  creditor  is  that  the 
creditor  cannot  divide  up  his  demand  against  the  debtor  and  re- 
quire the  latter  to  pay  it  in  parcels.  "But  everybody  knows,  and 
the  courts  no  less  than  commercial  men,  that  an  exception  to  this 
rule  exists  as  to  deposits  in  bank.  It  has  been  so  long  and  so  uni- 
versal a  custom  with  bankers  to  receive  deposits  from  time  to 
time,  as  the  convenience  of  the  depositor  may  require,  and  to 
allow  him  to  draw  out  his  funds  on  checks,  in  parcels,  in  such 
sums  as  he  sees  fit,  that  the  mere  fact  of  opening  a  deposit  ac- 
count with  a  banker  implies  a  contract  on  the  part  of  the  banker 
to  allow  the  depositor  to  withdraw  his  deposits  in  parcels. 
*  *  *  It  is  only  by  force  of  such  a  custom  that  such  a  con- 
tract, which  is  against  the  general  rule  of  law,  can  be  implied."" 

''^  Sleet  V.  Farmers'  Mut.  Fire  Ins.  Harper  v.  Calhoun,  7  How.    (Miss.) 

Co    (Ky.),  113  S.  W.  515,  19  L.  R.  A.  203;    Commercial   "Bank    v.    Varnum. 

(N    S)  421.    See  also,  Smith  v.  Mo-  49   N.   Y.   269;   Allen   v.    Merchants' 

bile  Nav.  &c    Ins.   Co.,  30  Ala.   167.  Bank,  22  Wend.  (N.  Y.)  215,  34  Am. 

''Munn  V.   Burch,  25  111.  35;   Bell  Dec.  289. 

V    Hagerstown   Bank,  7   Gill    (Md.)  ™  Commercial  Bank  v.  Varnum,  49 

216;    Citizens'    Bank   v.    Grafflin.    31  N.  Y.  269. 

Md.    507,    1    Am.    Rep.    66;    Central  "  Munn  v.  Burch,  25  III.  35. 
Bank  v.  Davis,  19  Pick.  (Mass.)  2>7i; 


§    1753  CONTRACTS.  IO92 

§  1753.  Essentials  of  good  bank  usage. — Banking  cus- 
toms, however,  must  be  uniform,  certain  and  sufficiently  notori- 
ous to  warrant  the  legal  presumption  that  the  parties  made  their 
contract  with  regard  to  them.'®  And  the  persons  who  transact 
business  at  a  bank  must  be  presumed  to  agree  to  conform  to  its 
mode  of  doing  business  so  far  as  they  are  known  to  them.  They 
incorporate  the  known  bank  usages  into,  and  make  them  a  part 
of,  their  contracts  and  are  bound  not  by  the  force  of  the 
usage  but  by  virtue  of  their  own  contract.''^  It  is,  also,  essential 
to  a  good  bank  usage  that  it  should  apply  to  a  place  rather  than 
to  a  particular  bank.  It  must  be  a  rule  of  all  the  banks  of  the 
place,  or  it  cannot  consistently  be  called  a  usage.  If  every  bank 
could  establish  its  own  usage,  the  confusion  and  uncertainty 
would  greatly  exceed  any  local  convenience  resulting  from  the 
arrangement.^"  Thus,  evidence  of  the  usage  of  two  banks  in 
New  York  City  and  of  single  instances  in  accordance  therewith 
and  the  practice  of  other  banks  was  held  insufficient  to  show  a 
local  custom  or  usage.^^  But  the  uniform  custom  of  the  single 
bank  may  suffice  to  show  a  local  custom  where  that  bank  was  the 
only  bank  in  the  place.^^  And,  generally,  it  would  seem  that  a 
usage  even  if  confined  to  only  one  of  the  banks  of  a  place  might 
be  effectual  to  bind  the  bank  or  one  who  dealt  with  it  after  knowl- 
edge of  such  usage.®^  The  custom  may  not  be  invoked  to  con- 
tradict or  vary  the  terms  of  an  express  contract  clear  as  to  its 
meaning.®*  Accordingly,  a  custom  or  usage  may  not  be  shown 
which  would  fix  a  different  maturity  from  that  plainly  appearing 
on  the  face  of  a  draft. ^^  The  existence  of  a  general  usage  among 
banks  must  be  established  as  a  fact  and  not  as  a  matter  of  judg- 
ment or  opinion  of  witnesses  deduced  from  the  manner  of  dealing 

"  Citizens'  Bank  v.  Grafflin,  31  Md.  bank  for  deposit,  was  taken  at  a  dis- 

507,  1  Am.  Rep.  66.  count,  and  was  subject  to  check  im- 

"  Central   Bank  v.  Davis,   19  Pick,  mediately    after    entry    in    the    de- 

(Mass.)  Z72).  positor's  pass   book,  it   could  not  be 

*°  Adams  V.  Otterback,  15  How.  (U.  shown    that    it    was    the    custom    of 

S.)  539,  14  L.  ed.  805.  bankers  to  credit  such  items  as  cash. 

Stringfield    v.     Vivian,    63    Mich,  though   in    fact   they   are  taken   only 

681,  30  X.  W.  346.  for  collection,  as  this  would  contra- 

"  Sahlien   v.    Bank   of   Lonoke,   90  diet    the    contract.      Auto    &    Acces- 

Tenn.  221,  16  S.  W.  2,73.  series   Mfg.    Co.   v.   Merchants'   Nat. 

"Fowler   v.    Brantly,    14   Pet.    (U.  Bank,  116  Md.  179,  81  Atl.  294. 

S.)  318,  10  L.  ed.  473.  *°  Hammond  v.  American  Exp.  Co., 

"Where  a  draft,  indorsed  to  the  107  Md.  295,  68  Atl.  496. 


I093  CUSTOMS   AND   USAGES.  §    1 754 

in  a  few  instances  in  particular  banks/®  The  custom  of  banks 
with  reference  to  the  presentation  of  checks  for  payment  is  one  of 
general  observance  in  the  banking  business,  of  which  knowledge 
on  the  part  of  all  persons  dealing  with  such  institutions  will  be 
presumed.**^ 

§  1754.    Customs  and  usages  must  not  be  unreasonable. — 

The  banking  custom  must  be  reasonable  and  where  it  lacks  this 
requisite  it  has  no  binding  force.  A  special  custom  of  bankers 
in  the  particular  locality  is  unreasonable  which  allows  the  pay- 
ment of  bank  obligations  in  depreciated  paper.^*  And  the  rule 
is  the  same  with  a  local  custom  of  banks  not  to  correct  mistakes 
in  the  receipt  or  payment  of  money  unless  discovered  before  the 
person  leaves  the  banking  room.*®  A  usage  is  unreasonable 
which  will  not  allow  a  bank  to  correct  a  mistake  in  certification.®" 

§  1755.    Bank  usages  as  to  powers  and  duties  of  officers. — 

The  usages  of  banks  with  respect  to  the  powers  and  duties  of 
their  officers,  where  these  usages  are  well  established  and  known 
to  the  public,  enter  into  and  become  a  part  of  contracts  made  by 
such  banks  through  their  officers.®^  Thus,  a  bank  will  be  bound 
by  a  usage  which  sanctions  the  right  of  the  president  to  sign 
drafts  or  checks  in  the  absence  of  the  cashier.®^  So,  the  bank 
may  be  bound  by  the  certificate  of  its  cashier  or  teller  that  the 
check  is  good  where  the  custom  is  well  established  that  such  officer 
may  so  certify."^ 

*  Chesapeake    Bank    v.    Swain,    29  v.  Johnson,  17  Mass.  449,  9  Am.  Dec. 

Md.  483;    Duvall   v.   Farmers'   Bank,  165;   Blanchard  v.   Hillard,    11    Mass. 

9  Gill  &  J.  (Md.)  31.  85;    Smith    v.    Whiting,    12    Mass.    6, 

"  Plover     Sav.     Bank     v.     Moodie  7  Am.  Dec.  25 ;  City  Bank  v.  Cutter. 

(Iowa),  110  N.  W.  29.  3  Pick.  (Mass.)  414;  Yeaton  v.  Bank 

•*  Marine  Bank  v.  Chandler,  27  111.  of  Alexandria,  5  Cranch.   (U.  S.)  49, 

525,  81   Am.   Dec.  249;  Thompson  v.  3   L.   ed.   2>:i;   Brent's  Exrs.   v.   Bank 

Ri.trgs,  5  Wall.  (U.  S.)  663,  18  L.  ed.  of  Metropolis,  1  Pet.  (U.  S.)  89,  7  L. 

704.  ed.  65. 

"Gallatin    v.     Bradford,     1     Bibb.  *"  Palmer   v.    Yates.    3    Sandf.    (N. 

(Ky.)   209.  Y.)    137:   Neiffer  v.  Bank  of  Knox- 

•"  Second  National   Bank  v.   West-  ville.  1  Head.  (Tenn.)   162. 

ern   Nat.  Bank,  51   Md.  128-  34  Am.  "  Meads  v.  Merchants'  Bank,  25  N. 

Rep.   300.  Y.    143,  82   Am.    Dec.  331;    Farmers* 

"  Hartford    Bank    v.     Stedman,    3  &   Mechanics'   Bank   v.   Butchers'  &c 

Conn.   489;   Jones  v.  Fales.  4   Mass.  Bank.  16  X.  Y.  125,  69  Am.  Dec.  678; 

245;      Widgery   v.    Munroe,   6   Mass.  Willets    v.    Phoenix    Bank,    9    X.    Y. 

449;    Lincoln    &c.    Bank    v.    Page,    9  Super.  Ct.  121 ;  Clarke  National  Bank 

Mass    155,  6  Am.  Dec.  52;  Whitwell  v.    Albion   Bank,   52   Barb.    (X.    Y.) 


§    1756  CONTRACTS.  IO94 

§  1756.  Cashier's  powers  and  duties  affected  by  usage. — 
The  powers  and  duties  of  cashiers  may  be  affected  and  controlled 
by  the  common  usage  of  banks  in  the  particular  locality;  and 
when  a  custom  prevails  with  certainty  and  uniformity,  the  cus- 
tomers of  a  bank,  in  the  absence  of  notice  to  the  contrary,  have 
the  right  to  presume  that  the  cashier  possesses  the  authority 
exercised  by  him  under  the  particular  usage ;  and  the  act  of  any 
cashier  under  such  circumstances  will  bind  his  bank.®*  Thus,  it 
has  been  held  that  the  requirement  of  certain  duties  from  the 
cashier,  by  the  board  of  directors  may  be  presumed  from  the  acts 
of  the  board  and  of  the  cashier  and  need  not  be  established  by 
a  recorded  order,  resolution  or  vote.®^  Where  it  appeared  that 
the  buying  and  selling  of  government  bonds  was  commonly 
transacted  over  the  counter,  a  bank  was  held  liable  for  funds 
deposited  by  a  customer  with  the  cashier  to  be  invested  in  such 
bonds ;  and  an  agreement  between  the  bank  and  the  cashier  that 
he  should  do  such  business  on  his  own  account  was  held  no  de- 
fense to  the  action."®  And  where  it  was  the  custom  of  a  bank 
to  receive  stocks  and  bonds  from  its  depositors  for  sale,  it  was 
held  liable  for  a  fraudulent  misappropriation  of  such  securities 
by  its  cashier."^  The  powers  of  the  cashier  may  be  limited  or 
enlarged  by  special  usages  peculiar  to  the  particular  bank.  If  the 
directors  suffer  him  to  pursue  a  particular  line  of  conduct  for  a 
considerable  period,  the  bank  may  be  bound  although  the  acts 
done  were  in  excess  of  his  express  authority.  It  may  be  stated  as 
a  rule  that  under  such  circumstances  proof  of  the  particular  usage 
will  sanction  any  acts  of  the  cashier  done  in  conformity  thereto, 
when  not  forbidden  by  statute  or  by  the  charter  of  the  bank. 
Where  a  cashier  in  the  ordinary  business  of  receiving  paper  for 
collection  failed  to  enter  it  as  received  on  the  books  of  the  bank, 
and  retained  it  without  collection,  protest  or  notice,  the  bank  was 
held   responsible    for   losses    in   consequence   of   his   conduct^^ 

592 ;  Girard  Bank  v.  Bank  of  Penn-  ^'  Caldwell     v.     National     Molawk 

sylvania,  39  Pa.  St.  92,  80  Am.  Dec.  Val.  Bank,  64  Barb.  (N.  Y.)  333.  See 

507;  Merchants'  Bank  v.  State  Bank,  also,  Zugner  v.  Best,  44  N.  Y.  Super. 

10  Wall.   (U.  S.)  604,  19  L.  ed.  1008.  Ct.  393. 

**Steinke  v    Yetzer,  108  Iowa  512,  "Williamson    v.    Mason,    12    Hun 

79  N.  W.  286.  (N.  Y.)  97. 

^'Durkin  v.  Exchange  Bank,  2  Pat.  "' Pahquioque  Bank  v.  Bethel  Bank, 

&  H.   XVa.)    277.  36  Conn.  325,  4  Am.  Rep.  80.  See  also, 


I095  CUSTOMS    AND    USAGES.  §    1 75 7 

The  authority  of  the  cashier  to  issue  certificates  may  be  estab- 
lished by  proof  of  the  custom  of  the  bank  in  this  respect." 

§  1757.  Certification  of  checks. — A  bank  in  the  certifica- 
tion of  a  check  undertakes  that  the  maker  has  sufficient  funds  in 
the  bank  to  meet  the  check  and  that  these  funds  shall  not  be  with- 
drawn and  extrinsic  evidence  is  not  admissible  to  prove  that  the 
contract  had  by  local  usage  or  the  understanding  of  bankers 
and  merchants  a  larger  scope  and  meaning  than  it  had  under  set- 
tled legal  constructions.^ 

§  1758.  Custom  of  bank  to  pay  notes  out  of  depositor's 
funds. — It  is  a  question  whether  a  local  custom  will  authorize 
a  bank  to  pay  the  notes  of  a  depositor  out  of  funds  deposited 
with  it  by  the  maker  of  the  note  in  the  absence  of  instructions  to 
that  effect.  It  is  clear  that  this  may  not  be  done  in  the  absence  of 
a  certain  and  uniform  custom  authorizing  it,  of  wdiich  both  par- 
ties have  knowledge.  This  would  seem  to  follow  from  a  consid- 
eration of  the  relation  of  the  parties  to  the  deposit.  The  relation 
is  one  purely  of  debtor  and  creditor.  Said  one  of  the  courts 
in  passing  on  this  question :  "Reduced  to  its  last  analysis,  then, 
the  question  at  issue  here  may  be  said  to  be  :  If  a  creditor  makes  a 
note  payable  to  a  third  party  at  his  debtor's  place  of  business, 
does  it  operate  as  an  order  on  the  debtor  to  pay  the  note,  in  the 
absence  of  any  instructions,  and  in  the  absence  of  any  understand- 
ing or  agreement  growing  out  of  the  previous  course  of  dealing 
between  the  parties?  In  the  absence  of  authority,  the  question 
would  seem  to  carry  its  own  answer  in  the  negative."^ 

§  1759.  Interest  on  overdrafts. — The  principle  which  in- 
validates a  custom  in  violation  of  an  express  statute  has  been 
applied  to  a  custom  of  banks  to  charge  ten  per  cent,  interest  on 
overdrafts  and  to  compute  the  interest  on  the  basis  of  thirty  days 

Mercantile  Bank  v.  McCarthy,  7  Mo.  Merchants'  Bank.   182  111.  367,  55  N. 

App.  318;   City  Bank  v.   Perkins,  17  E.  360,  74  Am.  St.  180;  Security  Bank 

N.  Y.  Super.  Ct.  420.  aflfd.  29  N.  Y.  v.   National   Bank,  67   X.   Y.  458.  23 

554,  86  Am.  Dec.  332.  Am.  Rep.  129. 

**  Abbott  V.  Jack,    136  Cal.   510,  69        "  Grissom   y.    Commercial    National 

Pac.  257.  Bank,  87  Tenn.  350,  10  S.  W.  774,  3 

*  Metropolitan      National    Bank  v.  L.  R.  A.  273,  10  Am.  St.  669. 


§    1760  CONTRACTS.  IO96 

to  the  month  in  states  where  the  statute  limits  the  interest  to  a 
less  per  cent,  in  the  absence  of  a  contract  for  a  greater  rate.^ 

§  1760.  Local  custom  of  banks  as  to  substituted  checks.— 
The  local  custom  of  a  bank  to  take  up  checks  drawn  upon  it 
by  its  depositors  with  its  own  checks  on  other  banks  will  not 
excuse  holders  from  exercising  the  proper  diligence  in  collecting 
the  substituted  checks.* 

§  1761.  Customs  as  to  days  of  grace. — The  allowance  of 
days  of  grace  on  commercial  paper  rests  on  custom.^  Days  of 
grace  have  become  so  thoroughly  established  as  part  of  the  law  of 
commercial  paper  that  it  has  been  held  that  courts  will  presume  the 
existence  of  the  custom  in  another  state  in  the  absence  of  special 
custom  or  contract.*  And  this  presumption  has  been  indulged  by 
courts  in  states  where  days  of  grace  have  been  abolished  by  stat- 
ute.' The  general  usage  to  allow  days  of  grace  is  so  thoroughly 
established  as  part  of  the  unwritten  law  that  it  may  not  be  affect- 
ed by  any  local  usage.^  Where  the  right  to  days  of  grace  has 
been  established  by  statute  it  is  all  the  more  clear  that  the  right 
cannot  be  defeated  by  local  usage.° 

§  1762.  Presumption  of  knowledge  of  bank  custom  where 
note  payable  at  bank. — The  rule  is  well  established  that  those 
who  make  or  indorse  notes  payable  at  a  bank  are  presumed  to 
have  knowledge  of  valid  usages  of  that  bank  in  respect  to  the 
presentation  and  protest  of  such  paper.^°     Accordingly,  "when 

'Talbot  V.  First  National  Bank,  106  rison  v.  Bailey,  5  Ohio  St.  13,  64  Am. 

Iowa  361,  Id  N.  W.  726,  afifd.  185  U.  Dec.  632. 
S.  172,  46  L.  ed.  857,  22  Sup  Ct.  612.        *  Mechanics'    Bank    v.    Merchants' 

*  Noble  V.  Doughton,  72  Kans.  336,  Bank,  6   Mete.    (Mass.)    13;   Perkins 

83  Pac.  1048,  3  L.  R.  A.  (N.  S.)  1167.  v.   Franklin  Bank,  21   Pick.    (Mass.) 

''Goddin    V.    Shipley,    7    B.    Mon.  483. 
(Ky.)    575;    Hill   v.    Norvell,   3    Mc-         '"Bank    of    Columbia    v.    Fitzhugh, 

Lean    (U.    S.)    583,    Fed.    Cas.    No.  1    Har.   &    G.    (Md.)    239;    Planters' 

6497.  Bank  v.   Markham,  5   How.    (Miss.) 

"Wood    V.    Corl,    4    Met.    (Mass.)  397;  Zl  Am.  Dec.  162;  Carolina  Na- 

203 ;  Lucas  V.  Ladew,  28  Mo.  342.  But  tional   Bank   v.   Wallace,    13    S.    Car. 

see    Goddin   v.    Shipley,    7    B.    Mon.  347,   36   Am.   Rep.   694;    Benedict   v. 

(Kv.)  575.  Rose,  16  S.  Car.  629;  Mills  v.  Bank 

'Lucas  V.  Ladew,  28  Mo.  342.  of  United  States,  11  Wheat.   (U.  S.) 

'Bowen    v.    Newell,   8    N.    Y.    190,  431,  6  L.  ed.  512;  Renner  v.  Bank  of 

Seld.   Notes  87;   Merchants'  Bank  v.  Columbia,  9  Wheat.    (U.   S.)    581,   6 

Woodruff,  6  Hill.  (N.  Y.)  174;  Mor-  L.  ed.   166;  Bank  of  Washington  v. 


I097  CUSTOMS  AND  USAGES.  §  1 763 

a  note  is  made  payable  or  negotiable  at  a  bank,  whose  invariable 
usage  it  is  to  demand  payment  and  give  notice  on  the  fourth  day 
of  grace,  the  parties  are  bound  by  that  usage,  whether  they  have  a 
personal  knowledge  of  it  or  not.""  And  so  the  purchaser  of  a 
note  made  in  a  peculiar  form  in  accordance  with  the  usage  of 
a  bank  at  w^hich  it  is  made  payable  is  presumed  to  know  of  this 
usage.^^  One  dealing  with  a  bank  is  presumed  to  know  its  usage 
as  to  crediting  checks  and  drafts  conditionally,  subject  to  collec- 
tion on  nonpayment. ^^ 

§  1763.  Bank  usages  as  to  demand  and  notice. — The  well- 
established  and  well-known  usages  of  banks  as  to  demand  and 
notice  on  bills  and  notes  are  binding  on  persons  liable  on  such 
paper  payable  at  the  bank."  Thus,  the  usage  of  banks  to  give 
notice  to  indorsees  by  mail  is  generally  sustained  as  a  valid 
usage.^**  And  so,  a  custom  may  be  valid  which  allows  a  demand 
of  payment  on  the  fourth  instead  of  the  third  day  after  paper  is 
due."  The  rule  is  the  same  and  the  parties  are  bound  in  the  case 
of  a  usage  allowing  a  demand  on  the  maker  without  presenting 
the  note  to  him,"  or  a  demand  on  a  day  preceding  a  day  which  is 

Triplett,    1    Pet.    (U.    S.)    25,   7   L.  "Gindrat   v.    Mechanics'    Bank.   7 

ed.  27.  Ala.  324 ;  Ray  v.  Porter,  42  Ala.  2>27 ; 

"Mills  V.  Bank  of  United  States,  Grinman    v.    Walker,    9    Iowa.    426; 

11  Wheat.  (U.  S.)  431,  6  L.  ed.  512.  Bell    v.    Hagerstown    Bank,    7    Gill 

"Fowler    v.    Brantly,    14    Pet.    (U.  (Md.)  216;  Chicopee  Bank  v.  Eager, 

S.)  318.  10  L.  ed.  473.  But  see,  Lea-  9  Mete.    (Mass.)   583;  Lincoln  Bank 

vitt  V.  Simes,  3  N.  H.  14.  v.    Hammatt,    9    Mass.     159;    Bene- 

"  Moors  V.  Goddard,  147  Mass.  287,  diet     v.     Rose,     16     S.     Car.     629 ; 

17  N    E.  532.  Carolina  National  Bank  v.   Wallace, 

"  Kilgore  V.  Bulkley,  14  Conn.  362 ;  13  S.  Car.  347,  36  Am.  Rep.  694. 
Hartford  Bank  v.  Stedman,  3  Conn.  "  Raborg  v.  Bank  of  Columbia,  1 
489;  Bridgeport  Bank  v.  Dyer,  19  Har.  &  G.  (Md.)  231;  Bank  of  Co- 
Conn.  136;  Godden  v.  Shiplev,  7  B.  lumbia  v.  Fitzhugh,  1  Har.  &  G. 
Mon.  (Ky.)  575;  Boston  Bank  v.  (Md.)  239;  Bank  of  Columbia  v. 
Hodges,  9  Pick.  (Mass.)  420;  War-  Magruder's  Admx..  6  Har.  &  J. 
ren  Bank  v.  Parker.  8  Gray  (Mass.)  (Md.)  172.  14  Am.  Dec.  271;  Grand 
221;  Widgery  v.  Munroe,  6  Mass.  Bank  v.  Blanchard,  23  Pick.  (Mass.) 
449;  Lincoln  &c.  Bank  v.  Page.  9  305;  Renner  v.  Bank  of  Columbia,  9 
Mass.  155,  6  Am.  Dec.  52;  Planters'  Wheat.  (U.  S.)  581.  6  L.  ed.  166; 
Bank  v.  Markham,  5  How.  (Miss.)  Mills  v.  Bank  of  United  States.  11 
397,  37  Am.  Dec.  162;  Commercial  Wheat.  (U.  S.)  431;  Bank  of  Wash- 
&c.  Bank  v.  Hamer.  7  How.  (Miss.)  ington  v.  Triplett,  1  Pet.  (U.  S.)  25, 
448,  40  Am.  Dec.  80 ;  Cohea  v.  Hunt,  7  L.  ed.  37 ;  Patriotic  Bank  v.  Far- 
2  Sm.  &  M.  (Miss.)  227,  41  Am.  Dec.  mers'  Bank.  2  Cranch.  C.  C  560,  Fed. 
589;  Bowen  v.  Newell,  7  (N.  Y.)  Cas.  No.  10811;  Jackson  v.  Hender- 
Super.  Ct.  326,  revd.  8  N.  Y.  190.  son.  3  Leigh.  (Va.)  196. 
Seld.  Notes  87;  Isham  v.  Fox,  7  "  Whitwell  v.  Johnson,  17  Mass. 
Ohio  St.  317.  449,  9  Am.  Dec.  165. 


§    1763  CONTRACTS.  IO98 

not  Strictly  a  holiday — as,  for  example,  commencement  day  at 
Harvard  College,^^  or  a  notice  on  the  day  before  or  a  day  later 
than  the  legal  day,^°  or  the  delivery  of  a  notice  by  leaving  it  at 
the  cashier's  desk  where  it  is  intended  for  a  director,^"  It  is 
essential,  however,  in  all  these  cases  that  the  custom  should  be 
a  valid  custom  and  well  understood  in  the  community.^^  A  custom 
of  a  bank  at  which  a  note  is  payable  by  which  a  demand  on  the 
note  is  made  without  presenting  the  note  or  having  it  in  possession 
is  good  as  to  the  maker.-"  In  one  of  the  cases,  a  usage  to  notify  an 
indorser  by  giving  a  letter  "to  some  individual  down  from  their 
neighborhood,"  was  held  too  loose  and  uncertain  to  be  valid  in  the 
absence  of  proof  of  the  assent  of  the  indorser  to  the  person 
selected  as  messenger,^^  It  has  been  held  that  a  usage  of  a  bank 
requiring  an  indorser  to  waive  demand  and  notice  was  not  binding 
and  was  not  provable  against  an  indorser  who  had  not,  in  fact, 
made  a  waiver.^*  A  customary  form  of  notice  long  used  by  a 
bank  is  generally  sufficient  as  to  an  indorser  of  a  note  payable  at 
that  bank.^°  Where  a  customer  has  knowledge  of  the  usage,  he 
cannot  complain  of  the  act  of  a  bank  in  sending  a  written  demand 
for  payment  while  the  note  remains  in  the  hands  of  the  bank.'^* 
The  Supreme  Court  of  the  United  States  has  held  valid  a  parol  I 

agreement  that  a  demand  may  be  made  at  the  bank,  when  the  note 
does  not  name  the  place  of  payment,  provided  this  is  in  accord- 
ance with  a  custom  of  the  bank  to  demand  such  agreement  when 
discounting  note  against  a  nonresident.-^  It  has  been  held  that 
the  usage  of  a  bank  to  make  demand  on  the  day  of  maturity  and 
to  send  notice  on  the  last  day  of  grace  was  good  as  to  an  indorser 
of  a  note  to  the  bank.^^ 

"City    Bank    v.     Cutter,    3     Pick.        "^  Gallagher   v.    Roberts,    11    Maine 

(Mass.)  414.  489. 

"Peirce   v.   Butler,    14   Mass.   303;        ''Thome  v.  Rice,  15  Maine  263. 
Jones  V.  Fales,  4  Mass.  245 ;  Blanch-         '*  Piscataqua    Exch.    Bank    v.    Car- 

ard  V.  Hillard,  11  Mass.  85;     Wood  ter,  20  N.  H.  246,  51  Am.  Dec.  217. 
V.  Corl,  4  Mete.   (Mass.)  203;  Taun-        "*  Smith  v.  Whiting,  12  Mass.  6,  7 

ton    Bank    v.    Richardson,    5      Pick.  Am.    Dec.   25. 
(Mass.)   436.  "^  Shove  v.  Wiley,  18  Pick.  (Mass.) 

'"Weld  V.   Gorham,   10  Mass.  366.  558. 

''Rickford  v.  Ridge,  2  Camp.  537;        '^Brent's  Exrs.  v.  Metropolis  Bank, 

Boddington    v.    Schlencker,    4    Barn.  1    Pet.    (U.   S.)   89,  7  L.   ed.  65. 
&  Ad.  752.  ''Boston  Bank  v.  Hodges,  9  Pick. 

(Mass.)   420. 


1099  CUSTOMS   AND   USAGES.  §    1 764 

§  1764.  Mailing  notice  of  protest. — The  mode  of  giving 
notice  of  protest  may  be  affected  by  the  usage  of  the  bank  at 
which  the  note  is  payable  and  such  usage  may  justify  and  make 
sufficient  and  binding  a  notice  sent  through  the  post-office  to 
indorsers  residing  in  the  place  where  the  bank  is  located.^*  And 
though  the  holder  and  indorser  reside  in  the  same  town,  if  it  is 
customary  to  give  notice  of  protest  by  mail,  it  will  be  sufficient 
where  it  is  shown  that  such  notice  was  actually  received  by  the 
indorser.^"  But  the  existence  of  a  general  custom  among  local 
banks  to  give  notice  of  dishonor  by  mail  notwithstanding  the  in- 
dorser and  holder  live  in  the  same  town  was  held  not  established 
by  proof  of  a  practice  prevailing  among  other  banks  in  which  the 
bank  urging  the  custom  did  not  participate.^^ 

§  1765.  Collection  customs  of  banks. — When  one  selects  a 
bank  as  his  collecting  agent,  in  the  absence  of  special  direction  he  is 
bound  by  any  reasonable  usage  prevailing  and  established  among 
the  banks  at  the  place  where  the  collection  is  made,  and  this  with- 
out regard  to  his  knowledge  or  want  of  knowledge  of  the  existence 
of  the  custom. ^^  Generally  speaking,  a  customer  is  entitled  to  ex- 
pect and  require  of  his  bank  that  it  shall  not  capriciously  or  need- 
lessly deviate  from  the  established  system,  whatever  that  may  be, 
and  if  it  does  so  deviate  and  a  loss  is  the  result  he  may  look  to  the 
bank  for  compensation.^*  "This  rule  regidating  the  relations  of 
collecting  banks  to  parties  who  take  advantage  of  the  means 
which  they  offer  in  this  respect  is  founded  on  sound  reason. 
Every  business  man  knows  that  in  the  constantly  increasing 
volume  and  variety  of  banking  transactions,  the  larger  number  of 
which  are  settled  or  disposed  of  by  a  simple  exchange  of  credits, 
methods  have  been  adopted  by  bankers  to  economize  labor,  reduce 

^  Carolina  National  Bank  v.  Wal-  Kershaw  v.  Ladd.  34  Ore.  375,  56    Pac. 

lace,  13  S.  Car.  347,  36  Am.  Rep.  694.  402,  44  L.  R.  A.  236;  Sahlien  v.  Bank 

'"Carter  v.  Odom,  121  Ala.   162,  25  of  Lonoke,  90  Tenn.   221,    16   S.   W. 

So.    774.    See    also,    Tshell    v.    Lewis,  373;    Howard    v.    Walker,    92    Tenn. 

98  Ala.  550,   13  So.  335.  452,  21   S.  W.  897;  Jefferson  County 

'Msbell   V.    Lewis,  98   Ala.   550,    13  Savinps      Bank    v.    Commercial    Na- 

So.  335.  tional  Bank.  98  Tenn.  337.  39  S.  W. 

*°  Davis  V.  First  National  Bank,  118  338;    Merchants'   Nat.    Bank  v.   Dor- 

Cal.    600,    50     Pac.    666;    Holder    v.  Chester  (Tex.  Civ.  App.),  136  S.  W. 

Western  German  Bank,  132  Fed.  187;  551. 

affd.   136  Fed.  90,  68  C.  C.  A.  554;  *» Morse  Bks.  &  B.  (4th  ed.),  §  243. 


§    1765  CONTRACTS.  IIOO 

risks,  and  simplify  dealings  with  one  another,  and  with  their  cus- 
tomers. Some  of  these  methods  are  of  a  general  character,  while 
others  are  dictated  by  local  convenience  or  necessity.  That  these 
methods  so  prevail  is  a  fact  of  such  public  notoriety  that  no 
business  can  well  affect  to  be  ignorant,  and,  least  of  all,  a  bank- 
ing institution.  It  is  in  view  of  this  we  have  held  that,  in 
choosing  a  bank  as  a  collecting  agent,  the  principal  impliedly 
agrees  that  the  agency  may  be  performed  in  accordance  with  such 
reasonable  methods  as,  sanctioned  by  experience,  have  ripened 
into  usage,  when  such  usage  is  not  in  contravention  of  a  general 
law;  and  in  this  holding  we  are  well  supported  by  authority."'* 
And  the  custom  of  all  the  banks  at  the  place  as  to  the  method 
of  collecting  commercial  paper  though  unknown  to  the  party 
sending  the  paper  there  for  collection  is  binding  on  him  as  part  of 
the  contract  of  agency  when  the  custom  is  not  in  contravention 
of  the  general  law  or  unreasonable.^''  Under  this  rule,  it  has 
been  held  that  a  usage  to  hold  a  note  for  no  more  than  ten  days 
after  presentation,  on  the  promise  and  expectation  of  payment 
was  valid  in  the  absence  of  special  instructions.'^  The  usage  is, 
of  course,  binding  where  the  parties  have  knowledge  of  its  exist- 
ence.'^ A  practice  of  other  banks  as  to  notes  held  for  cellectien 
is  not  material  in  respect  to  a  note  at  a  bank  which  has  a  different 
practice.'®  But  it  has  been  held  that  the  knowledge  of  an  accept- 
or of  a  bank  custom  not  to  make  a  personal  demand  will  not 
bind  him  with  respect  to  a  bill  held  by  the  bank  where  he  had 
no  reason  to  know  that  the  note  was  in  the  bank.'^  Bank  cus- 
tomers are  charged  with  the  knowledge  of  a  long  continued  usage 
in  a  place  to  give  notice  before  due  on  notes  held  for  collection 
instead  of  making  demand  when  due.^" 

A  usage  of  a  bank  adopted  for  its  own  convenience  to  hand 

"Jefferson    County    Savings    Bank  Chester   &c.    Bank   v.    New   England 

V.   Commercial   Bank,  98   Tenn.   337,  Bank,   1   Cush.    (Mass.)    177;   Moore 

39  S.  W.  338.  V.  Waitt,  13  N.  H.  415. 

*  Sahlien   v.   Bank   of   Lonoke,   90  ^*  Camden  v.  Doremus,  3  How.  (U. 

Tenn.  221,  16  S.  W.  373.  S.)   515,  11  L.  ed.  705. 

'•Sahlien   v.    Bank  of   Lonoke,   90  '^ Lewis  v.  Planters'  Bank,  3  How. 

Tenn.  221,  16  S.  W.  373.     See  also,  (Miss.)   267. 

Whitwell  V.   Johnson,   17   Mass.  449,  *<»  Warren  Bank  v.  Parker,  8  Gray 

9  Am.  Dec.  165.  (Mass.)  221. 

"  Jones  V.  Fales,  4  Mass.  245 ;  Dor- 


IIOI  CUSTOMS   AND   USAGES.  §    1766 

paper  to  a  notary  for  demand  will  not  vary  tlie  contract  between 
the  bank  and  their  customer,  for  the  notary,  in  this  particular, 
acts  as  the  agent  of  the  bank."  It  is  believed,  however,  that  the 
rule  would  be  otherwise  where  the  parties  had  knowledge  of  the 
custom."  The  drawer  of  a  check  payable  to  the  cashier  of  a 
bank  for  collection  is  not  bound  by  a  custom  of  the  bank,  of 
which  he  has  no  knowledge,  to  pay  the  proceeds  of  such  checks  to 
the  person  depositing  them."'^  Generally,  the  usage  of  banks  mu- 
tually to  credit  the  proceeds  of  collections  cannot  deprive  third 
persons,  who  own  the  bills  or  notes  deposited  for  collection,  of 
their  rights."  It  has  been  held  under  an  Iowa  statute,  providing 
that  in  determining  what  is  a  reasonable  time  for  the  presentation 
of  a  bill  of  exchange,  regard  must  be  had  to  the  nature  of  the  in- 
strument and  the  usage  of  the  trade  or  business,  that  the  usage  of 
banks  relating  to  the  presentation  of  checks  for  payment  was  rel- 
evant to  the  question  whether  the  check  in  question  had  been 
presented  within  a  reasonable  time,  so  as  to  charge  the  indorser, 
independent  of  the  latter's  knowledge  or  want  of  knowledge  of 
such  usage." 

§  1766.  Collection  customs  of  banks — Custom  will  not  ex- 
cuse negligence. — No  general  custom  will  excuse  a  collecting 
bank  from  exercising  all  reasonable  diligence  in  making  a  collec- 
tion and  a  special  usage  will  have  no  greater  effect  than  will  a 
general  custom.  Usage  or  custom  will  not  excuse  negligence,*'' 
or  nonperformance  of  duty.*^  Another  custom  condemned  by 
the  courts  is  the  custom  of  banks  to  hold  collections  at  the  request 
of  debtors  and  unknown  to  parties  drawing  on  the  bank.'** 
Where  a  bank  neglects  to  send  a  check  through  the  clearing-house 

**  Ayrault  v.  Pacific  Bank,  47  N.  Y.  "*  Bank  of  Commerce  v.  Miller,  105 

570,  7   Am.   Rep.   489.  111.  App.  224;  Citizens'  National  Bank 

**  Warren  Bank  v.  Suffolk  Bank,  10  v.  Third  National  Bank,  19  Ind.  App. 

Cush.    (Mass.)    582.  69,  49  N.   E.  171;   Ivory  v.  Bank  of 

"Kuder  v.  Greene,  72  Ark.  504,  82  Mo.,  36  Mo.  475.  88  Am.  Dec.   150: 

S.   W.  836.  Exchange   Nat.   Bank  v.   Third   Nat. 

**Hackett  v.  Reynolds,  114  Pa.  St.  Bank,   112  U.   S.  276,  28  L.  ed.  722. 

328,   6  Atl.   689.   See  also,  Lawrence  5  Sup.  Ct.  141. 

V.  Stonington  Bank,  6  Conn.  521.  "  Citizens'  Nat.  Bank  v.  Third  Nat. 

«*  Plover  Sav.  Bank  v.  Moodie,  135  Bank..  19  Ind.  App.  69,  49  N.  E.  171. 

Iowa  685,  110  N.  W.  29,  113  N.  W.  ^'Dern   v.   Kellogg,  54  Nebr.   560, 

476.  74  N.  W.  844. 


§    1767  CONTRACTS.  1 102 

at  the  customary  time  and  in  the  ordinary  manner  and  elects 
rather  to  keep  it  till  a  later  hour  and  present  it  at  the  counter, 
then,  if  it  would  have  been  paid  through  the  clearing-house  but 
is  refused  at  the  counter,  this  conduct  of  the  bank  being  con- 
trary to  this  custom  will  render  it  liable  to  the  depositor  of  the 
check  for  its  amount/®  It  has  been  held  the  duty  of  a  bank,  re- 
gardless of  its  custom,  to  send  instructions  as  to  the  residence  of 
an  indorser  to  its  correspondent  where  there  is  another  person 
bearing  his  name  and  this  fact  is  known  to  the  sending  bank.^* 

§  1767.  Custom  of  sending  collection  to  drawee  con- 
demned.— On  the  clearest  principle,  a  custom  of  banks  to 
send  drafts  and  checks  held  by  them  for  collection  directly  to  the 
drawees  is  bad  for  unreasonableness.  There  is  practical  unanimity 
in  the  American  cases  in  support  of  this  principle.^^  The  reasons 
against  such  a  custom  are  thus  stated :  "Undoubtedly  an  agent 
who  undertakes  to  collect  a  claim,  although  by  custom  he  may  be 
allowed  to  employ  subagents,  yet  he  is  certainly  bound  to  select 
his  subcollecting  agents  with  judgment  and  care,  and  one  of  the 
first  elements  of  care  is  to  select  a  subagent  who  is. not  adversely 
interested  in  the  subject  matter.  What  would  be  the  use  of  a 
party  placing  his  claim  in  the  hands  of  a  bank  for  collection,  if 
that  duty  could  be  performed  by  merely  indorsing  the  paper  by 
mail  to  the  party  who  is  obligated  to  pay  it  and  receive  his  check 

*'Boddington   v.    Schlencker,   4   B.  Minneapolis    Sash    &    Door    Co.    v. 

&  Ad.  752;  Alexander  v.  Burchfield,  Metropolitan  Bank,  Id  Minn.  136,  78 

Car.  &  M.  75.  N.  W.  980,  44  L.  R.  A.  504,  11  Am. 

■"Borup  V.  Nininger,  5  Gil.  (Minn.)  St.    609;    American    Exchange    Nat. 

417.  Bank  v.  Metropolitan  Nat.  Bank,  71 

"Farley    National    Bank    v.     Pol-  Mo.     App.    451;     Western    Wheeled 

lock,  145  Ala.  321,  39  So.  612,  2  L.  R.  Scraper  Co.  v.  Sadilek,  50  Nebr.  105, 

A.  (N.  S.)   194,  117  Am.  St.  44;  Ger-  69  N.  W.  765,  61  Am.  St.  550;  Pickett 

mao    Nat.    Bank    v.    Burn,    12    Colo.  v.  Baird  Investment   Co.    (N.  Dak.), 

539,   21    Pac.    714,    13   Am.    St.   247;  133   N.  W.   1026;   Wagner  v.  Crooki 

First     Nat      Bank    v.     Fourth     Nat.  167  Pa.  St.  259,  31  Atl.  576,  46  Am. 

Bank,  56  Fed.  967,  6  C.  C.   A.   183;  St.    672;      Merchants'    Nat.   Bank   v. 

Holland  v.   Mutual   Fertilizer   Co.,  8  Goodman,  109  Pa.  St.  422,  2  Atl.  687, 

Ga.  App.  714,  70  S.  E.  151;  Drovers'  58  Am.  Rep.  782;  Givan  v.  Bank  of 

Nat.  Bank  v.  Anglo-American  Pack-  Alexandria    (Tenn.),   52    S.    W.   923, 

ing  &c.  Co.,  117  111.  100,  7  N.  E.  601,  47  L.  R.  A.  270;  First  Nat.  Bank  v. 

57     Am.     R(ep.     855;     Anderson    v.  City   Nat.   Bank,   12   Tex.    Civ.   App. 

Rodgers,  53  Kans.  542,  36  Pac.  1067,  318,  34  S.  W.  458;   Farwell  v.  Cur- 

27  L.  R.  A.  248;  First  Nat.  Bank  v.  tis,   7   Biss.    (U.   S.)    160,   Fed.   Cas. 

Citizens'      Savings    Bank,    123    Mich.  No.  4690. 
336,  82  N.  W.  66,  48  L.  R.  A.  583; 


1 103  CUSTOMS   AND   USAGES.  §    1 768 

on  New  York?  The  owner  of  the  paper  could  send  it  directly, 
and  receive  his  New  York  exchange  in  much  less  time.  A  cus- 
tom must  be  reasonable,  and  the  best  considered  cases  hold,  not 
only  that  the  bank  or  party  who  is  to  pay  the  paper  is  not  the 
proper  person  to  whom  the  paper  should  be  sent  for  collection, 
but  also  that  a  custom  to  that  effect  is  unreasonable  and  bad."" 
The  act  is  an  act  of  negligence  and  custom  cannot  justify  negli- 
gence." The  principle  is  the  same  where  the  collecting  bank 
surrenders  a  draft  for  the  check  of  the  drawee.  A  collecting 
bank  has  no  implied  power  to  receive  anything  but  money  in  pay- 
ment." Usage  will  not  justify  the  receipt  of  worthless  checks 
in  payment  of  collections. °''  A  number  of  English  cases,  how- 
ever, would  seem  to  justify  the  practice  of  sending  checks  by  mail 
to  the  drawee  bank  through  the  clearing-house.^" 

§  1768.     Collection   customs — Remittance   of   proceeds. — 

The  custom  of  banks  in  regard  to  making  collections  and  remit- 
ting therefor  is  so  well  established,  and  has  become  so  universally 
known  that  knowledge  thereof  must  be  imputed  to  the  courts; 
and  they  are  therefore  required  to  take  judicial  notice  of  the  fact 
that  a  bank,  when  it  makes  a  collection  for  a  foreign  correspond- 
ent, never,  unless  specially  directed  so  to  do,  remits  the  specie 
collected,  but  takes  the  specie  to  its  own  use  and  sends  its  draft  or 
certificate  of  deposit  to  such  correspondent."     And  where  plain- 

"  Farley  National  Bank  v.  Pollock,  (N.   S.)    523,  4  L.   T.   363,  9  Wkly. 

145  Ala   321,  39  So.  612,  2  L.  R.  A.  Rep.  738;  Bailey  v.  Bodenham,  16  C. 

(N.  S.)   194,  117  Am.  St.  44.  B.    (N.  S.)   288,  10  L.  T.  422,  33  L. 

"Pinknev      v.      Kanawha      Valley  J.  C.  P.  (N.  S.)  252,  10  Jur.  (N.  S.) 

Bank,  68  \V    Va.  604,  69  S.  E.  1012.  821,  12  Wkly.  Rep.  865;  Prideau.x  v. 

"National    Bank   of    Commerce   v.  Criddle,  L.  R.  4  Q.  B.  455.  38  L.  J. 

American    Exchange    Bank,    151    Mo.  Q.  B.    (N.   S.)   232,  20  L.  T.  695,  10 

320    52  S    W.  265,  74  Am.  St.  527;  Best  &  S.  515;  Heywood  v.  Pickermg, 

Midland    Nat.    Bank    v.    Brightwell,  L.  R.  9  Q.  B.  428,  43  L.  J.  Q.  B.  (N. 

148   Mo.  358,  49  S.  W.  994,  71   Am.  S.)   145.  . 

St   608       See  also,  Minneapolis  Sash        "Morse  Bks.  &  B..  §  248;   Marine 

&    Door    Co.    V.    Metropolitan    Bank,  Bank  v.  Rushmore,  28  111.  463 ;  Tmk- 

76  Minn.  136,  78  N.  W.  980.  44  L.  R.  ham     v.     Heyworth.     31     111.     519; 

A  504  77  Am.  St.  609.    But  see  First  Jockusch   v.    Towsey,    51    Tex.    129; 

Nat      Bank     v.     First     Nat.     Bank  Marine  Bank  v.  Fulton  County  Bank, 

(Tenn.)  134  S.  W.  831.  2  Wall.    (U.   S.)   252.  17  L.  ed.  785 

"National    Bank   of    Commerce  v.  In    Fowler   v.   Brantly,    14    Pet.    (U. 

American   Exchange   Bank.   151    Mo.  S.)  318.  10  L.  ed.  473,  the  court  laid 

320,  52   S.   W.   265.  74   .'Km.   St.   527.  down   the   following   rule   in    respect 

"Hare  v.  Henty.  10  C.  B.   (N.  S.)  to  the  binding  force  of  banking  cus- 

65   30  L.  J.  C  P.  (N.  S.)  302,  7  Jur.  toms   as   to   the   discount   of   notes: 


§    1769  CONTRACTS.  II04 

tiff  sued  the  receiver  of  a  bank  for  the  amount  of  a  draft  collected 
by  it,  and  claimed  that  the  bank  held  the  amount  in  trust  for 
plaintiffs  at  the  time  of  its  suspension,  it  was  held  to  be  a  reversi- 
ble error  for  the  court  below  to  exclude  evidence  of  the  general 
banking  custom  above  mentioned. °^  A  banking  custom,  how- 
ever, to  be  binding  must  be  general  as  to  place,  and  not  confined 
to  a  particular  bank,  and  must  have  become  notorious."* 

§  1769.  Value  of  foreign  money. — The  relative  value  of 
foreign  and  American  money  is  a  question  largely  of  commer- 
cial usage.  What  this  usage  is  in  a  given  case  may  be  proved  by 
the  testimony  of  any  one  acquainted  with  the  usage.^" 

§  1770.  Customs  and  usages  in  master  and  servant  relation. 

— Where  there  has  been  no  express  contract  as  to  the  term  of 
employment  of  a  servant,  usage  is  generally  admissible  to  show 
the  length  of  time  of  the  hiring."  And  likewise  an  admission 
as  to  the  amount  of  the  wages  of  the  servant  and  the  mode 
and  time  of  their  payment  may  be  controlled  by  custom  or 
usage  which  prevails  in  the  community.®^     Usage  is  also  ad- 

"The   known   customs    of   the    bank,  or   it   cannot,   consistently,  be  called 

and  its  ordinary  modes  of   transact-  a  usage.     If  every  bank  could  estab- 

ing  business,  including  the  prescribed  lish  its  own  usage,  the  confusion  and 

forms  of  notes  offered  for  discount,  uncertainty  would  greatly  exceed  any 

were  matters  of   proof,   and   entered  local  convenience  resulting  from  the 

into    the    contract;    and    the    parties  arrangement." 

to  it  must  be  understood   as   having  *"  Kermott  v.  Ayer,  11  Mich.  181. 

governed    themselves    by    such    cus-  ^  Holcraft  v.  Barber,  1  Carrington 

toms  and   modes   of   doing  business;  &  K.  4;  Arkadelphia  Lumber  Co.  v. 

and    this,    whether    they    had    actual  Asman,  85  Ark.  568,  107  S.  W.  1171; 

knowledge   of    them    or   not;    and    it  Gleason    v.    Walsh,    43    Maine    397; 

was  especially  the  duty  of  all  those  Given  v.  Charron,  IS  Md.  502;  Har- 

dealing  for  the  paper  in  question  to  ris  v.  Nicholas,  5  Munf.    (Va.)   483; 

ascertain  them  if  unknown.     Such  is  Anderson  v.   Lewis,  64  W.  Va.  297, 

the  established  doctrine  of  this  court.  61   S.   E.  160. 

as  laid  down  in   Renner  v.   Bank  of  "^  Sewall   v.   Corporation,   1    Car.  & 

Columbia.  9  Wheat.    (U.    S.)    581,  6  P.  392;  Pursell  v.  McQueen's  Admr., 

L.    ed.    166;    Mills   v.   United    States  9  Ala.   380;   Hayes  v.   Moynihan,  60 

Bank,   11   Wheat.    (U.   S.)   431,  6  L.  111.    409;    Weber   v.    Noyes,    151    III. 

ed.    512;      Bank    of     Washington    v.  App.    596;    Ewing    v.    Beauchamp,    4 

Triplett,    1    Pet.    (U.    S.)    25,    7    L.  Bibb.    (Ky.)    496;    Dodge    v.    Favor, 

ed.  38."  65     Gray      (Mass.)     82;     Thayer  v. 

"'Bowman    v.    First   Nat.    Bank,   9  Wadsworth,    19    Pick.    fMass.)    349; 

Wash.  614,  38  Pac.  211,  43  Am.   St.  FJdridge  v.  Smith,  13  Allen   fMass.) 

870.  140;  Swain  v.  Cheney,  41  N.  H.  232; 

"Adams  v.  Otterback,  15  How.  (U.  Lowinson  v.  McKenna,  126  N.  Y.  S. 

S.)   539,  14  L.  ed.  805.    "It  must  be  604;   Anderson  v.  Lewis,  64  W.  Va. 

rule   of   all   the  banks   of  the  place,  297,  61   S.  E.   160. 


II05  CUSTOMS   AND   USAGES.  §    1 770 

missible  to  show  when  the  sen'ant  has  performed  the  particu- 
lar service  for  which  he  was  employed."^  There  is  a  case  in 
which  it  is  held  that  judicial  notice  will  be  taken  of  a  custom 
by  merchants  under  which  business  establishments  furnish  the 
clerks  or  customers  of  each  other  with  goods  and  charge  them 
to  each  other.''*  So  a  custom  may  be  shown  under  which  em.- 
ployes  are  allowed  the  privilege  of  working  for  themselves  after 
the  hours  of  work  for  their  employers  have  expired.""  The  prin- 
ciple that  a  custom  cannot  be  invoked  to  vary  the  plain  terms  of 
a  contract  is  applicable  in  the  master  and  servant  relation,"*  and 
has  been  applied  in  cases  where  an  employer  under  a  custom  in 
a  neighborhood  sought  to  justify  his  discharge  of  an  overseer 
before  the  end  of  the  term  for  which  he  was  hired. "^  Where  the 
terms  of  employment  of  hotel  porters  in  a  contract  were  clear  and 
explicit  a  custom  was  held  not  admissible  to  show  what  the  term 
was  understood  to  be  in  that  city.®^  In  another  case,  however, 
it  was  held  that  a  custom  not  to  pay  when  the  employe  was  not 
at  work  could  be  considered  in  construing  a  contract  of  employ- 
ment for  an  indefinite  term  as  this  custom  did  not  vary  the  con- 
tract but  merely  explained  it."*  It  has  been  held  that  a  contract 
for  the  employment  of  a  master  of  a  vessel  should  be  considered 
with  reference  to  a  prevailing  custom  by  owners  of  employing 
masters  at  the  close  of  the  preceding  season.'^"  In  the  absence  of 
evidence  that  the  contract  between  an  engineer  and  his  employer 
prohibited  the  engineer  from  employing  his  assistants,  evidence 

"Vaughn's    Executor    v.    Gardner,  "Jones    v.    Jackson,    22    La.    Ann. 

7  B.  Men.   (Ky.)   326;  Hunt  v.  Car-  112. 

lisle,  1  Gray   (Mass.)  257;  Martin  v.  '^  Connell   v.    Averill,   8   App.    Div. 

Hilton.  9  Mete.   (Mass.)   371.  (N.  Y.)  524,  75  N.  Y.  St.  247,  40  N. 

"  Cameron  v.   Blackman,  39  Mich.  Y.  S.  855. 

108  "Leavitt  v.  Kennicott,  157  111.  235, 

"Barnes  v.  Ingalls.  39  Ala.  193.  41  N.  E.  m. 

"A   contract   of   employment  of  a  "Carney  v.  Ionia  Transp.  Co.,  157 

traveling    man     for    services    to   be  Mich.  54,   121   N.  W.  806.  In  a  case 

rendered  in  the  New  England  States  where    the    issue    was    whether    the 

is  not  enlarged   so  as  to  permit   the  hiring  was  for  a  year  or  for  an  in- 

emplover  to  require  work  outside  the  definite  term,  an  offer  of  evidence  as 

New  England  States  by  a  clause  of  to  what  was  the  custom  in  steamboat 

the    contract    in    which'  the    employe  circles  with  respect  to  the  hirmg  of 

agrees    to    give    "his    entire    and    un-  captains    was    properly    excluded    as 

divided  attention  to  the  sale  of  goods  too    indefinite.      Cook    v     Eriterprise 

manufactured    by    the    party    of    the  Transp.   Co.,  197   Mass.  7,  83   N.   E. 

first  part."  Menage  v.  Rosenthal,  175  325. 
Mass.  358.  56  N.  E.  579. 

70 — Contracts,  Vol.  2 


1 771 


CONTRACTS. 


1 1 06 


is  competent  to  show  that  it  was  the  custom  for  engineers  to  hire 
their  assistants,  in  order  to  estabHsh  the  relation  of  master  and 
servant  between  the  engineer's  employer  and  his  assistant." 

§  1771.  Customs  and  usages  in  principal  and  agent  relation. 
— The  nature  and  extent  of  the  written  authority  of  an  agent 
cannot  be  varied  by  evidence  of  usage  of  other  agents  in  like 
cases.  The  language  of  the  instrument,  where  not  ambiguous, 
controls."  No  custom  or  usage  will  authorize  an  agent  to  depart 
from  his  positive  instructions.  These  instructions  are  the  law 
which  govern  the  agent  in  his  conduct.^^  The  usage  may,  how- 
ever, be  considered  where  the  language  of  the  contract  is  ambig- 
uous or  capable  of  different  constructions.''*  It  is  also  admissible 
to  make  clear  the  powers  actually  given  or  the  manner  of  their 
execution.^*  And  where  there  is  a  usage  of  a  place  that  an 
agency  should  be  executed  in  a  particular  way  the  parties  to  a 
contract  of  this  character  will  be  presumed  to  have  impliedly 


"White  V.  San  Antonio  Water- 
works Co.,  9  Tex.  Civ.  App.  465,  29 
S.  W.  252:  "We  are  of  opinion  that 
there  was  evidence  from  which  the 
jury  might  have  found  that  WilHs 
was  an  employe  of  the  Waterworks 
Company  in  respect  to  the  pump 
house  and  machinery,  and,  there  be- 
ing no  evidence  of  a  contract  which 
excluded  the  power  of  this  employe 
to  employ  assistants,  it  was  competent 
for  plaintiff  to  show  that  his  employ- 
ment carried  with  it  this  power,  by 
proving  that  by  a  universal  custom 
men  employed  as  he  was  exercised 
the  power.  Lawson  on  Usages  and 
Customs  371 ;  Moore  v.  Kennedy,  81 
Tex.  146,  16  S.  W.  740;  Mechem  on 
Agency,  §  281 ;  Harrell  v.  Zimpleman, 
66  Tex.  294,  17  S.  W.  478;  Birming- 
ham &c.  Mfg.  Co.  V.  Gross,  97  Ala. 
220,  12  So.  36." 

'^2  Rice  on  Evidence,  §  349;  Wig- 
glesworth  v.  Dallison,  1  Doug.  201; 
Hogg  V.  Snaith,  1  Taunt.  347;  Tal- 
lassee  Falls  Mfg.  Co.  v.  Western  R. 
Co.  of  Alabama,  128  Ala.  167,  29  So. 
203;  Currie  v.  Syndicate  Des  Culti- 
vators &c.,  104  Til.  App.  165;  Lehman 
V.  Clark,  71  Til.  'App.  366.  revd.  174 
Til.  279,  51  N.  E.  222,  43  L.  R.  A. 
64€;  Menage  v.  Rosenthal,  175  Mass. 


368,  56  N.  E.  579;  Cameron  v.  Mc- 
Nair  &  Harris  Real  Estate  Co.,  76 
Mo.  App.  366;  Spota  v.  Hayes,  36 
Misc.  (N.  Y.)  532,.  73  N.  Y.  S.  959; 
Simmons  v.  Law,  3  Keyes  (N.  Y.) 
217,  4  Abb.  Dec  (N.  Y.)  241;  Fox 
V.  Parker,  44  Ba-rb.  (N,  Y.)  541; 
Delafield  v.  Illinois,  26  Wend.  (N. 
Y.)  192;  Appalachian  Bank  v. 
Catch,  7  Ohio  (N.  P.)  307,  2  Ohio 
Dec.  366;  Silliman  v.  Whitmer,  11 
Pa.  Super.  Ct.  243;  Riley  v.  Penn- 
sylvania Mut.  Life  Ins.  Co.,'189*Pa. 
St.  307.  42  Atl.  191;  Reese  v.  Med- 
lock,  27  Tex.  120,  84  Am.  Dec.  611; 
Swadling  v.  Barneson,  21  Wash.  699, 
59  Pac.  506;  Burnham  v.  Milwaukee, 
100  Wis.  55,  75  N.  W.  1014. 

"Wanless  v.  McCandless,  38  Towa 
20;  Parsons  v.  Martin,  11  Gray 
(Mass.)  lli;  Leland  v.  Douglass,  1 
Wend.  (N.  Y.)  490;  Barksdale  v. 
Brown,  1  Nott.  &  McC.  (S.  Car.) 
517,  9  Am.  Dec.  720;  Catlin  v.  Smith, 
24  Vt.  85;  Bliss  v.  Arnold,  8  Vt. 
252,  30  Am.  Dec.  467 ;  Hall  v.  Storrs. 
7.  Wis.  253 ;  Osborne  v.  Rider,  62 
Wis.  235 

"Pole  v.  Leask,  28  Beav.  562. 

"Frink  V.  Roe.  70  Cal.  296.  11  Pac. 
820;  Reese  v.  Medlock,  27  Tex.  120, 
84  Am.  Dec.  611. 


1 107 


'CUSTOMS   AND  USAGES. 


§    I77I 


incorporated  this  usage  in  their  contract  where  they  do  not  ex- 
pressly exclude  it.''"  It  is  the  duty  of  an  agent  to  insure  the  goods 
of  his  principal  where  the  general  usage  of  trade  requires  it." 
Where  there  is  a  custom  to  that  effect  an  agent  working  on  a 
stated  salary  may  claim  extra  compensation  for  services  per- 
formed for  his  principal  outside  the  scope  of  his  agency."  The 
principle  of  agency  will  not  permit  an  agent  to  retain  profits 
incidentally  obtained  in  the  execution  of  his  duty  even  though  a 
usage  in  the  community  may  sanction  such  appropriation." 
Where  no  express  contract  has  been  made,  fixing  the  amount  of 
the  agent's  compensation  it  may  be  regulated  by  the  usage  of  the 
business.^" 

There  are  cases  which  hold  that  where  the  power  has  been 
delegated  to  an  agent  to  do  an  act  he  may,  by  usage  and  cus- 
tom, delegate  the  performance  of  this  act  to  another  person. ^^ 
Generally  speaking  an  agent  cannot  sell  on  credit,  unless  he  is  so 


"Brady  v.  Todd,  9  C.  B.  (N.  S.) 
592;  Pickering  v.  Busk.  15  East  38; 
Graves  v.  Legg,  2  Hurlst  &  N.  210; 
Bayliffe  v.  Butterworth,  1  Exch.  425; 
Young  V.  Cole,  3  Bing.  (N.  C.)  724; 
Sutton  V.  Tatham,  10  Ad.  &  El.  27; 
Willard  v.  Buckingham,  36  Conn. 
395 ;  Polzin  v.  McCarthy,  159  111. 
App.  526;  American  Central  Ins.  Co. 
V.  McLanathan,  11  Kans.  533;  Gree- 
ley V.  Bartlett,  1  Greenl.  (Maine)  172, 
10  Am.  Dec.  54;  Randall  v.  Kehlor, 
60  Maine  37,  11  Am.  Rep.  169;  Rosen- 
stoch  V.  Tormey.  22  Md.  169,  3  Am. 
Rep.  125 ;  Goodenow  v.  Tvler,  7 
Mass.  36,  5  Am.  Dec.  22;  Upton  v. 
SuflFolk  Mills,  11  Cush.  (Mass.)  586, 
59  Am.  Dec.  163;  Dav  v.  Holmes, 
103  Mass.  306;  Daylight  Burner  Co. 
V.  Odlin.  51  N.  H.  56,  12  Am.  Rep. 
45;  McKinstrv  v.  Pearsall.  3  Johns. 
(N.  Y.)  319';  Smith  v.  Tracv,  36 
N.  Y.  79;  Frank  v.  Jenkins.  22  Ohio 
St.  597;  Watson  v.  Brewster,  1  Pa. 
381 ;  Benners  v.  Clemens.  58  Pa.  St. 
24;  Schuchardt  v.  Aliens,  1  Wall. 
(U.  S.)  359.  17  L.  ed.  642. 

"French  v.  Backhouse,  5  Burr. 
2727;  Crauford  v.  Hunter.  8  T.  R. 
13 ;  Croshie  v.  MacDoual,  13  Ves. 
148;  Walsh  v.  Frank.  19  Ark.  270; 
Tonge  V.  F.  Kennett.  10  La.  Ann. 
800;    Lee   v.    Adsit,  37   N.   Y.   78; 


Thome  v.  Deas,  4  Johns.  (N.  Y.) 
84;  De  Forest  v.  Fulton  Fire  Ins. 
Co.,  1  Hall  (N.  Y.)  84;  Randolph  v. 
Ware,  3  Cranch  (U.  S.)  503,  2  L. 
ed.  512;  Columbus  Ins.  Co.,  v.  Law- 
rence, 2  Pet.  (U.  S.)  49,  7  L.  ed. 
344;  Kingston  v.  Wilson,  42  Wash. 
C.  C.  (N.  S.)  310,  Fed.  Cas.  No. 
7823 ;  Collings  v.  Hope,  5  Wash.  C.  C. 
(U.    S.)    149,   Fed    Cas.    I?o.   3003. 

"United  States  v.  Fillebrown,  7 
Pet.  (U.  S.)  28,  8  L.  ed.  596;  United 
States  V.  Macdaniel,  7  Pet.  (U.  S.)  1, 
8  L.  ed.  587. 

"  Diploch  V.  Blackburn,  3  Camp. 
43;  Massey  v.  Davies,  2  Ves.  317; 
Lees  V.  Nuttal,  1  Russ.  &  M.  53; 
Jacques  V.  Edgell,  40  Mo.  76;  Reed 
V.  Warner,  5  Paige  (N.  Y.)  650; 
Minnesota  Central  R.  Co.  v.  Morgan, 
52  Barb.  (N.  Y.)  217. 

*"  Cohen  v.  Paget,  4  Camp.  96 ; 
Auriol  V.  Thomas,  2  T.  R.  52;  Stew- 
art V.  Kahle,  3  Stark.  N.  P.  161; 
Eicke  V.  Mever,  3  Camp  412;  Read 
V.  Rann,  10  Barn.  &  C.  R.  438; 
Baynes  v.  Fry.  15  Ves.  120. 

"Moon  V.  Guardians,  3  Bing.  (N. 
C.)  814;  Johnson  v.  Cunningham,  1 
.\la.  249:  Darling  v.  Stanwood,  14 
Allen.  (Mass.)  504;  Grav  v.  Murrav, 
3  Johns.  Ch.  (N.  Y.)  167. 


§    1772  CONTRACTS.  II08 

authorized  by  his  power  of  attorney,  or  by  the  fixed  usage  of  the 
trade  in  reference  to  the  articles  sold,  and  such  usage  must  be 
brought  home  to  the  knowledge  of  the  persons  affected. ^^  As  a 
general  rule  an  agent  of  the  seller  has  no  implied  authority  to 
warrant  the  quality  of  the  goods,  unless  it  is  the  custom  in  sales 
of  goods  of  that  kind  for  an  agent  to  warrant  them.^^  He  may, 
however,  make  a  contract  of  warranty  where  there  is  a  custom  or 
usage  of  the  trade  in  which  he  is  engaged  for  agents  to  make  such 
contracts.^*  Accordingly,  where  it  is  shown  to  be  the  general  cus- 
tom for  local  agents  selling  mill  machinery  to  warrant  the  same, 
the  buyer  may  recover  from  the  principal  for  a  breach  of  the 
agent's  warranty.®^  A  custom  of  real  estate  agents  to  take  a 
secret  rebate  on  repairs  made  upon  the  property  is  void;  such  a 
custom  is  contrary  to  sound  public  policy.®^ 

§  1772.  Principal  and  agent — Authority  of  agent. — In 
every  agency,  in  the  absence  of  anything  to  the  contrary,  it 
may  be  presumed  that  the  authority  was  conferred  in  contem- 
plation of  the  usage  that  prevails  in  such  matters;  and  hence, 
persons  dealing  with  the  agent  in  good  faith  will  be  protected 
if  the  power  has  been  exercised  in  accordance  with  such  usage, 
unless  the  limitations  upon  power  of  the  agent  were  known 
to  those  who  dealt  with  him."  The  particular  custom  or  usage 
must,  however,  be  a  reasonable  one,  and  must  have  existed  'long 

^Kops    Bros.    Co.    v.    Smith,    137        ''Little  v.   Phipps,  208  Mass.  331, 

Mich.  28,   100   N.   W.   169;   State  v.  94  N.  E.  260,  34  L.  R.  A.   (N.  S.) 

Chilton,  49  W.  Va.  453,  39  S.  E.  612.  1046.  ,     _^ 

''Cafre  v.  Lockwood,  22  App.  Div.        "Greaves  v.   Legg,   11   Exch.   642; 

(N    Y  )    11,  47  N    Y.   S.  916;   Penn.  Russell  v.  Hankey,  6  T.  R.  12;  Brady 

&  Delaware  Oil  Co.  v.  Spitelnik,  27  v.    Todd,   9   C.    B.    (N.    S.)    592,   99 

Misc    (N.  Y.)  557,  58  N.  Y.  S.  311;  E.  C.  L.  591;   Sutton  v.  Tatham,   10 

Reese   v    Bates,   94    Va.    321,   26    S.  Ad.  &  E.  27,  11  E.  C.  L.  39;  Young 

E   865.  V.   Cole,  3  Bing.    (N.  C.)   724,  32  E. 

**  Reese   v    Bates,   94   Va    321,   26  C.   L.   334;   Willard   v.   Buckingham, 

S    E    865     *  36  Conn.  395;   Taylor  v.   Bailey,   169 

«» Larson  v.   Aultmann   &c.   Co.,  86  III.  181,  48  N.  E.  200;  Bailey  v.  Bens- 

Wis.  281,  56  N.  W.  915,  39  Am.   St.  ley,   87    111.   556;    Samuels   v.    Oliver, 

893.    In  Eastern  Granite  Co.  v.  Heim,  130  111.  11,  22  N.   E.  499;   American 

89  Iowa  698,  57  N.  W.  437.  Evidence  Cent.    Ins.    Co.    v.    McLanathan,    11 

that  it  is  usual  to  use  the  Latin  let-  Kans.    533;    Randall    v.    Kehlor,    60 

ter  in  German  inscriptions  on  granite  Maine  Zl,  11   Am.  Rep.   169;  Talcott 

monuments    is    admissible    to    show  v.    Smith,    142    Mass.    542,    8    N.    E. 

compliance  with  a  contract  for  erec-  413;    McKee    v.    Wild,    52    Nebr.    9^ 

tion  of  a  granite  monument,  inscrip-  71  N.  W.  958;  Frank  v.  Jenkms,  22 

tions  thereon   to   be  in   German.  Ohio   St.   597;   McMasters  v.   Penn- 


II09  CUSTOMS    AND    USAGES.  8    1 772 

enough  to  have  become  generally  known,  so  that  the  parties  must 
have  acted  with  a  view  to  it.**  If  the  usage  is  a  mere  local  one, 
and  not  generally  known,  the  presumption  that  otherwise  prevails 
as  to  the  principal's  knowledge  of  the  same  may  be  overcome  by 
him,  by  proving  that  he  had  in  fact  no  notice  or  information  of 
the  same.*"  But  the  mere  fact  that  the  principal  had  no  actual 
knowledge  of  the  custom  or  usage,  if  general,  does  not  excuse 
him  from  being  charged  with  notice  thereof.®"  It  would  be  dif- 
ficult, if  not  impossible,  for  the  parties  to  an  agency  contract  to 
provide  for  every  contingency  that  may  arise  in  the  execution 
thereof.  Many  questions  may  come  up  as  to  which  no  provision 
has  been  or  can  well  be  made  in  the  specification  of  the  power 
conferred  by  the  principal.  In  all  such  cases  the  usage  of  trade 
is  the  criterion  by  which  the  agent's  authority  is  to  be  measured ; 
and  this  is  so,  although  the  principal  and  agent  have  agreed  in 
their  contract  that  things  are  to  be  done  which  are  directly  in 
conflict  with  the  usages  and  customs  of  trade,  provided  the  usage 
is  general  and  reasonable,  and  the  third  party  had  no  information 
concerning  the  agent's  limitations.®^  The  courts  will  give  effect 
to  the  customs  of  shipmasters  in  charge  of  vessels  at  river  ports 
to  insure  their  vessel  and  give  premium  notes  therefor,  and  such 
notes  will  bind  the  owners  of  such  boats.®^  So,  where  a  customer 
has  given  a  broker  an  order  for  a  quantity  of  stock,  the  broker 
may,  in  accordance  with  custom,  direct  his  correspondents  in 
another  state  to  purchase  the  stock."  Of  course,  as  between 
principal  and  agent,  the  latter  will  never  be  justified  by  custom  or 

sylvania   R.    Co.,   69   Pa.    St.   374.  8  Am.   Rep.  407;   Barnard   v.   Kellogg, 

Am.    Rep.   264;    Gehl    v.    Milwaukee  10  Wall.   (U.  S.)   383,  19  L.  ed.  987. 

Produce  Co.,  105  Wis.  573,  81  N.  W.  '"Bailey    v.    Benslav,    87    111.    556; 

666.  Samuels  v.  Oliver,  130  111.  7i.  22  N. 

^Buyck  V.   Schwing,   100  Ala.  355,  E.  499;  Union   Stock  Yards  &c.  Co. 

14   So.  48;.Knowles  v.  Dow,  22   N.  v.   Mallory   &c.   Co.,    157   111.   554,  41 

H.  387,  35  Am.  Dec.  163.  Whether  a  N.  E.  888;  Cole  v.  Skrainka,  2,7  Mo. 

custom    is    reasonable    or    not    is    a  App.    427;    Sleght    v.    Hartshorne,    2 

question  of  law  for  the  decision  of  Johns.  (N.  Y.)  531;  Blin  v.  Mayo,  10 

the  court;  while  usage,  which  is  the  Vt.  56,  H  \m.  Dec.  175. 

evidence  of  custom,  is  a  question  of  "  See    Upton    v.     Suffolk    County 

fact  for  the  jury.    Bourke  v.  James,  I^Iills.  11  Cush.   (Mass.)  586,  59  Am. 

4    Mich.    Zi6.    Chicago    Packing    &c.  Dec.   163. 

Co.    V.   Tilton,   87   111.    547;    Randall  "Adams    v.    Pittsburgh    Ins.    Co., 

V.  Smith,  6Z  Maine  105,  18  Am.  Rep.  95   Pa.   St.  348.   10  Am.   Rep.  662. 

200.  **  Rosenstock    v.    Tormey,    32    Md. 

*•  Walls  V.  Bailey,  49  N.  Y.  464,  10  169,  3  Am.  Rep.  125. 


§    1775  CONTRACTS. 


mo 


usage  in  departing  from  his  plain  instructions."  Moreover, 
usage  can  never  be  relied  upon  to  violate  a  positive  law;®°  nor 
can  it  be  invoked  to  change  the  intrinsic  character  of  a  contract 
as  between  the  parties  thereto.''®  A  traveling  salesman,  selling 
by  sample,  for  credit  or  cash,  to  be  paid  on  receipt  of  the  goods, 
has  no  implied  authority  to  collect  the  money  agreed  to  be  paid, 
and  a  custom  in  the  town  in  which  the  goods  are  sold  to  pay  such 
salesman  is  not  binding  on  nonresident  principals  in  the  absence 
of  evidence  of  notice  to  them  of  such  custom.®^  Where  an  agent, 
authorized  to  buy  cedar  logs,  stated,  at  the  time  of  making  an 
arrangement  to  pay  for  supplies  furnished  to  the  seller  out  of  the 
money  due  him,  that  he  had  no  authority  to  make  debts,  the 
principal  was  not  bound,  although  there  was  a  local  custom  that 
agents  authorized  to  buy  logs  should  have  authority  to  make  such 
agreements.®* 

§  1773.  Brokers  and  factors. — A  person  who  employs  a 
broker  must  be  supposed  to  give  him  authority  to  act  as  other 
brokers  act,  whether  he  himself  is  or  is  not  acquainted  with 
brokers'  rules.®*  A  person  who  deals  in  a  certain  market  must 
ordinarily  be  taken  to  deal  according  to  the  custom  of  that 
market,  and  this  is  the  rule,  though  he  deal  through  an  agent  or 

"    Day  V.  Holmes,  103  Mass.  306;  "Mollett  v.   Robinson,   L.   R.  5  C. 

Hutchings  v.   Ladd,   16  Mich.  493.  P.  646,  L.  R.  7  H.  L.  802;  Pickering 

•°Healey  v.  Mannheimer,  74  Minn.  v.    Weld,    159   Mass.    522,    34    N.    E. 

240,  76  N    W.  1126;  McKee  v.  Wild,  1081;    Brown    v.    Foster,    113    Mass. 

52   Nebr.  9,  71    N.   W.  958;   Hopper  136,    18   Am.    Rep.    463;    Meloche   v. 

V.    Sage,    112    N.    Y.    530,   20    N.    E.  Chicago    &c.    R.    Co.,    116    Mich.   69. 

350,  8  Am.   St.   771.     No  custom  or  74   N.  W.  301;   McKee  v.   Wild,  52 

usage  which  will  relieve  a  party  from  Nebr.    9,    71    N.    W.    958;    Allen    v. 

a  just  legal  obligation  will  be  recog-  Dykers,    3    Hill    fN.    Y.)    593,    affd. 

nized  by  the  courts;  and  this  being  7  Hill  (N.  Y.)  497,  42  Am.  Dec.  87; 

true,  evidence  tending  to  prove  such  Hopper  v.   Sage,    112   N.   Y.   530,  20 

custom   is   properly   excluded.   West-  N    E.  350,  8  Am.  St.  771 ;   Swadling 

ern  Union  Cold  Storage  Co.  v.  Wino-  v.  Barneson,  21   Wash.  699,   59  Pac. 

na    Produce    Co.,    94    111.    App.    618,  506;    Burnham    v.    Milwaukee,    100 

revd.    197    111.   457,    64    N.    E.    496.  Wis.  55,  75  N.  W.  1014. 

Barnes  v.  Zettlemoyer,  25   Tex.   Civ.  "  Simon   v.  Johnson.   101   Ala.   368. 

App.  468,  62  S.  W.  111.    Nor  can  the  13  So.  491;  Johnston-Woodbury  Hat 

existence  of  a  custom  be  established  Co.  v.  Lightbody,  18  Colo.  App.  239, 

by  evidence  of  a  single  act,  custom  70   Pac.   957. 

being  the  result  of  a  series  of  acts;  •'American     Lead     Pencil     Co.     v. 

or,    in    other    words,    custom    is    the  Wolfe,  30  Fla.   360,   11    So.   488. 

result  of  usage,  and  must  be  proved  "  Sutton    v.     Tatham,     10    Ad.    & 

by    usage.    Shields    v.    Kansas    City  El.   27;    Greaves   v.    Legg,    11    Exch 

Suburban  Belt  R.   Co.,  87  Mo.  App.  642;  Ankeny  v.  Young,  52  Wash.  235, 

637.  100  Pac.  IZd.    A  custom  or  usage  of 


nil  Customs  and  usages.  §  1774 

broker.*  Where  a  broker  represents  that  he  has  certain  stock  in 
his  possession,  when,  in  fact,  he  has  no  such  stock,  and  a  sale  is 
closed  on  the  faith  of  this  representation,  in  an  action  to  recover 
the  price  paid,  evidence  of  a  custom  amon.<^  brokers  to  sell  stock 
in  their  own  name,  and  to  become  personally  liable  to  perform  the 
contract  is  inadmissible  for  the  alleged  custom  is  irrelevant  to  the 
actual  issue.^  And  so  evidence  of  the  custom  of  brokers,  when 
collateral  security  is  put  up  as  a  margin,  and  the  account  becomes 
reduced  sufficiently  to  jeopardize  it,  to  advertise  and  sell  the  col- 
lateral, and  charge  the  customer  with  the  balance,  is  properly  ex- 
cluded where  the  broker  sells  his  customer's  stocks  upon  the  lat- 
ter's  express  order,  and  not  to  protect  himself  from  a  shrinking 
margin.^  A  custom  of  dealers  in  bonds  and  stocks,  whereby  an 
option  to  sell  at  the  end  of  a  given  period  expires  on  the  last  day 
of  such  period,  does  not  apply  to  the  case  of  an  option  to  demand 
a  rescission  of  the  sale  of  bonds  and  stocks  after  their  obligatory 
retention  for  a  year  by  the  purchaser.*  A  custom  among  factors 
in  a  certain  city  to  credit  the  buyer  with  the  amount  of  the  sale 
and  charge  him  with  goods  received  from  him  is  not  binding  on 
the  principal  of  the  factor.  The  effect  of  such  a  custom  would  be 
to  permit  an  agent  to  appropriate  the  property  of  his  principal 
to  the  payment  of  his  own  debt."* 

§  1774.  Usage  of  brokers  to  treat  stock  certificates  as  ne- 
gotiable paper. — A  usage  of  brokers  or  bankers  to  treat  a 
certificate  of  stock  as  a  negotiable  instrument  cannot  give  the 
certificate  this  character.  Even  a  usage  to  issue  powers  of  attor- 
ney for  the  transferring  of  stock,  with  the  name  of  the  trans- 
feree left  blank  has  been  declared  vicious,  which  no  considera- 
tions of  convenience  are  sufficient  to  justify."     But  the  validity 

real    estate    agents    in    a    particular  19  S.  W.  622.    And  see  also,  Kimball 

locality  to  look  after  the  property  of  v.  Brawner,  47  Mo.  398. 

their   clients   while   vacant   is   admis-  "  De    Cordova   v.    Barnum,    130    N. 

sible   to   explain   the    intended    scope  Y.   615,  29   N.   E.   1099,  27   Am.   St. 

of  the   agencv.   Cameron   v.   McNair  538. 

&c.    Real    Estate    Co.,   76    Mo.    App.  *Weld  v.  Barker,   153   Pa.  St.  465, 

366.  26  Atl.  239. 

^Bavliffe   v.   Butterworth,    1    Exch.  "Liebhardt   v.   Wilson,   38   Colo.    1, 

425:  Furber  v.  Dane,  203  Mass.  108,  88   Pac.    173.   120  Am.   St.   97. 

89  N.   E    227.  'Dennv  v.  Lvon,  38  Pa.  St.  98,  80 

'Wolff  V.  Campbell,   110  Mo.   114,  Am.   Dec.  463. 


§    1775  CONTRACTS.  1 1 12 

of  such  powers  is  well  established.^  Some  of  the  cases,  how- 
ever, assimilate  certificates  of  stock  very  closely  to  negotiable 
instruments  and  give  a  bona  fide  holder  for  value  very  much  the 
same  rights  that  such  a  holder  of  negotiable  paper  has  who  takes 
it  before  maturity.^ 

§  1775.  Use  of  stock  of  customer  by  broker. — A  general 
custom  that  a  broker  may  pledge  the  stock  of  his  customer  for 
the  purpose  of  raising  money  to  carry  it,  is  valid  if  such  custom 
is  known  to  and  acquiesced  in  by  the  customer.^  It  is  probable  that 
this  is  the  general  custom  in  such  transactions  and  a  knowledge 
of  such  custom  would  be  imputed  to  one  who  purchases  stock 
from  a  broker  to  be  carried  in  this  manner.  Authority  in  the 
pledgee  to  sell  stock  held  in  pledge  is  inconsistent  with  the  con- 
tract of  pledge,  and  a  custom  or  usage  for  a  broker  holding  stock 
in  pledge  to  sell  it  will  not  avail  to  vary  the  terms  in  the  implied 
agreement."  The  contract  of  pledge  recognizes  the  general  prop- 
erty of  the  bailor  and  his  right  to  redeem  and  have  the  thing 
pledged.  A  custom  or  usage  for  a  pledgee  to  sell  the  thing 
pledged  is  not  consistent  with  the  contract  because  such  sale 
would  put  it  out  of  his  power  to  return  it  to  the  pledgor  upon 
payment  of  the  debt  secured." 

§  1776.    Sale  of  collateral  securities  to  enforce  pledge. — 

The  court  of  appeals  of  New  York  has  held  void  a  usage  among 
the  bankers  of  New  York  to  dispose  of  notes  held  as  collateral  by 
making  sales  of  them  because  such  a  usage  was  a  violation  of  the 
law.  The  ground  of  the  decision  is  that  notes  not  being  usually 
marketable  at  their  face  value,  must  generally  be  sold  at  a  sac- 
rifice and  so  injustice  would  be  likely  to  be  done  to  the  debtor 

'Rice    V.    Gilbert,    173    111.   348,    50  '"Oregon    &c.    Co.    v.    Hilmers,   20 

N     E    1087;    Persch   v.    Quiggle,   57  Fed.  717;  Kraft  v.  Fancher,  44  Md. 

Pa    St.  247;  German  Union  Building  204;  Rich  v.  Boyce,  39  Md.  314;  First 

Assn     V    Sendmeyer,   50    Pa.    St.   67.  National  Bank  v.  Taliaferro,  72  Md. 

*Prall  V.   Tilt,   27    N.   J.    Eq.   393,  164,    19    Atl.    364;    German    Saving 

aflfd   28  N.  J.  Eq.  479;  Mount  Holly  Bank   v.    Renshaw,    78    Md.    475,   28 

Turnpike  Co.  v.  Ferree,  17  N.  J.  Eq.  Atl.    281 ;    Fay    v.    Gray,    124    Mass. 

117;    Broadway    Bank    v.    McElrath,  500;    Lawrence    v.    Maxwell,    53    N. 

13   N.  J.   Eq.  24;   Leavitt  v.   Fisher,  Y.  19. 

4  Duer.  (N.  Y.)  1.  "Jones  Col.  Sec,  §  503. 

'Vanhorn  v.   Gilbough,  21   Am.  L. 
Reg.   (N.  S.)    171. 


1 1  13  CUSTOMS   AND   USAGES.  §    I  77/ 

even  if  the  sale  were  at  public  auction."  A  custom  of  brokers  to 
sell  at  the  stock  exchange  without  the  notice  required  at  common 
law,  stocks  and  bonds  deposited  as  collateral  is  unreasonable  and 
void.^^  In  a  case  in  New  York,  where  an  offer  of  testimony  was 
made  to  show  a  custom  of  brokers  to  sell  without  notice  the  tes- 
timony was  held  to  be  inadmissible.  In  this  case  the  court  said : 
"The  broker  has  no  right  to  sell  without  notice.  A  practice  or 
custom  to  do  otherwise  would  have  no  more  force  than  a  custom 
to  protest  notes  on  the  first  day  of  grace,  or  a  custom  of  brokers 
not  to  purchase  the  shares  at  all,  but  to  content  themselves  with 
a  memorandum  or  entry  in  their  books  of  the  contract  made 
with  their  customer.  Such  practice,  in  each  case,  would  be  in 
hostility  to  the  terms  of  the  contract,  an  attempt  to  change  its 
obligation,  and  would  be  void.  The  proof,  therefore,  cannot 
be  legally  given. "^* 

§  1777.  Landlord  and  tenant. — There  would  seem  to  be  a 
large  field  for  resort  to  customs  and  usages  in  the  interpretation 
of  contracts  between  landlord  and  tenant.  "The  common  law,  in- 
deed, does  so  little  to  prescribe  the  relative  duties  of  landlord  and 
tenant,  since  it  leaves  the  latter  at  liberty  to  pursue  any  course  of 
management  he  pleases,  provided  he  is  not  guilty  of  waste,  that 
it  is  by  no  means  surprising  that  the  courts  should  have  been 
favorably  inclined  to  the  introduction  of  those  regulations  in  the 
mode  of  cultivation  which  custom  and  usage  have  established  in 
each  district  to  be  the  most  beneficial  to  all  parties."^^  The  rela- 
tion of  landlord  and  tenant  of  farm  lands  imposes  an  obligation 
to  farm  the  land  according  to  the  customs  of  the  country.^®  It 
is  a  well  settled  custom  that  an  outgoing  tenant  is  entitled  to 

"Morris  Canal  &  Banking  Co.  v.  "  Markham    v.    Jaudon,    41    X.    Y. 

Lewis,  12  N.  J.  Eq.  323;  Wheeler  v.  235. 

Newbould,  16  N.  Y.  392,  5  Duer.  (N.  "  Hutton  v.  Warren,  1   Mee.  &  W. 

Y.)    29;    Brown    v.    Ward,    3    Duer.  466. 

(N.    Y.)    660;    Atlantic    Fire   &    Ma-  "Leigh    v.    Hewitt.    4    East     154; 

rine  Ins.  Co.  v.  Boles,  13  N.  Y.  Super.  Martin  v.  Gilham,  7  Ad.  &  El.  540; 

Ct    583;    Moody   v.   Andrews,   39  N.  Sutton  v.  Temple,  12  Mees.  &  W.  52; 

Y.    Super.    Ct.    302,    affd.    64    N.    Y.  Powley  v.  Walker,  5  T.  R.  373 ;  Fal- 

641.  mouth   V.    Thomas,    1    Cromp.    &    M. 

"Wheeler  v.   Newbould.    16  N.   Y.  88;  Angerstein  v.  Handson,  1   C.   M. 

392;  Lawrence  v.  Maxwell,  53  N.  Y.  &    R.    789;    Barrington    v.    Justice,   2 

19;   Smith  v.   Savin,   141   N.   Y.  315,  Clark   (Pa.)   501. 
36  N.  E.  338. 


§    1778  CONTRACTS.  III4 

crops  which  must  be  harvested  after  the  expiration  of  his  term." 
The  right  of  a  tenant  to  cut  wood  on  the  premises  may  be  deter- 
mined by  local  custom.^*  Custom  of  the  country  may  determine 
the  time  when  a  lease  expires  where  the  instrument  is  silent  in  the 
matter."  But  the  general  principle  applies  here  as  elsewhere 
that  the  plain  terms  of  a  lease  may  not  be  varied  or  contradicted 
by  evidence  of  usage  or  custom.'"  A  custom  or  usage  that  the 
landlord  retains  control  of  the  outside  yard  and  roof  of  a  dwelling 
leased  by  him  is  not  binding  where  it  contradicts  the  plain  pro- 
visions of  the  agreement  of  the  parties.  It  would  also  violate 
a  rule  of  law.^^  A  landlord  may  not  add  a  condition  to  his  lease 
based  on  his  individual  custom  with  his  tenants  where  the  lease 
is  silent  as  to  the  condition.  The  principle  of  usage  does  not  ex- 
tend to  the  business  rules  or  customs  of  individuals.^^ 

§  1778.  Measurements  and  vireights. — Questions  of  weights 
and  measures  are  largely  determined  by  usage  in  the  absence  of 
controlling  statutes  and  express  provisions  in  contracts.  Thus, 
where  a  written  contract  for  laying  brick  was  in  controversy,  and 
it  was  silent  as  to  the  method  of  measuring  the  quantity  of  the 
brick,  parol  evidence  was  allowed  to  show  the  custom  in  respect 
to  such  measurement.^^  So  also,  where,  in  an  action  to  foreclose 
a  mechanic's  lien  on  an  irrigating  ditch,  the  contract  for  the  con- 
struction of  the  ditch  was  silent  as  to  the  basis  of  estimates  of 

"Wiggleworth  v.  Dallison,  1  Doug.  Price,  8  Watts.    (Pa.)    282;  34  Am. 

201 ;  Holding  v.  Pigott,  7  Bing.  465 ;  Dec.  465. 

Beavan     v.     Delahay,    1    H.     Bl.    5 ;  "  Honywood   v.    Honywood,    18   L. 

Boraston  v.  Green,  16  East  71 ;  Grif-  R.    Eq.   306. 

fiths  V.  Puleston,  13  Mee.  &  W.  358;  "Webb  v.   Plummer,  2  B.  &  Aid. 

Caldecott  v.    Smythies,   7    Car.   &    P.  746. 

808 ;  Dorsey  v.  Eagle,  7  Gill.  &  J.  '"  Thorpe  v.  Eyre,  1  Ad.  &  El.  926 ; 
(Md.)  321;  Howell  v.  Schenck,  24  Stafford  v.  Gardner,  L.  R.  7  C.  P. 
N.  J.  L.  89 ;  Society  for  Establishing  242 ;  Sutton  v.  Temple,  12  Mee.  &  W. 
Useful  Manufactures  v.  Haight,  IN.  52 ;  Roberts  v.  Barker,  1  Cromp  & 
J.  Eq.  393;  Foster  v.  Robinson,  6  M.  808;  Roxburghe  v.  Robertson,  2 
Ohio  St.  90;  Stultz  v.  Dickey,  5  Bligh  156;  Clarke  v.  Roystone,  13 
Binn.  (Pa.)  285,  6  Am.  Dec.  411;  Mee.  &  W.  752;  Wiltshear  v.  Cot- 
Carson  V.  Blazer,  2  Bin.  (Pa.)  475,  trell,  1  El.  &  Bl.  674;  Hughes  v. 
4  Am.  Dec.  463 ;  Demi  v.  Bossier.  1  Gordon,  1  Bligh  287. 
Pen.  &  W  (Pa.)  224;  Iddings  v.  '"  Shute  v.  Bills.  191  Mass.  433,  78 
Nagle,  2W.  &  S.  (Pa.)  22;  Hunter  v.  N.  E.  96,  7  L.  R.  A.  (N.  S.)  965, 
Jones,   2    Brewst.    (Pa.)    370;    Craig  114  Am.  St.  631. 

V.  Dale,  1  W.  &  S.  (Pa.)  509;  Biggs  v.  ^Thompson  v.  Exum,  131  N.  Car. 

Brown,  2   S.   &   R.    (Pa.)    14;   Qark  111,  42  S.  E.  543. 

V.  Harvey,  54  Pa.  St.  142 ;  Forsythe  v.  ^  Rogers  v.   Hayden,  91   Maine  24, 


1 1 15  CUSTOMS   AND   USAGES.  §    1 778 

work  and  labor,  testimony  of  custom  was  aamissible.**  Where 
the  plaintiff  sold  to  the  defendant  granite  blocks  at  specified  prices 
per  "square  yard,"  with  the  understanding  that  they  were  to 
be  used  in  the  construction  of  a  sewer,  and  there  was  no  express 
agreement  as  to  how  the  number  of  "square  yards"  should  be 
determined,  whether  by  a  measurement  of  the  area  of  the  com- 
pleted stone  work  in  the  sewer,  or  by  taking  the  aggregate 
measurement  of  the  faces  of  the  blocks,  it  was  held,  in  an  action 
for  the  price  of  the  blocks,  that  the  circumstances  with  reference 
to  which  the  contract  was  made  might  be  considered  for  the  pur- 
pose of  discovering  the  real  intention  of  the  parties,  and  that 
proof  of  a  local  custom,  under  such  circumstances,  to  measure 
stone  in  the  completed  structure  was  admissible,  although  such  a 
custom  had  not  been  pleaded.*'  And  in  an  action  for  mason 
work,  at  a  specified  price  per  perch,  where  the  dispute  is  as  to  the 
number  of  perches  contained  in  the  work,  a  uniform,  universal 
and  notorious  custom  of  measurement  among  masons  may  be 
binding,  although  the  result  of  such  measurement  is  greater  than 
the  actual  contents.^^  Thus  in  the  absence  of  a  provision  for 
measurement  in  a  building  contract,  a  custom  in  measuring  brick 
walls  of  counting  the  openings  made  by  doors  and  windows  as 
part  of  the  solid  wall  will  prevail.-^  A  standard  in  general  use  for 
the  measurement  of  standing  timber  may  be  used  for  that  purpose, 

39   Atl.    283;    Walker   v.    Syms,    118  paid.      Defendants    answered    by    a 

Mich.  183,  76  N.  W.  320;   Richlands  counterclaim,    stating    that    it    is    the 

Flint  Glass  Co.  v.  Hiltebeitel,  92  Va.  custom    for    the    purchasers    of    po- 

91,  22  S.  E.  806.  tatoes   on    such    island    to    furnish    a 

"Bradbury  v.  Butler,  1  Colo.  App.  boat   for  their   shipment,   and   notify 

430,  29  Pac.  463.  the  seller  when  it  will  be  there,  which 

"Rogers  v.   Hayden.  91   Maine  24,  plaintiffs,    though    knowing    of    such 

39  Atl.  283 ;  Breen  v.  Moran,  51  Minn,  custom,  had   failed  and   neglected  to 

525,  53  N.  W.  755.  And  see  Wall  v.  do,  in  consequence  of  which  the  po- 

Bailey,   49   N.   Y.   464,   10   Am.   Rep.  tatoes   were  destroyed.     It   was  held 

407,   thax   the  local   usage   in    such  a  that    it    was    proper    to    admit    evi- 

case  need  not  ordinarily  be  pleaded,  dence  of   such   custom,  if  known   to 

See  Lowe  v.  Lehman,  15  Ohio  St.  179.  plaintiffs    at    the    time    the    contract 

^McCullough  V.  Ashbridge,  155  Pa.  was     made,    as    such     contract    was 

St.    166,    26    Atl.    10.      Plaintiffs    en-  silent   as    to   the    consignee   or   place 

tered  into  a  written  contract  to  pur-  of  destination  of  the  potatoes,  or  who 

chase    a    large    quantity    of    potatoes  should    furnish    the    boat    on    which 

on    Brown's    island,    paying    part    of  they    should    be    shipped.    Holmes    v. 

the       purchase-price.        Subsequently  Wliitaker,  23   Ore.  319.   31   Pac.  705. 

high    waters    destroyed   the   potatoes,  "Walker   v.    Syms,    118   Mich.    183, 

and    plaintiffs   then    brought    suit    to  76  N.  W.  320;  Lowe  v.  Lehman,  15 

recover  back  the  amount  of   money  Ohio  St.  179. 


§    1779  CONTRACTS.  III6 

provided  it  be  a  standard  in  general  use.^®  On  the  question  of 
weights  a  custom  may  be  shown  which  requires  the  deduction  of 
the  weight  of  the  containers,  as  for  example  the  deduction  of  the 
weight  of  sacks  in  which  grain  is  contained. ^^  And  in  an  action 
for  the  price  of  tobacco,  in  the  absence  of  an  express  agreement 
between  the  parties  in  regard  to  the  manner  of  ascertaining  the 
net  weight,  it  was  held  competent  for  plaintiffs  to  show  that, 
according  to  the  custom  of  the  tobacco  trade,  defendant  was  re- 
quired to  take  it  at  the  last  ascertained  weight,  looking  to  plain- 
tiffs to  make  good  any  loss  or  diminution.^"  In  a  case  where  the 
question  was  the  weight  of  structural  steel  where  it  appeared  that 
the  weight  was  customarily  computed  from  measurement  of 
dimensions  and  by  reference  to  tables,  and  not  by  actual  weight, 
it  was  held  proper  to  show,  in  an  action  on  the  contract  for  the 
agreed  price,  that  the  weight  of  steel,  by  general  custom  in  this 
business  referred  to  the  gross  weight  as  per  measurement,  and 
not  to  the  net  weight  of  steel  actually  employed  in  the  structure 
after  the  necessary  trimming  and  shaping  for  fitting  the  parts  to- 
gether had  been  completed. ^^ 

§  1779.  Partnership  customs  and  usages. — Articles  of  part- 
nership may  be  enlarged  by  a  general  usage  or  habit,  of  conduct- 
ing the  affairs  of  the  firm  acquiesced  in  by  all.  the  members.^* 
The  authority  of  one  partner  to  act  for  and  charge,  the  firm  may 
be  shown  by  a  course  of  business  between  the  members-  of  the 
firm.^^  But  the  "course  of  business"  to  bind  an  individual  part- 
ner, who  did  not  expressly  authorize  it,  must  be  such  as  to  indicate 
that  he  not  only  knew  the  course  of  dealing  but  assented  to  it  as 
a  regular  course  of  dealing.^*     Infrequent  acts  are  not  sufficient 

^Strickland     v.     Richardson,     135  "' Pursley  v.   Ramsey,  31   Ga.   403; 

Ga.  513,  69  S.   E.  871.  Woodward     v.     Winship,     12     Pick. 

=*  United   States  v.   Kerr,   196  Fed.  (Mass.)    430;    Davis    v.    Dodge,    30 

503  Mich.    267;    Midland    National    Bank 

'"Thompson    v.    Brannin,    94    Ky.  v.    Schoen,    123    Mo.    650,    27    S.    W. 

490     15     Ky.     Law    36,    21     S.    W.  547;  Burchell  v.  Voght,  35  App.  Div. 

1057;    Loeb   v.    Crow,    15    Tex.    Civ.  (N.   Y.)    190,   55   N.   Y.   S.   80,   affd. 

App.  537,  40  S.  W.  506.  164  N.  Y.  602,  58  N.  E.  1085 ;  Gallo- 

" Commercial    Tribune    Bldg.    Co.  way  v.  Hughes,   1   Bailey    (S.   Car.) 

V.    Potthorf   &c.   Iron    Co.,   28   Ohio  553. 

C.  C.  439.  '^Eady   v.    Newton    Coal    &c.    Co., 

•'  Eady   v.    Newton   Coal   &c.    Co.,  123  Ga.  557,  51  S.  E.  661,  1  L.  R.  A. 

123  Ga.  557,  51   S.  E.  661,  1  L.  R.  (N.  S.)  650. 
A.  (N.  S.)  650. 


in/  CUSTOMS   AND    USAGES.  §    1 780 

to  show  a  course  of  dealing.  Thus,  the  fact  that  a  partnership 
may  frequently  have  drawn  checks  against  its  funds  in  bank  to 
discharge  the  individual  debt  of  a  member  does  not  constitute  a 
course  of  dealing  that  will  justify  the  bank  in  assuming  that  it  is 
in  the  scope  of  the  partnership  business  to  pledge  its  credit  and 
give  its  note  in  satisfaction  of  a  debt  due  by  one  of  the  partners 
to  the  bank.^°  Generally  speaking,  the  act  of  one  member  of  the 
firm  inconsistent  with  the  practice  and  usage  of  the  business  of 
the  partnership  is  outside  the  scope  of  the  partnership  as  a  mat- 
ter of  fact  and  a  party  thus  acting  with  the  firm  will  not  be  heard 
to  plead  ignorance.'* 

§  1780.  Sales  of  goods. — Usages  as  to  the  time  and  place 
of  the  inspection  of  goods  by  the  purchaser  or  his  agent  as  a 
condition  to  their  acceptance  are  ordinarily  binding,  unless 
waived,  where  the  usage  is  well  established  and  of  such  notoriety 
as  to  charge  the  purchaser  with  knowledge  of  the  existence  of  the 
usage.''^  The  failure  of  the  seller  to  deliver  the  quantity  of  the 
commodity  purchased  under  an  express  contract  cannot  be  ex- 
cused by  a  trade  usage.'*  Where  goods  are  purchased  on  an  ab- 
solute written  order,  the  purchaser  cannot  defeat  a  recovery  of  a 
balance  due  on  the  order,  by  showing  a  local  custom  which  allows 
him  to  return  unsold  goods  and  receive  a  credit  therefor.  This 
would  allow  a  custom  to  vary  the  term  of  an  express  contract.^'' 
Where  an  express  warranty  is  given  with  a  commodity,  the  seller 
cannot  defeat  a  recovery  on  the  warranty  by  showing  the  failure 
of  the  purchaser  to  comply  with  a  custom  for  the  return  of  the 
commodity  for  replacement  by  the  seller.  This  would  tend  to 
contradict  the  terms  of  the  contract.*"  In  a  case  where  the  ac- 
ceptance of  an  order  was  unconditional,  and  the  time  of  delivery 
was  not  stated  so  that  the  law  would  imply  delivery  within  a 
reasonable  time,  it  was  held  that  the  seller  could  not  show  a  cus- 
tom in  the  trade  making  delivery  subject  to  the  exigencies  of 

"  People's    Saving   Bank   v.    Smith,  '^  Pittsburgh    Coal    Co.    v.    Xorthy, 

114  Ga.  185,  39  S.  E.  920.  158  Mich.  530,  123  X.  W.  47. 

"Biggs  V.  Hubert,  14  S.  Car.  620.  ■'"Gladstone  v.  Levine    (Ind.  App), 

"Guggenheim  v.  Hoffman,   128  111.  97  X.  E.  184. 

App.    289;    Motlev   v.    Elmhorst,    142  "Steele  v.  Andrews.  144  Iowa  3o0, 

App.  Div.  (N.  Y.')  830,  127  N.  Y.  S.  121  N.  W.  17. 
625. 


§    1 78 1  CONTRACTS.  IIII8 

transportation,  and  that  the  contract  of  sale  could  not  be  binding 
if  delivery  could  not  be  made  within  a  reasonable  time.'**  But  a 
plainly  expressed  condition  may  be  qualified  by  a  custom  where 
the  condition  has  a  meaning  in  the  trade  different  from  the  popu- 
lar meaning.  Thus  where  a  contract  called  for  amber  colored 
bottles  of  a  stated  weight,  it  was  held  proper  to  show  that  it  was 
impossible  to  produce  bottles  absolutely  uniform  in  weight  and 
color  and  that  the  custom  of  manufacturers  has  established  a 
limit  of  variations  to  be  allowed.*^  It  is  usually  the  custom  of  the 
place  of  acceptance  and  the  place  from  which  the  offer  is  made 
that  will  prevail.^^ 

§  1781.  Charges  for  professional  services. — ^There  is  a  cus- 
tom obtaining  in  some  localities  for  professional  men  to  render 
professional  aid  to  each  other  without  charge,  but  it  is  believed 
that  this  custom  has  not  yet  reached  the  status  of  a  binding  usage. 
It  is  more  in  the  nature  of  an  accommodation  usage  or  an  ex- 
change of  courtesies.**  There  is  authority  that  it  is  custom  of  the 
medical  profession  to  make  the  consulting  physician's  fee  a  charge 
against  the  patient  and  not  against  the  attending  physician  who 
requests  the  service  of  the  consulting  physician.*^  On  the  ques- 
tion of  custom  to  determine  the  amount  of  attorneys'  fees  it  has 
been  observed :  "Where  services  of  the  same  general  nature  and 
extent  are  of  such  frequent  recurrence  among  the  legal  profession 
that  a  certain  fee,  or  a  certain  basis  for  its  estimation,  has  become 
customary  and  usual  in  such  cases,  evidence  thereof  is  proper  to 
show  what  is  reasonable. "^'^  On  the  question  of  the  compensa- 
tion of  an  architect,  resort  may  be  had  to  usage  where  the  con- 
tract is  silent  or  incomplete  in  this  respect.*' 

*"  Aleaz   Lumber    Co.   v.   McNeeley  *^  Baer  v.  Williams,  75  N.  J.  L.  30, 

(Wash.),  108  Pac.  621.  66  Atl.  961. 

*^  Whitney  v.  Hop  Bitters  Mfg.  Co.,  ^  Faulk    v.     Hobbie    Grocery    Co. 

SO  Hun    (N.   Y.)    601,   18   N.   Y.   St.  (Ala.),  59  So.  450;  Knight  v.  Russ, 

891    2  N.  Y.  S.  438,  affd.   121   N.  Y.  77  Cal.  410,   19  Pac.  698;  Nathan  v. 

682i   24   N.    E.    1098.    See   also,   Eld-  Brgnd,    167   111.   607,   47    N.    E.    771; 

ridge  v.  McDermott   (Mass.),  59  N.  Stanton  v.  Embry,  93  U.  S.  548,  23 

E.  806.  L.  ed.  983;  Vilas  v.  Downer,  21  Vt. 

'*"  Somerset  Door  &c.  Co.  v.  Weber  419. 

Co.,  43  Pa.   Super.  Ct.  290.  *^  Weber    v.    Noyes,    151    111.    App. 

"Madden  v.  Blain,  66  Ga.  49.  But  596;   Lowinson  v.   McKenna   126   N. 

see    Bremerman    v.     Hayes,    9    Pa.  Y.  S.  604. 
Super.  Ct.  8. 


1 1 19  CUSTOMS   AND   USAGES. 


/o^ 


§  1782.  Interest  on  contracts. — Interest  can  only  be  de- 
manded on  pure  contracts  in  cases  specified  in  the  statute  or 
where  there  has  heen  a  special  promise  to  pay  such  interest  or  such 
a  promise  can  be  inferred  from  the  circumstances,  or  the  particu- 
lar mode  of  dealing  adopted  by  the  parties  or  the  usage  of  the 
trade  in  which  they  dealt.**  A  custom  to  charge  interest  on  ac- 
counts after  maturity  does  not,  generally,  create  an  implied  con- 
tract to  pay  such  interest  unless  the  debtor  knew  of  the  custom.** 
A  promise  to  pay  interest  on  an  advancement  may  be  implied 
from  a  uniform  custom  or  usage  in  the  particular  trade  governing 
transactions  in  which  the  parties  are  engaged.^" 

§  1783.  Theatrical  and  amusement  contract. — A  usage 
which  forbids  an  actor  to  perform  under  another  management 
during  the  existence  of  his  contract  will  generally  be  read  into  a 
contract  for  his  services  which  is  silent  in  this  respect.^^  Oral 
evidence  is  admissible  to  explain  the  meaning  of  the  term  "sea- 
son" in  a  theatrical  contract.  In  doing  this,  the  court  does  no 
more  than  when  he  refers  to  a  dictionary  to  ascertain  the  meaning 
of  a  word  and  this  reference  does  not  amount  to  the  use  of  a  cus- 
tom to  vary  a  contract.^"  In  a  case  where  a  contract  was  entered 
into  with  a  baseball  player  for  a  stated  period,  it  was  held  that  the 
employer  could  not  justify  the  discharge  of  the  player  on  the 
ground  that  a  custom  existed  which  gave  him  the  right  to  dis- 
charge him  on  ten  days'  notice  for  definite  work.  This  would 
allow  the  termination  of  a  special  contract  at  will  by  a  custom 
not  known  to  the  parties. ^^     Where  the  parties  make  a  lease  con- 

*'Sammis  v.   Clark,   13  111.  544.  1074  (Witness  is  competent  to  testify 

*'Rayburn  v.  Day,  27  111.  46;  Veiths  as  to  meaning  of  term).    In  the  case 

V.    Hagge,    8    Iowa    163;    Liotard    v.  of  a  written  contract  for  employment 

Graves,  3  Caines    (N.  Y.)   226;   Est-  as  a  theater  manager  for  an  indefinite 

erly  v.   Cole,    1    Barb.    (N.    Y.)    235,  term  at  a  stated  weekly  salary,  evi- 

affd.  3  N.  Y.  502;  Heyward  v.  Sear-  dence   was    held   admissible   to    show 

son,    1    Spear    (S.    Car.)    249;   Wood  that    the    word    "weekly,"    according 

V.  Smith,  23  Vt.  706.  to  theatrical  custom  means  the  weeks 

'"Ayers    v.     Metcalf    39    111.     307;  of  the  theatrical  season,   and  not   of 

Lamb  v.  Klaus,  30  Wis.  94.  the  entire  year.      Such   evidence   e.x- 

"  Montague  v.   Flockton,  L.   R.   16  plains,    but   does    not   vary    the   term 

Eq.  189.  of  the  contract.  Leavitt  v.  Kennicott, 

"Montague  v.   Flockton.   L.  R.    16  157   111.  235.  41   N.  E.  1Z1 . 
Eq.  189;  Mvers  v.  Walker,  24  111.  133;        "Baltimore  Base  Ball  Club  &c.  Co. 

Leavitt  v.  kennicott.   157  111.  235.  41  v.  Pickett,  78  Md.  375,  28  Atl.  279,  22 

N.    E.    in\    Mcintosh   v.    Miner,    11  L.    R.    A.    690,   44   Am.   St.   304. 
App.  Div.   (N.  Y.)  483,  55  N.  Y.  S. 


§    1784  CONTRACTS.  1 1 20 

tract  with  a  well-established  theatrical  custom  in  mind  and  can  be 
fairly  said  to  have  made  the  agreement  in  reference  to  it,  such 
custom  can  be  proved  and  will  be  construed  in  conjunction  with 
the  terms  of  the  lease.  The  rule,  of  course,  depends  for  its  appli- 
cation upon  the  knowledge  of  the  parties  of  such  custom  or  usage 
and  their  evident  intent  of  making  the  contract  with  this  custom 
or  usage  in  mind.°* 

§1784.  Custom  of  sending  telegraph  message  by  tele- 
phone.— A  custom  by  a  telegraph  company  to  receive  mes- 
sages for  transmission  by  telephone  which  is  of  long  standing, 
will  render  the  contract  to  transmit  the  message  binding  and  the 
company  liable  for  failure  to  deliver  the  message.^^  "If  such 
be  a  customary  method  of  receiving  messages,  it  cannot  be 
claimed  that  a  message  so  received  and  transmitted  over  the  wire 
for  the  usual  hire  was  not  received  by  the  company,  or  that  in 
the  act  of  receiving  and  writing  down  the  message  the  company's 
employee  was  acting  as  the  servant  of  the  sender."^® 

§  1785.    General  custom  need  not  be  specially  pleaded. — It 

is  not  required  that  a  general  custom,  of  which  the  court  will  take 
judicial  notice,  should  be  specially  pleaded."  Where  the  plead- 
ing alleges  a  general  custom  as  opposed  to  a  particular  usage  it  is 
not  defective  for  failure  to  aver  knowledge  of  the  parties.*^ 


58 


§  1786.  Local  customs  and  usages  must  be  pleaded. — The 
rule  is  well  settled  that  a  special  or  particular  custom  or  usage 
must  be  specially  pleaded  in  order  to  permit  evidence  to  show 
the  existence  of  such  custom  or  usage.^^     The  pleader  of  a  local 

"  Wigglesworth  v.  Dallison,  1  mond  v.  Barry,  109  Va.  274,  63  S. 
Doug.  201;  American  Academy  of  E.  1074;  Ryder-Gougar  Co.  v.  Gar- 
Music  V.  Bert,  26  Wkly.  Notes  Gas.  retson,  53  Wash.  71,  101  Pac.  498, 
(Pa.)  351,  8  Pa.  County  Gt.  223;  Van  132  Am.  St.  1053;  John  O'Brien 
Ness  V.  Pacard,  2  Pet.  (U.  S.)  137,  Lumber  Co.  v.  Wilkinson,  123  Wis. 
7  L   ed   374.  272,  101  N.  W.  1050;  Hewitt  v.  John 

"Western  Union  Tel.  Co.  v.  Todd  Week  Lumber  Co.,  77  Wis.  548,  46  N. 

(Ind.  App.),  53  N.  E.   194;  Gore  v.  W.  822. 

Western  Union  Tel.   Co.    (Tex.   Civ.  ""Doell    v.    Schrier,    36   Ind.    App. 

App.),  124  S.  W.  977.  253,  75  N.  E.  600. 

""  Western  Union  Tel.  Co.  v.  Todd  "'  Elmore  v.    Parish,   170   Ala.   499, 

(Ind.  App.),  53  N.  E.  194.  54    So.    203;    Antomarchi's    Exr.    v. 

^Templeman    v.    Biddle,     1     Har.  Russell,  63  Ala.  356,  35  Am.  Rep.  40; 

(Del.)   522;  Stultz  v.  Dickey,  5  Bin.  Goldsmith    v.    Sawyer.    46   Cal.   209; 

(Pa.)    285,    6    Am.    Dec.    411;    Rid-  Wilmington  City  R.  Co.  v.  White,  6 


1121 


CUSTOMS  AND  USAGES. 


§  1786 


usage  should  show  that  the  usage  has  all  the  requisites  of  a  good 
usage/''^  including  knowledge  of  its  existence  by  the  parties."^ 
Where  "a  particular  or  local  custom  is  relied  upon,  it  must  be 
pleaded  and  pleaded  so  explicitly  that  it  will  appear  not  only 
that  such  local  or  particular  custom  existed,  but  that  both  parties 
had  knowledge  of  it  at  the  time  the  contract  was  made,  and,  in 
addition,  contracted  with  reference  to  it."°-  It  should  be  alleged 
with  particularity  that  the  contract  was  entered  into  with  refer- 


Del.  363.  66  Atl.  1009 ;  Templcman  v. 
Biddle,  1  Har.  (Del.)  522;  Pittsburg 
Steel  Co.  V.  Streety,  61  Fla.  393,  401, 

55  So.  67;  Maddox  v.  Washburn- 
Crosby  iMilliriK  Co.,  135  Ga.  539,  69  S. 
E.  821;  Hendricks  v.  Middlebrooks 
Co.,  118Ga.  131,44  S.  E.  835  ;  Mobile 
Fruit  &  Trading  Co.  v.  Judy,  91  111. 
App.  82;  McCurdv  v.  Alaska  &c. 
Commercial  Co.,  102  III.  App.  120; 
Gladstein  v.  Levine  (Ind  App.),  97 
N.  E.  184;  Sherwood  v.  Home  Sav. 
Bank,  131  Iowa  528,  109  N.  W.  9; 
Farmers'  &  Merchants'  Bank  v. 
Wood  (Iowa),  118  N.  W.  282;  Lind- 
ley  V.  First  National  Bank,  76  Iowa 
629,  41  N.  W.  381,  2  L.  R.  A.  709, 
14  Am.  St.  254;  Eagle  Distilling  Co. 
V.  McFarland,  14  Ky.  L.  860;  Right 
V.  Bacon,  126  Mass.  10,  30  Am.  Rep. 
639;  Turner  v.  Fish,  28  Miss.  306; 
Staroske  v.  Pulitzer  Pub.  Co.,  235 
Mo.  67,  138  S.  W.  36;  Hayden  v. 
Grillo's  Admr..  42  Mo.  App.  1  :  Har- 
nett V.  Holdredg,  73  Xebr.  570.  103 
N.  W.  277,  119  Am.  St.  905;  First 
National  Bank  v.  Farmers'  &c.  Bank, 

56  Nebr.  149.  76  N.  W.  430;  Society 
for  Establishing  Useful  Manufac- 
tures V.  Haight.  1  N.  J.  Eq.  393; 
Overman  v.  Hoboken  Citv  Rank,  30 
N.  J.  L.  61;  Miller  v.  Fischer,  142 
App.  Div.  (N.  Y.)  172,  126  N.  Y.  S. 
996;  Dommerich  v.  Garfunkel,  32 
Misc.  (N.  Y.)  740,  65  N.  Y.  S.  564. 
nffd.  33  ^lisc.  (N.  Y.)  743.  67  N.  Y. 
S.  167;  Smith  v.  Stewart.  29  Okla.  26, 
116  Pac.  182;  Girard  Life  Insurance 
&-c.  Trust  Co.  V.  Mutual  Life  Ins.  Co. 
of  N.  Y..  13  Phila.  (Pa.)  90;  Amer- 
ican Lead  Pencil  Co.  v.  Nashville.  C. 
8z  St.  L.  R.  Co..  124  Tcnn.  57.  134  S. 
'^^^.  613;  Anderson  v.  Roege  (Tex.). 
28  S.  W.  106;  Standard  Paint  Co.  v. 
San  Antonio  Hardware  Co.  (Tex. 
Civ.  App.).  136  S.  W.  1150  (refund- 
ing  freight  charges  by  wholesaler)  ; 

71 — Contracts,  Vol.  2 


Gano  V.  Palo  Pinto  County,  71  Tex. 
99,  8  S.  W.  634;  Norwood  v.  Alamo 
Fire  Ins.  Co.,  13  Tex.  Civ.  App.  475, 
35  S.  W.  717;  Patton  v.  Texas  &  P. 
R.  Co.  (Tex.  Civ.  App.),  137  S.  W. 
721 ;  Oriental  Luml)er  Co.  v.  Blades 
Lumber  Co.,  103  Va.  730,  50  S.  E. 
270;  Liggatt  v.  Withers,  5  Grat. 
(Va.)  24,  50  Am.  Dec.  95.  A  local 
usage  as  to  the  weight  of  cotton 
bales  must  be  pleaded ;  "A  rule  of 
pleading  requires  that  all  those  parts 
of  a  contract  counted  upon,  which  are 
material  for  the  purpose  of  enabling 
that  court  to  form  a  just  idea  of  what 
the  contract  actually  was,  or  which 
are  necessary  for  the  purpose  of  fur- 
nishing the  jury  with  a  criterion  in 
the  assessment  of  damages,  should  be 
stated  with  certaintv  and  precision." 
Elmore  v.  Parish.  170  Ala.  499,  54 
So.  203.  A  particular  usage  was  not 
sufficiently  charged  in  a  comprint 
wliich  alleged  that  a  newspaper  pub- 
lisher had  established  a  system  of_  de- 
livery of  its  newspapers  by  carriers, 
that  where  a  route  was  acquired  by  a 
carrier,  it  was  understood  between 
the  publisher  and  tlie  carrier,  accord- 
ing to  custom  which  had  existed  for 
more  than  fifteen  years,  that  tJie  car- 
rier had  the  exclusive  righf  for  an 
indefinite  period  of  time  to  sell  the 
newspaper  to  subscribers  on  his 
route.  Staroske  v.  Pulitzer  Pub.  Co., 
235  Mo.  67,  138  S.  W.  36. 

""Mobile,  J.  &  K.  C.  R.  Co.  v.  Bay 
Shore  Lumber  Co..  158  Ala.  622.  48 
So  377:  Wallace  v.  Morgan.  23  Tnd. 
309-  Poland  v.  Hollander.  62  Misc. 
(n'Y)  523.  115  N.  Y.  S.  1042. 

"  Smart  v.  Haase.  79  Conn.  587.  65 
Atl   Q72. 

*'  StnrosVe  v.  Pulitzer  Pub.  Co..  235 
ATo  67  138  S.  W.  36.  See  also.  Har- 
rison v.  Birrell.  58  Ore.  410.  115  Pac. 
141. 


§    1787  CONTRACTS.  1 1 22 

ence  to  the  usage  relied  npon."^  An  allegation  that  by  a  general 
custom  prevailing  at  the  time  of  the  execution  of  a  timber  con- 
tract, burr  oak  was  classified  as  white  oak,  was  held  sufiicient 
without  the  allegation  of  knowledge  of  the  custom  by  both  parties 
to  the  contract/*  In  an  action  against  a  warehouse  company  foi 
the  value  of  tobacco  destroyed  by  fire  while  deposited  with  it, 
where  the  plaintiff  alleged  a  custom  that  warehousemen  should 
insure  their  customers'  tobacco,  and  that  plaintiff  deposited  his 
tobacco  with  defendant  with  reference  to  such  custom,  it  is 
proper  to  charge  that,  if  defendant  notified  plaintiff  that  the 
tobacco  was  held  at  the  warehouse  at  plaintiff's  risk,  and  plaintiff 
acquiesced  therein,  the  finding  should  be  for  defendant,  although 
there  was  such  a  custom  as  was  alleged.*'^ 

§  1787.  Customs  and  usages  as  evidence  need  not  be 
pleaded. — It  is  not  required  that  a  usage  be  pleaded  wdiere  it 
is  merely  incidental  to  an  implied  contract  and  is  relied  upon 
only  as  evidence  of  some  fact  in  issue.  The  custom  or  usage  in 
the  latter  case  may  be  offered  in  evidence  to  interpret  and  apply 
the  facts  proved  and  relied  upon  though  the  custoni  is  not 
pleaded."^  Proof  of  a  custom  not  pleaded  is  sometimes  allowed 
where  it  is  necessary  to  establish  an  ultimate  fact  charged  in  the 
pleading.^^ 

§  1788.    Technical  meaning  of  words  need  not  be  pleaded. 

— As  a  general  rule  the  technical  meaning  of  words  in  the  con- 
tract may  be  proved  in  an  action  on  the  contract  without  being 
specially  pleaded.^'  So  a  custom  merely  explanatory  of  words 
used  in  a  contract  need  not  be  pleaded.®^ 

§  1789.    Pleading  local  usage  in  action  for  compensation. — 

Where  there  is  no  contract  between  the  parties  except  that  which 

''Hendricks    v.    Middlebrooks    Co.,  W.   793;   Lowe  v.   Lehman.    15    Ohio 

118  Ga.  131,  44  S.  E.  835.  St.  179;  Harrison  v.  Birrell,  58  Ore. 

•^Doell  V.  Schrier,  36  Ind.  App.  253,  410,  115  Pac.  141. 

75  N.  E.  600.  "  Donk  Coal  &  Coke  Co.  v.  Thil,  128 

*' Western  Warehouse  Co.  v.  Hayes,  111.  App.  249. 

97  Ky    16.  29  S   W.  738.  "^  Steidtmann  v.  Joseph  Lay  Co.,  234 

«'  Arkadelphia   Lumber    Co.   v.    As-  111.  84.  84  N.  E.  640. 

man.  85    Ark.   568.    107   S.   W.    1171;  ""Globe  &  Rutgers  &c.  Ins    Co.  v. 

Sherwood   v.    Home   Sav.   Rank,   131  •  David  Moffat  Co.,  154  Fed.  13,  83  C. 

Iowa  528,  109  N.  W.  9;  Fish  v.  Craw-  C.  A.  91. 
ford  Mfg.  Co.,  120  Mich.  500,  79  N. 


I  123 


CUSTOMS    AND    USAGES. 


§    1790 


the  law  implies,  and  the  action  is  brought  to  recover  what  the 
services  performed  are  reasonably  worth,  there  does  not  seem  to 
be  any  good  reason  why  the  pleader  should  set  up  a  local  usage 
or  custom  by  which  the  value  of  the  services  are  fixed,  since  he  is 
entitled  to  recover  what  is  usual  and  customary  for  like  services.^" 

§  1790.  Judicial  notice  of  customs  and  usages. — Courts 
will  take  judicial  notice  of  settled  customs  of  general  application 
and  will  not  require  proof  of  such  customs.^ ^  "Courts  will  not 
profess  to  be  more  ignorant  than  the  rest  of  mankind."'"  But 
courts  will  not  accord  judicial  notice  to  mere  local  customs  and 
usages."  A  local  usage  must  generally  be  proved  as  any  other 
fact.  Courts  will  not  take  judicial  notice  of  it,  nor  can  its  exist- 
ence be  left  without  proof  by  witnesses  to  the  private  information 
of  jurors.''^ 

§  1791.  Judicial  notice — Examples. — Judicial  notice  will  be 
taken  of  the  general  nature  and  business  of  commercial  agencies 
and  the  reliance  of  merchants  thereon ;"  of  the  changes  and  new 


'"Hansbrough  v.  Xeal,  94  Va.  122, 
27  S.  E.  593. 

"  Butler  V.  Good  Enough  Min.  Co., 
1  Alaska  246;  Davis  v.  Hanly,  12  Ark. 
645;  McGirr  v.  Humphreys  Grocery 
Co..  192  Feci.  55 ;  Munn  v.  Burch,  25 
111.  35;  Columbia  Bank  v.  Fitzhugh, 
1  Har.  &  G.  (Md.)  239;  Merchants' 
Mut.  Ins.  Co.  V.  Wilson,  2  Md.  217; 
Samberg    v.    American    Express    Co., 

136  Mich.  639.  99  N.  W.  879;  Mc- 
Kibbin  v.  Great  Northern  R.  Co..  78 
Minn.  232.  80  N.  W.  1052;  Prudoehl 
V.  Randall.  108  Minn.  185.  121  N.  W. 
913;  Turner  v.  Fish.  28  Miss.  306; 
Crawford  Countv  v.  Hathowav,  67 
Nebr.  325,  93  N.  "W.  781.  60  L.  R.  A. 
889.  108  Am.  St.  647:  Francis  v.  Mu- 
tual Life  Ins.  Co..  55  Ore.  280.  106 
Pac.  323 :  Fleischman  v.  Southern  R. 
Co..  76  S.  Car.  237.  56  S.  E.  974,  9 
L.  R.  A.  (N.  S.)  519;  State  v.  Met- 
calf.  18  S.  Dak.  393.  100  N.  W.  923, 
67  L.  R.  A.  331 ;  Chadoin  v.  Magee, 
20  Tex.  476:  Prince  v.  Prince,  64 
Wash.  552.  117  Pac.  255:  Bernard  v. 
Benson,  58  Wash.  191,  108  Pac.  439, 

137  Am.  St.  1051.  See  1  Elliott  Ev., 
§64. 

"  Fleischman  v.  Southern  R.  Co.,  76 


S.  Car.  237,  56  S.  E.  974,  9  L.  R.  A. 
(N.  S.)  519. 

"  Sampson  v.  Gazzam,  6  Port. 
(Ala.)  123,  30  Am.  Dec.  578;  San- 
ders V.  Brown,  145  Ala.  665.  39  So. 
732;  Sullivan  v.  Hense,  2  Colo.  424; 
Meydenbauer  v.  Stevens,  78  Fed.  787; 
Rapp  V.  Grayson,  2  Blackf.  (Ind.) 
130;  Schultz  v.  Ford,  133  Iowa  402, 
109  N.  W.  614;  Gannon  v.  Chicago. 
R.  I.  &  P.  R.  Co.  (Iowa),  117  N.  W. 
966;  Livermore  v.  Avers,  86  Kans.  50, 
119  Pac.  549;  Tranter  v.  Hibbard.  108 
Kv.  265.  56  S.  W.  169 ;  Ward  v.  Ever- 
ett, 1  Dana  (Ky.)  429;  Soye  v.  Mer- 
chants' Ins.  Co.,  6  La.  Ann.  761 ;  Tur- 
ner V.  Fish,  28  Miss.  306;  Youngs  v. 
Ransom.  31  Barb.  (N.  Y.)  49;  Wood 
V.  Smith,  23  Vt.  706;  Cadv  v.  Case. 
1 1  Wash.  124,  39  Pac.  375 :  Columbian 
Banking  Co.  v.  Bowen.  134  Wis.  218, 
114  N.  W.  451.  See  1  Elliott  Ev.. 
§  64. 

"Morris  v.  Tamieson.  205  111.  ^7, 
68  N.  E.  742;  Kenvon  v.  Charlevoix 
Imp.  Co..  135  Mich.  103,  97  N.  \V. 
407;  First  Nat.  Bank  v.  Minneapolis 
&c.  Elevator  Co.,  11  N.  Dak.  280,  91 
N.  W.  436. 

"  Furry  v.   O'Connor,   1   Ind.  .\pp. 


§  1 791 


CONTRACTS. 


II24 


methods  of  carrying  on  trade;'*'  of  the  transportation  of  cattle  by 
rail;'^  of  the  general  method  of  carr3nng  the  public  mails;"  of 
the  custom  of  storing  wheat  in  mass  with  other  wheat  of  the  same 
grade  and  quality  in  general  commercial  elevators  ;'^°  of  the  cus- 
tom of  charging  interest  ;^'^  of  general  customs  in  regard  to  the 
management  and  operation  of  railroads  f^  of  the  general  custom 
of  railroads  to  carry  sample  trunks  of  commercial  travelers  as 
baggage  of  their  employers,  but  not  of  the  conditions  or  limita- 
tions under  which  it  is  done  f'  that  the  usual  method  of  canceling 
a  signature  is  to  draw  a  line  through  it  f^  that  telegraph  messages 
are  written  f*  that  applications  for  insurance  are  usually  made  to 
agents  in  their  capacity  as  representatives  of  the  company  f^  that 


573,  28  N.  E.  103;  Genesee  County 
Savings  Bank  v.  Michigan  Barge  Co., 
52  Alich.  164,  17  N.  W.  790;  Eaton, 
Cole  &  Burnham  Co.  v.  Avery,  83  N. 
Y.  31,  38  Am.  Rep.  389;  Wilmot  v. 
Lyon,  7  Ohio  Civ.  Dec.  394,  11  Ohio 
Cir.  Ct.  238.  But  see  Holmes  v.  Har- 
rington, 20  AIo.  App.  661. 

"  Richards  v.  Michigan  Cent.  R. 
Co.,  40  Fed.  165.  affd.  158  U.  S.  299, 
39  L.  ed.  991,  15  Sup.  Ct.  831 ;  Gregory 
V.  Wendell,  39  Mich.  337,  33  Am.  Rep. 
390  (of  the  ordinary  methods  of  car- 
rying on  business)  ;  Wiggins  Ferry 
Co.  v.  Chicago  &c.  R.  Co..  5  Mo.  App. 
347,  revd.  73  Mo.  389,  39  Am.  Rep. 
519,  119  U.  S.  615.  30  L.  ed.  519.  7 
.Sup.  Ct.  398 ;  Sacalaris  v.  Eureka  &c. 
R.  Co.,  18  Nev.  155,  1  Pac.  835,  51 
Am.  Rep.  737. 

"Michigan,  S.  &  N.  I.  R.  Co.  v. 
McDonough,  21  Mich.  165,  4  Am. 
Rep.  466. 

"Gamble  v.  Central  R.  Co.,  80  Ga. 
595,  7  S.  E.  315,  12  Am.  St.  276. 

"Davis  V.  Kobe.  36  Minn.  214,  30 
N.  W.  662,  1  Am.  St.  663. 

*"0'Ferrall  v.  Davis,  1  Iowa  560; 
Watt  V.  Hoch,  25  Pa.  St.  411.  But  see 
Wood  V.  Smith.  23  Vt.  706. 

"Alabama,  Midland  R.  Co.  v.  Cos- 
kry,  92  Ala.  254,  9  So.  202 ;  South  & 
North  Ala.  R.  Co.  v.  Pilgreen,  62 
Ala.  305;  Atchison.  T.  &  S.  F.  R.  Co. 
V.  Headland,  18  Colo.  477,  33  Pac. 
185,  20  L.  R.  A.  822;  Mann  Boudoir 
Car  Co.  V.  Dupre.  54  Fed.  646.  4  C. 
C.  A.  540,  21  L.  R.  A.  289;  Gulf  &c. 
R.  Co.  V.  Ellis,  54  Fed.  481.  4  C.  C. 
A.   454;   McDonald   v.   Illinois    Cent. 


R.  Co.,  187  111.  529,  58  N.  E.  463; 
Burlington,  C.  R.  &  N.  R.  Co.  v.  Dey, 
82  Iowa  312,  48  N.  W.  98,  12  L.  R. 
A.  436,  31  Am.  St.  477;  Mason  v. 
Richmond  &  D.  R.  Co.,  Ill  N.  Car. 
482,  16  S.  E.  698,  18  L.  R.  A.  845. 
32  Am.  St.  814.  But  they  have  not 
taken  notice  that  the  footboard  on  the 
front  of  an  engine  is  the  post  of 
duty  of  a  yardmaster.    Highland  Ave. 

6  B.  R.  Co.  V.  Walters,  91  Ala.  435, 
8  So.  357.  The  New  York  courts 
have  taken  notice  that  elevated  rail- 
roads in  New  York  City  have  in- 
creased traffic  on  the  avenues  along 
which  they  run  (Bookman  v.  New 
York  &c.  R.  Co.,  137  N.  Y.  302,  33 
N.  E.  333),  and  that  telegraph  lines 
are  necessary  to  the  operation  of  rail- 
roads, and  are  usually  wired  on  posts 
along  the  railway,  but  not  of  the  ex- 
act space  required.  P.  &  H.  H. 
Youree  v.  Vicksburg  &c.  R.  Co.  (La. 
Ann.),  34  So.  779. 

''McKibbin  v.  Great  Northern  R. 
Co.,  78  Minn.  232,  80  N.  W.  1052; 
Fleischman  v.  Southern  R.  Co.,  76  S. 
Car.  237,  56  S.  E.  974,  9  L.  R.  A.  (N. 
S.)  519. 

*'  Sandberg  v.  American  Express 
Co.,  136  Mich.  639,  99  N.  W.  879. 

**  People  V.  Western  Union  Tel. 
Co.,  166  111.  15,  46  N.  E.  731,  36  L.  R. 
A.  637,  and  that  telephone  connec- 
tions are  made  by  means  of  a  switch 
board.  State  v.  Cadwallader,  172  Ind. 
619,  87  N.  E.  644.  89  N.  E.  319.  _ 

"'Howe  v.  Provident  Fund  Society, 

7  Ind.  App.  586,  34  N.  E.  830. 


112: 


CUSTOMS    AXD    USAGES.  §    1 79 1 


it  is  the  custom  of  life  insurance  companies  to  forward  a  policy 
on  its  final  approval  and  execution  to  a  local  agent  for  delivery 
to  the  insured;'"  of  the  general  method  employed  in  the  location 
of  mines  where  these  metiiods  are  common  to  all  districts;"  of 
the  customs  and  usages  governing  the  creation  and  existence  of 
political  parties  which  are  matters  of  general  knowledge  and  com- 
mon information;'®  that  contracts  for  the  sale  of  real  property 
are  recorded  ;'*"  that  it  is  the  custom  in  states  recognizing  the  prin- 
ciple of  community  property  for  husbands  and  wives  to  make 
mutual  wills  for  the  disposition  of  the  community  estate;""  that 
there  is  a  distinction  in  the  commercial  world  between  the  whole- 
sale dealer  and  the  manufacturer;"  that  contracts  to  buy  real 
estate  are  often  made  with  the  expectation  on  the  part  of  the  pur- 
chaser of  selling  at  a  profit  before  he  is  required  to  complete  his 
contract  ;°2  and  that  thieves  often  resort  to  pawnbrokers  and  junk 
dealers."^ 

The  courts  have  refused  to  take  judicial  notice  of  the  fol- 
lowing usages  because  of  their  purely  local  character:  the  local 
rules  and  regulations  of  miners,"*  local  customs  as  to  days  of 
grace  on  commercial  paper,"^  usage  allowing  commissions  on  bills 
of  exchange  received  in  payment  of  a  judgment,""  a  custom  re- 
quiring the  owner  of  an  untenanted  house  to  have  it  guarded  by 
a  keeper  in  order  to  enable  him  to  recover  the  insurance  in  case 
of  its  loss  by  fire,"  a  custom  of  merchants  not  to  extend  credit  to 

^Francis  v.   Mutual  Life  Ins.  Co.,  Wis.  19.  81  N.  W.  1024,  82  N.  W.  691. 

55  Ore.  280,  106  Pac.  323.  But    the    courts    seem    to    have   gone 

"'  Butler  V.  Good  Enough  Min.  Co.,  to  extreme  lengths  in  some  of  these 

1  Alaska  246.  cases. 

**  State  V    Metcalf,  18  S.  Dak.  393,  ''Grand     Rapids    v.     Braudy,     105 

100  N.  W.  923,  67  L.  R.  A.  331.  Mich.  670,  64  N.  W.  29,  32  L.  R.  A. 

*"  Bernard  v.  Benson,  58  Wash.  191,  116,  55  Am.  St.  472. 

108  Pac.  439,  137  Am.  St.  1051.  "  Sullivan   v.   Hense,  2   Colo.   424 ; 

"*' Prince  v.    Prince,  64  Wash,  552,  Mevdenhauer  v.  Stevens,, 78  Fed.  787. 

117  Pac.  255.  So  held  as  to  authority  of  officer  of 

"  Kansas  City  v.  Butt,  88  Mo.  App.  private  corporation  depending  on  by- 

237.  laws  or  its  particular  usage.    Elkhart 

"'Anderson  v.  Blood,  86  Hun    (N.  Hvdraulic    Co.    v.    Turner.    170    Ind. 

Y  )  244,  66  N.  Y.  St.  750.  33  N.  Y.  455.  458.  84  X.  E.  812. 

S    233   afifd    152  N.  Y.  285,  46  N.  E.  "'Tranter  v.  Hibberd,  108  Ky.  265, 

493.  57  Am.  St.  515.    And  that  ordi-  21  Ky.  L.  1710,  56  S.  W.  169. 

narily  prudent  men  usually  keep  their  **Ward  v.   Everett,   1   Dana    (Ky.) 

large     manufacturing     establishments  429. 

insured    for   nearly   their   full   value.  "  Soye  v.  Merchants'  Ins.  Co.,  6  La. 

Hill    V.    American    Surety    Co.,    107  Ann.  761. 


§    1^92  CONTRACTS.  1 1 26 

their  customers  beyond  six  months,^^  a  custom  requiring  em- 
ployes to  accept  goods  from  the  store  of  their  employers  in  pay- 
ment of  wages.""  the  hours  of  business  recognized  in  a  foreign 
jurisdiction/  that  Pullman  porters  assist  passengers  in  boarding 
and  alighting  from  such  cars  in  the  same  way  that  brakemen 
render  like  service  to  their  passengers,^  that  banks  require  re- 
newal of  notes  not  paid  promptly  at  maturity.^ 

§  1792.  Proof  preliminary  to  admission  of  evidence  of 
usage  or  custom. — It  has  been  held  that  evidence  of  a  usage 
or  custom  should  not  be  received  until  the  party  offering  it  has 
distinctly  stated  to  the  court  what  he  intends  to  prove,^  and  the 
existence  of  such  a  custom  has  been  established  by  other  evi- 
dence.^ ''Before  evidence  of  a  custom  or  usage  can  be  received, 
it  must  appear  that  there  exists  a  usage  established  long  enough 
to  have  become  generally  known,  and  to  warrant  a  presumption 
that  the  contract  in  question  was  made  in  reference  to  it,  and 
that  the  usage  is  uniform  in  reference  to  the  business  and  locali- 
ties involved  in  the  inquiry."^  The  proof  must  show  that  the 
custom  was  so  general  that  the  parties  will  be  presumed  to  have 
knowledge  of  its  existence."^  Where,  however,  the  custom  which 
is  proved  for  the  purpose  of  construing  a  contract  is  in  accord- 
ance with  the  legal  principles  which  would  be  employed  in  that 
construction,  it  may  be  received  in  evidence  though  its  generality 
and  uniformity  have  not  been  established.^  Where  the  existence 
of  the  custom  has  been  shown  without  objection  then  evidence  is 
competent  as  to  what  the  custom  is."     The  contract  should  be 

"nVood  V.  Smith,  23  Vt.  706.  affd.  56  Hun  (N.  Y.)  646,  31  N.  Y. 

*'  Cady  V.  Case,   11   Wash.   124,  39  St.  1003,  10  N.  Y.  S.  951 ;  Dwight  v. 

Pac  375  Badgley.  60  Hun   (N.  Y.)   144,  38  N. 

'  Columbia  Bank  Co.  v.  Bowen,  134  Y.  St.  112,  14  N.  Y.  S.  498. 

Wis   218   114  N.  W.  451.  *Auto  &c.  Mfg.  Co.  v.  Merchants 

^^  Gannon  v.  Chicago,  R.  I.  &  P.  R.  National  Bank,  116  Md.  179,  81  Atl. 

Co.   (Iowa),  117  N.  W.  966.  294. 

^Livermore  v.  Ayers,  86  Kans.  SO,  '  McKinney     v.     Chester,     2     Del. 

119  Pac.  549.  County    Rep.    fPa.)    525.     See    also, 

*  Susquehanna     Fertilizer     Co.     v.  Papin  v.  Goodrich,  103  111.  86;  Couch 

White,  66  Md.  444,  7  Atl.  802,  59  Am.  v.    Watson    Coal    Co.,    46    Towa    17; 

Rep     1^6-    Ecker    v     AToore,    2    Pin.  I^Toore   v.    Michigan   Cent.    R.    Co..   3 

(Wis.)  425,  2  Chand.  (Wis.)  85.  Mich.    23;    Eaton    v.    Gladwell,    108 

"Tower   Co.    v.    Southern   Pac.    R.  Mich.  678.  66  N.  W.  598. 

Co.,    184   Mass.   47?.   69   N.    E.    348 ;  '  Kellv  v.  Waters,  31  Mich.  404.  _ 

Kenvon  v.  Luther.  50  Hun    (N.  Y.)  *Morg?n  v.  Mason,  4  E.  D.  Smith 

602,  19  N.  Y.  St.  32,  4  N.  Y.  S.  498,  (N.  Y.)  636. 


I  127  CUSTOMS   AND   USAGES.  §    1 793 

proved  before  the  admission  of  any  evidence  as  to  a  custom  or 
usage  whicli  should  control  its  construction.*'*  Evidence  of  the 
existence  of  a  custom  is  properly  refused  after  the  court  has  de- 
cided that  the  contract  was  not  made  with  reference  to  the  cus- 
tom." 

§  1793.  Burden  of  proof  of  custom  or  usage. — The  burden 
of  proof  of  a  local  usage  is  on  the  party  who  asserts  the  usage.^" 
The  presumption  is  generally  indulged  in,  in  the  absence  of  proof, 
that  the  usages  of  a  foreign  country  are  similar  to  those  existing 
in  this  country.^^  In  the  case  of  a  general  custom  the  burden  of 
proof  of  ignorance  of  its  existence  is  upon  the  party  pleading 
such  ignorance.^* 

§  1794.  Presumption  of  knowledge  of  usage. — When  a 
sufficient  usage  is  shown  to  be  established  in  a  trade  there  is  a  pre- 
sumption that  the  usage  is  known  to  all  parties  in  the  trade  and 
within  the  jurisdiction  of  the  usage."  This  presumption  of  knowl- 
edge exists  where  the  usage  is  thus  established  and  the  contract 
was  made  in  the  ordinary  course  of  the  trade  or  business  in  which 
the  usage  prevails.*^    Under  this  principle  it  is  not  material  how 

'nioore  V.  Eason,  33  N.  Car.  568.  "Olivari  v.  Thames  &c.  Marine  Ins. 

"Withers  v.  Moore  (Cal.),  71  Pac.  Co.,  37   Fed.   894.    But  see   Reynolds 

697.  revd.  140  Cal.  591,  74  Pac.  159.  v.  Continental  Ins.  Co.,  36  Mich.  131. 

'-Caldecott  v.  Smythies,  7  C.  &  P.  "Johnson  v.   DePeyster,  50   N.    Y. 

808;    German-American    Ins.    Co.    v.  666.     The    claimants    of    the    custom 

Commercial  Ins.  Co.,  95  Ala.  469,  474,  having  proved  user  of  the  close  for 

16  L.  R.  A.  291 ;  Dingley  v.  McDon-  the    purposes   of    the    custom    during 

aid,    124   Cal.  682,  57   Pac.   574;   The  living  memory    (extending  over  sev- 

Sultan,  15  Fed.  618;  Minis  v.  Nelson,  enty    years)    and    by    reputation    for 

43  Fed.  777;  The  John  H.  Cannon,  51  many    years    before    their    birth,    the 

Fed.  46;  Beatty  v.  Gregory,   17 'Iowa  onus    is   on   the    person    denying   the 

109,  85  Am.  Dec.  546;  Tyson  v.  Laid-  custom   to    demonstrate   the   impossi- 

law,  18  La.  380;   Senac  v.  Pritchard,  hility  of  its  existence  in  the  time  of 

4  La.   160;   Allen  v.   Lyles,  35   Miss.  Richard  I.   Mercer  v.  Denne.  91  L.  T. 

513;     Thomas     v.     Hooker     Colville  513. 

Steam  Pump  Co..  28  :\ro.  App.  563;  "United  States  Life  Tns.  Co.  v.  Ad- 

Runvan  v.  Central  R.  Co.,  64  N.  T.  L.  vance    Co.,    80    111.    549;    Bradley    v. 

67.  44  Atl.  985.  48  L.  R.  A.  744 ;  'Ma-  Wheeler,   44    N.    Y.    495 ;    Sewall    v. 

fine  Xntional   Bank  v.   National   Citv  Gibhs.  1  Hall   (N.  Y.)  602;  Robinson 

Bank,  59  N.  Y   67.  17  Am.  Rep.  305:  v.   United   States,   13  Wall.    (U.    S.) 

Mallorv  v.   Commercial    Tns.    Co..  22  363.  20  L.  ed.  653. 

N.  Y.  Super.  Ct.  101;  Sniero  v   New  "  Mott  v.  Hall.  41  Ga.  117;  Wilson 

York  8cc    R.   Co..  64   Mi-^c.    fN    Y)  v.    Bauman.    80    111.    493;    Barker    v. 

53.  117  N.  Y.  S.   1039;  Ohio  Oil  Co.  Bor^rone.   48    Md.    474;    .'\ppleman    v. 

V.    AlcCrorv,   7    Ohio    C.    D.    344.    14  Fisher.  34  ^l(\.   540;    Soutier  v.  Kel- 

Ohio    C.    C.    304;    Hall   v.    Storrs,    7  lermann.    18   Mo.    509;    Boardman    v. 

Wis.  253.  Gaillard,    1     Hun     (N.    Y.)     217.    3 


S       T-7 


1/94  CONTRACTS.  1 1 28 


large  a  territory  is  covered  by  the  usage  if  it  is  shown  that  the 
parties  are  so  circumstanced  that  it  is  reasonable  to  assume  that 
they  are  familiar  with  the  usages  of  the  particular  trades  to 
which  they  relate.^^  "The  authorities  are  abundant  that  a  usage 
may  be  general  and  still  confined  to  a  particular  city,  district, 
town,  or  village."^^  Where  a  usage  is  special  and  confined  to  a 
particular  business  or  has  reference  to  a  particular  port  only, 
there  is  no  presumption  of  knowledge  and  it  would  be  unjust  to 
admit  it  except  upon  proof  that  both  parties  were  or  ought  to 
have  been  aware  of  and  intended  to  be  governed  by  it.  Even 
though  there  is  a  presumption  it  is  at  best  but  a  prima  facie 
one,  liable  to  be  rebutted  by  proof  that  it  was  unknown  to  the 
party  against  whom  it  is  set  up.^^  The  presumption  of  knowl- 
edge of  purely  local  usages  may  be  rebutted.  "We  have  seen 
that  there  are  usages  which  have  become  so  general  and  so 
universally  received  and  acted  upon,  as  that  they  have  become 
a  part  of  the  common  law,  and  no  one  can  be  heard  to  profess 
ignorance  of  them.  But  it  is  equally  true  that  there  are 
usages  so  restricted  as  to  locality,  or  trade,  or  business,  as 
that  ignorance  of  them  is  a  valid  reason  why  a  party  may 
not  be  held  to  have  contracted  in  reference  to  them.  *  *  * 
It  seems  then,  to  come  to  this:  Is  the  presumption,  which  the 
jury  may  thus  make  conclusive,  or  may  not  that  presumption  be 
repelled  by  express  negatory  proof  of  ignorance?  When  the  de- 
fendant proposed,  by  the  question  which  was  rejected,  to  offer  evi- 
dence tending  to  show  his  ignorance  of  the  existence  of  the  usage, 
he  claimed  no  more  than  to  exercise  the  right  of  attempting,  by 
direct  evidence,  to  repel  the  presumption  of  his  knowledge,  which 
might  without  that  proof,  or  perhaps  in  opposition  to  it,  be  made 
from  the  facts  of  the  case.  It  is  for  the  jury  then,  under  proper  in- 
structions from  the  court,  to  take  all  the  evidence  in  the  case ;  that 
as  to  the  existence,  duration  and  other  characteristics  of  the  cus- 

Thomp.  &   C.    (N.  Y.)   695,  affd.  60  Clark  v.  Baker,  52  Mass.  186 ;  Thomp- 

N    Y.  614;  Ripley  v.  ^tna  Ins.  Co.,  son  v.  Hamilton,  29  Mass.  425;  Van 

30  N.  Y.  136,  86  Am.  Dec.  362;  Hig-  Ness  v.  Pacard,  2  Pet.   (U.  'S.)   148, 

gins  V.  Moore,  34  N.  Y.  417;  Harris  7    L.    ed.    378;    Baxter   v.    Leland,    1 

V.  Tumbridge,  83  N.  Y.  92,  38  Am.  Blatchf.   (U.   S.)   526,  Fed.  Cas.  No. 

Ren.  398.  1125. 

"Gleason  v.  Walsh,  43  Maine  397;  "  Gleason  v.  Walsh,  43  Maine  397. 

Perkins    v.    Jordan,    35    Maine    23 ;  ^'  Isaksson  v.  Williams,  26  Fed.  642. 


1 129  CUSTOMS    AND    USAGES.  §    1 795 

torn  or  usage,  and  that  as  to  the  knowledge  thereof  of  the  parties ; 
and  therefrom  to  determine  whether  there  is  shown  a  custom  of 
such  age  and  character,  as  that  the  presumption  of  law  will  arise, 
that  the  parties  knew  of,  and  contracted  in  reference  to  it;  or 
whether  the  usage  is  so  local  and  particular,  as  that  knowledge  in 
the  party  to  be  charged,  must  be  shown  affirmatively  or  may  be 
negatived. "^"^  The  usage  will  not  be  presumed  to  have  entered 
into  the  contract  if  the  circumstances  show  that  it  is  not  reason- 
able to  assume  tliat  the  parties  dealt  with  reference  to  the  usage 
by  reason  of  lack  of  knowledge  of  its  existence.*^ 

§  1795.  Character  of  evidence  to  establish  custom  or 
usage. — It  is  often  said  that  the  proof  of  a  usage  or  custom 
must  be  clear,  cogent  and  convincing.  The  party  charged  with 
this  proof  must  clearly  establish  such  a  usage  as  can  fairly 
be  presumed  to  have  entered  into  the  intention  of  the  parties.'^ 
Where  the  evidence  is  uncertain  and  contradictory  the  custom  is 
not  established  and  the  court  should  so  instruct  the  jury.^^  "A 
usage,  to  be  binding,  should  be  definite,  uniform,  and  well  known. 
It  should  be  established  by  clear  and  satisfactory  evidence,  so 
that  it  may  be  justly  presumed  that  the  parties  had  reference 
to  it  in  making  their  contract."**     The  existence  of  the  custom 

=nValls  V.  Bailey,  49  N.  Y.  464,  10  Steward  v.  Scudder,  24  N.  J.  L.  96; 

Am.  Rep.  407.  Dickinson  v.  Poughkeepsie,  75  N.  Y. 

'^Buckie  V.  Knoop,  L.  R.  2  Exch.  65;  Booth  &c.  Granite  Co.  v.  Baird, 
125;  Gabay  v.  Llovd.  3  B.  &  C.  793;  87  Hun  (N.  Y.)  452,  68  N.  Y.  St. 
Abbott  V.  Bates,  43  L.  J.  C.  P.  150;  324,  34  N.  Y.  S.  392;  Penland  v.  In- 
Southwestern  Freight  &  Cotton  Press  gle,  138  N.  Car.  456.  50  S.  E.  850; 
Co.  V.  Stanard.  44  :Mo.  71,  100  Am.  Adams  v.  Pittsburg  Ins.  Co.,  76  Pa. 
Dec.  255;  Walls  v.  Bailey,  49  N.  Y.  St.  411;  Pratt  v.  Bank.  12  Phila. 
464.  10  Am.  Rep.  407;  Esterly  v.  Cole,  (Pa.)  378;  Wootters  v.  Kauffman.  67 
3  N.  Y.  502 ;  Scott  v.  Whitnev,  41  Tex.  488.  3  S.  W.  465 ;  Bowles  v.  Rice. 
Wis.  504;  Bentlev  v.  Daggett.  51  Wis.  107  Va.  51,  57  S.  E.  575;  Hinton  v. 
224.  8  N.  W.  155.  Zl  Am.  Rep.  827;  Coleman.  45  Wis.  165;  Lemke  v. 
Hinton  v.  Coleman.  45  Wis.  165.  Hage.   142  Wis.   178,   125   X.  W.  440, 

"Desha  v.  Holland.  12  Ala.  513,  46  135  Am.  St.  1066. 

Am.    Dec.   261 ;    Rauth   v.    Southwest  -'  Desha  v.  Holland.  12  Ala.  513.  46 

Warehouse  Co..  158  Cal.  54.  109  Pac.  Am.  Dec.  261 ;  Bissell  v.  Ryan.  23  111. 

839;  Savage  v.  Pelton.   1   Colo.  App.  566;     Parrott    v.    Thacher.    9    Pick. 

148.  27   Pac.  948;   The   Gualala.    178  CMass.)  426;  Joseph  v.  Andrews  Co., 

Fed.  402.   102  C.    C.   A.  548;    Adams  72   :\Io.   App.   551;    Penland  v.   Ingle. 

V.   Manufacturers'  &c.   Fire  Ins.   Co..  138  N.  Car.  456.  50  S.  E.  850;  Lemke 

17  Fed.  630;  Cobb  v.  Lime  Rock  &c.  v.  Hage,  142  Wis.  178,  125  N.  W.  440, 

Ins.    Co.,    58    Maine    326;    Parrott   v.  135  Am.  St.  1066. 

Thacher.  9  Pick.   (Mass.)  426;  Boyd  =*  Bowling  v.  Harrison,  47  U.  S.  248, 

V.  Graham.  5   Mo.   App.  403 ;  Joseph  12  L.  ed.  425. 
V.   Andrews  Co.,   12   Mo.  App.  551; 


§    1796  CONTRACTS.  I  1 30 

must  be  proved  by  satisfactory  evidence  and  it  is  not  sufficient 
to  simply  set  it  up  in  answer.^^  A  custom  will  not  be  applied  to 
the  construction  of  a  contract  where  the  witnesses  examined  as 
to  the  custom  differ  with  reference  thereto."^  The  courts  allow 
less  distinct  and  certain  proof  of  the  existence  of  a  custom  when 
the  parties,  in  making  their  contract,  apparently  had  in  mind  the 
usage  which  it  is  sought  to  apply  in  the  construction  of  the  con- 
tract.^^  It  has  been  held  that  a  custom  is  not  shown  to  be  estab- 
lished where  the  testimony  of  the  witnesses,  who  aver  that  the 
custom  exists,  is  met  by  an  almost  equal  number  of  witnesses, 
with  equal  facilities  of  knowing,  who  testify  to  never  having 
heard  of  such  custom."^ 

§  1796.    Opinion  evidence  as  to  customs  or  usages. — The 

existence  of  a  custom  or  usage  is  a  matter  of  fact  and  not  of 
opinion,  and  may  not  be  established  by  opinion  evidence.  It  may 
be  proved  by  witnesses  who  testify  as  to  its  existence  and  uni- 
formity from  their  knowledge  obtained  by  observ^ation  of  what 
is  practiced  by  themselves  and  others  in  the  trade  to  which  it 
relates.  But  their  conclusion  or  inferences  as  to  the  effect  of  the 
custom  or  usage  either  upon  the  contract  or  the  legal  title  or  rights 
of  parties  are  not  competent  to  show  the  character  or  force  of  the 
usage. ^®    The  custom  of  merchants  or  mercantile  usage  does  not 

"  Bowles  V.  Rice,  107  Va.  51,  57  S.  Hoey,     128    Mass.    585;    Calvert    v. 

E.  575.  Schultz,   143    Mich.   441,    106   N.   W. 

='Herr  V.  Tweedie  Trading  Co.,  181  1123;   Ford  v.   St.  Louis  &c.   R.  Co., 

Fed  483  63  Mo.  App.  133;  Mills  v.  Hallock,  2 

"'kentuckj'   Distilleries   &c.   Ware-  Edw.  Ch.  (N.  Y.)  652;  Walls  v.  Bai- 

house  Co.  V.  Lillard,  160  Fed.  34,  87  ley,  49  N.  Y.  464,  10  Am.  Rep.  407; 

C.  C.  A.  190.  Austin  v.  Williams,  2  Ohio  61 ;  Lips- 

''The  Harbinger,  50  Fed.  941,  afifd.  comb  v.  Houston  &  T.  C.  R.  Co.,  95 

53  Fed.  394.  3  C.  C.  A.  573;  Oregon  Tenn.  5,  64  S.  W.  923,  55  L.  R.  A. 

Short  Line  &  U.  N.  R.  Co.  v.  North-  869,  93  Am.  St.  804;  Standard  Paint 

ern  Pacific  R.  Co.,  51  Fed.  465,  affd.  Co.    v.    San    Antonio    Hardware    Co. 

61  Fed.  158,  9  C.  C.  A.  409.  (Tex.    Civ.   App.),    136   S.   W.    1150. 

^  Lewis  V.  Marshall,  7   Man.  &  G.  Usage  must  be  proved  by  evidence  of 

729;  Carey  v.  Meagher,  33  Ala.  630;  facts,  not  by   mere   speculative  opin- 

Price    V.    White,   9    Ala.    563;    Ames  ions,  and  by  witnesses  who  have  had 

Mercantile  Co.  v.  Kimball  Steamship  frequent  and  actual  experience  of  the 

Co.,  125  Fed.  332 ;  Horan  v.  Strachan,  usage,   and   who   do  not   speak   from 

86  Ga.  408.  12  S.  E.  678,  22  Am.  St.  report  alone,  and  they  must  speak  as 

471 ;  Gilbert  v.  Kuppenhiemer,  67  111.  to  the  course  of  the  particular  trade. 

App.  251  ;   Shultz  v.  Ford.   133   Iowa  2  Greenleaf  on  Evidence,  §§  248,  251, 

402,  109  N.  W.  614:  Haskins  v.  War-  252,   citing,   as   to   the   difference   be- 

ren,     115     Mass.     514;     Kershaw     v.  tween   a   local   and  general  usage   in 

Wrigh*-     lis    Mass.    361 ;    Jones    v.  respect  to  the  sufficiency  of  the  proof 


1 131  CUSTOMS    AND    USAGES.  §    I797 

depend  upon  the  private  opinions  of  merchants  as  to  what  the 
law  is,  or  even  upon  their  opinions  pubhcly  expressed  but  it  de- 
pends upon  their  acts.^**  "Usage  is  a  matter  of  fact,  not  of  opin- 
ion. Usage  of  trade  is  a  course  of  deahng;  a  mode  of  conduct- 
ing transactions  of  a  particular  kind.  It  is  proved  by  witnesses 
testifying  of  its  existence  and  uniformity  from  their  knowledge 
obtained  by  observation  of  what  is  practiced  by  themselves  and 
others  in  the  trade  to  which  it  relates."^^  The  testimony  of  a 
witness,  to  the  effect  that  an  order  by  coal  dealers  to  a  carrier  to 
turn  over  a  car  of  coal  to  the  purchaser  amounts  to  a  delivery 
to  or  acceptance  by  the  purchaser  under  the  custom  of  the  place, 
is  an  example  of  evidence  of  a  legal  conclusion.^^  And  the  state- 
ment of  a  witness  that  a  certain  matter  was  according  to  an  exist- 
ing custom  is  no  more  than  the  expression  of  an  opinion  and  is 
without  probative  force.^^  But  evidence  is  admissible  of  the  be- 
lief of  a  witness  in  the  existence  of  a  usage  as  derived  from  a 
knowledge  of  the  business  for  a  long  series  of  years  and  it  is  not 
a  fatal  objection  that  the  knowledge  of  the  witness  is  derived 
from  his  own  business  if  it  also  appears  that  his  business  is  suf- 
ficiently extensive  to  enable  him  to  testify  to  the  fact  of  usage.''* 
Evidence  is  objectionable  on  the  ground  that  it  is  opinion  evi- 
dence where  a  witness  testifies  that  a  custom  is  so  general  and 
uniform  as  to  create  a  presumption  of  knowledge  of  its  exist- 
ence." 

§  1797.  Competency  of  experts  on  question  of  custom  or 
usage. — The  existence  of  a  custom  or  usage  is  a  proper  sub- 
ject of  expert  testimony.^*^     Generally  speaking,  the  custom  or 

required.    Booth    Sec.    Granite    Co.    v.  '*  Redfield  v.  Oakland  Consolidated 

Baird.  87  Hun  452.  34  X.  Y.  S.  392.  St.  R.  Co.,  112  Cal.  220,  43  Pac.  1117; 

^  Allen     V.     Merchants'     Bank,     22  In    re    Gavlor's    App.,    43    Conn.    82; 

Wend.  (N.  Y.)  215,  34  Am.  Dec.  289.  The  Alaska.  33  Fed.  107.  aflfd.  130  U. 

^'Haskins    v.    Warren,    115    Mass.  S.  201,  32  L.  ed.  923.  9  Sup.  Ct.  461 ; 

514.  Crafts    v.    Clark.    38    Iowa   237;    At- 

'=  Calvert  v.  Schultz,  143  J^Iich.  441,  water     v.     Clancv.     107     Mass.     369 ; 

106  N.  W.  1123.  Tower  Co.  v.  Southern  Pac.  Co.,  184 

""Haskins    v.    Warren,    115    Mass.  Mass.    472.    69    X.    E.    348;    Pac:e   v. 

514;  Henrv  v.  Tavlor.  16  S.  Dak.  424,  Cole.  120  Mass.  37;  Pratt  v.  Mostet- 

93  N.  W.  641.  ter.  9  Civ.  Proc.  R.  (X.  Y.)  351.  1  N. 

^*  Hamilton  v.   Nickcrson,   13  .Mien  Y.  St.  75;    Sullivan  v.  Owens    (Tex. 

(Mass.)  351.  Civ.  App.),  90  S.  W.  690;   Missouri. 

="Ford  V.   St.  Louis  &c.  R.  Co.,  63  K.  &  T.  R.  Co.  v.  Cr?ne.  13  Tex.  Civ. 

I^To.  App.  133.  App.  426.  35  S.  W.  797 ;  Wall  v.  Mel- 


§    1797  CONTRACTS,  1 1 32 

usage  must  be  proved  by  witnesses  who  have  had  actual  experi- 
ence or  knowledge  about  which  they  testify  and  not  by  witnesses 
who  can  merely  give  a  speculative  opinion  as  to  the  existence  of 
the  custom."^  The  witness  must  qualify  by  showing  a  familiarity 
with  a  custom.^*  It  is  no  valid  objection  to  the  competency  of  a 
witness  that  his  knowledge  is  derived  from  his  own  business  if 
the  knowledge  thus  derived  is  sufficiently  extensive  to  enable  him 
to  testify  to  the  fact  of  usage.^^  The  testimony  may  be  given  by 
a  witness  who  knows  the  custom  although  he  may  not  have  been 
actually  engaged  in  the  business  to  which  the  custom  applies/" 
The  witness  must  testify  as  to  a  general  knowledge  of  the  custom 
or  usage  and  his  testimony  in  this  respect  must  show  a  knowledge 
of  the  custom  extending  over  a  period  of  time  and  extent  of  lo- 
cality that  would  show  a  custom  general  enough  to  satisfy  the 
requirements  of  a  valid  usage  or  custom/^  He  is  competent  if 
he  testifies  to  the  existence  and  uniformity  of  the  custom  from  his 
knowledge  obtained  by  observation  of  his  own  practice  and  that 
of  others  in  the  trade  to  which  it  relates.*^  Accordingly,  one 
who  knows  the  usage  between  commission  merchants  may  testify 
thereto,  though  he  be  not  a  commission  merchant  himself/^  So, 
the  owner  of  a  tanyard  who  had  been  engaged  in  the  business  of 

ton  (Tex.),  94  S.  W.  358;  Roberts  V.  Clancy,     107    Mass.    369;    Gaunt    v. 

Cooper,  20  How.   (U.  S.)  467,  15  L.  Pries,  21   Mo.  App.  540;  Van  Doren 

ed  969  V.   Jelliffe,    1   Misc.    (N.  Y.)    354,  48 

"Chicago,   M.  &   St.   P.   R.   Co.  v.  N.  Y.  St.  784,  20  N.  Y.  S.  636;  Hobby 

Lindeman,  143  Fed.  946,  75  C.  C.  A.  v.  Dana,  17  Barb.   (N.  Y.)   Ill;  Ku- 

18-    Suarez    v.    Duralde,    1    La.    260;  gelman  v.  Levy.  4  Misc.  (N.  Y.)  519, 

Shackelford  v.   New  Orleans  &c.   R.  54  N.  Y.   St.   123,  24  N.  Y.  S.  559; 

Co.    2,1  Miss.  202;   Prigg  v.   Preston,  E.  C.  Fuller  Co.  v.   Pennsylvania  R. 

28  Pa.  Super.  Ct.  272;  Nagle  v.  Hake,  Co.,  61  Misc.   (N.  Y.)  599,  113  N.  Y. 

123  Wis.  256,  101  N.  W.  409.  S.   1001;   Griffin  v.  Rice,   1   Hilt.    (N. 

^Schultz    V.    Ford,    133    Iowa    402,  Y.)  184 ;  Holmes  v.  Whitaker,  23  Ore. 

109  N    W.  614;   Whipple  v.  Tucker,  319,    31    Pac.    705;    King    v.    Wood- 

123  111.  App.  223 ;   Hess  v.  Shurtleff,  bridge,  34  Vt.  565. 
74  N.  H.  114,  65  Atl.  Zll.  "Hale     v.     Gibbs,     43     Iowa     380 

"°  Hamilton  v.   Nickerson,   13  Allen  (knowledge  of   witness   covered   one 

(Mass)  351  vear  only).    See  also,  Wallace  v.  Le- 

*"  Nelson  v   Wood,  62  Ala.  175;  Off  ber,    65    N.    J.    L.    195,   47   Atl.   430; 

V.  Inderrieden,  74  111.  App.  105 ;  Gregg  Woldert    v.    Arledge,    11    Tex.    Civ. 

V.    Garverick,   ZZ   Kans.    190.    5    Pac.  App.  484,  7>Z  S.  W.  2,12. 
751;    Luce    v.   Dorchester    Mut.    Fire        "Ames   Mercantile  Co.  v.   Kimball 

In.s.  Co.,  105  Mass.  297,  7  Am.  Rep.  Steamship  Co.,  125  Fed.  332;  Tower 

522;   Kershaw  v.   Wright,   115   Mass.  Co.  v.  Southern  Pac.  Co.,  184  Mass. 

361 ;   Worchester  v.   North   Borough,  472.  69  N.  E.  348. 
140  Mass   397.  5  N.  E.  270;  Page  v.        "Gregg  v.  Garverick,  ZZ  Kans.  190, 

Cole,     120     Mass.     21;     Atwater     v.  5  Pac.  751. 


I  133  CUSTOMS    AND    USAGES.  §    1 798 

tanning  for  nearly  twenty-five  years  during  which  time  he  had 
seen  the  work  going  on  and  knew  how  it  was  done  was  held  an 
expert  as  to  such  matters  although  he  may  have  employed  others 
to  do  the  work  for  him  and  he  was  not  a  practical  tanner/*  A 
person  who  has  purchased  and  shipped  potatoes  from  a  certain 
island,  and  can  testify  to  a  custom  in  shipping  potatoes  therefrom, 
from  his  own  experience  and  his  observation  of  the  practice  of 
others  for  three  years,  as  well  as  one  who  has  lived  on  the  island 
for  ten  years,  raising  and  selling  potatoes  during  that  time,  is 
competent  to  testify  to  such  custom."  On  the  question  of  the 
meaning  of  the  term  ''merchantable  measurement"  of  lumber, 
evidence  of  those  who  buy  and  manufacture,  as  well  as  those  wlio 
buy  and  sell  lumber,  may  be  received.*'^  But  a  witness  who  knows 
of  a  custom  in  but  two  cities  in  the  country  is  not  competent  to 
testify  as  to  a  general  custom  throughout  the  United  States.*^ 

§  1798.  Number  of  witnesses  required  to  establish  custom. 
It  seems  to  be  well  settled  that  a  usage  or  custom  may  be  estab- 
lished by  the  testimony  of  one  witness,  where  it  appears  that  he 
has  full  knowledge  and  long  experience  on  the  subject  about 
which  he  speaks,  and  testifies  explicitly  to  the  duration  and  uni- 
versality of  the  usage,  and  is  not  contradicted.***  But  it  seems 
that  the  witness  must  not  be  contradicted.  "All  the  courts  agree 
that,  if  the  testimony  of  the  one  witness  in  support  of  a  custom 
be  contradicted  by  others,  the  custom  cannot  be  held  established. 
It  is  reasonable  to  presume  that  if  such  general  usage  exist  as 
is  essential  to  show  a  custom  in  a  particular  branch  of  business, 
that  every  one  engaged  in  such  business  should  know  it;  and 
hence,  if  the  fact  be  called  in  question,  more  than  one  witness 
could  be  brought  to  support  it.""  The  witness  must  testify  to  a 
general  custom.     Proof  of  the  custom  of  the  witness  alone  is  not 

"  Nelson  v.  Wood,  62  Ala.  175.  v.  Quinbv,  206  Mass.  259.  92   N.   E. 

*'  Holmes  v.  Whitaker,  23  Ore.  319,  451 ;  Jones  v.   Hoey,   128  Mass.   585 ; 

31  Pac  705.  Vail  v.  Rice,  5  X.  Y.  155 ;  Southwest 

*«  Gaunt  V.  Pries,  21  Mo.  App.  540.  Va.  &c.   Land  Co.  v.   Chase,  95   Va. 

"Edwards  v.  Davidson   (Tex.),  79  50.  27  S.  E.  826;  Robinson  v.  United 

S.  W.  48.  States.  13  Wall.  (U.  S.)  363.  20  L.  ed. 

**  Jones   V.   Herrick,   141    Towa  615,  653. 

118  N.  W.  444.    See  also.  Marston  v.  "Wootters   v.    Kauffman,   61   Tex. 

Bank  of   Mobile,  10  Ala.  284;   Part-  488,3  S.  W.  465. 
ridge  v.  Forsvth,  29  Ala.  200;  Barrie 


§    I  799  CONTRACTS.  I  I  34 

sufficient.^"  In  other  words  the  evidence  of  the  custom  of  one 
person  is  not  sufficient  to  establish  a  general  course  of  trade. °^ 
Thus  it  was  held  that  a  custom  was  not  established  by  the  testi- 
mony of  an  insurance  broker  as  to  the  authority  of  agents  in  a 
certain  locality  to  make  binding  preliminary  contracts  where  his 
testimony  was  based  wholly  on  the  practice  of  his  own  office." 
A  particular  custom  that  one  who  undertakes  to  dig  a  well  is  not 
entitled  to  compensation  unless  a  reasonably  sufficient  supply  of 
water  is  obtained  has  been  held  not  established  by  the  testimony 
of  two  persons  that  they  follow  such  custom  in  their  own  busi- 
ness/^ Similarly,  proof  was  held  insufficient  where  the  evidence 
offered  to  prove  the  existence  of  a  particular  custom  consisted  in 
the  testimony  of  only  four  persons  who  testified  merely  as  to 
what  their  practice  was  respecting  the  matter  in  question.^* 
Whether  the  general  knowledge  of  the  witness  is  such  as  to  qual- 
ify him  to  give  testimony  as  to  a  common  usage  or  custom  is  a 
preliminary  inquiry  to  be  decided  by  the  trial  judge.^^ 

§  1799.  Parol  proof  of  usage  or  custom. — It  is  well  settled 
that  a  usage  or  custom  may  be  proved  by  parol  to  explain  the 
meaning  of  terms  in  a  written  contract  that  would  otherwise  be 
ambiguous,"''  and  the  authorities  go  to  the  extent-  of  allowing 
such  evidence  in  a  proper  case  to  explain  rather  than  to  contra- 
dict in  cases  where  there  is  no  ambiguity  upon  the  face  of  the 
instrument."    This  evidence  is  admissible  to  aid  the  court  in  in- 

"^  Sloss-Sheffield    Steel  &   Iron   Co.  v.   Hartman,   126  Ind.   177,  25  N    E 

V    Smith   (Ala.),  40  So.  91;  Jewell  v.  901;  Lyon  v.  Lenon,   106  Ind    567    7 

Center    25  Ala.  498;  Greenwich  Ins.  N.  E.  311;  Leiter  v.  Emons,  20  Ind. 

Co.  V.' Waterman,  54  Fed.  839,  4  C.  App.    22,    50    N     E    40;    Packard    v. 

C  A.  600-  Jones  v.  Herrick,  141  Iowa  Van   Schoick,   58   111.   79;    Randall  v. 

615      118     N      W     444-     Parrott     v.  Kehlor,   60    Mame   6],    11    Am.    Rep. 

Thacher,  9  Pick.  '(Mass.)  426.  169;  Drake  v.  Hudson,  7  Har    &  J^ 

"Burr  V    Sickles,   17  Ark.  428,  65  (Md.)    399;   Williams  v.   Woods,    16 

Am    Dec    437  ^Id.  220;   Murray  v.  Hatch.  6  Mass. 

''^Greenwich  Ins.  Co.  v.  Waterman,  465;   Walls  v.   Bailey,  49  N.   Y.  464, 

54  Fed   839   4  C.  C.  A.  600.  10  Am.  Rep.  407;  Long  v.  Davidson, 

"^Lemke  v   Hage,  142  Wis.  178,  125  101  N.  Car.  170,  7  S.  E.  758;  Blythe 

N    W    440    i35  Am.  St.  1066.  v.  Richards.  10  Serg.  &  R.   (Pa.)  261, 

"Anewalt  v.  Hummel,   109  Pa.   St.  13     Am.     Dec.     672;     Livingston     v 

271.    See   also,   Hibbard  v.    Peek,   75  Maryland   Ins.   Co.,    11   U.    S.    506,   3 

Wis   619  44  N   W   641.  L.  ed.  421. 

"  Barrie  v.  Quinby,  206  Mass.  259,        "  Brown  v.  Byrne,  3  El.  &  Bl.  70.3. 

92  N    E   451  77  E.  C.  L.  703;  Myers  v.  Sari,  3  El. 

"'Hinote   V    Brigman,  44   Fla.   589,  &  El.  306;  Smith  v.  Wilson,  3  B.  & 

ZZ  So    303 ;  Van  Camp  Packing  Co.  Ad.  728 ;  Regina  v.  Stoke-upon-Trent, 


II35 


CUSTOMS    AND    USAGES. 


1799 


terpreting  the  contract,'*^  and  in  a  proper  case  it  may  be  admitted 
even  to  annex  incidents  or  stipulations  as  to  the  time  or  manner 
of  performance  not  expressed  in  the  writing,"^"  or  to  give  words 
used  therein  a  different  meaning  from  that  commonly  attributed 
to  them.""  But,  while  parol  evidence  is  generally  competent  to 
show  a  custom  or  usage  of  the  business,  profession,  or  trade, 
when  it  is  shown  to  the  parties  or  is  so  general  and  well  settled 
that  it  must  be  presumed  to  have  been  known  to  them  and  they 
must  be  deemed  to  have  contracted  with  reference  thereto,"  the 
rule  is  otherwise  where  one  of  the  parties  is  not  familiar  with 


5  Q.  B.  303 ;  Grant  v.  Maddox.  15  M. 

6  W.  Til ;  Moonev  v.  Howard  Ins. 
Co.,  138  Mass.  375,' 52  Am.  Rep.  277; 
Soulier  v.  Kellerman,  18  Uo.  509; 
Barton  v.  McKelway,  22  N.  J.  L.  165; 
Walls  V.  Bailey,  49  N.  Y.  464,  10  Am. 
Rep.  407;  Hinton  v.  Locke,  5  Hill 
(N.  Y.)  437. 

"  Everitt  V.  Indiana  Paper  Co.,  25 
Ind.  App.  287,  57  N.  E.  281 ;  Cox  v. 
O'Riley,  4  Ind.  368,  58  Am.  Dec.  (i2>l; 
Shaw  V.  Binkard,  10  Ind.  227. 

"Price  V.  Mouat,  11  C.  B.  (N.  S.) 
508;  Hutton.v.  Warren.  1  M.  &  W. 
466.  474:  Wigglesworth  v.  Dallison, 
1  Doug.  201,  1  Smith  Lead.  Cas.  (11th 
ed.)  545;  East  Tennessee,  V.  &  G.  R. 
Co.  V.  Johnston,  75  Ala.  596.  '51  Am. 
Rep.  489;  Evermgnam  v.  Lord.  19 
111.  App.  565 ;  !\knd  v.  Trail,  92  Ind. 
521,  47  Am.  Rep.  163;  Pittsburg.  C. 
&  St.  L.  R.  Co.  V.  Nash,  43  Ind.  423 ; 
Hirschhorn  v.  Bradley,  117  Iowa  130, 
90  N.  W.  592;  Thompson  v.  Brannm, 
94  Ky.  490,  15  Kv.  L.  36,  21  S.  W. 
1057;  Patterson  v.  Crowther  70  Md. 
124,  16  Atl.  531 ;  Jones  v.  Hoey,  128 
Mass.  585;  Merick  v.  McNally,  26 
Mich.  374;  Merchant  v.  Howell  53 
Minn.  295.  55  N.  W.  131;  Soutier 
V.  Kellerman.  18  Mo.  509;  Walls  v. 
Bailev.  49  N.  Y.  464.  10  Am.  Rep. 
407;  Newhall  v.  Appletnn.  114  X.  Y. 
140.  21  N.  E.  105.  3  L.  R.  A.  859; 
Hagan  v.  Domestic  Sewing  Machine 
Co..  9  Hun  (N.  Y.)  12>;  Lowe  v. 
Lehman.  15  Ohio  St.  179;  Robinson 
V.  United  States,  13  Wall.  (U.  S.) 
363,  20  L.  ed.  653  (evidence  admitted 
of  usage  to  deliver  grain  in  sacks")  ; 
Humphreysville  Copper  Co.  v.  Ver- 
mont Copper  Min.  Co..  33  Vt.  92: 
Gehl  V.  Milwaukee  Produce  Co.,  116 


Wis.  263,  93  N.  W.  26.  In  the  ab- 
sence of  any  express  agreement  as 
to  the  amount  or  time  of  payment  for 
work  contracted  to  be  done,  parol  evi- 
dence is  admissible  to  show  a  certain 
usage  of  the  business  and  of  the  lo- 
cality, known  to  the  parties,  or  so 
general  and  well  settled  as  to  raise 
the  presumption  that  the  parties  dealt 
with  reference  to  the  usage,  and  with 
a  tacit  understanding  that  their  rights 
and  responsibilities  should  be  deter- 
mined therebv.  Anderson  v.  Lewis, 
64  W.  Va.  297,  61  S.  E.  160.  But  see 
Kendall  v.  Russell,  5  Dana  (Ky.) 
501,  30  Am.  Dec.  696;  Sweeney  v. 
Thomason,  9  Lea.  (Tenn.)  359,  42 
Am.  Rep.  676. 

**•  Moonev  v.  Howard  Ins.  Co.,  138 
Mass.  375,  "52  Am.  Rep.  277.  See  also, 
Brown  v.  Bvrne,  3  El.  &  Bl.  703,  11 
E.  C.  L.  703;  Spartali  v.  Benecke,  10 
C.  B.  212;  Mornihgstar  v.  Cunning- 
ham, 110  Ind.  328,  11  N.  E.  593,  59 
Am.  Rep.  211;  Van  Camp  Packing 
Co.  V.  Hartman,  126  Ind.  \11 ,  25  X.  E. 
901 ;  Jaqua  v.  Witham  &c.  Co.,  106 
Ind.  545,  7  N.  E.  314;  Marrett  v. 
Brackett,  60  Maine  524;  Grinnel  v. 
Western  Union  Tel.  Co..  113  Mass. 
299;  Warren  Bank  v.  Parker.  8  Gray 
(Mass.)  221;  Southwestern  Freight 
&  Cotton  Press  Co.  v.  Stanard.  44 
Mo.  71.  100  Am.  Dec.  255;  Fabrri  v. 
Phoenix  Ins.  Co..  55  X.  Y.  129;  Car- 
ter v.  Philadelphia  Coal  Co.,  11  Pa. 
St.  286. 

"Humfrev  v.  Dale.  7  El.  &  Bl.  266: 
Corbett  v.  Underwood,  83  111.  324,  25 
Am.  Rep.  392;  Lupton  v.  Xichols.  28 
Ind.  App.  539.  63  X.  E.  477;  Howe  v. 
Hardv,  106  Mass.  329;  Baxter  v.  Mas- 
sasoit  Ins.  Co..  13  Allen  (Mass.)  320; 


§  1799 


CONTRACTS. 


II36 


the  usage  and  it  is  not  of  such  a  general  or  well-known  character 
that  the  parties  will  be  presumed  to  have  known  it  and  deemed  to 
have  contracted  with  reference  to  it.*^-  Neither  is  parol  evidence 
admissible  to  prove  a  custom  or  usage  that  contradicts  the  written 
contract  and  varies  its  express  terms/^  nor  if  the  usage  or  custom 
is  unreasonable,^*  nor  if  it  is  in  conflict  with  a  sound  and  well- 
settled  rule  of  law.*^^  Chief  Justice  Marshall  says,  *'The  usage 
may  be  proved  by  parol,  and  the  effect  of  the  usage  remains  the 
same  whether  it  originated  in  an  edict,  or  in  instructions  given 
by  the  government  to  its  officers."®'^  But  parol  evidence  is  not 
admissible  to  show  that  a  usage  was  different,  at  the  time,  from 


Robertson  v.  National  Steamship  Co., 
139  N.  Y.  416,  34  N.  E.  1053;  Mc- 
Pherson  v.  Cox,  86  N.  Y.  472;  Es- 
terly  v.  Cole,  3  N.  Y.  502;  Girard 
Life  Ins.  Co.  v.  Mut.  Life  Ins.  Co.  of 
N.  Y.,  86  Pa.  St.  236. 

°^  Kirchner  v.  Venus,  12  Moo.  P.  C. 
361;  Isaksson  v.  Williams,  26  Fed. 
642 ;  Great  Western  Elevator  Co.  v. 
White,  118  Fed.  406,  56  C.  C.  A.  388; 
Ocean  Steamship  Co.  v.  /Etna  Ins. 
Co.,  121  Fed.  882;  Byrne  v.  iNIassasoit 
Packing  Co.,  137  Mass.  313;  Sawtelle 
V.  Drew,  122  Mass.  228;  Van  Hoesen 
V.  Cameron,  54  Mich.  609,  20  N.  W. 
609;  Pennell  v.  Deha  Transp.  Co.,  94 
Mich.  247.  53  N.  W.  1049;  Keavy  v. 
Thuett,  47  Minn.  266,  50  N.  W.  126; 
Brown  v.  Strimple,  21  Mo.  App.  338; 
Long  Bros.  v.  Armsby  Co.,  43  Mo. 
App.  253;  Martin  v.  Maynard,  16  N. 
A.  165;  Harris  v.  Tumbridge,  83  N. 
Y.  92,  38  Am.  Rep.  398;  Insurance 
Co.  of  North  America  v.  Hibernia 
Ins.  Co.,  140  U.  S.  565,  35  L.  ed.  517, 
11  Sup.  Ct.  909;  Chateaugay  Ore  & 
Iron  Co.  V.  Blake,  144  U.  S.  476  36 
L.  ed.  510,  12  Sup.  Ct.  731 ;  Consum- 
ers' Ice  Co.  V.  Jennings,  100  Va.  719, 
42  S.  E.  879.  But  compare  Fleet  v. 
Murton,  L.  R.  7  Q.  B.  126. 

'^Lonergan  v.  Courtney,  75  111.  580; 
Spears  v.  Ward,  48  Ind.  541 ;  Seavey 
V.  Shurick,  110  Ind.  494.  11  N.  E. 
597;  Scott  v.  Hartley.  126  Ind.  239, 
25  N.  E.  826;  "Louisville  &  C.  Packet 
Co.  V.  Rogers,  20  Ind.  App.  594.  49 
N.  E.  970;  Brown  v.  Faster.  113  Mass. 
136,  18  Am.  Rep.  463;  Benson  v. 
Gray,   154   Mass.  391,  28   N.   E.  275, 


13  L.  R.  A.  262;  Detroit  Advertiser 
V.  Detroit,  43  Mich.  116,  5  N.  W.  72; 
Collender  v.  Dinsmore,  55  N.  Y.  200, 

14  Am.  Rep.  224;  Deacon  v.  Matti- 
son,  11  N.  Dak.  190,  91  N.  W.  35; 
The  Delaware,  14  Wall.  (U.  S.)  579, 
20  L.  ed.  779 ;  National  Bank  v.  Burk- 
hardt,  100  U.  S.  686,  25  L.  ed.  766; 
Partridge  v.  Phoenix  Mut.  Life  Ins. 
Co.,  15  Wall.  (U.  S.)  573,  21  L.  ed. 
229;  Barnard  v.  Kellogg,  10  Wall. 
(U.  S.)  383,  19  L.  ed.  987. 

•"Anderson  v.  Whitaker,  97  Ala. 
690,  11  So.  919;  Cook  v.  Hawkins,  54 
Ark.  423,  16  S.  W.  8;  Gallatin  v. 
Bradford,  1  Bibb.  (Ky.)  209;  Has- 
kins  V.  Warren,  115  Mass.  514;  Mer- 
chants' Ins.  Co.  V.  Prince,  50  Minn. 
53.  52  N.  W.  131,  36  Am.  St.  626. 

•"Sohn  V.  Jervis.  101  Ind.  578,  1  N. 
E.  73 ;  Cox  v.  O'Riley,  4  Ind.  368,  58 
Am.  Dec.  633 ;  Wheeler  v.  Newbould, 
16  N.  Y.  392;  Hopper  v.  Sage,  112  N 
Y.  530,  20  N.  E.  350.  8  Am.  St.  77i: 
See  also.  Raisin  v.  Clark,  4)  Md.  158, 
20  Am.  Rep.  66;  Eager  v.  Atfas  Ins. 
Qo.,  14  Pick.  (Mass.)  141,  25  Am. 
Dec.  363 ;  Koppitz  &c.  Brewing  Co.  v. 
Behm,  130  Mich.  649,  90  N.  W.  676; 
Walters  v.  Senf,  115  Mo.  524,  22  S. 
W.  511;  Dunham  v.  Gould.  16  Johns. 
(N.  Y.)  367,  8  Am.  Dec.  323;  Ingle- 
bright  v.  Hammond,  19  Ohio  337,  53 
Am.  Dec.  430;  Barnard  v.  Kellogg,  10 
Wall.  ru.  S.)  383,  19  L.  ed.  987.  See 
also.  Noble  v.  Durell,  3  T.  R.  271; 
Edie  V.  East  India  Co.,  1  W.  Bl.  295, 
2  Burr.^  1216. 

^Livingston  v.  Maryland  Ins.  Co., 
11  U.  S.  506,  3  L.  ed.  421. 


I  137  CUSTOMS    AND    USAGES.  §    iSoO 

what  the  courts  have  solemnly  adjudged  it  to  be.    It  is  admissible, 
however,  to  show  that  the  usage  was  thereafter  changed." 

§  1800.  Custom  or  usage  not  established  by  proof  of  iso- 
lated instances. — A  custom  or  usage  cannot  be  established 
by  proof  of  isolated  instances  of  its  application."*  These  in- 
stances, however,  may  be  so  numerous  as  to  establish  the  custom 
or  usage.  "A  custom  or  usage  of  trade  that  is  the  habit  of  a 
body  of  persons  can  be  established  by  specific  instances,  provided 
they  are  sufficiently  numerous  to  indicate  a  fairly  regular  course 
of  business,  where  they  occur  under  similar  circumstances."'^'* 
Accordingly,  it  has  been  held  that  evidence  of  the  omission  of  a 
benefit  society  to  forfeit  certificates  for  failure  to  pay  dues,  in  a 
few  instances,  was  not  sufficient  to  show  an  established  custom  of 
the  association  not  to  declare  forfeitures  for  failure  to  pay  dues.'" 
Furthermore,,  the  proof  of  this  character  though  not  competent 
otherwise  to  show  the  existence  of  the  custom  may  be  competent 
as  tending  to  show  knowledge  of  the  custom  by  the  party  sought 
to  be  charged  with  the  same.^^  Neither  is  a  custom  to  be  estab- 
lished by  the  mere  opinion  of  witnesses  that  such  a  custom  or  us- 
age exists."  Where  it  is  sought  to  charge  one  with  an  infallible 
habit  in  his  business,  he  may  rebut  this  evidence  by  evidence  of 
specific  instances  where  the  custom  was  not  observed."  Although 
the  existence  of  a  usage  may  be  established  by  the  uncontradicted 
testimony  of  one  witness,  when  he  is  explicit  as  to  its  duration, 
certainty  and  notoriety,  the  testimony  of  an  insurance  broker  as 

"  Cookendorfer  v.  Preston,  4  How.  Wis.  178,  125  N.  W.  440,  135  Am.  St. 

(U.  S.)  317,  11  L.  ed.  992.  1066. 

•"Herring  v.   Skaggs,  7i  Ala.  446;  '"Broussard  v.  South  Tex.  Rice  Co. 

Burr  V.  Sickles.  17  Ark.  428,  65  Am.  (Tex.  Civ.  App.),  120  S.  W.  587.    See 

Dec.   437 ;    Willcuts   v.    Northwestern  also.  Bardsley  v.  Gill,  218  Pa.  56,  66 

Mut.  Life  Ins.  Co.,  81  Ind.  300;  Du-  Atl.  1112. 

vail  V.    Farmers'   Bank,  9   Gill.   &   J.  '"  Illinois    Masons'    Benev.    Soc.    v. 

(Aid.)  31 ;  Flatt  v.  Osborne,  2,i  Alinn.  Baldwin,  86  111.  479. 

98,  22  N.  W.  440;  Runvan  v.  Central  ''Off    v.    Inderrieden    Co.,    74    111. 

R.  Co.,  64  N.  J.   L.  67,  44  Atl.  985,  App.  105. 

48  L.R.  A.  744;  First  Nat.  Bank  v.  "See  §  1799;  Havward  v.  Middle- 
Minneapolis"  &c.   Elevator  Co..   11  N.  ton,  3  McCord  (S.  Car.)   121,  15  \m. 
Dak.    280,    91    N.    W.    436;    Cope   v.  Dec.   615;    Williams  v.    Ninemire.   2i 
Dodd,   13   Pa.  St.  2>Z\   Nichols  v.  De  Wash.  393.  63  Pac.  534. 
Wolf,  1  R.  I.  277;  Garrison  v.  Mem-  "  Parrott  v.  .\tlnntic  8:  N  C  R   Co 
phis  Ins.  Co.,  19  How.   (U.  S.)   312.  140  N.  Car.  546,  53  S.  E.  432. 
15  L.   ed.  656;   Lemke  v.   Hage,   142 

72 — CoNTR.^CTS,  Vol.  2 


§    l80I  CONTRACTS.  1 1 38 

to  the  authority  of  agents  in  a  certain  locality  to  make  binding 
preliminary  contracts,  which  is  based  wholly  on  the  practice  of 
his  own  office,  is  not  sufficient  to  go  to  the  jury."''  It  has  also 
been  held  that  the  rules  of  the  chamber  of  commerce  established 
for  the  purpose  of  maintaining  uniformity  in  commercial  usages 
of  the  place  are  admissible  to  show  the  existence  or  nonexistence 
of  a  particular  usage  in  that  place." 

§  1801.  Evidence  of  knowledge  of  custom  or  usage. — 
Where  a  custom  is  set  up  to  qualify  a  contract,  it  must  be  shown 
that  the  custom  was  known  to  the  party  sought  to  be  charged 
with  it  or  that  it  was  of  such  well-known  character  as  to  warrant 
an  inference  that  he  knew  the  custom  or  usage/*'  A  party  may 
be  charged  with  knowledge  of  a  custom  where  it  is  shown  that 
he  was  in  the  habit  of  dealing  in  accordance  with  such  custom.'^ 
Where  a  party  seeks  to  set  up  a  general  custom,  knowledge  of 
which  would  be  presumed,  it  is  competent  for  the  opposite  party 
to  show  that  neither  he  nor  other  persons  residing  in  the  vicinity 
ever  heard  of  the  alleged  custom  and  that  there  was  no  such  gen- 
eral custom  in  the  region."     Knowledge,  of  course   need  not  be 

'*  Black  V.  Ashlev,  80  Mich.  90,  44  Thaver  v.   Smokv  Hollow  Coal   Co., 

N.  W    1120;  Reynolds  v.  Continental  121   Iowa   121,  96  N.   W.  718;   Cald- 

Ins.    Co.,    36    .Mich.    131;    Schurr    v.  well  v.  Dawson,  4  Mete.    (Kv.)    121; 

Savignv,  85  Mich.  144,  48  N.  W.  547;  Norton  v.   University  of    Maine,    106 

Stringfield    v.    Vivian,    63    Mich.   681,  Maine  436,  76  Atl.  912;  Bourbonnais 

30  N    W.  346;   Lamb  v.   Henderson,  v.  West  Boylston  Mfg.  Co.,  184  Mass. 

63  Mich.  302.  29  N.  W.  732;  Ricker-  250,   68    N.   E.   232;    Collins   v.    New 

son   V.    Hartford    Fire    Ins.    Co..    149  England    Iron    Co.,     115    Mass.    23; 

N.  Y.  307,  43  N.  E.  856;   Southwest  Shields     v.     Kansas     City     Suburban 

Virginia    Mineral    Co.    v.    Chase,    95  Belt  R.  Co.,  87  Mo.  App.  637;   Cam- 

Va  50,  27  S.  E.  826;  Bowling  V.  Har-  eron   v.    McNair,   76   Mo.    App.    366; 

rison,  6  How.   (U.  S.)  248,  12  L.  ed.  Silliman  v.   Whitmer,    11    Pa.    Super. 

425-    United    States    v.    Buchanan.    8  Ct.  243;  Godcharles  v.  Wigeman,  113 

How.    (U.    S.)    83,    12    L.    ed.    997;  Pa.    St.    431,    6    Atl.    354;    Standard 

Greenwich    Fire    Ins     Co.   v.    Water-  Paint  Co.  v.  San  Antonio  Flardw.  Co. 

man,   54   Fed.   839,   4   C.   C.    A.   600:  (Tex.   Civ.   App.),    136   S.   W.    1150; 

"'it   is    well    settled    that   a   usage    or  Scott  v.  Whitney,  41  Wis.  504. 

custom,  to  affect  the  construction  of  "  Rastetter    v.    Reynolds,    160    Ind. 

contracts,  or  to  extend  the  apparent  133.  66  N.  E.  612;   Warren   Bank  v. 

authority  of  agents  beyond  their  ac-  Parker,  8  Gray   (Mass.)   221;  Dodge 

tual  authority,  must  be  uniform,  no-  v.    Favor,    15   Gray    (Mass.)    82.    See 

tofious  and  well  defined."  also.  Stern  v.  Simons,  77  Conn.  150, 

"Kershaw    v.    Wright,    115    Mass.  58  Atl.  696. 

361  '*  Prigg  V.    Preston.   28   Pa.    Super. 

™Chilberg  v.    Lvng,    128   Fed.   899,  Ct.  272.    See  also.  Walls  v.  Bailey,  49 

63   C    C    A    451 ;'  Rastetter   v.   Rev-  N.  Y.  464,  10  Am.  Rep.  407. 
nolds,    160   ind.    133,  66   N.   E.   612; 


1 139  CUSTOMS    AXD    USAGES,  §    l8o2 

proved  where  the  custom  is  so  widely  accepted  that  law  will 
impute  such  knowledf^e  to  all  parties  in  the  trade/®  Neither  is 
it  necessary  to  show  how  long  a  usage  is  continued  if  it  is  other- 
wise shown  to  have  l)een  known  to  the  parties.*"  There  is  no  pre- 
sumption, ordinarily,  that  one  living  outside  of  the  state  has 
knowledge  of  local  customs  within  the  state.  His  knowledge  of 
such  custom  must  be  proved.*^ 

§  1802.  Evidence  of  custom  of  prompt  payment  or  collec- 
tion.— It  is  not  evidence  of  payment  that  the  party  from 
whom  it  is  sought  to  recover  payment  was  a  prompt  and  punc- 
tual* man  in  the  payment  of  his  debts. ^-  This  evidence  is  some- 
times admitted,  however,  to  show  the  ability  of  the  party  to  pay 
his  debts.^^  In  one  of  the  cases,  it  is  held  that  the  character  of 
the  creditor  for  promptness  in  the  collection  of  his  debts  may  be 
given  in  evidence  as  a  circumstance  to  show  that  a  debt  has  been 
paid,  where  the  question  arose  after  a  long  lapse  of  time.®*  In 
an  action  for  goods  sold,  it  has  been  held  that  the  plaintiff  may 
show  by  his  bookkeeper,  in  corroboration  of  his  own  testimony, 
that  the  debt  has  not  been  paid,  his  usage  in  regard  to  his  system 
of  entry  in  his  books,  when  checks  and  money  have  been  received, 
and  that  the  books  fail  to  show  any  evidence  of  payment.®^ 

§  1803.  The  South  Carolina  rule  as  to  evidence  of  custom 
to  vary  contract. — The  South  Carolina  rule  is  that  evidence 
of  custom  and  usage  is  not  admissible  to  explain  or  var}-'  the  terms 
of  an  express  contract,  whether  written  or  verbal,  unambigu- 
ous in  its  terms,  unless  to  show  the  meaning  of  certain  terms  used 
in  such  contract,  which,  by  well-established  custom  or  long  usage, 
have  acquired  a  meaning  different  from  that  which  they  primarily 

'"Thaver    v.    Smokv    Hollow    Coal  don,  8  Allen    (Mass.")    532;   Doak  v. 

Co.,  12rio\va  121,  96  N.  \V.  718;  Pat-  Currv.  4  Pitts.  Leg.  J.  (O.  S.)   (Pa.) 

terson  v.    Crowther,   70   Md.    124,    16  829;  Strong  v.  Slicer,  35  Vt.  40.    See 

Atl.  531 ;  Tower  Co.  v.  Southern  Pac.  also,  Fletcher  v.  Dulaney,  1  Ind.  Ter. 

Co..  184  Mass.  472,  69  X.  E.  348.  674,  43  S.  W.  955. 

'"Lamb  v.  Klaus,  30  Wis.  94.  ""Orr  v.  Jason,  1  111.  App.  439. 

■^  Gould    V.    Cates    Chair    Co.,    147  '*Leiper  v*.  Erwin,  5  Yerg.  (Tenn.) 

Ala.  629.  41  So.  675;  Miller  v.  Wig-  97. 

gins.  227  Pa.  564.  76  Atl.  711.  ^Harbison  v.  Hall,  124  N.  Car.  626, 

»=  Martin  v.  Shannon.  92  Iowa  374,  32  S.  E.  964. 
60  N.  W.  645;  Abercrombie  v.  Shel- 


i8o3 


COXTRACTS. 


I  140 


bear,  for  the  reason  that  when  parties  in  making  a  contract,  use 
terms  which,  by  usage  or  custom,  have  acquired  a  certain  mean- 
ing, they  must,  in  the  absence  of  any  evidence  to  the  contrary, 
be  assumed  to  have  used  such  terms  in  such  acquired  sense.^** 


^"^leloche  v.  Chicago,  M..&  St.  P. 
R.  Co.,  116  Mich.  69,  74  N.  W.  301; 
Goulds  Mfg.  Co.  V.  Munckenbeck,  20 
App.  Div.  (N.  Y.)  612,  47  N.  Y.  S. 
325.  In  Fairly  v.  Wappoo  Mills,  44  S. 
Car.  227,  22  S.  E.  108,  29  L.  R.  A. 
215,  the  court  reviews  some  of  the 
decisions  as  tollows:  "In  Globe 
^klilling  Co.  V.  Minneapolis  Ele- 
vator Co.,  44  Minn.  153,  46  N.  W. 
306,  the  question  was  whether  the 
title  to  certain  grain  sold  vested  in 
the  vendee.  By  the  terms  of  the  con- 
tract of  sale  the  grain  was  sold  for 
'cash  on  delivery,'  which  had  not 
been  complied  with;  but  vendee 
sought  to  sustain  his  claim  by  proof 
of  a  custom  prevailing  in  that  local- 
ity, whereby  the  title  was  regarded  as 
having  passed  when  certain  things 
were  done,  whatever  might  be  the 
terms  of  the  sale  agreed  upon  by  the 
parties.  But  the  court  said:  'A  local 
usage  cannot  be  proved  to  contradict 
a  contract.  *  *  *  If,  by  the  contract 
of  sale  of  this  wheat,  it  was  for  cash 
on  delivery,  the  usage  cannot  make 
it  a  sale  on  a  credit.'  In  Page  v.  Cole, 
120  Mass.  2)1,  the  action  was  to  re- 
cover damages  for  the  breach  of  a 
contract  for  the  sale  of  a  'milk-route,' 
and  evidence  as  to  the  meaning  and 
effect  which  that  term  had  acquired 
by  usage  prevailing  in  that  locality 
was  held  competent.  In  Walls  v.  Bai- 
ley, 49  N.  Y.  464,  the  action  was  to 
recover  the  amount  due  plaintiff  for 
plastering  which  he  had  contracted  to 
do  at  so  much  per  square  yard,  and 
it  was  held  competent  to  prove  that 
the  custom  was  to  measure  the  open- 
ings for  windows,  and  doors,  as  well 
as  the  solid  walls.  In  that  case  it 
was  said  that:  'Every  legal  contract 
is  to  be  interpreted  m  accordance 
with  the  intention  of  the  parties;  and 
usage,  when  it  is  reasonable,  uniform, 
and  well  settled,  not  in  opposition  to 
fixed  rules  of  law,  not  in  contradic- 
tion to  the  express  terms  of  the  con- 
tract, is  deemed  to  form  a  part  of 
the  contract,  and  to  enter  into  the 
intentions  of  the  parties.'    In  Hinton 


V.  Locke,  5  Hill  437,  the  action  was 
on  a  contract  to  pay  the  plaintiff  so 
much  per  day  for  his  services,  and  it 
was  held  competent  to  show  that  the 
universal  custom  in  that  locality  was 
to  count  a  day  as  ten  hours.  Of 
course,  the  term  'day'  could  not  be 
regarded  as  meaning  twenty-four 
hours,  and  hence  it  was  competent  to 
show  how  many  hours  were  regarded 
as  a  day.  In  that  case,  however,  Bran- 
son, J.,  in  delivering  the  opinion  of 
the  court,  expressly  disapproves  of 
the  case  of  Smith  v.  Wilson,  3  Barn. 
&  Adol,  728,  where,  upon  a  contract 
to  pay  so  much  a  thousand  for  all 
the  rabbits  in  a  certain  warren,  it  was 
held  competent  to  show  that  in  that 
part  of  the  country  the  custom  was 
to  construe  the  term  'thousand'  as 
meaning  100  dozen  or  1,200,  because 
he  said  that  would  be  allowing  the 
custom  to  contradict  the  express 
terms  of  the  contract.  *  *  *  in 
Ware  v.  Hayward  Rubber  Co.,  3  Al- 
len 84,  the  plaintiff  claimed  one-half 
commissions  on  goods  consigned  to 
him  for  sale,  but  not  sold,  and  turned 
over  to  consignor,  basing  his  claim 
upon  a  custom  prevailing  in  that  lo- 
cality. Held,  that  evidence  of  such  a 
custom  was  incompetent.  Chapman, 
J.,  in  delivering  the  opinion  of 
the  court,  used  this  language: 
'This  being  a  written  and  ex- 
press contract,  the  evidence  of- 
fered in  respect  to  the  usage  of  com- 
mission merchants  to  charge  one-half 
commission  when  goods  consigned  to 
them  in  the  ordinary  way  for  sale  are 
taken  back  is  not  applicable  to  this 
case,  for  an  express  contract  cannot 
be  controlled  or  varied  by  usajie.* 
And  this  was  the  point  upon  which 
the  case  turned.  In  Ford  v.  Tirrell, 
9  Gray  401,  the  action  was  upon  a 
contract  to  build  an  octagon  cellar 
wall  at  11  cents  per  foot,  and  the 
question  was  as  to  the  mode  of 
measurement  to  be  adopted  in  or- 
der to  ascertain  the  amount  of  work 
done.  The  court  seems  to  have  held 
that,  as  the  contract  was  silent  as  to 


1 141 


CUSTOMS    AND    USAGES. 


§    1804 


§  1804.  Custom  or  usage  as  question  of  law  or  fact. — The 
question  wiicihcr  a  usage  or  custom  is  valid  and  if  so  its  effect  on 
the  issue  is  one  purely  of  law  for  the  court."^  Whether  the  cus- 
tom or  usage  contended  for  actually  exists  is  a  question  of  fact 
for  the  determination  of  the  jury,*"*  unless  the  facts  and  circum- 


the  mode  of  measurement,  it  was 
competent  to  introduce  evidence  as 
to  the  custom  or  usage  in  such  cases 
by  which  the  mode  of  measurement 
sliould  be  determined:  citing  1 
Greenleaf  on  Evidence,  §  292.  In 
Barton  v.  McKehvay,  22  X.  J.  L. 
165,  the  action  was  on  a  written  con- 
tract for  the  delivery  of  a  specified 
number  of  morus  multicaulis  trees, 
of  not  less  than  one  foot  in  height, 
and  the  question  was  as  to  the  mode 
of  measuring  the  height  of  the  trees. 
Held,  that  it  was  competent  to  show 
that  it  was  the  universal  custom  pre- 
vailing among  dealers  in  such  arti- 
cles to  measure  only  the  ripe,  hard 
wood,  rejecting  the  green,  immature 
top.  *  *  *  In  Wilcox  V.  Wood,  9 
Wend.  346,  the  question  was  as 
to  when  —  at  what  hour  —  a  lease 
from  the  first  of  May  to  the 
first  of  May  in  a  succeeding  year 
terminated;  and  it  was  held  com- 
petent to  show  that,  by  universal 
custom,  such  a  lease  would  terminate 
at  12  m.  on  the  first  of  May.  In 
Grant  v.  Maddox,  15  Mees.  &  W. 
737,  the  court  went  as  far  as  in 
any  other  case  which  we  have  ex- 
amined. In  that  case  the  action  w-as 
upon  a  contract  to  pay  the  plaintiff, 
for  her  services  as  an  opera  singer, 
so  much  per  week  for  each  week  in 
the  three  years  for  which  she  en- 
gaged ;  and  the  controversy  was  as 
to  whether  plaintiff  was  entitled  to 
receive  the  stipulated  sum  for  each 
week  during  the  whole  of  the  three 
years,  or  only  for  each  week  during 
the  theatrical  season  of  those  years. 
The  court  held  that  it  w^as  competent 
to  prove  a  custom  by  which  a  year 
was  regarded  as  only  the  theatrical 
season,  and  not  the  whole  calendar 
year.  In  Higgins  v.  Moore.  34  N. 
Y.  417,  the  question  was  whether  a 
purchaser  of  grain  in  the  city  of 
New  York,  negotiated  by  a  broker, 
would  be  discharged  by  the  payment 
of   the  purchase-price  to  the  broker. 


Held,  that  he  would  not,  as  the 
broker's  agency  terminates  when  he 
makes  the  sale,  and  he  has  no  au- 
thority to  receive  purchase-money, 
and  that  evidence  of  any  local  usage 
in  New  York  to  the  contrary  was 
not  admissible  to  control  the  general 
rule  of  law.  In  Bower  v.  Jones, 
8  Bing.  65,  21  E.  C.  L.  447,  it  was 
held  that,  where  there  was  an  ex- 
press agreement  that  the  principal 
should  be  responsible  for  bad  debts, 
proof  that  the  custom  of  the  trade 
was  that  commissioHS  should  not  be 
allowed  on  bad  debts  could  not  be 
received,  because  in  violation  of  the 
express  terms  of  the  agreement. 
F"rom  this  review  of  the  cases  cited 
above,  as  well  as  from  the  examina- 
tion of  others,  which  we  have  not 
deemed  it  necessary  to  cite,  it  is 
obvious  there  is  not  entire  harmony 
in  the  decisions." 

"Sullivan  v.  Jernigan,  21  Fla.  264; 
Lancheimer  v.  Jacobs,  126  Ga.  261, 
55  S.  E.  55 ;  Chicago  Packing  & 
Provision  Co.  v.  Tilton,  87  111.  547; 
Currie  v.  Svndicate  Des  Cultiva- 
tors &c.,  104  ill.  App.  165;  Milroy  v. 
Chicago.  M.  &  St.  P.  R.  Co.,  98 
Iowa  188.  67  N.  W.  276;  Bodfish  v. 
Fox,  23  Maine  90,  39  Am.  Dec.  611; 
Codman  v.  Armstrong,  28  Maine  91 ; 
Given  v.  Charron,  15  Md.  502; 
Bourke  v.  James,  4  Mich,  336;  Hess 
V.  Shurtleff,  74  N.  H.  114,  65  Atl. 
377;  Runvan  v.  Central  R.  Co.,  64 
N.  J.  L.  '67.  44  Atl.  985.  48  L.  R. 
A.  744;  Citizens'  State  Bank  v. 
Cowles.  39  Misc.  (N.  Y.)  571,  80  N. 
Y.  S.  598,  affd.  89  App.  Div.  (N.  Y.) 
281.  86  N.  Y.  S.  38;  Somerby  v. 
Tappan.  Wright  (Ohio)  570.  See 
also.  Withers  v.  Moore  (Cat.).  71 
Pac.  697,  revd.  140  Cal.  591,  74  Pac. 
159. 

**  Sullivan  v.  Jernigan.  21  Fla. 
264:  Branch  v.  Palmer.  65  Ga.  210; 
Knoll  V.  Mayer,  13  111.  App.  203; 
Chicago  Packing  &  Provision  Co.  v. 
Tilton,   S7   111.   547;   Bodfish  v.   Fox, 


§    l805  CONTRACTS.  1 1 42 

Stances  are  undisputed  by  which  the  custom  or  usage  is  sought  to 
be  estabHshed.*^  "Some  customs  are  so  well  established  and  so 
universally  recognized  as  to  have  become  a  part  of  the  law  of 
the  land,  and  a  party  will  not  be  heard  to  allege  his  ignorance  of 
them.  Others,  however,  are  so  restricted  as  to  locality  or  trade 
or  business  that  ignorance  of  them  is  a  valid  reason  why  a  party 
will  not  be  held  to  have  contracted  in  reference  to  them.  Not 
only  the  existence  of  such  a  custom,  but  whether  the  knowledge 
of  it  exists  in  any  particular  case,  are  questions  of  fact  for  the 
jury.  It  is  for  them  to  determine,  under  proper  instructions 
from  the  court,  whether  the  evidence  as  to  the  existence,  dura- 
tion, and  other  characteristics  of  the  custom,  and  as  to  knowl- 
edge thereof  by  the  party  therein,  shows  a  custom  of  such  age 
and  character  that  the  law  will  presume  that  the  parties  knew 
of  and  contracted  in  reference  to  it,  or  whether  the  custom  is  so 
local  and  particular  that  knowledge  in  the  party  to  be  charged 
must  be  affirmatively  shown  and  may  be  negatived.""**  The  rule 
does  not  require  conclusive  evidence  of  the  extent  of  the  usage. 
That  matter  becomes  a  question  for  the  jury  where  there  is  evi- 
dence of  the  extent  of  the  usage  though  such  evidence  is  con- 
flicting."^  In  weighing  the  testimony  of  witnesses  as  to  the  trade 
usage  the  jury  may  consider  the  extent  to  which  any  of  the  wit- 
nesses may  have  an  interest  in  the  result  of  the  litigation  which 
might  color  their  evidence.^^ 

§  1805.  Knowledge  a  question  for  jury. — When  a  custom 
is  general,  eveiy  person  who  makes  a  contract  is  presumed  to 
know  the  custom,  and  it  enters  into  the  contract  and  binds  him ; 
but,  where  it  is  purely  local  custom,  a  stranger  to  the  locality 
where  it  exists  can  not  be  bound  by  it,  unless  knowledge  of  the 

23  Maine  90,  39  Am.  Dec.  611;  Bur-  «°  Runyan  v.  Central  R.  Co.,  64  N. 

roughs  V.  Langley,  10  Md.  248;  Pad-  J.  L.  67,  44  Atl.  985,  48  L.  R.  A.  744. 

dock  V.   Franklin    Ins.    Co.,   11    Pick.  ~  New    Roads    Oilmill    &c.    Co.    v. 

(Mass.)    227;    Bank    of    New    Han-  Kline,    154   Fed.  296,   83   C.   C.   A.   1. 

over   V.    Williams,    79    N.    Car.    129;  "  Hirschhorn  v.  Bradley,  117  Iowa 

Carolina    Nat.    Bank    v.    Wallace,    13  130,  90  N.   W.   .592;   Loring  v.   Gur- 

S.  Car    347,   36   Am.   Rep.  694;    Mc-  nev,    5    Pick.     (Mass.)     15;    Fish    v. 

Lanahan  v.  Universal  Ins.  Co.,  1  Pet.  Crawford    Mfg.    Co.,    120   Mich.   500, 

(U.    S.)    170,   7   L.   ed.   98;    Oriental  79  N.  W.  793. 

Lumber    Co.   v.    Blades   Lumber    Co.,  "'  Dodge  v.  Hedden,  42  Fed.  446. 
103  Va.  730,  50  S.  E.  270. 


1 143 


CUSTOMS    AND    USAGES, 


§    l8o: 


custom  is  proved."  It  is  for  the  jury,  under  proper  instructions 
from  the  court,  to  take  all  the  evidence  in  the  case — that  as  to 
the  existence,  duration,  and  other  characteristics  of  the  custom 
or  usage,  and  that  as  to  the  kno\vledf,^e  thereof  by  the  parties — 
and  therefrom  t(j  determine  ^vhether  there  is  shown  a  custom  of 
such  age  and  character  that  the  presumption  of  law  will  arise 
that  the  parties  knew  of  and  contracted  with  reference  to  it,  or 
whether  the  usage  is  so  local  and  particular  as  that  knowledge  in 
the  party  to  be  charged  must  be  shown  affirmatively  or  may  be 
negatived."*  There  are  some  usages  so  general  as  to  be  deemed 
to  have  become  a  part  of  the  common  law  so  that  no  one  can  be 
heard  to  profess  ignorance  of  them.  On  the  other  hand,  there 
are  usages  so  restricted  to  locality,  or  trade,  or  business,  that 
ignorance  of  them  constitutes  a  valid  reason  why  a  party  may 
not  be  held  to  have  contracted  with  reference  to  them."^  Thus, 
where  a  physician  employs  another  to  assist  him  in  a  case,  evi- 
dence is  not  admissible  of  a  custom  prevailing  among  the  physi- 
cians of  the  city  and  vicinity  that,  in  the  absence  of  a  special 
agreement  to  the  contrary,  the  physician  so  employed  is  to  obtain 


"Horan  v.  Strachan,  86  Ga.  408, 
12  S.  E.  678,  22  Am.  St.  471 ;  Knight 
V.  Overman  Wheel  Co.,  174  J^Iass. 
455.  54  N.  E.  890. 

"^  Walls  V.  Bailc>-,  49'  N.  Y.  464, 
10  Am.  Rep.  407,  a  case  reviewing 
Barnard  v.  Kelloi^g,  10  Wall.  (U.  S.) 
383,  19  L.  ed.  987;  and  Dodge  v. 
Favor,  15  Gray,  (Mass.)  82.  See 
to  the  same  effect,  Sampson  v.  Gaz- 
zam,  6  Port.  (Ala.)  123,  30  Am.  Dec. 
578,  where  the  court  saj-s :  "Where  a 
custom  or  usage  is  proved  to  exist, 
in  relation  to  a  particular  trade  or 
pursuit,  if  it  be  general,  all  persons 
engaged  therein  are  presumed  to  con- 
tract in  reference  to  such  usage."  See 
also.  Andrews  v.  Roach,  3  Ala.  590, 
37  Am.  Dec.  718;  Monney  v.  Howard 
Ins.  Co.,  138  Mass.  375,  52  Am.  Rep. 
277;  Currie  v.  Syndicate  Des  Culti- 
vators &c.,  104  111.  .-Xpp.  165;  Runvan 
V.  Central  R.  Co.,  64  N.  J.  L.  67,'  44 
Atl.  985,  48  L.  R.  A.  744;  and  the 
authorities  in  note  to  Smith  v. 
Clews,  114  N.  Y.  190,  21  N.  E.  160, 
4  L.  R.  A.  392,  11  Am.  St.  627; 
Scott  V.  Brown,  29  Misc.  (N.  Y.) 
320,  60  N.  Y.  S.  511.     In  Barnard  v. 


Kellogg,  10  Wall.  (U.  S.)  383,  19 
L.  ed.  987,  the  point  decided  was 
that  the  rule  of  caveat  emptor  could 
not  be  annulled  by  proof  of  custom 
to  the  contrary,  on  the  familiar  prin- 
ciple that  custom  cannot  be  shown 
when  it  contravenes  the  law.  The 
evidence  must  not  be  of  opinions,  as 
in  Shackelford  v.  New  Orleans  &c. 
Co.,  27  Miss.  202,  where  the  general 
doctrine  is  recognized  and  approved, 
in  the  court's  statement,  of  the 
'foundation  of  this  whole  doctrine 
of  custom  and  usage,'  and  in  which 
case  the  mode  of  showing  knowledge 
is  not  passed  on  except  as  to  opin- 
ions. In  Dodge  v.  Favor,  15  Grav 
(Mass.)  82,  it  is  stated  (page  83) 
that  'they  did  not  offer  to  prove  by 
direct  testimony,  that  the  plaintiff 
knew  of  this  custom,  but  contended 
that  they  could  satisfy  the  jury  on 
the  evidence  in  the  case  that  he  did 
know  of  it.'  This  was  allowed.  It 
went  to  the  jury. 

"Booth  &c.  Granite  Co.  v.  Baird. 
87  Hun  (N.  Y.)  452,  68  N.  Y.  St. 
324.  34  N.  Y.  S.  392. 


§    l805  CONTRACTS.  1 144 

his  compensation  from  the  patient,  it  not  being  shown  tliat  the 
custom  was  known  to  him  or  so  general  that  knowledge  and 
adoption  of  it  might  be  presumed. °°  But  in  an  action  on  a  con- 
tract for  the  manufacture  of  candy  boxes,  evidence  is  admissible 
as  to  the  mode  in  which  such  boxes  are  made  and  printed  in  the 
candy  trade,  in  the  absence  of  a  special  direction  as  to  the  mode 
of  printing."^ 

**  Fitzgerald   v.    Hanson,    16   Mont.  Spain  in   sales  of  iron  ore  to  fix  a 

474,  41   Pac.  230.  standard  of  50  per  cent,  with  a  slid- 

"  Gair      V.      Auerbach,      13      IMisc.  ing    scale,    and    that    the    purchaser 

(N.    Y.)    264,   67   N.    Y.    St.    859,   34  was  obliged  to   receive  the  ore  if   it 

N.  Y.  S.  3.     In  Guillon  v.  Earnshaw,  did  not  go  below  45  or  46  per  cent. 

169  Pa.   St.  463,  32  Atl.  545,  it  was  And  see  Carey  v.  Bright,  58  Pa.  St. 

held   to   be   error   to   reject   evidence  70. 
offered   to  plaintiff   of   a  custom   in 


CHAPTER  XXXIX. 


TRADE    CON  TRACTS. 


§  1810.  Introductory.  §  1829. 

1811.  Construction      of      particular        1830. 

terms  in  contracts  of  sale,  1831. 
barter  or  exchange  gener-  1832. 
ally. 

1812.  Abbreviations  generally.  1833. 

1813.  "Sales       on       credit" — "Time        1834. 

sales." 

1814.  "Cash  sale" — "Terms  cash."  1835. 

1815.  "Cost"    —    "Actual       cost"—       1836. 

"Wholesale  cost."  1837. 

1816.  "More    or    less"    in    sales    of 

personalty.  1838. 

1817.  "More  or  less''  in  descriptions 

of  land.  1839. 

1818.  "About"— "Almost." 

1819.  "Say"    and    "say  about." 

1820.  Terms       relating      t  o       time, 

"year,"  "month,"  "week,"  1840. 
"day,"   "Sunday." 

1821.  "From      and      after" — "On" — 

"Or  before" — "On  or  about" 
—"Since."  1841. 

1822.  "Until"  —  "By"  —  "Forthwith" 

— "Immediate"  —  "Present-  1842. 
ly" — "At    once." 

1823.  Sale  on   trial. 

1824.  Interest       with       respect      to       1843. 

transfer  of  property  right — 
"Interest  in  land" — "As  in- 
terest mav  appear."  1844. 

1825.  "C  O.   D."  'and  "F.  O.  B." 

1826.  "Carloads."  1845. 

1827.  "On  sale  and  return." 

1828.  "Satisfactory."  1846. 


"For  collection." 

"Dollar" — "Greenbacks." 

"Supplies." 

"Regrating"     and     "Forestall- 

"Stock  in  trade." 

Terms  used  in  grain  and  lum- 
ber contracts. 

"Strike"  clauses. 

"Extra"    in   building   contract. 

"Agency,"  "agent,"  "sub- 
agent,"    "attorney    in    fact." 

Construction  of  conditions 
and   warranties. 

Terms  relating  to  position, 
"near,"  "abutting,"  "ad- 
jacent," "contiguous,"  "on," 
"meander   line." 

"Guaranty,"  "unlimited  guar- 
anty." "primarily  liable," 
"secondarily  liable,"  "sure- 
ty-" 

Terms    used    in    dealing    with 

real   estate. 

"Real  estate,"  "vested  es- 
tate." "perpetuity,"  "ap- 
purtenant." 

"Conditional  estates,"  "condi- 
tions" in  deeds,  "defeas- 
ances," "vendor's  lien." 

"Lease"  or  "license,"  "sub- 
tenant." 

"All  crops  grown  and  to  be 
grown." 

Miscellaneous  terms. 


§  1810.  Introductory. — The  general  principles  of  the  law 
of  contracts  in  their  application  to  trade  contracts  have  already 
been  sufficiently  set  out  and  it  is  not  intended  in  this  chapter  to 
restate  these  principles.  It  is  the  purpose  here  to  apply  those 
principles,  or  show  how  they  have  been  applied,  in  ascertaining 
the  meaning  of  certain  words  and  clauses  of  wide  use  in  sucli 
contracts. 


II45 


.;^    iSlI  CONTRACTS.  I  1 46 

§  1811.  Construction  of  particular  terms  in  contracts  of 
cale,  barter  or  exchange  generally. — A  "sale"  is  the  transfer 
of  tlie  ahsolute  or  general  property  in  a  thing  for  money  or  in  a 
wide  sense  it  may  be  anything  of  value.^  The  word  usually  implies 
or  imports  a  money  consideration.-  A  "conditional  sale"  is  a  sale 
in  which  the  transfer  of  title  in  the  thing  sold  to  the  purchaser, 
or  his  retention  of  it  is  made  to  depend  upon  the  performance  of 
some  condition.^  A  "consideration"  is  defined  as  any  benefit  to 
the  promisor,  or  any  loss,  trouble  or  inconvenience  to  or  charge 
upon  the  person  to  wdiom  the  promise  is  made.  It  is  that  which 
the  party  to  whom  a  promise  is  made,  does  or  agrees  to  do  in 
exchange  for  the  promise."*  The  word  may  mean  either  "price" 
or  "motive",  though  consideration  is  usually  a  different  thing 
from  mere  motive.^  "Performance"  means  the  doing  or  com- 
pleting of  an  act.*"  The  word  "approve"  means  to  sanction  official- 
ly;  to  ratify;  to  confirm,'  and  is  often  synonymous  with  "ratify".^ 
The  words  "on  approval"  have  a  well-understood  meaning  in 
the  diamond  trade  and  as  ordinarily  interpreted  are  neither  incon- 
sistent with  an  authority  "to  show"  or  an  obligation  "to  return 
on  demand."'^  The  word  "delivered"  in  a  contract  of  sale  has 
been  held  to  mean  or  imply  a  transfer  sufficient  to  give  the  seller 
an  action  for  goods  sold  and  delivered  or,  at  least,  a  complete 
voluntary  transfer  of  the  possession  of  goods  from  one  to  an- 

^Roberson    v.    State,    100    Ala.    37,  85  N.  W.  635;  Ayrcs  v.  Chicago  &c. 

14    So.    554;    Vincent   v.    Walker,   93  R.   Co.,  52   Iowa  478,   3   N.   VV.   522; 

Ala.   165,  9   So.   382;    Cain  v.   Ligon,  Chicora   Fertilizer   Co.  v.   Dunan,  91 

71   Ga.  692,   51   Am.   Rep.  281 ;   Bar-  Md.    144,   46   Atl.   347,   50   L.    R.    A 

row  V    Window    71    111.   214;    Micks  401;  St.  Mark's  Church  v.    feed,  120 

V.    Ste'ven.son,    22    Ind.    App.    475.    51  N.   Y.  583,   24   N    E.   1014;    Phoenix 

N    E    492;  Albemarle  Lumber  Co.  v.  Mut.    Life    Ins.    Co.    v.    Raddin,    120 

Wilcox.    105    N.    Car.    34.    10    S.    E.  U.  S.  183.  30  L.  ed.  644.  7  Sup.  Ct. 

871-    Ott   V.    Sweatman,    166    Pa.    St.  500;    Ballard  v.   Burton,   64   Vt.  387, 

217;'   Iowa  v.   McFarland,    110   U.    S.  24  Atl.  769,  16  L.  R.  A   664. 

471    28   L.   ed.   198,   4   Sup.   Ct.   210;  "State  v.   Pirkey,  22   S.   Dak.   550, 

Butler   V.    Thompson,  92   U.    S.   412,  118  N.  W.   1042.                    ,„    .   .r.  , 

23  L    ed    684;  Ross  v.  Portland  Cof-  "  Knudtson  v.  Robinson,  18  N.  Dak. 

fee  &    Spice   Co.,   30   Wash.  647,   71  12,   118  N.  W.  1051. 

Pac     184-    Cone  v.    Ivinson,   4  Wyo.  ''Long  v.   Needham,  o7  Mont.  4U8, 

203,' 33  P'ac.  31,  35  Pac.  933.  96  Pac.   731. 

==  Alcorn    v    Gieseke,    158    Cal.    410,  "Baker  v.   IlammeU,  23   Okla.  480, 

111    Pac    98  100   Pac.    1114. 

^'Poirier  Mfg.   Co.  v.  Kitts,  18  N.  "Smith   v.    Clews,    114   N^  Y    190, 

Dak    556,  120  N.  W.  558.  21  N.  E.  160,  4  L.  R.  A.  392,  11  Am. 

*  Eastman  v.  Miller,  113  Iowa  404,  St.  627. 


I  1 47  TRADE    CONTRACTS.  §    iSlI 

other/"  A  contract  for  the  sale  of  goods  for  dehvery  "at  the 
specified  dates"  which  are  set  out  requires  delivery  on  these  dates 
and  the  buyer  caiinul  be  compelled  to  accept  the  goods  at  a  later 
date.^^  "Earnest"  under  the  civil  law  is  a  sum  of  money  which 
one  of  the  contracting  parties  delivers  to  the  other  at  the  time 
of  the  contract,  and  is  presumed  to  be  a  forfeit  in  the  absence 
of  evidence  that  tlic  parties  intended  to  bind  themselves  then  and 
there  by  an  irrevocable  contract.'-  The  word  "assume"  in  a  con- 
tract for  the  exchange  of  property  in  which  the  party  assumes 
incumbrance  means  that  the  party  assuming  the  incumbrance  shall 
pay  the  incumbrance  when  it  is  due."  The  word  "merchantable" 
describes  the  grade  or  quality  of  the  thing  sold  and  is  determined 
by  experts  with  approximate  certainty.^*  The  word  is  practically 
synonymous  with  the  word  "marketable. "^°  By  "value,"  in  com- 
mon parlance,  is  meant  "market  value"  which  is  no  other  than  the 
fair  value  of  property  as  between  one  who  wants  to  purchase  and 
another  who  desires  to  sell  and  the  courts  have  frequently  used 
the  terms  as  interchangeable  and  both  as  being  the  equivalent  of 
"actual  value,"  "salable  value,"  and  in  proper  cases,  "rental 
value."'"  An  agreement  to  purchase  all  the  coal  of  a  stated 
kind  that  the  "purchaser  may  use"  during  a  specified  time  has 
been  held  valid  and  binding  upon  the  purchaser  to  take  from 
the  seller  all  the  coal  that  may  be  needed  or  required  in  the 
conduct  of  his  business  during  the  specified  time."  A  con- 
tract to  sell  the  entire  "output"  of  a  mill  for  a  year  re- 
quires the  seller  to  deliver  no  more  than  the  actual  pro- 
duction of  the  mill  during  the  year  although  this  is  less  than 
its  estimated  capacity.^*  The  words  "net  to  us"  in  a  telegram 
ofifering  to  sell  a  commodity  at  a  certain  price  per  pound  mean 

*°  Stanley   v.    Drjer,    70    Misc.    (N.  things   which   merchants  sell.     Rohlf 

Y.)  561,  127  X.  Y.  S.  468.  v.    Kasemcier     (Iowa),    118    N.    W. 

"  Oshinskv   v.    Lorraine    Mfg.    Co.,  276. 

187  Fed.  120,  109  C.  C.  A.  38.  "Eaton  v.   Blackburn,  49  Ore.   22, 

'=Legier  v.   Braughn,  123   La.  463,  88  Pac.  303. 

49  So.  22.  "Hetland  v.  Bilstad,  140  Iowa  411, 

"Olsen    V.    Sortedalil    (Iowa),    121  118  N.  W.  422. 

N.  W.  559.  "Golden    Cjxle   Min.   Co.   v.    Rap- 

"Lee   Lumber   Co.  v.   Hotard,    122  son    Min.    Co.,   188   Fed.    179,    112    C. 

La.  850.  48  So.  286,  129  Am.  St.  368.  C.  A.  95. 

The    word    "merchandise"    in    anti-  "  Burt    v.    Garden    City    Sand    Co., 

trust  statute  refers  primarily  to  those  237  111.  473,  86  N.  E.  1055. 


§    l8l2  CONTRACTS.  II48 

the  amount  specified  free  from  all  charges  and  deductions/®  The 
term  "quick  assets"  is  used  to  distinguish  liquid  assets  from  those 
permanently  invested  in  the  business  like  real  estate  and  ma- 
chinery.-" 

§  1812.  Abbreviations  generally. — Abbreviations  are  largely 
used  in  contracts  and  there  is  no  impropriety  in  their  use  where 
they  have  a  well-understood  meaning  or  the  meaning  can  be  de- 
rived from  the  context.  In  the  case  of  meaningless  abbrevia- 
tions, the  rule  is  that,  where  a  complete  contract  is  expressed 
without  the  abbreviation  employed  therein,  a  meaningless  abbre- 
viation may  be  disregarded  as  surplusage.^^ 

§  1813.  "Sales  on  credit"— "Time  sales."— The  term  "sales 
on  credit"  has  the  popular  meaning  and  requires  that  the  price 
be  agreed  upon  as  well  as  the  time  and  likewise  the  time  at  which 
the  payment  shall  be  made.  There  is  not  such  a  sale  where  no 
time  was  given  for  the  payment  of  the  price,  or  leave  given  to 
take  the  property  away  without  payment."  The  word  "sell"  as 
used  in  an  assignment  for  the  benefit  of  creditors  authorizes  a 
sale  on  credit. ^^ 

§  1814.  "Cash  sale"— "Terms  cash."— A  "cash  sale"  is  a 
Sale  for  the  money  in  hand  and  the  owner  is  not  bound  to  deliver 
the  goods  until  the  price  is  paid.^*  The  expression  "terms  cash" 
excludes  all  idea  of  credit,^^  but  it  may  be  shown  to  have  a  differ- 
ent meaning,  as,  for  example,  a  cash  payment  after  the  expiration 
of  a  given  time.^" 

§  1815.  "Cost"— "Actual  cost"— "Wholesale  cost."— The 
term  "cost"  is  equivocal,  particularly  where  the  term  is  applied 
to  the  production  of  a  commodity.     "Even  in  the  simpler  appli- 

"  Floral  Creamery  Co.  v.  Dillon,  83  30    Pac.    1064;    Steward    v.    Scudder, 

Conn.  65,  75  Atl.  82.  24  N.  J.  L.  96;  Philadelphia  &  R.  R. 

^"In  re  American  Knit  Goods  Mfg.  Co.   v.   Lehigh    Coal   &   Nav.   Co..   36 

Co.,  173  Fed.  480,  97  C  C.  A.  486.  Pa.  204;   Austin   v.   Welch,   31   Tex. 

^  Berry  v.   Kowalsky,  95   Cal.   134,  Civ.  App.  526,  72  S.  W.  881 ;  Hall  v. 

30  Pac.  202,  29  Am.   St.   101.  Storrs,  7  Wis.  253. 

"Riley  v.  Wheeler,  42  Vt.  528.  ""Lawder    &    Sons    Co.    v.    Mackie 

^Keep  V.  Sanderson,  2  Wis.  42,  60  Grocery  Co.,  97   Md.   1,  54  Atl.  634, 

Am.  Dec.  404.  62  L.   R.  A.  795n. 

"  Dazet    V.    Landry,    21    Nev.    291,  ^  George  v.  Joy,  19  N.  H.  544. 


I  149  TRADE    CONTRACTS.  §    iSlG 

cation"  says  one  of  the  courts,  "to  mere  bargain  and  sale 
of  a  thing  already  in  existence,  and  not  to  be  manufactured, 
the  term  is  ambiguous,  and  so  much  so  that  it  is  not  impossible 
that  often  it  will  be  found  to  avoid  the  contract  for  incurable 
uncertainty.""^  Like  difficulty  is  encountered  in  connection  with 
the  meaning  of  the  term  "actual  cost."  It  would  seem  a  matter 
of  ordinary  prudence  in  contracts  involving  these  terms  that  the 
parties  clearly  indicate  the  elements  that  are  to  enter  into  the 
computation  of  the  items  of  cost.^*  Says  the  court  in  one  of  the 
recent  cases,  "The  term,  'wholesale  cost,'  is  not  free  from  ob- 
scurity, and  is  to  some  extent  ambiguous,  making  it  necessary  to 
look  to  the  surrounding  circumstances  to  determine  what  it  really 
means  as  used  by  the  parties  in  this  contract.  It  has  generally 
been  said  in  the  adjudged  cases  that  such  terms  as  'actual  cost,' 
'estimated  cost,'  'first  cost,'  'original  cost,'  'jM-ime  cost,'  and 
Svhole  cost'  are  indefinite,  and  that  surrounding  circumstances 
must  often  be  looked  to  in  order  to  arrive  at  a  proper  interpre- 
tation.'"" 

§  1816.  "More  or  less"  in  sales  of  personalty. — The  words 
"more  or  less"  have  a  plain,  ordinary,  and  popular  signification, 
and  are  often  used  in  contracts  relating  both  to  real  and  per- 
sonal estate.  As  applied  to  quantity,  they  are  to  be  construed 
as  qualifying  a  representation  or  statement  of  an  absolute  and 
definite  amount,  so  that  neither  party  to  a  contract  can  avoid  it 
or  set  it  aside  by  reason  of  any  deficiency  or  surplus  occasioned 
by  no  fraud  or  want  of  good  faith,  if  there  is  a  reasonable  ap- 
proximation to  the  quantity  specifically  stipulated  in  the  con- 
tract.^°     In  sales  of  merchandise,  especially  in  large  quantities, 

-'  Hazelton      Tripod-Boiler    Co.    v.  v.    Citizens'    Street   Rv.    Co.,   72   Fed. 

Citizens'  St.  R.  Co.,  72  Fed.  317.  See  317;    IMcCov    v.    Hastings,    92    Iowa 

also.    In    re    Citv    of    Newton,     172  585.  61    N.  W.  205;    Boaz  v.  Owens. 

Mass.  5,  51   N.  E.  183.  20  Kv.  L.  257,  45  S.  W.  876;  Herst 

-'Lexington    &    W.    C.    R.    Co.    v.  v.   De  Comeau,  31    N.   Y.    Super.   Ct. 

Fitchburg    R.    Co.    9    Gray    (Mass.)  590;  Holloway  v.  Frick.  149  Pa.  178. 

226 ;  Newton  v.  Boston  &  A.  R.  Co.,  24  Atl.  201 ;  Ea?an  v.  Clasbcv.  5  Utah 

172  Mass.  5,  51   N.  E.   183.  154.    13    Pac.    430.    affd.    137    U     S. 

="Finn  V.  Culberhouse  (Ark),  150  654,  34  L.  ed.  822.  11  Sup.  Ct.  231. 
S.  W.  698.  citing.  Goodwin  v.  United  '"  Hackett  v.  State.  103  Cal.  144. 
States.  10  Fed.  Cas.  No.  625.  2  Wash.  37  Pac.  156:  Chicago  v.  Galpin,  183 
C.  C.  (U.  S.)  493.  Fed.  Cas.  No.  5.  554.  III.  3W.  55  N.  E.  731 ;  C^bot  v.  Win- 
See  also,  Hazelton  Tripod-boiler  Co.  sor,   1   Allen   (Mass.)   546.  The  plain 


i8i6 


CONTRACTS. 


II5O 


the  ofifice  and  effect  of  the  words  "more  or  less,"  in  connection 
with  the  specific  amount  which  forms  the  subject-matter  of  the 
contract,  is  to  cover  any  variation  from  the  estimate  which  is 
Hkely  to  arise  from  dift'erences  in  weight,  errors  in  counting, 
diminution  by  shrinking  or  other  similar  causes.  It  is  sometimes 
briefly  expressed  to  be  "an  absolute  contract  for  a  specified  quan- 
tity with.in  a  reasonable  limit. "^^  The  term  permits  a  limited 
deviation  within  reasonable  limits  in  quantity. ^^  What  is  a  rea- 
sonable limit  and  a  substantial  compliance  with  such  a  contract, 
if  the  facts  are  not  in  dispute  between  the  parties,  is  a  question 
of  law  for  the  determination  of  the  court.^^  It  has  been  held  that 
there  was  a  material  deviation  where  there  was  a  deficiency  of 
7,000  feet  in  the  sale  of  23,000  feet  of  lumber;^'*  and  where  on 
a  sale  of  262  head  of  cattle,  the  count  was  88  short.^^ 


and  obvious  meaning  of  the  expres- 
sion is  that  the  parties  are  to  run 
the  risk  of  gain  or  loss,  as  there 
might  happen  to  be  an  excess  or  de- 
ficiency in  the  estimated  quantity. 
Harrison  v.  Talbot.  2  Dana  (Ky.) 
258.  The  words  should  be  construed 
to  qualify  the  representation  of 
quantity  in  such  a  manner  that  if 
made  in  good  faith  neither  party 
should  be  entitled  to  any  relief  on 
account  of  deficiencv  or  surplus. 
Jones  V.  Plater.  2  Gill.  C^Id.)  125, 
41  Am.  Dec.  408. 

''Cabot  V.  Winsor.  1  Allen 
(Mass.)  546,  where  it  was  held  that 
a  shortage  of  five  per  cent,  on  "500 
bundles,  more  or  less,  gunny  bags" 
was  not  such  a  deficiency  as  to  fall 
outside  of  the  fair  and  reasonable 
limit  of  short  delivery,  and  that  by 
delivering  of  a  portion  of  475  bundles 
and  a  readiness  to  deliver  the  resi- 
due of  the  475.  the  plaintiff  proved  a 
full  compliance  with  tlie  terms  of  his 
contract.  After  declaring  the  law  in 
substantially  the  language  of  the 
text,  the  court  continued :  "In  such 
cases,  parol  evidence  is  not  admitted 
to  show  that  the  parties  intended  to 
buy  and  sell  a  different  quantity  or 
amount  from  that  stated  in  the  writ- 
ten agreement.  On  the  contrary,  it 
is  held  to  be  a  contract  for  the  sale 
of  the  quantity  or  amount  snccified ; 
nnd  the  effect  of  the  words  'more 
or  less'  is  only  to  permit  the  vendor 


to  fulfil  his  contract  by  a  delivery 
of  so  much  as  may  reasonably  and 
fairly  be  held  to  be  a  compliance 
with  the  contract,  after  making  due 
allowance  for  an  excess  or  short  de- 
livery arising  from  the  usual  and 
ordinary  causes,  which  prevent  an 
accurate  estimate  of  the  weight  or 
number  of  the  articles  sold."  See 
further,  to  the  point  that  the  words 
"more  or  less"  do  not  render  a  con- 
tract prima  facie  void,  Holland  v. 
Rea,  48  ^lich.  218,  12  N.  W.  167  and 
cases  there  cited.  ]Morris  v.  Levison, 
L  R.  1  C.  P.  Div.  155;  Cockerell  v. 
Aucompte,  2  C.  B.  (N.  S.)  440; 
Brown  v.  Bellows,  4  Pick.  (Mass.) 
179. 

••'^Hackett  v.  State,  103  Cal.  144. 
37  Pac.  156;  Chicago  v.  Galpin,  183 
111.  399,  55  N.  E.  731;  Kellv  v. 
Bowker,  11  Gray  (Mass.)  428.  71 
Am.  Dec.  725;  Cabot  v.  Winsor,  1 
Allen  (Mass.)  546;  Rea  v.  Holland, 
48  ^lich.  218,  12  X.  W.  167. 

''Cross  v.  Eglin,  2  Barn.  &  Ad. 
106;  Moore  v.  Campbell,  10  Exch. 
323;  Bourne  v.  Sevmour,  16  C.  B. 
337;  Cabot  v.  Winsor,  1  Allen 
(Mass.)  546;  Pembroke  Iron  Co.  v. 
Parsons,  5  Grav  (Mass.)  589;  Steb- 
bins  V.  Eddy,  4  Mas.  (U.  S.)  414, 
Fed.   Cas.   No.    13342. 

'*Creighton  v.  Comstock,  27  Ohio 
St.  548. 

^^'Tilden  v.  Rosenthal,  41  111.  385, 
89  Am.  Dec.  388. 


II^I 


TRADE    CONTRACTS. 


I817 


§  1817.  "More  or  less"  in  descriptions  of  land. — Generally 
speaking,  the  words  "more  or  less"  following  a  description  of 
land  in  a  deed  indicates  that  the  statement  of  quantity  is  mere 
matter  of  description  and  the  buyer  takes  the  risk  of  quantity  if 
there  is  no  intermixture  of  fraud  or  gross  error.  The  expression 
covers  small  errors  of  surveying.  The  words  are  words  of  safety 
and  precaution.^"  The  effect  of  these  words  was  thus  declared 
in  Massachusetts :  "In  an  agreement  for  the  sale  and  purchase 
of  land  for  an  entire  sum,  either  the  description  of  the  land  by 
its  boundaries,  or  the  insertion  of  the  words  'more  or  less,'  or 
equivalent  w'ords,  will  control  a  statement  of  the  quantity  of 
land  or  of  the  length  of  one  of  the  boundary  lines  so  that  neither 
party  may  be  entitled  to  relief  on  account  of  a  deficiency  or  sur- 
plus, unless  in  case  of  so  great  a  difference  as  will  naturally  raise 
the  presumption  of  fraud  or  gross  mistake  in  the  very  essence  of 
the  contract."^^    The  words  are  intended  to  cover  slight  and  rea- 


'*  Hodges  V.  Rowing,  58  Conn.  12, 
18  Atl.  979,  7  L.  R.  A.  87;  Tyler  v. 
Anderson,  106  Ind.  185.  6  N.  E.  600; 
Moore  v.  Harmon,  142  Ind.  555,  41 
N.  E.  599;  Caldwell  v.  Moore,  3 
Dana  (Ky.)  340;  Young  v.  Craig,  2 
Bibb.  (Ky.)  270,  8  Cranch  (U.  S.) 
375  note,  3  L.  cd.  595  note.  Libby  v. 
Dickey,  85  Maine  362,  27  Atl.  253; 
Tyson  v.  Hardesty.  29  Md.  305 ;  Slo- 
thower  v.  Gordon,  23  Md.  1 ;  Hall  v. 
Mavhew,  15  Md.  551 ;  Jenkins  v. 
Bolgiano,  53  Md.  407;  Blanev  v.  Rice, 
20  Pick.  (Mass.)  62,  32  Am.  Dec. 
204 ;  McArthur  v.  Morris.  84  N.  Car. 
405;  Crislip  v.  Cain.   19  W.  Va.  438. 

"Noble  V.  Googins.  99  Mass.  231, 
citing,  Stebbins  v.  Eddv,  4  Mas.  (U. 
S.)  414,  Fed.  Cas.  No.  13342;  StuU 
V.  Hurtt,  9  Gill  (Md.)  446;  Weart 
V.  Ro.se.  16  N.  J.  Eq.  290;  Marvin  v. 
Bennett.  8  Paige  (N.  Y).  312.  affd. 
26  Wend.  (N.  Y.)  169;  Morris  Canal 
Co.  V.  Emmett.  9  Paige  (N.  Y.)  168. 
Zl  Am.  Der.  388;  Faure  v.  :\Iartin,  7 
N.  Y.  210.  57  Am.  Dec.  515;  Ketchum 
V.  Stout,  20  Obio  453.  Tbe  latitude 
which  will  be  given  by  a  court  of 
equity  to  the  words  "more  or  less" 
in  such  cases  was  thoroughly  dis- 
cussed in  the  light  of  the  authorities 
bv  Com^tock.  J.,  in  Belknap  v.  Sea- 
lev.  14  N.  Y.  143.  67  Am.  Dec.  120. 
For  other  cases  involving  the  phrase 


"more  or  less"  in  deeds,  see  Harrell 
v.  Hill,  19  Ark.  102,  68  Am.  Dec. 
202.  Dale  v.  Smith,  1  Del.  Ch.  1,  12 
Am.  Dec.  64;  Maccoun  v.  Delanv.  3 
Bibb.  (Ky.)  46,  6  Am.  Dec.  635; 
Poague  v.  Allen,  3  J.  J.  Marsh.  (Ky.) 
421;  Shipp  v.  Swann.  2  Bibb.  (Ky.) 
82;  Pollock  v.  Wilson,  3  Dana  (Ky.) 
25;  Willi  ford  v.  Bentlev,  5  J.  J. 
Marsh.  (Ky.)  181;  Fannin  v.  Bel- 
lomv,  5  Bush  (Ky.)  663;  Smallwood 
v.  Hatton.  4  Md.  Ch.  95;  Hoffman  v. 
Johnson,  1  Bland  (Md.)  103;  Tvson 
v.  Hardestv.  29  Md.  305;  Blanev  v. 
Rice,  20  Pick.  (Mass.)  62.  Zl  Am. 
Dec.  204 ;  Phipps  v.  Tarpley.  24 
]\Iiss.  597;  McConnell  v.  Bravncr.  63 
IMo.  461 ;  Williamson  v.  Hall,'  62  Mo. 
405 ;  Sullivan  v.  Ferguson.  40  Mo. 
79;  Gerrens  v.  Huhn,  10  Nev.  137; 
Couse  V.  Boyles.  4  N.  J.  Eq.  212.  38 
Am.  Dec.  514;  Bradv  v.  Hennion,  21 
X.  Y.  Super.  Ct. '  528 ;  Pettit  v. 
Shcpard,  32  N.  Y.  97;  Gentry  v. 
Hamilton.  38  N.  Car.  376;  Smith  v. 
Evans,  6  Binn.  (Pa.)  102,  6  Am.  Dec. 
436;  Baynard  v.  Eddings,  2  Strob. 
(S.  Car.)  374;  Pedcn  v.  Owens.  Rice 
Eq.  (S.  Car.)  55;  Allison  v.  Allison, 
1  Yerg.  (Tenn.)  16;  Smith  v.  Flv.  24 
Tex.  345.  76  Am.  Dec.  109;  United 
States  V.  D'Aguirre.  1  Wall.  (U.  S.) 
311.  17  L.  ed.  595;  Thomas  v.  Perrv. 
Pet.  C.  C.   (U.  S.)  49,  Fed.  Cas.  No. 


i8i7 


CONTRACTS. 


II52 


sonable  deficiencies  or  excesses  of  qnantity.^^  The  words  relieve 
from  the  necessity  for  exactness  but  do  not  reHeve  from  gross 
deficiency/^  The  use  of  the  words  "more  or  less"  in  a  con- 
veyance of  a  tract  of  land,  containing  so  many  acres  more  or  less 
may  indicate  a  sale  in  gross  and  not  by  the  acre  and  this  excludes 
the  idea  of  warranty  of  quantity."  Where  metes  and  bounds  are 
set  forth,  they  govern  and  not  the  number  of  acres  set  out  in  the 
deed."  The  deviation  has  been  held  immaterial  in  cases  where 
there  was  a  deviation  of  six  acres  in  a  "more  or  less"  convey- 
ance of  four  hundred  thirty-one  acres,""  eight  acres  in  a  convey- 
ance of  five  hundred  fifty-two  acres,"  three  and  one-half  acres  in 
a  conveyance  of  one  hundred  acres,**  forty  acres  in  a  conveyance 
of  nine  hundred  acres.*^  In  other  cases,  the  variance  was  re- 
garded as  material  where  there  was  a  deficiency  of  twenty  acres 
in  a  conveyance  of  one  hundred  thirty-five  acres  ;**"  eight  and 
fifty-eight  hundredths  acres  in  a  conveyance  of  two  hundred 
acres  ;"'^  four  acres  in  a  conveyance  of  eight  acres  ;''^  seventy-eight 


13908;  Duvals  v.  Ross,  2  Munf. 
(Va.)  290;  Pendleton's  Exrs.  v. 
Stewart,  5  Call  (Va.)  1.  See  Law- 
son's  Concordance  of  Words, 
Phrases  and  Definitions,  title  "More 
or  Less."  A  deficiency  of  8  acres  in 
a  contract  for  552  acres  is  no  more 
than  a  purchaser  who  buys  for  more 
or  less  can  reasonably  expect.  Nel- 
son V.  Matthews,  2  Hen.  &  M.  (Va.) 
164,  3  Am.  Dec.  620. 

^'Touart  v.  Jett  Contracting  Co., 
169  Ala.  638,  53  So.  751 ;  Kitzman  v. 
Carl,  133  Iowa  340,  110  N.  W.  587; 
Hosleton  v.  Dickenson,  51  Iowa  244, 
1  N.  W.  550;  Phipps  v.  Tarpley,  24 
!\Iiss.  597;  Couse  v.  Bovles,  4  N.  J. 
Eq.  212,  38  Am.  Dec.  514;  Belknap 
V.  Sealey,  14  N.  Y.  143,  67  Am.  Dec. 
120;  Gentry  v.  Hamilton,  38  N.  Car. 
376;  Douthit  v.  Hipp,  23  S.  Car. 
205;  Smith  v.  Flv,  24  Tex.  345,  76 
Am.  Dec.  109;  Duvals  v.  Ross,  2 
Munf.  (Va.)  290;  Pratt  v.  Bowman, 
37  W.  Va.  715,  17  S.  E.  210. 

^BogRs  V.  Bush,  137  Ky.  95.  122 
S.  W.  220. 

'"Pollock  V.  Wilson,  3  Dana  (Kv.) 
25 ;  Faure  v.  Martin,  7  N.  Y.  210,  57 
Am.  Dec.  515;  Wilson  v.  Randall,  67 
N.  Y.  338;  Bellamy  v.  McCarthy,  75 


Tex.  293,  12  S.  W.  849 ;  Franco-Tex- 
an Land  Co.  v.  Simpson,  1  Tex.  Civ. 
App.  600,  20  S.  W.  953 ;  Hull  v.  Cun- 
ningham's Exr.,  1  Munf.  (Va.)  330; 
Anderson  v.  Snyder,  21  W.  Va.  632; 
Depue  V.  Sergent,  21  W.  Va.  326. 

"Rogers  v.  Peebles,  72  Ala.  529; 
Dozier  v.  Duffee,  1  Ala.  320 ;  Bishop 
V.  Morgan,  82  111.  351,  25  Am.  Rep. 
327;  Armstrong  v.  Brownfield,  32 
Kans.  116,  4  Pac.  185;  Austrian  v. 
Dean,  23  Minn.  62 ;  Mann  v.  Pearson, 
2  Johns.  (N.  Y.)  37;  Glen  v.  Glen, 
4  S.  &  R.  (Pa.)  488;  Kennedy  v. 
Bovkin,  35  S.  Car.  61,  14  S.  E.  809, 
28 'Am.    St.  838. 

"Young  v.  Craig,  2  Bibb.  (Ky.) 
270,  8  Cranch  (U.  S.)  375  note,  3 
L.  ed.  595  note. 

'^Nelson  v.  Matthews,  2  Hen.  & 
M.  (Va.)   164,  3  Am.  Dec.  620. 

"Smallwood  v.  Hatton,  4  Md.  Ch. 
95. 

«  Douthit  v.  Hipp.  23  S.  Car.  205. 

""Couse  V.  Bovles,  4  N.  J.  Eq.  212, 
38  Am.  Dec.  514. 

"^Fisher  v.  Trumbauer  (Iowa),  138 
N.  W.  528. 

'*  Belknap  v.  Sealey,  14  N.  Y.  143, 
67  Am.  Dec.  120. 


I  153  TRADE    CONTRACTS.  §    1818 

acres  in  a  conveyance  of  one  hundred  eighty  acres  ;■*"  one  hundred 
fifteen  acres  in  a  conveyance  of  five  hundred  acres  i*^"  one  hun- 
dred ninety-two  acres  in  a  conveyance  of  eight  hundred  acres. "^ 
The  words  ''containing  by  estimate"  a  certain  number  of  acres 
in  a  deed  describing  land  by  metes  and  bounds  are  equivalent 
to  the  words  "more  or  less."*- 

§  1818.  "About"— "Almost."— The  word  "about"'  means, 
when  used  in  connection  with  expressions  of  distance  or  number, 
nearly  or  approximately,  and,  when  used  in  statements  of  courses 
or  distances,  it  is  discarded  as  being  without  significance  if  there 
are  no  other  words  necessary  to  retain  it.^^  A  contract  for  a  herd 
of  cattle  containing-  two  hundred  sixty-tw^o  head,  "more  or  less," 
was  held  elastic  enough  to  require  an  acceptance  of  one  hundred 
seventy-eight.^''  Under  a  contract  calling  for  "about  three  hun- 
dred quarters  more  or  less"  of  rye,  the  buyer  was  not  compelled 
to  accept  three  hundred  fifty  quarters."  But  under  a  contract  to 
deliver  five  hundred  thousand  feet  of  lumber,  "more  or  less,"  a 
delivery  of  four  hundred  seventy-three  thousand  feet  was  said 
to  be  a  deviation  quite  within  the  degree  the  courts  have  held  to 
be  reasonable.^"  A  contract  to  pay  "a  claim  *  *  *  fQj- 
about  one  hundred  fifty  dollars"  was  held  to  be  a  contract  to  pay 
the  whole  amount,  although  the  latter  was  in  fact  fifty  dollars 
more  than  the  sum  mentioned."    The  word  "almost"  implies  un- 

"Harrell  v.   Hill,    19   Ark.    102,   68  121.     "Where  a  contract  is   made  to 

Am.  Dec.  202.  sell  or   furnish   certain   foods   idcnti- 

•"  Smith    V.    Fly,    24    Tex.    345,    76  fied  by  reference  to  independent  cir- 

Am.   Dec.   109.  cumstances,  such  as  an  entire  lot  de- 

"  Quesnel   v.   Woodlief ,   2    Ilcn.   &  posited    in    a    certain    warehouse,    or 

M.    (Va.)   173  note.  all  that  may  be  manufactured  by  the 

"Maver   v.    Wooten,   46  Tex.    Civ.  vendor  in  a  certain  establishment,  or 

App.  Zil,  102  S.  W.  423.  that  may  be  shipped  by  his  agent  or 

"  Featherman      v.       Hennessy,      43  correspondent  in  certain  vessels,  and 

Mont.  310,  115  Pac.  983.  the  quantity  is  named  with  the  quah- 

"'Tilden   v.   Rosenthal,   41    111.   385,  fication  'about,'  or  'more  or  less.'  or 

89    Am.    Dec.    388,    "We    understand  words  of  liRe  import,  the  contract  ap- 

the  phrase  'more  or  less,'"  said  Law-  plies  to  the  specific  lot;  and  the  nam- 

rence,   J.,    "as    having   been    used    by  ing  of  the  quantity  is  not  regarded  as 

the    parties    to    cover    such    trifling  in    the    nature    of    a    warranty,    but 

deficiencies    in    number   as    might    be  only  as  an  estimate  of  the  probable 

caused  by  the  ordinary  casualties  of  amount,  in   reference  to  which  good 

death   or  loss."  faitli   is   all    that   is    required    of   the 

"  Cross  v.  EgHn,  2  B.  &  Ad.  106.  partv  making  it.     In   such   cases  the 

"Holland  v.  Rea,  48  Mich.  218,  12  governing     rule     is     somewhat     an- 

N.   W.    167.  alogous   to   that   which   is   applied   in 

"Turner    v.    Wliidden,    22     Maine  the  description  of  lands,   where  nat- 

IZ — CoxTR.vcTS.  Vol.  2 


§    l8l9  CONTRACTS.  1 1 54 

certainty,  want  of  precision,  and  one  using  it  within  certain 
limits  does  not  commit  liimself  to  exactness,  but  the  word  also 
implies  that  the  limits  are  narrow,  and,  when  such  limits  are 
passed  the  expression  may  and  sometimes  must,  cease  to  be  re- 
garded as  an  opinion  and  becomes  a  representation  of  a  fact.^^ 

§  1819.  "Say"  and  "say  about." — The  same  words  may- 
have  different  meanings,  according  to  the  context,  in  different 
contracts.^®  But,  unless  there  is  something  in  the  context  to  in- 
dicate a  more  positive  signification,  such  words  as  "say,"  or  "say 
about"  when  used  to  specify  quantity,  ought  not  to  be  construed 
as  words  of  warranty.""  Thus,  a  contract  to  sell  all  the  naphtha 
that  the  vendor  might  make  during  a  certain  period,  "say  from 
one  thousand  to  one  thousand  two  hundred  gallons  per  month," 
was  held  not  to  impose  an  absolute  obligation  to  supply  that  num- 
ber of  gallons.*'^  In  a  similar  connection,  the  words  "say  about" 
afford  a  contractor  as  much  latitude  as  the  words  "say  from."®'^ 
On  the  other  hand,  an  agreement  to  furnish  "say  not  less  than" 
a  certain  quantity  leaves  no  uncertainty  as  to  the  minimum."^ 
And  a  contract  to  load  "a  full  and  complete  cargo  of  iron  ore, 
say  about  i,ioo  tons,"  where  the  ship  could  carry  one  thousand 

ural  boundaries  and  monuments  con-  eight  hundred  eighty  cords  of  wood, 

trol   courses  and   distances   and   esti-  "more  or  less  as  shall  be  determined 

mates    of    quantity.      But    when    no  to  be  necessary,"  by  an  agent  of  the 

such    independent    circumstances    are  vendee.      Subsequently,    the   agent   in 

referred    to,    and   the    engagement    is  good    faith    notified    the    contractor 

to  furnish  goods  of  a  certain  quality  that  only   forty  cords  were   required, 

or    character    to    a    certain    amount,  and    it   was   held    that   there  was  no 

the  quantity  specified  is  material  and  liability  beyond  the  value  of  the  forty 

governs   the   contract.     The  addition  cords. 

of   the  qualifying  words,   'about,'  or  '^^Hotchkiss   v.    Bon    Air    Coal    &c. 

'more  or  less/  and  the  like,  in  such  Co.,  108  Maine  34,  78  Atl.  1108. 

cases,  is  only  for  the  purpose  of  pro-  °'  McConnel  v.  Murphy,  L.  R.  5  P. 

viding    against    accidental    variations  C.  App.  203,  217. 

arising  from   slight  and  unimportant  **"  INfcConnel    v.    Murphy,    L.    R.    5 

excesses    or    deficiencies    in    number,  P.  C.  App.  203,  217. 

measure  or  weight.    If,  however,  the  "^  Gwillim  v.  Daniell,  2  Cromp.  M. 

qualifying    words    are    supplemented  &  R.  61. 

by    other    stipulations    or    conditions  "'  McConnel    v.    Murphy,    L.    R.    5 

which     give  them  a  broader  scope  or  P.  C.  App.  203,  217,  holding  that  496 

a    more    extensive    significancy,    then  will   satisfy  "say  about  600." 

the    contract    is    to    be    governed    by  "' Leeming  v.  Snaith,  16  Q.  B.  275, 

such    added    stipulations    or    condi-  declared  in  McConnel  v.  Murphy,  L. 

tions."        Per      Justice     Bradley      in  R.  5  P.   C.  App.  203,  217,  not  to_  be 

Brawley  v.   United    States.  96  U.    S.  inconsistent  with  Gwillim  v.  Daniell, 

168,  24 L.  ed.  622, 13  Ct.  CI.  (U.  S.)    521,  2  C.  M.  &  R.  61. 

where  a  contractor  agreed  to  furnish 


I  155  TRADE    CONTRACTS.  §     1020 

two  hundred  ten  tons,  was  not  fulfilled  by  loading  one  thousand 
eighty  tons."* 

§  1820.  Terms  relating  to  time,  "year,"  "month,"  "week," 
"day,"  "Sunday." — Under  a  statute  which  provides  that  the 
word  "year"  is  equivalent  to  "year  of  our  Lord"  the  expression 
"in  any  one  year"  means  a  calendar  year.'^'^  The  words  "current 
year",  in  a  statute  exempting  from  execution  supplies  necessary 
for  running  a  farm  for  the  current  year,  means  from  harvest 
to  harvest  and  not  a  calendar  year.""  The  word  "month"  in  a 
contract  for  the  delivery  of  a  fixed  quantity  of  a  commodity  in 
any  month  means  a  calendar  month."^  The  word  "week"  is 
usually  regarded  as  referring  to  a  period  of  seven  successive 
days."*  A  "day"  or  "natural  day"  is  a  continuous  period  of 
twenty-four  hours  commencing  at  midnight  and  is  the  unit  of 
measure.  The  law  usually  takes  no  notice  of  fractions  of  a  day."'' 
By  common  usage  the  terms  "Sabbath"  and  "Sunday"  are  used 
indiscriminately  to  denote  the  Christian  Sabbath,  that  is,  Sunday. 
But  properly  speaking,  the  word  Sabbath  carries  with  it  a  re- 
ligious meaning  and  is  not  synonymous  with  Sunday  under  the 
practices  of  many  religious  societies.^*'    Sunday  within  the  mean- 

**  Morris  v.  Levison,  L.  R.  1  C.  P.  tract.     Only    1080    tons    were   loaded, 

D.    155,    where    Brett,    J.,    premising  and      consequently      defendant      has 

that    the    words    "full    and    complete  loaded  53  tons  short."     In  the  same 

cargo"  were  a  material  factor  in  the  case    Archibald,    J.,    said    that    "The 

construction,  continued:  "What,  then,  nature    of    the    subject-matter    must 

is  the  meaning  of  the  word  'about?'  be    considered    in    determining    what 

This    is   partly    matter   of    fact,    and  meaning  is  to  be  attributed  to  such 

partly    matter   of   law.      I    think    the  expressions." 

direction  to  the  jury  has  always  been  ""  Sawyer    v.    Steinman,    148    Iowa 

that  the  deviation   must  not  be  very  610,    126   N.   W.    1123. 

large.     The  difference  must  be   such  '"' Hinton    v.    Roane,    124    La.    927. 

as   people   would  ordinarily   consider  50   So.  79S.   134  Am.   St.  526. 

as     included     in     the    word     'about.'  "' Fairchild-Gilmore-Wilton     Co.    v. 

There  can  be  no  exact   rule  of  law  Southern   Refining  Co.,   158  Cal.  264, 

as  to  the  percentage  of  difference  al-  110  Pac.  951. 

lowed,  but  I  have  known  juries  often  ""Jackson^  v.    Guss,    86    Kans.    280, 

allow   in   practice  3  per  cent.     Here  120   Pac.   353. 

we  are   placed    in    the  position   of   a  ""  Brainard    v.    Bushnell.    11    Conn, 

jury,    and    are    entitled    to    find    the  16;  Fox  v.  Abel.  2  Conn.  541 ;  Towell 

facts,  and   we  think  that  3  per  cent.  v.  Hollweg.  81  Ind.  154;  Cummins  v. 

above  1100  tons  is  somewhere  about  Holmes,    11    111.    App.    158.    affd.    109 

the  right  quantitv  to  fix  upon.     If  so.  111.    15;    Edmundson    v.    Wragg,    104 

the   undertaking"  was  to   load   a    full  Pa.  St.  500.  49  Am.  Rep.  590. 

and    complete    cargo,    but    the    ship-  ~°  Winnfield  v.  Grigsby,  126  La.  929, 

owner  undertook  to  be  content  wMth  53   So.  53. 
1133  tons  as  a  fulfilment  of  the  con- 


§    l82I 


CONTRACTS. 


iiq6 


ing  of  a  statute  forbidding  work  on  that  day  means  the  entire 
day  extending  from  midnight  Saturday  until  midnight  Sunday. ^^ 
A  contract  for  services  to  be  recompensed  at  the  end  of  each 
week  refers  to  week  days  and  is  not  rendered  invahd  by  the  fact 
that  some  of  the  services  are  performed  on  Sunday  in  violation 
of  the  law.'" 

§  1821.  "From  and  after"— "On"— "On  or  before"— "On 
or  about" — "Since." — In  the  construction  of  the  words  "from 
and  after,"  as  applied  in  a  contract  to  a  period  of  time,  if  the 
time  is  computed  from  an  act  done,  it  includes  the  day  on  which 
the  act  is  done;  if  from  a  day  specified,  it  excludes  the  day.''.^ 


"  Muckenfuss  v.  State  (Tex.  Civ. 
App.),    116   S.   W.   51. 

"  Keith  V.  Kellermann,  169  Fed. 
196. 

'^When  time  is  to  be  computed 
after  a  certain  date,  it  is  meant  that 
such  day  should  be  excluded  in  the 
computation.  Holt  v.  Richardson, 
134  Ga.  798,  67  S.  E.  798.  Chicago 
Title  &  Trust  Co.  v.  Smyth,  94  Iowa 
401,  62  N.  W.  792.  "We  next  inquire 
as  to  the  proper  construction  to  be 
given  to  the  words  'from  and  after 
April  1,  1893,'  as  written  in  this  con- 
tract. *  *  *  The  learned  district 
judge,  after  noting  that  the  courts 
have  dififered  in  their  construction 
of  the  words  'from  and  after,'  cor- 
rectly states  the  rule  to  be  as  sus- 
tained by  the  weight  of  authority, 
'that  if  it  is  from  an  act  done  it  is 
inclusive,  but  if  from  a  day  it  is 
exclusive.'  This  statement  of  the 
rule  is  based  upon  reason  as  well  as 
authority.  If  it  is  from  an  act  done, 
the  time  commences  immediately 
upon  the  act  being  done.  We  have 
a  familiar  illustration  in  legislative 
enactments  which  are  to  take  effect 
from  and  after  their  passage,  or 
from  and  after  publication.  In  the 
case  of  Arnold  v.  United  States,  147 
U.  S.  494,  yi  L.  ed.  254,  13  Sup.  Ct. 
406,  the  question  was  whether  the 
additional  duties  imposed  by  an  act 
passed  and  which  took  effect  on  July 
1,  1812,  were  chargeable  upon  the 
cargo  of  a  ship  that  came  within 
the  jurisdiction  of  the  United  States, 
and  within  one  of  its  collection  dis- 
tricts, on   the   1st   day  of   July   1812. 


The  courts  says:  'The  statute  was  to 
take  effect  from  its  passage,  and  it 
is  a  general  rule  that,  where  the 
computation  is  to  be  made  from  an 
act  done,  the  day  on  which  the  act 
is  done  is  to  be  included.'  It  was 
held  that  the  goods  were  subject  to 
the  additional  duty.  In  Arrowsmith 
V.  Hamering.  39  Ohio  St.  573,  a  pe- 
tition in  error  was  filed  on  April  18, 
1883,  without  leave  of  court.  On  that 
day  an  act  was  passed  and  took  ef- 
fect, amending  the  statute  so  as  to 
require  leave  to  be  first  granted.  It 
was  held  that  by  presumption  of  law 
the  act  took  effect  from  the  com- 
mencement of  that  day,  but  that  such 
presumption  would  not  prevail  where 
it  is  in  conflict  with  any  right  required 
in  actual  points  of  time,  or  on  that 
day  before  that  act  took  effect,  and 
that  in  such  case  the  exact  time  in 
the  day  may  be  shown ;  that  in  the 
absence  of  proof  that  the  case  was 
pending  on  that  day,  before  the  act 
was  passed  and  took  effect,  the  pre- 
sumption of  law  will  prevail  that  the 
net  took  effect  from  the  commence- 
ment of  the  day.  Mr.  Bishop,  in 
his  work  on  Contracts  (§  1343"), 
states  the  rule  thus:  'Where  time  is 
computed  from  an  act  done,  the  gen- 
eral rule  is  to  include  the  day.  Where 
it  is  computed  from  the  day  of  the 
act  done,  the  day  is  excluded.'  He 
adds:  T.ut  it  is  believed  that  not 
all  courts  will,  and  none  should,  ad- 
here to  this  or  any  other  like  techni- 
cal distinction,  in  a  case  where,  by 
disregarding  it.  they  can  better 
carry   into   effect   what,   all  the   con- 


1 157  TRADE    CONTRACTS.  §    1 82 1 

The  word  "from"  in  its  literal  and  restricted  sense  generally 
implies  exclusion,  but  it  may  be  used  in  a  connection  that  means 
inclusive."  Under  a  contract  to  pay  plaintiff  a  certain  price  for 
all  stamps  ordered  and  delivered  by  a  certain  date,  which  amount 
is  to  be  full  compensation  for  everything  done  under  the  contract, 
plaintiff  agreeing  to  keep  on  hand  stamps  sufficient  to  meet  all 
orders,  the  United  States  is  not  liable  for  stamps  remaining  on 
hand  after  expiration  of  the  period,  although  manufactured  and 
stored  under  supervision  of  a  governmental  agent. ''^  When  the 
words  "from  a  date"  or  "from"  a  day  named  are  used  in  connec- 
tion with  the  creation  of  an  estate  or  interest  and  it  is  not  con- 
trary to  the  expressed  intention  of  the  parties,  the  date  named 
from  which  the  estate  or  interest  is  to  exist  is  to  be  included  and 
it  vests  on  that  day.''"  The  word  "on"  is  often  given  the  meaning 
of  "in"  or  "during"  and  this  meaning  of  the  word  is  well  recog- 
nized when  used  to  designate  a  date  or  calendar  division  of 
time.''^  A  note  payable  "on  or  before"  a  certain  date  is  valid  as 
a  negotiable  instrument.  The  words  mean  immediately  at  or 
any  time  in  advance  of  the  date  named. "^  The  word  "before" 
as  ordinarily  used  in  a  note  containing  the  "on  or  before"  privi- 
lege gives  the  payor  the  privilege  of  paying  the  note  at  any  time 
before  the  date  named  on  which  payment  must  be  made.'^  The 
phrase  "on  or  about"  in  a  claim  of  mechanic's  lien  describing  the 
date  when  the  materials  were  furnished  is  a  relative  term  which 
does  not  show  definitely  when  the  materials  were  furnished.''*' 
The  word  "since"  is  not  always  limited  in  meaning  to  the  time 
between  the  present  and  a  certain  past  event  or  a  space  of  time 

sideration  being  taken   into  account,  ™  Continental    Bank    Note    Co.    v. 

it    is    reasonably    plain    the    parties  United   States,   154  U.   S.  671,  26  L. 

meant.'"  ed.  997,   14  Sup.  Ct.   1194. 

'*  Baker  v.  Hammett.  23  Okla.  480.  '"  Budds    v.    Frey,    104    Alinn.    481, 

100  Pac.  1114.  The  words  "from  and  117  N.  W.  158. 

after"  indicate  when  the  time  begins  "  Henry   v.    Lovenberg    (Tex.    Civ. 

to    run    and    when    it    ends    for    the  App.),  128  S.  W.  675.  Sqc  also,  as  to 

purposes    of    computation    only,    that  these    words    in    insurance    policies, 

is.  the  time  began  to  run  and  included  note  in  Zl  L.  R.  A.  (N.  S.)  620. 

the    day   work    was    completed,    in    a  "Lovenberg  v.  Henry    (Tex.),  140 

case   where   the   law   allowed    a    me-  S.  W.  1079. 

chanic's  lien   and  the  time  ran  from  "Henry   v.   Lovenberg    (Tex.    Civ. 

and  after  completion.     Cascade  Lum-  .\pp.).  128  S.  W.  675. 

bcr  Co.   V    Aetna   Indemnity  Co.,   56  ""Godfrev    Lumber    Co.    v.    Kline, 

Wash.  503,  106  Pac.  158.  167  Mich.  629,  133  N.  W.  528. 


§    1 822  CONTRACTS.  1 1 58 

between  two  certain  past  events,  but  sometimes  reaches  beyond 
the  present  and  embraces  future  time,  and,  when  used  as  a  prepo- 
sition, may  niean  "during  or  within  the  time  after ;  ever  after, 
or  at  any  time  after;  for  and  after  the  time,  occurrence,  or  exist- 
ence of."**^ 

§  1822.  "Until"  —  "By"  —  "Forthwith"  —  "Immediate"  — 
"Presently" — "At  once." — The  word  "until"  may  be  con- 
strued either  exclusive  or  inclusive  of  the  day  to  which  it  applied, 
according  to  the  context  and  subject-matter.^"  Its  more  obvious 
meaning  requires  the  exclusion  of  the  day  named,  but  the  cir- 
cumstances and  subject-matter  of  each  case  presented  must  de- 
termine. Where  an  act  continued  the  charter  of  a  corporation 
"until  the  first  day  of  January,"  it  was  held  that  the  charter  ex- 
pired on  the  31st  day  of  December.^^  In  an  action  on  a  policy 
of  insurance  for  six  months  from  the  14th  day  of  February  until 
the  14th  day  of  August,  the  question  was  whether  the  14th  day 
of  August  was  included  so  as  to  cover  a  fire  which  occurred  on 
that  day,  and  it  was  held  that  it  was.^*  The  word  "till"  in  a  stat- 
ute fixing  the  termination  of  an  office  means  "up  or  down  to; 
as  far  as;  until."^^  A  contract  to  complete  work  "by"  a  certain 
time  generally  means  that  it  shall  be  done  before  that  time.  Where 
parties  agreed  to  build  a  saw-mill  and  "to  have  it  completed  by 
November  next,"  it  was  held  that  the  month  of  November  was 
excluded.**'  The  phrase  "until  otherwise  provided  by  law"  means 
until  the  law  provides  some  other  method  and  is  used  in  the  sense 
of  "up  to  that  time,"  "till  the  point  or  degree  that.""  There  is 
no  precise  definition,  so  far  as  time  is  concerned  of  the  words 

*^  State  V.  Mathew,  68  W.  Va.  89,  ruary    was    included,    the    14th    of 

69  S.  E.  644.  August     was     not.       Otherwise     the 

*-  King  V.  Stevens,  5  East  244.  period    of      more    than    six    months 

^  People  V.  Walker,   17  N.  Y.  502.  would   be   covered   by   the   policy." 

The   provision    requiring   books   con-  "^  Oberhaus  v.  State  (Ala.).  55  So. 

taining  the  record  of  assessed  valua-  898. 

lion   of    real   and   personal   estate   to  *"  Rankin  v.  Woodworth,  3  Pen.  & 

be    open    for    examination    and    cor-  W.    (Pa.)   48.  "Where  a  thing  is  or- 

rection  from  the  second   Monday  of  dered  by  a  particular  day,  it  is  with 

January  until   the   first   day   of   May,  a  view   of   having  the   use   of   it   on 

does   not   include   the   last   day   men-  the  day.     Thus  a  coat  is  ordered  by 

tioned    Clarke  v.  New  York,  111   N.  Sunday,  with  a  view  of  wearing  it  to 

Y.  621,  19  N.  E.  436.  church." 

**  Isaacs  v.  Roval  Insurance  Co.,  5  "  Holcomb  v.   Chicago  &c.   R.   Co., 

L.  R.  Ex.  296.  "If  the  14th  of  Feb-  27  Okla.  667,  112  Pac.  1023. 


I  I  59  TRADE    CONTRACTS.  §    1 822 

"forthwith"  and  "immediately."  In  every  case,  the  meaning 
depends  upon  the  circumstance  of  the  case  and  the  act  to  be  per- 
formed.**'* Where  a  pohcy  of  insurance  required  notice,  of  loss 
by  fire  to  be  given  to  the  secretary  "forthwith,"  it  was  held  that 
the  rule  meant  due  diligence  under  all  the  circumstances  and  no- 
tice after  eighteen  days  was  not,  in  that  case,  deemed  sufficient. ®° 
Where  a  policy  of  insurance  required  immediate  notice  to  be 
given  by  the  assured  in  case  of  a  loss,  and  in  the  great  fire  in 
Chicago,  on  October  9,  1871,  the  plaintiff's  property  was  burned, 
notice  of  the  loss  given  November  13,  1871,  was  held  to  have 
been  given  in  sufficient  time,  in  view  of  the  great  derangement 
in  all  kinds  of  business  caused  by  the  fire.^°  In  giving  a  con- 
struction to  terms  of  this  description,  some  regard  must  undoubt- 
edly be  had  to  the  nature  of  the  act  or  thing  to  be  performed, 
and  the  circumstances  of  the  case.  Nothing  more  is  imposed 
upon  the  party  than  what  is  called  due  diligence,  under  all  the 
circumstances  of  the  case.  There  must  be  no  unnecessary  pro- 
crastination or  delay,  nothing  which  the  law  calls  laches.®^  The 
term  "immediate"  does  not  have  its  usual  meaning  of  "instantly, 
forthwith,  nothing  intervening  as  to  place,  time  or  action,"  where 
the  question  involved  relates  to  transportation  but  it  rather 
means  within  a  reasonable  time  having  due  regard  to  the  cir- 
cimistances.""    The  word  "immediately"  when  used  in  connection 

*' Lewis  V.   Curry,   156  Cal.  93,   103  of   the   assured,   and   strictly   against 

Pac.  493.  the    insurer.     Piedmont    &    Arlington 

**  Edwards     v.     Lvcoming     County  Life  Ins.  Co.  v.  Young,  58  Ala.  476, 

Mut.  Ins.   Co.,  75   Pa.  St.  378.  29  Am.  Rep.  770.  See  also,  Alabama 

'"Knickerbocker    Ins.    Co.    v.    Mc-  Gold    Life    Ins.    Co.    v.   Johnston,   80 

Ginnis,  87  111.  70.  "Forthwith"  in  all  A\a.  467.  60  Am.  Rep.  112;  Hydraulic 

such  policies  means  without  unneces-  Engineering   Co.   v.    McHaffie,    L.    R. 

sary   delay,   or   with   reasonable   dili-  4  Q.  B.  D*iv.  670  (construction  of  the 

gence,    under    the    circumstances    of  words  "as  soon  as  possible")  ;  Roberts 

the    particular   case.      St.    Louis    Ins.  v.  Brett,   11    H.   L.   Cas.  237,   and  34 

Co.  V.  Kyle,  11  Mo.  278,  49  Am.  Dec.  L.  J.  C.  P.  241  (as  to  interpretation  of 

74,    where   the    fire    occurred    on    the  "forthwith")  ;   Strauton  v.   Wood,   16 

15th  and  the  plaintiffs  hearing  of  it  Q.    B.   637    (where  the   contract   was 

on  the   18th  gave  notice  by  mail  on  to     deliver     goods     "forthwith"     the 

the  23d,  this  was  held  to  be  a  suf-  price    being      made      payable    within 

ficient    compliance    with    a    condition  fourteen    days    from   the    making   of 

requiring  notice  to  be  given   "forth-  the  contract). 

with."     New   York   Central   Ins.   Co.        "  Tnman  v.  Western  Fire  Ins.   Co., 

V.    National    Protection    Ins.    Co..    20  12  Wend.    (X.  Y.^   452. 
Barb.    (X.   Y.)    468.    revd.    14   X.    Y.         '=  Williams  v.  Southern  R.  Co.  155 

85.     The   settled   rule  is  to  construe  X.   Car.  260,  71    S.  E.  346. 
such  requirements  liberally  in   favor 


§    1823  COXTRACTS.  1 160 

with  the  right  of  one  to  rescind  a  contract  for  fraud  immedi- 
ately upon  discovery  of  the  fraud  means  a  reasonable  time  under 
the  circumstance  within  which  to  do  the  things  necessary  to  re- 
scind.^^  A  contract,  the  legal  import  of  which  is  that  it  shall  be 
performed  "presently,"  has  been  held  to  mean,  not  that  it  may  be 
performed  "within  a  reasonable  time,"  but  that  it  must  be  per- 
formed "immediately;  now;  at  once.'"'*  An  order  for  an  article 
to  be  delivered  "at  once"  denotes  a  prompt  or  immediate  ship- 
ment.^^  But  the  words  "at  once"  in  a  note  indicating  its  time  for 
payment,  mean  a  reasonable  time  and  not  a  cash  payment,  espe- 
cially where  the  parties  themselves  have  so  construed  the  con- 
tract.'" 

§  1823.  Sale  on  trial. — A  sale  on  trial  has  been  held  to  be 
a  sale  on  condition  precedent  to  buy  if  satisfied ;  that  is,  the  title 
does  not  pass  until  the  condition  prescribed  is  fully  performed, 
although  the  possession  is  delivered.  It  is  rather  a  bailment  with 
an  option  to  buy  than  a  sale.  It  may  become  a  binding  promise 
through  delay." 

§  1824.  Interest  with  respect  to  transfer  of  property  right 
— "Interest  in  land" — "As  interest  may  appear." — The  term 
"interest"  has  a  varied  significance  when  applied  to  a  transfer  of 
property  and  its  meaning  in  a  particular  case  must  be  determined 
by  the  circumstances  or  context.®^  Under  some  circumstances  it 
may  include  title.'^  Again  it  may  mean  a  limited  property  right 
less  than  an  absolute  ownership.'  "Interest"  may  denote  the 
property  itself,'  or  it  may  denote  the  "estate."^    It  is  sometimes 

*^Long    V.    International    Vending  Fire  Ins.  Co.,  59  Minn.  267,  61  N.  W. 

&c.  Co.,  158  Mo.  App.  662,  139  S.  W.  137,  50  Am.  St.  405. 

819  "^Dickson    v.    Wildman,    183    Fed. 

'*' Hawkins    v.    Studdard,    136    Ga.  398,    105    C.    C.   A.    618;    Ormsby   v. 

727,  71   S.  E.  1112.  Ottman,    85    Fed.   492,   29   C.    C.    A. 

"Bowser   v.   Atkinson    (Mo.),   143  295;  Ragsdale  v.  Mays,  65  Tex.  255. 

S    \V    75  ^  Garner   v.    Milwaukee    Mechanics' 

'"'Rivers  V.  Campbell,  51  Tex.  Civ.  Ins.   Co.,  IZ  Kans.   127.  84  Pac.  717, 

App.  103,  111   S.  W.  190.  4  L.  R.  A.   (N.  S.)  654,  117  Am.  St. 

"'Osborne   v.    Francis,    38   W.    Va.  460;    Copeland   v.    Eaton,    209    Mass. 

812,  18  S.  E.  591,  45  Am.  St.  859.  139,  95   N.   E.  291;   Merrill  v.   Agri- 

"'  Arkansas  Fire  Ins.  Co.  v.  Wilson,  cultural    Ins.    Co.,   11   N.    Y.   452,   29 

67  Ark.  553,  55  S.  W.  933,  48  L.  R.  Am.  Rep.  184. 

A.    510.    n   Am.    St.    129;    Hough    v.  "'Pierce  v.   Pierce.  14  R.  I.  514. 

City   Fire   Ins    Co..  29   Conn.    10,   76  ^Widincamp  v.  Phenix  Ins.   Co.,  4 

Am.  Dec.  581;   Gibb  v.   Philadelphia  Ga.  App.  759,  62  S.  E.  478;  Ladd  v. 


Il6l  TRADE  CONTRACTS.  §  1825 

held  to  include  the  title  of  a  lessee.*  The  word  "estate"  has  a 
variety  of  significance.  It  may  mean  the  property  of  a  living 
man  or  the  property  of  a.  decedent  which  passes  to  his  adminis- 
trator for  the  payment  of  debts.  It  may  also  be  appropriately, 
though  inaccurately,  used  to  signify  the  property  of  a  d<icedent 
so  long  as  it  remains."  A  contract  by  which  one  who  had  laid 
a  cement  sidewalk  took  in  part  payment  the  sand  excavated  in 
the  course  of  the  work  is  not  a  contract  "in  or  concerning  an 
interest  in  land"  within  the  meaning  of  the  statute  of  frauds.*^ 
The  sale  of  standing  timber,  however,  has  been  held  a  sale 
of  an  "interest  in  land"  and  so  within  the  statute  of  frauds 
unless  under  the  agreement  the  title  is  not  to  pass  till  such  tim- 
ber has  been  severed,'  A  mere  license  to  enter,  cut  down  and 
take  away  standing  timber  is  not  a  sale  of  an  "interest  in  land," 
within  the  meaning  of  the  statute  of  frauds.^  A  power  of 
attorney  given  by  joint  owners  of  land  to  another  joint  owner 
of  the  same  land  to  sell  and  convey  it,  which  conveys  to  the 
attorney  no  interest  in  the  land  to  be  sold  is  not  a  "power 
coupled  with  an  interest.""  The  words  "as  interest  may  appear" 
should  be  construed  to  mean  such  interest  as  by  proper  proofs 
was  shown  to  appear  at  the  time  of  the  loss.^° 

§  1825.  "C.  O.  D."  and  "F.  O.  B."— The  abbreviation, 
"f.  0.  b."  has  a  well-defined  business  meaning  and  as  applied  to 
the  sale  of  merchandise  destined  for  shipment  is  a  term  used  to 
indicate  that  it  will  be  placed  on  a  car  or  vessel  free  of  expense 
to  the  purchaser."  The  letters  "C.  O.  D."  mean  collect  on  deliv- 
ery ;  that  is,  to  deliver  upon  payment  of  the  charges  due  the  seller 
for  the  price  and  the  carrier  for  the  carriage  of  the  goods."  Both 

Ladd,  8  How.   (U.  S.)   10,  12  L.  cd.  ^"  Fenton  v.  Cascade  &c.  Fire  Assn., 

967  60  Wash.  389,  111  Pac.  343. 

*  Sanford  v.  Johnson,  24  Minn.  172.  "  Sheffield     Furnace    Co.    v.     Hull 

"West   V.    Hermann,  47   Tex.   Civ.  Coal   &c.   Co.,    101    Ala.   446.    14   So. 

•\pp    131     104   S.  W.  428.  672;   Branch  v.  Palmer,  65  Ga.  210; 

«6kin  v.   Selidor    (N.  j.),  78  Atl.  Silberman    v.    Clark,   96    X.    Y.    522; 

770  Hobart    v.    Littlefield.    13    R.    I.    341; 

'Hurlev  v.  Hurley,  110  Va.  31,  65  Manganese    &c.    Safe    Co.    v.    First 

S    E    472.  State   Bank.  25   S.  Dak.   119.    125   X. 

"Goodnouph  &c.  Stock  Co.  v.  Gal-  W.   572.                                   ,,,  ,       • 

lowav.  171   Fed.  940.  '=  American   Exp.  Co.  v    Wettstem. 

"Gilmer's  Heirs  v.  Veatch.  56  Tex.  28  Til.    .Xpp.  %;   Adams   Exp.   Co    v. 

Civ    App    511    121   S.  W.  545.  McConnell,  27  Kans.  238;   Collender 


§     1826  CONTRACTS.  I162 

terms  are  generally  regarded  as  having  required  a  fixed  and  well- 
known  meaning  so  that  parol  evidence  is  not  needed  to  explain 
them"  and  courts  take  judicial  notice  of  their  meaning."  Some 
courts,  however,  have  taken  a  different  view  and  allow  parol  evi- 
dence to  explain  their  meaning/^  The  cases  are  by  no  means 
harmonious  upon  the  question  whether  the  words  "f.  o.  b."  of 
themselves  impose  upon  the  purchaser  or  upon  the  seller  the  duty 
of  furnishing  or  designating  the  cars  by  which  the  goods  are  to  be 
shipped.  According  to  a  goodly  array  of  authority,  the  expres- 
sion means  that  the  seller  will  secure  the  cars,  load  them  and  do 
whatever  may  be  required  to  accomplish  the  shipment  and  con- 
signment of  the  buyer  free  of  all  expense  to  him.^*^  Other  cases 
hold  that  the  prima  facie  effect  of  the  phrase  without  qualification 
is  to  cast  this  duty  upon  the  purchaser."  The  prima  facie  effect  of 
the  presumption  under  either  rule  may  be  rebutted  by  circum- 
stances showing  a  different  intention.'^  Where  goods  are  sold 
under  an  agreement  for  delivery  f.  o.  b.  cars  at  the  place  of  ship- 
ment and  no  time  of  payment,  inspection  or  acceptance  is  men- 
tioned, the  buyer  generally  has  the  right  of  inspection  after  the 
arrival  of  the  goods  at  their  destination.^^ 

§  1826.    "Carloads." — A  contract  to  deliver  a  certain  num- 
ber of  carloads  of  wood  is  not  void  for  uncertainty,  because  a 

V.   Dinsmore,   55    N.   Y.   200,   14   Am.  525;    Cincinnati    S.    &    C    R.    Co.   y. 

Rep    224.  Consolidated    Coal    &c.    Co.,    7    Ohio 

"Kilmer     v      :Moneyweight     Scale  Wkly.  L.  Bull.  200;  Vogt  v.  Schiene- 

Co    36  Ind.  App.  568,  76  N.  E.  271 ;  beck,  122  Wis.  491,  100  N.  Y.  820,  67 

United  States  Exp.  Co.  v.  Keefer,  59  L.  R.  A.  756,  106  Am.  St.  989. 
Ind.    263 ;      American      Exp.    Co.    v.         ''  Baltimore   &   L.   R.    Co.   v.    Steel 

Shier,  55  111.  140;   State  v.  Intoxicat-  Rail    Supply    Co.,    123    Fed.    655,    59 

ing  Liquors,  IZ  Maine  278.  C.   C.   A.  419;   Evanston    Elevator   & 

"Capehart  v.    Furman   Farm    Imp.  Coal    Co.   v.    Castner.    133   Fed.   409; 

Co     103  Ala    671,  16  So.  627,  49  Am.  Davis  v.  Alpha  Portland  Cement  Co., 

St.  60 ;  Sheffield  Furnace  Co.  v.  Hull  134   Fed.    274,   affd.    142    Fed.    74,   IZ 

Coal    &c.    Co.,    101    Ala.    446,    14    So.  C.  C.  A.  388;   Consolidated  Coal  Co. 

672;  American  Exp.  Co.  v.  Shier,  55  v.    Schneider,   163   111.   393,   45   N.   E. 

111.    140;    United    States   Exp.    Co.   v.  126;  Consolidated  Coal  Co.  v.  Jones 

Keefer.  59  Ind.  263;   State  v.  Intoxi-  &c.    Co.,    120    111.    App.    139;    Kunkle 

eating  Liquors,  1Z  Maine  278.  v.    Mitchel,   56   Pa.    100;    Hocking  v. 

"Collender  v.   Dinsmore,  55  N.  Y.  Hamilton,    158   Pa.    107,   27   Atl.   8.36. 
200    14  Am.  Rep.  224;    Silberman  v.        ^' Davis  v.  Ainha  Portland  Cement 

Clark,  96  N.  Y.  522.  Co.,  134  Fed.  274,  affd.  142  Fed.  74, 

"Elliott  v.  Howison,  146  Ala.  568,  1?>  C.  C.  A.  388. 
40  So.  1018:  Hurst  v.  Altamont  Mf.g.         '"Eaton  v.  Blnckhurn.  52  Ore    300. 

Co..    73    Kans.    422,    85    Pac.    551,    6  96  Pac.  870.  97  Pac.  539,  20  L.  R.  A. 

L.  R.  A.   fN.  S.)  928,  117  Am.  St.  (N.  S.)  53,  132  Am.  St.  705. 


I  163  TRADE    CONTRACTS.  §    iSj/ 

carload  varies  from  thirty-five  thousand  to  sixty  thousand  feet. 
The  vendee  has  a  right  to  insist  upon  as  much,  at  least,  as  the 
specified  number  of  loads  of  the  smallest  capacity.^" 

§  1827.  "On  sale  and  return." — A  contract  "on  sale  and 
return"  though  sometimes  given  a  broader  meaning  is  said 
to  be  an  agreement  by  which  goods  are  delivered  by  a  wholesale 
dealer  to  a  retail  dealer,  to  be  paid  for  at  a  certain  rate,  if 
sold  again  by  the  retailer  and  if  not  sold  to  be  returned  within 
reasonable  time  in  case  no  time  is  specified  in  the  contract.  Un- 
der such  a  contract,  if  the  retailer  returns  the  goods  within  a  rea- 
sonable time  where  no  time  is  specified,  the  contract  of  sale  is 
terminated.  It  becomes  absolute,  however,  where  the  goods  are 
retained  beyond  a  reasonable  time.  The  title  to  the  property 
under  such  a  contract  passes  to  the  purchaser  subject  to  an  op- 
tion in  him  to  return  them  within  a  reasonable  time.  Where  the 
retailer  disables  himself  from  performing  the  condition  of  the 
contract  or  fails  to  perform  it  within  a  reasonable  time,  his  lia- 
bility to  pay  the  price  fixed  becomes  unconditional.  What  is  a 
reasonable  time  for  the  return  of  the  goods  depends  upon  the 
circumstances  of  each  case,  and  no  fixed  rule  can  be  laid  down.-^ 

§  1828.  "Satisfactory." — A  contract  to  furnish  an  article 
warranted  "satisfactory"  means  that  the  article  shall  be  satisfac- 
tory to  the  purchaser.  But  this  does  not  justify  a  rejection  for 
mere  caprice  and  some  courts  have  held  that  it  is  sufficient  if  the 
article  is  such  as  ought  to  satisfy  the  purchaser  as  a  reasonable 
man;  the  ground  of  rejection  must  be  bona  fide.--     It  has  been 

**  Indianapolis  Cabinet  Co.  v.  Herr-  carloads,  to  deliver  the  remainder  of 

mann,  7  Ind.  App.  462,  34  N.  E.  579,  the   specified    number   of    thirty.    See 

where  the  court  said  that  "So  far  as  also,  O'Ferrall  v.  Van  Camp,  124  Ind. 

the  contract   is  uncertain,  the  courts  336,  24   N.  E.    134. 

cannot    enforce    it,    but,    within    the  ^  House   v.    Beak,    141    111.   290.   30 

limits  that  the  contract  is  certain,  the  N.   E.    1065,  33  Am.   St.   307;   Frantz 

courts  will  enforce  it."    In  Schreiber  v.  Fink,   125  La.   1013.  52  So.  131.  28 

V.    Butler.   84    Ind.   576,    it    was   held  L.  R.  A.    CN.  S.)  539;   Hunt  v.  Wy- 

that   a   contract    for   the   delivery   of  man,     100    Mass.    198;     Hickman    v. 

a  certain  number  of  carloads  of  ice  Shimp.    109    Pa.    St.    16;    Haskins   v. 

was    not    void    for    uncertainty    and  Dern.  19  Utah  89,  59  Pac.  ^53. 

that  the  quantity  could  be  made  cer-  ^Zaleski    v.    Clark,    44    Conn.    218. 

tain    by    averment    and    proof.      The  26    Am.    Rep.    446;    Berthold    v.    St. 

suit   was  based   unon   the   refusal   of  Louis    Electric    Const.    Co.,    165    Mo. 

the    defendant,    after    delivering  ten  280,  65  S.  W.  784;   Stutz  v.  Loyal- 


§    1829  CONTRACTS.  II64 

held,  however,  that  the  word  means  that  the  purchaser  has  re- 
ceived to  himself  an  unqualified  option,  and  is  not  willing  to  have 
his  freedom  of  choice  subject  to  any  contention  or  to  be  subject 
to  any  investigation  whatever  and  that  his  determination  of  the 
matter  is  final  and  conclusive."^ 

§  1829.  "For  collection." — The  indorsement  "for  collec- 
tion" is  restrictive  and  does  not  pass  title.  The  indorsee  takes  the 
instrument  as  agent  or  trustee  for  the  indorser.-*  Accordingly  an 
indorsement  on  a  check  "for  collection,  pay  to  the  order  of  the 
cashier"  is  notice  to  all  purchasers  of  the  check  that  the  indorser  is 
entitled  to  the  proceeds  and  that  the  indorser  is  only  an  agent 
for  collection.*^  The  words  "for  collection"  in  a  note  allowing 
attorneys'  fees  for  collection  only  authorize  such  fees  after  ma- 
turity.'° 

§  1830.  "Dollar"— "Greenbacks."— The  word  "dollar"  sig- 
nifies the  money  unit  of  the  United  States  and  it  is  of  the  value  of 
one  hundred  cents. -^  When  figures  are  used  to  denote  a  sum  of 
money,  these  figures  are  ordinarily  understood  to  represent  dollars 
unless  a  different  intention  is  fairly  expressed  in  the  instrument.^* 
The  term  is  an  expression  of  value  as  well  as  the  name  of  a  coin 
and  is  certain  as  an  expression  of  value.^^  The  term  "greenback" 
is  a  popular  name  applied  to  all  United  States  treasury  notes. ^'^ 

§  1831.  "Supplies." — Pig  iron  furnished  a  manufacturing 
company  engaged  in  making  steel  and  other  metals  is  a  "supply" 
within  the  meaning  of  a  statute  giving  a  lien  to  persons  furnish- 

Hanna  Coal  &c.  Co..  131  Pa.  St.  267,  ""  Shenandoah      National    Bank    v. 

18  Atl.  875;   Suigerly  v.  Thayer,  108  Marsh,  89  Iowa  273,  56  N.   W.  458, 

Pa.  St.  291.  2  Atl.  230,  56  Am.  Rep.  48  Am.  St.  381. 

207.  See  ante  §§  1604,  1605.  ="  Leonard  v.  State,  115  Ala.  80,  22 

^^  Baltimore  &c.   R    Co.   v.   Brydon,  So.  564;  Newlove  v.  Mercantile  Trust 

65   Md.    198,  611,   3   Atl.   306,  9   Atl.  Co.   (Cal.),  105  Pac.  971;   McDonald 

126,    57    Am.    Rep.    318.     See    ante  v.   State   (Ga.   App.),  58  S.   E.   1067; 

§§   1603,   1605.  United   States   v.   Fuller,   4   N.    Mex. 

^'Tvson  V.  Western  Nat.  Bank,  V  358,  20   Pac.   175. 

Md    412,   26   Atl.   520,   23   L.    R.   A.  "^  Newlove  v.  Mercantile  Trust  Co. 

161 ;  First  Nat.  Bank  v.  Gregg.  79  Pa.  (Cal.),   105  Pac.  971. 

384;    Freiberg   v.    Stoddard,    161    Pa.  ="  State  v.  Barr.  61  N.  J.  L.  131,  38 

St.  259.  28  Atl.   1111.  Atl.  817. 

="Bank  of  Metropolis  v.  First  Na-  ^"McDonald    v.    State    (Ga.   App.), 

tional  Bank,  19  Fed.  301.  58  S.  E.  1067. 


1 165  TRADE    CONTRACTS.  §    1832 

ing  supplies  necessary  in  the  operation  of  a  manufacturing  com- 
pany.^^ 

§  1832.  "Regrating"  and  "forestalling."— The  word  "re- 
grating"  means  the  buying  of  corn  or  other  dead  victuals  in  any 
market  and  selling  it  again  in  the  same  market,  for  this  enhances 
the  price  of  provisions,  as  every  successive  seller  must  have  a  suc- 
cessive profit.^"  The  word  "forestalling"  means  the  buying  of 
victuals  on  their  way  to  market  before  they  reach  it  with  the 
intent  to  sell  again  at  a  higher  price. ^^ 

§  1833.  "Stock  in  trade." — Generally  speaking,  the  "stock 
in  trade"  includes  everything  necessary  for  carrying  on  a  busi- 
ness.^* It  includes  unfurnished  goods  in  the  course  of  manufac- 
ture^^ and  tools  and  implements  of  the  business.^"  It  is  generally 
held  to  exclude  money  in  bank^'  and  revenue  stamps. ^^  The  term 
has  been  held  to  include  goods  in  stores  bought  on  joint  account 
and  sold  for  the  mutual  profit  of  the  insured  and  another  person. ^° 

§  1834.  Terms  used  in  grain  and  lumber  contracts. — 
"Country  run"  oats  means  the  grain  as  it  comes  from  the  coun- 
try station  in  carload  lots  with  the  identity  of  the  contents  of  the 
cars  preserved,  and  a  contract  for  the  sale  of  such  oats  is  not 
complied  with  by  furnishing  oats  which  have  been  stored  in  a  ter- 
minal elevator. ■''*  The  word  "lumber"  has  not  the  same  meaning 
as  "logs"  or  "timber."'*^  The  "stumpage  value"  of  a  tree  is 
understood  to  be  merely  the  value  of  the  tree  of  standing  timber.*" 

§  1835.  "Strike"  clauses. — It  would  seem  well  settled  that 
a  common  carrier  may  stipulate  by  special  contract  for  exemp- 

"  Virginia     Development      Co.      v.  '"  Moadinger     v.     Mechanics'     Fire 

Crozer  Iron  Co.,  90  Va.  126,  17  S.  E.  Ins.  Co.,  2  X.  Y.  Super.  Ct.  527. 

806.  44  Am.   St.  893.  "' Boston    Investment    Co.    V.    Bos- 

"  Button   V.    Kno.wille.    121    Tenn.  ton,   158  Mass.  461,  33  N.  E.  580. 

25.   113  S.  W.  381,   130  Am.  St.  748.  *^  Palfrey  v.  Boston,  101  Mass.  329, 

'^Button    V.    Knoxville,    121    Tenn.  3  Am.  Rep.  364. 

25.   113  S.  \V.  381,  130  Am.  St.  748.  '"  Millaudon  v.  Atlantic  Ins.  Co.,  8 

"*  Harper  v.   Albany  Mut.  Ins.  Co.,  La.  557. 

17   N.  Y.    194.  ""  Updike    Grain    Co.    v.    Williams 

"Benuilliard   v.   Bartlett,    19  Kans.  Grain  Co..  198  Fed.  828. 

382,    27    Am.    Rep.    120;    IMcAbe    v.  "Craze  v.  Alabama  Land  Co.,  155 

Tjiompson,   27   Minn.    134,  6   N.   W.  Ala.  431.  46  So.  479. 

479.  *-  Stanley  v.  Livingston,  9  Ga.  App. 

523,  71  S.  E.  878. 


§    1836  CONTRACTS.  II66 

tion  from  liability  for  loss  occurring  by  reason  of  delay  in  the 
transportation  of  goods,  caused  by  mob  or  strike  or  threatened 
violence  to  person  or  property,  provided  the  carrier  is  free  from 
fault,  and  the  principle  should  apply  to  other  contracts  containing 
a  like  resen^ation.  In  all  cases  the  strike  or  other  form  of  vio- 
lence must  be  the  direct  and  proximate  cause  of  the  delay.^^ 

§  1836.  "Extra"  in  building  contract. — The  word  "extra" 
whether  used  as  an  adjective  or  a  noun,  ordinarily  expresses  an 
idea  of  something  in  addition  to  or  in  excess  of  what  is  usual  or 
necessary.  As  used  in  building  or  other  similar  contracts  it 
denotes  something  done  or  furnished  in  addition  to  the  require- 
ment of  such  contract.** 

§  1837.    "Agency,"  "agent,"  "subagent,"  "attorney  in  fact." 

— "Agency"  is  the  legal  relation  founded  upon  an  express  or 
implied  contract  of  the  parties  or  created  by  law,  by  virtue  of 
which  the  agent  is  employed  and  authorized  to  act  for  the  prin- 
cipal.^^  The  word  "agent"  is  employed  in  more  than  one  sense, 
and  it  is  frequently  used  to  indicate  that  a  merchant  or  dealer 
has  the  exclusive  right  to  sell  a  specified  article  in  certain  territory 
when  in  fact  no  agency  exists.  The  dealer  in  no  sense  represents 
the  manufacturer  but  simply  buys  from  him  in  the  regular  course 
of  trade  and  sells  the  specified  article  to  the  public.*'^  A  "sub- 
agent"  is  one  employed  by  an  agent  to  assist  him  in  transacting 
the  affairs  of  his  principal.*'^  An  "attorney  in  fact"  is  a  private 
or  express  attorney  appointed  for  some  particular  or  definite  pur- 
pose not  connected  with  a  proceeding  at  law.*® 

§  1838.  Construction  of  conditions  and  warranties. — "War- 
ranties" and  "representation"  are  not  equivalent  terms.*''  In  con- 
struing a  contract  containing  an  express  warranty  "the  object  to 

^'See  Miller  v.   Norcross,  92  App.  "'Poirier  Mfg.  Co.  v.  Kitts,   18  N. 

Div.    (N.   Y.)   352,  87   N.   Y.   S.   56;  Dak.  556,  120  N.  W.  558. 

Hall  V.  Pennsylvania  R.  Co.,  14  Phila.  "  Fanset  v.   Garden   City   Bank,   24 

(Pa.)   414;   Gulf,  C.  &  S.  F.  R.  Co.  S.  Dak.  248,  123  N.  W.  686. 

V    Gatewood,  79   Tex.  89,   14   S.   W.  ■"  Harkins  v.  Murphy,  51  Tex.  Civ. 

913.   10  L.  R.  A.  419n.  App.  568,  112  S.  W.  136. 

"FuUerton  v.  Des  Moines   (Iowa),  "Minnesota  Mut.  Life  Ins.   Co.  v. 

115  N.  W.  607.  Link,  131  111.  App.  89. 

"Harkins  v.  Murphy.  51  Tex.  Civ. 
App.  568,  112  S.  W.  136. 


116/  TRADE  CONTRACTS.  §  1839 

be  attained  is  the  intent  of  the  parties;  but  this  intent  must  be 
ascertained,  if  possible,  by  the  language  which  the  parties  have 
themselves  adopted  and  used  in  such  contract,  and  not  by  reading 
into  the  same  words  that  import  an  intent  and  understanding 
wholly  unintended  and  unexpressed  when  tlie  contract  was  writ- 
ten, but  suggested  by  some  apparent  hardship  in  the  enforcement 
thereof.'"^"  The  word  "purchase-money"  under  the  principle 
allowing  the  recovery  of  the  purchase-money  on  a  breach  of 
warranty  includes  the  actual  consideration  paid  whether  in 
money,  property  or  otherwise/^ 

§  1839.    Terms  relating  to  position — "Near,"   "abutting," 
"adjacent,"  "contiguous,"  "on,"  "meander  line." — The  word 

"near"  means  "adjacent  to,  close  by,  not  far  from."  It  is  a  rela- 
tive term  and  its  precise  import  can  only  be  determined  by  sur- 
rounding facts  and  circumstances.^^  The  word  "abutting"  means 
"joined  to"  or  "adjoining"  but  does  not  necessarily  imply  that  the 
things  spoken  of  are  in  contact. ^^  The  W'ords  "abutting"  and 
"adjacent"  are  not  synonymous.  The  former  contemplates  the 
street  boundary  toward  the  lot  as  identical  with  the  boundary  of 
the  latter  toward  the  former,  while  the  idea  of  the  latter  is  the 
parcel  near  by  the  street  but  separated  therefrom  by  an  intervening 
abutting  strip  or  parcel.^*  The  word  "contiguous"  means  land 
which  touches  other  land  on  the  sides.^^  When  used  as  indi- 
cating relative  situation  "on"  means  at,  near,  or  adjacent  to, 
without  implying  contact  or  support.^®  The  words  "to",  "on", 
"by",  "at",  "along",  in  a  conveyance  of  land  bounded  by  a  non- 
tidal  stream  or  highway  presumptively  carry  title  to  the  center 
or  as  far  into  the  stream  or  highway  as  the  grantor  possesses 
such  title.^^     A  "meander  line"  is  not  established  as  a  boundary 

•^Nave   V.    Powell    (Ind.    App),   96  cited    in    Elliott    Roads    &    Sts.    (3d 

N.  E.  395.  cd.).  §  876.  note   1. 

"Tavlor  v.   Allen,   131   Ga.  416,  62  "  Xorthern  Pac.  R.  Co.  v.  Douglas 

S.   E.   291.  Countv,  145  Wis.  288.  130  X.  W.  246. 

"Karczenska    v.    Chicago,    239    111.  "Griffin   v.    Denison    Land    Co.,    18 

483.  88  N.   E.   188;   Kilgore  v.  Jack-  X.  Dak.  246,  119  X.  W.  1041. 

son,  55  Tex.  Civ.  App.  99,  118  S.  W.  ""O'Mara  v.  Jensma,  143  Iowa  297, 

819.  121   X.  W.  518. 

"People  V.   Willison,   237   111.   584,  "  Learv   v.    Jersey    Citv,    189    Fed. 

86   X.   E.    1094.    See  generally   cases  410.  2  Elliott,  Roads  &  Sts.  (3d  ed.), 

§  914. 


§    1840  CONTRACTS.  II68 

but  is  a  line  drawn  along  the  shore  of  water  disregarding  its 
minor  sinuosities  and  is  not  ordinarily  used  to  mark  the  limits 
of  a  tract  of  land,  but  simply  as  a  basis  from  which  to  measure 
such  tract  and  determine  the  number  of  acres  for  which  the  gov- 
ernment will  demand  payment/^ 

§  1840.  "Guaranty,"  "unlimited  guaranty,"  "primarily  lia- 
ble," "secondarily  liable,"  "surety." — "Guaranty"  is  an  un- 
dertaking by  one  person  that  another  shall  perform  his  contract 
or  fulfil  his  obligation  and  that  in  case  he  does  not  do  so  the 
guarantor  will  do  it  for  him.'^®  A  guarantor  of  a  bill  or  note  is 
one  who  engages  that  the  note  shall  be  paid.^"  It  has  been  said 
that  the  word  implies  that  the  entire  matter  was  one  concurrent 
act  and  the  contract  of  guaranty  was  part  of  the  original  agree- 
ment and  supported  by  the  same  consideration.*'^  An  "unlimited 
guaranty"  is  one  that  is  unlimited  both  as  to  time  and  amount. 
A  "continuing  guaranty"  is  one  that  is  not  limited  in  time  or 
to  a  particular  transaction  or  to  specific  transactions,  but  is  opera- 
tive until  revoked.^"  A  guaranty  made  to  apply  in  terms  to  sales 
made  "on  and  after  the  date  thereof,"  applies  alike  to  present 
and  future  sales. ^^  The  terms  "primarily  liable"  and  "second- 
arily liable"  as  used  in  a  statute  fixing  the  liability  of  a 
guarantor  have  reference  to  the  remedy  provided  by  law 
for  enforcing  the  obligation  of  one  signing  negotiable  in- 
struments rather  than  to  the  character  and  limits  of  the 
obligation  itself.''*  A  "surety"  is  an  insurer  of  the  debt. 
A  "guarantor"  is  an  insurer  of  the  solvency  of  the  debtor.^^ 
"A  surety  and  guarantor  have  this  in  common  :  that  they  are  both 
bound  for  another  person.  Yet  there  are  points  of  difference  be- 
tween them.    *    *    *    A  surety  is  usually  bound  with  his  principal 

='Barringer  V.  Davis,  141  Iowa  419,  Eelcher    (Mo.),   104   S.   W.   894.   But 

120   N.    W.    65.  sec  last  note  to  this  section. 

''  Miller  v.  Lewiston  Nat.  Bank,  18  '''  Merchants'      National      Bank     v. 

Idaho    124,    108    Pac.    901;    Northern  Cole,   83   Ohio  50,  93    N.   E.   465. 

State   Bank  v.   Bellamy,   19  N.   Dak.  "''Bond    v.    Farwell    Co.,    172    Fed. 

509   125  N   W.  888 ;  Clymer  v.  Terry,  58.  96  C.  C.  A.  546. 

50    Tex     Civ.    App.    300,    109    S.    W.  "  Northern  State  Bank  v.  Bellamy, 

1129.      ■  19  N.  Dak.  509,  125  N.  W.  888. 

"^ Northern  State  Bank  v.  Bellamy,  '"Northern   State  Bank  v.  Bellamy 

19  N.  Dak.  509,   125  N.  W.  888.  19  N.  Dak.  509,  125  N.  W.  888. 

®' Great    Western    Printing    Co.    v. 


Il69  TRADE  CONTRACTS.  §  184I 

by  the  same  instrument,  executed  at  the  same  time  and  on  the 
same  consideration.  He  is  an  original  promisor."  The  contract 
of  the  guarantor,  however,  is  his  own  separate  undertaking,  in 
which  the  principal  does  not  join.  It  may  be  entered  into  before 
or  after  that  of  the  principal  and  is  often  founded  on  a  separate 
consideration  from  that  supporting  the  contract  of  the  princi- 
pal.«' 

§  1841.  Terms  used  in  dealing  with  real  estate. — A  "deed" 
in  its  broadest  meaning  includes  all  varieties  of  sealed  instru- 
ments ;  in  its  secondary  and  more  common  meaning  it  signifies  a 
writing  under  seal  conveying  real  estate."  An  "executed  deed" 
is  a  deed  signed,  sealed  if  necessary,  acknowledged  if  necessary, 
and  delivered.^*  A  "quitclaim  deed"  is  a  form  of  deed  in  the  na- 
ture of  a  release,  though  it  may  contain  words  of  grant  as  well  as 
of  release,*"  and  it  will  convey  what  the  grantor  has  as  well  as  any 
other  deed.'"  A  "trust  deed"  is  substantially  a  mortgage  with 
power  of  sale  and  the  trustor  or  his  successor  is  the  holder  of  the 
legal  title  entitled  to  exercise  the  ordinary  incidents  of  owner- 
ship subject  to  the  execution  of  the  trust."  The  meaning  of  the 
word  "hold"  as  applied  to  real  estate  has  to  do  with  the  duration 
of  the  estate  and  is  somewhat  different  from  the  mode  of  acquisi- 
tion." The  term  "seized"  when  applied  to  dower  in  personalty 
means  "title"  or  "ownership"  which  carries  with  it  the  immediate 
right  of  possession.''^  There  is  a  "  'delivery'  of  a  deed,  where, 
after  its  execution,  the  scrivener,  in  accordance  with  the  uncondi- 

"Musgrove  v.   Luther   Pub.   Co.,  5  often  used  to  express  merely  fhe  act 

Ga.  App    279,  63  S.  E.  52;  1  Brandt  of    signing    the    instrument.     Morris 

on  Suretyship  (3d  ed.),  §  2.  v.  Butler  (Mo.  App.),  122  S.  W.  Zll. 

"Malsby  v.  Gamle,  61  Fla.  310,  54  ""Nathans    v.    Arkwright,    66    Ga. 

So.  766;  Fisher  v.  Pender,  52  N.  Car.  179;   State  v.  Kemmerer.  14  S.  Dak. 

483.     A  "conveyance"  is  any  instru-  169,  84  N.  W.  771 ;  Balch  v.  Arnold, 

ment    by    which    an    estate    in    real  9  Wyo.  17,  59  Pac.  434.  But  see  Chew 

property   is    created    and    includes    a  v.  Kellar,  171  Mo.  215,  71  S.  W.  172. 

mortgage.     Farmers'     &c.     Bank     v.  "Smith   v.    Pendell,    19   Conn.    107. 

Citizens'   Nat.   Bank,  25   S.   Dak.  91,  48   Am.  Dec.    146;   Utley  v.    Fee.  ZZ 

125   N.  W.  642.  Kans.  683,  7  Pac.  555. 

"Creamer  v.   Bivert,  214  Mo.  473.  "Hollywood  Lumber  Co.  v.  Love, 

113  S.  W.  1118.  In  strict  legal  under-  155  Cal.  270,  100  Pac.  698. 

standing    the    word    "to    execute"    as  "Lehman    v.    State,    45    Ind.    App. 

applied    to    deeds,    notes    or    written  330.  88  N.   E.  365. 

contracts,    includes,   signing   and   de-  ^  Burdett  v.  Burdett,  26  Okla.  416, 

livery,    but   in    popular   speech    it    is  109  Pac.  922. 

74 — Contracts,  Vol.  2 


§    1842  CONTRACTS.  II70 

tional  instructions  of  the  grantor,  turns  it  over  to  the  grantee."^* 
A  "cloud  upon  title"  is  in  itself  a  title  or  encumbrance  apparently 
valid  but  in  fact  invalid.  It  is  something  which,  nothing  else 
being  shown,  constitutes  an  encumbrance  on  the  property  or  a 
defect  in  its  title/"*  A  title  need  not  in  fact  be  bad  in  order  to 
make  it  unmarketable.  The  question  is  whether  a  reasonably 
prudent  man,  familiar  with  the  facts  and  apprised  of  the  question 
of  law  involved,  would  accept  the  title  in  the  ordinary  course  of 
business.  If  there  be  doubt  or  uncertainty  sufficient  to  form  the 
basis  of  litigation  the  title  is  not  marketable.'"  On  the  question 
of  knowledge  of  defects  in  title  as  bearing  on  the  question  of  good 
faith  the  rule  is  that  the  purchaser  of  land,  with  knowledge  of 
such  facts  as  would  put  a  prudent  man  upon  inquiry  which  if 
pursued  with  ordinary  diligence  would  lead  to  actual  notice  of 
adverse  claims,  may  be  deemed  guilty  of  bad  faith  if  he  neglects 
to  make  such  inquiry,  and  is  chargeable  with  the  "actual  notice" 
he  would  have  received."  A  mortgage  "deficiency"  is  the  bal- 
ance due  after  exhausting  the  property  given  as  security.'^ 

§  1842.  "Real  estate,"  "vested  estate,"  "perpetuity,"  "ap- 
purtenant."— The  words  "real  property"  or  "real  estate"  in- 
clude every  estate,  interest  and  right  in  lands,  tenements  and 
hereditaments. '^^  A  "chattel  real"  at  common  law  was  an  inter- 
est annexed  to,  or  growing  out  of,  real  estate,  as  a  term  of  years, 
having  the  character  of  immobility,  which  denominated  it  as  real 
while  other  chattels  proper  are  movable.^**  Coal  in  place  is 
"real  estate"  within  the  meaning  of  statutes  giving  a  wife  dower 
in  her  husband's  "real  estate."®^     The  homestead  right  of  minors 

"Conway  v.   Rock,    139  Iowa   162,  Henderson  v.   Harness,   176  111.  302, 

117  N.  W.  273.  52  N.  E.  68;  Bodwell  v.  Heaton,  40 

''  McArthur  v.  Griffith,  147  N.  Car.  Kans.  36.  18  Pac.  901 ;  Kiser  v.  Saw- 

545,  61  S.  E.  519.  ver,  4  Kans.  503;   Slattery  v.  Jones, 

'"  Williams  V.  Bricker,  83  Kans.  53,  96  Mo.  216,  8  S.  W.  554,  9  Am.  St. 

109  Pac.  998.  344;    Nichols   v.    Guthrie,    109  Tenn. 

"Cooper   V.   Flesner,  24   Okla.   47,  535,  73  S.  W.  107;  Potter  v.  Couch, 

103  Pac.  1016.  141  U.  S.  296,  35  L.  ed.  721,  11  Sup. 

'*  Barley   v.   Block    (Tex.),   134    S.  Ct.  1005. 

W.  323.  *  Comer   v.    Light    (Ind.),    93    N. 

"Stull  V.  Graham,  60  Ark.  461,  31  E.  660. 

S.  W.  46;   California  &c.   R.  Co.  v.  **  Reynolds  v.  Whitescarver,  66  W. 

Mecartney,  104  Cal.  616,  38  Pac.  448;  Va.  388,  66  S.  E.  518. 


I  I /I  TRADE    CONTRACTS.  §    1843 

in  land  of  their  deceased  father  is  "real  estate.""  An  estate 
"vests"  in  a  person  who  is  given  a  present  and  immediate  interest 
as  distinguished  from 'an  interest,  the  existence  of  which  depends 
on  a  contingency.  The  word  applies  to  estates  in  personalty,  as 
well  as  estates  in  land.**^  A  "perpetuity"  is  any  limitation  tend- 
ing to  take  the  subject  of  it  out  of  commerce  for  a  longer  period 
than  a  life  or  lives  in  being  and  21  years  beyond.^*  A  thing  is 
deemed  to  be  incidental  or  "appurtenant"  to  land  when  it  is  by 
right  used  with  the  land  for  its  benefit. ^'^ 

§  1843.  "Conditional  estates,"  "conditions"  in  deeds,  "de- 
feasances," "vendor's  lien." — An  estate  upon  condition  is  one 
which  is  made  to  vest  or  to  be  enlarged  or  defeated  upon  the  hap- 
pening or  not  happening  of  some  event.  An  express  condition 
in  this  view  is  one  declared  in  terms  in  the  deed  creating  the 
estate.  An  implied  condition  is  one  which  the  law  implies,  either 
from  its  being  always  understood  to  be  annexed  to  certain  estates 
or  as  annexed  to  estates  held  under  certain  circumstances.*®  A 
condition  precedent  is  one  which  must  happen  before  the  estate 
dependent  upon  it  can  arise  or  be  enlarged.  A  condition  subse- 
quent, is  such  as  when  it  does  happen,  defeats  the  estate.®^  Where 
it  clearly  appears  from  the  language  of  a  deed  that  it  was  the  in- 
tention of  the  parties  that  on  breach  of  a  restriction  the  estate 
should  be  defeated  and  returned  to  the  grantor,  this  restriction 
is  a  "condition"  without  regard  to  whether  apt  words  were  used 
to  create  the  condition  or  not.**  The  word  "business"  in  a  deed 
forbidding  the  use  of  the  lot  for  business  purposes  excludes  the 
use  of  the  lot  for  a  physician's  office.*®     An  instrument  which 

"Ancell  V.  Southern  111.  &c.  Bridge  "Armstrong  v.  Barber,  239  111.  389, 

Co.,    223    Mo.    209,    122    S.    W.    709.  88   N.   E.  246. 

"When    the   'homestead'    of   a    land-  "  Corea  v.   Higuera,    153   Cal.   451. 

owner     is     alluded     to     in     common  95    Pac.    882,    17   L.    R.    A.    (N.    S.) 

speech  it   is  never  understood   to   be  lOlSn. 

limited     to     the     dwelling-house   or  ^  Raley  v.  Umatilla  County,  15  Ore. 

other  house  within  curtilage,  but  em-  172,  13  Pac.  890,  3  Am.  St.  142. 

braces  the  tract  of  land  on  which  is  "  Ralev  v.  Umatilla  Countv.  15  Ore. 

located    the    dwelling    and    tributary  172.  13  Pac.  890.  3  Am.  St.  142. 

improvements."      Hancock    v.     King,  "  Ball   v.   Milliken,  31    R.   I.  36,  76 

133  Ga.  734.  66  S.  E.  949.  Atl.  789. 

''Armstrong    v.      Barber.    239    111.  '"  Semple    v.    Schwarz    (Mo.).    100 

389,  88  N.  E.  246;   In  re  McQellan,  S.   W.   633. 
221  Pa.  261,  70  Atl.  737. 


§    1844  CONTRACTS.  1 1 72 

defeats  the  force  or  operation  of  some  other  deed  or  of  an  estate 
is  a  "defeasance" ;  but  if  the  provision  is  in  the  same  deed  it  is  a 
condition.®"  A  conveyance  of  real  estate  for  which  the  con- 
sideration is  not  paid  raises  a  claim  in  equity  upon  the  property 
conveyed  and  this  is  commonly  called  a  "vendor's  lien."®^ 

§  1844.    "Lease"   or   "license,"   "subtenant."— There   is   a 

plain  difference  between  a  lease  and  a  license.  The  test  to  deter- 
mine whether  an  agreement  for  the  use  of  real  estate  is  a  license 
or  a  lease  is  whether  the  contract  gives  exclusive  possession  of  the 
premises  against  all  the  world  including  the  owner,  in  which  case 
it  is  a  lease ;  or  whether  it  merely  confers  a  privilege  to  occupy 
under  the  owner,  in  which  case  it  is  a  license,  and  this  is  a  ques- 
tion of  law  arising  out  of  the  construction  of  the  instrument.®* 
A  "subtenant"  is  one  who  leases  all  or  a  part  of  rented  premises 
from  the  original  lessee  for  a  term  less  than  that  held  by  the 
latter.®^ 

§  1845.  "All  crops  grown  and  to  be  grown." — A  chattel 
mortgage  covering  "all  crops  growing  and  to  be  grown"  is  not  void 
for  uncertainty  as  to  that  part  which  refers  to  "all  crops  growing" 
in  that  it  fails  to  specify  the  year  in  which  the  crop  was  to  be 
grown  but  is  void  as  to  the  part  which  refers  to  the  crop  "to  be 
grown  without  stating  any  year.""*  A  mortgage  describing  the 
property  as  "my  entire  crop,  grown  the  present  or  next  year" 
has  been  held  to  embrace  the  crop  of  each  and  both  years,  and 
equivalent  to  the  phrase  "my  entire  crop,  whether  grown  the 
present  or  next  year,"  and  hence  not  defective  as  to  description 
because  covering  the  crop  of  one  or  the  other  of  two  years  with- 
out showing  which  of  the  two  crops  was  intended  to  be  mort- 
gaged.®' 

§  1846.  Miscellaneous  terms. — A  note  payable  "at"  a  des- 
ignated bank  which  is  negotiable  within  the  statute  declaring  a 

**  Epperson    v.    Epperson,    108    Va.  ^  Hudgins   v.     Bowes     (Tex.  Civ. 

471,  62  S.  E.  344.  App.),  HO  S.  W.  178. 

"  Wilson  V.  Plutus  Mining  Co.,  174  ""  Luce  v.  Moorehead,  73  Iowa  4y«, 

Fed.  317,  98  C.  C.  A.   189.  35  N.  W.  598.  5  Am.  St.  695 

•"Shaw   V.   Caldwell,   16   Cal.   App.  '"Hoist   v.   Harmon,    122   Ala.   45J, 

1,  115  Pac.  941.  26  So.    157. 


I  I  73  TRADE   CONTRACTS.  §    1 846 

note  payable  in  a  bank  within  the  state,  shall  be  negotiable.  The 
word  "at"  is  equivalent  to  *'in"."°  A  "check"  is  an  order  on  a  bank 
purporting  to  be  drawn  upon  a  deposit  of  funds,"  and  is  by  com- 
mon law  negotiable  and  a  consideration  is  presumed."®  The  in- 
dorsement of  commercial  paper  "without  recourse"  does  not  avoid 
the  warranty  of  its  genuineness  and  of  its  title  in  the  indorser,®* 
The  words  "obligation  executed"  as  used  in  a  statute  prohibiting 
any  corporation  from  pleading  usury  on  any  obligation  executed 
by  it  refers  to  corporate  obligation  such  as  bonds,  mortgages  and 
the  like  and  is  without  application  to  an  agreement  to  pay  usuri- 
ous commission  to  an  agent.^  One  of  the  meanings  of  the  word 
"advance"  is  "a  loan"  and  the  use  of  the  word  quite  naturally 
may  import  a  reimbursement  and  the  relation  of  debtor  and  cred- 
itor may  be  implied  from  the  use  of  the  word."  "Best  judgment" 
means  substantially  the  same  thing  as  "opinion"  or  "belief."^ 
The  terms  "good  faith"  and  "notice"  are  intimately  related  but 
are  not  of  uniform  meaning;  the  former  retains  in  some  measure 
the  popular  sense  of  honest  belief,  but  its  technical  significance 
depends  largely  upon  the  doctrine  of  notice  as  developed  in  the 
progress  of  the  equity  system.*  A  corporate  "surplus"  is  that 
which  remains  after  the  payment  of  expenses  and  dividends.""' 
Under  the  laws  of  Mississippi  usurious  interest  is  "received" 
when  it  is  charged  in  the  settlement  of  a  building  and  loan  asso- 
ciation with  the  borrowing  member."  The  word  "general"  in  its 
use  to  designate  newspaper  circulation  is  equivalent  to  extensive.^ 

"Halstead  v.  Woods  (Ind.  App.),        *Grone  v.  Economic  Life  Ins.  Co. 

95  N.  E.  429.  (Del.),  80  Atl.  809. 

''State  V.  Hammelay,  52  Ore.   156,        *  Harris  v.  State  (Tex.),  137  S.  W. 

96  Pac.  865,  17  L.  R.  A.  (N.  S.)  244n,    Z7Z. 

132  Am.   St.  686.  *  Richmond     v.      Ashcraft      (Mo. 

"Purcell   V.    Armour    Packing  Co.  App.).   117  S.  W.  689. 

(Ga.  App.),  61  S.  E.  138.  "Mark  v.   American   Brewing   Co., 

"  State   V.    Corning    Saving    Bank,  126  La.  666,  52  So.  983. 

139  Iowa  338.  115  N.  W.  937.  'Mississippi   Building  &c.   Assn.  v. 

^  Mazarin    v.    Hudson    County    &c.  McElveen    (Miss.),  56  So.   187. 

Building  Co.,  80  N.  J.  L.  35,  76  Atl.  '  Times   Printing  Co.  v.   Star  Pub. 

i22.  Co.,  51  Wash.  667,  99  Pac.  1040. 


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